Found this pretty interesting article from Christopher Westfall about the potential problems that may arise if Life Settlement Firms have continued loses… I think he is a tad bit harsh, but he does make some valid points. Here are some good excerpts:
As life settlement firms rack up losses — and sometimes collapse — expect the industry to come under attack from all sides. The broader life insurance industry as historically had a tenuous relationship with life settlement business since it blossomed in the 1990s. Insurers fear that the process of selling a policy to a third party as an investment is confusing to consumers and could create thousands of lawsuits as policyholders dispute the “insurable interest” of the contract.
In the meantime, don’t be surprised to see life-settlement losses crop up in some unusual places. Losses from life settlements reportedly are what initially brought down financier Danny Pang, who reportedly tried to cover up the life settlement losses with investor assets.
Even the Federal Reserve could be on the hook. AIG used assets from the largest life-settlement securitization to date — $2 billion –- to pay back a portion of its government loan.
Read complete article at:
Life Settlement Industry Next on Chopping Block
