Evening star., 1949-04-17
Billions Bet
On America
To Prosper
Insurance Companies
Wager on Industry
And Business
ey n. e. Johnson

ness and industry In the pas; five
years.
!. They also have wsgered heavily
on the future OF the American
farmer.
+ The bet is that business. in
dustry and agriculture will con-
tinue to enjoy good times as they
did in the war and immediate
postwar years. and that they will
be able to pay their debts on
schedule.
/ Life insurance companies nov
have 9 $40 .ooo. 900 900 stake in
business and industry. This is
in the form OF loans to business
and industry and. to a much
smaller degree. in actual owner
ship as represented by stock
holdings.
I In l944-five years ago-that
stake was only $4,000 .0o0. 900,
Total insurance company as
sets as of January 81 were s5s.-
/ TOO ,0oo. 900. In other words. the
companies have bet IS per cent
of their assets. or $40. 900 900 900,
that the United States, econom-
ically. is a going concern.
Not Undersellins Treasury
Their stake in agriculture is rep
resented by more than 81 900 ,0o0.-
900 in farm mortgages, compared
with a little more than $500. .00o.-
900 five years ago.
Sweetening the pot to the tune
OF many billions of dollars in the
last few years Is not sentimental
gesture on the part OF the COM
panies. It Is no mere reaction 10
a wishful prayer that the United
States may avoid large measure
of postwar economic unpleasant
mess.
Insurance companies are able
exponentS OF the art OF gauging
the niceties of business changes.
They are known for the deftness
with which they are able to invest
their policyholders' money 30 as
to realize maximum interest for
a minimum risk.
Life insurance's holdings Of
United States Government Securi-
ties on January 81 OF this year
were at a four-year low. 1t held
sic, 1881 .000, 900 of United States
securities, compared with si9.7sl.-
1000 900 a year earlier and $2i sol. =
000, 900 on the same date in l947,
Life insurance is not selling the
United States Treasury short. This
is no indication the companies feel
any less than they ever did that
the United States Of America still
is the safest investment OF all.
Government bonds. though, have
recently advanced to prices which
offer an unusually low return.
ILarsest Stake in Utilities
With corporate bonds and other
forms Of corporate indebtedness
generally paying higher interest
rates than Government securi-
ties, the fiscal ofiicials OF the in
surance companies 20 shopping
more and more for investments In
private concerns. Safety. Of course,
still Is the prime factor and pri-
Ivate securities still get the fine
tooth comb treatment.
i Government interest in the
farmers problems. plus the fact
that the American public Is eat
ing more and dressing better
than at any time in history. are
the factors that make farm mort
cages attractive as investments.
| Government support Of farm
prices has given the average
farmer q stable and comparatively
stable income since before World
War II.
There are those who contend
that this advantage to the farmer
now is wearing . little thin. The
life insurance companies appar-
emily feel otherwise. Their hold
lings In farm mortgages have
risen each year from $767 .o00. 900
on January 81. 1916. to 81 .0i7 .00o.-
900 on the same date this year.
| Among the corporations, the
1 insurance companies have their
largest stake In public utilities.
Their outstanding loans TO public
utility concerns totaled $S.5l3.-
900 900 as Of January 81. Addi-
tionally. there were $7,072 .000, 900
of industrial and miscellaneous
loans, S2.o52o00.o 900 In loans 70
railroads and el.l57 .0oo. 900 In
equity financing. virtually all OF
i 1t In preference stock.
Prefer Negotiation
| A recent development In insur-
ance company Investment has
been the increased use Of nego-
tiated sales Of securities by bor-
rowing firms. as contrasted to-
competitive bidding. Insurance
companies prefer negotiation to-
competitive bidding because inter
est rates tend TO be higher. and
also, they say. because II offers
them Q better opportunity Of In
lvestigating borrowers more thor
oughiy.
! A Securities and Exchange Com
mission ruling. however. requires
that all public utilities securities
be sold comparatively except By
special permission OF the State
public utility commission involved
and the SEC itself.
Within the past few weeks COM
missions have denied two utilities
Termination TO sell securities on D