Interesting news…. Here are some tidbits, I wonder if other large firms might take a step back.

Goldman Sachs (GS.N) is quietly backing away from life settlements— the business of buying life insurance policies from aging Americans in the hopes of collecting on the death benefit.

The Wall Street investment bank is ending its involvement with a “mortality index” it launched in December 2007 with high expectations. A Goldman spokesman confirmed the decision.

Goldman’s QXX index tracks the life expectancy of a group of people aged 65 and older who have sold their life insurance policies to an investment pool that’s managed by another firm, AVS Underwriting LLC.

But the market for Goldman’s index-based life settlement derivatives appears to be a casualty of the worst financial crisis since the Great Depression, said executives with several life settlements firms, who didn’t want to be identified.

The market for bonds backed by life settlements — so-called “death bonds” — has been even slower to pick up.

In September, the House Financial Services Committee held a hearing on Wall Street’s involvement in the life settlement market and asked Goldman Chief Executive Lloyd Blankfein or one of his “designees” to testify. The firm sent Steven Strongin, a managing director, to testify. He told the panel that life settlements represented a “very small percentage of our overall business.”

Strongin also testified the company had never been involved in a life settlement securitization and had “no plans to execute one.”

Source: Rueters

Read full article:
www.reuters.com/article/idUSN1823436220091218