Evening star., 1939-02-07
Monopoly
Continued From First Page.)

oAAA
high rates Of interest, We are forced
to take lower rate
Prefacing his examination. Mr.
Ecker asked permission to correct
an impression gained from two
charts yesterday, that the margin of
$4,000 100000 between total income
and total expenditures, accumulated
by 308 companies over the past 20
years, is entirely profit. The bulk
of it, he explained, was added to
the reserves, as legally required.
The first chart" Mr.. Ecker said
indicated that the total income of
the companies over the total ex-
penditures for the 20 years ending
in 1887 amounted to $20927 ,000, 900
and it was implied that this repre-
sented profits to the 308 life insur-
ance companies in the operation OF
their business. AS matter of fact,
the real situation is quite different
"The difference between the total
of the income as set forth in the
chart and the total of the expendl-
lures as set forth in the chart for
any given year or for all the years
put together is represented almost
entirely by addition to policy re-
serves required by law and increases
In other liabilities such as claims
dividends and the like, and also
additions to surplus.
1T must be understood that the
New York law requires that surplus
of a mutual company be annually
distributed to policyholders except
for an amount, also limited by law,
to be held for contingencies.
"In compliance with such law or
of laws or practices prevalent in
other States, companies have dis
tributed to policyholders through
the years in question more than ST.
500,O00,000. in the shape of divi-
dends. In actual fact, speaking for
the Metropolitan Life Insurance
Co. alone, the surplus funds of this
company during the period in ques-
tion increased by the sum of $270,-
100000, while the assets for the
same period increased by s4,000,-
100000"
The witness expressed his belief
In mutual companies as compared
to stock companies, but declared
Metropolitan statesmen are not per-
mitted to draw individual compar-
isons," beyond putting his best foot
forward"
Interests Diversified.
Asked if he believed there Is nc
ceiling" in size beyond which such
company should not grow, Mr.
Ecker replied:
ct haven't fixed in my mind any
point beyond which we could no.
safely 60. Our policyholders arr
better protected now than ever be-
cause of the diversification and ex'
tent of our interests"
The committee had received yes
terday a picture of the extent tt
which insurance concerns have bull
up their total assets from less thai
$4,000 900 in 1906 to $26, ,000,0 900,
900 in 1888.
Constantly and successfully search
Ing for investments which would bt
both profitable and secure, 49 Of tht
biggest of the legal reserve COM
panies were holding II per cent O.
all United States Government
bonds. 22.95 per cent of all rail
road obligations. % per cent of tota
public utility debt, IA per cent O.
urban real estate mortgages, H.;
per cent of farm mortgages ane
is per cent OF general industria
obligations.
AS committee witnesses, expert!
from the Securities and Exchange
Commission, made it clear repeated.
ly that the insurance business /.
thoroughly sound and its millions o.
policies grounded in ample reserves
the only note of alarm was the ques.
ton of where the companies coule
continue to find suitable invest.
ments to maintain their presen
earnings.