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Whole life growth outpaces universal life

par Alain Thériault | January 20 2003 05:48PM

Whole life insurance sales are growing at a faster pace than universal life sales in the first three quarters of 2002, exclusive industry data reveals.

Overall, universal life sales shrunk by nearly 15%, while whole life sales surged by 27%, say various sources armed with exclusive data on life insurance sales in Canada in the first three quarters of 2002.

Several observers attribute this downturn to stock market turbulence. In its 2002 third quarter report, Industrial Alliance attributed the slump in its universal life insurance sales to poor stock market performance.

During the first three quarters of 2002, the company’s universal life insurance sales – ranked fourth in the market with nearly $43 million in premiums – dipped 2% in the first three quarters of 2001. In parallel, the company posted growth of 1% in whole life sales.

This contrast pales in comparison with the figures of some competitors, who reported a dizzying chasm between the decline in their universal life insurance sales and the rise in their whole life sales.

Insurers woos

For one, Canada Life saw its universal life insurance sales plunge by 39% between the first three quarters of 2002 and the same period in 2001. In contrast, the insurer enjoyed growth of 65% in whole life insurance sales for the same reference periods.

A gap of similar proportions was seen at AIG Life, whose universal life insurance sales diminished by 26% compared with a 62% rise in whole life sales between the first three quarters of 2001 and 2002.

Manulife also posted an outsized spread, with a 12% decline in universal life sales versus a growth of 69% in whole life sales, again between the first three quarters of 2001 and 2002.

These three companies reported the most marked growth of whole life insurance sales. But they are not the only companies to post spectacular gains in this business sector: Standard Life posted growth of 39%, Great-West growth of 31% and Sun Life growth of 30% for comparable periods.

With whole life’s star rising, only two players managed to boost their universal life insurance sales. RBC Insurance reported growth of universal life insurance sales of close to 18% in the first three quarters of 2002 compared with the same period in 2001. For the same comparison period, Clarica saw its universal life insurance sales edge ahead by 3%.

Despite the turnaround that ignited whole life, product sales were minuscule compared with those of universal life.

Universal life insurance sales for the first three quarters of 2002 exceeded $400 million in premiums, while whole life insurance sales approached $115 million in premiums.

AIG, ranked third in terms of universal life sales, it sold over $48 million in new universal life insurance premiums in the first three quarters of 2002, but only $575,000 in new whole life insurance premiums. Standard Life sold close to $29 million in universal life but only $201,000 in whole life.

Maritime Life sold close to eight times more universal life insurance than whole life. During the first three quarters of the year it garnered $25.6 million in universal life sales versus $3.5 million in whole life.

Other recognized universal life insurance leaders such as Transamerica and National Life do not sell whole life. RBC Insurance is not far behind, with universal life insurance sales of $35.1 millions for the same reference period – versus anaemic sales of whole life, at $1,000!

The leaders

In the first three quarters of 2002, Sun Life dominated universal life insurance sales thanks to its merger with Clarica. The combined figures for the two entities: $62.3 million in premiums.

Transamerica and AIG were two other key players in Canadian universal life, with sales of $49.7 million and $48.2 million respectively, followed closely by Industrial Alliance and Manulife with $42.9 million and $36.4 million in premiums respectively.

In whole life insurance sales during the first three quarters of 2002, most of the premiums flowed to three players: Great-West/ London Life with $48.8 million, Manulife with $20.1 million and Sun Life (including Clarica) with $19.1 million

In term insurance, Manulife and Transamerica triumphed in the first three quarters of 2002, with $21.0 million and $18.3 million respectively, T100 insurance aside.

Trailing behind are Canada Life, Clarica and Industrial Alliance with term sales of $17.7 million, $17.0 million and $12.2 million in premiums in the first three quarters of 2002.

Overall, term insurance sales were up 15% in the first three quarters of 2002 compared with 2001.

In contrast, T-100 term insurance is merely a shadow of its former self with a spare $20.1 million in premiums sold in the first three quarters of the year.

Few players stand out in this niche: most sold $2 million of T-100 premiums or less. Only Manulife and RBC were on the radar, with respective sales of $4.7 million and $4.0 million.

For all products combined, Sun Life (including Clarica) dominated the Canadian scene with total sales of $105.1 million. Manulife followed with total sales of $82.1 million and Great-West/London Life with total sales of $70.7 million.

On their heels are the other market leaders: Transamerica with sales of $69.1 million and Industrial Alliance with $61.8 million. All figures cover the first three quarters of 2002.

The grand total for Canadian life insurance sales for the first three quarters of 2002: $702.9 million – a 3% downturn compared with sales in the same period in 2001.

Note that some companies’ data did not make it into this ranking, notably Liberty Health, Unity Life, SSQ Financial Group, and Assumption Life.

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