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The Introduction of the Prudential of London

It is a matter of record that both President Dryden of the Prudential and President Knapp of the Metropolitan were close students of the Prudential of London. Both went to London and witnessed the functioning of the business at first hand. In fact, Mr. Knapp and the Metropolitan’s Attorney, Stewart L. Woodford, and an expert they took with them, were shown every courtesy. They brought back with them a clear conception of the details of management, and implemented this with a complete file of the forms essential to a business as intricate as industrial insurance.

The records of the company show that the procedures and the forms of the Prudential of London were followed to a large degree, and these undoubtedly contributed to the immediate success of the venture. Of course, important adjustments to American conditions had to be made. There was a fundamental difference, for instance, in the basis on which the reserve liability was computed. To be permitted to transact business in the United States, regardless of whether it is life insurance or cheap car insurance, a company was required to maintain reserves computed on the net premium basis, which made it necessary for American companies to maintain larger reserves than those on similar business in England.

The computation of premiums in the earlier days, before the mortality experience on this class of risks or the expense rate of conducting such business was known, was not easy. It was due to the good sense and skill of James M. Craig, Actuary of the Company, that the business was launched properly and safely. The Metropolitan’s industrial business was begun with the issuance, on November 17, 1879, of 34 Industrial policies for weekly premiums totaling $3.95. Before the end of that year a total of 5,143 policies for $516,618 face amount were on the books, and those at the helm knew that their new venture was meeting a real need. By the end of 1880 the industrial business of the Metropolitan had already out