Evening star., 1938-07-18
INSURANCE STUDY
IS MADE BY S. {. c.
All Phases Of Subject Will
Be Examined as Agency
Enters New Field.


Securities Commission aides are
preparing q study Of the $50. .000, ,0O0.-
900 insurance business and its relation
to the capital market.
Experts at the commission saw that
this task-assigned to the commission
a It's part in inquiries led by the
Governments Monopoly Committee
will take the agancy into a new field.
During its relatively short existence
the commission has delved into the
major fields of finance. It has be-
come familiar with the technique of
stock exchange procedure, dissected
Investment trusts and put vast utility
systems under the microscope. But
up TO the present 1t has not had oc-
easion to analyze the insurance chan
nes and tributaries which pour mil
Hons OF dollars annually into the
nfafn-stream Of the capital market.
Study q Capital Market.
A starter the commissions
monopoly division will study the
capital market a. = whole. 1t will
analy1e sources Of capital, the ma
ehinery through which corpora tions
set capital and how that machinery
Affects corporate control.
Insurance companies are huge con-
tributors Of capital. For instance, they
own about IS per cent Of the Nations
railroad bonds. They are not allowed
to own common stock. hence control
no voting power. On the other hand,
the commission will try to determine
whether, through ownership of vast
amounts of bonds, insurance COM
panies have any influence over other
corporations and. If 50, what form it
takes.
The commission also will survey
directorships. For example, suppose
insurance company "A" owns a large
block of bonds of industrial company
'B" and an ofiicial OF the former is
4 director OF the latter The COM
mission will try to determine the sig
nificance Of this from all points of
view.
Another phase of insurance-finan-
cial policy on which S. E. c. will turn
its diagnostic lens is illustrated by
small group of insurance companies
which own an entire bond issue. This
will involve placement of issues, both
public and private.
Role as Investors.
No less important, in the eyes of
commission experts, is the role insur-
ance companies play as investors OF
other peoples money. This aspect
Of the study will raise questions as
to investment policies. types OF Sc
curities, maturities and various intri-
cate financial ratios.
One thing the commission is trying
to stress, 1t Is not investigating in
surance companies as such, offlcials
say. They emphasize that the study
will not resemble the Hughes insur-
ance investiga ton in New York State |
In 1912. That survey touched on the |
mechanisms of insurance
on commissions. salaries and cost of |
insurance and kindred topics.
Present indications are, commits
sion men say, that the study may de-
velop largely into paper" analysis, |
rather than exhaustive type Of in
vestment company study which called
for numerous witnesses and days OF
public testimony. On this score, it
is to be noted that the commission |
already has developed an enormous |
Of information on paper from
which much work can be done Also |
helpful, it is said, will be the close
daily business relationship which the |
commission has with various promi- |
nent investment banking houses in
Wall Street.