(SANITIZED)LETTER (SANITIZED) FROM WILLIAM W. FELLERS, ACTUARY JAMES A. HAMILTON, ACTUARY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP86-00964R000100110033-9
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 3
• Document Creation Date: December 19, 2016
• Document Release Date: April 13, 2006
• Sequence Number: 33
• Publication Date: May 12, 1954
• Content Type: LETTER

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~~ COMPANY
THE
WASHINGTON 5, D. C.
1029 VERMONT AVENUE, N. W
DISTRICT 7-21$53
CHICAGO
CLEVELAND
DALLAS
DETROIT
NEW YORK
OTTAWA, CAN.
ventral 00T
Rouse 'S?LX) - North SuildIng
2430 "E" Street j, A'. W.
Washin. t m, D. C.
reviewed the ;prc poral s) the lpaaet*al Benefit Health and
Accident Association Of QAVA& re ative to the provision of life insurance
and accidental death benefits to eMployees of your asrresnisation. This pro-
posal was Bet *at briefly in 14r. Randal.l'$ letter dated April 19, 1954
directed to y attention, aced, Lit certsin exhibits. The inferreatio i rap-
plied, is very sketchy and, co sequently, we are able to eel only a few
rather general compmeate. Thee cc events cn the letter, exhibits and relate{
items are an follows
(1) The proposed berm. l fe co tra ge mould, iao l ode the cuattoe ry
conversion privilege ewd also valver of ereatuat daring nt disabilit.
providing such disabl at Oolaas, r r prior to age 60. I/ This appears to be
s cnevrhat more favourable than 1(-A-11: - ?. A. because we can find no evidence of
disability paareeartiun waiver p xri ion in the W.A.B.P.A. plan. iio e e , a sue: -
what more favosr*ble disability provision (including pe aeent of sa nthly in-
stallaeuta up to the facee +es ent. o ins 1.e the event of total and
arrangesaeeaat used to be widely found in w'oup life policies and we ua~ retat
that certain insurance coapanie.s will include this type of parovisio curreaN:ty.
We assume from aWibit 1 that the ?' he conversion pnrivile,gs is Mt- liaaai.tt'
to thou under age 60.
(2) tie have trouble understanding just how the schedule of insur V
out in I. Randal.l's letter in to be used.
Mention is weed* of an "opticeaal sob*dule of insurance" but the v
tug Immediately preceding the echcdule mould scan to dear the a stence of . rq
options. Still a little later on in his letter, it woulit appear that an ea-
plus has a vary wide choice in the aeounta of ivP rant, which he t eey eeleut)
e. g. , an employers earning $k0200 a xally apparently could select the cunt
of insurance equal to hie annual salary takes to the nearest $1,000 (*4t000),
Bete the aerpt?+esascn t ,> permane?a~tt p fc+r to age 6A which, of c3'ur
lay have reference to acme quJite d:iffereut err nt (i.e. the woard "total" is
)t used by Er. Randall nor is there any direct refere=e to "disability").
eecoud garagrap i of Mr. 1s letter to ro r to the
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or he se'oald elect to to Class :.t-aen4 have $3r~ of iamaeara a ear he could
ape in Class 5 and have 415#000 of is ursno* . ltery fraxseeicly, we are sc rtiat
pies by the deFtcriptioa of the bmwfitc to be prided and are voseidesrtzag
if perhaps the intent is merely tO ;permit of eapioyee to elect aA aatuODUt of
in esr a in even thou/mot leesfs then 0,000 or over $15,x, ezoept
that if an employ" ear" of ar $ 3,. aM*All.y he 7 not select more U AM
$6,000. If the Intent is to bolt seTeral quite d,ifterent schedalas of
elective benefits operating sinalttaosoael1, we are Inclined to believe that
each a oyet*a vonlel. be t+ vith anti.-.ela to tae ass trow the insar-
aaeae off' es stanlipoiat, and in any event might well be con using to all
sma rt. We voalt s1 t that the exlres ion of benefits of the proposed
plan be clarified.
(3) The ozaluston described at the bottom of the first pigs is not
clear. We interpret it to man that the exclusion applies only to accidental
deaths occurring while omp o7ees are in or on vohicler or U vices for aortal
navigation other then aircraft. Tbie tr because the lesion refers to the
type of vehicle iaxyolved rather than to the status of thee employee, 1.e? , it
do.s not seem. to be related to vtet eer or not, the inww" is a member o'f the
ores of t h* aircraft (this is Used on the taterprot$tioa that all 1seee1t7i.dumis
in or on at aircraft are passomwerv - the nasal azeteion refers to either the
fare paying status of the pssae @er or the esaploymeft of the excluded irvii-
videal as a crow aeeeabeeer of the veehicle ).
(4) The complete fetor r on the 4ovorage offered is not available
since no smpl* oc atrect was suttsi.tte&. We are also unable to comment ou the
cowZamtivo cost aspects of the jproporal since no retention agreement 1s at
!sated for review (p 'ua rates, .nibwjeect to change each ,year, considered with-
out a retention agreement at Wojectec4t dividend distributions are not per-
ticularly informative as to ultbaste 0o'tr ).
(5) iron Exhibits p 42d 3 it ao14 appear that the Omaha rates are
more favorable than those of W.A.Z. P.A. Hoover, as point eed out in (4) above,
the stated j ium rate basis to sot *early as important in Wind c,4st
results as is the retention rate or dividend ttreatsaeat and premium rate
stability.
(6) If a retention of 1% of Grose pr**iu*t is involved, as we ka t
been advised, the an the basis of a 00,000 annual premium eaymmee $3C,
bee retained by the insurance 606, Pk" each year. We have no intormatton as to
homer this $3o,000 vault be distributed an the varia expenses incurred by
the insurance cove ' and seontia Ue7 reserves. The establishment of it
of coarse to be
tae
'
a
,
pe off
d for this T
lo contieege uer fen coverage
-14-4&r A ~: flea '$ /Ir
be
red enpemse. a+esa*erd3 sag ire'' #be several categ +es '' a r cetret -ver
( g apt possiblly for the first l.essr ,
the plan at harm is quite different ft (w the custcaemary Sraap 'If* tnstsx metes
progMa and special contingency reeterVes a be called for, but information .,
such reserves should be furnished to the policyholder.
ewe, agAt7Z; S efe~av+u~p al f+~.vv. p. w r....,. _ _ __._
000
*2:00,
ovintcn that in the usual groap life imueaeeraacearaermrss seetwneet Involving
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(7') in this oonnectiar it might be possible to too 'e a still hearer
retention rate from another insEr ce cam. ?hers say be important reasons
why each aeaciditiorartl bide should not be inrited, but in the sbee a of each
reasons are woul4 .satggaett that three or four insurance ooapaenies be invited to
submit bids for the businoes.
(8) The 4 UdW 1 6oee premium rates appear to be lover t.
rt
iar
e
id
ll tot bu xrKrs in ftv- York.(1~e soarr~Lialeafeel this HMV" is
=
mot
a
that Mob licensing and supervision by the New York &tate Insurance i Parrt-
.e the selection of an uzdarvr'iter. )
In eummiry, we to not have very cinch in the army of sug?estis to
offer regarding the paroposet u s iting ar asgeomat primrily because no
policy contract or retention agxeement wa - bunted to as (and also because
we had c aai:derable difficulty in Interpreting the material that was submitted ).
While vs. are latcewt that the Cl a is villkag to abids by a 1% retention
Nor have an r' other proposals inrtarraenn a kerns 'been broadly di rt ussel in our neetinge, and we
hesitate to, embark on an exhaustive survey alcmt these lines unless very Berri ,us
consideration is being given to the sel -insuret route.
Very truly YO
Iii- ila W. llws,, Actuary
_- .... Y ~..,........... ~. .
Actuary
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