UPDATED: Insurance Companies Seek Healthy Profits in Tobacco Stock

By Jaime Cunningham

This article has been updated with a response from one of the companies mentioned.

Sure, smoking kills. But it's so lucrative! That seems to be the attitude of health and life insurance companies in North America and the United Kingdom, who have more than $4 billion invested in tobacco companies, according to a correspondence published in the June 4th issue of the New England Journal of Medicine (subscription required). The same companies that could deny you coverage because you're a smoker—or charge you astronomical premiums if you do make the cut —are actually profiting from your bad habit.

According to the authors, the big name insurance companies that many of us depend on—including Prudential Financial, Mass Mutual, and New York Life – own stocks in companies like Reynolds American (the makers of Camel cigarettes), Lorillard (Newport menthols), and Philip Morris USA (Marlboro.) Sure tobacco consumption is considered a major risk factor for cancer, heart attack and stroke, but it's also a significant contributor to insurance companies' stock portfolios. According to the study, Mass Mutual holds $17.3 million in Reynolds America, $155.4 million in Lorillard and $412.6 million in Philip Morris USA, for a grand total of $585.3 million in tobacco investments. Prudential Financial has $69.4 million invested in Reynolds American, $8.8 million in Lorillard, and $186.1 million in Philip Morris USA, for a total of $264.3 in tobacco holdings. New York Life has the tamest portfolio, with only $13 million invested in Reynolds American.

The authors of the study point out that the insurance companies have found ways to up their profits on tobacco use by both investing in these companies as well as charging smokers higher premiums. The authors also warn Canadian and British readers: their respective countries are considering remodeling their socialized systems by privatizing them like American health care.

Is it really possible that insurance companies are more concerned with turning a profit than securing the health of those they insure? Shocker!

The three authors sum it up best in their paper: "For those of us in the United States, these data are a reminder of the true priority of the insurance industry, which is making money, not ensuring health or well being."

Note: In response to this blog posting, MassMutual issued a statement to Newsweek saying that "as of December 31, 2008, MassMutual's holdings of tobacco related equities are approximately $548,000, representing less than one-thousandth of one percent of consolidated statutory cash and invested assets of $86.2 billion." We reported the numbers listed in the New England Journal of Medicine.

UPDATED: Insurance Companies Seek Healthy Profits in Tobacco Stock | News