Settlement Association: Awards Will Recognize Leaders in Struggle for Consumer
Financial Freedom

ORLANDO, FL — (MARKET WIRE) — April 19, 2007 — At its 13th Annual Spring Conference May 16-18 in New York City, the Life Insurance Settlement Association (LISA) will honor legislators and regulators, “who are strong proponents of a pro-consumer, free-market approach,” says Doug Head, the Association’s executive director, in announcing the Life Consumer Freedom Awards.

“Insurance is, and always has been a mechanism for wealth transfer, whether that is a small or large amount. We believe in consumer choice and options. The folks we will be recognizing represent and, in fact, stand up for personal freedom and that includes the opportunity for people to be able to realize the value in the investment they have made in life insurance,” Head says, referring to legislators and regulators who he notes have taken care to protect life settlements as an option for informed consumers. “With information, and the advent of our industry, consumers can feel free to keep or sell insurance products according to their needs.”

A life settlement is the sale to a third party of an existing life insurance policy for more than its cash surrender value but less than its net death benefit. Such transactions are usually undertaken for the purposes of estate or financial planning.

“Imagine a world in which you were limited in trading up on your car or house. In such a situation, you couldn’t exercise the freedom which comes from the American marketplace using information to look out for your best interests. It just seems un-American to constrain a good consumer decision about life insurance with rules that do not apply to other assets. People need the same rights to make decisions about life insurance that they have in selling cars, houses or other assets when they see a better deal or want a new opportunity which fits their needs,” Head says. “Around the world, there are societies where people are really trapped in the status to which they were born. They have no options. Americans know that opportunity and freedom is for all. With new information now available about life insurance, consumers have a better chance to make their own decisions and to exercise new options. Life settlements mean people who purchase life insurance are no longer chained to decisions they may have made decades ago, and can, with the right information and good professional advice, make new decisions to fit new times. The public officials we are recognizing have helped break old chains — creating greater consumer freedom.”

Ramiro Rencurrell, Of Magna Administrative Services, President of the Board of LISA said, it is important that we recognize the efforts of public officials who believe in consumer choice and fight for consumer rights in regards to life settlements and other financial innovations.”

Rencurrell continues, noting, “With this award, we will celebrate those who support consumer awareness. It is regrettable that consumers sometimes feel trapped or locked into situations where our industry offers options. I am proud that our Association members and these responsible public officials have consistently supported appropriate disclosures (to consumers).”

According to LISA’s Head, any consumer or life settlement industry participant may nominate legislators and regulators for Life Consumer Freedom Awards. Legislators and regulators may also self-nominate. Only LISA members will vote, and winners will be announced in conjunction with the May 16-18 meeting, which is to be held at the Sheraton New York Hotel & Towers. Nomination forms can be obtained by contacting the
Life Insurance Settlement Association, 407-894-3797, or support@lisassociation.org,
and will soon be available on the Association’s Web site, www.lisassociation.org.

Founded in 1994, the Life Insurance Settlement Association is the oldest and largest trade organization in the industry. Its goal is to promote the development, integrity and reputation of the life settlement industry, and to promote a competitive market for the people it serves. LISA now represents 141 member companies with a wide variety of interests in the industry.

For more about LISA: www.lisassociation.org.

Stable returns draw pension funds to growing market

AMSTERDAM, Netherlands – Large Dutch pension plans are turning to securitized life
insurance policies, or life settlements, as a new source of uncorrelated returns.

Life settlements comprise a relatively new asset class for pension plans in both Europe and the U.S., and issuance of these bondlike investments has grown rapidly over the last few years. Market issuance of life settlements totaled an estimated $23 billion by year-end 2005, up from $13 billion in 2004, the most recent numbers available, according to research by Sanford C. Bernstein LLC, New York.

Up to $12 billion was issued in 2006, said Larry Simon, president of Life Settlement
Solutions, San Diego, a provider of investible pools of life settlements.

To date, investors in life settlements, life insurance policies that are surrendered early by their holders to third parties who reckon the value of the death benefits will be higher than surrender and premium payments, have been mainly hedge funds, investment banks and high-net-worth individuals.

But now pension plans are moving directly into this area, attracted by a stable source of annualized returns of between 8% and 11%.

Last August, the $20.5 billion ($26.8 billion) Pensioenfonds Metalektro, Schiphol, invested about $100 million in life settlements. The plan, also known as PME, intends to allocate up to 2% of total assets, or $400 million, to the asset class, according to Roland van den Brink, managing director, investments.

The $25 billion multiemployer pension manager Cordares, Amsterdam, plans to launch a
pooled fund in the asset class for Dutch pension plans, said Jeroen Tielman, managing director, sales, strategy and innovation. It already has one commitment, for $50 million, from a Dutch pension fund client.

So far, few European or U.S. pension plans have invested directly in life settlements, although they might have had some indirect exposure through hedge fund of funds, said David Fishbaum, Chicago-based president of Mercer Oliver Wyman Actuarial Consultants Inc.

Liability match

Returns on life settlements are linked to mortality, and pension plans view them as an alternative source of return and a liability match rather than a hedge against longevity risk.

But life settlements are one of the early steps in creating a market in human longevity, according to Kevin Wesbroom, London-based principal consultant at Hewitt Associates LLC.

If the market becomes more liquid, it may be possible to create a tradable market for use by investors, said Mercer’s Mr. Fishbaum. And if that happens, it may be possible to launch derivatives on life settlements and provide a much desired hedge against longevity, said Mr. Wesbroom.

PME’s Mr. van den Brink sees life settlements as a form of fixed-income arbitrage with a 10-year investment horizon and an average annual return of between 9% and 11%. The investment is definitely not a longevity hedge in its current form, he said.

“The life expectancy of the (former) policyholders is the risk. The trick is for a pension fund to invest in a very large portfolio (of policies) in order to get to the statistical average of life expectancies. If you build a large portfolio, the longevity risk is low, compared to the additional return,” he said.

Counterparty risk is limited because investors are putting money into securitized pools of policies backed by highly rated insurance firms, not unlike mortgage-backed securities.

Cordares, whose clients include the $18 billion Stichting Bedrijfstak Pensioenfonds
Bouwnijverheid plan for construction workers, Amsterdam, and Stichting Pensioenfonds
voor de Woningcorporaties, the $4.5 billion Huizen-based pension plan for housing
corporations, has teamed up with life settlements provider Legacy Benefits Corp., New York, to launch its fund by the summer, said Mr. Tielman.

He expects Cordares’ clients to invest up to $100 million in the fund. The fund will be based on a broad pool of U.S. life settlements with conservative life expectancy estimates and will have an expected annual net return around 8%.

Fairly conservative

Mr. Tielman considers this a fairly conservative return for the asset class and said the investment fund is designed to give investors their first taste of life settlements rather than trying to squeeze out every last ounce of alpha. But recent strong demand from investment banks for life settlements has pushed up prices and could reduce short-term yields. This short term buying could scare off long term investors who are just starting to express an interest in the asset class, he warned.

The pension plan executives he has spoken with view life settlements as an attractive investment because of the low correlation to other asset classes. “It’s a relatively new and illiquid asset class, so there could be some excess returns, and it has long-term diversifying benefits,” he added.

He said a number of Dutch pension plans outside the Cordares group are also “seriously considering” investing in the asset class and a Belgian institution was watching short-term price movements before firmly committing assets. He would not identify any of the plans.

But the life settlements market is still small compared with the investment needs of U.S. pension plans. Some Mercer Oliver Wyman clients struggle to find sufficient policies to build a diversified portfolio, said Mr. Fishbaum.

Early investors in the asset class might get the best returns, he added. When the market first launched around four years ago, some investors were getting returns of between 13% and 15%. Increased demand has seen that fall to around 9.5% now. “That’s still a pretty good return for the risks involved,” he said.

Less likely in U.S.

U.S. pension plans are unlikely to invest in life settlements to any great extent until the market becomes better regulated and more transparent in originating policies for investment, said Dan Ozizmir, managing director at Swiss Re Capital Management and Advisory, New York.

Also known as death bonds, life settlements have a somewhat tainted reputation as returns are dependent on the death of the policyholder.

But Mr. van den Brink, Mr. Tielman and other sources active in the market take pains to draw a distinction between life settlements and viaticals, a practice where people dying of cancer or AIDS sell their life insurance policies to third parties.

Life settlements are different because the policyholder cannot have been diagnosed with AIDS or cancer and cannot have a life expectancy of less than two years, said Life Settlement Solutions’ Mr. Simon.

Troy, New York, March 30, 2007 -  Representative Michael Ripley (IN), Chair of the National Conference of Insurance Legislators (NCOIL) Life Insurance & Financial Planning Committee, has scheduled an interim meeting of an NCOIL Subcommittee on Life Settlements on Saturday, April 21, at the Hyatt Regency Crystal City at Reagan National Airport outside Washington, D.C.

During the meeting, which is scheduled from 10:00 a.m. to 4:00 p.m. and will be open to the public, legislators will consider amending an NCOIL Life Settlements Model Act. Rep. Ripley said, “Legislators sense the urgency of addressing stranger-originated life insurance (STOLI) schemes. The practice of manufacturing a life insurance policy to create a security interest damages the integrity of the product, and needs to be stopped.”

Hopefully, the interim meeting will lead to a product suitable for consideration by the full Committee in July. Subcommittee Chair Rep. George Keiser (ND) will preside over the discussion, in which members will review and discuss interested party mark-up proposals to the NCOIL model act.

Representatives of the life insurance, life settlement, and premium finance industries submitted amendments prior to the recent NCOIL Spring Meeting that addressed issues related to STOLI, insurable interest, fraud, trusts, and disclosure.

Rep. Keiser said, “The amendment proposals are very complicated and highly contentious. Legislators will face some tough choices as we debate what should be considered a life settlement contract, how to address premium financing, and whether a two- or five-year moratorium on policy settlements is appropriate, among other things. The challenge will be to curtail the inappropriate use of the life product without hindering legitimate business practices.”

The NCOIL model, originally adopted in 2000, was amended in 2004 to address a growing life settlements market. It would regulate the business of life settlements by requiring, among other things, provider and broker licensing, complex disclosures to the policyowner, and a two-year moratorium on settling a policy.

At the NCOIL Spring Meeting, legislators voted to reauthorize and expand the Subcommittee, which was appointed following the 2006 Annual Meeting, and to hold a special meeting of the Subcommittee before the NCOIL Summer Meeting. Members also passed a Resolution Regarding Enforcement of Existing State Insurable Interest Laws, Stranger-Originated Life Insurance (STOLI), and Related NAIC Action that encourages states to enforce existing state laws as a means to combat STOLI, and requests that
the National Association of Insurance Commissioners (NAIC) delay final consideration of its Viatical Settlements Model Act.

Call 1-888-973-8377 with any Life Settlement or Viatical Questions.