GI Asset Management Logo
+61 7 5557 4700

Blog

Get to Know Your Investment Manager

Get to Know Your Investment Manager
11/07/2016Author: GI Asset Management | Blog

Both the investment manager and the investor can find the secondary life insurance market an irate beast. We see this in the litter of negative headlines exposing illegal behaviour and incompetence of some managers. But as the industry grows and matures we see investors succeed and those investment manager prolonging their existence. A successful investment manager can continually adapt to changing valuations and regulation. Finally, a bright future is ahead for the asset class.

Some investors see multi-asset managers, with numerous fund options, as highly experienced. However, life settlements boutique managers are single focused and have boundless experience. Certainly, they have shown to be capable of significant success.  One team might do a great job, and one team might not. Varying traits may be the cause of this but individual personnel experience has a key role to play.

The industry has unfortunately been characterised by frequent business entity changes and staff turnover within organisations.  In contrast, GISF’s underlying managers have each been in unbroken business for over 10 years with low staff turnover.

This piece will introduce you to the key personnel involved in the everyday management of Global Insurance Settlements Funds PLC (GISF). Reviewing their experiences and sharing what they have learned managing this alternative investment. In addition to the management below the company has three non-executive directors, two of whom are independent directors.

GI Asset Management

Stephanie Nolan

stephanie

More About Stephanie

What have I learned?
  • Traditional asset class thinking doesn’t apply to this asset class. My views have changed and developed with experience.
  • 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.
  • Don’t make simplistic assumptions. Certainly, historical experience will serve you well in policy purchase. Hence, find an experienced player who is willing to point you in the right direction and make investment tailored to your strategy.
  • Modelling and analysis are essential in sorting the assets on a policy by policy basis for their economic value and robustness to variable mortality assumptions and variable cash flow assumptions.
  • Ensure you retain control and visibility on your assets. Get quality reporting and service from your providers. Certainly, most operational issues occur as a result of cash flow management issues.
  • Understanding the changes in mortality estimates and the impact on life settlements. Life Expectancy providers will continue to combine data and experience more observations. As such, they will continue to have more opportunities to improve life expectancy models. It’s a good thing for new investors coming into the market.
  • Trading the asset in the search for liquidity will not serve you well. Certainly, this is not the best strategy for the asset.

Stephen Knott

stephen

More About Stephen

What have I learned?
  • Embrace the characteristics of the life settlements asset class. Appreciate the Lack of Correlation, Risk/Reward proposition to name a few. It takes experience to manage it accordingly.
  • 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. Certainly, an experienced player can mitigate risks commonly associated with the asset class.
  • A little actuarial expertise is essential.  Clearly you need to do a lot of modelling in order to understand and manage risks and to have realistic expectations of your portfolio.
  • Benchmarking 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.
  • Ensure you appreciate the unique risks of the life settlements asset class.
  • Different managers use different valuations processes. So, this makes it difficult to make exact comparisons between policies let alone entire portfolios.
  • If you are a Non-US investor you will need a substantial commitment to housing your new portfolio in an appropriate structure that will not result in unnecessary tax leakage.
  • Although it appears to be a simple asset class there are many hidden opportunities and as well as risks. Here are the top reasons to invest in life settlements.

 

As always we wish you well with your life settlement investment opportunities and if you want to learn more about investing in this asset class please contact us. Additionally, if you want to understand performance cycles in life settlements we would be happy to discuss.

 

 

About Global Insurance Settlements Funds PLC (GISF)

Global Insurance Settlements Funds PLC (GISF) is an umbrella type investment company with segregated liability between sub-funds. The fund is incorporated in Ireland. The first sub-fund launched, GIS General Fund (the Fund), is listed on the Irish Stock Exchange.

This structure is aimed at Sophisticated / Institutional investors. Additionally, it provides tax clarity by ensuring there is no tax leakage. It enables a number of different investment options to suit the specific needs of our investors.

The Fund’s core activity is to actively manage a large and diverse portfolio of life insurance policies (life settlements). The Board of GISF selects those that best meet the Fund’s policy purchase criteria.

 

Disclaimer

This information is intended for qualifying investors only. It was correct at the time of preparation. It has been prepared to provide general information only and should not be considered as a “securities recommendation” or an “invitation to invest” in any jurisdiction. Potential investors should consider the relevance of this information to their particular circumstances. Before proceeding, investors must obtain the prospectus and take their own legal and taxation advice. If you acquire or hold one of our products we will receive fees and other benefits as disclosed in the prospectus and relevant offering documents.