Over the years we have noted many recurring questions about the market, our fund and our investment management skills.
We have compiled many of these questions right here for your convenience but if you don’t come across the question you want answered or you need further clarification please contact us.
A major research house has analysed that the total face value of in force U.S life settlements, at year-end 2014, was just over US$32 Billion. They also forecast that the average annual volume of new life settlements will be approximately US$1.8 billion per year. All up they estimate that, over the period of 2015-2024, the average annual gross potential for life settlements will be approximately US$182 billion.
(Conning Research & Consulting, 2015, Life Settlements Secondary Market Annuities: Opportunities and Challenges, pp.7-9)
The investment manager offers sourcing, selection and management of high quality, low risk assets housed in structures most appropriate to individual client needs.
The returns from Life Policy investments (through Life Settlements) are generally not correlated with other investment markets (see below).
- Uncorrelated returns– This means that the performance of the Life Policies will be based on the characteristics of the pool of the insured lives, and not on the performance of traditional markets, such as the stock market, the property market and the interest rate market.
- Lower volatility of returns
- Benefit amount assured– This means the benefit payable on each policy is contractually fixed at the time of purchase.
- Sizeable and growing asset class– Please refer to Conning Inc Life Settlements publications
- Potential for higher returns– Please refer to Conning Inc Life Settlements publications
- Improved mortality data accuracy– Please refer to Conning Inc Life Settlements publications
- Non-contestability– The Fund only purchases Life Policies that have a non-contestability provision. Normally the Contestability Period is the first 2 years that the policy is in force, so we don’t buy policies until it has passed that time.
- Increased Regulation– adding to strength and stability in the industry.
- Strength of the underlying asset is highly rated– insurance securities that can be easily diversified.
- The risk of life extension in individual policies can be mitigated– by owning an actuarially significant portfolio of policies.
The appeal of the asset class appears to be wide and diverse. Our funds are aimed at institutional and sophisticated investors who have the capacity to diversify their investment portfolios into an alternative asset class. Institutional investors are seen as more experienced in the understanding of risks associated with investing in the alternative investment market due to their long term strategy outlook.
Yes, GI Asset Management uses a number of tools and processes to assist in the efficient management of your investment. We utilise a life settlement management software system which enables us to evaluate a range of outcomes for a portfolio and provide varying outcomes for risk scenarios associated as major risks for this asset class.
Two of the greatest challenges of institutional buyers, in the life settlement marketplace, are disciplined acquisitions and then managing the policies after they are purchased.
We offer the technical analysis and disciplined processes of a provider blended with the oversight and experience of a Fund Manager operating in a regulated environment. The combination of this industry expertise in-house is unique in giving the Investment Manager the skills necessary to properly manage policies, particularly in the highly compliance driven environment of an institutional investor.
We use a number of tools to address the primary risk factors associated with this asset class. Using these tools the Investment Manager is able to minimise this risk and other policy-related risks while protecting the inherent value of life settlements as a non-correlated investment.
A portfolio life insurance policies generally requires liquidity to meet premiums and expenses. Failure to meet these will result in a loss of value because policies will lapse.
Life insurance policies are only semi-liquid. Hence, a portfolio manager needs access to a range of strategies to successfully manage this asset. The team at GIAM have been managing liquidity issues successfully for more then 10 years.
Liquidity provision are the key to the successful operation of our life settlements funds and portfolios.
You can me confident in knowing that we have never had policies lapse, never lost a policy to miss management or to legal proceedings.
If you have questions please contact us.
Over the years we have learned and had the pleasure to share our tips on investing in the asset class successfully;
- Traditional asset class thinking doesn’t apply to this asset class.Be prepared to find another process to evaluate fund performance.
- Be patient. Cash flow in the early years of a new portfolio should rightly be expected to be small. The real returns come from holding to maturity. Life settlement policies have never been a trading asset.
- Embrace the characteristics of the asset class (Lack of Correlation, Risk/Reward proposition to name a few) and manage it accordingly.
- Bench-marking is difficult. For instance it is at best unhelpful and at worst dangerous, to assume a higher headline return is better than a lower return unadjusted for relative risk.
- Although it appears to be a simple asset class there is a lot more involved to constructing a successful portfolio than just Life Expectancy (LE). Don’t make simplistic assumptions. Find an experience fund manager willing to guide you in the right direction and make investments tailored to your strategy?
- Different managers use different evaluation processes. It’s difficult to make exact comparisons between policies let alone entire portfolios.
- When constructing your own portfolio and evaluating funds keep your ultimate goal in mind. Ensure your goal matches the strategy of the fund/portfolio.
- A little actuarial expertise is essential as you need to be prepared to do a lot of modelling in order to understand and manage risks, and to have realistic expectations of your portfolio.
- Whatever the strategy of the fund you must select the one that suits your ultimate goals. Many an investor, new to the game, has unwittingly taken on risks disproportionate to their appetite or missed value opportunities, through simple lack of knowledge.
- It can take years of progress to develop accurate management techniques so it is essential that the fund manager has been operational long enough to have learned how to develop the optimum strategy for you.
- Ensure you retain control and visibility on your assets. Get quality reporting and service from your providers. Most operational issues occur as a result of cash flow management issues when timing is miss-estimated.
There are a number of opportunities to invest in the asset class and we would be happy to assist you with your journey.
Currently opened for investment is the GIS General Fund. An Irish structure appropriate for institutional and sophisticated investors.
Alternatively, if you are looking at a large scale investment we can discuss the option of a separate mandate catered specifically for your needs.
By learning about your intentions for investing in the asset class we would be better able to understand how to move forward with your objectives.
If you wish to discuss varying (Life Expectancy) LE and Valuation techniques which may affect your life settlements investment, we would be more than happy to outline a best practise approach to suit your needs. We have used a number of the best recognised LE underwriters over the years and have determined those that we believe to be the best in terms of consistency of life estimates over time.
We focus exclusively on acquisition and management of US domestic Life insurance policies. Therefore, correct structuring of vehicles to hold and manage these policies is essential to avoid unnecessary tax leakage.
Global Insurance Settlements Funds PLC, the Irish domicile structure, benefits from a strong double tax treaty with the US, which makes the structure tax efficient. It is also an umbrella structure which provides the greatest degree of investment flexibility, with numerous sub-funds having segregated liability.
If you are searching for information which is more specific to your investment protocols we would be happy to help answer them. We have a long history in the asset class and have accumulated many studies which may be able to help you clarify information.
For additional questions or information, please phone the investment manager at +61 7 5557 4700 or alternatively please contact the investment manager using the contact form.
We have also included several articles published about life settlements on our website to assist you in further understanding this asset class. Please review our News Section for more information.