The former founders of the life settlement desk at Goldman Sachs have recently launched a longevity-based hedge fund that will invest in life settlements.

The name of the New York-based firm is Broad River Asset Management.

The founders are currently seeking to raise initial capital.

Source: HFMWeek

Longevity risk has existed as an asset class for quite some time but has primarily been the focus of larger institutions.

In a recent Financial Times article, the author discusses the recent proliferation of longevity and mortality related investment products.

The range of product options include:

Similar to many parts of the economy, the market for life settlements took a step back in 2008 as a result of the financial crisis.

The face value of life insurance policies that were exchanged through life settlement transactions in 2008 was $11.8 billion, a slight decrease from $12.2 billion in 2007.

"Tighter" capital market conditions contributed to the recent advantage that buyers have had over sellers.  Analysts believe that the general advantage will return to sellers as liquidity and capital market conditions improve.

Wall Street Journal personal finance columnist Brett Arends wrote an excellent piece on life settlements from a consumer perspective.

Arends discusses:

• The inefficiencies of the life settlement market.
• When a life settlement makes sense.
• What to watch out for as a potential seller of a life insurance policy.
• Rates of return (10-12%) for buyers and investors in the life settlement market.
• The top three considerations for sellers in the market.

Source: Wall Street Journal

Recent coverage of the life settlements market by the New York Times appears to have ignited a small media frenzy.

The business of selling a life insurance policy when it is no longer needed is poised to become a very large industry--particularly as retirees seek to tap into all types of assets for sources of income.

According to a recent New York Times article, the life settlement industry could grow to as much as $500 billion.

While this figure represents a small portion of the $26 trillion in life insurance outstanding, securitization of life settlements could prove to be a meaningful source of growth for Wall Street.

Source: New York Times

Life settlement sales made by seniors have doubled over the past two years to $11.8 billion.

The financial crisis appears to have had an impact on sales as seniors are likely looking at all of their assets for sources of funds and liquidity.

Experts do caution, however, that there are other ways to realize the value of a life insurance policy that do not involve loss of life insurance coverage:

The life settlement market is benefiting from the fallout of the financial crisis.

The supply side of the settlement industry is affected by consumers who have suffered through the crisis.  Many are looking to raise cash through the sale of assets such as life insurance policies.

Wall Street is pumping the demand side of the securitization market as investors seek alternative assets that are not correlated to the broader equity and fixed income markets.

Source: Reuters

The prominent insurance firm Barry Kaye and Associates is accused of fraud in a case involving life settlements.

The suit against the Boca Raton Florida firm alleges breach of contract, unjust enrichment, negligence, fraud and violation of Ohio's securities laws.

Source: Investment News

Full Story