Life Settlement News

Ritchie Units Reach $10M Deal to End Coventry Document Fight

Two bankrupt investment units of Ritchie Capital Management LLC will pay Coventry First LLC $10 million in exchange for its recognition that they own key documents necessary for the sale of more than 1,000 life insurance policies.

Under a deal struck Thursday, Coventry, a leading buyer of life insurance polices, also agreed that the $10 million payment will settle all claims it holds against the Ritchie units. The deal between the Ritchie units and Coventry allowed the parties to avoid a contentious hearing on who owned the documents, which are described by Ritchie as life settlement files. Coventry calls the documents origination files.

U.S. Bankruptcy Judge Burton Lifland, who approved the deal Thursday, had urged the two sides to come to an agreement.

“I point out that (sanctions are) subject to reevaluation and resurrection in the event that there is a failure to …honor the agreement,” Lifland said. The two Ritchie units Ritchie Risk-Linked Strategies Trading (Ireland) I and II  collapsed into bankruptcy last summer. Ritchie is looking to sell more than 1,000 life insurance policies it bought from Coventry in 2005 for more than $750 million. Ritchie said it bought the life settlement files from Coventry at the time it bought the life insurance policies, but Coventry had denied that.

The documents are needed for policy owners to obtain the insured’s medical records and update the person’s medical history. That’s crucial for monitoring the health of the insured and accurately valuing the policy, according to Ritchie.

Ritchie had warned that without the life settlement files, bidding from potential buyers would be severely depressed. Ritchie is looking to sell the policies at an auction scheduled for Jan. 9.

In the life settlement business, companies buy life insurance policies from individuals, paying more than if the insured surrendered the policy to the insurance company but less than the death benefit. The buyer then pays the premiums and collects the death benefit when the insured dies.

When we get more information here at Life Settlement News about the upcoming Life Settlement Auction for the Ritchie policies, we will post about it.

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Life Settlement Hedge Fund Auction

This entry was posted on Monday, January 7th, 2008 at 1:05 pm 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.