Health and life insurance companies in the US and abroad have nearly $4.5 billion invested in tobacco stocks

[one...two...tree 2,762]

Health insurers want you to keep smoking, Harvard doctors say

By Brendan Borrell in 60-Second Science Blog

Health and life insurance companies in the US and abroad have nearly $4.5 billion invested in tobacco stocks, according to Harvard doctors.

"It's the combined taxidermist and veterinarian approach: either way you get your dog back," says David Himmelstein, an internist at the Harvard Medical School and co-author of a letter published in this week's issue of the New England Journal of Medicine.

The largest tobacco investor on the list, the 160-year old Prudential company with branches in the US and the UK, has more than $1.5 billion invested in tobacco stocks. The runner-up was Toronto-based Sun Life Financial, which apparently holds over $1 billion in Philip Morris (Altria) and other tobacco stocks. In total, seven companies that sell life, health, disability, or long-term care insurance, have major holdings in tobacco stock.

Why is it a big deal? "If you own a billion dollars [of tobacco stock], then you don't want to see it go down," says Himmelstein, "You are less likely to join anti-tobacco coalitions, endorse anti-tobacco legislation, basically, anything most health companies would want to participate in."

The letter is the third report that the doctors – who all support a national healthcare program – have published in the last 14 years. We decided to check in with some of the insurance companies mentioned in the letter to learn more about their policies with respect to tobacco stock. Prudential was unable to respond by press time. Sun Life, however, flatly denied the charges.

"Sun Life does not carry significant holdings in tobacco stocks," says representative Steve Kee, "We do not disclose specific holdings and, for good measure, we conducted a review further to your inquiry and our exposure to 'tobacco' stocks is less than 0.005 percent [about $5 million] of the investment portfolio. Importantly, tobacco-related businesses can be part of a broader conglomerate involving other aspects such as food production."

Himmelstein rechecked his numbers in the Osiris database, and said, "I fear that if Sun Life has a dispute, it is with Osiris not with us."

In any event, the doctors' persistence over the years seems to be working to some extent. They targeted MetLife and Cigna in their 1995 and 2000 letters to medical journals, but neither is listed in the latest reckoning, indicating that the insurers no longer hold enough to stock to be noted on filings for the U.S. Securities and Exchange Commission. In addition, a representative for Cigna says they currently have no direct holdings in tobacco stock unless it is part of an index fund.

But with $4.5 billion still invested in Big Tobacco, many insurers are reaping profits from a cancer-causing industry. As Himmelstein puts it, "Is this who we want running our healthcare system?"

http://www.scientificamerican.com/blog/60-...p-sm-2009-06-03

[spookyturtle 9,466]

It's called self preservation.

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Their investments are typically handled by business units dedicated to investment strategy. Tobacco is a good investment.

[one...two...tree 2,762]

Their investments are typically handled by business units dedicated to investment strategy. Tobacco is a good investment.

They could send a carton to all their customers for their birthday.

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Dumb hippie.

[one...two...tree 2,762]

Dumb hippie.

It's called protecting your investments.

[mawilson 2,133]

Dumb hippie.

It's called protecting your investments.

I'm sure it's not their only investment. For all you know, they also have $5.1 billion invested in energy stocks,

$3.8 billion in financial stocks, $9.7 billion in technology stocks, $2.4 billion in transportation stocks and

$4.9 billion in utility stocks.

So what?

[w¡n9Nµ7 §£@¥€r 123]

Insurance companies have a fiduciary duty to protect and grow their reserves. Diversification is key. Tobacco's a component of that.

[one...two...tree 2,762]

Insurance companies have a fiduciary duty to protect and grow their reserves. Diversification is key. Tobacco's a component of that.

Conflict of interest.

[w¡n9Nµ7 §£@¥€r 123]

Insurance companies have a fiduciary duty to protect and grow their reserves. Diversification is key. Tobacco's a component of that.

Conflict of interest.

Wow you're clueless.

[mawilson 2,133]

Insurance companies have a fiduciary duty to protect and grow their reserves. Diversification is key. Tobacco's a component of that.

Conflict of interest.

Steven,

There's no longer a direct connection between shareholders and the companies they own.

For example, index funds have no interest in the behavior of the management of the companies they own.

An index fund will keep holding the company in proportion to its weight in the index regardless of

whether the managers act in shareholders’ interests.

This disconnect happened in the 1980's and 90's when large mutual funds took over as the main

investors, and then again with hedge funds after 2000.