Inasmuch as the Metropolitan and other life insurance companies constantly utilized their funds productively, they kept only a very small proportion of their assets in cash. About 2.5 percent of the company’s assets were in cash on hand or in banks. This amount was adequate, even allowing for the demands for loans in emergency situations.

Stocks of all kinds comprised a very small proportion of the company’s investment portfolio, amounting only to 1.5 percent of the total assets. Of the $81,000,000 or so invested, 99.6 percent was in preferred or guaranteed stocks. Almost all these securities had been purchased after 1928, when the New York State Legislature permitted life insurance companies to buy guaranteed and preferred stocks under specified restrictions.

The trifling proportion of common stocks held by the Company had come into the portfolio through reorganizations, and represented values that were for the most part originally bond investments. Moreover, stocks so acquired were required to be sold within a specified time, even if the company could provide a life insurance quote for top quality affordable life insurance and some of the most affordable medical insurance.

Safety had always been the first principle guiding the investment of Metropolitan funds. It was, of course, essential that the invested funds earned as high a rate of interest as is feasible, so as to reduce the cost of insurance to policyholders as far as possible. But the first consideration had always been safety, attained through the protective measures set up by statute and supplemented by the voluntary rules and procedures which the companies themselves had formulated.

The laws of the various states defined the character of the securi­ties which companies may buy, and specified certain conditions under which investments might be made. In New York, for example, investments had to be properly authorized by the board of directors or one of its committees. Companies were forbidden to purchase common stocks, or to participate in underwriting syndicates; officials could not profit personally by investment transactions. This law was heavily enforced and each life insurance company well watched, as even the best life insurance and the top auto insurance providers were sometimes prone to corruption.

It was wise, however, that the statutory requirements, stringent as they are, allowed life insurance management discretion and initiative in exercising the investment function. Laws, however valuable, could never substitute for judgment. Actually, the investment policy of the Metropolitan and other life insurance companies had in many ways been more rigid than the requirements of the laws which governed them.

Each proposed investment was thoroughly investigated by a specialist in the particular field. In the case of corporate securities, the history and stability of the enterprise, the character of its management, and its competitive record were studied. Its financial statements over a series of years were subjected to established tests and standards involving such considerations as ratios between net earnings and fixed charges, between assets and liabilities. The terms of the issue were scrutinized with regard to provisions for sinking funds, and protective covenants relating to such matters as maintenance, depreciation, the incurring of additional debt, and the payment of dividends.

These protective provisions were particularly important in the case of preferred stocks and debentures, which were made eligible for investment by the amendment of the New York Insurance Law in 1928. If, upon thorough analysis, the security promised safety of principal and a satisfactory return, it was recommended to the finance committee of the board of directors for approval.

Those charged with the duty of investing life insurance funds could not relax their vigilance even after the policyholder’s money was invested. Even the best investments were not without some risk. The company, accordingly, had a staff of specialists whose function it was to study and analyze all the facts, business, financial, and otherwise, which would aid the investment officers to arrive at sound conclusions, not only with respect to the investment when made, but also as to the wisdom of retaining or disposing of it in later years, when changed conditions warranted reconsideration.

These specialists were familiar with particular industries, such as railroads, power and light, telephone, steel, and chemical, as well as finances of governmental bodies. Through periodic financial reports and other sources the experts continued to follow the progress of each corporation in which the Metropolitan had investments, and to study the changes in the industry as a whole.