A confluence of demographic and economic forces are aligning to drive substantial growth of the life settlements asset class, according to featured speakers at this week’s Life Insurance Settlement Association (LISA)’s Ninth Annual Life Settlement Institutional Investor Conference in New York.
“Now is the best time ever to invest in life settlements,” said Alan H. Buerger, executive chairman and co-founder of Coventry, the pioneer in the life settlement industry. “We are seeing organic growth of this market through the education of consumers and their professional advisors of the life settlement option as an alternative to the lapse or surrender of a life insurance policy. In addition, the demographic trends are very favorable for our industry, with 10,000 Americans turning 65 every day and struggling to fund their retirement income needs.”
In his keynote address at the conference, Buerger noted that a recent Coventry survey found 8 in 10 seniors who contacted the company to discuss a life settlement were not previously aware that they could sell their life insurance policy.
“Life settlements have proven to be an attractive option for consumers who no longer need their life insurance policy, so they are now accepted as self-evident transactions by regulators, financial intermediaries and institutional investors,” Buerger said.
“The performance of the U.S. financial markets in 2018 really illustrates the value of life settlements to institutional investor portfolios,” said Dan Young, senior managing director at Vida Capital, in opening remarks at the conference. “Last year, every major investment category was down — stocks, bonds and even supposedly uncorrelated assets such as gold — but life settlements continued to deliver consistent returns for institutional investors who owned them in their funds.”
“The consumer is in need and we can help them,” said Darwin M. Bayston, president and chief executive officer of LISA. “LISA’s Life Settlement Institutional Investor Conference bridges the gap between consumer policyholders and sources of investment capital by bringing together professionals from pension funds, hedge funds, family offices, foundations and endowments for updates on the latest developments in the life insurance secondary market.”
A panel discussion (“The Evolution of Life Settlements: From Origination to Portfolio Management”) — featuring Steven Shapiro, president and CEO of Q Capital, John Welcom, founder and CEO of Welcome Funds, and Jeffrey Bollerman, managing director of Houlihan Lokey — also walked attendees through changes in the life settlement marketplace that have led to a sharp increase in business volume over the past three years.
The panelists agreed that both consumers and institutional investors have grown more comfortable with life settlement transactions, fueled by increased awareness of the life settlement option as an alternative to lapse or surrender of a life insurance policy, as well as a change in federal estate tax law that has many seniors re-evaluating the need to maintain their policies.
Another featured session at the conference was titled, “Hot Topics in Life Settlements” — a panel discussion featuring Jule Rousseau, partner at Arent Fox, Matthew Sheridan, consultant to QuantRes, Nat Shapo, partner at Katten Muchin Rosenman LLP, and moderated by Mark Venn, chief executive officer of ClearLife, Ltd., that provided attendees with important updates on key legal and regulatory issues, such as upcoming court proceedings in Cost of Insurance litigation, new tax reporting requirements created by the 2017 Tax Cuts and Jobs Act, and developments in return of premium cases.
About LISA: The Life Insurance Settlement Association (LISA) is the nation’s oldest and largest organization representing participants in the life settlement Industry, with a current membership of more than 90 companies doing business in all 50 states, the District of Columbia, Puerto Rico and the U.S. Virgin Islands. The mission of LISA is to promote the development, integrity and reputation of the life settlement industry, to advance the highest standards of practice and professional development for the industry, and to educate consumers and advisors about a life settlement as an alternative to lapse or surrender of a life insurance policy. For more information, visit www.lisa.org.