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Alternative Market Briefing

Pensions, endowments, family offices reconsider life settlement investments

Thursday, April 10, 2014

Bailey McCann, Opalesque New York:

Hedge funds were once the largest investors in the life settlement industry, now the industry is seeing more interest from pensions, endowments and family offices directly. Life settlements have always been considered a niche part of the investing landscape, and their high rate of return was attractive to hedge funds. However, as hedge funds have shifted to more short term investing allocators themselves are stepping in.

"The typical timeline for an investment like this is minimum 7 years, that can be a long time for a hedge fund to be locked up in an investment in the current environment," Scott Page, president and CEO of The Lifeline Program tells Opalesque. "Instead, we're seeing more interest from pensions, endowments and family offices that have a longer term investment horizon and can stay with these vehicles for the long haul."

The Lifeline Program provides life insurance settlement options for life insurance policyholders that wish to get out of unwanted or underperforming policies. Typically one of these policies is considered underperforming if a policy holder took out universal life coverage when interest rates were much higher and now sees little help from interest rates in terms of cost and coverage. Depending on the age of the policyholder, investors who wish to purchase these policies can find a decent return multiple.

"Well constructed life settlement portfolios can have long term returns in the low- to......................

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