Cordares invests in the US secondary insurance market
Dutch pension company Cordares invests in the US secondary insurance market
This is the pension provider’s first investment in the US life settlement market.Â
LONDON (Thomson IM) - Cordares, the pension provider in charge of 26.5 bln eur of
assets of five pension schemes including the construction and social housing sector,
has become one of the first Dutch providers to make an allocation to the US life
settlement market.
Cordares, the company in merger talks with ABP, has made the investment on behalf of
one of its main pension scheme clients.
This portfolio has provided funds for the new life settlements investment, which was made in the second quarter of the year, following the example of the the pension fund for the metal industry, PME, which last year invested about 400 mln eur to this emerging asset class.
A life settlement is a financial transaction in which a policy-owner can sell an unwanted life insurance policy to a third party for more than the cash value offered by the life insurance company.
The buyer becomes the new beneficiary of the policy at maturation but is responsible for all subsequent premium payments.
A four-strong team at Cordares spent 18 months studying the market before deciding
on the investment, Remco Zomer, the life settlement portfolio manager at Cordares,
told Thomson Investment Management News.
Zomer declined to disclose the amount of the investment but said he expected the
investment would yield a return of a round 8 pct a year.
Remco said Cordares saw it as a mortality-pool investment, leveraging its knowledge
of longevity risk.
Remco is also among the Cordares staff currently advising Dutch and international pension schemes interested in life settlement investments. Cordares offers both advisory and asset management services to potential investors in the new asset class.
Aside from life settlements, most Cordares’ clients invest in other alternative classes including infrastructure and hedge funds and commit between 2 pct and 10 pct.
Source: Cecilia ValenteÂ
