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B. G., Opalesque Geneva: 2022 has called on investors to return to the basic investment principles: analysis of risk, return, and non-correlation. Among the asset classes providing genuine non-correlation is life settlements.
To discuss life settlements as an asset class, Opalesque has assembled a panel of experts for an interactive webinar: a specialised institutional investor, a life settlements asset manager, and an expert in the fields of immunology, drug development, and mortality trends. The webinar, ILS Life Settlements: The Institutional Approach, will take place on January 18th (details below).
Life settlements in 2022 and forward
Following the double-digit losses in both the US bond and equity markets in 2022, and since the life settlement market is considered an alternative investment, one might think that this asset class too has had similar negative returns, commented Corwin Zass, an actuary, in Financier Worldwide. "This is not the case," he says. "During this period of financial chaos and excessive inflation, in general, the typical buyers of life settlements were not deviating too much from their prior-year discount rates as part of their discounted cashflow computations that frame the price to bid."
An increase in interest rates this year may well push new investors into this asset class, he adds. "More investments are possible from a widening list of investors targeting less volatility in returns."
Enters the Laureola Fund, a life settlements fund - managed by Tony Bremness, who will take part in the webinar. After returns of -0.5% in November, the manager estimates the $40m Bermuda feeder fund to end the year flat.
"The results are below expectations, but even a flat year compares favourably with all traditional asset classes including bonds," says a monthly report from Laureola Advisors seen by Opalesque.
Since its inception in May 2013, the fund, which buys individual life insurance contracts, has returned 235%, compared to the S&P 500's return of 155% in the same period.
Investors in general suffered from declines in asset values last year, but it was the high levels of correlation that hurt portfolios even more, the report says. "As the adults take back control of the markets, the basic investment principles will come to the fore: analysis of risk, return, and non-correlation. Understanding these - both on individual assets and across a portfolio - is the foundation of successful portfolio construction."
For those investors who want to build a 'back to basics' portfolio, the most important component of the Laureola Fund's returns is the proven non-correlation. "This is supported by the quantitative analysis: the correlation with all other asset classes is near zero. In the 115 months since inception, the Laureola Fund has contributed to the standard 60/40 investment portfolio by both reducing volatility and increasing returns."
A life settlement refers to the sale of an existing insurance policy to a third party for a one-time cash payment. Payment is more than the surrender value but less than the actual death benefit. After the sale, the purchaser becomes the policy's beneficiary and assumes payment of its premiums. By doing so, he or she receives the death benefit when the insured dies.
Next webinar:
Life settlements is an asset class with great promise for producing genuinely non-correlated returns which many investors are not taking advantage of. Watch three experts discuss the asset class in our webinar: ILS Life Settlements: The Institutional Approach
Who: Karim Dellal, Tony Bremness, Khadija Benlhassan, PhD
- Karim Dellal is a former Senior Portfolio Manager at the Abu Dhabi Investment Authority (ADIA), one of the world's largest and most respected Sovereign Wealth Funds. Karim spent 20 years of his career at ADIA. In that time Karim specialised in Alternative and Quantitative strategies; his focus for the last 4.5 years has been on Insurance Linked Securities (ILS) and Life Settlements.
- Tony Bremness has been the founding partner, managing director, and CIO at Laureola Advisors Inc since 2012. Mr Bremness has over 35 years of asset management experience, including 10 years in life settlements.
- Khadija Benlhassan, PhD is a biotechnology executive and entrepreneur with 20 years of experience in preclinical and clinical research and development. Currently, she is an expert for the European Community, founding director of Voynich Biosciences Inc, chief scientific officer of Wellness Group Intl SA, and part of the scientific advisory board of Laureola Advisors Inc.
When: Wednesday, January 18th 2023, at ET 11 am, PT 8 am, UK 4 pm, CET 5 pm
Free registration: www.opalesque.com/webinar/
Related article:
02.Nov.2021 Opalesque TV: How life settlements managers earn their keep
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