dividends (including terminal dividends), and dividend illustrations for 10 and 20 year periods. The book also has an analysis ɔf each company's policy contracts, covering their salient features. These include the contestable clause, reinstatement provision, arrangements to change the plan of insurance, policy loan interest rate, option rates, dividend refund at death (if any), the semi-annual, quarterly and monthly premium factors, the availability of premium waiver and accidental death benefits, exclusions for occupational activities (for such things as aviation), and the interest rate on dividend accumulations.

3. Life Reports

"Life Reports" covers the financial and operating results of over 1,200 life insurance companies. It is published annually by the National Underwriter Company and is currently more than 800 pages. It costs $13.77. It covers the following subjects: corporate history, corporate affiliations (e.g., holding companies, affiliates), dividend scale changes, a description of current operations including the states were licensed, and statistics for recent years as to assets, policy reserves, capital and surplus, paid-for insurance, insurance in force, premium income, total income, dividends to policyholders, net gain from operations, total benefits paid. It also includes a summary of the most recent annual statement, and a brief description of the investment portfolio.

This periodical does not undertake to rate companies although comparative data is provided with facilitates comparisons.

4. Spectator Handy Guide

"The Spectator Handy Guide" is issued annually by The Spectator Co. of Radnor, Pennsylvania. This volume sells for $25.60. The current issue is 1,500 pages and covers virtually all major life insurance companies. The purpose of the "Spectator" is to provide (1) premium rates on different plans of insurance at different ages, and (2) a complete specimen copy of the policy contract, including a typical specifications page with premium schedule, table of guaranteed cash values, contract provisions, policy loan provisions, (including the interest rate), dividend provisions (including the first year in which dividends are payable and whether any dividend is paid at death), a statement of the interest assumption and

mortality table used in calculating reserves and a complete description of the guaranteed settlement options, waiver of premium benefit on disability and accidental death benefit.

5. Best's Settlement Option Manual

"Best's Settlement Option Manual" has been published annually by the A. M. Best Co. since approximately 1940. This periodical is approximately 800 pages long and covers approximately 120 of the largest life insurance companies. It sells for $14.41. It describes specific option arrangements, company practices, individual company option rates, and information on supplemental government plans such as Social Security and Medicare.

6. Best's Life Insurance Reports

"Best's Life Insurance Reports" is published annually by A. M. Best Co. (Best publishes a similar guide for property and liability insurance.) This book has over 1,800 pages and costs $50.00. It has been published since 1906. The current edition covers about 98% of the life insurance business in the United States.

The information on each company, including operating data, is extensive. The data includes: (1) a statement of assets and liabilities and summary of operations for the most recent year; (2) a description of the business in force; (3) premium income by line of business (ordinary, group, industrial, etc.) for a period of years; (4) operating income and operating gain for a period of years; (5) a summary description of the investment portfolio including Best's comments on the quality of the bond and mortgage portfolios: (6) investment yield for a period of years for each type of investment; (7) company history; (8) description of reserve basis; (9) listing of all officers, directors and the territories in which licensed; (10) significant operating ratios for a number of years including lapses, average size policy (issued and in force), average premium per thousand and renewal expense ratio per thousand; and (11) tabluation for a period of years on new business issued, insurance in force, assets, surplus and reserves.

Best gives an evaluation of the following categories of operations: (1) net yield (rated from "excellent" to "exceptionally low"); (2) the relationship between the interest rate required to meet the reserve assumption and the actual interest rate, with the margin described as "more than ample", "ample", or "sufficient"; (3) expenses (graded from "relatively low" to "excessive"); (4) mortality (graded from "very favorable" to "unfavorable"); (5) lapses (graded from "very low" to "high"); (6) net cost to policyholders (graded from "remarkably low" to "high"); and (7) the company's overall margins for contingencies (graded from "most substantial" to "considerable").

Exhibit is an excerpt from "Best's Reports" entitled "Basis and Form of Our Reports". This outlines the techniques used by Best for rating and illustrating purposes. For illustrative purposes, we have also attached Best's current report on the Prudential Insurance Company of America. This shows how Best's format is ipplied to an individual company.

1. Cost Facts on Life Insurance

"Cost Facts on Life Insurance" published in October, 1969 by the Diamond Life Bulletin department of the National Underwriter Company. This book was published only one time.

It consists of approximately 220 pages and cost $25. The publisher has not kept it up to date (presumably because of the current controversy) and since it does not reflect dividend changes by the insurance Companies since 1969, the comparative data is now out of date. It Covers only companies.

It shows illustrated costs for 5, 10, 15 and 20 year periods based on 1969 dividend scales on: (1) the traditional net cost method, (2) the "equalized cost" method (better known as the "interest djusted method"), and (3) the "benefits cost" method (under which early prices as calculated by Professor Belth's "level price" ethod are reduced to reflect current mortality).

The book then tabluates for comparative purposes the costs for 20 ear periods on these three cost methods, using two different ssumed interest rates, 2 1/2% and 4%.

3.

Pennsylvania Insurance Department "Shopper's Guide"

"A Shopper's Guide to Life Insurance", issued by the Pennsylvania Insurance Department in April, 1972, undertakes to identify the ten lowest cost straight life insurance policies sold by the 166 largest companies doing business in Pennsylvania. "Considering cost only", the Guide says, "these are the 10 best buys for life insurance among the companies listed." The Guide also undertakes to show the ten highest cost life insurance policies based on cost only. These are described as the "ten worst buys" of the life insurance companies listed. The basis for this comparison is the so-called "interest adjusted" method recommended by the Moorhead Committee which, in turn, served as the basis for the book "Cost Facts on Life Insurance" published by the Diamond Life Bulletin department of the National Underwriter Company.

The "Shopper's Guide" also tabulates the costs of the straight life policies of the 50 largest companies in Pennsylvania on the same basis.