Evening star. [volume] (Washington, D.C.) 1854-1972, 1930-09-28
PREFERRED ISSUES
GAINING IN FAVOR
Representative Brig h a m
Tells Bankers of Insurance
Investment Trends.

The common stock is not a partic-
ularly suitable investment for life in
surance company funds, said Ebert s.
Brigham. Chairman of the Finance
Committee OF the National Life In
sararlce Co. ana member Of the House
Of Representatives from Vermont. be-
fore the recent Mortgage Bankers
Association Convention at Detroit.
Life insurance companies make a
definite commitment 60 their policy
holders TO pay a certain number of
dollars when the policy is due. This
means that funds should be invested in
securities having a definite maturity
date when the principal sum Is payable
In definite number of dollars. This
= not true of common stocks
Preferred stocks. however, do provide
for return Of principal, and their fixed
income prevents vide fiuctuatibn in
price. In the next decade, therefore,
we may expect 10 see investments of
larger amounts of life insurance funds
Ia preferred stocks, and it may be pos
eiole TO detise plan whereby q limited
PORTION OF q comranyis assets can be
safely invested in common stocks, but
this respect.
More liberal Laws Seen.
Indications point to more liberal
AlEEcA1llCHt EaNS ana VIACNdCES OF HE
Insurance companies in the next decade
VIII certainly show an increasing per
cent OF thslr assets in public utility and
Industrial bonds and In preferred stocks
Perhaps there viii be inclusion of COM
mon stocks up to a limited percentage
% q coGnpanyS assets. do not be-
neve this wiz decrease the volume Of
real estate Mortgages in the total in
vestment list but may decrease the
percentage.
Prom 1871 to 1928, the assets of life
insurance companies practically doubled.
II this rate OF growth continues, we
may expect in the next decade de-
rnard from these companies for all the
high-grade, well secured MORTGAGES
upon farm and city real estate which
can be offered. The companies will
require that these loans be adequately
nargined and that they net q fair re-
turn after all allowances for taxes, ex-
penses of dong business and risks are
taken into account. Life insurance COM
panies have recently encountered many
dificulties with farm mortgage invest
ments, but these difficulties can be
overcome by cooperative research work
among life insurance companies and
mortgage bankers to effect safer and
better loans.
Appraisal Of Farm Lands
1.-THE only safe course to follow In
making appfaisals for farm loans a
to determine that the production Of
the farm is of crops suited to its soil,
that it ID fafmed by q man Of average
ability, and that its produce Il SUM
Gent to pay all expenses and interest
By fair margin over q period Of years,
provided the produce is sold at prices
which we may reasonably expect to
prevail
life. insurance officials are facing
the problem Of giving policy holders the
best grade of protection at the lowest
price commensurate with safety. Prac-
tically all insurance companies charge
O level premium, but the net cost is
adjusted by dividends. This high divi-
dend can be obtained only by careful
selection Of the insurance risk, keep
ing expenses of doing business at q
minimum, and increasing income from
Investments. The savings of the peo-
pie OF the United States exceed the gi-
gai1tic sum Of $4,000, 100000 annually.
Mortgage Lean sun Favored.
I'm 1929 one-flfth Of this annual saw
ing, or $4,000, 600 900, was entrusted to
the legal reserve life insurance cbnipa-
MES Of the United States. No other
class Of investment Of saving Is made by
the people with so little thought Of any
chance Of loss as Is life insurance. The
investment problem Of life insurance
companies consists IN sorting out from
the available opportunities for invest
f11ent those which afford ample Secur.
tty Of principal and fair income.
Constant appraisal must be made of
changes IN the demands Of people for
goods and services and investment must
be made only in the securities of those
institutions and industries which give
promise of supplying the things which
Will meet the demand of the consuming
public in the future. Diversity Of in
vestment is wise measure of eliminate
ing risks. The mortgage loan still re-
mains the leading type of investment
for the funds Of life insurance COM
panies."