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New Report Criticizes Insurers for Owning Fast Food Company Shares

Source: Insurance Networking News


Posted on 16 Apr 2010

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In article published in the American Journal of Public Health criticizes insurance companies for $1.88 billion worth of investments in fast-food companies.

The study's authors, all physicians, cite research that fast-food consumption is linked to obesity and cardiovascular disease—two leading causes of death in Americans—and say, given the importance of insurers in the nation’s health care delivery system, they ought to be held to a higher standard of corporate responsibility. In 1990s, a similar campaign convinced many health insurers to divest their holdings in tobacco companies.

The current report, compiled from Icarus, a subscription-based proprietary database of industrial, banking and insurance companies that is often used by educational institutions, targets the holdings from disability, long-term care and life insurers. The authors state that Icarus draws upon Securities and Exchange Commission filings and news reports from providers such as Dow Jones and Reuters. In addition, the authors obtained market capitalization data from Yahoo! Finance.

Using numbers from year-end 2008, the report cites Boston-based MassMutual as holding $366.5 million of fast-food stock, including $267.2 in McDonald's and Milwaukee, Wis.-based Northwestern Mutual Life Insurance Co. for owning $422.2 million of fast-food stock, of which $318.1 million is McDonald's. Holland-based ING, an investment firm that also offers life and disability insurance, is listed as having fast-food holdings of $406.1 million, and Newark, N.J.-based Prudential Financial Inc. is identified as holding $355.5 million worth of this type of stock.

“Given that we don’t report or discuss the individual investments in either our portfolios or third-party portfolios, it’s hard for us to verify the number,” Bob DeFillippo, chief communications officer for Prudential, tells Insurance Networking News. “There are financial instruments within Prudential’s portfolios that are managed for third parties. That said, we have a fiduciary duty to manage assets for consistently strong investment performance, and we do that while managing risk and investing responsibly.”

Likewise, Jean Towell, a spokesperson for Northwestern Mutual, disputes the tally, and pegs the true total of the company’s fast-food holding at the end of 2008 at $257 million. Moreover, Towell says the numbers are insignificant considering the size of the company’s portfolio. “Our goal is to have a highly diversified portfolio that provides long-term value to our policyholders,” she tells Insurance Networking News. “That $257 million represented only 0.19% of the company’s $136 billion account portfolio at the time. In today’s numbers, it’s even smaller, 0.17%.”

Dr. J. Wesley Boyd, of Harvard Medical School and senior author of the study, says the article was intended “to illustrate the extent to which the insurance industry seeks to turn a profit above all else.”

All of the article’s authors are affiliated with Physicians for a National Health Program, which advocates for a single-payer health care system. “All the authors of these papers are frontline physicians working in public hospitals,” Boyd tells Insurance Networking News. “The insurance industry so often puts up roadblocks for us to do what we need to do for patients.”


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