Traded Life Policies (TLPs or Life Settlements), the secondary trade of US Life Insurance Policies, are a rapidly growing investment market as investors increasingly seek out returns that are not correlated to the Fixed Income and Equity markets as well as having visible and fairly definite returns.
Interest has increased substantially recently given the evident problems in the Equity and Fixed Income Markets. The TLP market has grown from zero in the 1990s to $13bn in 2005 and is estimated to grow to $160bn in around ten years. Both Hedge Funds and Investment Banks have massively increased their exposure to this investment class and are looking to expand further here.
A major problem is a lack of understanding as to the structure, process and pricing of this unusual Investment class. This course is designed to give delegates a comprehensive overview of the market, its participants, processes and example prices besides current issues. No prior knowledge of the Insurance or Traded Life Policy universe is assumed.
Content
Introduction
- What is a TLP? History and jargon. Viaticles, Size of market
- How does it compare to other investment product (correlation with traditional asset classes, level of returns)
- The players: insureds, beneficiaries, funds, brokers, underwriters, tracking agents
- What is a STOLI and what are the issues ?
- What is premium financing and what are the issues ?
- Components of a life policy (whole life, universal life, cash value, premiums, wet policies, dry policies, contestability)
- Different Life Settlement products. Direct vs. Synthetic,
Regulation
-State vs. Federal
- Self-regulation and voluntary practices
Valuation
- The 4 key variables (Face value, premiums, discounts and life expectancy)
- Transaction costs
- Expected returns
Structuring
-Trust setup
-buying a wet policy, dry policy, typical valuations and commissions
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