Evening star., 1931-12-14
BY CHARLES r. SPEARE.
Special Dispatch to The Star.

NEW YORK, December 14.-Among
the many false rumors that have been
circulated in Wall Street in recent
months has been one to the effect that
the life insurance companies were SELL
ing securities. This has been heard in
connection with the generalization In
the bond market. The absence of any
Justification for 1t is apparent in fig
ures Of life insurance investments at
William A. Law, president Of the Penn
Mutual Life Insurance Co. of Phila-
delphia, at the convention of life insur-
ance presidents in New York.
At the end Of December the total OF
all bonds and stocks of the life insur-
ance companies will be approximately
$3.50 ,00O, 900 in excess of their par value
on December 81, 1890. 1t is significant
that IN only two of the nine clasifica-
tions of investments held by the life
insurance companies have there been
any reductions in the past IL months
These were in farm mortgages and in
foreign government bonds other than
Canadian issues. In both instances the
decreases have been slight. The total
OF foreign government obligations held
by the life insurance companies amounts
to but $3l 100000 par value. or two
tenths of l per cent of the total assets
Of the owners.
Extent Of Investment.
The present investment of the life
insurance companies in railroad bonds
| and stocks aggregates a par value OF
So 900 100000 This is 1862 per cent
of their total assets Concerning this
class Of investment, Mr. Law says in
his excellent report:
Life insurance companies are not
immune from the possibility of some
loss in specific cases of railroad invest
ments, but the record of past experience
| and the extreme care with which such
securities have been selectd by life in.
| surance companies justify complete con-
| fidence in the integrity of railroad OBJ
legations held by them, and in ultimate
payment at maturity regardless Of pres.
| ent market quotations and outlook"
In the past 10 years the ratio Of
life insurance investments in pubic
utility securities hass steadily increased
1t is now 10 per cent of assets. 1t in
cludes fair amount of preferred and
guaranteed public utility stocks, which
have been purchased quite freely since
| 1928. when the Wales act liberalized
the New York State laws regarding the
| investment Of life insurance funds in
! this type Of security.
| 1t is interesting to note that at pres
| ent public utility bonds and stocks are
| almost identical in amount with farm
mortgages in the portfolios of life in
! surance companies. Farm mortgages
reached their high point in 1927, whcr
they were Is per cent of assets ccm.
| pared with 10 per cent currently. Ir
! this period the investments of insur.
ance companies in mortgages, othel
than those on farm property, have in.
! creased in dollar amount over 40 Pc,
cent.
Investments in Bonds.
There has also been a substantial
! addition in the past five years to lift
! insurance investments in State. count,
and municipal bonds This group. il
! 1927, represented an aggregate amour
of 1856. 800 900 and was then 81 o
| total assets. 1t is now $4,000 .00O
gain Of over 100 per cent, and amount
to 80 Of total assets
Another phase of life insurance bust
ness that has been gossiped about
great deal in Wall Street and colorec
to fit certain speculative commitments
has been the drain on these companie
! from their loans to policyholders thi
year. This has run hand in hant
with rumors about selling of securitie
by life insurance companies in orde
to cover these loans The actual fig
ures of loans made to policyhoiders ar
today available. They are large bu
not appalling in view of the tremen.
dous assets of the life insurance com.
panies and the fact that, as Mr.. Law
states, the companies will add TIL!
year sl.320. $4,000 to their assets
| notwithstanding the influences of tn
current depression" The increase il
policy loans and premium notes il
1881, with the period between Sep
amounts to s428,0O0, 900. This com
pares with s377,OO0,000 in 1890 II
1929 the increase was just short o
$3.50 000,0 600. 1t is to be remembered
however. that when the panic suddenl,
broke over Wall Street in October anc
November. 1929, many persons negoti
ated loans on their insurance policies
not only to protect margin accounts
but to take advantage of what thei,
thought were remarkable bargains il
securities Their action paralleled tina
of savings bank depositors who with
drew funds to buy what seemed to b
promising stock and bond investments
Document Constructive
The analysis made by Mr. Law O
the investment situation surroundin,
the life insurance companies is a docu
ment that is entitled to careful sur
vey by any one who may question the
position of these companies. As a con
structive presentation of the status O
tho 10 roeSt in, tho
ment market it stands out in its frank,
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