It hasn’t been posted at the current time what are the parameters and expected returns for investors. I also wasn’t able to find the minimum capital requirement. If they are seeking strictly institutional investors, I am sure it will be a large amount.

We will post more updates here once we receive them.

The report notes that there is no comprehensive data for life settlements, but estimates that the market “grew rapidly from 1998 until the recent financial crisis.”

After increasing from 2006 to 2008, the number of policies settled declined in 2009, the report found. In 2009, over 2,600 policies were settled with a total face value of $7.01 billion, down from 4,505 in 2008. Policy owners were paid a total of $890 billion and brokers made $90 million in commissions from the sale of life settlements, in 2009. In 2008, the total value of policies settled was nearly $13 billion. Policy owners were paid more than $2 billion and brokers’ commissions were $280 million.

Life settlements are regulated by state insurance laws, which oversee the “front-end transaction,” or the sale of a policy by its owner to a provider; and by state and federal securities laws which regulate the “back-end transaction,” or the sale of the policy to an investor from the provider.

The life settlement market is organized largely as an informal network of specialized intermediaries that facilitate the sale of existing life insurance policies by their owners to third-party investors. Policy owners may sell their policies directly to investors in some cases, but owners and investors commonly use intermediaries to assist them with their life settlement transactions. Life settlement brokers represent policy owners for a fee or commission and may solicit bids for policies from multiple life settlement providers with the goal of obtaining the best price. Life settlement providers buy life insurance policies on behalf of investors for a fee or commission or for their own account. The number of brokers and providers varies widely from state to state

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LifeSettlementFunder.com

We are looking to sell this domain as the previous client is no longer in the industry. The domain has been established since 2007, is on the first page of Google, and can be a quick way to immediatly add credibility to your life settlement business.

The first $395.00 request we get takes it. Simply email sales@dreamteamfinancial.com or call 1-888-249-0399. This won’t last.

The audit of Hamilton, Ohio-based Midwest, written by actuarial firm HMH Consulting, was submitted as evidence by the Texas State Security Board’s enforcement division in an administrative hearing June 2 in the case of AGAP Life Offerings. Plano, Texas-based AGAP is accused by Texas regulators of selling unregistered securities, failing to register as a securities dealer, and misleading investors. The enforcement division provided a copy of Midwest Medical’s audit to The Life Settlements Wire.

Midwest’s life expectancy estimates have been criticized as being misleading and inaccurate by state and federal regulators in accusations against life settlement investment companies that have used them. Although the Texas State Securities Board did not mention Midwest in the AGAP order, the Texas Department of Insurance has issued an emergency cease-and-desist order against Midwest in relation to another life settlement investment firm, Retirement Value.

Source: Life Settlements Wire – Read Full Article

Here is a sample of a Midwest Life Expectancy Certificate…

• June 8 – Qualified Participants Only Part 1 – Current Opportunities and State of the Market
• June 16 – Broker Panel: Understanding Providers and Brokers
• June 22 – The Life Settlement Marketplace – Regulatory Climate; Market Trends
• June 24 – Qualified Participants Only Part 2 – Portfolios, Securitization, Settlement Allocation impact on overall Portfolios

Previous events include:

• June 1 – Fundamentals of Life Settlements
• June 3 – Advanced Strategies and Case Studies

I am pretty sure these past events will be available in some type of media forum.

Events are open to financial and insurance professionals, and qualified institutional participants of all experience levels. To register, visit the events page of www.lifesettlementawarenessmonth.com, or contact Angie Robert at arobert@lifefirms.com.

The person told The Life Settlements Wire that J.P. Morgan expects to wind down its operation over the next few months.

J.P. Morgan is the second major investment bank to exit the market in recent months. Goldman Sachs said it was leaving the market in January, disappointed in its lack of growth.

J.P. Morgan had entered the business around 2007. It had a smaller operation than its competitors, employing fewer than 10 people in its life finance business, the person familiar with the company said.

Rob Finfer, chief executive of Bethesda, Md.-based life settlement broker Integrity Capital Partners said he hasn’t seen J.P. Morgan purchasing policies for at least a year.

Source: Life Settlement Wire

Life Expectancies and the proper LEs used to reflect actual-to-expected ratios has been a huge issue for the industry for over a year. A Task Force was appointed to examine the issue and a subgroup of that Task Force developed eight new tables that were approved by the Board of Directors last month.

LISA points out that the base mortality tables are to be used as the standard base tables for use in calculating the actual/expected experience ratios of LISA member company’ underwriters. The tables are not designed for use for any other purpose, and no one should feel that these tables are appropriate for other purposes.

The tables are now available on the Life Insurance Settlement Association website (TheVoiceOfTheIndustry.com) at:
LISA Actuarial Tables

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.

6.       How does the manager approach liquidity provision in its funds? Life settlement portfolios generally require liquidity to meet premiums and expenses. Failure to meet these will result in a loss of value because policies will lapse. Liquidity provision is therefore a key to the operation of a successful life settlement fund and there needs to be a combination of a liquidity facility and non-policy liquid assets in the fund. Liquidity is especially important to open-ended funds because whilst it is simplicity itself to maintain liquidity when a fund is receiving subscriptions, it is a different matter when a fund begins to suffer net redemptions. For example, SL Investment Management operates a liquidity banding whereby action is triggered if cash and facility levels fall below a certain pre-determined level and where investment is capped based on holding sufficient assets to withstand sustained periods of limited income. The liquidity is stress-tested both using stochastic models and deterministic models.

7.       How are mortality and longevity dealt with? Mortality in the elderly population is always improving and it is important when assessing policies to consider how their likely mortality is going to emerge. Life expectancy is an actuarial term which means the average time remaining for which an individual will live. Some people will die before this date and some will die after. It is important that a fund manager is aware of this and allows for this effect both in the valuation and in any forecasts or liquidity planning. This should be on a rolling basis to reflect actual mortality experience across the whole portfolio – not simply one calculation at the outset of the fund

8.       How does the manager approach the operational risk within life settlements? The legislation and licensing and the practical realities of running a life settlement fund means that there will be numerous third parties involved. Investors are dependent upon all of these functions operating properly. Tracking the status of the insured lives, renewing documentation, payment of premiums and other unglamorous functions need to be performed and the Manager needs to ensure that these are monitored and reported on and, where necessary, remedial action is taken. The impact of policies lapsing can be quite dramatic.

9.       How are conflicts of interest managed? Some funds may combine certain functions. For instance some managers also provide sourcing services and may have their own internal valuation services. The life settlement market is a new market and specialist providers of such services are not available and so it is neither uncommon nor unethical for such conflicts to exist. It is important, however, that parties involved in the transaction disclose such conflicts and can explain how they are managed.

10.    Is the fund tax efficient? In 2009 the IRS issued new guidance on taxation of life settlement transactions. This brought much-needed clarity to the market but also created a number of problems for funds and companies that held such policies in countries that did not have a suitable tax treaty with the US. Some funds have yet to solve these issues.

Source: HedgeWeek.com

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

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