NU Online News Service

Life insurance industry earnings are likely to be up slightly inthe first quarter, an industry analyst says.

A favorable stock market, rising yields and milder catastrophesare likely to help industry earnings, despite a slight increase inmortality over the year before, says Andrew Kligerman, an analystwith UBS Investment Research, New York.

Kligerman points to preliminary estimates showing strong salesgrowth for variable annuities. VA sales rose 17% in the first 2months, he points out, compared to growth of less than 3% for allof 2005.

That will make up for weak fixed annuity sales, which Kligermanprojects to be down 20% in the first quarter from a yearearlier.

Kligerman also expects a modest rise in life insurance sales,based on a 1% to 2% increase in applications processed in the first2 months of the year, according to MIB Group Inc. data.

[A new report from MIB shows applications processed in Marchwere down over 7% from a year earlier. See article in today'sBreaking News.]

Strong mutual fund sales could further buoy the industry,Kligerman says. He notes a 41% in fund sales and 240% increase innet inflows in the first 2 months of the year compared to the sameperiod of 2005.