Life, Health Insurers Invest in Fast Food Stocks

Group Claims Investments Show Insurance Companies Don't Value Health

From the WebMD Archives

April 15, 2010 - If life and health insurance companies really care about health and wellness, why do they invest large sums in fast-food firms?

The question comes from members of Cambridge Health Alliance, a Harvard-affiliated medical group. The group finds that as of June 2009, major insurers owned $1.88 billion of stock in the five leading fast-food companies.

J. Wesley Boyd, MD, PhD, assistant clinical professor of psychiatry at Harvard, is one of the study authors. Boyd says that insurance companies' business practices belie any claims that their first priority is the well-being of their clients.

One example of these business practices with negative public health consequences, Boyd says, is investment in fast-food companies.

"What spawned our report is our own interactions with insurance companies that bespeak an industry highly concerned with money and puts our patients' concerns in second place, if that," Boyd tells WebMD. "They will invest in the largest entities that cause morbidity and mortality as long as it makes money."

Boyd and colleagues name several prominent life and health insurance companies and list their investments in fast-food firms:

  • Northwestern Mutual: $422.2 million
  • ING: $406.1 million
  • Massachusetts Mutual: $366.5 million
  • Prudential Financial: $355.5 million
  • Manulife: $146.1 million
  • Prudential PLC: $80.5 million
  • Standard Life: $63 million
  • Sun Life: $26.8 million
  • Guardian Life: $16.7 million
  • New York Life: $2.4 million
  • MetLife: $2.2 million

What should the companies do? Boyd says it would be good if they got out of the fast-food business. But he says it would be better if they used their position as large stock holders to push the firms to make healthier products.

Boyd and colleagues report their findings in the April 15 online issue of the American Journal of Public Health.

Insurers Respond

WebMD contacted several insurers for comment. Most of the firms noted that their investments in fast-food companies represent tiny fractions of their total investments.

"Even if it is a small part of their portfolio, to have $1.88 billion invested in fast food shows that their first and foremost concern is making money, not promoting health -- at least among those they insure," Boyd says.

Continued

That's not how the companies see it.

Northwestern Mutual spokeswoman Jean Towell says Boyd and colleagues overestimated the companies' fast-food holdings. (Boyd defends the numbers.) Towell says Northwestern's fast-food stock accounted for less than one-fifth of 1% of the company's $136 billion investment portfolio in 2008 -- and much less in 2009.

"Northwestern Mutual places a high priority on the health of our workforce as well as on the health of our policy holders," Towell tells WebMD. "Health and wellness is a priority."

However, Towell agrees with Boyd that the point of Northwestern's investments is to "generate high-quality returns" and "to make long-term value to our policy holders."

Massachusetts Mutual spokesman Mark Cybulski also takes issue with the figures and tells WebMD that at the end of 2009, the company held only $1.4 million in fast-food related stock -- less than one hundredth of a percent of the company's highly diversified total investments of $86.6 billion.

In an email to WebMD, Cybulski says Mass Mutual portfolio managers "have a fiduciary obligation to evaluate many factors" when buying stock, "including social, environmental, and corporate governance policies."

MetLife spokesman John Calagna notes that his firm's investment in fast food is the smallest on the list and suggests that $2.2 million is "minuscule" compared to the firm's $340 billion investment portfolio.

MetLife's investment in fast food "is far outweighed by the billions we invest in the 'health and wellness' sector, including farms, agricultural markets, and solar energy companies, just to name a few examples," Calagna tells WebMD via email.

Prudential Financial spokeswoman Theresa Miller notes that many of her firm's investments are made through passive index funds and are not specifically managed by Prudential.

"Prudential has a long track record of contributing to the good of the community through its business practices and through the many programs and services it supports," Miller tells WebMD via email.

WebMD Health News Reviewed by Laura J. Martin, MD on April 15, 2010

Sources

SOURCES:

Mohan, A.V. American Journal of Public Health, April 15, 2010; published online ahead of print.

J. Wesley Boyd, MD, PhD, assistant clinical professor of psychiatry, Harvard Medical School; staff psychiatrist, Cambridge Health Alliance.

John Calagna, vice president, MetLife Public Relations, email correspondence.

Mark Cybulski, Massachusetts Mutual Life Insurance Company, email correspondence.

Jean Towell, assistant director, media relations, Northwestern Mutual.

Theresa Miller, vice president, global communications, Prudential Financial Inc.

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