Low interest rates seem may have hurt earnings of U.S. universal life (UL) operations during the first half of 2010.

Analysts at Milliman Inc., Seattle, published this finding in a summary of results from an annual survey of 29 carriers that sell UL and indexed universal life (IUL products).

The analysts looked at factors such as rider type, premium type, issue-age ranges, gender, underwriting class and distribution channel.

Only 35% of the participating companies met profitability goals on UL products that offer secondary guarantees during the first half of 2010, down from 45% in 2009, the analysts report.

Sales of UL products with secondary guarantees were strong, possibly because of a lag in efforts to re-price guarantees to reflect the current low interest rates, the analysts say.

IUL sales also increased, the analysts found.

At least 15 of the 29 participants already sell UL or IUL policies with riders that accelerate benefits payments for insureds who need long term care or said they expect to add UL or IUL products with LTC benefits riders in the next 12 to 14 months, the analysts report.

- Warren S. Hersch

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