1st Quarter Variable Life Sales Slid 23% From 4th Quarter 2001
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Variable life sales continue to slide. VL sales with single premiums included at 10% for the 53 companies reporting in Tillinghasts VALUE survey for the first quarter of 2002 were almost $1.14 billion. This is a 28% decrease from the first quarter of 2001 and a 23% decrease from the fourth quarter of 2001, which had sales of $1.48 billion.

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

The market estimate for the first quarter of 2002 with single premiums included at 10% is $1.15 billion.

The decrease in variable life sales can be attributed to the volatile and depressed equity markets shifting sales to fixed products, the estate tax law changes and the lagging economy.

Variable life sales with single premiums included at 100% for the 53 companies in the VALUE survey for the first quarter of 2002 were $1.18 billion. This is almost a 29% increase from the first quarter of 2001 and almost a 24% decrease from the fourth quarter of 2001.

The market estimate for the first quarter of 2002 with single premiums included at 100% is $1.2 billion.

For 2002, the top five companies/fleets–MetLife/NEF/GenAm/COVA, Hartford Life, IDS Life, Pacific Life, and Equitable–captured 32% of all variable life sales (including single premiums at 10%), while the top 10 companies/fleets garnered 56% of all sales.

For the first quarter of 2002, Met Life reported the highest annual premiums ($54.3 million). Pacific Life had the second highest with $48.1 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 the first quarter of 2002 decreased 28% from the number issued during the first quarter of 2001. The average face amount increased 11% to $303,139, while the percentage of premium allocated to the general account increased to 3%.

The total premium for the 13 companies participating in VALUE with 15 single premium products for the first quarter of 2002 was $32.6 million, compared to $49.0 million for the first quarter of 2001.

The number of single premium contracts issued in the first quarter of 2002 was 2% lower than the number issued in the first quarter of 2001. The average face amount decreased 49% to $139,748, while the average premium decreased 32% to $71,024.

The total premium from all second-to-die products issued during the first quarter of 2002 for those companies in the survey was $179.2 million compared to $253.3 million in the first quarter of 2001. This decrease in premium can be attributed to the changes and uncertainty surrounding the estate tax.

The number of second-to-die contracts (including single premium and flexible premium products) issued during the first quarter of 2002 decreased 48% from the first quarter of 2001. The average face amount increased 12% to $2,444,474.

For the companies reporting sales by distribution channel for the first quarter of 2002, career agents dominated flexible premium variable life sales, capturing 47% of the market. This is mainly due to many market leaders selling primarily through their career agents.

Independent broker-dealer firms were second, capturing 41% of the market.

Independent broker-dealer firms and career agents dominated single premium variable life sales in the first quarter of 2002, capturing 40% and 33% of the market, respectively.

As of March 31, 2002, total variable life assets for the companies reporting in VALUE were $86 billion. Of the total assets reported, 91% 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, 2002, approximately 77% of the variable life separate account assets were stock funds; 7%, bond funds; 6%, 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, June 17, 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.