To achieve its growth potential in coming years, the life settlement industry must evolve its business model to better serve a fast-growing population of recipients of long-term care funded through Medicaid, according to the keynote speaker at the conference held for life settlement institutional investors on March 11.
Recent changes to mortality tables by life expectancy (LE) providers pose new challenges for the secondary life insurance market. This environmental shift has resulted in investors revising risk assessments and return rates and some life settlement providers rescinding offers to brokers based on old LE assumptions. How are these changes, along with others, impacting brokers?
Life expectancy providers are a key component of the life settlement process. They offer a life expectancy for someone who is looking to sell his or her life insurance on the secondary market to life settlement investors.
In a transaction known as a viatical settlement (for terminally ill patients) or a life settlement (for everyone else), the person selling his insurance gets an immediate cash payment. The buyer, in exchange, is named as the beneficiary and pays the premiums until the insured person dies.
As Boomers feel increasingly uncertain about being able to meet their retirement goals by the time they turn 65, they are turning to unconventional financial vehicles to meet their needs, including life settlements.
JIm Avery is Prudential’s president of individual life insurance, and an outspoken critic of both the life settlements industry and stranger-owned life insurance (STOLI). He recently traveled to South Korea in an effort to convince the life insurance industry there to not allow the practice of life settlements.
A top life settlement industry official this week said that despite current opposition from some underwriters, he believes the life settlement business will soon become an integral part of the life insurance industry.
The Wall Street Journal on Monday ran an interesting piece about state regulators cracking down on "middlemen" pushing Stranger-Originated Life Insurance (STOLI). The article, titled "Regulators Rein in Murky Life Policies," centered around Florida life insurance agent Steven M. Brasner, a STOLI specialist (who last year surrendered a 50-foot yacht named "STOLI on the Docks") arrested by Florida authorities in April on 22 counts of alleged grand theft, fraud and other offenses tied to $78 million of policies that earned him nearly $2 million in commissions.
Stranger-originated annuity transactions (STATs) have stirred up the ire of professionals in the life settlement and life insurance businesses as well as from the fixed and variable annuity businesses, broker-dealers and more.
The battle over stranger-originated annuities is part of a larger battle over the insurance product resale market, representatives from an insurer group and a life settlement group agree.
Witnesses from the American Council of Life Insurers, Washington, and the Life Insurance Settlement Association, Orlando, Fla., appeared Thursday at a STOA hearing organized by the Life Insurance & Annuities Committee at the National Association of Insurance Commissioners.
The question was: Some of my life settlement clients are concerned by the idea that their life policy may be purchased by an overseas interest. They say they would “feel better” having a U.S. buyer. How can I respond effectively to this concern?
Once a life policy has been settled, 50% of direct writing life insurers say their company procedure is to “terminate producers circumventing the system” and 33% say they would “consider rescinding the policy if it is sold,” according to a new report.
As the insurance industry and regulators are making headway dealing with stranger-originated life insurance transactions (STOLI), a new threat known as stranger-originated annuity transactions (STAT) is emerging.
Life settlement providers see more than a concern about STOLI in the ACLI's call to ban securitization for settlements. They see a line drawn in the sand portending a battle over the settlement industry's survival.
Actuarial consultant John Bragg responds to the question: Some life settlement clients tend to be put off by the news that a “life expectancy” report will be done. What should I explain to them about these reports in relation to the settlement transaction?
A position paper by the American Council of Life Insurers (ACLI) asking legislators to ban securitization of life settlements is eliciting some heated responses. The paper contends that securitization of life settlements presents dangers to the insured public and to the investors who buy the securities.
A positive for the industry could come from the proposed increase in tax rates for upper-income Americans, “which could help demand for tax-advantaged policies,” according to a note to investors by Andrew Kligerman, an analyst for UBS, New York.
Kligerman says an administration budget proposal to limit tax avoidance on life settlement arrangements would hurt life settlement firms, but he believes that strikes a positive note for life insurers’ policy margins, which are partly supported by lapse rates.
The ACLI, Washington, has put out a policy statement asserting that packaging life insurance settlements into securities increases the risk of fraud, by encouraging securitizers to lure seniors into participating in illegal, stranger-originated life insurance transactions; by encouraging seniors to help file fraudulent STOLI applications; and by encouraging investors to buy life settlement-backed securities without understanding the risks involved.
The Life Settlements Survey Subcommittee of the Society' of Actuaries' Committee on Life Insurance Mortality & Underwriting Surveys has completed their report on the results of a survey on the current practices and reactions related to life settlements.
A federal program that collects information about possible cases of money laundering is receiving some reports on life settlement transactions.
Officials at the Financial Crimes Enforcement Network, a branch of the U.S. Treasury Department, have discussed those reports in a catalogue of about 1,300 “suspicious activity reports” that insurers filed with FinCen from May 2007 to May 2008.
The battle to deter a financial abuse of senior citizens advanced recently as three state legislatures approved bills aimed at a fraudulent transaction called stranger-originated life insurance (STOLI).
As life settlements (or viatical settlements), have grown enormously in popularity and use over the past few years, regulation of this secondary market has become a headline issue for many states, garnering a great deal of attention (and controversy) among national organizations such as the National Association of Insurance Commissioners (NAIC) and the National Conference of Insurance Legislators (NCOIL). Consumers, institutional investors, financial advisors, and the “primary market” insurers, as well as regulators and public policy makers are all very interested in the handling of life settlements.