Author: Greg Winterton
Despite their industry now being two decades old (in its current form), life settlement asset managers still, occasionally, have to undertake the role of educator when discussing the asset class with a potential new investor. One question that is known, anecdotally, to come up is: ‘Why would anyone want to sell their life insurance policy?’ After all, in many countries in Europe, the Middle East and Asia, you can’t sell it, so those less familiar with the nuances of Grigsby vs Russell – and the multi-billion-dollar industry that the case created (albeit approximately 90 years later) – will not know…
Like most asset classes in the alternative credit market, the life settlement industry has had an interesting few years as macroeconomic changes have impacted fundraising and deal flow. Greg Winterton spoke to Anna Bailey, Managing Partner at asset manager Chestnut Capital Management, to get her thoughts on the current state of the space. GW: Anna, let’s start with something general. What’s your view of the impact of the macroeconomic environment of the past few years on the life settlement market – on both fundraising and deal flow? AB: The market is still steadily growing – not quite the way I…
Data and analytics firm PitchBook published its full year 2023 report on the insurtech industry in early March, showing that activity from the venture capital funds in the space delivered a six-year low in both the number of deals completed (486) and the aggregate value of deals ($5.6bn). The data wasn’t surprising to many industry observers: the private markets experienced fundraising and dealmaking challenges last year as macroeconomic (rising interest rates) and microeconomic (the fallout from the collapse of Silicon Valley Bank in March) forces conspired to put the brakes on the extraordinary recent growth rate in the space. The…
The alternative credit industry experienced something of an up-and-down year in 2023. On one hand, fundraising pulled back as investors rotated into more liquid, higher yielding credit investments, and on the other, existing funds, particularly in the private debt space, with floating rate loans enjoyed higher returns. The impact of higher interest rates was certainly felt keenly in the life ILS corner of the alternative credit space last year, in both capital raising and deal activity. In the former, the reasons were consistent with the alternative credit market at large. But in deal flow, certain trades experienced a retraction in…
The past few years have been arguably the most significant ever to those studying longevity and mortality, with a range of issues impacting the field, and consequently, actuaries and risk holders. Greg Winterton spoke to Nicola Oliver, Director of Life and Health at consulting firm Medical Intelligence, to get her thoughts on the current state of the space. GW: Nicola, you advise actuaries and companies about the impact of the provision of healthcare on longevity and mortality. So, let’s start with Covid-19. What are some of the hangovers in terms of the provision of healthcare that the industry is still…
The reverse mortgage market in the US has had a tough time of it in recent years. The volume of HECM loans in the primary market has been steadily falling over time, from more than 100,000 mortgages annually in the market’s heyday of 2007-2009, to approximately 33,000 in HUD’s fiscal year 2023. The rising interest rate environment of the past two years has been a contributing factor in the dampening of demand, which, should rates start to come down again in the next year or so, could pick up. But other events have hurt the industry of late. In the…
Many subsets of the alternative investment industry have a preference for either open-ended or closed-ended funds. Hedge funds tend to be almost always open-ended, whereas private equity or venture capital funds tend to be almost always closed-ended. The life settlement industry hasn’t – yet – settled on one or the other. But anecdotal evidence suggests that, at least at the moment, the closed-ended model is increasingly finding favour. A couple of reasons exist as to why, according to Patrick McAdams, Investment Director at SL Investment Management. “It’s a combination of the administrative burden and cash management considerations,” he said. “A…
Last year was one that many in the alternative investment industry would like to forget. Fundraising and deal activity fell significantly as investors rotated to liquid credit opportunities due to the relatively better yield offered by these products, along with a perceived lower risk when benchmarked against a more volatile geopolitical climate. For those in the venture capital industry, add the collapse of Silicon Valley Bank in March and the resulting fallout amongst the start-up ecosystem, and you have something of an annus horribilis for the VC folks. The venture capital-backed life insurance insurtech market certainly took a hit. According…
Life Equity CEO, Scott Willkomm, concluded his tenure as Chair of the European Life Settlement Association last month. Greg Winterton spoke to Willkomm to get his thoughts on his time as Chair at ELSA, and his views on the life settlement market more broadly. GW: Scott, your term as ELSA Chair concluded at the end of December. You’ve been Chair for a number of years: what will you look back on with pride the most when you hand over the reins? SW: When I became chair of ELSA, one of the main things I noticed was that we needed a…
The Home Equity Conversion Mortgage (HECM) accounts for nearly all reverse mortgages in the US, and for the US Department of Housing and Urban Development (HUD)’s fiscal year 2022-23, the number of HECMs fell by around 50% when compared to the prior year. Indeed, the industry has been on a general downward slope since the heady days of 2007 – 2009, when more than 100,000 mortgages were issued to Americans each year. If the industry is to turn the trend around, it will need to navigate some headwinds. Higher interest rates are the obvious challenge du jour, with the US…