Author: Greg Winterton

The life settlement market has undertaken significant efforts in recent years to improve what it considers to be an awareness challenge in terms of the general senior population in the US not always being aware that they can sell their life insurance policy for a lump sum. The direct-to-consumer market, for example, is proving effective at generating more enquiries not only from the insured, but also from their advisors, like accountants, lawyers, and wealth managers. The equity release market in the UK has a similar challenge. Unlike life settlements, where the capital comes largely from investment fund managers, the money…

The life ILS market, like many alternative credit strategies, is facing challenges from the rising interest rate environment not only in terms of investor appetite but in terms of deal activity, as higher risk-free rates impact the extent to which life insurers can transfer risk to life ILS investors. But, like other life risk markets, it’s also facing challenges from changing mortality trends in terms of modelling that risk. So, for this month’s poll, we asked our readers which of the two was the more prevalent. And the results were clear. The need for higher deal flow was the landslide…

The subject of enhanced cash surrender value offers (ECSVOs) made by life insurance companies in the United States during the past few years has caused a great deal of chagrin amongst those in the life settlement industry. Greg Winterton spoke to Nat Shapo, Partner at law firm Katten Muchin Rosenman, to get his views on the issue. GW: Nat, for those who might not be too familiar with ECSVOs, tell us what they are. NS: A few life insurers are making limited-time offers, by endorsements created many years after the creation of the policy form and the issuance of the…

The growth in the UK pension risk transfer (PRT) market in the past few years has been accelerated by the recent rises in interest rates, the effect of which has been an increase in many defined benefit pension funds’ balance sheet readiness for a buy-out or buy-in solution. On the surface, seeing a significant growth in deals is music to the ears of the ecosystem at large; an array of lawyers, salespeople, actuaries and analysts. But underneath the headline numbers lurks a formidable obstacle – that of a lack of people power to absorb the glut of work. “The real…

In 1983, the UK government introduced the mortgage interest relief at source (MIRAS) program, which was designed to encourage homeownership in the country by offering borrowers tax relief on interest payments on their mortgage. Albeit circuitously, this policy paved the way for what followed; the Traded Endowment Policy (TEP) market, where individual policyowners could sell their policy on the secondary market to a third-party investor. Thus, the first substantial secondary life market was born. The sale of mortgage endowments in the UK eventually became something of a consumer – and therefore political – hot topic, however, as it became clear…

A significant percentage of deal activity in the life ILS market consists of ‘value in force’ (VIF) transactions; the life ILS fund lends money to life insurance companies, with the collateral being the premium payments of a block of policies. One impact of the higher interest rate environment on both sides of the Atlantic is that deal activity in the VIF space is, currently, subdued when compared to previous years when lower interest rate regimes were more normal. The reason is clear; higher risk-free rates trickle down into the alternative financing market. “Counterparties have much higher costs of financing now.…

It’s incredibly difficult to measure the size of the life ILS market in terms of assets under management held by investment funds. There’s little publicly available data, and naturally, many asset managers won’t provide information unless they’re forced to. So, we wanted to ask our readers what they thought, with a little bit of educated guessing on our part. We offered three options: below $10bn, between $10 and $25bn, and over $25bn. The middle option won out in the end, and fairly convincingly; almost two-thirds of our readers think that the market is between $10 and $25bn in AUM. It’s…

Technology advances are driving improved processes in all industries and markets, and the longevity markets are no different. Life Risk News’ Greg Winterton spoke to Mark Venn, Director at ClearLife, to learn more about his firm and how technology is impacting longevity investors. GW: Mark, yourself and Chris Stuart, ClearLife CTO, worked together at Mizuho before setting up ClearLife. What was the ‘eureka’ moment that led to the decision to launch your own firm? MV: If I’m being completely honest, it was probably more hubris than “eureka”! After three years of investing in life settlements – and 14 years in…

Reasons abound why seniors in the United States might seek to sell their whole life insurance policy to a third-party investor. Two of the most frequently cited are that the insured simply can’t afford the premiums anymore – and so selling their policy via a life settlement gets them more cash than the surrender value offered by the insurance company – and the need to be able to fund medical bills or pay off a mortgage. Many life settlement sales run into five, six, and even seven figures, depending on the policy value. But the more financially savvy American seniors…

Life settlement secondary market transaction data continues to encourage