Summary |
This book deals with the problems and issues involved when a stock life insurance company offers contracts the terms of which call for participation by policyholders in the surplus of the company. While various facets of the broad topic are explored, the treatise focuses on the central issue of how to reconcile the conflicting interests of the participating policyholders, the nonparticipating policyholders (if any), and the stockholders, within the framework of traditional management prerogatives. The major conclusion of the book is that there should be a statutory or other mandatory limitation on the extent to which earnings on participating policies may be withheld by management for the benefit of stockholders. If such a limitation is to be meaningful, the accounts of the insurance company must be kept in a manner to permit identification of the earnings attributable to the participating portion of the company’s operations. Thus, the author was led to certain recommendations concerning the separation of accounts as between the participating policyholders’ and stockholders’ “branches” of the company, a subject currently under consideration by the National Association of Insurance Commissioners.
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