Document x5x1Dd084aDDNznrKmozk0N2Q

1946 ANNUAL REPORT -j/'wi'- ->%/t/" f'%*.VY-); To Metropolitan Policyholders: 1946 wu an outstanding year for Metropolitan. In line with the Company's policy of operating on the "open book'' principle, we arranged with Marquis James, the distin guished historian, to tell you about last year's record. You probably know Mr. James as the author of two Pulitzer prize-winning biographies, "The Ravens A Biography of Sam Houston" written in 1930 and "Andrew Jacksons Portrait of a President" written in 1936. More recently Mr. James wrote "The Cherokee Strip" which told of his Okla homa boyhood days. Mr. James was unusually well-equipped to undertake the writing of our customary Annual Report to Policyholders, not only because ofhis training as an impartial and objective writer, but also because he had just finished a three-year study of Metropolitan's operations from the time the Com pany was founded. The results have been published by the Viking Press under the title of "The Metropolitan life-- A Study in Business Growth." Copies are for sale at numer ous book stores throughout the United States and Canada. This history by Mr. James is part of a broad Metropolitan program to help its policyholders understand how the Company operates. As Mr. James la a Metropolitan policyholder, his views on last year's operations carry particular weight. We believe that you will find them interesting and helpful in visualizing the high spots ofthe Company's 1946 accomplishments. In presenting them are wish to commend the thousands of Home Office employees and Agents whose efforts have made this record possible. The Company, aided by their loyal cooperation, has operated on a sound and progressive basis consistent with prudent business and Its responsibilities to policyholders. CHAOUUM or TB SOAJLO rammer St One of METROPOLITAN'S Greatest Years 1946 A Report by Marquis Jams The Company and a Historian Get Acquainted Ever7 year Metropolitan makes available to its policy* holders a report of the Company's affairs. This is proper procedure because Metropolitan is a mutual company. The nearest thing it has to stockholders are the policy* holders. The business is operated solely in their interest. Aside from die surplus, such as every sound business builds up to meet unexpected emergencies, anything left over above actual current costs and necessary provision for future costs is distributed each year among the policy* holders as dividends. Possibly you knew that already. But I didn't know it until I had been a policyholder for nearly 15 years. For many years the Officers of the Company got up these reports to policyholders. In 1949, however, they decided to have a professional writer who was a policy* holder look over die figures, ask any questions he wanted to, and then tell die other policyholders what the figures meant to him. Mr. Bruce Barton agreed to do so. His i effort was so well received that it was decided to repeat the experiment. I suppose die reason they asked me to do it this time was because for weeks at a stretch during the past three years I have practically lived at the Company's Home Office. I was there gathering material for a history of Metropolitan which has lately been published. Before speaking particularly of some of the things Metropolitan did in 2946,1 want to my something about my experience during the three years I worked on that book. The situation was unusual: a writer of history with a free hand to examine any record in the possession of a great corporation and to write the story as he saw it. When Metropolitan first made a proposal that I write its history with a free hand, I was skeptical; its idea of a free hand and none migjbt be different dungs. But after a couple of talks with Mr. F. H. Bcker, die and Mr. Leroy Lincoln, the President ofthe Company, I bepn to consider die matter seriously. Mr. Ecker's name is known wherever die subject of finance is known. He has had to do with investments in greater vohnn% in connection with private enterprise, than any man who has ever lived. He began his career at Metropolitan as an affioe boy. As far Mr. Lincoln, it didn't take me loog to place him: a wise and scholarly man of wide personal interests and sympathies who'd come up through die legal branch of die Company. He reminded me of my father, in that he seemed to have read about everything under dm sun. He mentioned some good, impartial histories, and said that was the kind Metro* politan wanted. My ta1k with these gentlemen, neither of whom I had met before, were as pleasant as oould be. All at once it occurred to me that I, myself, was a policyholder in 4 it was decided to repeat ed me to do it this time ch during the past three t the Company's Home [lateral for a history of been published. Before the things Metropolitan ting about my experience on that book, writer of history with a d in die possession of a the story as he saw it. proposal that I write its keptical; its idea of a free ent things. But after a icker, the Chairman, and : ofthe Company, I be&n wherever the subject of 3 do with investments in with private enterprise, ed. He began bis career . As for Mr. Lincoln, it a wise and scholarly man mpathies who'd come up Company. He reminded sued to have read about ; mentioned some good, at was die kind Metro- m, neither of whom 1 had could be. All at once it was a policyholder in Metropolitan, and that with men like Ecker and Tinraln at the head of it I probably hadn't made a bad choice. Three years of association with diem have strengthened and deepened that impression. 1 pass that on, as from one policyholder to another. Personal History of a Policyholder 1 became a policyholder of Metropolitan in 1909-- December 1929. Some of my fellow policyholders may recall that month and year. Certain things had lately happened to the stock market. My small portfolio of securities was worth a good deal less than it had cost me, and my earnings had sloped of. In this situation I felt it a good plan to let someone who knew more aoout handling money than I did take over a part of the burden of pro viding for the financial security ofmy family. That meant mm life insurance. I have since learned, horn my association with insur ance men, that my method of procedure was unusual. This is what I did. I picked out die type of policy I wanted and asked an insurance representative to quote die costs of the leading companies. Metropolitan's was lowest. Readers of my generation will also recall the years of 1930 and '30. In '30, with less income than I had had far several years, I doubled my coverage with Metropolitan. I did this purely to relieve my mind. In 193a I scraped up money for premiums by borrowing on another Life insurance policy, taken when I was 11 yean old. Unlike my other assets, that policy had not depreciated z cent in the face of the depression that had followed the stockmarket bust. From then on I was able to pay my premiums without hocking anything. Beyond noting that with nearly every- 5 I thing else in the asset line gone to smash. Life insurance, with negligible exceptions, stood up with its value un* diminished and paid dollar for dollar right through the depression--beyond noting that extraordinary fact I simply forgot about my Life insurance and went my way. This forgetfulness was a high tribute to Life insurance. Back in the gilded 1910's they would say of a certain stock, "You can put that away and forget it." How many of us did just that--until October 1919. Then the stock recalled itself to our minds--and a sorry sight it was. But in the hardpan 30's, when I "forgot" my Life insurance, it went right on working for me, increasing in value year by year, protecting my family and freeing my mind from one set of perplexities. A Ufe&uter in Hard Times--and Why When the history of Metropolitan which I was writ' ing reached die period of the depression thirties I began to recall my own personal ups and downs during those tames, and the part that Life insurance had played in them. I wondered how many other Metropolitan policy' holders had had somewhat similar experience*. I found that they numbered in the hundreds of thousands. With every other asset shot to pieces, they were pulled through by their Life insurance. Depute restrictions on payments imposed by certain States during die "bank holiday,'' there were times in the depths of die depression when Metropolitan's cash outlays on account ofpolicy loans and surrenders exceeded $1,000,000 a day. This was over and above die usual disbursements. Where did Metropolitan get the money--die cashin those days when cash was as scarce as hens' teeth? It got it from premium and investment income. Not for a moment did the Company even consider selling any of its 6 to smash, Life insurance, d up with its value undollar right through the it extraordinary fact 1 ranee and went my way. ibute to Life insurance. y would say of a certain 7 and forget it." How October 1929. Then the is--and a sorry sight it vhen I ``forgot" my Life dng for me, increasing in ,xy family and freeing my }. s--and Why olitan which I was writ' :pression thirties I began and downs during those insurance had played in her Metropolitan policy' lar experiences. 1 found reds of thousands. With .hey were pulled through restrictions on payments ng the "bank holiday," of the depression when xount of policy loans and a day. This was over its. the money--the cash-- scarce as hens'teeth? It ment income. Not for a consider selling any of its assets to meet the drain. Naturally, however, as long as the crisis lasted fewer new investments were than otherwise would have been the case. That rah* us to Metropolitan's investment policy, particularly during the 1920's when the investment habits of the country in general were building inevitably to the crash in 1929. The bonanza of the period was common stocks. The investments ofLife insurance companies are closely | supervised by the regulatory authorities of each State, f A few States permitted the ownership of Irnirfrd amounts of common stocks. New York, the home of die Metro politan and several ocher large companies, permitted no common'Stock investments to Life insurance companies. A cry went up for the easing of those restrictions. A few States let down the bars a little. More probably would have done so but for die opposition of Life insur ance officers, especially F. H. Eeker, of Metropolitan. Mr. Eeker was called oldfeshicned and out of date, but he stuck to his guns. In dm avid pursuit of common stocks, high-grade bonds were comparatively neglected and their prices remained within reason. On behalf of us policyholders, Metropolitan made some very advan tageous purchases of such Dollars in the Service of Society Any investor considers the factors of safety and yield; and those are all the factors most investees have to consider. Mhnpnl^an aim atvrW ferfwr; service to society. Taking into account die extent of its stake in die well-being of all the people of die United States and Canada, Metropolitan is simply doing dm intelligent thing when it works for dm common good of afl. Although Metropolitan restricts its business to those 7 f; two countries, no other corporation anywhere is con' cemed directly with the welfare of so many people. Metropolitan's 50,000,000 policies exceed by 17,000,000 the number of motor vehicles or telephones in the United States and Canada combined. Those policies are held by one person in every Jive in the two countries mentioned-- that is, by ao per cent of the total population. For that reason anything that affixes die general welfare of the Unified States or Canada immediately affects the Metro' poiitan Life Insurance Company. For illustration I will mention three types of invest' meat in which Metropolitan has kept in mind the general good. Metropolitan Owni War Bonds, Too First was the purchase of United States and Canadian Government securities during die war. To the financing ofthat unavoidable conflict Metropolitan made the largest contribution of any single investor. At die end of 1946 it owned $4fiaifioojxx> inUnited States and $04^,000,000 in Dominion bonds. These beddings are equal to three and onehalf times the amount of the national debt of the Unified States in 1916. To Grow the Food You Eat Next, rd like to speak of the way Metropolitan handled the mortgaged farms it was obliged to take over during die depression in order to protect die policyholders' investment*. By foreclosures, reluctantly made, the Company became temporarily the largest farm owner in the United States. Its holdings of vapypoo acres would have made a belt a mile wide from coast to coast. Many of these properties had got into very bad shape, and a few had become nearly worthless--would not grow 8 ration anywhere is conire of so many people, ies exceed by 17,000,000 telephones in tbe United "hose policies are held by o countries mentioned-- eal population. For that s general welfare of the iately affects the Metro' m three types of invest' > kept in mind the general onds, Too ited States and Canadian ie war. To the financing ropolitanmade the largest xx. At die end of 1946 d States and $043,000,000 dings are equal to three f the national debt of the ay Metropolitan handled jged to take over during rotect the policyholders' reluctantly made, the be largest farm owner in of a,ooo^ooo acres would an coast to coast, got into very bad shape, rthless--would not grow a thing. A farmer about to lose his land ``mines" the soil, neglects fences, buildings, everything. To bring' those properties back Metropolitan carried through the largest faxm'rehabilitation project ever attempted by private capital. Some of Metropolitan's methods have been adopted by the United States Department ofAgriculture, by agricultural schools, and so on. Equally important, during 1946, Metropolitan just about realised its ambition to get out of the farmowning business, where it never wanted to hem the first place. Nearly all those 2,000,000 acres are bade in private bands as profitable farms. Thus Metropolitan saved its investments and did it in a manner that benefited the whole country. Homes for the Homeless The third example I will cite of Metropolitan invest' merits with a social purpose touches the most acute domestic problem in the United States today--housing. Besides its extensive mortgage loans to home owners. Metropolitan's unique contribution has been the housing projects it has built, and is building, oq its own a demonstration of what private enterprise can da Here again. Metropolitan's achievement is unequalled in the whole history of such enterprise. How does this oome about? Simply through Frederick H. Ecker's genius fix management. The housing projects are Hkairman fideer's personal conception. He has sur' rounded himself with an organisation which has demon' stated its ability to make a dollar go farther in die building business **>an anyone else has done. This is anmplihf3 without false economies. Metropolitan buddings are of firstdaas construction, as low main' tenance costa show. They have worked a revolution in urban mass'reaide&tiai development. Rooma have plenty 9 of air, tun, and light. Outside are lawns, trees, Bowers, playgrounds. The major projects are in Washington, Los Angeles, San Francisco, and New York City. In Canada Metro* politan has cooperated with other Life insurance can* panics in helping to meet local housing problems. When three projects now under construction are finished in 1948, Metropolitan will have provided, under its own roafo, homes fee zoo,000 people. There is space to mention only one of these under takings--Stuyveant Town, between 14th and 20th Streets, fronting on Ease River, in New York. Conditions there were getting too bod even for slum dwellers: the population of the district dropped from 27,000 to 11,000. Metropolitan bought up 18 city bkxka and is erecting buildings that will house about 25,000 people. The old streets have been abolished. The build ings are going up around a three-toe private park. The redemption of this blighted area is die same sort of thing as Metropolitan's transformation of rundown forms into productive ones. Other enterprising organisa tions--msunnee companies, savings fanla, and prafesskoal real-estate developer*--have studied die Metro politan methods. Government housing officials have studied them, and several additional housing projects, variously sponsored, have been annameed for the East Side area of New York City. A Phenomenal Record Is it any wonder people take to a Company like that? In 1946 new business came to Metropolitan in record volume. About 2,400/100 people bought new polities. That is more than die population of Iowa. The amount of new insurance it has written in 1946 zo also top* anything in Metropolitan* 'jyyeir history. The gain in insurance in force was more than $3,000,000,000 lifting that figure from $31,260,000,000, as of the end of 1945, to $34*420,000,000. That increase reflects not only new issues, and increased coverage on old Group policies, but a very low lapse rate. Lapses increased a little over 1945, because of a small increase in the number of families experiencing temporary financial pinches, but tbe rate was still quite low and far below pre-war levels. Professional Advice to Policyholders Metropolitan's Field Force of 26,800 persons did a good deal more than run up a new record for sales of Life insure ance. I refer particularly to their service as professional advisers to policyholders, old and new. Metropolitan Life insurance has many, many forms and uses. Taking a fiunily as an economic unit, how much protection should be oa the breadwinner, and how much on the others? What forms should this protection take to meet the foreseeable and unforeseeable problems every fiunily encounters an its way through life: accident, sick' ness, children's educations, the possibility of the bread' winner's income declining in die evening of his career? Those are simple examples of problems the Metropolitan experts sit down and study with their clients. Fran year.to year changes may be made to meet changed con' dittoes. Before going out to meet their publics, nineteen hundredodd Metropolitan Field'Men, returning from the armed forces, were given a special refresher course in the architecture of fiunily insurance programs. Old Agents also benefit by a continuous educational program. A superficial glance at the 1946 figures shows one striking result of this assistance to policyholders. New Ordinary insurance rose almost 50 percent over 1945 and rz new monthly payment Industrial insurance increased 14 percent. But new writings of weekly premium Industrial insurance rose only y percent. This was not because Metropolitan Agents could not have sold a larger pro portion cf weekly premium Industrial insurance. It was because Metropolitan's Agents, recognizing improved economic conditions, stressed monthly premium Industrial insurance or Ordinary policies. Real Security Labor troubles make the headlines, but one rarely hears of rise many plants where employers and employees have been able to adjust their mutual problems amicably. Such plants for outnumber those in which the publicised troubles occur. A factor in friendly employer-employee relationships has long been Group insurance, the cost of which is usually shared between the workers and the management. Metropolitan's Group business had a great upswing in 1946. Group Life issued was two and one-half times that of 1945, and the other forms of Group pro tection ^ showed substantial pin* It is interesting to note bow the different kinds of insurance work together to provide protection over the course of a lifetime. There are three general levels. Since 2939 the people of the United States have had an Old'Age and Survivorship Insurance plan as part of the Federal Msodal security" program. The States also pro vide old-age pensions to the needy. But, lumped together. Federal and State plans provide little more than bare sub sistence. They are not intended to do more. The next level is Group insurance, provided by the private companies to farsighted employers and employees. Combined with the Government plans, this definitely 22 v***X`*r; rncxOMPA the protection mjnyrA hy the henefioane But usually it is still not enough* The third and most important level is the protection the individual policyholder acquires on his own initiative. It is based on man's desire to take care of himself and his family in his own way. To meet tins need people in America have at their disposal all the varied insurance plans offered by the Life insurance companies. And they axe taking advantage of them. Some of the high spots of Metropolitan's business record for 1946 have been noted. Other Life insurance companies also had a good year. One of the Lowest Death Rates on Record In 1946 the death rate among Metropolitan policyholders was one ofthe lowest on reoord. This was despite a poor beginning, due to .the ravages of infbeno and pneumonia during the first quarter ofthe year. Normally, thorn month* are always the hardest to live through- This was particularly true last year. Though the epidemic of infantile paralysis during the summer was rim worst since 1916, the death rate from this cause was only a little above that ofthe much smaller epidemic of 1944. Fatalities from heart diseases and 60m cancer continued their increase, however. They constitute medical science's No. z problem Metropolitan has joined with 147 other Life insurance companies in setting up the Life Insurance Medical Research Fund. This group is making grants to finance reaeaxch projects relating to disease* of rim heart and blood vessels. The mortality picture is distinctly favorable. Th$ aver age length of lift (expectation at birth) in America is longer than ever before. It is now more than 65 yean. This is an increase of ten years since 1906, only 10 years x* nr iji ago. Most of this increase is due to die lowering of the death cate from the disease* rfehiMhnnri, tuberculosis, and pneumonia. Although from time to time war claims continue to come in. Metropolitan is in a position to make approxi mately final returns on the impact of war deaths on the Company. From Pearl Harbor to Dcocmher 31,1946, it had paid $66,176,000 on 75,090 livesj oi which 54,210 represented deaths from enemy action and die test from accidents and disease. The figures include 1,316 civilians, mostly merchant seamen, whom death* were caused by enemy action. War death claims paid by Metropolitan represented about 19 percent of the total amount paid by all companies. This corresponds with die fret that Metropolitan carries about one-fifth of the total Life insurance in force in United States aanpaniw. Our Money Earns Less The social character of some of Metropolitan's invest ments has been touched upon. The Company's policyholders also have a practical stake m die amount of income the Company is able to earn on its investments, because the higher the Company's interest return, the lower the cost of insurance to each policyholder. To illustrate, a man of 35 now pays Metropolitan a yearly premium of $37.57 on a $1,000 life Policy. I am told that if the Com pany could not cam interest on its mwstmrints, the premium would be $36^7. As everyone knows, interest rates have declined during recent year*. Most of us policyholders can recall when we got 4 or 4H percent on our savings bank accounts. Now the rate is frequently less than 3 percent. And we, like Metropolitan, are dm holders of Government bonds, with their low yields. . < * *!' . m The Metropolitan, in common with all ocher investors, has experienced a downward trend in interest earnings. In 1946 the Company earned interest on its investments at an average net rate of 3.01 percent As an additional safeguard against the effects of this trend, the Company, during the past few years, has materially increased the reserve standards for its earlier issues of Life insurance and annuities. Operating Costs Are Up We all know that it costs more to run a household than it did a year ago. There has been a moderate increase in the operating expenses ofMetropolitan--and for the same reasons: increase in the prices of everything in the way of goods and services. As to operating expenses, Metro* politan has never been a miser or a spendthrift. It pursues a reasonable and prudent course, aware that there is true economy in buyinggood materials and paying its help welL The Company has the name of a good employer. I think this will be of particular interest to its millions of policyholders, most of whom are wageeamers. Metro politan is, io feet, a company of persons of moderate means, the amount of its average policy being about $750. In its Home and Head Offices Metropolitan was a pioneer in die provision of vacations, medical examinations, pen' cions, Life, Accident and Health insurance, which are now almost standard practice among enlightened employers. The Company's personnel appreciates this. Of the 6,703 young men and women who left its services for the armed forces, more than 8a percent returned to Metro' politan when out of uniform. If so many of the girls who were m the armed forces hadn't ntarrtmAt the percentage would have been higher. XJ Present Dividends Maintained Something has now been said about the three mam factors that determine the cost of insurance: z. Mortality a. Investment earnings, and 3. The expense of doing business The factor of mortality has been favorable. Chiefly because of lower interest earnings, however, there is indicated a trend toward an increase in the cost of insur* ance. As a policyholder, I am glad to know that the Company has made the welcome announcement that it will continue to pay the current rate of annual dividends for both Ordinary and Industrial policies for another year. The total set aside for payment as dividends in 1947 is $138^00^300, but if the Company had earned the interest rate that was earned just 25 years ago, there would have been $232,000,000 available for payment as dividends-- an additional $94^00^)00. Look at the Figures I have exhausted the space at my disposal, without by any means telling all die important facts about Metro* pditans progress in 1946. On the following pages appears a recapitulation of die year's outstanding operational achievements; also a condensed financial statement in terms that any person can understand. This tells how much money came in during the year, and from where; how much money went out, and where it went. It tells what the Company's are, and what assets it has to meet diem. I think you will be interested in looking at those figures. 16 SOME HIGHLIGHTS OF THE YEAR'S OPERATIONS Payments to Beneficiaries and Policyholders Daring 1946 Ordinary................................................. Industrial.............................................. Group (excluding Accident and Health) Accident and Health............................ TOTAL.......................................... $250351392 252357366 89,926318 37,966,727 $630302303 Total Life Insurance in Force on December 31,1946 Ordinary..................................................... $17316364389 Industrial.............................................. 9364329,717 Group..................................................... 7340324,705 TOTAL.............................................. $34322319,111 Accident and Health Insurance Weakly benefits............................ Principal suae benefits..................... $34372371 $2,199351321 New Life Insurance Issued During 1946 Ordinary................................................. Iadoatrial.............................................. Graep..................................................... TOTAL.......................................... $2304397302 656394320 459354356 $3,119345378 Number at new Ordinary and Industrial!Ifeinsmunce policies Issued x7 2306,280 and Tract Company