(Updates to include annuity sales)
DOW JONES NEWSWIRES
Annualized life-insurance premium sales fell 23% in the first
half of the year, the steepest slump in 67 years, but the rate of
decline in the second quarter slowed from the quarter before, Limra
said Monday.
Life insurers have been battered the past year by billions of
dollars in investment losses and write-downs amid the slumping
stock market. Last month, the largest U.S. life insurer, MetLife
Inc. (MET), swung to a loss on big investment losses linked to
derivatives.
Industrywide premium sales fell 20% in the second quarter after
a 26% drop in the first, said Limra.
The organization of life insurers and other financial firms said
policy counts continued to drop, down 4% in the second quarter and
6% in the first half. Every product declined in the most recent
period except universal life, which increased 8%.
Variable sales, which have the strongest ties to the market,
suffered most, down 50% in the second quarter and 55% in the first
half. Whole life and and term life insurance again were the most
resilient, both posting sales declines in the low single digits in
both periods.
However, Limra said that 40% of companies were able to increase
their total individual life sales in the second quarter over the
previous year. Yet in the first half, the policies that were sold
were slightly smaller.
The data come 10 days after Limra said quarterly individual
annuity sales dropped 11% to $60.5 billion and off 9% from the
first quarter. The drop put the first half's decline at 3% to
$126.8 million, with the 39% jump for fixed anniuties nearly
offsetting the 24% drop for variable annuities. Still, Limra
research director Joe Montminy noted variable-annuity sales rose
from the first quarter as sales "have a tendency to follow the
stock market."
Variable annuities had been among the biggest concerns for the
life-insurance industry as the stock market slumped because such
policies carry guaranteed minimum returns. Without a rebound,
observers were worried if anniuty sellers would be able to make
good on the policies without falling into dire straits.
-By Joan E. Solsman, Dow Jones Newswires; 212-416-2291;
joan.solsman@dowjones.com