Author: Jeffrey Davis
In a ruling that sets up North Carolina as a favorable jurisdiction for the life settlement business, a judge has ruled in favor of Wells Fargo in a dispute over the legality of a policy that North Carolina resident Dr. Gordon E. Trevathan Jr. took out on himself to later sell purely as a profit-making venture. The Hon. Mark A. Davis, Special Superior Court Judge for Complex Business Cases, issued an order in May finding that the Columbus Life Insurance Co. policy Dr. Trevathan had obtained to cover his own life — and which later came under the control of…
The US Securities and Exchange Commission established a Life Settlement Task Force in 2009 to examine then-emerging issues in the life settlement market and advise whether market practices and regulatory oversight could be improved. Fourteen years later, the task force is yet to deliver its recommendations to Congress. Life Risk News reached out to attorneys and others in the industry for insights as to why. “I don’t have an opinion on why more has not been done, other than to observe that the task force recommended that Congress change the definition of security to include life settlements, but getting any…
Tax experts serving the life settlement industry are paying close attention to a proposed rule from the US Treasury Department that addresses unintended tax consequences resulting from Internal Revenue Service regulations issued in 2019 under IRC Sections 101 (death benefit exclusion) and 6050Y (Form 1099 information reporting). The proposed rule to clarify how life settlement exchanges are taxed, “Information Reporting and Transfer for Valuable Consideration Rules for Section 1035 Exchanges of Life Insurance and Certain Other Life Insurance Contract Transactions,” was published in early May 2023 and comments from interested parties were closed on July 10, 2023. According to the…
The Office of the Montana State Auditor has issued an advisory regarding the practice of inducing termination of death benefits through time-limited enhanced cash surrender value offers. Montana’s advisory, issued by Commissioner Troy Downing and titled “Inducing Termination of Death Benefits Through Endorsements Offering Time-Limited Enhanced Cash Surrender Values Not Available at Policy Issuance,” highlights concerns over the potential violation of the Montana Insurance Code by a select number of life insurers. The issue revolves around the emergence of enhanced cash surrender value offers (ECSVOs) made to policyholders via endorsements not initially contemplated at the policy’s issuance. These limited-time offers,…
Skellig ICAV, a collective investment vehicle from Ireland, along with Gannet Funds and its securities intermediary, Wilmington Trust, have reached a settlement with John Hancock Life Insurance Company of New York in a lawsuit accusing the insurer of unlawfully increasing the cost of insurance on a targeted group of universal life insurance policies. The plaintiffs had filed the lawsuit in the U.S. District Court for the Southern District of New York in Manhattan, citing “sudden and massive COI increases” and seeking compensatory and punitive damages, equitable relief, and attorneys’ fees. Details of the settlement were not released. The suit was…
In the carrier rescission case of Columbus Life Insurance Company versus Wilmington Trust, N.A., filed in 2021, the Arizona Supreme Court is being asked if a life insurance company can contest the validity of a policy based on a lack of insurable interest after the two-year contestability period expires, as required by Arizona law
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Life Risk News’ annual life settlements legal and regulatory roundtable looks at what’s coming up in the regulatory world that will impact the life settlement market
Current life settlement litigation cases could have a significant impact on the industry in 2023
On July 11, 2007, according to court documents, the Mansour Seck Irrevocable Life Insurance Trust applied to MetLife Investors USA Insurance Company (the predecessor to Brighthouse Life Insurance Company) for a $5 million universal life insurance policy insuring the life of a ‘Mansour Seck’. After confirming that its procedures and guidelines were met, MetLife issued a $5 million universal life insurance policy on or around July 24, 2007. The life insurance application offered financial details describing a wealthy retired ambassador, a French citizen living in a three-story apartment building at 170 Academy Street in Jersey City, New Jersey. The address…