Close Menu
    What's Hot

    Global Equity Release/Reverse Mortgage Primary Market on Track To Hit $56bn by 2035

    18 June 2025

    Church Mission Society Pension Scheme Joins Consolidator Clara Pensions

    17 June 2025

    The McGregor Construction (Highlands) Limited Pension Plan Completes Bulk Purchase Annuity Buy-In With Just Group

    16 June 2025
    Facebook X (Twitter) Instagram
    Instagram LinkedIn X (Twitter)
    Life Risk News
    • Home
    • Features

      Both Demand and Supply Factors Contribute to Rare Secondary Market Pullback in 2024

      12 June 2025

      Funded Reinsurance Under Scrutiny But Should Remain a Feature of the UK Pension risk Transfer Market

      12 June 2025

      Plenty of Guardrails for US Life Insurers Backing Group Annuities With Private Assets

      12 June 2025

      Liver Disease Mortality in England Continues to Worsen but General Mortality Still on a Post-Covid Downward Trend

      12 June 2025

      Q&A: Matthew Sheridan, Health Data Analytics

      12 June 2025
    • Commentary

      Life Expectancy in Breast Cancer

      12 June 2025

      The Healthy Wealthy Population of the Life Settlement Market

      12 June 2025

      UK Life Insurers to Benefit from Robust Bulk Annuity Market in 2025

      14 May 2025

      The Power of Uncorrelated Diversification During Market Volatility

      14 May 2025

      Overseeing BPA Growth Safely

      14 May 2025
    • Events
    • Magazine
    • News

      Global Equity Release/Reverse Mortgage Primary Market on Track To Hit $56bn by 2035

      18 June 2025

      Church Mission Society Pension Scheme Joins Consolidator Clara Pensions

      17 June 2025

      The McGregor Construction (Highlands) Limited Pension Plan Completes Bulk Purchase Annuity Buy-In With Just Group

      16 June 2025

      The London Waste Limited Pension Scheme Completes Bulk Purchase Annuity Buy-In with Royal London

      2 June 2025

      Morrisons Retirement Saver Plan Completes Bulk Purchase Annuity Buy-In With Aviva

      28 May 2025
    Subscribe
    Life Risk News
    Home » Plenty of Positives for Life Settlement Market Despite Challenging Macro Environment

    Plenty of Positives for Life Settlement Market Despite Challenging Macro Environment

    Features 11 October 2023Greg WintertonBy Greg Winterton
    Twitter LinkedIn Email
    Share
    Twitter LinkedIn Email

    The rising interest rate environment of the past 18 months has had a significant impact on the alternative investment industry, with fundraising across all the main segments – hedge funds, private equity, private debt, real assets – falling in 2022 and then again this year as global capital allocators pivot to assets that are perceived as having lower risk, higher liquidity and now, for the first time in more than a decade, an acceptable yield. 

    The impact has certainly been felt in the life settlement market. 

    “You can get a four-week US treasury bill for around 5% at the moment,” said Jonas Martenson, Founder and Sales Director at life settlements investor Ress Capital. “It’s had a big impact on asset raising in our space.” 

    What’s unclear is how long the current macro-economic situation will persist. In September, both the Bank of England and the US Federal Reserve held interest rates steady for the first time in more than a year, providing optimism for certain investors. But for Martenson, the current situation highlights something that he thinks the life settlement space more broadly should be promoting regardless of the prevailing macro-economic and capital markets climate. 

    “Investors like the uncorrelated returns. I think we should be pushing that more closely,” he said. “The asset class is still very unknown. Most investors in most countries have no idea that an American can sell their life insurance policy. Life settlements is truly uncorrelated so if you take the positive side, there are a lot of investors waiting to be educated who have never heard about the asset class.” 

    The uncorrelated nature of the return profile of life settlements isn’t the only benefit that the industry could use in its sales pitch, according to Alejandra Limones, Partner at Demeter Capital. Whilst the ESG topic has taken something of a back seat in recent months to the broader macroeconomic climate – at least, in terms of column inches – many investors are still interested in exploring opportunities that support their own ESG requirements, and she says that communicating the social benefit is something the life settlement market could be better at. 

    “Correlation is the top bullet point. But ESG isn’t played up enough in this asset class – probably due to the negative press life settlements used to get. We need to focus on all the good that this product is doing to fund the retirement gap in the US, and the various social benefits of it. And I think for the big pension funds that are looking at impact investing, this should be a big opportunity and selling point for us and we should focus on publicising that,” she said. 

    The ‘negative press’ issue that the life settlement industry has received in the past is less of a barrier for managers looking to secure an allocation than it used to be, but there are other challenges that were born many years ago that the industry is still paying off. According to Bill Corry, Founder at Corry Capital, it’s important that the space acknowledges that expectation setting could have been better. 

    “Sometimes I hear stories of disappointment from investors who have invested in the asset class in the past, not just because the returns had been over promised, but also because cash flows weren’t what they were hoping. I think it’s important for both managers and investors to understand the past to have a better conversation about what it is you’re trying to achieve,” he said. 

    A recent good news story in the space came in the summer, when trade publication The Life Settlement Report, part of The Deal published its annual secondary market provider league tables, which showed that around $4.5bn of face value transacted in 2022, a return to growth for the space after a retraction in 2021. Overall, the secondary market has grown four-fold in the past decade or so, from just $1.1bn in 2013.  

    There is no publicly available data for the tertiary market, however. But it’s generally accepted that the space is much larger than the secondary market, as life settlement portfolios contain multiple policies, often many years old, so the sheer number of policies transacted each year is naturally higher than the secondary market, which consists only of new settled policies. Still, while the secondary market is growing, that’s not the case in the tertiary space. 

    “If I look at opportunities this year in the tertiary market compared to last year, we probably see a 25% decrease of the paper auctions, whether that’s liquidity in open ended funds, or funds coming to end of life, or bankruptcy cases. That tells me that buyers and sellers are not quite meeting at the current price expectations,” said Limones. “Buyers would like to see a higher yield and sellers are maybe not willing to sell their paper at the current demand. That points to illiquidity and it only takes a couple hundred basis points correction to erode and to get the new capital coming in.” 

    Whether the pull back in the tertiary market continues also remains to be seen. But these deals are still moving existing policies around different investors. To truly grow, there needs to be more activity in the secondary market, and life settlements participants will have to wait another nine months or so to see if the 2022 upturn in the secondary market continues. But overall, Corry says that the life settlement market is in a good place. 

    “The opportunity is significant. From a capital raising perspective, it’s never looked better, despite higher interest rates. Supply is a challenge, but it always has been. A lot of people don’t know a great deal about life settlements, including institutional investors. This makes the opportunity so encouraging.” 

    2023 - October Equity Release / Reverse Mortgages Life Settlements Volume 2 Issue 10 - October 2023
    Share. Twitter LinkedIn Email

    Related Posts

    Both Demand and Supply Factors Contribute to Rare Secondary Market Pullback in 2024

    12 June 2025

    Funded Reinsurance Under Scrutiny But Should Remain a Feature of the UK Pension risk Transfer Market

    12 June 2025

    Plenty of Guardrails for US Life Insurers Backing Group Annuities With Private Assets

    12 June 2025

    Liver Disease Mortality in England Continues to Worsen but General Mortality Still on a Post-Covid Downward Trend

    12 June 2025

    Comments are closed.

    Most Popular

    Both Demand and Supply Factors Contribute to Rare Secondary Market Pullback in 2024

    12 June 2025

    Funded Reinsurance Under Scrutiny But Should Remain a Feature of the UK Pension risk Transfer Market

    12 June 2025

    Plenty of Guardrails for US Life Insurers Backing Group Annuities With Private Assets

    12 June 2025

    Liver Disease Mortality in England Continues to Worsen but General Mortality Still on a Post-Covid Downward Trend

    12 June 2025
    Ad

    Your trusted source for capital markets participation in Life Risk

    X (Twitter) Instagram LinkedIn
    Life Risk
    • About Life Risk News
    • Get In Touch
    • Our Team
    • Copyright Notice
    • Terms and Conditions
    • Privacy Policy
    • Sitemap
    Coverage
    • Home
    • Features
    • Events
    • Commentary
    Subscribe

    Type above and press Enter to search. Press Esc to cancel.

    We use cookies on our website to give you the most relevant experience by remembering your preferences and repeat visits. By clicking “Accept All”, you consent to the use of ALL the cookies. However, you may visit "Cookie Settings" to provide a controlled consent.
    Cookie SettingsAccept All
    Manage consent

    Privacy Overview

    This website uses cookies to improve your experience while you navigate through the website. Out of these, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may affect your browsing experience.
    Necessary
    Always Enabled
    Necessary cookies are absolutely essential for the website to function properly. These cookies ensure basic functionalities and security features of the website, anonymously.
    CookieDurationDescription
    cookielawinfo-checkbox-analytics11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Analytics".
    cookielawinfo-checkbox-functional11 monthsThe cookie is set by GDPR cookie consent to record the user consent for the cookies in the category "Functional".
    cookielawinfo-checkbox-necessary11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookies is used to store the user consent for the cookies in the category "Necessary".
    cookielawinfo-checkbox-others11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Other.
    cookielawinfo-checkbox-performance11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Performance".
    viewed_cookie_policy11 monthsThe cookie is set by the GDPR Cookie Consent plugin and is used to store whether or not user has consented to the use of cookies. It does not store any personal data.
    Functional
    Functional cookies help to perform certain functionalities like sharing the content of the website on social media platforms, collect feedbacks, and other third-party features.
    Performance
    Performance cookies are used to understand and analyze the key performance indexes of the website which helps in delivering a better user experience for the visitors.
    Analytics
    Analytical cookies are used to understand how visitors interact with the website. These cookies help provide information on metrics the number of visitors, bounce rate, traffic source, etc.
    Advertisement
    Advertisement cookies are used to provide visitors with relevant ads and marketing campaigns. These cookies track visitors across websites and collect information to provide customized ads.
    Others
    Other uncategorized cookies are those that are being analyzed and have not been classified into a category as yet.
    SAVE & ACCEPT