3rd Quarter Variable Life Sales Off 31% From Last Years 3rd Quarter

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Variable life sales continue to erode. VL sales with single premiums included at 10% for the 53 companies reporting in Tillinghasts VALUE survey for the third quarter of 2002 were $868 million, with year-to-date sales at almost $3.1 billion. This is a 31% decrease from the third quarter of 2001 and a 20% decrease from the second quarter of 2002, which had sales of $1.085 billion.

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

The market estimate for the first nine months of 2002 with single premiums included at 10% is $3.15 billion.

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

Variable life sales with single premiums included at 100% for the 53 companies in the VALUE survey for the third quarter of 2002 were $916 million. This is a 30% decrease from the third quarter of 2001 and a 19% decrease from the second quarter of 2002.

The market estimate for the first nine months of 2002 with single premiums included at 100% is $3.33 billion.

For 2002, the top five companies/fleets–Pacific Life, Hartford Life, MetLife/NEF/GenAm, IDS Life and Equitable–captured 34% of all variable life sales (including single premiums at 10%), while the top 10 companies/fleets garnered 57% of all sales.

For the first nine months of 2002, Pacific Life reported the highest annual premiums ($145.2 million) and ranked first 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 nine months of 2002 decreased 25% from the number issued during the first nine months of 2001. The average face amount increased 4% to $293,739, while the percentage of premium allocated to the general account increased to 6%.

The total premium for the 14 companies participating in VALUE with 15 single premium products for the first nine months of 2002 was $105.5 million, compared to $141.1 million for the first nine months of 2001.

The number of single-premium contracts issued in the first nine months of 2002 was 8% lower than the number issued in the first nine months of 2001. The average face amount decreased 21% to $150,309, while the average premium decreased 19% to $67,628.

The total premium from all second-to-die products issued during the first nine months of 2002 for those companies in the survey was $457.1 million compared to $684.6 million in the first nine months of 2001. This decrease in premium can be attributed to 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 nine months of 2002 decreased 44% from the same period in 2001. The average face amount increased 12% to $2,441,519.

For the companies reporting sales by distribution channel for the first nine months of 2002, career agents and independent broker-dealer firms dominated flexible-premium variable life sales, capturing 45% and 43% of the market, respectively.

Career agents and independent broker-dealer firms dominated single-premium variable life sales in the first half of 2002, capturing 37% and 36% of the market, respectively. Regional firms captured 18% of the market.

As of Sept. 30, 2002, total variable life assets for the companies reporting in VALUE were $72.8 billion, down from $78.5 billion on June 30, 2002. Of the total assets reported, 88% were held in a separate account, down from 90% at June 30.

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, 2002, approximately 67% of the variable life separate account assets were stock funds; 14%, bond funds; 10%, 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 30, 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.