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March 16, 2003 at 07:00 PM
Despite Slight 4th Quarter Uptick, Variable Life Sales Fell 32% Last Year
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Despite a slight upturn in variable life sales in the fourth quarter of 2002, sales for the entire year–at $3.929 billion– were down over 32% from 2001s total of $5.815 billion.
The 2% increase recorded in the fourth quarter is substantially smaller than the typical increase of fourth quarter sales over the previous quarter. Third quarter to fourth quarter increases in VL sales have generally ranged from 13% to 25% over the period from 1997 to 2001.
VL sales with single premiums included at 10% for the 52 companies reporting in Tillinghasts VALUE survey for the fourth quarter of 2002 were $860 million, with full-year sales at $3.929 billion. This is almost a 2% increase over third quarter sales, but a 42% decrease from the fourth quarter of 2001, which had sales of $1.487 billion.
(Sales include first-year annualized premium, drop-in premiums and 10% of single premiums.)
The market estimate for 2002 with single premiums included at 10% is $4 billion.
Variable life sales with single premiums included at 100% for the 52 companies in the VALUE survey for the fourth quarter of 2002 were $898 million. This is a 42% decrease from the fourth quarter of 2001. Fourth quarter 2002 sales were flat compared to third quarter sales.
The market estimate for 2002 with single premiums included at 100% is $4.2 billion.
For 2002, the top five companies/fleets–Hartford Life, Pacific Life, Nationwide, MetLife and Equitable–captured 35% of all variable life sales (including single premiums at 10%), while the top 10 companies/fleets garnered 59% of all sales.
For 2002, Pacific Life reported the highest annual premiums ($210 million), yet ranked second based on total sales (including single premiums at 10%). MetLife had the second highest annual premiums ($175 million) yet ranked fourth for the year.
For the companies reporting in the survey, the number of flexible premium contracts issued during 2002 decreased 29% from the number issued during 2001. The average face amount increased 3% to $298,816, while the percentage of premium allocated to the general account increased to 7%.
As of Dec. 31, 2002, total variable life assets for the companies reporting in VALUE were $75.1 billion, down from $84.2 billion on Dec. 31, 2001. Of the total assets reported, 88% were held in a separate account, down from 90% at Dec. 31, 2001.
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interest rate on Dec. 31, 2002 was 5.34%, up from 5.19% on Sept. 30, 2002. The average renewal rate on Dec. 31, 2002 decreased to 5.11% from 5.21% on Sept. 30, 2002.