Great Depression

  • The life insurance industry takes great pride in its survival of the depression, although it seems to me that it was bailed out by government intervention.
    • I wonder if the time may come again, say if the prime rate goes to 38%, that the life insurance industry will need to be bailed out in some fashion.
    • I do not know what that fashion might be, but that is why I am curious about the nature of the discussions of April 1980.

--  Joseph Belth

1981 - SOA - The Life Insurance Business--The View of Consumerists (rsa81v7n38), Daniel F. Case - Moderator, Society of Actuaries - 18p

  • 1936 December 1, 2, 3, 7, 8 - GOV (House) - Investigation of Real Estate Bondholders' Reorganizations - Part 20 - Adolph J. Sabath (D-IL)   ---   [BonkNote]
  • 1952 - Book - The Memoirs of Herbert Hoover: The Great Depression, 1929-1941, by Herbert Hoover - 513p
  • 2004 - Book - Banksters, Bosses, and Smart Money: A Social History of the Great Toledo Bank Crash of 1931, by Timothy Messer-Kruse
  • 2017 - Paper -  Financial crises at insurance companies: learning from the demise of the National Surety Company during the Great Depression, by JD Rose - 
  • Empire Life Insurance Company
  • Ben Bernanke
  • RFC - Reconstruction Finance Corporation
  • (p1703) - This study is cited in Huebner, The Economics of Life Insurance (New York: Appleton Century-Crofts, 3d ed. , 1959 ), pp. 167-169. See Huebner and McCahan, Life Insurance as Investment (New York: D. Appleton-Century Co., 1933), Ch. 7.

The Life Insurance Industry: Hearings, Ninety-third Congress, First [-second] Session, Part 3r
United States. Congress. Senate. Committee on the Judiciary. Subcommittee on Antitrust and Monopoly
U.S. Government Printing Office, 1973 - Insurance companies - 3011 pages

  • (p152) -  iv. Would Bankruptcy Have Been as Bad as the Government Claims?
    • 585 The events of the Great Depression are a useful comparison.
      • There were two financial holidays in 1933:
        •  ... the first was a full banking holiday that shut down every bank in the United States for 10 days and ushered in sweeping changes in banking regulation, and
        • ... the second was a partial life insurance holiday that suspended the payment of cash surrender values and the granting of policy loans for a period of roughly six months.
      • During the Great Depression, insurance policyholders substantially accelerated the rate at which they drew on the savings and credit features of their life insurance contracts, and with the banks closed or allowing withdrawals on only a restricted basis, individuals turned to their life insurance for cash.
      • These circumstances caused the insurance companies, like the banks, to face the possibility of a run that would force them into failure. 

2010 0610 - COP - Report - The AIG Rescue, Its Impact on Markets, and the Government’s Exit Strategy, Congressional Oversight Panel  ---  [BonkNote]  ---  337p

  • 10 Up until the early 1990s there was a rule stating that equities could not make up more than 25 percent of assets, yet Canadian insurers were generally well below that.
    • The more conservative practices of Canadian insurers may go back to the depression, when Sun Life, the largest insurer at the time, would have been insolvent on a market value basis.
      • The company was heavily invested in equities, as well as farm mortgages, and the value of these assets plunged.
      • The government allowed Sun Life to use what they called “authorized values,” which were neither market nor book, but were determined in such a way as to enable the company to still appear to be solvent.

2009 - Journal of Insurance Issues - An Examination of Property & Casualty Insurer Solvency in Canada, by Anne E. Kleffner and Ryan B. Lee, 32(1): 52-77 - 27p

  • memory.loc.gov/master/pnp/habshaer/ca/ca1400/ca1461/data/ca1461data.pdf
    • The Depression did not immediately affect Johnson's fortunes and directly cause the sudden and final cessation of construction. In fact it was four years after the crash on Wall Street when the nation's economic condition actually caught up with him and his project.
      • In 1933 the National Life Insurance Company went into receivership. Johnson had invested a large proportion of the company's assets in banking, an activity that was hit especially hard in the 1930s.
      • National Life had purchased over 12,000 shares of Continental Illinois and Johnson was one of its directors.
      • Shares of Continental sold for as high as $1,400. After the crash it sold for as little as $17.115
    • When National went into receivership, the plant, along with the life insurance company itself, was put on the auction block.
      • National was eventually awarded to Sears, Roebuck and Co. and renamed Hercules
        Life.