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9 J. Ins. Regul. 5 (1990-1991)

handle is hein.journals/jloins9 and id is 1 raw text is: Insurance Investments, Environmental Laws, and the Acquisition of Contaminated Properties by Life Insurance Companies$ Malcolm Pittman* ABSTRACT Life insurance company investments are limited by state and federal stan- dards which do not apply to other investors, but the trend in such standards has been toward allowing companies greater freedom to make riskier in- vestments. The risks for any investor in buying slightly contaminated prop- erty are often less than is commonly believed. Accordingly, life insurance companies may acquire some slightly contaminated properties. Life insurance companies invest substantial amounts of money, both premiums received on various types of policies and, increasingly, money paid to them in their capacity as providers of financial services by other investors such as pension funds. Like any other sophisticated investor, life insurance companies diversify their investments, and approximately 23.2 per cent of the money they have invested (in the aggregate) consists of mortgage loans or equity interests in real estate.' They are making such investments at a time when one of the most important features of the real estate investment environment is too much money in search of too few good investments.2 In such a market, it is important for $ The author gratefully acknowledges the assistance of Amy Weed, now an attorney at John Hancock Mutual Life Insurance Company, and Warren Jurovaty, Vice President, John Hancock Properties, Inc., for their assistance in the preparation of this article. The views expressed in this article are those of the author and not necessarily those of his employer. * B.A., Oberlin College; J.D., Yale University. The author is Associate Counsel, John Hancock Mutual Life Insurance Company, Boston, Mass. 1. In 1988, life insurance companies in the aggregate had $232.863 billion, or 20 % of their assets, invested in mortgages, and $37.371 billion, or 3.2 % of their assets, in equity real estate. AMERICAN COUNCIL OF LIFE INSURANCE, 1989 LIFE INSURANCE FACT BOOK UPDATE at 42. 2. J. Lebow, The Flow of Money into Real Estate, The Wall Street Journal, Bl (July 24, 1989); see also, e.g., Conversation, Joe O'Connor: A Penchant for Pensions, s/f, at 102-03 (July/Aug. 1989) (hereafter Conversation).