Author: Greg Winterton

Retirement planning in the US typically involves discussions around investments such as stocks and bonds, and, for the more affluent, offerings such as hedge funds, private equity, and real estate.   But for many Americans, their life insurance policy is their second largest asset, after their home. And many of these life insurance policies meet the criteria for sale in the life settlement market.  So, why aren’t more American seniors taking advantage of this option as part of a more holistic retirement planning solution? Greg Winterton spoke to Rob Haynie, Managing Director at Life Insurance Settlements, Bryan Nicholson, Executive Director at…

Equity Release mortgage securitisations carry a range of benefits for institutional investors when compared to standard residential mortgage-backed securities (RMBS).   Reverse mortgage securitisations involve deferred payment of interest and principal along with low loan-to-value security risk, often offering higher risk-adjusted yields compared to standard RMBS. Since reverse mortgages are typically not repaid until the borrower sells the home, moves out permanently, or passes away, the risk of early repayment (which can affect returns in RMBS) is generally lower, making cash flow more predictable. Another is that reverse mortgages usually have longer durations because they are not amortising monthly like typical…

The landscape of licensed life settlement providers is largely unchanged this year, according to new data published by the European Life Settlement Association (publisher of Life Risk News).  The organisation is out with an update to its Licensed Provider Matrix (LPM), which it originally published as part of a ‘fact sheet’ in December last year. The LPM lists the licensed life settlement providers active in the industry, and the states in which they are licensed to operate.  In 2024, there is a net reduction of the total number of licenses of seven, a statistically insignificant 0.85% contraction from the 707…

Summer tends to be quieter for many parts of the alternative investment industry as people take their foot off the gas a little bit to enjoy the nicer weather and head out on holiday. But this year, two categories within the broader longevity and mortality risk markets did not get the memo. The life settlement and insurance-linked securities markets saw four deals announced publicly in July – three M&A deals and one management buyout.  Whilst alternative asset classes such as private equity, real estate and private debt see four deals announced most days, for these industries, this was something of a busy month. In…

Activity in the smaller scheme corner of the UK’s pension risk transfer market has held up in the past 18 months, despite initial concerns of crowding out. Greg Winterton spoke to Adam Davis, Managing Director at K3 Advisory, to get his thoughts on the drivers of activity in this part of the country’s booming bulk purchase annuity space.  GW: Adam, first off, what is the main reason – or reasons – that activity in the smaller scheme space has held up well recently?  AD: It is important to remember that, in terms of large schemes, there are not that many…

It is now a year since UK regulator the Financial Conduct Authority (FCA) brought in its new Consumer Duty (Duty), a regulation requiring all financial services firms to ‘act to deliver good outcomes for retail customers’ for all new product offerings. This month, the FCA closes the loop with the implementation of the duty for closed product offerings.  One of the markets that is impacted by the Duty is the country’s equity release market (ERM). Participants ranging from independent financial advisors right through to the funders themselves (life insurers and pension funds, in the main) have had to get with…

Life settlement asset managers pay significant sums of money to keep a life insurance policy in force until the insured dies. These sums can, and very often do, stretch to millions of dollars from when they assume ownership of a policy to when it matures.  But what happens if a policy they own is declared void ab initio because of a lack of insurable interest?  Under Delaware law in the US, when the present owner acquires an insurance policy, they typically also acquire all right, title, and interest in the policy – including the right to recovery of prior premiums…

Life settlement provider Abacus Life listed on the Nasdaq a year ago, a rarity in the life settlement market. Greg Winterton spoke to Jay Jackson, Founder and CEO at Abacus Life, to get his thoughts on a range of topics in the life settlement market.  GW: Jay, we’re into the second half of 2024 now, and both LISA and The Deal have published their annual data insights into activity in the secondary market. What are your thoughts on the results at an industry level?  JJ: Overall, I thought the results were encouraging for our industry. The life settlement market had…

Investors in the senior living market in the US are typically more active in assisted living facilities, as opposed to a nursing home. The two are very different stateside and provide different levels of care.   But regardless, for senior living investors, the risk associated with investing in the space has typically been a real estate one – vacancy rates. Every unoccupied bedroom is missing rental income that could be going into the bank account of the investor.   But as far as risks go, that’s arguably a small one, with the industry recently seeing occupancy rates increase for the 11th consecutive…

The rising interest rate environment of the past two and a half years has had the impact of reining in deal activity in some life ILS trades, such as commission financing or value-in-force (VIF) deals, because rising rates make these transactions more expensive for life insurers, thus dampening demand, as well as being challenged by rate-driven lapsation.  That is not the case in the asset-intensive corner of the life ILS market, however. These deals – whereby the investor(s) assume both the liability and asset risk associated with a block of insurance-linked policies, like annuities, for example – benefit from a…