Longevity Protection:

Bringing the Life Settlement Market into the 21st Century.

The Life Settlement Market had seen exponential growth over the last 15 years only to be derailed by turbulent credit and equity markets, issuance of new mortality tables in 2008 and subsequent underwriting adjustments by the major life expectancy underwriters in the US. This market dislocation created opportunities for some as well as significant losses for others. The root cause of the losses experienced by most life settlement funds was the lack of cash flows from their portfolios. This coupled with a slowdown in the demand for all investments caused the tertiary market to swell with portfolios trading at steeply discounted values.

Some of these issues, particularly in closed ended structures, could have been avoided if the cash flows from the portfolio where insured. This is achieved by providing insurance against mortality extension within a pool of policies. There have been several insurers and reinsurers that have recently entered the space to provide solutions for the market. These solutions come in a variety of offerings such as put contracts on policies at life expectancy, while others are linked to an index or pool of lives whose characteristics are akin to call options. Wharton Advisors Corp. believes that this is the next step in the evolution of the life settlement market. The creation of these protection products will enable participants who could not tolerate the longevity risk to invest in this non correlated asset class.

 

Wharton Advisors Corp. Updates

  • Improving Models

    The use of actuarial data has rightly been the cornerstone of the Life Settlements industry.


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  • Longevity Protection: Bringing the Life Settlement Market into the 21st Century.

    The Life Settlement Market had seen exponential growth over the last 15 years

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  • Life Settlements – Is the Market Dying?

    The recent deal for Fortress Investment Group securing the $6.2bn portfolio of distressed assets from KBC Financial Products was the major deal in the market of this year.

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