Here is a good piece of information for life settlement investors…

SL Investment Management recommends asking the following questions:

1.        Where is the manager or the fund regulated? The regulatory environment provides investor protection by enforcing certain behaviours on the manager and in some cases can even provide some degree of compensation. Knowing the regulatory environment your manager is operating within is important.

2.       What due diligence does the manager perform at acquisition? Some past life settlement transactions have included cases of dubious legality, from outright fraudulent activity to so-called “wet paper” transactions, which fall under the more modern definition of stranger-originated life insurance. Furthermore incomplete documentation may prevent policies from being sold on in the market at a later date. It is important that the manager perform its own due diligence on policy packages or that it delegates this function to a suitably qualified third party to review cases.

3.       How are policies valued? There is no consistent approach to the valuation of life settlement policies in the market and this gives a wide range of reported performances. Life settlement policies are an unusual asset class in that they give rise to substantial realised gains on early maturities that are offset to an extent by unrealised losses on policies that remain in force.  It is not usual for policies to be sold on at a profit, although this can happen. Additionally it is important to consider how much a valuation basis may deviate from a realisable value – particularly with open-ended funds where if policies are overvalued, redemptions may lead to draconian gate-keeping measures on redemptions. To what extent are actuarial models involved and how robust is this.

4.       How are parties remunerated? It is normal for funds and companies to disclose in some detail the fees on a fund structure and it is worthwhile comparing these stated fees against the fee outgo in a company’s reports and accounts. Origination fee arrangements are typically disclosed in much less detail and it is worthwhile exploring how the fee process and controls work for the origination process. In particular it is worth asking what proportion of the origination price goes to the manager; the provider; the brokers and advisers; and to the policy owner. Funds that remunerate advisers should provide full transparency on their remuneration structure. Avoid funds that are not prepared to openly disclose their fees and remuneration packages.

5.       How are fees calculated? Some fees may be expressed as a proportion of value or price whilst others are a proportion of face value. The face value of a policy is the amount that will be paid on the death of the life insured. Typically this will be three to five times the size of the value or price of the policy. When comparing providers and funds an investor would be advised to bear this in mind. Performance fees are another important consideration. In a market where there is very little uniformity in valuation methodology there is considerable scope for abuse in arriving at performance fees. How the performance fees are calculated is a key consideration and front-loaded fee structures are best avoided. Read the rest of this entry »

Commissioner Fred J. Joseph of the Colorado Securities Commission and President of the North American Securities Administration (NASAA) will present the Keynote Address during the 3rd Life Settlements and Longevity Summit. This conference, being held March 24-25, 2010 at the Sentry Conference Center in New York, NY, explores strategic investments in longevity-linked assets, synthetics and life settlement securitizations.

Impending federal regulations in the life settlement industry have brought to light many questions for investors, providers and other market participants. Recently, investors have stressed that any additional federal oversight would need to interact with state regulations, which already tend to vary. Commissioner Joseph’s session, “Lifting the Lid on NASAA’s Role in the Future of Life Settlement Regulation” will not only explore the role of NASAA’s Life Settlement Committee in regulating life settlements, but also about the future of regulations, particularly at the federal level.

More details:
Life Settlement Summit
Life Settlement Conference

Hundreds of investment professionals have participated in the second annual Insurance Linked Investments Awareness Month (ILIAM) making it the biggest online-only life settlement investment series of its kind.

Events covered the growing secondary market for life settlement portfolios, the best practices for navigating the transaction process, market history, how to avoid the potential pitfalls in both selling and purchasing a pool of policies, life settlement securitization, market status, servicing and pension plan criteria. All events were web-based and free to attend.

“This year more than 1,000 participants listened to the ILIAM events,” said Larry Simon, president, Life Solutions International. “The large turnout reflects the pique in market interest and investors’ desire to learn more about non-correlated, alternative asset classes like life settlements.”

Read more:
Life Settlement Investor Education Attendance

Found this interesting article, I thought I would share with everyone…

The Financial Services Authority (FSA) has warned that the marketing of traded life policies carry ‘major flaws’ and said it would be ‘very concerned’ to see the market increase rapidly.

Peter Smith, head of investment policy and conduct policy division at the FSA, told the European Life Settlement Association conference the regulator had ‘significant concerns’ about traded life settlements.

‘We do not see them as mainstream products…From our supervisory work we do have some significant concerns in the way these products are brought to the market at present,’ said Smith.

‘We have had to take action with a number of firms already and so we would be very concerned to see a rapid increase in the size of this market.’

Smith warned delegates that longevity risk, on which the price of traded life policies are calculated, is the largest risk the market faces. Read the rest of this entry »

Has the age range changed for a Life Settlement the past 1-2 years?

I would have to say yes, it has. The groups that are currently purchasing policies know that it is a buyers market and are cherry picking the best policies. In the recent years we saw seniors at the age of 65 or older actively getting offers on their policies, however in the last year it seems the main focus is over the age of 75.

However, depending on your current health conditions, that may play a factor. But we want consumers to know that younger seniors are struggling to get offers.

Call the help line at 1-888-823-7764, and we will let you know the potential of getting a Life Settlement offer…