The European Life Settlement Association is the leading European industry group promoting the life settlement industry to institutional, end investors. As such, our leadership position carries with it a range of responsibilities.
First is our responsibility to educate the end investor with regards to the nuances of our market and the challenges and opportunities in front of us – and, in turn, them. These nuances include the complexities of longevity risk, the influence of the actuarial sciences, the inner workings of the life insurance industry, and the vast swath of regulations that impact our market.
Second is the responsibility to highlight the benefits the life settlement industry provides to the end investor that entrusts assets managers in the space with their capital. Primary among these are the low correlation nature of the return stream to the broader capital markets, the low volatility of the return stream, and the societal benefits that our industry provides to literally thousands of American seniors each year who have the opportunity to sell their life insurance policies.
Our third responsibility is to walk the talk, by holding our members and the industry at large to the very highest standards of conduct. We do this primarily via two mechanisms – the ELSA Code of Conduct, to which every ELSA member must sign up; and the ELSA Master Agreement for Tertiary Transactions (MATT).
These responsibilities are journeys, not destinations; and the journey itself is a marathon, not a sprint. But I believe that we as an association are maintaining a solid pace as we juggle the various roles and responsibilities that come with running an industry group, and we are seeing the fruits of our labours in the form of a growing, more informed, audience.
Highlights from the previous 12 months
A highlight of our efforts since last year’s Secondary Life Markets Conference came only recently, as we revised our Master Agreement for Tertiary Transactions, or MATT. The MATT is the gold standard for tertiary market deals, and the new edition features not only tweaks to the representations, warranties and covenants to reflect changes in market practices since the first version, but a bill of sale form and a step-by-step instructions designed to help those new to our market. I can speak from personal experience when I say that the MATT has been terrific in simplifying transaction documents in the tertiary market over the last two years.
Our investor education efforts continued with the publishing of a variety of Fact Sheets, including a look at the life settlement licensing landscape, the drivers of the decision to sell a life insurance policy in the first place, and an analysis of the size of the secondary market and its growth over the past six years. In just two years, our proprietary tool, the Licensed Provider Matrix, has become the go-to resource in the industry for understanding trends in the number and activities of licensed life settlement providers.
Our Life Risk News magazine continues to grow its audience. Since its launch in May 2022, the magazine has expanded its coverage both in terms of the assets and transactions it covers, and the number of people and firms who participate either through interviews for articles or submitting commentary pieces. We have invested additional resources to help us hire writers with experience in covering the core markets that Life Risk News focuses on and polishing the editorial production process, and the fruits of this investment can be seen both in terms of a more professional infrastructure and a higher quality of content. Lastly, I’ve been told that one sign of a magazine that is making headway is when companies and their PR representatives begin to proactively contact you with regards to coverage, which is something that has been happening regularly since the beginning of the year now.
Lastly, our Life ILS Conference in May this year once again took place in person and virtually. The event is now in its fifth year, and continues to deliver new faces in the audience, which reflects not only the efforts of the organising committee and the sponsors, but more broadly, the interest in life-linked solutions from both investors and asset managers.
Our plans for the upcoming year
ELSA will continue to invest in educational content that is designed to lift the lid on the inner workings of our market, both through our Fact Sheet initiative and through the Life Risk News publication. And I’m very excited to mention a new initiative, the inaugural ELSA / Conning Investor Sentiment Survey, which should be published before the end of the year.
The survey is the latest project we are committing to that will help asset managers and capital allocators – as well as the broader life settlements ecosystem – to understand just how investors view our market at an aggregate level. The intelligence that the survey provides will help ELSA and individual firms to shape their awareness, communications and marketing efforts in the coming years.
In the past few years, the life settlement market has had to deal with the fall-out from the Covid-19 pandemic and the higher interest rate environment. While every private market asset class has been impacted by both of these issues, our industry’s links to mortality exacerbated the impacts.
But what I think is more notable is the resilience shown by our industry, particularly in the secondary market. After the Global Financial Crisis, the life settlement market suffered as deal flow in the secondary market fell off a cliff. Liquidity dried up generally and distressed assets in the tertiary market crowded out the secondary market to a certain extent, both of which impacted our space negatively.
This time, however, it’s different. Deal activity in the secondary market has held firm, with the number of transactions increasing in each of the past three years. The secondary market is the lifeblood of our industry and the fact that activity has been better than stable is a good news story that we should be proud to tell; it speaks to the maturation of our market in the post-GFC period.
ELSA should also be proud of its efforts and successes in the past 12 months, and it should be excited and optimistic about the various initiatives that we have in place to continue in our mission of promoting the wide range of benefits of the life settlement industry to institutional, end investors.
The future, I believe, is very bright for the life settlement market and ELSA is there to assist where we can in getting the word out and to provide support for our members.
The journey continues.
Bill Corry is CEO of Corry Capital Advisors and current ELSA Chair
Any views expressed in this article are those of the author(s) and may not necessarily represent those of Life Risk News or its publisher, the European Life Settlement Association