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Variable life sales continue to slide. VL sales with single premiums included at 10% for the 50 companies reporting in Tillinghasts VALUE survey for the second quarter of 2003 were $582 million. This is a 46% decrease from second quarter 2002, which had sales of $1.08 billion, and almost a 9% decrease from first quarter 2003, which had sales of $637 million.

Sales for the first six months of 2003 were $1.218 billion, down from $2.199 billion in the same period of 2002.

(Sales include first-year annualized premium, drop-in premiums and 10% of single premiums.)

The market estimate for the first six months of 2003 with single premiums included at 10% is $1.28 billion.

Variable life sales with single premiums included at 100% for the 50 companies in the VALUE survey for the second quarter of 2003 were $601 million. This is almost a 47% decrease from the second quarter of 2002, which had sales of $1.127 billion, and almost a 9% decrease from first quarter 2003 sales, which were $658 million.

The market estimate for the first six months of 2003 with single premiums included at 100% is $1.33 billion.

For 2002, the top five companies/fleets–Hartford Life, Pacific Life, MetLife, Nationwide and IDS–captured 37% of all variable life sales (including single premiums at 10%), while the top 10 companies/fleets garnered 61% of all sales. For the first six months of 2003, IDS ranked among the top five companies, displacing Equitable, which ranked among the top 10 companies for 2002.

For the companies reporting in the survey, the number of flexible premium contracts issued during first six months of 2003 decreased 39% from the number issued during first half of 2002. The average face amount increased 2% to $301,649, while the percentage of premium allocated to the general account increased to 8%.

The total premium for the 10 companies participating in VALUE for first six months of 2003 was $32.9 million, compared to $70.5 million for first six months of 2002.

The number of single premium contracts issued during first half of 2003 was 44% lower than the number issued during first six months of 2002. The average face amount decreased 5% to $147,203, while the average premium decreased 17% to $59,818.

The total premium from all second-to-die products issued during first half of 2003 for those companies in the survey was $142.6 million, compared to $347.4 million during first six months of 2002.

The number of second-to-die contracts (including single-premium and flexible-premium products) issued during first six months of 2003 decreased 54% from first half of 2002. The average face amount decreased 19% to $2,082,544.

For the companies reporting sales by distribution channel for first six months of 2003, independent broker-dealer firms and career agents dominated flexible premium variable life sales, capturing 44% and 42% of the market, respectively.

Career agents and independent broker-dealer firms dominated single premium variable life sales in first six months of 2003, capturing 46% and 30% of the market, respectively. Regional firms captured 18% of the market.

As of June 30, 2003, total variable life assets for the companies reporting in VALUE were $88 billion, up 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, 2002.

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, 2003, approximately 71% of the variable life separate account assets were in stock funds; 11%, bond funds; 8%, money market funds; 8%, balanced funds; and 2%, specialty funds.

Fixed account interest rates on VL policies continue to decrease. The average one-year interest rate on June 30, 2003, was 4.70%, down from 4.97% on March 31, 2003. The average renewal rate on March 31, 2003, decreased to 4.72% from 5.03% on March 31, 2003.

, CLU, ChFC, is with Tillinghast-Towers Perrin.


Reproduced from National Underwriter Life & Health/Financial Services Edition, September 15, 2003. Copyright 2003 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.