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.
“The economic crisis was the major impediment to growth in the U.S. life settlements markets in 2008, as the credit markets froze in the second half and life settlements buyers had difficulty financing new premiums,”
In addition, the majority of life settlement buyers are actually foreign investors, so their demand for dollar denominated investsments has been adversely impacted by the relative strength of the U.S. dollar throughout much of 2008.
Source: Bloomberg
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