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U.S. Life Insurers, Stocks Shook Off the 1918 Flu

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Today’s world is much different from the world of 1918, and “past performance is no guarantee of future results.”

But one comforting takeaway from 1918 influenza flu pandemic statistics is that U.S. life insurers and major U.S. stocks got through the pandemic period in pretty good shape.

(Related: How Life and Health Insurer Stocks Performed This Week)

The 1918 flu pandemic may have been comparable, in some ways, to the Covid-19 pneumonia that has devastated Wuhan, in China, and is now started showing up in the United States.

The 1918 flu pandemic probably infected at least 20 million of the people living in the United States in 1918 and killed about 500,000 of those people, including many people who worked in the life insurance industry. Newspapers at the time carried articles about full hospitals, efforts to set up emergency tent hospitals, people who felt fine in the morning and died in the evening, and difficulties with burying the dead.

But a look at the Dow Jones Industrial Average stock index for the period from 1917 through 1920 shows that top companies’ stock prices were relatively stable from November 1918 through early 1919, when the effects of the pandemic were most severe.

A review of coverage in industry trade publications shows that all major life insurers were able to pay the flu-related claims, and that many of the policyholder-owned mutual insurers paid participating policyholders at least some dividends in 1919.

The publications are available as searchable “free books” in the Google Books archive.

Thomas Tarbell, an actuary with the Connecticut Insurance Department, was able to get death claims data from 31 insurers, according to an article that appeared in the Sept. 12, 1919, issue of the Eastern Underwriter.

He found that flu and flu-related pneumonia deaths accounted for about $120 million of the $252 million in death claims paid during the period from Oct. 1, 1919, through March 31, 1919.

“It would thus appear that so far as our statistics go we may reasonably assume that the mortality rate was almost double that of the normal during the period under consideration,” Tarbell wrote.

Bankers’ Life of Des Moines and Lincoln National suspended payments of dividends for a year, but they paid all claims.

Provident Life, New England Life and Equitable of Iowa are examples of companies that said they would keep their dividend rates the same.

J.B. Franks, the actuary at Fidelity Mutual Life, concluded in a report published in July 1919 that high claim costs had eroded life insurers’ safety margins.

“This effect has been so great in some cases as to cause the managers to discontinue entirely the payment of dividends for the current year; in other cases, to reduce their dividend distributions by 50%, and so on down to small reductions,” according to an article about Franks’ report that was published in the July 18, 1919, issue of the Eastern Underwriter.

But “in some cases no reductions were made,” according to Franks.

Newspapers in that era published some articles about limited quarantines in places like Alaska, Australia and Ohio. But the papers reported no dramatic shortages, and the newspapers themselves seem to have published regularly throughout the period.

The newspapers carried many ads. The insurance publications reported that one effect of the pandemic was a big increase in life insurance sales that started in late 1918 and carried into 1919.

— Read Warren Probes Biggest Banks on Coronavirus Exposureon ThinkAdvisor.

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