2004 Variable Life Sales At $2.7 Billion, Rose 11% From 2003 4th quarter sales were up 20% over previous quarter

Tillinghast chart

For 2004, the top 5 companies/fleetsHartford Life, IDS, Pacific Life, AXA Financial/MONY and Nationwidecaptured 41% of all VL sales (including single premiums at 10%), while the top 10 companies/fleets garnered 64% of VL sales. For 2004, IDS reported the highest annual premiums ($170.4 million). Although Hartford Life ranked first based on total sales, it ranked fourth based on annual premium sales.

For the companies in the survey, the number of flexible-premium contracts issued during 2004 increased 6% over the number issued during 2003. The average face amount increased 10% to $339,270, while the percentage of premium allocated to the general account decreased to 6% from 7%.

The single-premium VL market continues to suffer. The total premium for single-premium products for the 6 companies in VALUE for 2004 was $46 million, compared to $58 million for 2003.

The number of single-premium contracts issued during 2004 was 15% lower than the number issued during 2003. The average face amount decreased 6% to $126,766, while the average premium decreased 7% to $55,623.

The total premium for second-to-die products issued during 2004 for the companies in the survey was $320 million, compared to $289 million during 2003.

The number of second-to-die contracts (including single-premium and flexible-premium products) issued during 2004 rose 2% from 2003. The average face amount increased 13% to $2,332,586.

For the companies reporting sales by distribution channel for 2003, career agents and independent broker-dealer firms dominated flexible-premium variable life sales, capturing 52% and 38% of the market, respectively.

Career agents and independent broker-dealer firms dominated single-premium variable life sales in 2003, capturing 55% and 24% of the market, respectively. Regional firms captured 19% of the market and wirehouses had 2%.

As of Dec. 31, 2004, total variable life assets for the companies reporting in VALUE were $105.3 billion, up 10% from $95.8 billion on Dec. 31, 2003. Of the total assets reported, 91% 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 Dec. 31, 2004, approximately 75% of the variable life separate account assets were in stock funds; 12%, bond funds; 2%, money market funds; 4%, balanced funds; and 7%, specialty funds.

Fixed account interest rates on VL policies continue to decrease. The average one-year interest rate on Dec. 31, 2004, was 4.31%, down from 4.41% on Sept. 30, 2004. The average renewal rate on Dec. 31, 2004, decreased to 4.71% from 4.84% on Sept. 30, 2004.

Geraldine Murtagh, CLU, ChFC, is with the Tillinghast business of Towers Perrin.


Reproduced from National Underwriter Edition, April 1, 2005. Copyright 2005 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.