Manner of computing

reserve.

First year.

Second year.

Third year.

Fourth year.

Fifth year.

Sixth year.

When to reduce reserve.

Policies

valued by net reserve plan so stated.

Term insurance contracts.

In the case of any policy having a net premium equal to or greater than the net premium at the same age for a continuous level premium ordinary whole life policy, the reserve shall be computed in the following manner:

For the first year reduce the usual net reserve by the excess of the reserve for the aforesaid ordinary life policy over that for one-year term policy at the same age;

For the reserve in the second policy year diminish the usual reserve by five-sixths of the aforesaid excess;

For the reserve in the third policy year reduce the usual reserve by four-sixths the aforesaid excess; and For the reserve in the fourth policy year reduce the usual reserve by three-sixths of the aforesaid excess;

For reserve in the fifth policy year reduce the usual reserve by two-sixths of the aforesaid excess;

For reserve in the sixth policy year reduce the usual reserve by one-sixth of the aforesaid excess.

In the case of any policy having a net premium less than the aforesaid ordinary life policy, reduce the usual reserve for the first year by the excess of the usual reserve for the said low premium policy over that for a one-year term policy. For the second policy year reduce its usual reserve for the second policy year by three-fourths of the last-mentioned excess. For the third policy year reduce the usual reserve by one-half of the said excess, and for the fourth policy year reduce the usual reserve by one-fourth of the said excess.

When a valuation of any of the policies of any company shall have been made upon the modified net reserve plan as herein provided, the Commissioner of Banking and Insurance, in certifying or publishing the results of the valuation of the policies of said company, shall state distinctly what classes of policy have been so valued.

Subject to the above provisions, no policies issued after the thirty-first day of December, one thousand nine hundred and seven, shall be valued as term insurance contracts if the premiums charged for such term insurance exceed those charged by the company for like term insurance under any other form of policy.

The Commissioner of Banking and Insurance may accept the valuation of the department of insurance of any other State or country when made upon a specified basis or bases, according to which the reserves would be at least as large as if they had been computed upon the basis or bases herein prescribed, if the insurance officer of such State or country accepts as sufficient and valid for all legal purposes the certificate of valuation of the Commissioner of Banking and Insurance of this State, when such certificate states the valuation to have been made in a specified manner according to which the reserves would be at least as large as if they had been computed in the manner prescribed by the law of such State or country; or if the insurance officer of such State or country, by express requirement of law, shall have made yearly for not less than thirty years past valuations of the policies of all companies issuing or delivering policies therein.

The modified net reserve plan shall not be employed in valuing industrial policies nor the policies of any company which has premium reserves amounting to four hundred millions of dollars or more, and as to other companies the application of the said modified net reserve plan shall, after the thirty-first of December, one thousand nine hundred and ten, be subject to the following limitations:

Acceptance of

valuations of

other States.

Modified net reserve plan not used in

valuing in

dustrial

policies.

If the reserves of any company amount to twenty-five Limitations. millions of dollars on the thirty-first of December, one thousand nine hundred and ten, or at the close of any year thereafter, the modified net reserve plan shall not be employed in tthe valuation of the endowment policies of such company issued in any succeeding year; and if the reserves of any company are found to amount to fifty millions of dollars on the thirty-first of December, one thousand nine hundred and ten, or at the close of any year thereafter, the modified net reserve plan shall not be applied to the valuation of any policies thereafter issued.

The application of the modified net reserve plan to the valuation of the new policies of any life insurance company, issued in any calendar year and thereafter, shall be subject to the following conditions, viz.:

Conditions of

applying plan

to new

policies.

Application to insurance com

A request for such application of said mode of valuamissioner. tion shall be filed with the Commissioner of Banking and Insurance by the company not later than the thirtyfirst day of March in such year, if such company is doing business in this State at that date, otherwise at the time. of applying for a license to begin business in this State. Such request once made shall be considered as continued also for succeeding years under the operation of this law, unless such company shall file a withdrawal of such request with the commissioner.

Agreement to accompany request.

Said request shall be accompanied by a duly executed agreement on the part of said company that the sum of the expenses incurred and payable wholly in connection with the first year's premiums on policies issued in said year, including commissions, agents' salaries or other compensation based on new business, agents' advances and medical fees and a proper share of other expenses, together with the modified mean net reserves to be held for such policies, shall not exceed the total amount of said first year's premiums, including premiums deferred or in course of transmission, and also that the aggregate expenses of such company in each calendar year shall be so regulated that the percentage of such expense upon premiums received in such year shall be less than when similarly computed for the calendar year next previous in case said company shall have been in operation during the whole of such previous year. In reckoning such How expenses aggregate expenses, investment expenses, not exceeding one-fourth of one per centum of the mean invested assets at book value and taxes on real estate and other necessary outlays, exclusively connected with real estate, shall not be included. In reckoning a proper share of other expenses in connection with first year's premiums in the case of any stock company, the portion of such other expenses as shall be definitely paid out of surplus contributed by stockholders shall not be included.

reckoned.

Continuance of agreement.

When such an agreement has been filed by any company, it shall be considered as in force and as applying to succeeding years as long as the modified net reserve plan is employed in the valuation of its policies, and the company shall, not later than the first day of February on each succeeding year, file with the commissioner an

exhibit, showing how far it has fulfilled its agreement as to the calendar year next previous, and if the commissioner, after due notice and hearing, shall consider that said company has failed to make a reasonable and proper compliance with said agreement, he shall notify said company that said modified net reserve plan will not be applied to the valuation of the policies of said company issued during said previous year and in succeeding years.

Section 70 amended.

File annual condition.

statement of

5. Section seventy of the act to which this is an amendment is hereby amended so as to read as follows: 70. Every insurance company transacting business in this State shall annually, on or before the thirty-first day of January, file in the Department of Banking and Insurance a statement, subscribed and sworn to by its president and secretary, or, in their absence, by two of its principal officers, showing its financial condition at the close of business on the thirty-first day of December of the year last preceding, and its business for that year, which statement shall be in such form and contain such matters as the Commissioner of Banking and Insurance shall prescribe; said commissioner may also address any Commissioner inquiries to any such company or its officers in relation information. to its condition or affairs, or any matter connected with its transactions, and it shall be the duty of the officers of such company to promptly reply in writing to all such inquiries; for good cause shown the commissioner may extend the time within which any such statement may be filed; the annual statement of a company of a foreign country shall embrace only its business and condition in the United States, and shall be subscribed and sworn to by its resident manager or principal representative in charge of its American business.

may require

Matter to be annual report.

stated in

In addition to any other matter which may be required by law or pursuant to law by the Commissioner of Banking and Insurance to be stated therein every annual report of every life insurance company doing business in this State shall contain an accurate, concise and complete statement of the following matters, to wit: (1) All the Real estate. real property held by the company, the dates of acquisition, the names of the vendors, the actual cost, the value at which it is carried on the company's books, the market

Loans on real estate.

Loans on personal property.

Other prop erty of company.

Commissions paid.

Moneys expended on legislative business.

Officers and directors.

value, the amounts expended during the year for repairs and improvements, the gross and net income from each parcel, and if any portion thereof be occupied by the company, the rental value thereof, a statement of any certificate issued by the commissioner extending the time for the disposition thereof, and all purchases and sales made since the last annual statement, with particulars as to dates, names of vendors and vendees, and the consideration. (2) The amount of existing loans upon the security of real property, stating the amount loaned upon property in each State and foreign country. (3) The outstanding sums loaned by the company other than loans upon the security of real property above mentioned and other than loans upon policies, the maturity and rate of interest of such loans, the securities held therefor, and all substitutions of securities during the past calendar year in connection therewith, and the same particulars with reference to any loans discharged since the last statement. (4) All other property owned by the company or in which it has any interest (including all securities, whether or not recognized by the law as proper investments), the dates of acquisition, from whom acquired, the actual cost, the value at which the property is carried upon the books, the market value, the interest or dividends received thereon during the year; also all purchases and sales of property other than real estate made since the last annual statement, with particulars as to dates, names of purchasers and sellers, and the consideration; and also the income received and the outlays made in connection with all such property. (5) All commissions paid to any persons in connection with loans or purchases or sales of any property, and a statement of all payments for legal expenses, giving particulars as to dates, amounts and names and addresses of payees. (6) All moneys expended in connection with any matter pending before any legislative body or any officer or department of government, giving particulars as to dates, amounts, names and addresses of payees, the measure or proceeding in connection with which the payment was made and the interest of the company therein. (7) The names of the officers and directors of the company, the proceedings at the last