National Financial Partners Corp. has taken on full ownership of Institutional Life Services LLC, a venture that The Goldman Sachs Group Inc. recently exited.
Institutional Life Services LLC started out in 2007 as a venture between NFP, affiliates of Goldman and Genworth Financial Inc. Back then, it was intended to act as a life settlement exchange.
Genworth and Goldman have since pulled out of the investment, but. According to a filing with the Securities and Exchange Commission, NFP took on full ownership of the enterprise in December.
ILS will act as a life settlement provider, rather than as a life settlement index, according to the filing. NFP also bought full ownership of Institutional Life Administration LLC.
NFP’s acquisition of the full ILS business came just before Goldman announced its departure from the life settlements arena by shuttering its QxX mortality index and closing down Longmore Capital, a life settlements provider.
Goldman’s vision of a booming institutional market simply wasn’t bearing fruit, Goldman spokesman Michael DuVally had said.
NFP has been a player on the retail side of the life settlements business. Some of its affiliates provide those services to investors who want to sell an unneeded policy.
That corner of the business hasn’t always been simple, though. NFP’s commission and fee revenue declined last year to $948.3 million, from $1.15 billion in 2008. The dropoff stemmed, in large part, from falling sales of the company’s retail life and life settlements products, which tend to be high-commission products
Further, the company’s affiliates have had a number of legal brushes related to life settlements. Media personality Larry King sued NFP-affiliated firm The Meltzer Group Inc. in 2007 for breach of fiduciary duty. He claimed he was told to buy $10 million in life insurance coverage and then sell it to another party for $550,000. Mr. King received a settlement in that claim.
In another suit filed last year in Ohio, Louis Levin, an 81-year-ancient investor, claimed NFP-affiliate Howard Kaye Insurance Agency Inc. — along with principal Howard Kaye and Barry Kaye and Associates Inc. — advised him to buy a $5 million policy. According to the suit, the defendants told Mr. Levin he would earn a “substantial profit” for selling the policy on the life settlements market. The firm wasn’t able to locate buyers, and Mr. Levin wound up spending $322,000 on premiums. He is suing for breach of contract. NFP itself was not named in any of these suits.
