Holding On to Life.Lower lapse (language) LAPSE - A single assignment language for the Manchester dataflow machine. ["A Single Assignment Language for Data Flow Computing", J.R.W. Glauert, M.Sc Diss, Victoria U Manchester, 1978]. ratios show that policyholders are keeping their life insurance policies longer. The equity market downturn Downturn The transition point between a rising, expanding economy to a falling, contracting one. downturn A decline in security prices or economic activity following a period of rising or stable prices or activity. is having a positive effect on some aspects of the life insurance industry, as lapse ratios improved more than a half percentage point and average policy sizes increased 17.6% in 2000. "It's it's 1. Contraction of it is. 2. Contraction of it has. See Usage Note at its. it's it is or it has it's be ~have a positive sign that people are holding on to life policies longer," said Jack Dolan Dolan is a surname, and the following people:
The lapse ratio for ordinary life policies decreased to 7.6 in 2000, down from 8.3 in 1999. Mutual organizations, which usually have lower lapse ratios, saw an even larger improvement last year, decreasing to 5.6 from 6.9. The lapse ratio compares the number of life insurance policies lapsed LEGACY, LAPSED. A legacy is said to be lapsed or extinguished, when the legatee dies before the testator, or before the condition upon which the legacy is given has been performed, or before the time at which it is directed to vest in interest has arrived. Bac. Ab. Legacy, E; Com. Dig. with the number of policies in force at the beginning of a period. A low lapse ratio indicates a strong business. Industry experts believe the downturn in the equity markets is making people less inclined to let policies lapse. "As more people are looking for Looking for In the context of general equities, this describing a buy interest in which a dealer is asked to offer stock, often involving a capital commitment. Antithesis of in touch with. protection, rather than equity appreciation, universal life policies provide a guaranteed rate of return compared to equities in the present market," said Rich McMillan Mc·Mil·lan , Edwin Mattison 1907-1991. American physicist and chemist. He shared a 1951 Nobel Prize for the discovery of neptunium (1940). , a senior financial analyst with A.M. Best Co. "So, people are more likely to continue their life insurance protection before investing in the stock markets right now. If the economy heats up again, new business will tend to slow, and we'll we'll Contraction of we will. we'll we will or we shall we'll will ~shall see deterioration de·te·ri·o·ra·tion n. The process or condition of becoming worse. in lapse ratios again as people choose to invest their money in areas that deliver higher returns." The sales increase and improved lapse ratios are the result, in part, of agents doing a better job of educating clients about the features and benefits of life insurance. "We've we've Contraction of we have. we've have always championed the cash value in life policies, because it helps many people in many different ways. But in recent years, people have wanted double-digit dou·ble-dig·it adj. Being between 10 and 99 percent: double-digit inflation. returns in their savings that were available in the stock market. Fact is, the cash value in a policy provides solid returns and is a worthwhile feature and component of any savings program," Dolan said. Agents are convincing customers that life policies should be held long term, he said. The decline in lapse ratios is a trend Dolan believes will continue as the importance of a life policy's cash value grows clearer each day. Average policy issued increased to $131,576 from $111,883, which is also a reflection of the performance of the equity markets. "The decline in the markets will make products such as whole life--which were always attractive because of their cash value--look more so," Dolan said. Again, mutual organizations saw the greatest improvement, with a 27.3% increase in average policy size. For the short-term Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. , however, McMillan believes there may be an increase in term life insurance, which is generally less expensive than universal or whole life insurance. The recent terrorist attacks on the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. also will have an effect on the life insurance industry, perhaps increasing group life business through work-site marketing and payroll-deduction programs. "The World Trade Center scare will cause people to think about the future. 'If something happens to me, how will the kids go to college?' The scare with terrorism terrorism, the threat or use of violence, often against the civilian population, to achieve political or social ends, to intimidate opponents, or to publicize grievances. will make people think more about guaranteed protection," McMillan said. Renewal premium persistency rates--at 83.2 in 2000--remained on par with reported levels since 1996. As a group, mutual organizations performed better, with a persistency rate of 86.1 compared with 81.5 for stock-based life insurers. Renewal persistency represents the likelihood that a policy won't won't Contraction of will not. won't will not won't will lapse or be replaced by another insurer's product. A high persistency rate means a high percentage of policies stay in force to the end of the coverage period. Policies more than a year old tend to have higher persistency rates because the insured The person who obtains or is otherwise covered by insurance on his or her health, life, or property. The insured in a policy is not limited to the insured named in the policy but applies to anyone who is insured under the policy. insured n. has made more of an investment in the policy.
Ordinary Life Average Policy Size and Lapse Ratios, Top Writers--2000
Amount
Company AMB # ($ Thousands)
First Colony Life Ins Co 06403 $104,221,026
Northwestern Mutual Life Ins 06845 82,664,864
State Farm Life Ins Co 07080 72,726,337
Transamerica Occidental Life 06848 71,576,489
Valley Forge Life Ins Co 07207 61,405,140
Primerica Life Ins Co 06693 56,724,135
Banner Life Ins Co 06468 40,035,213
Allstate Life Ins Co 06027 38,886,706
Hartford Life Ins Co 06518 38,774,079
New York Life Ins Co 06820 34,031,933
Business Men's Assurance Co 06175 32,886,439
Metropolitan Life Ins Co 06704 31,240,799
Old Line Life Ins Co of America 06859 30,884,396
John Hancock Variable Life 08958 26,805,127
West Coast Life Ins Co 07222 23,488,831
Lincoln Benefit Life Co 06657 22,198,482
American Life Ins Co DE 06081 21,403,484
Nationwide Life Ins Co 06812 21,305,096
Prudential Ins Co of America 06974 20,806,868
Farmers New World Life Ins Co 06373 20,554,458
First Penn-Pacific Life Ins Co 06904 20,129,586
Pacific Life Insurance Co 06885 19,223,679
Western Reserve Assur of OH 07239 19,147,729
Security-Connecticut Life Ins 07026 19,024,907
Guardian Life Ins Co of America 06508 18,661,869
Total US LH Stock Companies 99201 $1,418,133,274
Total US LH Mutual Companies 99202 $351,206,416
Total US LH Legal Reserve Cos 99210 $1,769,339,690
Total US LH Fraternal Cos 99212 $23,390,353
Total US LH Indemnity Cos 99220 $1,792,730,043
Average Policy Issued
Company 2000 1999
First Colony Life Ins Co $355,310 $326,727
Northwestern Mutual Life Ins 330,502 287,205
State Farm Life Ins Co 100,999 88,488
Transamerica Occidental Life 533,218 441,299
Valley Forge Life Ins Co 492,159 405,067
Primerica Life Ins Co 289,691 271,208
Banner Life Ins Co 422,165 449,118
Allstate Life Ins Co 201,096 163,943
Hartford Life Ins Co 758,744 316,886
New York Life Ins Co 194,484 181,165
Business Men's Assurance Co 36,149 29,115
Metropolitan Life Ins Co 185,076 162,510
Old Line Life Ins Co of America 259,010 238,311
John Hancock Variable Life 522,263 401,310
West Coast Life Ins Co 435,745 360,173
Lincoln Benefit Life Co 428,368 390,385
American Life Ins Co DE 59,188 69,877
Nationwide Life Ins Co 326,755 252,694
Prudential Ins Co of America 173,466 159,610
Farmers New World Life Ins Co 157,531 122,730
First Penn-Pacific Life Ins Co 314,677 351,444
Pacific Life Insurance Co 678,850 710,454
Western Reserve Assur of OH 277,310 234,914
Security-Connecticut Life Ins 464,521 355,321
Guardian Life Ins Co of America 436,239 360,910
Total US LH Stock Companies $125,492 $107,107
Total US LH Mutual Companies $177,761 $139,719
Total US LH Legal Reserve Cos $133,270 $113,206
Total US LH Fraternal Cos $67,074 $64,454
Total US LH Indemnity Cos $131,576 $111,883
Average Policy Issued
Company 1998 1997 1996
First Colony Life Ins Co $307,255 $320,110 $277,600
Northwestern Mutual Life Ins 269,359 261,893 235,787
State Farm Life Ins Co 87,097 87,608 89,145
Transamerica Occidental Life 319,404 253,899 291,081
Valley Forge Life Ins Co 205,892 303,857 290,079
Primerica Life Ins Co 260,789 229,412 207,668
Banner Life Ins Co 495,559 352,043 217,802
Allstate Life Ins Co 102,084 109,843 114,174
Hartford Life Ins Co 401,243 717,287 462,676
New York Life Ins Co 181,133 190,588 164,201
Business Men's Assurance Co 35,602 36,147 33,415
Metropolitan Life Ins Co 148,122 131,639 113,003
Old Line Life Ins Co of America 198,086 177,666 129,426
John Hancock Variable Life 326,172 307,390 261,268
West Coast Life Ins Co 346,030 312,378 320,437
Lincoln Benefit Life Co 303,536 309,795 317,666
American Life Ins Co DE 78,625 28,163 32,529
Nationwide Life Ins Co 204,905 134,663 115,248
Prudential Ins Co of America 150,488 136,593 101,977
Farmers New World Life Ins Co 121,806 113,753 108,033
First Penn-Pacific Life Ins Co 295,721 292,745 288,607
Pacific Life Insurance Co 606,488 516,200 453,529
Western Reserve Assur of OH 222,379 217,460 209,178
Security-Connecticut Life Ins 337,729 270,923 255,432
Guardian Life Ins Co of America 318,756 287,108 265,938
Total US LH Stock Companies $96,969 $90,093 $80,142
Total US LH Mutual Companies $134,825 $126,252 $117,614
Total US LH Legal Reserve Cos $104,057 $97,045 $87,058
Total US LH Fraternal Cos $60,699 $58,029 $53,737
Total US LH Indemnity Cos $102,812 $95,905 $85,992
Average Policy in Force
Company 2000 1999
First Colony Life Ins Co $277,057 $256,068
Northwestern Mutual Life Ins 140,706 130,732
State Farm Life Ins Co 68,269 65,023
Transamerica Occidental Life 75,282 69,589
Valley Forge Life Ins Co 248,951 193,711
Primerica Life Ins Co 189,938 181,653
Banner Life Ins Co 280,145 218,753
Allstate Life Ins Co 103,389 96,637
Hartford Life Ins Co 328,673 299,914
New York Life Ins Co 82,871 79,562
Business Men's Assurance Co 35,159 34,358
Metropolitan Life Ins Co 45,002 42,575
Old Line Life Ins Co of America 147,508 125,198
John Hancock Variable Life 222,359 181,641
West Coast Life Ins Co 250,319 174,697
Lincoln Benefit Life Co 290,943 275,971
American Life Ins Co DE 65,941 73,202
Nationwide Life Ins Co 99,103 81,126
Prudential Ins Co of America 33,907 32,474
Farmers New World Life Ins Co 100,996 94,558
First Penn-Pacific Life Ins Co 270,368 261,967
Pacific Life Insurance Co 353,888 314,308
Western Reserve Assur of OH 218,586 204,636
Security-Connecticut Life Ins 254,788 224,171
Guardian Life Ins Co of America 33,305 41,930
Total US LH Stock Companies $46,954 $48,946
Total US LH Mutual Companies $67,547 $61,874
Total US LH Legal Reserve Cos $49,949 $51,239
Total US LH Fraternal Cos $32,841 $31,474
Total US LH Indemnity Cos $49,507 $50,654
Average Policy in Force
Company 1998 1997 1996
First Colony Life Ins Co $240,192 $231,744 $218,060
Northwestern Mutual Life Ins 121,924 112,599 102,170
State Farm Life Ins Co 62,866 61,003 58,944
Transamerica Occidental Life 72,814 72,190 74,553
Valley Forge Life Ins Co 197,992 203,782 182,120
Primerica Life Ins Co 175,485 168,961 164,374
Banner Life Ins Co 96,917 57,686 40,792
Allstate Life Ins Co 90,175 90,665 90,478
Hartford Life Ins Co 309,978 296,474 221,500
New York Life Ins Co 76,558 73,228 68,232
Business Men's Assurance Co 36,636 36,820 36,559
Metropolitan Life Ins Co 40,625 38,381 36,531
Old Line Life Ins Co of America 108,072 99,799 94,632
John Hancock Variable Life 156,732 132,607 116,616
West Coast Life Ins Co 127,506 101,721 82,457
Lincoln Benefit Life Co 262,626 248,900 227,623
American Life Ins Co DE 69,323 29,315 31,192
Nationwide Life Ins Co 66,538 55,448 49,237
Prudential Ins Co of America 31,104 28,829 27,551
Farmers New World Life Ins Co 91,684 88,037 83,507
First Penn-Pacific Life Ins Co 237,733 204,993 167,264
Pacific Life Insurance Co 277,571 243,027 220,500
Western Reserve Assur of OH 192,884 182,100 167,226
Security-Connecticut Life Ins 204,844 188,620 178,046
Guardian Life Ins Co of America 25,888 34,855 38,346
Total US LH Stock Companies $48,708 $47,687 $46,993
Total US LH Mutual Companies $55,041 $53,570 $51,872
Total US LH Legal Reserve Cos $50,024 $48,979 $48,090
Total US LH Fraternal Cos $30,285 $29,042 $27,739
Total US LH Indemnity Cos $49,387 $48,261 $47,285
Published Lapse Ratio
Company 2000 1999
First Colony Life Ins Co 7.6 8.7
Northwestern Mutual Life Ins 4.7 4.7
State Farm Life Ins Co 7.9 8.2
Transamerica Occidental Life 9.1 9.4
Valley Forge Life Ins Co 7.7 7.6
Primerica Life Ins Co 9.8 9.6
Banner Life Ins Co 5.1 -7.6
Allstate Life Ins Co 10.7 12.1
Hartford Life Ins Co 7.0 1.7
New York Life Ins Co 7.4 7.0
Business Men's Assurance Co 10.1 11.6
Metropolitan Life Ins Co 6.5 6.6
Old Line Life Ins Co of America 8.3 10.3
John Hancock Variable Life 5.5 3.9
West Coast Life Ins Co 5.9 7.1
Lincoln Benefit Life Co 8.1 8.7
American Life Ins Co DE 9.7 10.7
Nationwide Life Ins Co 3.5 6.6
Prudential Ins Co of America 4.9 6.7
Farmers New World Life Ins Co 8.8 8.5
First Penn-Pacific Life Ins Co 6.4 6.8
Pacific Life Insurance Co 3.7 4.4
Western Reserve Assur of OH 6.5 6.5
Security-Connecticut Life Ins 13.6 8.9
Guardian Life Ins Co of America 1.1 8.2
Total US LH Stock Companies 8.2 8.8
Total US LH Mutual Companies 5.6 6.9
Total US LH Legal Reserve Cos 7.7 8.4
Total US LH Fraternal Cos 5.3 5.6
Total US LH Indemnity Cos 7.6 8.3
Published Lapse Ratio
Company 1998 1997 1996
First Colony Life Ins Co 8.5 9.1 7.8
Northwestern Mutual Life Ins 4.4 4.9 5.1
State Farm Life Ins Co 7.1 7.9 7.2
Transamerica Occidental Life 8.4 9.5 9.6
Valley Forge Life Ins Co 7.1 2.1 3.8
Primerica Life Ins Co 9.3 9.6 9.5
Banner Life Ins Co 8.3 9.3 12.9
Allstate Life Ins Co 9.0 9.9 8.6
Hartford Life Ins Co 2.0 2.6 3.4
New York Life Ins Co 7.1 7.1 7.0
Business Men's Assurance Co 11.2 11.3 12.8
Metropolitan Life Ins Co 6.8 7.4 8.1
Old Line Life Ins Co of America 10.1 10.4 10.1
John Hancock Variable Life 4.1 4.2 5.5
West Coast Life Ins Co 8.0 10.4 12.3
Lincoln Benefit Life Co 7.6 6.4 7.2
American Life Ins Co DE 8.5 6.9 7.9
Nationwide Life Ins Co 6.8 7.5 8.1
Prudential Ins Co of America 8.0 8.9 8.1
Farmers New World Life Ins Co 8.6 8.5 8.1
First Penn-Pacific Life Ins Co 7.3 5.2 2.1
Pacific Life Insurance Co 2.0 1.6 2.4
Western Reserve Assur of OH 9.4 9.2 8.2
Security-Connecticut Life Ins 9.5 9.7 11.0
Guardian Life Ins Co of America 21.2 5.4 7.0
Total US LH Stock Companies 8.0 8.5 8.6
Total US LH Mutual Companies 7.8 6.7 7.1
Total US LH Legal Reserve Cos 7.9 8.0 8.2
Total US LH Fraternal Cos 6.0 5.8 5.4
Total US LH Indemnity Cos 7.9 8.0 8.2
Renewal Premium Persistency
Company 2000 1999
First Colony Life Ins Co 90.8 87.1
Northwestern Mutual Life Ins 94.4 94.8
State Farm Life Ins Co 89.8 91.8
Transamerica Occidental Life 92.2 81.6
Valley Forge Life Ins Co 89.5 82.9
Primerica Life Ins Co 88.2 88.9
Banner Life Ins Co 110.9 92.0
Allstate Life Ins Co 91.8 91.0
Hartford Life Ins Co 76.7 17.2
New York Life Ins Co 94.2 96.2
Business Men's Assurance Co 87.6 85.6
Metropolitan Life Ins Co 90.5 88.3
Old Line Life Ins Co of America 95.7 88.4
John Hancock Variable Life 75.4 79.5
West Coast Life Ins Co 62.5 41.9
Lincoln Benefit Life Co 80.6 79.4
American Life Ins Co DE 93.3 98.6
Nationwide Life Ins Co 66.2 69.7
Prudential Ins Co of America 94.7 104.6
Farmers New World Life Ins Co 90.1 89.8
First Penn-Pacific Life Ins Co 56.7 49.4
Pacific Life Insurance Co 70.2 73.1
Western Reserve Assur of OH 70.7 68.5
Security-Connecticut Life Ins 76.6 82.9
Guardian Life Ins Co of America 93.7 94.3
Total US LH Stock Companies 81.5 78.4
Total US LH Mutual Companies 86.1 86.2
Total US LH Legal Reserve Cos 83.0 80.9
Total US LH Fraternal Cos 89.2 89.0
Total US LH Indemnity Cos 83.2 81.1
Renewal Premium Persistency
Company 1998 1997 1996
First Colony Life Ins Co 87.3 102.5 72.2
Northwestern Mutual Life Ins 95.3 94.9 94.4
State Farm Life Ins Co 91.3 90.8 91.0
Transamerica Occidental Life 83.9 91.7 76.6
Valley Forge Life Ins Co 82.5 79.4 82.5
Primerica Life Ins Co 88.9 88.2 87.6
Banner Life Ins Co 83.5 82.8 72.3
Allstate Life Ins Co 88.4 86.7 87.8
Hartford Life Ins Co 29.0 18.2 79.5
New York Life Ins Co 92.4 92.6 92.8
Business Men's Assurance Co 82.4 87.8 87.0
Metropolitan Life Ins Co 87.6 91.3 85.7
Old Line Life Ins Co of America 88.8 87.4 86.9
John Hancock Variable Life 80.2 57.0 82.9
West Coast Life Ins Co 75.0 47.7 53.9
Lincoln Benefit Life Co 76.3 71.7 73.9
American Life Ins Co DE 80.3 78.5 73.8
Nationwide Life Ins Co 74.9 77.7 82.5
Prudential Ins Co of America 71.5 87.7 88.0
Farmers New World Life Ins Co 88.9 88.2 88.2
First Penn-Pacific Life Ins Co 45.6 40.1 37.5
Pacific Life Insurance Co 84.4 81.4 83.8
Western Reserve Assur of OH 64.4 61.8 68.8
Security-Connecticut Life Ins 84.2 81.6 82.6
Guardian Life Ins Co of America 86.8 93.4 92.9
Total US LH Stock Companies 79.8 78.9 81.1
Total US LH Mutual Companies 86.4 89.0 88.7
Total US LH Legal Reserve Cos 81.9 82.2 83.5
Total US LH Fraternal Cos 88.0 87.9 88.6
Total US LH Indemnity Cos 82.1 82.3 83.6
Source: A.M. Best Statement and Competitive Analysis Report Products.
Year-end data is as of June 30, 2001.
To access this statistical study online, visit www.bestreview.com and
click on this story. The full statistical report and the data in
spreadsheet format can be downloaded. For more information, call
Customer Service at (908)439-2200. Ext. 5742. For custom data, call
(908) 439-2200, Ext. 5383.
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