Life Insurers Cash In on Boomers, Annuities

As the large Baby Boomer generation approaches retirement in an era in which employer-sponsored pension plans are less common, variable life insurance and annuity products have become increasingly popular.

Variable annuities -- insurance products designed to provide a steady post-retirement income stream backed by underlying investments -- have become particularly attractive the past couple of years because of the strength in the stock market.

The popularity of these products have helped fuel the growth of the nation's life insurers, according to a new report released today by the TheStreet.com Ratings.

As of March 31, separate account holdings -- the accounts that hold the assets to back variable products -- jumped to $1.8 trillion, compared to $1.5 trillion the year before, a gain of $213.2 billion, or 13.8%, according to the report. These results are astonishing given they represent 36% of the life and health insurance industry's total assets.

The National Underwriter, a publication covering the insurance industry, further reported that during the first three months of 2007, sales of variable annuities were $40.1 billion, up 6.6% from the same period in 2006.

Likewise, variable life product sales reached $641.7 million, a 9.8% increase over first-quarter 2006 results.

The top 10 insurers with the greatest percentage increase in separate account assets from March 31, 2006 to March 31, 2007 are listed in the table below.

This list represents 0.5% of total market share in terms of total assets in separate accounts as of March 31. Life Investors Insurance Co. of America (Rated B) is at the top, with an increase of $98.7 million, a 542% increase over the year-ago figure. This is outstanding for a company that has only 1.2% of its total assets in separate accounts. Variable products are clearly hot sellers right now, and it appears that life insurers of all sizes and specializing in all lines of products are cashing in on their popularity.

The top 10 insurers with the greatest percentage increase in separate account assets from March 31, 2006 to March 31, 2007
Company	Domicile State	Financial Strength Rating	Total Assets 1st Quarter ($Mil)	Separate Account 1st Quarter 2007 ($Mil)	Separate Account 1st Quarter 2006 ($Mil)	$ Change ($Mil)	% Change
Life Investors Ins Co of Amer	IA	B	10,022	117	18	99	542%
National Security Life & Annuity Co	NY	B	70	40	18	22	122%
Amerus Life Ins Co	IA	B-	10,063	898	496	402	81%
First MetLife Investors Ins Co	NY	B-	1,598	1,410	811	598	74%
American Investors Life Ins Co	KS	B-	9,171	995	579	415	72%
Pacific Life & Annuity Co	AZ	A-	1,973	861	553	308	56%
Genworth Life Ins Co of NY	NY	C+	5,806	545	355	190	53%
Country Investors Life Assr Co	IL	B+	161	23	15	8	52%
Agl Life Assur Co	PA	C	4,227	4,185	2,784	1,401	50%
American Family Life Ins Co	WI	A+	3,777	194	132	62	47%
A=Excellent; B=Good; C=Fair; D=Weak; E=Very Weak

Prudential Financial(PRU Quote) last year acquired Allstate's variable annuity unit for approximately $560 million. As of March 31, Prudential Insurance Co. of America (Rated B), a unit of Prudential Financial, remained the second-largest U.S. life insurer with total assets of $249 billion. Prudential trailed only Metropolitan Life Insurance Co. (Rated B+), a unit of MetLife(MET Quote), with total assets of $287 billion.

The top 10 insurers with the greatest dollar increase in separate account assets from March 31, 2006 to March 31, 2007 are:

The top 10 insurers with the greatest dollar increase in separate account assets from March 31, 2006 to March 31, 2007
Company	Domicile State	Financial Strength Rating	Total Assets 1st Quarter ($Bil)	Separate Account 1st Quarter 2007 ($Bil)	Separate Account 1st Quarter 2006 ($Bil)	$ Change ($Bil)	% Change
Hartford Life InsCo	CT	B	148.9	113.2	95.4	17.8	18.70%
John Hancock Life Ins Co (USA)	MI	B+	112.7	88.7	72.6	16.1	22.20%
Riversource Life Ins Co	MN	B	76	49.2	35.9	13.3	37.00%
Prudential Ins Co of America	NJ	B	249	96.8	83.9	12.9	15.30%
Axa Equitable Life Ins Co	NY	B	134.8	88.6	76.3	12.3	16.10%
Lincoln National Life Ins Co	IN	B-	106.4	70.9	59.7	11.2	18.80%
Pacific Life Ins Co	NE	A	88.1	50.5	41	9.5	23.30%
Principal Life Ins Co	IA	A-	128.4	71.4	62.5	9	14.40%
American Life Ins Co	DE	B	86.4	28.4	21	7.4	35.40%
Metropolitan Life Ins Co	NY	B+	287.4	73.5	66.2	7.3	11.00%
A=Excellent; B=Good; C=Fair; D=Weak; E=Very Weak