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Life Health > Life Insurance

2Q Variable Life Sales Fell 12% From Last Year

By Leah Wolf

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Variable life insurance sales with single premiums included at 10% for the 38 companies reporting in the VALUE survey for the 2nd quarter of 2008 were $628 million, a 1.4% increase over 1st quarter 2008 sales, which were $619 million and a 12% decrease from 2nd quarter 2007 sales, which totaled $714 million.

Year-to-date 2nd quarter 2008 sales of $1.247 billion are 7.3% lower than the same time period in 2007, which had sales of $1.345 billion.

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

The market estimate for the 2nd quarter of 2008 with single premiums included at 10% is $675 million, while for the first 6 months the market estimate is $1.34 billion.

Variable life sales with single premiums included at 100% for the companies in the VALUE survey for the 2nd quarter of 2008 were $635 million, a 1.7% increase over 1st quarter 2008, which had sales of $625 million, and a 12.5% decrease from 2nd quarter 2007 sales, which were $726 million.

The market estimate for the first 6 months of 2008 with single premiums included at 100% is $1.35 billion, down from $1.465 billion for the same period the year before.

For the first 6 months of 2008, the top 5 companies/fleets–John Hancock, Hartford Life, Pacific Life, RiverSource and AXA Financial/MONY–captured 56% of all variable life sales (including single premiums at 10%), while the top 10 companies/fleets garnered 80% of VL sales.

For the companies in the survey, the number of flexible-premium contracts issued during the first 6 months of 2008 decreased 17% from the number issued during the first 6 months of 2007. The average face amount decreased 5% to $379,745.

The total premium for second-to-die products issued during the first 6 months of 2008 for the companies in the survey was $195 million, compared to $168 million during the first 6 months of 2007.

The number of second-to-die contracts (including single-premium and flexible-premium products) issued during the first 6 months of 2008 increased 13% over the same period the year before. The average face amount increased 5% to $2,458,614.

For the companies reporting sales by distribution channel for the first half of 2008, career agents and independent broker-dealer firms dominated flexible-premium variable life sales, capturing 49% and 36% of the market, respectively.

Independent broker-dealer firms and career agents also dominated second-to-die variable life sales, capturing 53% and 30% of the market, respectively.

As of June 30, 2008, total variable life assets for the companies reporting in VALUE were $118 billion, down 2% from $121 billion reported on June 30, 2007. Of the total assets reported, 91% were held in a separate account.

Fixed account interest rates on VL policies are relatively stable. The average 1-year interest rate was 4.36% on June 30, 2008, up slightly from 4.27% on March 31, 2008. The average renewal rate on June 30, 2008 was 4.33%, up from 4.27% on March 31, 2008.

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