Life settlement investor Corry Capital Advisors manages more than $2bn in assets and counts pension plans, foundations, endowments, and sovereign wealth funds amongst its clients. Greg Winterton spoke to William Corry, Founder and Managing Director at Corry Capital Advisors, to get his views on the industry, and to learn more about the firm and its approach.
GW: Bill, a lot has been made of the impact of higher interest rates on investor appetite for life settlements, but there’s some cyclicality here, isn’t there? Are there any reasons why investors should still be allocating now versus waiting for rates to plateau, or come down?
WC: I understand the discussion regarding higher interest rates vs life settlement investing, however the case for consistency of investing in diversified products, especially those that are to a large degree not correlated to markets, continues to make the case for life settlements to be considered for investors.
GW: In a Life Risk News roundtable in February this year, you mentioned that you saw wealth managers taking an increased interest in the life settlement space last year. Is that a trend that’s continued in the first half of this year, and if so, what are the drivers?
WC: I continue to see that as a trend, and I believe the driver is advisors continuing to look into non-corelated investment opportunities.
GW: Moving onto your firm. What do you look for in a policy when you’re evaluating policies in the secondary market, and why?
WC: In the secondary market the evaluation beyond pricing is driven by due diligence into the chain of title and origination of the policy. Origination being driven by insurable interest correctly being established at time of purchase.
GW: Corry Capital Advisors is also active in the industry’s tertiary market. Discounts in this space have been hard to come by in recent years. Has anything changed this year so far, and if so, what’s driving that?
WC: There are several factors that affect the discounts on tertiary policies and portfolios. If the seller is distressed, then the discount rates are typically higher, as well as if you’re dealing directly with the capital source vs going through intermediaries, as that can add a large amount of fees that reduce the discount rate. This year there has been an increase in tertiary portfolios in the market, which is a positive trend on the buy side.
GW: Finally, Bill, what’s your message to investors when conducting due diligence on a life settlement fund manager? What are a couple of specifics that they should focus on?
WC: Factors that should be considered would be conducting background checks on the manager and senior management as well as researching track record of past funds and the transparency supporting the track record. I think investors should dig down deep into the transparency of a past fund’s performance to the point of evaluating the granular investments to see how they’ve performed over time. The realised events are easy to evaluate, though the unrealised are being driven by different factors, such as medical updates and the valuation methodology of the manager when it comes to the marks of each policy.