New Companies

  • 1966 - Book - The Case Against New Life Insurance Companies, by Halsey Josephson
  • 1967 - SOA - Digest of Discussion of Subjects of Special Interest, Society of Actuaries - 25p
  • 1967 - SOA - New-Company Problems, Society of Actuaries - 38p

[Bonk: ⇒  Connection]

  • I will start by discussing the expansion and consolidation of the U.S. life insurance industry.
    • Table 1 shows the development, in five-year intervals, of the number of companies in the U.S. since the end of World War II.
    • At the end of World War II, we had 473 life insurance companies in the U.S. (a relatively modest number) of which only one-third were mutual companies, or roughly 160.
    • There was rapid expansion and the number of companies quintupled from 470 in 1945 to 2,300 in 1988 before we began a severe consolidation.
  • Why were so many new companies added in this postwar period?
    • First of all, banks, finance companies and auto dealers formed life insurance companies that were basically credit life and health insurers.
    • A number of reinsurance companies were formed in Arizona, and a number of limited surplus companies were formed in Texas.
    • Both these states have small surplus requirements, which enabled companies to get into the business with very modest capital contribution.

--  Frederick S. Townsend, Jr.

1995 - SOA - International Consolidation of the Life Insurance Industry, Society of Actuaries - 20p

  • We must realize that the difference in the surplus relief in the earlier policy years between coinsurance or modified coinsurance, on the one hand, and some form of yearly renewable term, on the other, is minimal, at least in the United States where new companies make such extensive use of modified reserve systems.

--  C. David Silletto

1967 - SOA - Digest of Discussion of Subjects of Special Interest, Society of Actuaries - 25p

  • CASUAL CURRENT COMMENT
  • It became apparent some time since that the epidemic of organizing new life insurance companies in this country, which was one effect of the Armstrong Investigation of 1905, had reached its top-notch figure, and was beginning to subside. In both 1913 and 1912 the net annual increase in the number of active life insurance companies in the United States was restricted to 10, whereas in 1911 and 1910 it had been, respectively, 26 and 25.
  • The moving cause for the flood of new life companies was the rapid growth of a new industry, which might appropriately have been termed the Life Insurance Promoters' Crusade, and for a time the chances of making easy money in this field were even better in the shrewd judgment of a horde of glib-tongued confidence-men than in the overworked field of imaginary wire-tapping, sick engineer pleas for charity, and other time-honored gold-brick games.
  • One of the most observing and thoughtful life company organs, Field Notes, sagely remarks that "this business may be said to have now reached its second period when the professional promoters are seeking to amalgamate groups of small companies."
  • If the bottom really has dropped out of the old game, and the former promoters of new life companies are now converting themselves from professional "organizers" into professional "amalgamators," a new industry may be said to be in process of making, and one which offers for a time at least even better chances for one breed of barnacles on the life insurance craft than did their former profession of hatching new life companies over night in any and all sections of the country where the breeding conditions were good.
  • In their former line of work even they had to admit, if cornered, that they had nothing more tangible to offer than gilt-edged stock certificates and entirely hypothetical prospective dividends on that stock, but in their new garb of "expert amalgamators" they can point to bona fide combined cash assets of so many hundreds of thousands, and so many millions of actual business in force in the case of the two or three, or more, life companies which they propose to amalgamate.
  • Accustomed as is this particular genus of legalized highwaymen to separating people from their money with absolutely nothing but glorious possibilities as the quid pro quo, they may fairly be expected to work wonders once they get themselves readjusted to the semi-honest occupation of selling, or amalgamating, something which has an actual existence!

1915 - Journal - American Underwriter Magazine and Insurance Review, Volumes 43-44 - [GooglePlay-463p]!