Strategy, Technology, Sticking to Basics Credited by Top Gainers in 2008 Total Life Issued

While the overall U.S. life/health industry saw a 2.1% decline in total life business issued in 2008, according to a recently released A.M. Best Statistical Study, three insurers saw significant increases thanks to sticking to the basics, technology and strategy, they say.

Manulife Financial, ING USA Life Group and Securian Financial Group were the top gainers among the top 25 U.S. life insurers in total life business issued in 2008, according to the study. Meanwhile, industry sales of life insurance products declined in 2008 from 2007 "driven by the recessionary environment as consumers tightened their belts," said Andrew Edelsberg, vice president at A.M. Best Co. In 2008, total life issued for the industry decreased to $3.03 trillion, according to the study.

Individual life sales, on a recurring premium basis, declined 7% in 2008, while total individual face amount issued declined only 2%, said Edelsberg, citing data from Limra International. "This is driven by the continued shift in consumer preferences toward term products, which have lower premiums and typically higher face amounts than universal life and whole life policies."

Canada's Manulife Financial, which ranked ninth, showed the greatest increase among the top 25 ? up 58% from 2007 ? to $88.8 billion.

Manulife is a significant seller of term life in the United States through its Boston-based John Hancock subsidiary, said Edelsberg. For term life, John Hancock ranked 11th in 2008, he said, citing Limra data.

Daragh O'Sullivan, vice president, life product development at John Hancock Life Insurance, said the company believes it's "more important than ever to stick to the basics and remain committed to what we do best ? providing a powerful brand and superior financial strength and stability as well as having competitive products, underwriting expertise, service enhancements and an outstanding distribution network."

No.4-ranked ING USA Life saw a 51.6% increase, to $151.4 billion. The last few years, ING USA has focused on term sales, said Edelsberg. It's now the No. 3 writer of the product, he said, citing Limra data, with sales increases of greater than 50% in 2008. ING USA also is a top 10 player in terms of group life premium in force, he said.

Dan Mulheran, president of ING U.S. retail life distribution, said the company's 2008 sales growth was a result of the strategy it put in place almost four years ago. "Specifically, our focus was, and is, to grow our premium base by penetrating the affluent market with permanent and large-case term, and to build scale through policy count through sales of term and lower face permanent in the middle market," he said. The company established "a three-legged business model, concentrating our resources on building effective distribution, competitive manufacturing and efficient operations," Mulheran said.

Securian Financial, in 10th place, saw a 30.4% increase, to $86.8 billion. Last year was good for Securian, as it benefited from good retention, Edelsberg said. The company is a top-five writer for group life, he said.

The group life insurance division is responsible for the bulk of the company's 30.4% sales increase, said Securian Vice President Von Peterson, who oversees group client relationships for Minnesota Life Insurance.

The company's growth results from service excellence combined with industry-leading technology, Peterson said. "In 2008, we began an investment in technology and service capabilities that will enhance our technology leadership position and prepare us for larger opportunities," he said. The company enhanced Web services that support evidence-of-insurability processing and multilingual service, he noted.

It also introduced "an industry-first option" for beneficiaries to have claim payments deposited directly into their bank accounts, said Peterson.

Meanwhile, UnitedHealth Group, ranked 21st, showed the greatest decline among the top 25 ? down 39.5% to $49.2 billion.

Attempts to speak with UnitedHealth weren't successful.

Several companies that primarily write group life, such as UnitedHealth, as well as Cigna, StanCorp and Assurant, reported declines in amount issued in 2008, Edelsberg said. Factors include a competitive employer group market, which can cause employers to change carriers; increases in job losses and fewer new hires due to the recession; and mergers and acquisitions among employers, which translates to a lower number of employers available to buy new group life contracts, he said.

No. 15-ranked Protective Life Corp., saw a 35.3% decline to $59.6 billion. The company, a No. 5 writer of term life, "intentionally dialed down business" in 2008 as capital markets and reinsurance solutions for Regulation Triple X reserves weren't available, said Edelsberg.

A spokesperson for Protective was unable to comment.

Canada's Sun Life Financial Group, ranked 24th, saw a 28.2% decline to $42.6 billion. Contributing to Sun Life's decline was that it made a large acquisition in its group line of business in 2007 ? the employee-benefits business of U.S.-based Genworth Financial, said Edelsberg.

At the time, A.M. Best said it expected the deal would increase the scale of Sun Life?s U.S. group business and complement Sun Life?s existing product offerings; and that the addition of Genworth?s distribution network would bolster Sun Life?s group insurance growth strategy in the United States (BestWire, Jan. 11, 2007). The subsequent decline in 2008 in life insurance issued "was consistent with what sometimes typically occurs with blocks of business/distribution that moves from one company to another -- shock lapses, and business moves due to price increases," Edelsberg said.

A spokesperson for Sun Life Financial said the overall decline is due to the company's large-case, corporate- and bank-owned life insurance business, "which tends to have an uneven sales pattern due to the size of the cases involved." However, Sun Life's core individual life sales were up 3% in the year-to-year data compared in this study, the spokesperson said.