21st announced yesterday, at their Annual Investor Subcommittee conference, that they will be using new mortality tables which will be more reflective of real world life expectancies. Jack Ketter is showing that 21st Services is making a long term commitment to the industry.

As a result of the implementation of these new tables to their life expectancy underwriting, 21st Services will effectively lengthen their life expectancy determinations. We will have to see how quickly this will effect current offers, pending bids, and current policies in pricing.

We have also yet to confirm if LEs purchased in the last say 30-60 days will be updated to the new mortality tables without an additional charge.

We will keep everyone updated as these changes are completed.

Experienced European Specialist Starts His Own New Life Settlement Firm

January 3, 2008 — Netherlands — The year has just begun and Life-Exchange has just added a new Member firm to its list. Titus van Heur, a seasoned CEO of many companies, has started his own firm as Abacus Life Settlements Management in the Netherlands. Previously he was responsible for managing another Dutch firm active in this field.

“I am proud to announce the start of my own firm in the US Life Settlements market. If you believe in this business as I do, it is important to show commitment to the market and your future clients. I will work together with a professional team of at least 2 other members, who also participate in my firm. They have built up experience in the Life Insurance business in the Netherlands and also have experience as CFOs with larger organizations. The network of people they know was also an important element of starting the business relationship with them.

One of our cornerstones of accepting clients is, that they have a high level of integrity and ethics. We will not accept every client that might want to do business with us. Only if they meet our ethical standards will we then build a business relationship together. We will focus on Institutional Investors in Europe. The US Life settlements will be managed either directly or via funds to be set up. We are really excited about this and expect a lot of business to be built up in a couple of month’s time.

We will also focus on Funds already active in Life Settlements with a need for temporary external asset management services. I am aware of funds in Germany for example that lack proper asset management experience in this asset class and have found themselves far too dependent on US providers. These are the kind of funds that will likely run into problems in the coming years if nothing is done about it.

Last but not least we are very pleased to also have become a Member of Life-Exchange, commented Mr. Van Heur.

For more information on Abacus Life Settlements Management, B.V. please visit their website at www.abacuslsm.com.

For more information about Life Exchange, visit Life Settlement Auctions.

Don’t forget that Life Settlement Magazine is coming soon.

Stranger/Investor Oriented Life Insurance not a good idea

FAIRMONT – The West Virginia Offices of the Insurance Commissioner warns against “Stranger/Investor Originated Life Insurance.”

Known as STOLI for short, these life settlement arrangements can come in different forms and names, said Dena Wildman, insurance complaint specialist supervisor for the state Offices of the Insurance Commissioner.

For example, if something happens that affects the finances or health of a consumer, he or she may no longer have the money to pay for a life insurance policy. A company may offer a specific payment to the person, continue paying the premiums, and will become the beneficiary of the death benefits, Wildman said.

In some cases, a stranger purchases a life insurance policy from another individual for a certain amount of money, she said. Another method is when a company contacts a consumer and offers to buy a policy from him or her for cash value. One of these arrangements could involve an individual entering into free or no-cost life insurance, or someone may buy a policy just to sell it to a third-party investor. In viatical settlements, different investors will invest in a life insurance policy on a person who has some sort of life illness.

“Anytime someone’s wanting to buy your policy from you, you should always question it,” Wildman said.

She said consumers should be careful when thinking about participating in a STOLI arrangement. Persons need to determine whether a tax consequence or other problems could result if they purchase one of these life settlement arrangements. It could also cause limits on future insurability or higher premium for additional coverage.

“The first thing to consider is someone is going to make money off your death, Wildman said. “Youu’re putting your life in someone’s hands who will profit from your death, which is a scary thing.”

“They may not give you what your policy is worth. (Consumers) are not going to benefit from what they paid over the years.”

STOLI arrangements often originate from investment firms that set up trusts specifically for this purpose and often target people who are 65 to 85 years old. West Virginia doesn’t license these types of companies, she said.

Wildman said the Offices of the Insurance Commissioner receives calls from people questioning life settlement agreements and refers these types of complaints to the auditor’s office.

People may consider a STOLI life settlement arrangement if they have an illness or are in a tough financial situation, but clients can obtain accelerated benefits from insurance firms without having to sell their policy to another company, she said.

In most cases, people establish a life insurance policy to take care of family in the event of their death and designate loved ones as beneficiaries. With an accelerated death benefit, a person gets a portion of the benefits now and family or friends also receive death benefits, Wildman said.

If a company offers to purchase a consumer’s life insurance policy, the person should always investigate the business and also look into the benefits and options associated with their existing policy.

Wildman advised consumers to “know their policy and check it out first before they agree to anything. They may have an accelerated death benefit available to them.”

Source: Jessica Legge
For life insurance premium financing (not STOLI), please call a premium finance professional at 1-888-973-8377

Coming soon, a site dedicated to Life Settlement Articles (LifeSettlementArticles.com)

Among the notable differences, NCOIL has adopted a “first-of-its-kind definition of STOLI,”2 which is defined as “a practice or plan to initiate a life insurance policy for the benefit of a third-party investor who, at the time of policy origination, has no insurable interest in the insured.”3 The definition goes on to say that “STOLI practices include but are not limited to cases in which life insurance is purchased with resources or guarantees from or through a person, or entity, who, at the time of policy inception, could not lawfully initiate the policy himself or itself, and where, at the time of inception, there is an arrangement or agreement, whether verbal or written, to directly or indirectly transfer the ownership of the policy and/or the policy benefits to a third party.”4

Another distinguishing point between the two models is the length of time a policyholder is prohibited from settling a policy. The NCOIL Model Act has a two-year moratorium on settlement, which parallels the contestability period traditionally used in life insurance contracts, whereas the NAIC model has a five-year moratorium with certain exceptions for life-changing events.

Recognizing that some commentators have criticized the five-year ban in the NAIC model as addressing STOLI at the back-end, North Dakota State Representative George Keiser, NCOIL’s Life Settlements Subcommittee chairman, said, “STOLI occurs at the front-end of a life insurance sale. By defining STOLI, and strengthening reporting requirements and penalties for participating in STOLI, the NCOIL model gets at the heart of what needs to change.”5 Despite the amendments to the Model Act, “[NCOIL] attempted to protect all of the legitimate applications of financing, trusts, and the structural options that exist in packaging products sold, both from the life settlements perspective, and from the life insurance industry,” said Mr. Keiser.6

The Model Act also includes:(1) a recommendation that states amend their insurable interest laws, if necessary, to prevent the use of trusts to benefit investors without insurable interest; (2) an annual statement requirement for contracts settled within five years of policy issuance; and (3) a penalties section addressing fraudulent life settlement acts.

Source: Mondaq

Death Trap Ahead
Death bonds may sound like a good investment–but are they?

When I started seeing articles last summer about something called death bonds, it took me back to the ’90s when I was a personal finance columnist in Tampa, Florida, witnessing the tail end of the viatical settlement movement. Viaticals were contracts calling for an investor to pay part of a seller’s life insurance policy upfront and wait to collect the full amount when that person died. Viaticals originally catered to AIDS patients but were later marketed to all sorts of terminally ill folks. The viatical business worked in theory, but in practice, it attracted shady characters and enough fraudulent behavior to keep a personal finance columnist busy for years.

With death bonds, it seems the viatical settlement industry has matured and drunk the Wall Street Kool-Aid. Life settlement-backed securities are essentially spiffed-up viaticals. But this time, companies are bundling them up, dividing them into bonds and selling them mostly to institutional investors. Providers market them as good investments because they’re not correlated with traditional investments–undoubtedly true–and because they can generate returns of 8 percent a year or better. The return figures might not be exaggerated, though history tells me to keep a hand on my wallet when listening to claims made by the people who dream these things up. As long as Wall Streeters are bundling the bonds for sale to hedge, pension and mutual funds, I’ve got no complaints. But don’t be surprised to hear a sales pitch arguing that sophisticated individual investors could use some death bond diversification, too.

A couple of simple online searches tell me what I need to know for now: Many of the same characters from the old viatical business are now working the life settlement trade, which is to say that securities regulators are beginning to unearth scams. In some cases, promoters have attempted to persuade people (who aren’t terminally ill) to take out life insurance strictly for the purpose of selling it. In others, they’ve inflated the expected returns based on the life expectancies of insurance holders. It’s no wonder the National Association of Securities Dealers recently issued a warning about abusive practices in the industry.

So unless or until the industry gets absorbed by the mainstream investment community and sheds its sketchy past, steer clear.

Source: Scott Bernard Nelson is a newspaper editor and freelance writer in Portland, Oregon.

The initial index will independently track monthly a pool of 46,290 anonymous U.S. citizens over age 65, providing real-time publication of mortality information. The results will be periodically verified by a third party.

The New York financial firm said that until now, holders of mortality risk – such as insurance carriers and reinsurers – and holders of longevity risk such as pension funds and annuity writers – had no mechanism to manage their exposures in the capital markets.

Now, hedge funds, banks and asset managers with existing positions in the cash longevity market, or those with an interest in gaining synthetic exposure to this uncorrelated risk class, will be able to use the index to either hedge existing exposure or to initiate investments.

“This will result in more transparent pricing of longevity risk, should reduce transaction friction, and will likely lead to improved economics for market participants,” said Alex Dubitsky, head of Goldman Sachs’ Longevity Markets Group.

The index also could help manage risk in a burgeoning business market that, in effect, makes hedges on death itself. The business is referred to as “life settlements.”

The way it works is a firm pays the holder of a life insurance policy a lump sum for the policy now, takes over paying the premiums for as long as the insured person lives, then collects the benefits — generally worth far more — when the person dies. The firm keeps some of the policies in its own portfolio. It sells others to institutional investors.

In April, Goldman Sachs, Credit Suisse Group and Bear Stearns Co. helped form the Institutional Life Markets Association to lobby against efforts to restrict the business. If successful, Wall Street firms could buy policies directly and squeeze out the middlemen. This year, Cantor Fitzgerald LP set up an Internet-based exchange for those who want to sell or buy policy rights.

Life settlements stir objections, and not only because they make some people squeamish. Some state regulators have called life-settlement terms unfavorable in some cases to policyholders. They’ve also charged that certain arrangements flout the spirit of laws designed to keep speculators from taking out policies on strangers.

Source: Wall Street JournalÂ

Doubletree Hotel Philadelphia
March 11-12, 2008

The National Underwriter Company Life Settlement Summit is the most educational event for carriers, providers, brokers and investors involved in this sector. This summit will cover the latest political, regulatory and legal developments as well as new products, investment strategies, and pricing structures.

Featured Speakers:
Alan Buerger
Co-Founder and Chief Executive Officer
Coventry

Stuart Hersch
President and Chief Executive Officer
Cantor LifeMarkets

Erik Friedman
Senior Managing Director Investment Banking
Bear, Stearns & Co

Rep George J. Keiser
Chairman
Life Settlements Subcommittee
National Conference of Insurance Legislators

Don’t miss out hearing from an excellent lineup of CEO speakers representing:

Life Settlement Solutions

Neuma Inc.

Secondary Life Capital, LLC

Milestone Managers and Providers

Proverian Capital, LLC

Q Capital Strategies, LLC

Abacus Settlements, LLC

Life Insurance Settlements, Inc

Integrity Capital Partners LLC

Select Life Settlements Corporation

Advanced Settlements, Inc

Ashar Group LLC

Wealth Management Capital Holding GmbH

Life Equity LLC

On Thursday, bankruptcy court judge Burton Lifland agreed to delay the auction until Jan. 9.

The Ireland-domiciled funds sought bankruptcy protection in June after they lost about $700 million on investments in life insurance settlements issued by Coventry First.

Coventry First buys life insurance policies and, after paying the policyholder a settlement price, sells the rights to the policies to investors.

In documents filed in the bankruptcy case, Ritchie claimed that the assets won’t be worth their full value if they don’t include the underlying documentation, called life settlement files, for the asset-backed securities. Coventry is in possession of those files.

Coventry, however, claimed Ritchie never owned the files and, therefore, can’t include them in the auction.

The bankruptcy court judge has yet to rule on the issue of who owns the files, according to attorneys for both sides.

In May, Ritchie sued Coventry First under the Racketeer Influenced and Corrupt Organizations Act. The lawsuit alleges that Coventry defrauded both policy owners and investors by engaging in bid rigging and concealing unlawful practices.

Last year, when New York State Governor Elliot Spitzer was still attorney general, he sued Coventry claiming it engaged in fraudulent practices. That case was mostly dismissed on jurisdictional grounds. A Florida investigation into Coventry was settled without an admission of liability, although the company agreed to pay $1.5 million for the cost of the investigation.

Source: HFN

Life Partners had hoped the top court would resolve conflicting opinions on the matter in two federal circuit courts.

Life Partners had appealed a U.S. 4th Circuit Court of Appeals case in Richmond, Va., that went against the company on April 30. It upheld a lower court that said viaticals are to be considered part of the insurance business and thus can be regulated by states.

A 1996 decision by the U.S. Court of Appeals in Washington, D.C., ruled that Life Partners transactions did not constitute the business of insurance.

The Virginia case involved a viatical policy sold by a terminally ill woman who had invoked the state’s minimum pricing provision. Life Partners had paid her $29,000 for her $115,000 policy. But she later learned that she would have been entitled to at least $69,000 under the state’s pricing policy.

Jay Hottinger, a Republican in Ohio’s House of Representatives, and Matthew Barrett, a Democrat, plan to introduce House Bill 404 in the Insurance Committee, according to Jonathan Baker, a legislative aide for Hottinger.

He said his office worked on the bill with the American Council of Life Insurers (ACLI), a trade group representing major carriers, and the Ohio Insurance Department.

A committee hearing on the proposal may be scheduled for next Tuesday or Wednesday, Baker said.

“Life insurance is designed to provide protection to covered individuals and those who have an interest in that person’s life,” Hottinger said in a Nov. 30 joint press statement with Barrett. “The practice of STOLI financially benefits those who have a great interest in that person’s death. That’s why Ohioans should be interested in stopping this unconscionable practice.’

“We’re closing a dangerous loophole with this legislation,” Barrett said in the statement. “We must stop people from taking advantage of some of our most vulnerable citizens, and this bill takes a big step toward broadening protections for our seniors and their families.”

Source: APÂ

This should not have any effect on normal Life Settlement Transactions in the state of Ohio. Call 1-888-973-8377 with any Life Settlement questions or cases.