Life Settlement News

The life settlement investing space is slowly gaining traction in the financial industry both by the growth of assets in the space and the performance of those specializing it. In fact the trade organization Life Insurance Settlement Association (LISA) confirms that up until now “capital from Wall Street, such as hedge funds and pension funds, still view this asset as too exotic, complex, and not transparent enough.”

However, that may change in 2009 after use of these instruments and understanding of them grows. In 2009 AIG used a securitization of an $8.4 billion pool of life settlement policies to repay its $1.2 billion loan to the Feds. British Virgin Islands-based Tranen Capital’s +2.49% return for March 2009 (+11.5% YTD) hopes that recognition from its top spot on the Barclay Hedge Rankings provide another indicator that these markets are not only viable, but have returns completely uncorrelated to the larger markets.

Tranen Capital, which also has offices in Boston, launched in July 2008. The Tranen Capital Alternative Investment Fund is now two months shy of its first anniversary and has managed to return 27%.

Tranen Capital’s strategy is to trade life insurance policies in the Life Markets Space, more commonly referred to as the Life Settlements Market. The Life Markets Space enables seniors to sell their life insurance contracts for more than the cash surrender value than they would otherwise receive from the Insurance Company. The credit crisis has helped create more supply as Seniors (65 or older) are looking for other ways to generate cash. In fact, the life settlements market is expected to grow to over $160 billion over the next several years, according to a Sanford Bernstein report.

According to the firm website: “Utilizing the various benefits of Life Insurance products, Tranen Capital operates a diversified strategy by managing variables of value, contestability and projected maturities, carrying the strategy forward by selecting from two options of the realization of profits, being a classic buy and hold strategy, where policies would be held until maturity.

For more information about Hedge Funds, visit Life Settlement Funds.

Source: HedgeCo and Opalesque

This entry was posted on Wednesday, May 27th, 2009 at 9:52 am and is filed under Life Settlements. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.