Lapas attēli

15. Prudential Insurance Co. of America-Continued
Parker, Henry G.:

National Bank of New Jersey, chairman of board
New Brunswick Savings Institution, chairman of board
Interwoven Stocking Co., chairman of board

New Brunswick Fire Insurance Co.

Shanks, Carrol M.:

Roper Lumber Co.

Roper Realization Co.

United States Guarantee Co.

Public Service Electric & Gas Co.

Bigelow-Sanford Carpet Co., Inc.
Fidelity Union Trust Co.

Sprague, Edward W. (no other directorship listed)
Stryker, Josiah: Fidelity Union Trust Co.

Tomlinson, Roy Everett:

National Biscuit Co., chairman of board
American Can Co.

Delaware, Lackawanna & Western Railroad
Montclair Trust Co.

American Sugar Refining Co.

16. Travelers Insurance Co.

Baker, Gladden W.:

Travelers Indemnity Co.

Travelers Fire Insurance Co.
Charter Oak Fire Insurance Co.
Travelers Bank & Trust Co.
Connecticut River Banking Co.
Hartford Gas Co.

Hartford-Connecticut Trust Co.

Beach, Joseph Watson:

J. Watson Beach, Inc., president
Riverside Trust Co.

Travelers Indemnity Co.

Travelers Fire Insurance Co.

Charter Oak Fire Insurance Co.

Bertolette, Norman B.:

Hartford Gas Co., president.

Society for Savings, trustee

Governmental Research Institution

Connecticut Electric & Gas Association, president

Travelers Indemnity Co.

Travelers Fire Insurance Co.

Charter Oak Fire Insurance Co.

Manufacturers Association, Hartford Co.

Chaplin, John H.:

Veeder-Root, Inc.

Hole-Krome Screw Corp.

Bristol Brass Corp.

Phoenix State Bank & Trust Co.

Colt's Manufacturing Co.

National Association of Manufacturers

Travelers Indemnity Co.

Travelers Fire Insurance Co.

Charter Oak Fire Insurance Co.

Cole, Francis W.:

Society for Savings, trustee

Hartford National Bank & Trust Co.

Travelers Indemnity Co., chairman of board

Travelers Fire Insurance Co., chairman of board

Charter Oak Fire Insurance Co., chairman of board
Colt's Manufacturing Co.

United Aircraft Corp.

Chase National Bank

Standard Screw Co.

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Combustion Engineering Corp., Ltd.

Howard, James L.:

Travelers Indemnity Co.

Travelers Bank & Trust Co.

Travelers Fire Insurance Co.

Charter Oak Fire Insurance Co.

Landers, Frary & Clark

Hubbard, L. Marsden:

Travelers Bank & Trust Co., president

Connecticut River Banking Co., president

Travelers Indemnity Co.

Travelers Fire Insurance Co.

Charter Oak Fire Insurance Co.

Randall, Jesse W.:

Travelers Bank & Trust Co.

Travelers Indemnity Co., president

Travelers Fire Insurance Co., president

Travelers Broadcasting Service Corp., president

Connecticut River Banking Co.

Hartford-Connecticut Trust Co., trustee

Mechanics Savings Bank, trustee

Skinner, William Converse:

Travelers Indemnity Co.

Travelers Bank & Trust Co.

Travelers Fire Insurance Co.

Charter Oak Fire Insurance Co.

Spencer, Charles Luther, Jr.:

First National Bank, Suffield, Conn., president

Connecticut River Banking Co.

Travelers Indemnity Co.

Travelers Bank & Trust Co.

Travelers Fire Insurance Co.

Charter Oak Fire Insurance Co.

Taylor, James A.:

Hartford Machine Screw Co., president

Taylor & Fenn Co., president

Travelers Indemnity Co.

Travelers Fire Insurance Co.

Charter Oak Fire Insurance Co.

Spencer Turbine Co.

Edwin Taylor Lumber Co.

Bristol Brass Co.

Manufacturers Association, Hartford

Society for Savings, Hartford, trustee

Way, John Latimer:

Travelers Indemnity Co.

Travelers Bank & Trust Co.

Travelers Fire Insurance Co.

16. Travelers Insurance Co.-Continued

Charter Oak Fire Insurance Co.

Aetna Insurance Co.

Hartford-Connecticut Trust Co., trustee
Mechanics Savings Bank, trustee
World Fire & Marine Insurance Co..
Century Indemnity Co.

Standard Fire Insurance Co.

Piedmont Fire Insurance Co.

Willson, Everett C. (no other directorship listed)

17. Union Central Life Insurance Co.

Clark, Jesse R., Jr.: First National Bank, Cincinnati
Clark, R. W. (no other directorship listed)

Cottle, Frank W. (no other directorship listed)
Cox, William Howard (no other directorship listed)
Davis, Thomas Jefferson:

First National Bank of Cincinnati
Bank of Athens, N. B. A.
Cincinnati Gas & Electric Co.

U. S. Printing & Lithograph Co.
Cincinnati Chamber of Commerce
Covington & Cincinnati Bridge Co.

Dupuis, Charles W.:

Central Trust Co., president

Procter & Gamble Co.

Cincinnati Street Railway

Cincinnati & Suburban Bell Telephone Co.
Cincinnati Union Stock Yard Co., chairman of board
Cincinnati Milling Machine Co.

F. H. Lawson Co.

J. H. Hibben Dry Goods Co.

Whitaker Paper Co.

Kroger Grocery & Baking Co.

Ohio Bus Lines Co.

Manufacturers & Merchants Indemnity Co.

Geier, Frederick V.:

Cincinnati Milling Machine Co.

Central Trust Co.

Cincinnati Rubber Manufacturing Co.

Robert A. Cline, Inc.

Procter & Gamble Co.

ARMCO Steel Corp.

McCurdy & Co.

Hanselman, Wendell F. (no other directorship listed)
Harrison, W. H. (no other directorship listed)

Hoy, Carson (no other directorship listed)
Lloyd, John A. (no other directorship listed)

Nelson, Lanthrop B. (no other directorship listed)
Pattison, Aletheia (no other directorship listed)
Pattison, Marie S. (no other directorship listed)
Pattison, John W. (no other directorship listed)
Rust, Richard S. (no other directorship listed)
Stewart, C. H. (no other directorship listed)
Sutphin, Stuart Bruen:

I. V. Sutphin Co., president

Central Trust Co.

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17. Union Central Life Insurance Co.-Continued

U. S. Printing & Lithograph Co.

Strobridge Lithographing Co.

Rudolph Wurlitzer Co.

Cincinnati Street Railway

Cincinnati Equitable Insurance Co.



Washington, D. C.

The committee met at 10:15 a. m., pursuant to adjournment on Wednesday, February 26, 1941, in the caucus room, Senate Office Building, the chairman, Senator Joseph C. O'Mahoney, presiding.

Present: Senator Joseph C. O'Mahoney (chairman); Senators Wallace H. White, Jr., Maine, and James M. Mead, New York; Representative Hatton W. Sumner, Texas; Thurman Arnold, Assistant Attorney General, Department of Justice; Wayne C. Taylor, Under Secretary of Commerce; Joseph J. O'Connell, Jr., special assistant to General Counsel, Department of the Treasury; A. Ford Hinrichs, chief economist, Bureau of Labor Statistics, Department of Labor; Joseph Meehan, Department of Commerce; Sumner T. Pike, Commissioner, Securities and Exchange Commission; Gerhard Gesell, Securities and Exchange Commission; Joseph T. Sheehy, assistant chief examiner, Federal Trade Commission; H. Dewey Anderson, executive secretary of the committee.

The CHAIRMAN. The committee will please come to order.

We have assembled this morning to hear a presentation on life insurance by Mr. Sumner T. Pike, the representative of the Securities and Exchange Commission, upon the TNEC. Are you ready to proceed, Mr. Pike?

Mr. PIKE. Yes, sir.



Mr. PIKE. This is a pretty big memorandum, but it is a pretty big subject. With that small apology, I will go ahead.

This morning I will present recommendations and suggestions based upon the study of life insurance which the staff of the Securities and Exchange Commission conducted in cooperation with the Temporary National Economic Committee. The Securities and Exchange Commission itself has, of course, never had occasion to consider life-insurance problems in detail, and as a consequence it should be understood that the recommendations and suggestions which will be presented this morning are my own and those of Mr. Gesell, special counsel in charge of the insurance study-not those of the Commission.

When the study of life insurance was undertaken over 2 years ago, there was much ground to cover. There had not been an over-all survey of the lifeinsurance business since a committee of the New York State Legislature, with Charles Evans Highes, now Chief Justice, as counsel, made an exhaustive inquiry into the operations of the business and in 1906 recorded its findings in what is now known as the Armstrong report.

At the present time there are approximately 365 legal reserve life-insurance companies in the United States. These companies have assets of more than $28,000,000,000. One out of every two people in the country is a policyholder. The income of the companies reaches over $5,000,000,000 a year. There are over 124,000,000 policies with a face value in excess of $111,000,000,000 outstanding. The rapid development of the insurance business may be seen by comparing the present size of the companies with the situation which existed at the time of the Armstrong report. At that time there were only 138 companies. The assets, which have since increased by upward of 800 percent, were then only $3,000,000,000, and the amount of insurance in force was then only $15,000,000,000. It seems a little awkward saying that when there are any number of billions


The life-insurance testimony fills six volumes of hearings before this committee and there are two committee monographs on the subject.' We are aided in the

1TNEC hearings, pts. 4, 10, 10-A, 12, 13, 28; TNEC Monographs No. 2, Families and Their Life Insurance, and No. 28, Study of Legal Reserve Life Insurance Companies.

inquiry from many sources. Not only did many State insurance commissioners give valuable assistance by making statistical data and other information available, but the life insurance industry itself was, with few exceptions, cooperative and generously anxious to assist us in our efforts to present the facts before this committee. We are confident that the inquiry made was sufficiently broad and penetrating to present a true cross section of the business and adequate to justify the general recommendations and suggestions which follow. As was pointed out in more detail in our monograph report the life-insurance business was shown to be generally healthy. Our recommendations are not an attack on the life-insurance business. They are made solely because we believe certain improvements in management practices and the supervisory machinery are desirable both from the point of view of the policyholders and of the companies. Before turning to our specific recommendations and suggestions, it will be desirable to review briefly the existing machinery which the States have set up to regulate life-insurance companies. Life insurance has been subject to some form of State regulation throughout its history. As early as 1851, New Hampshire created an insurance board to examine companies. At the present time, every State in the Union, as well as the District of Columbia, has a governmental unit responsible for regulating insurance. Most States have created separate insurance departments headed by a State official whose title varies but whom we will call, for purposes of convenience, the insurance commissioner.

The State insurance commissioner is usually responsible for all insurance regulation, including not only life insurance but fire, casualty, health and accident, automobile, and perhaps even marine insurance as well. The insurance laws laws of no two States are identical and as a consequence the duties and responsibilities of the insurance commissioners vary from State to State. By and large, however, State life-insurance legislation is comprehensive. The State insurance laws, which it is the duty of the insurance commissioner to enforce, are designed to assure, insofar as possible, the financial stability of life-insurance companies and to establish standards of business conduct which companies are required to follow. The formation of new domestic insurance companies is subject to the commissioner's approval and the permission of the insurance commissioner must be obtained before an insurance company incorporated outside the State can enter to sell insurance. Each company is obliged to submit annually a detailed statement of its financial condition and business operations in accordance with specifications set up by the insurance commissioner. The commissioner periodically calculates the reserves of a company to make certain that they are adequate in accordance with law. The commissioner has, of course, power to examine the books and records of any company or agent operating in the State and usually may question individual company representatives under oath in connection with official investigations. The commissioner may suspend a company's license in the event it fails to meet certain financial and business standards or to grant access to its books and records. The investments which a company may make are fixed by statute and it is the insurance commissioner's duty to see that only approved forms of investment are made.

In addition most insurance commissioners must license agents, approve policy forms and undertake a variety of other duties. Where companies become insolvent or their reserves are impaired, the insurance commissioner is usually authorized to administer their affairs for the benefit of the policyholders. Likewise, the approval of the commissioner must frequently be obtained for consolidations and mergers as well as other types of important business transactions affecting the over-all operations of the company.

While the foregoing is of necessity somewhat general, it can be seen that ne statutory powers of the insurance commissioner are considerable. Generally speaking, statutes in the principal insurance States are adequate. Such inadequacies of State regulation as do arise result either because of weaknesses in the existing administrative machinery or because of the interstate character of the problem with which State regulation must contend.

The commissioner of insurance is appointed by the Governor or elected by popular suffrage. He usually has a fixed term of office, normally from 2 to 4 years. Because of the complexity of the problems of insurance regulation, this short tenure has often been criticized. By the time a man has mastered the intricacies of the business enough to be of real use as a supervisor, his term is up and his place is taken by a new man who may as yet be unfamiliar with the technicalities of the industry. While routine activities may continue with less serious disruptions, the opportunities for the development of new supervisory policies are seriously restricted by the constant turnover of commissioners and continuity of a supervisory program is next to impossible.

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