I followed carefully the
explanation given by the minister, which seemed to indicate that in the United States
Life Insurance Companies
there is a different basis of lending in the insurance investment field from that which prevails in Canada. So far as I know we here do not have a situation quite comparable to the situation the minister described as existing in the United States. Up to the time the federal housing administration entered the guaranteed field, if I may call it that, in the United States, in connection with these loans, evidently the same provisions applied with respect to the protection of policyholders; that is, a sixty per cent ceiling was placed upon loans on real estate which are accepted by the insurance companies. That, of course, would be in compliance with certain legal protection which has been afforded trust funds of this character in both countries. The investments of the public in insurance companies in Canada and elsewhere are very large. The popularity of insurance as a means of saving and protection combined has increased during the years, and we have seen it reach the point where the savings of many people find their way first of all into the coffers of the insurance companies by way of premiums, and then from the insurance companies into investments such as those envisaged in this act.
One point which was not very clear to me I think has been clarified to' some extent by the minister's statements. When the bill was first introduced I was afraid we were inventing a departure from the system of protection which exists in Canada, under which the loan may not exceed sixty per cent of the value of the real estate, which was the system under which our companies operated in the United States.
I was fearful that perhaps the funds of those who are paying premiums in Canada might be utilized in a less protected fashion, when the company outside could utilize its funds for investment in the United States. But the minister points out that there is a definite limitation, a definite boundary line with respect to the investment of our funds in the United States, the same as there is in respect of the investment by the same company of United States funds in Canada. In other words, as I understand the minister's statement, this bill would apply only to the funds which are invested by a Canadian life insurance company doing business in the United States, but which will be utilized onlj' for United States investments. In other words unless the foreign exchange control board authorizes differently, this will prevent Canadian funds by way of premiums going into the investment market in the United States under a different system, and perhaps under a lesser protection-although it is not clear as to that-than we have in Canada.
My understanding-and the minister will correct me if I am wrong-is that only funds of policyholders in the United States are the ones actually affected by this legislation, with the one exception, namely, in the event of this government's allowing, through the foreign exchange control board, a movement of funds from Canada to United States account to be invested in real estate there.
That, of course, is true now. But the first question which enters one's mind is that this legislation will apply for years to come. The foreign exchange control board will pass out of existence legally as soon as the War Measures Act becomes inoperative. This would be at some time after the War, or when the policy of the government then in power might be changed in respect of the movement of funds. So that the answer given by the minister is not the only possible answer in respect of the movement of Canadian funds for United States investment. It may be at this time, but it would not be in the future, when the war -is over. So that I suggest the minister's argument falls to the ground. If the operations of the foreign exchange control board would cease within the next year, this legislation would still be in operation, and there would be nothing to hinder investment in the United States of Canadian funds paid in by Canadian policyholders to a Canadian insurance company under the provisions of this bill, and on terms which may be less safe and less protected than provided by Canadian law. Has this phase of the matter been considered by the government, as to whether the law in respect of investments in the United States under this act is different from the law which applies if the money is invested in Canada?
Subtopic: EXTENSION OF AUTHORIZED INVESTMENTS IN UNITED STATES SECURITIES