Longevity Coverage Now Available to Mitigate Extension Risk in Life Settlement Portfolios

Risk Capital Partners (RCP) today announced that it has structured longevity extension coverage in cooperation with a leading European P&C and Life carrier rated A- by S&P. The product addresses investor requirements to lock in a sum certain at a future maturity date. Although similar protection had been offered in the past by a credible Lloyd’s syndicate, in recent years few reputable carriers have been willing to offer a suitable product. Instead, most investors have found that longevity extension products have been limited to highly suspect entities attempting to exploit irrational investor demand.
Risk Capital Partners, a risk specialist in the life and property casualty arena, has spent the past six years evaluating and debunking purported longevity extension products while attempting to develop longevity coverage with credible insurers. RCP’s multi-disciplinary set of skills and expertise includes: tax and accounting related to insurance products; actuarial and underwriting for both life and property casualty non-traditional products; investment banking related to insurance securitizations and a keen ability to develop new risk transfer products that meet a pressing market condition on behalf of leading insurance providers.
The terms of the RCP LE product will offer flexibility to meet investor return requirements. However, the basic construct may be summarized as follows: the insured has the option at life expectancy + 1 or 2 years to transfer ownership of (or assign proceeds from) a life settlement policy to the insurer for a claim equal to some percentage of the face value of the life insurance policy. Furthermore, a Commitment of Coverage can be procured prior to the actual binding of coverage, allowing investors to acquire policies after receiving assurance that LE coverage is available.
About Risk Capital Partners
Risk Capital Partners (RCP) is a boutique insurance consultancy and brokerage that specializes in modeling actuarial data, developing complex underwriting pitch books and brokering insurance policies for clients who seek to mitigate unconventional risks. We are unique due to: Our exclusive focus on the mitigation and placement of complex risks; Our proven track record developing unique risk transfer products that enable complex transactions; Our extensive network of senior level contacts among property & casualty carriers, life carriers, re-insurers and financial markets; Our continuous efforts to research and develop new risk transfer vehicles to unlock hidden financial value; Our unparalleled risk finance knowledge, skills and credibility with insurers; And our integrity and commitment as a boutique firm to serve our clients to the best of our abilities.

Fla. Judge Dismisses Coventry Case

An administrative law judge in Florida has dismissed a life settlement firm’s claim that state regulators have no right to demand records of its out-of-state business.

Suzanne Hood, a judge in the state’s Division of Administrative Hearings, rejected the contention of Coventry First L.L.C., Fort Washington, Pa., that the Florida Office of Insurance Regulation had failed to follow statutory requirements when it set up a procedure for demanding the business records of settlement firms operating in the state.

The Florida OIR maintained in the case that its procedures for examining viatical cases were an internal management process and hence exempt from state requirements for agency rule-making.

Hood has agreed with the Florida OIR. The statute that gives the Florida OIR authority to examine all books and records “does not differentiate between in-state and out-of-state records,” Hood says.

An attorney for Coventry says the company has filed a notice with Florida’s appellate court that it will appeal the decision.

“The method the [OIR] is using is an unadopted rule,” says Nat Shapo, a lawyer with Katten Muchin Rosenbaum L.L.C., Chicago, which represents Coventry in the case. “It’s clear that no rule has been adopted. And, if it’s unadopted, it’s a violation of the statute.”

Shapo, a former Illinois insurance department director, says Coventry welcomes Florida OIR review of Florida transactions.

“The issue we’ve objected to is the review of non-Florida transactions by Florida regulators,” Shapo says. “Coventry has cooperated and will continue to cooperate for any transactions in the regulator’s state.”

Longevity Coverage Now Available to Mitigate Extension Risk in Life Settlement Portfolios

NEW YORK – (Business Wire) Risk Capital Partners (RCP) today announced that it has structured longevity extension coverage in cooperation with a leading European P&C and Life carrier rated A- by S&P. The product addresses investor requirements to lock in a sum certain at a future maturity date. Although similar protection had been offered in the past by a credible Lloyd’s syndicate, in recent years few reputable carriers have been willing to offer a suitable product. Instead, most investors have found that longevity extension products have been limited to highly suspect entities attempting to exploit irrational investor demand.
Risk Capital Partners, a risk specialist in the life and property casualty arena, has spent the past six years evaluating and debunking purported longevity extension products while attempting to develop longevity coverage with credible insurers. RCP’s multi-disciplinary set of skills and expertise includes: tax and accounting related to insurance products; actuarial and underwriting for both life and property casualty non-traditional products; investment banking related to insurance securitizations and a keen ability to develop new risk transfer products that meet a pressing market condition on behalf of leading insurance providers.

The terms of the RCP LE product will offer flexibility to meet investor return requirements. However, the basic construct may be summarized as follows: the insured has the option at life expectancy + 1 or 2 years to transfer ownership of (or assign proceeds from) a life settlement policy to the insurer for a claim equal to some percentage of the face value of the life insurance policy. Furthermore, a Commitment of Coverage can be procured prior to the actual binding of coverage, allowing investors to acquire policies after receiving assurance that LE coverage is available.

Law regulating life settlements, banning STOLI advances in New York

A new law regulating New York’s life settlements market and outlawing stranger-originated life insurance (STOLI) is awaiting the signature of Gov. David A. Patterson.
The New York State Senate passed the measure, sponsored by Sen. Neil D. Breslin (D-Delmar), outlining new regulations for the market, including protecting the medical and financial information of consumers. An accompanying New York Assembly bill (A 7131), sponsored by Assemblyman Joseph Morelle (D-Rochester), was passed in June.
If the governor signs it, the new legislation would require the licensure of life settlement companies and brokers by the New York State Insurance Department. It also would mandate that the policyholder and the individual insured under the policy consent to the release of medical and other personal information; life settlement companies and investors would need to keep any personal information related to the transaction confidential.
Similar to steps taken in other states nationwide, the New York law also would outlaw STOLI transactions, where large life insurance policies are purchased, usually for senior citizens, for the purpose of selling the policy within a short period of time.
Breslin said that a side effect from the growing life settlement market has been individuals insured under policies who do not have a life-threatening illness. When those individuals no longer want or need their policy and are able to obtain a monetary benefit greater than the cash surrender value, but less than the death benefit of the policy by selling it to a “life settlement provider.” The provider can then resell the policy to a third-party investor, a transaction that fell outside of state law until the new regulation would prohibit it.
“This legislation contains numerous disclosure and consumer protection provisions which will help to ensure that an owner considering selling his or her policy makes an informed decision,” Breslin said in a statement. “The legislation will also protect the medical and other personal information of those who enter into a life settlement transaction. In addition, this legislation specifically outlaws certain improper and abusive practices currently happening in the life settlement industry.”
Breslin added he is encouraging Paterson to “immediately sign what will be one of the most comprehensive and effective laws in the country for the regulation of the life settlement industry.”
In response to the possible new law, the Life Insurance Settlement Association (LISA) had a mixed message of support and concern for New York legislators.
The Orlando, Fla.-based trade association said the STOLI provisions of the law clearly reaffirm that such transactions occur at inception and does not include life settlements and that the new regulation also subjects life insurance companies to penalties for engaging in STOLI transactions.
With New York joining 38 other states regulating life settlements, LISA said even in the absence of regulation, state consumers have benefited from the market by receiving, on average, 300%-500% more than the cash surrender value in their policies.
“Furthermore, New Yorkers have been well protected by the best practices that have been advanced by LISA and its members,” the association said in a statement.
LISA pointed out that during hearings in New York last year, the state’s insurance department did not receive one complaint from those who have sold their policies and that the National Association of Insurance Commissioners has not recorded a complaint to date this year.
“LISA applauds the bill sponsors and the New York State Insurance Department for working with LISA and its members in crafting this legislation,” the association said. “While this bill is a good start to regulating life settlements in New York, there are several provisions which concern LISA and its members, and LISA will continue to work for reforms which will serve the consumers of New York. Of greatest importance is that New York consumers be educated and notified about all of their rights under their life insurance policy, in a timely manner, including the option of a life settlement, whenever they are facing a lapse or surrender of that policy.”

New York State passes reforms for Life Settlement Consumer Protection

ALBANY – The New York State Senate convened in extraordinary session, passing reforms that deliver wide-ranging relief for millions of New Yorkers. The legislative package includes increased protections for homeowners and consumers, energy efficiency loans for property owners, and an expansion of health benefits for the uninsured.

• Mortgage Foreclosure Bill: Expanding upon legislation passed by the Senate in 2008, this bill provides additional measures to protect homeowners at risk of foreclosure, and to prevent similar crises from occurring in the future.
• Life Settlement Bill: The legislation regulates the billion dollar life settlement market in New York ensuring greater consumer protection for millions of New Yorkers.
• Municipal Energy Sustainable Loan Program: Taking another significant step toward a cleaner, greener and more energy efficient New York, this bill enables property owners to lower energy costs, reduce greenhouse gas emissions and reduce dependence on fossil fuels.
• COBRA Amendment: As health care costs continue to skyrocket and the number of uninsured growing by the day, this amendment to legislation previously passed by the Senate will make thousands of individuals eligible for an extension in their COBRA benefits.

Life Insurance Policy Securitization

Assured Fund has warned that "unrealistic" calls for the securitisation of life settlements failed to take into account the complexities involved in such a move.

Andrew Walters, finance director at Assured Fund, said it was concluded last month that the market infrastructure did not exist for the securitisation of life settlements.

Mr Walters said it would be instructive to examine whether a wholesale securitisation of the market could really work. He said: "Some sceptics claim the market cannot handle the volume of policies required. There was $26trn (£15.5trn) of life insurance in force last year, but only $12bn traded.

"Undoubtedly, far more could have been traded if the sector, like the whole financial market, had not experienced a withdrawal of investment, which means many policies went to waste."

Mr Walters said there was a fear overaggressive origination practices could occur to feed the industry, but he said these were often "short-lived" and "quickly weeded out".

But he warned the "potential Achilles heel" of securitisation was the liquidity pressure that would result from marrying the asset and the investment product, particularly during the early "ramping" phase.

"To maintain the assets," he said, "there is a continual cash outflow by way of premium payments, and at the same time there is a continual cash outflow by way of coupon on the bond and, ultimately, the repayment of expected repayment of capital."

Win ­ Win Financial Solution for Seniors!

A Life Insurance Settlement is the sales of a life insurance policy to a third party in exchange for a cash settlement in excess of the cash surrender value of policy —even if none exists! This is also called as Life settlement, Insurance settle ment or Senior settlement.
Typically, a Life insurance settlement or senior settlement is about three to five times the cash surrender value of the policy.
Life settlement: When an individual who does not have a terminal or chronic illness sells a policy for other reasons, including changed needs of dependents, wanting to reduce premiums, and cash for meeting expenses, that is known as a Life settlement.
Viatical settlement: When an individual with a terminal or chronic illness sells his or her life insurance policy that is known as a Viatical settlement.
Hitherto, elderly Americans with life insurance policies they do not need or cannot afford to keep up have had little option. They will let the policies lapse or sell them back to their insurers. Now lots of them are glad to have an alternative, i.e. Life Insurance Settlement or Senior Settlement. Seniors may now be able to sell their policy for far more than the cash surrender value the insurance carrier would offer.
When you go for Life Insurance Settlement or Senior Settlement, the life insurance policy owner sells his or her contractual rights under the policy at its present market value in exchange for a lump sum cash payment, which payment exceeds the cash surrender value of the policy.
The purchaser of the policy will then become the new owner and the new beneficiary of the life insurance policy and is then responsible for making all of the future premium payments. The new owner now collects the full amount of the death benefit when the insured dies.
Life Insurance settlement or Senior settlement present a unique opportunity to the senior policy holder to extract the maximum possible value from an existing life insurance policy and repurpose those funds for whatever financial needs may exist.
Seniors can use the money received from Life Insurance Settlement or Senior Settlement, to purchase new insurance, travel the world, start a business, buy a property or fulfill their dreams. The money is theirs to simply enjoy and use it for any reason they can think of. In fact, seniors can use the cash settlement for medical expenses, living expenses, or anything they desire—with no restrictions.
There are various reasons why seniors sell their life insurance policy and opt for Life Insurance Settlement or Senior Settlement.
Why Sell Your Life Insurance Policy?
1. If you are chronically ill, selling your current life insurance policy provides needed funds to cover financial burdens caused by your illness. A viatical settlement gives you the ability to regain needed financial security.
2. If you are over the age of sixty-five, a life insurance settlement or senior settlement maximizes your current assets by eliminating premiums and getting funds that can be used today.
3. Pay off debts.
4. Make funds available for other investments.
5. Turn a lapse insurance policy into cash with Life settlement.
6. Pay your medical care bills.
7. Finance your retirement.
8. If you are a corporation, selling corporate owned life insurance lets you regain back premiums paid on no longer needed policies.
9. If you are a non profit organization, selling a gifted life insurance policy provides funds that can be used now and also eliminates premiums.
10. If you managing an estate, selling your current life insurance policy will help manage changes in estate size, eliminate premiums, and liquidate policies that no longer are needed.
What Insurance Policies Qualify for Life Insurance Settlements or Senior Settlements?
To find out whether you qualify, here are some of the requirements.
(A) Must be at least 65 years of age
(B) The face value of the policy is at least $50,000
(C) The insured has experienced deterioration in health since the insurance policy was issued; life expectancy is under 15 years
(D) The insurance policy is in effect beyond the two year contestable period
(E) You Are Over 21 with a Life-Threatening Illness – Viatical Settlement
But any policy owner, including individuals, corporations, charities or trusts, may sell any life insurance policy, including group and term policies.
What Types of Life Insurance Polices are purchased?
1. Government issued policies
2. Term Life
3. Universal Life
4. Survivorship policies
5. Many Group types of policies
6. Corporate Owned Life Insurance
7. Whole Life
8. Basically All Types of Life Insurance Policies
The Life insurance settlement value could be potentially much higher than the cash settlement of your life insurance policy. Do not continue to pay expensive premiums for coverage you no longer need, and do not surrender the policy or let it lapse. The Life Insurance settlement, Senior settlement or Viatical settlement solution is typically the Win-Win scenario that you have been looking for.

Viatical and Life Settlement Laws, Legislation and Regulation

Life settlement industry was formed on the extension of Viatical Industry and was evolved in the late 1990s. Life settlement according to the Conning study was referred as the sale and purchase or transfer of the existing life insurance policy to a new owner in exchange of huge lump sum amount under the circumstances where the owner of the policy or the insured individual has an impaired life expectancy.

Currently some states fall under the laws of the life settlement but yet there have been no uniform regulation implemented for the life settlement industry. Currently the regulation used by the industry is based on the model issued by National Conference of Insurance Legislators and The National Association of Insurance Commissioners. This model was regulated and later amended in the year 2004, and the implication it includes are as follows:
A separate provision is required for the license of the life settlement investment agent or for those who sell life settlements.
The broker of life settlement transaction need to complete 24 hrs of education before the licensing is issued to, to maintain the ethics and continue the education on biennium basis.
A provision is required to disclose the options to the policy holders regarding the life settlement transaction done under some circumstances.
A provision is also required for the prohibition of the person to enter into a transaction if the policy that is obtained and kept on sale is acquired by false or deceptive means.

  Life Settlement Regulation By States:
Life Settlement Regulation is implemented on each state but they vary from state to state on the basis of the conditions and circumstances prevailing in each state. In the state if any financial representative that is acting on behalf of the seller of the policy then he must be licensed from the state where the policy owner resides. On the other condition if the policy is owned by a trust, the required licensing and regulations that is implicated by the state are to be followed by the current trust and where is resides or the trust is domiciled. Each state has it own procedures and rules to allow one to practice the transaction procedure done for life settlement and they differ from state to state. But still a non resident of a particular state can obtain the license of that state if their home state government allows a non resident of their state to obtain the license on the same basis.

  How life settlement brokers, providers and advisors are regulated?
There are several aspects that surround the agents of the life settlement transaction. Before they start working on as an agent in the form of either as advisor or broker or provider they have to follow some procedures regulated on them and thus get through training to get a license so that they can assist the policy owners if they desire for a life settlement transaction. The regulation specifies the duties of the agents and the restriction created on their work area. It also includes regulation for examination, bond or letter of credit, their fees, contracts, record retention how to maintain the standard of conduct. The regulation also claims that the agent can only act or bid on the benefit of the policy owner if it claims to do so.

MetLife Executive Opposes Life Settlement Securitizations

Steven Kandarian, executive vice president and chief investment officer for MetLife, opposed securitizations of life settlements during testimony Thursday before a congressional committee.

Although he laid out a plan on how securitizations of other asset classes can be improved at a hearing of the House Committee on Financial Services, his views don’t apply to life settlements.

In a footnote in his statement, Kandarian said he opposes securitizing life settlements because it would lead to stranger-originated life insurance.

Life Settlement Political Action Committee Opens 2009 Campaign Drive in NYC

ORLANDO, FL–(Marketwire – November 4, 2009) – On November 8-10 in New York City, the Life Insurance Settlement Association’s (LISA) non-partisan federal political action committee, LISAPAC, will launch its 2010 campaign drive to preserve and protect the life settlement industry. As 2009 winds down, LISAPAC is aggressively gearing up for a new political year with tremendous possibilities as well as potential threats. In a matter of days, at the LISA 15th Annual Fall Life Settlement Conference, the PAC will remind life settlement professionals about its critical mission.

"On a federal level, 2009 will prove to be decisive year in the future of life settlements," remarked Mark Goode, LISAPAC Chairman. "In the midst of substantial and unprecedented federal interest in this market and the emergence of Wall Street participation in life settlements, the work of the PAC has never been more urgent and its important service to our market is clear." LISAPAC’s presence at the LISA 15th Annual Life Settlement Fall Conference comes in the wake of multiple significant developments coming out of Washington, D.C. In September, Congressman Paul E. Kanjorski (D – PA), Chairman of the U.S. House Sub-Committee on Capital Markets, Insurance, and Government Sponsored Enterprises, convened a hearing on life settlement securitization. In August, U.S. Securities and Exchange Commission (SEC) Chairman Mary L. Schapiro launched a special internal taskforce to review the subject of securitization in the settlement industry. The U.S. Governmental Accountability Office (U.S. GAO) is seeking a better understanding of life settlements as they develop a forthcoming report on the secondary market. Most recently, the North American Securities Administrators Association (NASAA) announced the formation of a task force to consider the issue of life settlement investment.

"The considerable action in Washington on this issue should serve as a wake-up call to all who seek to preserve the settlement option for consumers. Ours is a vital service to seniors that, despite exponential success in recent years, demands significant explaining to Washington legislators," explained Doug Head, LISAPAC Treasurer and LISA Executive Director. "Our job is to ensure that policy makers get it. They are facing some critical questions with regards to federal treatment of settlements in the scope of larger insurance legislation. Consumer property rights must be preserved in a time of expanded regulation."

During its inaugural fundraising campaign LISAPAC raised nearly $100,000 from more than 70 industry leaders. LISAPAC’s presence at LISA’s 15th Annual Fall Conference will serves as a major indication that it is driving for a substantial increase in participation by the life settlement community. "The stakes are simply too high and we must work together to achieve 100% industry participation for LISAPAC," commented Mark Goode. "One cannot overstate the gravity of the challenges we face on not only the legislative front but also from a public relations perspective. By now, it must be clear to all that media outlets drive the public discourse and, by extension, the debate among policy makers. LISAPAC serves a vital role in clarifying and, where necessary, correcting the direction of this discourse. In this regard, LISAPAC is an important force for good in promoting public policy that protects the interest of senior insured consumers, as well as protecting our marketplace."

To learn more about LISAPAC, please call the LISA office at 407-894-3797 and ask for the LISAPAC Administrator.

10TH ANNIVERSARY OF LIFE SETTLEMENT INDUSTRY

LISAPAC’s campaign comes at another significant moment in life settlement history — 2009 marks the 10th anniversary of the industry. At the 1999 September meeting of the National Association of Insurance Commissioners (NAIC) convened in Orlando, Florida, representatives from a settlement firm announced that they were actively purchasing policies from seniors who were not terminally ill. This was the first public acknowledgment of such transactions. Having evolved out of the viatical settlement industry, life settlements represented a quantum leap in the ability of an insurance policy owner to extract, while living, hitherto unrealized cash value. Since then, thousands have benefited from this unique financial opportunity.

About LISAPAC

LISAPAC, a qualified multi-candidate committee is the federal bipartisan political action committee of the Life Insurance Settlement Association. The purpose of LISAPAC is to use raised funds in support of United States Senate and House of Representatives candidates who endeavor to promote consumer rights which will lead toward a strong and competitive market for the life settlement industry by advancing the legislative and regulatory interests of the members of LISA. Any U.S. citizen or green card holder can contribute to LISAPAC. Contributions must be voluntary. Contributions are not tax deductible for federal income tax purposes. LISAPAC cannot and does not accept corporate contributions. LISAPAC is administered by its Board LISA’s Political Committee. LISAPAC’s Political Committee is comprised of LISA’s President, the Chairman of the Political / Legislative Committee and the LISA Executive Director. LISAPAC is fully compliant with all FEC and IRS Rules and Regulations.

About LISA

Established in 1994, the Life Insurance Settlement Association is the oldest and largest trade organization in the industry. Its goal is to promote the development, integrity, and reputation of the life settlement industry, and to promote a competitive market for the people it serves. LISA now represents over 140 members with a wide variety of interests in the industry. For more about the association, visit www.thevoiceoftheindustry.com <http://www.thevoiceoftheindustry.com> .