1Q 2001 Variable Life Sales Off 17% From 4Q 2000

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Variable life sales with single premiums included at 10% for the 56 companies reporting in Tillinghasts VALUE survey for the first quarter of 2001 were $1.58 billion. This is a 17% decrease from the fourth quarter of 2000 and a 2% increase over the first quarter of 2000, which had sales of $1.545 billion. (Sales include first-year annualized premium, drop-in premiums and single premiums.)

The market estimate for the first quarter of 2001 with single premiums included at 10% is $1.63 billion.

For the first quarter of 2001, the top five companies– MetLife/NEF/GenAm/COVA, Pacific Life, IDS Life, ING Life and Equitable–captured 32% of all variable life sales (including single premiums at 10%), while the top 10 companies captured 54% of all sales.

In 2000, the top five companies–IDS, MetLife/NEF/GenAm/COVA, Pacific Life, Hartford and Aegon–captured 34% of all variable life sales, while the top 10 companies controlled 57%.

For the first quarter of 2001, Pacific Life reported the highest annual premiums ($95.7 million), although it ranked second for the year.

For the companies reporting in the survey, the number of flexible-premium contracts issued during the first quarter of 2001 decreased 16% from the number of contracts issued during the first quarter of 2000. The average face amount decreased 5% to $272,198, while the percentage of premium allocated to the general account decreased to 2%.

The total premium for the 17 companies participating in VALUE with 18 single-premium products in the first quarter of 2001 was $49 million, compared to $42.4 million in the first quarter of 2000.

The number of single-premium contracts issued during the first quarter of 2001 was 17% lower than the number issued in the first quarter of 2000. The average face amount increased 79% to $276,039, while the average premium increased 39% to $104,478.

The total premium from all second-to-die products issued during the first quarter of 2001 was $253.3 million, compared to $231.6 million in the first quarter of 2000.

The number of second-to-die contracts (including single-premium and flexible-premium products) issued during the first quarter of 2001 decreased 422% over the same time period last year. The average face amount increased 92% to $2,183,721.

The decrease in second-to-die sales may be attributed to the new estate tax legislation that significantly reduces estate taxes over the upcoming years.

For the companies reporting sales by distribution channel for the first quarter of 2001, career agents dominated flexible-premium variable life sales, capturing 54% of the market. This is mainly due to many market leaders selling primarily through their career agents.

Independent broker-dealer firms were second, capturing 38% of the market.

Career agents and independent broker-dealer firms dominated single-premium variable life sales in the first quarter of 2001, capturing 36% and 32% of the market, respectively.

As of March 31, 2001, total variable life assets for the companies reporting in VALUE were almost $71 billion. This is a 9% decrease from Dec. 31, 2000. This decrease in assets can be attributed to the downturn in the stock market. Of the total assets reported, 90% were held in a separate account, similar to past quarters.

VALUE classes funds into the following categories: growth, aggressive growth, growth and income, international stock, government bond, corporate bond, high-yield bond, international bond, money market, balanced and specialty (e.g., gold, real estate).

As of March 31, 2001, approximately 70% of the variable life separate account assets were stock funds; 8%, bond funds; 5%, money market funds; 15%, balanced funds; and 2%, specialty funds.

, CLU, ChFC, is with Tillinghast-Towers Perrin.


Reproduced from National Underwriter Life & Health/Financial Services Edition, June 29, 2001. Copyright 2001 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.


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