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.
Life Settlements
Monday, March 1, 2010
Wednesday, February 10, 2010
European Life Settlement Trade
As the life settlement market struggles to recover from a tough 2008 and 2009, a group of American life settlement representatives are embarking on a European trade mission. This is exactly the kind of proactive thinking that we need more of in the industry to lift from the difficult times we are now facing. The idea is to cultivate international activity in the US longevity market. Below is an excerpt of the press release.
LUXEMBOURG, February 08, 2010 -- Carlisle Management Company, a leading alternative assets manager and manager of the Luxembourg Long Term Growth Life Settlement Fund, today announced its sponsorship of the First European Life Settlements Trade Mission.
"We are extremely pleased to be a part of the foundation for a European based life settlement organization, ELSA sets standards for the European life settlement industry and promotes transparency by providing accurate, authoritative information to the investment community," said Tim Mol, Carlisle's Chief Operating Officer.
A life settlement is the transfer of ownership and beneficiary rights of an unwanted or unneeded life insurance policy in exchange for a cash settlement. Life settlements represent an estimated $12 billion annual secondary market and one of the fastest growing financial sectors today. As capital sources continue to search for stable returns and low volatility, life settlements are already playing a significant role in the asset allocation strategies of leading banks, financial institutions, insurance companies and mutual funds.
LUXEMBOURG, February 08, 2010 -- Carlisle Management Company, a leading alternative assets manager and manager of the Luxembourg Long Term Growth Life Settlement Fund, today announced its sponsorship of the First European Life Settlements Trade Mission.
"We are extremely pleased to be a part of the foundation for a European based life settlement organization, ELSA sets standards for the European life settlement industry and promotes transparency by providing accurate, authoritative information to the investment community," said Tim Mol, Carlisle's Chief Operating Officer.
A life settlement is the transfer of ownership and beneficiary rights of an unwanted or unneeded life insurance policy in exchange for a cash settlement. Life settlements represent an estimated $12 billion annual secondary market and one of the fastest growing financial sectors today. As capital sources continue to search for stable returns and low volatility, life settlements are already playing a significant role in the asset allocation strategies of leading banks, financial institutions, insurance companies and mutual funds.
Friday, January 29, 2010
5 Things To Know About Life Settlements
As someone who has been in the life settlement industry it gets old hearing people bash life settlements. My philosophy is that they aren't for everyone, but if they can help you or a loved one...why knock it? In the interest of being fair and balanced, I am passing along some "tips" that everyone should take into consideration about life settlements.
From Money Magazine, Jan. 26, 2010
1. Your parents may be getting sold on these
In some retirement hot spots, such as South Florida, advertising for "life settlements" is ubiquitous. The pitch? Sell us your permanent (cash-value) life insurance policy and you can have a chunk of the death benefit now. In exchange, the company buying the policy becomes the owner and beneficiary and gets the full payout when you die.
Most settlement firms want policies likely to pay off within 10 years, so the elderly are prime targets. For those who anticipate running out of money, it's an appealing idea.
You'll probably hear this sell more often in the coming years: Wall Street is turning pools of insurance policies into tradable securities (as it did with mortgages), which will increase investor demand.
2. It's hard to know a good deal from a bad one
The life settlement industry is run by small investment firms, and there isn't a central marketplace to solicit bids. So there's no "going rate." A 70-year-old man with high blood pressure and heart disease could get offers from $116,000 to $162,000 for a $1 million policy, reports broker Golden Gateway Financial (compared with about half that if he surrendered it to the insurer). Thus, it pays for anyone considering a settlement to get several bids.
3. Brokers help obscure the process
Since many settlement firms won't deal with consumers directly, shopping around typically means going to one or more brokers. But brokers' fee structures vary widely -- from 1% of the death benefit to 15% of the difference between the offer and the policy's surrender value -- and they're not always transparent. That makes it tricky to compare offers, says Connecticut insurance commissioner Thomas Sullivan. So ask for the offers minus all charges.
4. Your insurer hates them
Insurance companies assume some policyholders will stop paying premiums -- meaning the firms will have to foot only a small surrender value, vs. a big death benefit. Since investors make good on policies that might otherwise lapse, insurers pay more death benefits, which makes them none too happy.
That's led many insurers to sweeten the payout for surrendering. Some even let you partially cash out but keep the policy active at a lesser death benefit. It's worth asking the insurer what it could do for you, and weighing that against settlement offers.
5. There are alternatives
Before taking a settlement, "you have to ask, 'Who will go unprotected if this policy is sold?' " says Steven Weisbart of the Insurance Information Institute. If it's your parents who can't bear the premiums, you may want to help. It'll be worth your investment if you stand to inherit, or if keeping the policy in force means you won't be financially supporting Mom when Dad passes on.
If your folks just need money but still could benefit from the policy, help them consider other options, such as selling their home or taking out a reverse mortgage.
From Money Magazine, Jan. 26, 2010
1. Your parents may be getting sold on these
In some retirement hot spots, such as South Florida, advertising for "life settlements" is ubiquitous. The pitch? Sell us your permanent (cash-value) life insurance policy and you can have a chunk of the death benefit now. In exchange, the company buying the policy becomes the owner and beneficiary and gets the full payout when you die.
Most settlement firms want policies likely to pay off within 10 years, so the elderly are prime targets. For those who anticipate running out of money, it's an appealing idea.
You'll probably hear this sell more often in the coming years: Wall Street is turning pools of insurance policies into tradable securities (as it did with mortgages), which will increase investor demand.
2. It's hard to know a good deal from a bad one
The life settlement industry is run by small investment firms, and there isn't a central marketplace to solicit bids. So there's no "going rate." A 70-year-old man with high blood pressure and heart disease could get offers from $116,000 to $162,000 for a $1 million policy, reports broker Golden Gateway Financial (compared with about half that if he surrendered it to the insurer). Thus, it pays for anyone considering a settlement to get several bids.
3. Brokers help obscure the process
Since many settlement firms won't deal with consumers directly, shopping around typically means going to one or more brokers. But brokers' fee structures vary widely -- from 1% of the death benefit to 15% of the difference between the offer and the policy's surrender value -- and they're not always transparent. That makes it tricky to compare offers, says Connecticut insurance commissioner Thomas Sullivan. So ask for the offers minus all charges.
4. Your insurer hates them
Insurance companies assume some policyholders will stop paying premiums -- meaning the firms will have to foot only a small surrender value, vs. a big death benefit. Since investors make good on policies that might otherwise lapse, insurers pay more death benefits, which makes them none too happy.
That's led many insurers to sweeten the payout for surrendering. Some even let you partially cash out but keep the policy active at a lesser death benefit. It's worth asking the insurer what it could do for you, and weighing that against settlement offers.
5. There are alternatives
Before taking a settlement, "you have to ask, 'Who will go unprotected if this policy is sold?' " says Steven Weisbart of the Insurance Information Institute. If it's your parents who can't bear the premiums, you may want to help. It'll be worth your investment if you stand to inherit, or if keeping the policy in force means you won't be financially supporting Mom when Dad passes on.
If your folks just need money but still could benefit from the policy, help them consider other options, such as selling their home or taking out a reverse mortgage.
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