Evening star., 1932-03-06
INSURANCE FIRMS
FAVOR RAIL BONDS
Five Largest Companies In
creased Their Holdings Dur.
ing Last Year.
BY FRANK II. MCCONNELL.

| Copyright 1882 by the Associated Press
NEW YORK, March 5-The five
! largest American insurance companies
| increased their holdings of railroad
bonds by S48,499, ,499 during 1881, com
! plete figures obtained today reveal
The total of such holdings on Decem-
| ber 81, 1881, was S2,151 ,952 ,6Z9.
Continued accumulation of railroad
bonds by the insurance companies took
| place at a time when leading insurance
executives were warning the Interstate
Commerce Commission that railroad
debacle threatening dire consequences
to the entire financial structure of the
country would result unless the railroads
were given badly needed relief.
Company Viewpoint.
A spokesman of the insurance COM
pany viewpoint said that this action
was entirely consistent. In the first
place, he explained, the insurance COM
panies were not SO much disturbed over
the eventual safety of their own invest
ment in gilt edge railroad bonds as they
were over the financial situation in gen.
eral, should relief for the carriers be
withheld. Second, he explained, it be-
came more evident in the latter half OF
the year that some relief would be given
to the carriers thus justfying greater
confidence in railroad bonds.
The combined 1891 purchases of rail-
road bonds by the Metropolitan, Pru-
Dental, New York Life, Mutual Life of
New York and Equitable Life Insurance
Cos. totaled $113,220, ,499 Against
this total there were offsets amounting
to $64, 72l 900, which represented the
years reduction in bond holdings,
caused mostly by retirement of matur-
frarr dc 7I,f1 11f&
S48, ,499, ,499 in railroad bond holdings
of the companies
An executive of prominent railroad
banking institution in Wall street said
that the insurance company holdings
were not in the same category as the
holdings of most investors Insurance
companies, he explained, had concen-
trated their investments in first lien
or underlying bonds, which are well
secured by mortgages on the entire as
sets of railroad systems.
But their additional purchases in
1881 didn't greatly help the general
picture" this banker said. Its safe to
say that the insurance companies didn't
buy any railroad refunding mortgage
bonds, hence, their market purchases
didn't contribute money directly to the
railroads for use by them in meeting
maturities"
The insurance companies found a
number of attractive purchase possibili-
ties during 1881, an authority said Due
to abnormal conditions, many wealthy
individuals and even large institutions
were forced at times to unload large
blocks of bonds to raise cash. AS there
was only a restricted public market
available. it was necessary to turn to
the insurance companies when such
distress sales became necessary The in
surance companies were one of few
siZable buyers then available.
Selling by Banks.
In cities where banking difficulties
arose there was heavy selling of choice
railroad bonds by banks, distress Offer
ings which we're made at sacrifice in
price The energetic effort of Philadel-
phia banks to raise cash so as to allay
the concern of depositors was cited
as an instance. The insurance COM
panies bought large blocks of these
sacrificial offerings, it was said, and
thereby played a double role: that of
turning needed cash over to the bank
ing institutions and that of acquiring
blocks of strong underlying railroad
bonds at the lowest prices in years.
Since then the emergency has passed
and the price of gilt-edged bonds has
gone up.