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Increased Life Settlement Supply in the US will Benefit Life Settlement Investors in Coming Years
Policies entering the secondary market could be up by up
to 40% in the next few years with potential enhancements to
investment returns as a result.
SL Investment Management (SL), one of the largest life
settlements investment managers in Europe, is predicting a market
increase similar to that seen by the TEP industry when UK life
insurance providers were forced to inform consumers about the
secondary market; SL predicts this will happen in life settlements
following adoption of similar laws in the States.
The US National Conference Of Insurance Legislators (NCOIL)
adopted legislation requiring life assurance companies to provide
alternatives to lapsing or surrendering a life policy and this
model has now been implemented in a number of US States.
According to a survey by the US Government and Accountability
Office, consumers who chose to sell their policy in the secondary
market received seven times more on average than if they had chosen
to sell the policy back to the insurer for the policy's cash
Furthermore, a recent survey by industry commentators Dealflow,
revealed that $5.04bn worth of life policies were traded in the
secondary market in the US in 2011 - up 18.5% on 2010.
SL predicts the trend will continue if further states adopt the
NCOIL model and this may drive a similar market increase in the US
as was experienced in the UK when disclosure requirements lead to a
40% increase in secondary policies being brought to the UK
secondary life policy market.
SL's Investment Director and ELSA Chair, Patrick McAdams,
commented: "More policies entering the secondary market in the
US is good news for investors. Life Settlement managers will have
greater choice in terms of the quality and price of policies they
wish to buy for their portfolios. This is continuing good news for
the surge in interest from sophisticated investors that the asset
class is enjoying at the moment."
Read more in the article 'US TEP
market hots up' at the FT Adviser and the article
'Increased life settlement supply in US will benefit investors'
in the Wealth Adviser.