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4th Quarter Variable Life Sales Up 18% From 3rd Quarter 2001

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4th Quarter Variable Life Sales Up 18% From 3rd Quarter 2001

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Variable life experienced an upturn in fourth quarter sales as compared to third quarter sales, which is consistent with the seasonality trend that life insurance sales typically exhibit.

Variable life sales with single premiums included at 10% for the 54 companies reporting in Tillinghasts VALUE survey for the fourth quarter of 2001 were $1.49 billion. This is an 18% increase over the third quarter of 2001 and a 23% decrease from the fourth quarter of 2000, which had sales of $1.93 billion.

Full year 2001 sales were $5.8 billion, 15% lower than full-year 2000 sales of $6.87 billion.

(Sales include first-year annualized premium, drop-in premiums and single premiums.)

The market estimate for 2001 with single premiums included at 10% is $5.9 billion.

Variable life sales with single premiums included at 100% for the 54 companies in the VALUE survey for the fourth quarter of 2001 were $1.55 billion. This is an 18% increase over the third quarter of 2001 and a 23% decrease from the fourth quarter of 2000.

The market estimate for 2001 with single premiums included at 100% is $6.25 billion.

For 2001, the top five companies– MetLife/NEF/GenAm/COVA, Hartford Life, IDS Life, Pacific Life, and Equitable–captured 35% of all variable life sales (including single premiums at 10%), while the top 10 companies captured 58% of all sales.

For 2001, Met Life reported the highest annual premiums ($295.2 million). Pacific Life had the second highest with $254.1 million in annual premium sales, although it ranked fourth based on total sales (including single premiums at 10%).

For the companies reporting in the survey, the number of flexible premium contracts issued during 2001 decreased 26% from the number issued during 2000. The average face amount increased 8% to $290,465, while the percentage of premium allocated to the general account remained at 3%.

The total premium for the 15 companies participating in VALUE with 17 single premium products for 2001 was $180.3 million, compared to $210.3 million for 2000.

The number of single premium contracts issued in 2001 was 16% lower than the number issued in 2000. The average face amount increased 3% to $181,650, while the average premium increased 2% to $81,034.

The total premium from all second-to-die products issued during 2001 for those companies in the survey was $910.4 million compared to $1,101.7 million in 2000.

The number of second-to-die contracts (including single premium and flexible premium products) issued during 2001 decreased 33% from 2000. The average face amount increased 3% to $2,281,909.

For the companies reporting sales by distribution channel for 2001, career agents dominated flexible premium variable life sales, capturing 56% of the market. This is mainly due to many market leaders selling primarily through their career agents.

Independent broker-dealer firms were second, capturing 36% of the market.

Independent broker-dealer firms and career agents dominated single premium variable life sales in 2001, capturing 40% and 34% of the market, respectively.

As of Dec. 31, 2001, total variable life assets for the companies reporting in VALUE were $84.15 billion. 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 Dec. 31, 2001, approximately 77% of the variable life separate account assets were stock funds; 7%, bond funds; 7%, 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, April 1, 2002. Copyright 2002 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.