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Variable life sales continue to slide. VL sales with single premiums included at 10% for the 49 companies reporting in Tillinghasts VALUE survey for the third quarter of 2003 were $554 million. This is a 33% decrease from third quarter 2002, which had sales of $829 million, and a 6% decrease from second quarter 2003, which had sales of $590 million.

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

The market estimate for the first 9 months of 2003 with single premiums included at 10% is $1.835 billion.

Variable life sales with single premiums included at 100% for the 49 companies in the VALUE survey for the third quarter of 2003 were $573 million with year-to-date sales at $1.83 billion. This is a 35% decrease from the third quarter of 2002, which had sales of $877 million, and a 6% decrease from second quarter 2003 sales, which were $608 million.

The market estimate for the first 9 months of 2003 with single premiums included at 100% is $1.9 billion.

For 2002, the top 5 companies/fleets–Hartford Life, Pacific Life, IDS, Nationwide, and MetLife–captured 38% of all variable life sales (including single premiums at 10%), while the top 10 companies/fleets garnered 62% of all sales. For the first 9 months of 2003, IDS ranked among the top 5 companies, displacing Equitable, which ranked among the top 5 companies for 2002.

For the companies reporting in the survey, the number of flexible-premium contracts issued during the first 9 months of 2003 decreased 40% from the number issued during first 9 months of 2002. The average face amount increased 3% to $301,307, while the percentage of premium allocated to the general account increased to 8%.

The total premium for single-premium products for the 10 companies participating in VALUE for the first 9 months of 2003 was $44.3 million, compared to $105.5 million for the first 9 months of 2002.

The number of single-premium contracts issued during the first 9 months of 2003 was 49% lower than the number issued during the first 9 months of 2002. The average face amount decreased 12% to $131,554, while the average premium decreased 17% to $55,934.

The total premium from all second-to-die products issued during the first 9 months of 2003 for those companies in the survey was $205 million, compared to $457 million during the first 9 months of 2002.

The number of second-to-die contracts (including single-premium and flexible-premium products) issued during the first 9 months of 2003 decreased 47% from the first 9 months of 2002. The average face amount decreased 19% to $1,970,041.

For the companies reporting sales by distribution channel for the first 9 months of 2003, career agents and independent broker-dealer firms 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 the first 9 months of 2003, capturing 47% and 29% of the market, respectively. Regional firms captured 20% of the market and wirehouses had 4%.

As of Sept. 30, 2003, total variable life assets for the companies reporting in VALUE were $88.3 billion, up from $72.8 billion on Sept. 30, 2002. Of the total assets reported, 90% were held in a separate account.

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, 2003, approximately 73% of the variable life separate account assets were in stock funds; 10%, bond funds; 7%, money market funds; 8%, balanced funds; and 2%, specialty funds.

Fixed account interest rates on VL policies increased slightly. The average one-year interest rate on Sept. 30, 2003, was 4.71%, up from 4.70% on June 30, 2003. The average renewal rate on Sept. 30, 2003, increased to 4.77% from 4.72% on June 30, 2003.

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


Reproduced from National Underwriter Life & Health/Financial Services Edition, December 12, 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.