3rd Quarter Variable Life Sales

Off 26% From 3rd Quarter 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 third quarter of 2001 were $1.26 billion. This is a 15% decrease from the second quarter of 2001 and a 26% decrease from the third quarter of 2000, which had sales of $1.712 billion. (Sales include first-year annualized premiums, drop-in premiums and single premiums.)

The market estimate for the first nine months of 2001 with single premiums included at 10% is $4.4 billion.

Variable life sales with single premiums included at 100% for the 56 companies in the VALUE survey for the third quarter of 2001 were $1.32 billion. This is a 15% decrease from the second quarter of 2001 and a 26% decrease from the third quarter of 2000.

The market estimate for the first nine months of 2001 with single premiums included at 100% is $4.65 billion.

For the first nine months of 2001, the top five companies– MetLife/NEF/GenAm/COVA, Hartford Life, IDS Life, Pacific Life, and Nationwide–captured 36% of all variable life sales (including single premiums at 10%), while the top 10 companies captured 58% of all sales.

For the first nine months of 2001, Met Life reported the highest annual premiums ($211.2 million), while Pacific Life was second ($208.2 million).

For the companies reporting in the survey, the number of flexible premium contracts issued during the first nine months of 2001 decreased 24% from the number issued during the first nine months of 2000. The average face amount decreased 9% to $281,715, while the percentage of premium allocated to the general account decreased to 3%.

The total premium for the 18 companies participating in VALUE with 19 single premium products for the first nine months of 2001 was $141.4 million, compared to $139.1 million in the first nine months of 2000.

The number of single premium contracts issued during the first nine months of 2001 was 10% lower than the number issued in the first nine months of 2000. The average face amount increased 13% to $189,469, while the average premium increased 13% to $83,570.

The total premium from all second-to-die products issued during the first nine months of 2001 for those companies in the survey was $684.6 million compared to $782.2 million in the first nine months of 2000.

The number of second-to-die contracts (including single premium and flexible premium products) issued during the first nine months of 2001 decreased 26% over the same time period last year. The average face amount increased 2% to $2,173,055.

For the companies reporting sales by distribution channel for the first nine months 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 37% of the market.

Independent broker-dealer firms and career agents dominated single premium variable life sales in the first nine months of 2001, capturing 39% and 33% of the market, respectively.

As of Sept. 30, 2001, total variable life assets for the companies reporting in VALUE were almost $69.5 billion. This 7% decrease from June 30, 2001 can be attributed to the downturn in the equity markets. Fixed account assets increased 0.5% during the 2001 third quarter.

Of the total assets reported, 89% 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 Sept. 30, 2001, approximately 74% of the variable life separate account assets were stock funds (down from 78% on June 30); 8%, bond funds; 8%, money market funds; 8%, balanced funds; and 1%, specialty funds.

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


Reproduced from National Underwriter Life & Health/Financial Services Edition, December 24, 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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