US Life Settlements
With an estimated annual market of $13bn, Life Settlements
present an attractive opportunity for investors seeking more stable
returns than often seen in other more widely known asset
What are US Life Settlement Investments?
A US Life Settlement policy is a longevity-based asset that is
sold by the original policy owner. The investor pays a lump sum to
acquire the policy and then assumes the responsibility to pay the
premiums for the remaining term of the policy. In exchange the
investor will collect the net benefits on maturity that would
otherwise have been received by the original policyholder.
With low-market correlation and low volatility, Life Settlement
investments typically deliver more stable returns than those levels
seen in other traditional asset classes.
Value Creation in Life Settlement Investment
The primary driver of investor return is accurately assessing
the distribution of mortality events for each insured life and
thereby arriving at the "right" price for each policy. A regular
update of this analysis is required once policies are in portfolio
to ensure that the ongoing valuation is fair and consistent for all
investors - and ultimately that the price at which investors
subscribe or redeem is fair.
Using actuarially robust policy pricing and portfolio valuation
methodologies is of vital importance. SL's in-house actuarial team
bring dedicated and specialist expertise to enhance and optimise
the Life Settlement investment performance. This expertise and
understanding of the importance of robust valuation methodology
supports SL's position as one of the leading authorities in Life
The Role of the Investment Manager
Whilst Life Settlements present an attractive investment
opportunity, the appointment of an experienced investment manager
is critical. Robust asset valuation and management plays a key role
in delivering investor return. Detailed due diligence at policy
acquisition stage, effective asset valuation methodology,
transparency of fees, approach to liquidity provision, efficient
and thorough operational processes and acknowledgement of
regulatory environment and tax implications should all be
considered in the manager choice.
SL has purchased over 70,000 UK TEPs and US Life Settlements
since 1990. Entering the US Life Settlement market in 2003, we have
subsequently managed or advised 20 Life Settlement portfolios
purchasing over 2,200 policies with in excess of $300 million in
maturity value collected for investors.
SL is authorised and regulated by the Financial
Conduct Authority as an Alternative Investment Fund Manager
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