2Q 2005 Variable Life Sales Rose 2%

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Variable life sales with single premiums included at 10% for the 42 companies reporting in Tillinghast's VALUE survey for 2nd quarter 2005 were $630 million. This is a 2.1% increase over 1st quarter 2005 sales, which were $617 million, and a 9.7% decrease from 2nd quarter 2004 sales, which totaled $698 million.

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

The market estimate for the first 6 months of 2005 with single premiums included at 10% is $1.31 billion.

VL sales with single premiums included at 100% for the 42 companies in the VALUE survey for 2nd quarter 2005 were $642 million. This is a 2.3% increase over 1st quarter 2005 sales, which were $628 million, and a 9.8% decrease from 2nd quarter 2004 sales, which amounted to $712 million.

The market estimate for the first 6 months of 2005 with single premiums included at 100% is $1.36 billion.

For the 1st quarter of 2005, the top 5 companies/fleets–IDS, Hartford Life, Pacific Life, MetLife and John Hancock–captured 43% of all VL sales (including single premiums at 10%), while the top 10 companies/fleets garnered 69% of VL sales.

For the 2nd quarter of 2005, Hancock ranked among the top 5, displacing AXA Financial/MONY, which now ranks 9th.

For the companies in the survey, the number of flexible premium contracts issued during the first 6 months of 2005 decreased 17% from the number issued during the 1st half of 2004. The average face amount increased 3% to $347,748.

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 6 months of 2005 was $20 million, compared to $25 million for the first half of 2004.

The number of single premium contracts issued during the first 6 months of 2005 was 16% lower than the number issued during the first half of 2004. The average face amount decreased 1% to $138,558, while the average premium decreased 5% to $57,803.

The total premium from all second-to-die products issued during the first 6 months of 2005 for the companies in the survey was $118 million, compared to $167 million during the first half of 2004.

The number of second-to-die contracts (including single-premium and flexible-premium products) issued during the first 6 months of 2005 increased 12% from the first half of 2004. The average face amount decreased 23% to $2,024,588.

For the companies reporting sales by distribution channel for the first 6 months of 2005, career agents and independent broker-dealer firms dominated flexible premium variable life sales, capturing 51% and 34% of the market, respectively.

Career agents and independent broker-dealer firms also dominated single premium variable life sales in the first 6 months of 2005, capturing 51% and 27% of the market, respectively. Regional firms captured 19% of the market, while wirehouses had 2% and banks had 1%.

As of June 30, 2005, total variable life assets for the companies reporting in VALUE were $103.5 billion, up 4% from $99.3 billion on June 30, 2004. 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 June 30, 2005, approximately 77% of the variable life separate account assets were in stock funds; 9%, bond funds; 4%, money market funds; 8%, balanced funds; and 2%, specialty funds.

Fixed account interest rates on VL policies continue to decline. The average one-year interest rate on June 30, 2005, was 4.26%, down from 4.27% on March 31, 2005. The average renewal rate on June 30, 2005, decreased to 4.66% from 4.68% on March 31, 2005.

Gabby Cui is with Towers Perrin, of which Tillinghast is a business. She can be reached at [email protected].

Sales from the same period last year are down 9.7%, however

2Q 2005 Variable Life Sales Rose 2%

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2Q 2005 Variable Life Sales Rose 2%

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