As an experienced life settlements manager, we have listed 10 reasons you should partner with us. Being early participants in the industry we have witnessed the industry continually grow and adapt. We are here to guide you through your investment in the asset class. After working through some challenges related to regulation, capital flow, and underwriting, the life settlements industry seems set for growth.
1. We are an Experienced Life Settlements Asset Manager
The team at GI Asset Management Limited (GIAM) have an extensive track record as a regulated life settlements manager, structuring and managing funds for investors. An early entrant to the market, we have gathered and adapted the knowledge to manage this asset class successfully.
Managing the asset class since 2004, we have acquired approx. 2.5B in face value. These were acquired for a number of structures designed to meet investor needs. The structures provided a high level of corporate governance and accountability. With our proven track record, we have the experience and flexibility to advise and guide investors towards the value and appropriate risk/reward frontier in this evolving asset class.
It can take years to develop the appropriate management techniques needed in this asset class. We are confident that our longevity is a testament to our ability to adapt as needed in this industry. We have been around long enough to know what works and how to avoid critical risk factors to maximise returns for our investor.
2. We are Boutique and Independent
We are small, but we are mighty. Our management style has a boutique flavour with a customised investor focus. Our independence ensures we are more responsive and flexible to our investor’s needs.
We believe that as a boutique manager we are more accountable to our investors. As owners of our business, we focus on greater engagement in the investment process. We have skin in the game and our interest is in capital preservation. Consequently, we take a more conservative approach to our portfolio construction. However, we can be more flexible and nimbler, giving our investors greater freedom in investment or structure.
Communication and honesty form the foundation of the business. We pride ourselves on cultivating a culture of trust with transparent communication. It inspires and empowers our investors to be confident in our investment strategy.
In our investment approach, we wear multiple hats and act in a near fiduciary role. However, our power is in the quality of our relationships. We surround ourselves with quality people and firms who have specific expertise in the asset class. We have the right skillsets, internally and via partners, to minimise the loss exposure and increase return potential. Investor comfort and security are paramount. So, we only deal with blue-chip service providers and are domiciled in a regulated jurisdiction.
3. Our Operational Activities are Exhaustive
Our in-depth management goes well beyond the level required of a traditional managed fund or mutual fund. The legislation and licensing and the practical realities of running a life settlement fund means that there will be numerous third parties involved. Investors are dependent upon all these functions operating properly. Tracking the status of the insured lives, renewing documentation, payment of premiums and other unglamorous functions need to be performed. Ensuring these are monitored and where necessary, remedial action is taken. The impact of policies lapsing can be dramatic on the overall performance.
With closed-end funds, little active management is performed. Their only requirement is for the policies to be kept in force until maturity. The GIS Fund is different, however, because an open-end fund requires constant monitoring of policy values, premium impact, timing of policy acquisition, and so much more dynamic responsibilities.
As a result of the extensive due diligence procedures and quality operational management;
- We have never allowed a policy to lapse.
- We have never failed to collect a policy benefit that has become payable.
- We have never lost a policy due to legal action.
The strength and safety of the process is based on a wealth of experience developed over time as a life settlements manager. Further strengthened by the use of independent and financially strong service providers to oversee and carry out the process.
4. We Operate in Regulated Environments
The Investment Manager (GIAM) operates under a first world regulatory scheme in Australia. This puts GAIM in a class of its own in terms of compliance and accountability. This is due to the regular and comprehensive review by both the internal compliance officer and the independent compliance committee, both of which must report to the Regulator.
The LSI Management Limited (LSIM) the Irish Management company, with the same ultimate shareholding as GAIM was set up for Regulatory purposes in November 2011. This entity was approved as an Alternate Fund Investment Manager (AFIM) by the Central Bank of Ireland in July 2014. With this designation comes extensive compliance requirements.
Both GIAM and LSIM work closely with the Irish regulator, the Central Bank, and the Irish Stock Exchange (as the Fund is Listed on EuroNext) to ensure comfort with their processes, people and their risk mitigation strategies. We gained approval in November 2011 to be an investment company with the authority to run numerous sub-funds (separate mandates).
5. Quality Service Providers
In combination with the General Fund, under the umbrella of GISF PLC, being established in Ireland a highly regulated and compliance orientated jurisdiction. We also aim to provide investors with additional security by employing quality service providers.
Our market leading services providers:
- Securities Intermediary – Wells Fargo N.A. (US)
- Custodian and Administrator – CACEIS (Ireland)
- Share Listing & Broking – Euronext and Cantor Fitzgerald (Ireland)
- Policy Servicer – Northstart Life Services (US)
- Independent Actuary – Lewis & Ellis Actuaries and Consultants (US)
- Audit and Taxation – KPMG (Ireland and US)
- Legal Advisers – LK Shields (Ireland) and Locke Lord (US)
Our service providers are subject to regular review in relation to competence, communication, and cost.
6. Our Structure is Tax Efficient
In 2009 the United States Internal Revenue Service published two tax clarifications addressing how buyers and sellers of in-force life policies should treat transactions. Although this bought some clarity to the market it also created a number of problems for funds and companies that held life settlement policies in countries that did not have a suitable tax treaty with the US.
Not all Life Settlement funds operating internationally are domiciled in countries that can take advantage of double taxation treaties with the United States. It is very important that you ensure that your life settlement fund is structured to minimise the risk of unnecessary tax leakage thus reducing net returns to the investor.
The GIS General Fund is one of the suite of products offered by Global Insurance Settlements Funds PLC for whom we are the appointed Investment Manager. This Irish Umbrella QIF structure takes advantage of the tax clarity in Ireland. It also enables us to develop the most appropriate structure for each investor.
7. The Flexibility in Structure
Our early entry into the market has allowed us to create a highly specialised business model. No two investors are the same in skill and understanding in the asset class. We have developed an array of solutions and services. These are designed to meet the varying needs of our investors and their varying risk appetites.
Our Global Insurance Settlements Funds PLC is a purpose-built investment structure. It is an Irish Qualified Alternative Investment Fund (QAIF), capable of housing multiple separate sub-funds. A separate mandate can be held in a sub-fund under our Global Insurance Settlements Funds PLC thus still providing you with the best structure from a transparency perspective. This allows you to own the policies in a legally separate pool. GI Asset Management Limited functions as your life settlements manager giving you more flexibility with portfolio construction.
Along with the already established QAIF we have created bespoke structures to meet specific investors needs, just tell us what you need, and we will build it.
8. Our Investment Strategy and Policy Acquisition is the Secret Sauce
An honest self-assessment is prudent for all professionals, but more so for keepers of other people’s money. The portfolio construction for clients has been managed by applying disciplined fund management techniques. In addition to rigorous asset selection and due diligence processes, only an experienced asset class player can provide.
Policies are individually underwritten by the life settlement market based on the insured’s unique health condition and the pricing characteristics of the policy. Having an in-depth knowledge of analysing this information and recognising risk and opportunity on a per-policy and portfolio basis is key to our investment strategy. The portfolio management tools at our disposal allow complex projections, many ‘what-ifs’ tests. The resulting value metrics form the backbone of measuring progress and strategy execution.
9. Our Portfolio is Reaching a Peak Stage of Maturity
By examining the GIS General Fund, it would appear that the best times are yet to come. Our conservative acquisition strategy has resulted in a modest return in initial years to ensure future stable return on investment in the future.
Policy underwriting forms both the basis for the acquisition price as well as an input for the ongoing valuation of policies. Over time the methods employed by the Underwriters have developed or matured to better suit the Life Settlements cohort of lives. As a prudent life settlements fund manager, we have always taken on board any major changes, these to date have mainly been more conservative and which has meant there has been a drag on the Funds performance.
What this means, to a new investor into our Fund, is that the assets values of an existing portfolio are valued using the most up to date information and that there is more security in acquiring new policies based on better underwriting.
As well as the above, the existing portfolio is considered “aged”. Similarly, so are the insured, with the average age of insureds in our portfolio pushing 90.
10. We are Transparent with our Valuation Strategy
Our valuation and performance are under regular review. The purpose is to subject the Valuation and Life Expectancy metrics for adequacy, appropriateness, and commerciality.
We share with our investors the actual-to-expected on the number of claims in a period – as it is central in the understanding that winning every hand at the gambling table is not possible, but in the long run, the strategy can show significant reward.
Return attribution is disclosed to our clients in regular reports. We do not artificially manipulate our returns and are transparent in the calculation process.
Our performance fee is only based on actual realised return not based on artificial valuation assumptions.
Conclusion
To all prospective life settlements investors, we offer you this observation. In this market, funds operate within different regulatory regimes, utilise different investment strategies, different valuation methodologies, and operate with varying levels of transparency which makes significant analysis across funds difficult. Ensure that the asset manager(s) you choose is fully transparent and can adequately meet your objectives.
Disclaimer: This information is intended for qualifying investors only and 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.
