White Ashes Part 52

"Roughly, our surplus," commented the financier. "Now, how about our other a.s.sets? Stocks and miscellaneous securities, $1,500,000. Only it won't be a million and a half by the time we get rid of them.

Probably a couple of hundred thousand less. Encouraging, isn't it? In other words, this fire is going to cost us $900,000 before we're through. And the present question is, how are we to get through?"

O'Connor looked him over with an appraising glance.

"Well, the Salamander has paid good dividends for years," he said.

"Probably more than most companies would have thought it prudent to pay--they'd have put a larger amount into surplus to take care of such a smash as this. And I've made the company a better money-maker on the underwriting side than it's ever been before--you'll admit that, I think. There's no reason why we shouldn't go on. My suggestion would be to a.s.sess the stock."

He awaited the answer nervously, toying with a penholder, not daring to glance at the other man. He did not have to wait long.

"Not much!" said Mr. Murch, coldly. "I'm going to get out of this as fast as I can, and I'm going to stay out, you understand. No more fire insurance business for me. It's the only business I ever made a complete mess of. The Salamander would have done better if they had never issued a policy--if they had merely let me invest their money for them. Now the next question is, how to get out. You are an insurance man and supposed to be a competent one--possibly you can tell me how to set about it."

"Do you mean to liquidate the Salamander--close up the company?"

"Whatever one does to extricate himself from this kind of a hole.

What's the usual method?"

"The usual method," replied O'Connor, his face somewhat flushed at the other man's tone, "is for the stockholders to authorize an a.s.sessment on their stock, and continue. That apparently does not appeal to you; and if I understand you correctly, you wish to terminate operations and wind up the company."

"Exactly so. You catch my meaning perfectly."

"There are two ways, then," the other said. "One is to let the risks in force expire, paying the losses as they occur; that will take about five years. The other, which is the usual way, is to pay some other company to a.s.sume the liability on all our outstanding policies--to reinsure us. We pay a lump sum, and the other company pays the losses as the risks expire, instead of our doing so."

"I see the idea. But what company would do that? And wouldn't it cost a small fortune to get any one to? And isn't this a bad time to approach any company with such a proposition?"

"No, I don't think so. Some company might be glad to get hold of a large amount of cash which it could use to pay its own Boston losses, and then it could pay the losses on our outstanding business, which would come along gradually for several years, out of its own normal profits in that time."

Mr. Murch looked at O'Connor with more respect.

"That sounds plausible. How much would it cost--in round numbers?"

"Our reinsurance reserve is about $1,500,000. I should think a company might be found to take it over for about two thirds of that sum. You see, we have a valuable agency plant and a good business, and although you want to get rid of it, it would be considered by most companies as well worth having. The company that took over our risks wouldn't let them expire; that company would hold on to them and secure them on renewal."

"How can this be arranged?" Mr. Murch inquired.

It was like cutting off his right hand to reply, O'Connor reflected, but he did so.

"Mr. Simeon Belknap usually manages such matters," he said. "Naturally he doesn't manage them for nothing; but he does the trick, and he's much the best man for it. He has probably engineered four fifths of the important reinsurance deals that have gone through in this country.

No one has ever discovered why these things gravitate so unerringly to him--but they do. He will undoubtedly be pleased to find you a reinsurer for the Salamander."

He rose from his seat. It was perfectly evident that the game was over, and only the tumult and shouting remained to die away. But Mr.

Murch was not entirely through.

"Suppose we ask Mr. Belknap to come and talk it over," he proposed.

O'Connor shook his head.

"Don't do it. It would hurt your market. If he were seen coming in here at this time, the whole Street would know we were in trouble and getting ready to quit. It would be better to make an appointment with him somewhere else."

"As you say," agreed Murch. "Please arrange one for us as soon as possible."

"All right," said the man whom this operation would leave bare of position and prestige alike. "I'll get him on the phone at once."

It was late that afternoon when a three-cornered interview took place in a down-town office somewhat outside the customary espionage of William Street. Most of the talking was done by Mr. Simeon Belknap, who talked crisply and to the point.

"The figures you have given me, Mr. Murch," he said, "indicate that the Salamander's capital is impaired to the probable extent of several hundred thousand dollars. I a.s.sume from your coming to me in this way, that you have decided that it is not worth while trying to put the company on its feet. Is that correct?"

"How much would it cost to keep going?" asked the financier, bluntly.

"I should think you would have to a.s.sess your stock one hundred and fifty dollars a share. Yes, it would take $750,000 to put the Salamander in a position to continue in business with proper resources."

"Eliminate that possibility from the discussion," said Mr. Murch, tersely; and O'Connor's last faint hope died.

"There remains, then, to find some company willing to take over your outstanding business. Your present reinsurance reserve is about $1,500,000. Your available a.s.sets over capital, including your real estate and everything, will bring approximately $1,800,000. Mr.

O'Connor tells me you will pay in Boston about $700,000. This leaves you $1,100,000. For this sum, or perhaps a little less, you can probably reinsure all your business now in force, leaving you, let us say, with your capital stock intact and perhaps $100,000 over."

"In other words," said Mr. Murch, "we'll get for our liquidated stock about 120;--stock which sold last week at 210!"

"Precisely. If I can get you a reinsurer on the terms I mentioned.

And I think you'll be getting out pretty well. You're impaired right now, you know."

Mr. Murch's financial vanity was touched.

"After all," he said, with an effort, "I probably averaged only 150 for mine. I've got pretty fair dividends on it for some time. That'll get me out pretty nearly even. Well, Mr. Belknap, if you can arrange to reinsure the Salamander on those terms, go ahead."

"The directors of the company--?" said Belknap, suggestively.

"I either own or control a majority of the stock," replied Mr. Murch.

There was no more to be said. The President and the majority stockholder of a corporation whose days were numbered walked back to the office with hardly a word spoken between them.

These were troublous times in William Street. The Salamander was not the only company which had been hard hit in Boston. Many of the smaller underwriting inst.i.tutions were tottering very close to the wall. Already two failures were known; a dozen others were suspected.

But in Boston, where the stricken city lay impatiently waiting, most of the companies already had men on the ground, adjusting and paying claims. The Boston insurance district had fortunately been left untouched, so that the local records were intact, making the work of the adjusters much simpler than it would otherwise have been.

Whence was the money to come--this golden flood which now began to pour from a hundred coffers into the empty pockets of the sufferers? The large companies, for the most part, were paying without discount or delay, and the line of claimants at the Boston offices and adjustment bureaus never ceased. In New York, in London, in Hartford, wherever insurance companies had their home offices, securities were being converted into cash to meet this tremendous demand. And the golden stream that flowed toward Boston knew no stop.

Of all the companies doing a general business in the East, the Guardian had come through least scathed, its withers unwrung. Thanks to the raiding of its Boston business by the Salamander, the Guardian's loss, which was confined wholly to three-year and five-year lines unexpired, would not much exceed, according to Smith's computation, $100,000, even if all its claims were adjusted as total.

Smith's first work on reaching the home office had been to compute the actual liability of the Guardian; his second was a similar calculation for a corporation in which he had no financial interest whatever. He was engaged in this task when Mr. Wintermuth entered the office.

"Ah, Richard," said his chief, "I'm glad to see you safe. An insurance man in a fire is like a duck in a pond; but I'm glad to see you here, just the same. A terrible calamity!--a really terrible calamity! How much did we get? Wagstaff estimated it at one hundred and forty thousand, but of course we can't tell how far the fire actually went."

"He was pretty close to my figures," said Smith, with a smile. "It was a terrible calamity, sir, but not so terrible as if the Guardian had a half a million loss--instead of $107,500 at the outside limit."

"Are those the figures you have there?" inquired the President, glancing at the list on his subordinate's desk.

"No. I sent that list with the daily reports to the loss department.

This is another one--even more interesting on some accounts. This is a list of the lines we didn't get."