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Life Health > Life Insurance

3Q 2004 Variable Life Up 9% Over Last Year

By Geraldine Murtagh

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Variable life sales with single premiums included at 10% for the 43 companies reporting in the VALUE survey for 3rd quarter 2004 were $618 million. This is almost an 11% decrease from 2nd quarter 2004 sales, which were $693 million, but a 9% increase over 3rd quarter 2003 sales, which totaled $568 million.

Year-to-date 3rd quarter 2004 sales at $1.97 billion were almost 12% higher than 9-month sales in 2003, which totaled $1.76 billion.

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

The market estimate for the first 9 months of 2004 with single premiums included at 10% is $2.075 billion.

VL sales with single premiums included at 100% for the 43 companies in the VALUE survey for 3rd quarter 2004 were $631 million. This is an 11% decrease from 2nd quarter 2004 sales, which were $707 million, but an almost 8% increase over 3rd quarter 2003 sales, which amounted to $586 million.

The market estimate for the first 9 months of 2004 with single premiums included at 100% is $2.15 billion.

For the first 9 months of 2004, the top 5 companies/fleetsIDS, Pacific Life, Hartford Life, Nationwide and AXA Financial/MONYcaptured 41% of all VL sales (including single premiums at 10%), while the top 10 companies/fleets garnered 65% of VL sales.

For the companies in the survey, the number of flexible-premium contracts issued during the first 9 months of 2004 increased 20% over the number issued during the first 9 months of 2003. The average face amount increased 10% to $330,752, while the percentage of premium allocated to the general account decreased to 7% from 8%.

The single-premium variable life market continues to suffer. The total premium for single-premium products for the 6 companies in VALUE for the first 9 months of 2004 was $34 million, compared to $44 million for the first 9 months of 2003.

The number of single-premium contracts issued during the first 9 months of 2004 was 24% lower than the number issued during the first 9 months of 2003. The average face amount increased 5% to $138,104, while the average premium increased 3% to $57,333.

The total premium from all second-to-die products issued during the first 9 months of 2004 for the companies in the survey was $225 million, compared to $205 million during the first 9 months of 2003.

The number of second-to-die contracts (including single-premium and flexible-premium products) issued during the first 9 months of 2004 increased 1% over the number issued in the first 9 months of 2003. The average face amount increased 15% to $2,274,707.

For the companies reporting sales by distribution channel for the first 9 months of 2004, career agents and independent broker-dealer firms dominated flexible-premium variable life sales, capturing 52% and 38% of the market, respectively.

Career agents also dominated single-premium variable life sales in the first 9 months of 2004, capturing 51% of the market. Independent broker-dealer firms and regional firms captured 26% and 19% of the market, respectively, while wirehouses had 4%.

As of Sept. 30, 2004, total variable life assets for the companies reporting in VALUE were $98.5 billion, up 12% from $88.3 billion on Sept. 30, 2003. 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, 2004, approximately 75% of the variable life separate account assets were in stock funds; 10%, bond funds; 7%, balanced funds; 6%, money market funds; and 2%, specialty funds.

New money fixed account interest rates on VL policies continue to decrease. The average one-year interest rate on Sept. 30, 2004, was 4.41%, down from 4.5% on June 30, 2004. The average renewal rate on Sept. 30, 2004, increased to 4.84% from 4.52% on June 30, 2004.

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

Reproduced from National Underwriter Edition, December 16, 2004. Copyright 2004 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.

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