Evening star., 1933-04-02
Life Insurance Companies
Surviving the Depression
BY HARDEN COLFAX.

How American life insurance has
borne up under the abnormal strain of
business depression is shown by figures
which have just now become available
as to developments during the past
three years, particularly 1892.
The earnings Of the principal COM
panieS for 1882 are found to have been
sufficient to provide necessary dividends
and also substantial additions to re-
serves for contingencies. Almost 80
per cent of dividends to policy holders
were left with the companies.
Representing some 90 per cent of the
entire outstanding legal reserve insur-
| ance business Of the country, data pre-
sented by the larger companies may be
said to reflect fairly accurately the
state OF life insurance on the side of
Its d1vidend-earning power. During
! 1882, the figures disclose, these COM
pan1es paid to policy holders, or benefi-
ciaries, in cash and credits the enor-
nous sum Of $3,1O0, 1000, ,OOO-a record
for all time. Census Bureau data from
other sources confirm the figures of the
companies themselves.
4
How did they earn the vast propor-
tion OF this amount that came from in
vestmentS? Aside from surrenders.
loans and claims payments, which are
expenditures, not in any real sense in
vestments, the relative growth of life
insurance assets since 1929 shows some
Signincant changes. At the end of the
boom year 1929, mortgage loans made
up AZ per cent of life insurance invest
mentS. At the end of 1882 they made
up 36.3 per cent This, however, ac-
cording to the authorities, has not been
due entirely to selection or to any with
drawal from this field of investment,
since foreclosures have transferred
many mortgages to new classification
as real estate. This now represents
some per cent of the assets, as against
2.2 per cent on December 81, 1929. The
foreclosure situation, as to both farm
and city mortgages. is admittedly diff
cult at present, but the companies re-
Gently announced a liberal and SYM
pathetic policy toward borrowers In this
class
Turning to other major forms of in
vestment, We find that the net increase
IN the value of railroad bonds and
stocks bought by the companies dur
ing the three years has been lust short
OF $l23 100000. The companies declare
they hove not lost faith in railroad
securities as an investment. Public
utility bonds and stocks are also re-
garded highly, the holdings of these
having increased from 9 per cent in
1929 to 96 per cent today. Other stocks
and bonds, including those of the Fed
eral Government and Of States and
municipalities make UP most of the
rest.
Since 1905, when this kind Of stats
tics began to be collected and inter-
preted, the records show that there has
been on the whole, a steady increase
In these investments N Government
and industrial securities. The peak fer
most OF these was reached in the period
from 1921 to 1924. Then the curve for
most types turned downward. Farm
mortgage Looms in 1882 were about as
large a proportion Of total investments
as in 1906, some 10 per cent; city mort
gage loans. simewhat higher. as was
also the case with Government securi-
ties Of all kinds
OF the effect Of the depression on in
vestments by life insurance enterprises.
spokesmen for the companies say they
are adjusting their dividend policies
and allotments so as to insure their
own future and that of their policy
holders
(CopyriRht, 1933)