The sun. [volume] (New York [N.Y.]) 1833-1916, 1906-03-10
The INSURANCE MEMS PLEA.
Continued from First Page.

enforce a point made. Presidents Paul
Morton, Alexander f.. Orr, Charles A.
Peabody and George f.. Ide we're the first
speakers and then came the actuaries
and Representatives Of the agents and policy
holders, Mr.. Woodruff announcing what
subject each one would speak on.
ENATo ARMSTRONG OPENS THE HEARING.
Senator Armstrong opened the hearing
by saying that the committee would be glad
to listen to the life insurance people. He
continued;
we are glad to have a free discussion
and we will be glad TO have the assistance
of the life insurance men in perfecting this
legislation. Any radical suggestion that
will be Of value will be carefully entertained
by the committee. What We want. though,
are facts, and arguments based on facts viii
be listened to with the utmost attention.
We want your judgment on these bills
and feel we can profit by suggestions giving
the maximum of information. No one need
spare the recommendations Of the COM
mittee. We realize that this is a serious
business and want the aid of every life in
surance man, so that we can arrive at some
thing that will be beneficial to all. :"
Mr.. Woodruff, who was introduced as
the guide, philosopher and friend Of the
insurance co mpanies and the policyholders,
outlined the procedure of the day, saying
that the insurance presidents would talk
first. They would be followed by a com
mittee of the actuaries and then by repre-
sentatives of the policyholders. He said
that william b. Hornblower would sum up
the arguments.
PAUL MORTON THE FIRST SPEAKER.
President Paul Morton of the Equitable
was the first speaker. He read a letter
addressed TO the chairman of the insurance
investigating committee. outlining in de-
tntl fhA coalition nT tho tnattrnnnn nnrnQnV
o Ulcers on the Armstrong committees
recommendations. The letter says;
With the general purposes which you have
In view ] am In entire accord, and in the main
your recommendations seem to me well
adapted to accomplish those purposes. Your
atoms upon the subjects Of pollti-
cal contributions. lobbying. publicity and
State supervision. the prevention OF rebatlnR
and deception. the prohibition of personal
profit by officers. and, indeed. most Of your
other recommendations. are admirable There
are, however. certain of your recommended
lions which seem TO my associates and myself
likely to seriously injure the insurance busi-
ness and to defeat the very results YOU seek
to accomplish.
Accepting your Judgment that there should
be a radical restriction In the scope OF invest
ments and that in future investments OF life
insurance companies should be practically
VI w lDhlS u w INV uh'
to corporate bonds. | offer the following
suggestions. the adoption Of which. in my
judgment. will save policyholders a great
deal of money without violating the spirit OF
the restrictions which You recommend. The
existing inves tments of life in
surance companies which come within the
prohibition OF the law which YOU propose
may conveniently be considered under three
heads, viz:
Collateral trust bonds.
Railroad stocks, and
Stocks in banks and trust companies.
The investment OF the life insurance COM
panies of this State in securities of this char
scter are su bstantially as follows:
Collateral trust bonds, slO7 .lO7. 900; railroad
stock. see. 6?s, $40: bank and trust company
1874, 1872: Equitable. s42.-
La, i5j. Grand total. s20a. 2s5. Az.
These Investments have been made under
the authority of the law heretofore existing,
aud it has taken many years TO
them. 1t seems TO me that the companies
should be allowed to retain such OF these
investments as are sound and do not tend
to create any of the evils which the com-
mittee is seeking to remedy.
COULDN'T MARKE oND LOSS.
If the life insurance companies were COM
PEELED 20 market this very large amount Of
collateral trust bonds. this could only be
done at a serious loss. and the society would
be unable to invest the proceeds in other
bonds equally well secured which would
yield "a high a rate Of interest.
The reason why these bonds could not be
without a loss Is that the insurance
companies have heretofore been among the
most important purchasers of collateral trust
bonds (Which are not legal investments for
sa wings banks. and the fact that insurance
m m nm N ina pOtli DItrNhaap this plpEE pf honda |
has had an influence in fixing their price.
II the insurance companies should be COM
Oelled to market their holdings they would
nave TO be sold very largely to private in
restors. and the knowledge that this large |
AMOUNT OF bonds had to DO marketed within
I've years would materially depress the price.
/ accept the conclusion Of your committee
hat experience has shown that insurance
companies should not be permitted 10 control
,r dominate financial institutions. | there
agree that the insurance companies
which now control or dominate banks or
rust companies should not be permitted
o continue such control or domination.
On the other hand. with unimportant ex-
'eptions, the investments of life insurance
companies in banks and trust companies
ire sound and profitable investments and
Yield an excellent return upon the values
1t which they are now being carried
II the Legislature enacts a law compelling
he sale of these holdings il would place the
ire insurance companies at the mercy of a
comparatively small number of men who.
within certain limits, could, by acting to-
zether, fix the price AT which these stocks
,ould be marketed Indeed. there are In
that movements of this character
ire already on foot.
RECOMMENDATIONS.
My recommendations with reference TO
,xistinR investments. therefore. is that life
companies be permitted 20 retain
heir present investments in collateral trust
ponds and in railroad stocks and also their
present investments in banks and trust COM
oanies, provided that in no case shall an in
Iurance company hold over 20 per cent. of
he stock of a bank or trust company.
Accepting generally your conclusion that
companies should not invest in
tocks of corporations and in collateral trust
ponds. ] submit that your restrictions might
,e liberalized in the following respects with
'ut danger 10 life insurance companies and
the result Of very substantial lily widening
he scope of Investments:
Permit investments In co lateral trust bonds
ssued by companies operating railroads.
( thought wise there could be the additional
estriction that the railroad company by