2nd Quarter Variable Life Sales Slid 27% From Last Years 2nd Quarter

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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 second quarter of 2002 were almost $1.09 billion, with year-to-date sales at $2.22 billion. This is a 27% decrease from the second quarter of 2001 and a 4.5% decrease from the first quarter of 2002, which had sales of $1.136 billion.

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

The market estimate for the first six months of 2002 with single premiums included at 10% is $2.25 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 second quarter of 2002 were $1.13 billion. This is a 27% decrease from the second quarter of 2001 and a 4% decrease from the first quarter of 2002.

The market estimate for the first six months of 2002 with single premiums included at 100% is $2.38 billion.

For 2002, the top five companies/fleets–MetLife/NEF/GenAm/COVA, Hartford Life, Pacific Life, IDS Life, and Equitable–captured 33% of all variable life sales (including single premiums at 10%), while the top 10 companies/fleets garnered 56% of all sales.

For the first six months of 2002, Met Life reported the highest annual premiums ($105.1 million). Pacific Life had the second highest with $98.3 million in annual premium sales, although it ranked third 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 six months of 2002 decreased 23% from the number issued during the first half of 2001. The average face amount increased 7% to $296,263, while the percentage of premium allocated to the general account increased to 4%.

The total premium for the 13 companies participating in VALUE with 14 single premium products for the first six months of 2002 was $70.5 million, compared to $87.9 million for the first half of 2001.

The number of single premium contracts issued in the first six months of 2002 was 6% higher than the number issued in the first half of 2001. The average face amount decreased 34% to $155,125, while the average premium decreased 24% to $72,234.

The total premium from all second-to-die products issued during the first half of 2002 for those companies in the survey was $347.4 million compared to $480.9 million in the first six months 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 six months of 2002 decreased 36% from the first half of 2001. The average face amount increased 18% to $2,578,234.

For the companies reporting sales by distribution channel for the first six months 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 39% of the market.

Independent broker-dealer firms and career agents dominated single premium variable life sales in the first half of 2002, with each capturing 36% of the market.

As of June 30, 2002, total variable life assets for the companies reporting in VALUE were $78.5 billion, down from $86 billion on March 31, 2002. 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 June 30, 2002, approximately 74% of the variable life separate account assets were stock funds; 9%, 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, September 23, 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.