Update: Wink CEO: Indexed Universal Life is ‘Toeing the Line’ for All Sales of Universal Life
June 24, 2014 by Fran Matso Lysiak
PLEASANT HILL, Iowa – First-quarter 2014 sales of indexed universal life insurance in the United States rose to $330.3 million, up 3.6% from the same period a year ago, according to Wink Inc., a firm that tracks the data.
The first quarter was off to a slow start as sales of individual life insurance in the United States, based on new annualized premium, declined 7%, according to Limra (Best’s News Service, June 16, 2014). But improving 15% in the first quarter, according to Limra, was new annualized premium for indexed universal life, which it attributed, in part, to several new entrants in the market.
Indexed UL is the “fastest-growing” segment of the life insurance market, Sheryl Moore, president and chief executive officer of Wink, told Best’s News Service. Her firm reports a different sales metric on indexed UL from Limra. A main reason for the record sales is that universal life products are crediting “nominal” interest while the indexed product gives the potential to earn greater interest based on the performance of the stock market, Moore said.
Less than 5% of indexed UL sales are on extended secondary, or no-lapse, death-benefit guarantee products, Moore said. For that reason, AXXX reserve requirements have had minimal impact on indexed life sales, she said. “Based on our observations of the life insurance market, IUL is toeing the line for all universal life sales.”
The decline in individual life sales is being driven by a drop in sales of universal life, particularly guaranteed universal life, which fell 48% in the first quarter, Benjamin Baldwin, associate analyst, insurance research for Limra, said in a statement. “Responding to new reserving requirements implemented in 2013, we saw companies re-pricing or adjusting features on their guaranteed universal life products.”
By company, the Pacific Life companies, with first-quarter indexed life sales of more than $41.6 million and a 12.6% market share, ranked No. 1, according to Wink Inc.
Pacific Life has a been a top-five seller of indexed life since 2008, Moore said. Its distribution is primarily independent agents who contract directly with Pacific Life, and not an independent marketing organization, she said. Pacific Life offers “strong support” of its distribution and a simplistic product design, she said.
Capturing second place was Aegon’s U.S. operations, with sales of more than $30.5 million and a nearly 9.3% market share. Western Reserve Life Assurance Co. of Ohio, part of Aegon USA Group, is the primary company of Aegon that sells indexed life, Moore said. Aegon USA is part of the Netherlands-based Aegon N.V.
Ranking third was National Life Group with sales of nearly $29.6 million. Life Insurance Company of the Southwest, part of National Life Group, is the primary seller of indexed life for National Life Group, Moore said.
Coming in at No. 4 was Minnesota Life Insurance Co., whose parent company is Securian Financial Group, with sales of nearly $25.7 million.
Rounding out the top five was Lincoln National Life Insurance, whose parent is Lincoln National Corp. (NYSE: LNC), with first-quarter sales of $16.5 million and a 5% market share, according to Wink.
Just a few years ago, there were 12 companies offering indexed UL, Moore said. Today, there are 51 companies offering the product “so there’s a lot of room for shakeup.” Historically, Aviva USA had been the top seller of indexed life until the Athene acquisition was finalized last October, Moore said.
Meanwhile, sales of indexed UL were down 18% from last year’s fourth quarter. The fourth quarter is usually record-setting for sales because agents are trying to qualify for trips and incentives, she said. “So it’s not a surprise that sales would be down from the prior quarter.”
Indexed UL is a permanent life policy that allows policyholders to tie accumulation values to a stock market index. These policies typically contain a minimum guaranteed fixed interest rate component along with the indexed account option.
Pacific Life Insurance Co. and Pacific Life & Annuity Co. each currently has a Best’s Financial Strength Rating of A+ (Superior)
(By Fran Matso Lysiak, senior associate editor, BestWeek: fran.lysiak@ambest.com)
