According to Life Settlement Investor Sentiment 2025, a report published late last year by insurance asset manager, Conning (in conjunction with the European Life Settlement Association (ELSA), publisher of Longevity and Mortality Investor), life settlements are on their way to becoming an established portfolio allocation.
There’s plenty in that observation to like for those in the space and plenty of those investment managers out on the capital raising trail looking to tap into this increased interest will be raising money for an Irish-domiciled investment vehicle.
There are two main reasons why a life settlement portfolio manager chooses Ireland: first, if they have or want to court US investors, the QIAIF (Qualifying Investor Alternative Investment Fund), housed in the ICAV (Irish Collective Asset-Management Vehicle), is particularly attractive because it can generally be structured to achieve tax treatment that is familiar and efficient from a US federal tax perspective. In addition, overlaying the ICAV in a QIAIF wrapper incorporates the EU’s AIFMD marketing passport, providing asset managers with a structure that straddles a large potential investor base simultaneously.
In practice, most life settlement ICAVs targeting institutional capital are authorised as QIAIFs, because unlike many retail fund wrappers such as UCITS, the QIAIF regime can comfortably accommodate portfolios consisting entirely of illiquid assets, including life insurance policies. Add to that the availability of custom drawdown structures, no mandatory diversification/concentration rules, and the all-important 24-hour Central Bank of Ireland authorisation fast-track, and, according to David Naughton, Partner at Byrne Wallace Shields, you get a compelling structuring argument in favour of Ireland as an investment funds domicile.
“For international investors, the QIAIF has become a very familiar structure. It combines a highly flexible investment framework with a tax regime that is well understood by institutional allocators. For an asset manager pitching pensions, insurers and family offices, familiarity matters. Investment committees are far more likely to approve a structure they have seen before than an unfamiliar offshore vehicle,” he said.
“But for life settlement managers specifically, the 24-hour authorisation really matters. If they identify a $50m portfolio of life insurance policies hitting the market, they might only have a month or so to win the bid and deploy capital. Sometimes, they can’t wait months for regulatory approval for a fund.”
The QIAIF is Ireland’s most common regulated route into the life settlement asset class, but not every life settlement strategy is designed for larger institutional investors.
Some managers are looking for a vehicle to accumulate policies, finance acquisitions or accommodate a smaller group of investors rather than market a fund across Europe or beyond. For those situations, Ireland offers an ‘unregulated’ option: the Section 110 special purpose company, a structure borrowed from the securitisation market. These vehicles are not regulated by the Central Bank of Ireland but typically are designed to hold assets and issue funding instruments against them, so for life-settlement managers, that distinction opens up a different set of structuring possibilities.
Under Ireland’s Section 110 regime, a qualifying special purpose company can hold portfolios of life insurance policies while funding itself through the issuance of debt securities. Those financing costs are generally deductible, meaning the vehicle itself is intended to retain little taxable profit. The structure becomes particularly attractive when combined with Ireland’s quoted Eurobond regime, under which qualifying debt can typically be serviced without Irish withholding tax. The result is a tax-neutral platform that has long been familiar to participants in the securitisation and structured finance markets.
“The Section 110 route tends to appeal where the focus is on efficient asset financing, private capital arrangements or a securitisation-style investment model rather than broad-based fund distribution,” said Naughton.
While these two options are generally considered ‘either/or’ by life settlement portfolio managers, that doesn’t have to always be the case. A regulated QIAIF may sit at the investor-facing level, with its familiar governance and distribution characteristics, while one or more Section 110 vehicles beneath it hold portfolios of life policies or undertake financing activities. The result is a structure that combines the fundraising advantages of a regulated fund with the flexibility traditionally associated with securitisation vehicles.
“Seeing the QIAIF and the Section 110 routes as competing alternatives is arguably a simplification of the options because, while not the most commonly taken path, they can be used in combination with each other,” said Naughton.
Another factor frequently cited by practitioners as to why they set up in Ireland – regardless of the vehicle they choose – is Ireland’s common-law legal system. While often overshadowed by tax and regulatory considerations, legal familiarity can matter in cross-border transactions involving life policies, financing arrangements and multiple classes of investors.
Not everyone regards the distinction as decisive, of course; Luxembourg, for example, has a civil law system, and is one of Europe’s largest fund domiciles. Indeed, some life settlement vehicles are set up there.
But for those that decide that Ireland is where they want their investment vehicle to call home, Naughton says that investors wouldn’t set up there if there wasn’t a support ecosystem to do the middle and back-office work effectively.
“Ireland has a deep bench when it comes to the life settlement service provider community. Life settlements are a complex asset class that is not as well-known as other alternative investment strategies. Ireland has administrators, depositaries, securities intermediaries, auditors and legal counsel who know this asset class exceptionally well, and while investors and managers like the tax and legal features and benefits of setting up here, the domain expertise of the broader ecosystem is just as important,” he said.
