Evening star., 1938-07-30
INSURANCE STUDY
STARTED BYS.E.C c.
Role Of Firms in Entire
Financial System Is
Subject of Survey.
Ey the Associated Press.

Ey the Associated Press.
Mention the sum of 10000 000, 600
to the man in the street and see what
happens.
He may humble something about
the war debt. He may visualize a
dollar sign followed by a three a
cipher and then nine more ciphers
He may think of the $50 payment due
on his new car and forget the addi-
tional nine naughts. Or he may
merely laugh and walk away.
The fact is that, like the idea Of
light travelling millions of light years,
so huge q figure means nothing to
him.
Mention the sum Of $4,000 900 900
to any Of . small group Of securities
commission analysts and chances are
he will tell you these figures represent
the approximate total assets Of the
insurance industry.
Show q flicker OF interest and he
may still tell you OF his preparations
to juggle such huge sums around on
paper in the course of the S. E. C.'s
monopoly study OF the insurance in
dustry and its relation to the capital
market.
Here are some Of the round figures
the commissions star experts will at
tack in order to find out how the in
surance industry pours hundreds OF
millions Of dollars annually into the
Nations Capital markets and how it
also takes out large sums each year.
Life Insurance Figures.
In the FIRST place. S. E. c. analysts
will tell you that hard and fast sta
tistics are most readily available for
the Nations life insurance companies.
At the end Of 1887 ~ United States
companies, according to the Associa-
ton Of Life Insurance Presidents. had
total admitted assets OF $26,35o ,000,-
900, or 81 per cent Of the total assets
of all life companies.
For practical purposes the invest
ments held by these companies will be
the bulk Of the grist for the S. E. C.'s
monopoly study mill
Insurance companies dig no mines,
produce no steel. grow no crops; in
short, they create no wealth. Instead,
they redistribute wealth placed in
their hands by policy holders. Their
main ideal is to get a conservative
return. And to do this they attempt
to put as many Of their eggs in as
many different baskets as possible.
Here is the record presented by the
annual convention Of the Association
of Life Insurance Presidents last De-
cember.
At the end Of 1887 these companies
had put more of their funds in United
States Government bonds than in any
other type OF investment The total.
estimated at $4,40O 600, 900. represent
ed 1872 per cent Of their aggregate
assets.
Investment Channels.
Other investment channels, in the
order of their Importance. were mort
cages (other than farm mortgages, l6
per cent; railroad bonds and stocks,
l29 per cent; policy loans and pre-
MUM notes, 1874; public utility bonds
and stocks. lit: real estate. 81, and
State, county and municipal bonds,
SO per cent
The remaining 14S per cent Of re-
sources were distributed as follows, in
the order Of importance: Other"
bonds and stocks. farm mortgages.
cash. foreign bonds and collateral
loans
Bond holdings OF the 49 companies.
together with relatively small amount
OF common stocks. totaled sl3, SOC, ,O00,-
000-or about 557 per cent of assets
at the end of 1897. These investments
were about evenly split between Gov
ernment and corporate obligations.
With the aid OF these and other
figures S. E. C.'s experts are trying
to piece together comprehensive pic
tule Of the way insurance companies
act as tributaries to the capital main
stream
Some frankly admit they have no
idea what the finished survey will
show, nor what recommendation may
be in order.
Most States have laws rigidly re-
stricting the types of investments in
surance companies may make. Briefly,
they are required to invest mainly in
bonds secured by property, or the tax
ing power Of Government, either
Federal. State or municipal.
Commission analysts hope, however,
that further study will reveal possible
methods by which the flow of insur-
ance capital can be guided so as to
make the capital markets function