The European Life Settlement Association recently returned Life Equity CEO Scott Willkomm as Chair. Life Risk News’ Greg Winterton spoke to Willkomm to find out his views on the life settlement market generally and what 2023 has in store for ELSA.
GW: Scott, let’s start with ELSA. What were some of the highlights of 2022 for the association?
SW: I’d point to a couple of things. Firstly – and this isn’t quite specific to 2022 – is that in the last few years we have significantly increased our membership and industry engagement. ELSA’s membership has doubled since 2018; we’re now at 34. We want to position ELSA as the forum of choice for institutional investors looking at life-based secondary market investments for inclusion in their broader portfolios. Developing the code of practice and the master agreement for tertiary transactions are two endeavours that were designed to support that goal. We’re making good progress in involving institutions into the conversation now.
Secondly, I think we’ve done a good job of demonstrating resilience and adaptability during the Covid-19 pandemic. Like everyone else, we adjusted to virtual events and communication; this was important as the pandemic highlighted the importance of understanding life risk amongst capital market participants and ELSA was able to demonstrate its strengths as a thought leader as well as provide a platform for discussion on the pandemic’s wider impact. The conferences we produce have continued to be some of the most sought after and best attended forums for networking in the life settlement industry, but we’ve also been expanding the audience with the life ILS event. Both of our conferences reach a broader universe and the fact that appetite amongst our members to return to in-person events this year validates what we’re trying to do in terms of both networking and education.
Also, it would be amiss to not mention the launch of the Life Risk News publication as a highlight. The initiative behind the magazine was that we wanted to create a public forum for information dissemination not only in our space but more broadly with regards to life-linked investing. The first six months have been encouraging, and the magazine is hitting its stride now. We’re starting to do more in-depth discourse – topical discussions that are of interest to our membership and our readership.
GW: What about some of the frustrations?
SW: I’m not sure I’d use the word ‘frustrations’ but there are things where I’d like to see us get better. Historically, we haven’t really done much in the way of academic research and in-depth analytical content. And that’s important because not only can it provide additional insights to our members and the industry at large, but it adds credibility as well. So, what we’re doing now is the groundwork to launch a Research Committee which will take the lead on engaging with academics and that wider world to produce more in-depth, analytical content that we think will enable life settlements and broader life-based strategies to get a more consistent seat at the institutional investor table.
In a similar vein – and again I wouldn’t call this a frustration, it’s simply another area where we want to improve – would be more discussion in Life Risk News about critical actions that are going on, and the real-world implications about valuing life risk. We’re getting there, though – the first six months of Life Risk News has been largely about producing more foundational content to educate the audience on the basics and now we’ll look to go to the next level in 2023.
GW: Moving onto the life settlement market more generally now. From your perspective as a provider, as CEO of Life Equity, what trends emerged or changed in the market in 2022 and what was the impact on firms like Life Equity?
SW: Something I’ve noticed this year is that while we’ve seen some new brokers enter the market, and some formerly active brokers re-engage with it, we haven’t seen the type of investment in market expansion from the broker side that I would have liked to see. Supply issues do plague the secondary market in the life settlement industry and even though there has been an uptick in deal activity in 2022, I think some of that is catching up from Covid-19. The brokers in the space tend to focus on higher value policies, which is understandable to a point, but there are plenty of policies that could turn into a life settlement that we never see because of this. I’m hopeful that as we begin the new year that more brokers in the industry expand the range of policies that they would consider.
GW: In terms of 2023, will these trends continue, or were they short term aberrations, and what else is on your radar to keep an eye on more generally this year?
SW: Obviously, with regards to the broker point I made, time will tell. In terms of other things on my radar, there are real business issues we, the life settlement industry, should be talking about and engaging with relevant groups. There is a lot of disparity in our industry in terms of stakeholder focus – there isn’t enough collaboration going on and all the constituent groups need to do better in terms of talking to each other and supporting each other to move our industry forward.
GW: Finally, Scott, back to ELSA. What are some of the association’s goals for 2023? Is there anything new coming down the pipe?
SW: The Research Committee is the new initiative we have. It will be finalised shortly and will begin planning probably before the end of the first half of this year. As I’ve already mentioned, getting Life Risk News to cruising altitude is another goal. I would hope that by the end of 2023, after 18 months of publishing, we’ll have gotten to that point where it’s a go-to place for the industry.
One of the things about the life settlement industry is that it seems to struggle to find legitimacy or believe in its own legitimacy. It has a bit of an inferiority complex when compared to the reinsurance world, for example. The efforts on the Research Committee side and investing in and expanding Life Risk News will enable us to get a more permanent seat at the table. We have something to say, and not enough of the right people are hearing it at the moment; we’re confident these initiatives, added to our growing conference franchises, will help to solve for that challenge.