Michael Abraham

07143 Summary:

BILL NO    A07143
SAME AS    Same as S 4427
SPONSOR    Morelle
COSPNSR
MLTSPNSR
Amd SS7803, 7807, 7811, 7814 & 7819, rpld S7811 13, subS (c) 3, Ins L
Relates to licensure of life settlement providers and certain reporting and disclosure requirements.

A07143 Memo:

BILL NUMBER:A7143
TITLE  OF BILL:  An act to amend the insurance law, in relation to the licensure and reporting requirements  of  life  settlement  providers, certain  disclosures  of life settlement providers and life settlement brokers, and scope of law for life settlement contracts; and to repeal certain provisions of such law relating thereto.
PURPOSE:
The purpose of  this  legislation  is  to  amend  the  New  York  Life Settlement Act of 2009 to clarify provisions related to implementation of that act for licensees and life settlement contract transactions,
SUMMARY OF PROVISIONS:
Section  1  of the bill amends S7803(c)(2)(F) to clarify the authority of the Superintendent to require  applicants  for  a  life  settlement provider   license   to  submit  any  information  the  Superintendent requires, provided such  information  will  be  “to  verify  that  the applicant  qualifies  as  a  life  settlement  provider  and determine compliance with any applicable state  law,”  This  amendment  conforms with   the  Superintendent’s  authority  to  require  information  for applicants for a life settlement intermediary  registration,  pursuant to  S7804(d)(1).  This  section  also  adds  a  new  paragraph  (G) to establish that the Superintendent shall not require  an  applicant  to provide any individual transaction data regarding the business of life settlements,  consistent with the limitation of such a requirement for licensees.<
Section 2 of the bill amends S7807(a)(1) to clarify  that  the  annual statement  required  to  be  submitted  by  licensed  life  settlement providers shall include only statutorily mandated information and that the  information  shall  not  include  individual  transaction  data regarding the business of life settlements, Section   3  of  the  bill  deletes  S7811(a)(13)  and  renumbers  the subsequent subdivisions accordingly to eliminate  the  provision  that requires  a  life  settlement  provider to disclose to the seller of a policy “any affiliations or contractual arrangements  with  any  other life  settlement  provider,  life  settlement  broker, life settlement intermediary or party financing the transaction”.
Section 4 of the bill deletes S7811(c)(3) and renumbers the subsequent subdivisions accordingly to eliminate the provision  that  requires  a life  settlement broker to disclose to the seller “any affiliations or contractual arrangements with any life settlement provider, other life settlement broker,  life  settlement  intermediary  or  any  financing entity.”
Section 5 of the bill makes a conforming amendment to S7814(a)(6).
Section  6  of the bill amends S7819(a) and (c)(2) to clarify that the provisions of Article 78 shall apply to any life  settlement  contract entered into with an owner whose principal residence is in this state, or with a bust that is sited in New York.
Section 7 of the bill sets forth the effective date of the law.
EXISTING LAW:
Article 78 of the Insurance Law, The New York Life Settlement Act, was enacted  pursuant  to Chapter 499 of the Laws of 2009, to regulate them modern life settlement market in New York State.
JUSTIFICATION:
Since article 78 was  enacted  in  2009,  concerns  have  been  raised regarding  the  application  of  various provisions of the law. First, there is a  concern  about  the  State  Insurance  Department’s  (SID) requirement  that  applicants  for  a life settlement provider license submit individual transaction data,  individual  transaction  data  on non-New  York  transactions  and an applicant’s past revenues received from matured policies. As such, the bill places reasonable limitations on the extent to which the department can require  the  disclosure  of individual  transaction data from an application for a life settlement provider license.
Additional concerns have been raised regarding SID’s interpretation of S 7811(c)(3) to require that  a  broker  must  disclose  any  and  all affiliations  with  providers,  brokers,  intermediaries  or financing entities even though such person or entity is not involved in the life settlement transaction and even though such person or  entity  is  not licensed  or  registered  in New York. Similarly, SID also applied the same conclusion with  respect  to  S  7811(a)(13),  as  the  “Required Disclosures  to  Policy Owner” form issued by SID requires that a life settlement provider provide the  seller  “about  any  affiliations  or contractual arrangements with any other life settlement provider, life settlement broker, life settlement intermediary or party financing the transaction.”
SID  partially  modified  this  position in OGC Op. No. 11-02-07, with respect to disclosures by  life  settlement  providers,  stating  that “Insurance  Law  S  7811(a)(13)  is  not  intended  to  require a life settlement provider to disclose to a life insurance policy owner every agreement that the provider  has  with  unaffiliated  life  settlement brokers”  but  only  “when  the  agreements have the same boiler-plate language governing the manner in which the  provider  and  the  broker will  conduct  business  if  the  provider  agrees  to  pursue  a life settlement application submitted by the life  settlement  broker,  and the  life  settlement  brokers  are  not  actually engaged in the life settlement transaction.”
However, this new SID OGC Opinion  does  not  address  disclosures  by brokers,  disclosure of “affiliations”, or disclosures of a provider’s contractual relationships or  affiliations  with  financing  entities. There  are  still  concerns  that  this  will  result  in  brokers and providers inundating sellers with several  hundred  names  of  parties that  the  broker  or provider has relationships throughout the United States and the world that have no relationship, no involvement with or even knowledge of  the  life  settlement  transaction  involving  that owner. This may result in additional and unnecessary confusion for the owner of the policy.
Further,  consumers  are  already  receiving comprehensive information related to the settlement transaction, including specific  information about  relationships between the broker and provider and other persons or  entities  directly  involved  in   the   settlement   transaction, Specifically, S 7811(a)(8) requires that the seller be advised of “the name  of  each  life  settlement broker, life settlement intermediary, insurance producer or insurance consultant that will be compensated by the life settlement provider, or any affiliate, parent corporation, or subsidiary  of  the  life  settlement  provider;  and  the  amount  of compensation that the life  settlement  provider,  or  any  affiliate, parent  corporation  or  subsidiary  of  the life settlement provider, shall  provide  to  a  life   settlement   broker,   life   settlement intermediary,  insurance  producer  or  insurance  consultant,  or any affiliate,  parent  corporation  or   subsidiary   of   such   broker, intermediary, producer, or consultant, pursuant to the life settlement contract.”
Also,  S 7811(c)(4) has a similar requirement that the broker disclose “the amount of compensation to be paid to the life  settlement  broker pursuant  to  the  life settlement contract, and the name of such life settlement broker.” Section 7811(a)(12) requires the policy  owner  be advised  of  “any affiliations or contractual arrangements between the life settlement provider and the issuer of the policy to be  settled.”
Other  provisions  ensure  that  the  seller be advised of the contact information  of  the  escrow   agent,   the   broker   and   provider.
Furthermore,  in  addition  to  the  many  provisions in the Act which protect sellers against self-dealing or fraud, S  7814(a)  establishes numerous  prohibited  practices  that  ensure  the transparency to the seller about relationships of brokers and provider that  are  relevant to the settlement transaction.
Finally, it should be noted that the new opinion creates a fair amount of  uncertainty for brokers and providers as there is no definition or understanding as  to  what  is  a  “boiler-plate  agreement”,  or  the condition  that  such  agreements  govern  the  “maimer  in  which the provider will conduct business if the provider agrees to purse a  life settlement  application  submitted  by the life settlement broker, and the life settlement brokers are  not  actually  engaged  in  the  life settlement transaction.”
An  additional  concern  pertains to the current S7919 of the New York Life Settlement Act, which provides that New York law applies  in  any instance  where  the  settlement  is  proposed to be made or where the owner has a residence in New  York.  In  other  words,  New  York  law currently  governs  in  situations  where  there is a conflict of law.
This legislation clarifies that New York law applies  only  where  the contract is entered into with an owner whose principal residence is in New  York.  The  legislation further clarifies that, with respect to a trust, New York law will apply only where the owner of a policy  is  a New York-based trust.
LEGISLATIVE HISTORY:
New bill.
FISCAL IMPLICATIONS:
None.
EFFECTIVE DATE:
Immediately.
http://assembly.state.ny.us/leg/?default_fld=&bn=A07143%09%09&Summary=Y&Memo=Y

Commentary by Michael Abraham :

At one of the many conferences in May I was privileged to hear … Morelle speak and later spoke with him, he is open minded and appears to be doing a good job in balancing the various issues, however, one interesting point is that he was not aware of how few NEW licences had been granted in New York. I made the point that while he was advocating choice he had actually drastically reduced it as a large number of those providers who have historically done business in New York  were now no longer able to do so.  And as only 5 new (as distinct from those that were ‘grandfathered in’) licences had been granted in almost a year this situation was not going to change quickly.  Let’s hope matters improve.

By Bob Graham

Posted: April 27, 2011

The life settlement industry is positioned for “one of its strongest years in recent memory,” according to a financing company chief executive.

Chris Ledlie, CEO of Opulen Capital, based in Manhattan Beach, Calif., said the last couple of years of battling a struggling economy and lack of capital have given way, leading him to see that “optimism remains high” for life settlements, according to a statement.

“The industry as a whole has seen a vibrant recovery and the worst is certainly behind us,” Ledlie said. “We’ve seen many buyers return to aggressive bidding which has had yielded extraordinarily positive results for our clients.”

The life-settlement sector is “a viable market option” again, since the increase in increase transparency and disclosure, better industry practices and “meticulous underwriting,” according to Clark Hogan, managing director at Opulen Capital, a specialized financial service firm focusing on the life insurance needs of senior citizens.

For more than two years, starting with the global financial crisis in September 2008, funding for life settlements disappeared, as investors held their money. Since then, some states have imposed tighter restrictions on the sale of life settlements.

“These [regulatory] actions serve to control the industry, push out the bad actors, instill greater confidence in institutional investors who plan on purchasing life settlements and create a better experience for the financially distressed or overinsured senior citizen,” Hogan said.

Sagging housing values and delayed retirements caused by the recent financial downturn have baby boomers seeking creative methods to raise money, including selling their life insurance policies to investors to fund their retirement lifestyle, according to Opulen Capital.

http://ifawebnews.com/2011/04/27/life-settlement-bidding-aggressive-set-for-one-of-strongest-years/

Commentary by Michael Abraham:

Well done Chris, some positive news – and it got printed.

Since 2001, American International Group (AIG) through its Chartis property-casualty division, has been engaged in a line of business that is almost too gruesome to be true. AIG calls the business line “life-settlement”, but critics of the practice have called it “death bonds”, “blood pools” and “collateralized death obligations”.

This is the way it works. Let’s say that you and your spouse are getting up in years, but you are afraid that you did not adequately save up for retirement. In fact, as you reach your mid-seventies, you find that you still have a substantial mortgage on your home, credit card bills, and other household debt that will make it difficult, if not impossible, to retire. The one asset you do have is a nice whole-life insurance policy that you pay a monthly premium to maintain. For the sake of argument, let’s say your total death benefit is $200,000, which you pay a monthly premium of $200 to maintain.

Your friendly insurance agent says to you, “Hey, why don’t you cash out your life insurance policy now, that way you can pay off your debts and retire with some relative comfort?” The insurance will pay out 75% your life insurance benefit now, take over your monthly premium payments and then receive the full benefit for themselves when you die. So you get a check for $150,000, and you have one less bill to pay. The insurance company realizes a reduced claims loss by paying you less than if you died today, and the additional premium cost can be applied to “loss control” expenses. It’s a win-win, right?

The obvious risk to this program is this: What if you don’t die? Yes, everyone dies, but with life spans constantly expanding, a person in their mid-seventies may not find themselves in the Hereafter for another twenty or thirty years. At the most, $150,000 (taxed as regular income if you take it in a lump-sum) will last you three to five years, at which time you will find yourself looking for other ways to generate the cash you need to survive. By the time you actually do die, your family may discover that they owe tens of thousands of dollars in new debts and no life insurance check to pay for them.

Meanwhile, the insurance company’s risk is not so dramatic. By paying out the early death benefit, they saved their company $50,000 in “recovered losses”. Remember that they will assume the monthly premium of $200 a month for the policy. In that scenario, it would take nearly 21 years for the insurance company to “lose” on their bet. However, if the insured dies within ten years, the company will have saved themselves $25,000 in “recovered losses”, while the family of the insured will be likely on the hook for over $100,000 in new debt.

But wait, there’s more!

AIG estimates that the accumulated death benefits that they’ve written since 2001 is worth at least $18 billion, and they now want to sell that benefit as a security to investors. (That’s about $4.5 billion in life insurance benefits that was supposed to go to our grandparents and their heirs, but is now contributing to the profits of the insurance industry!)

This is the way it would work. Let’s say AIG takes a “pool” of these “life settlement” policies that are worth $500 million once all the participants in the pool have died and it sells it to an investor as an investment vehicle. As each person in the pool dies, the investor will receive a payment, and each month, the investor will either pay the premiums on the policy, or net the received death benefits against the remaining premiums that are due. The market value of the security will be determined by the number of policy holders in the pool. It is unclear as to whether the ages of the particpants will be included in the prospectus of the security but if it is, it will likely be hidden behind technical language much the same way that Subprime Mortgage-Backed securities are hidden. That is why critics have called this security a “death bond”. The more people that die, the larger the payout for the investor!

Thankfully, Standard and Poors (S&P) has refused to grant this type of security a rating, so at the moment they cannot be sold to investors. However, if Finch or Moody’s decides to give this type of security a rating, the implications for senior citizens would be dire.

1) Investors are constantly looking for new investment vehicles that can provide a positive cash flow with limited risk. The “Death Bond” would allow investors to realize investment gains that will not be tied to the overall economy. In fact, if the economy gets worse, it is more likely that the health of seniors on a fixed income will suffer. Therefore, this investment could be considered an excellent “hedge” against a poor economy. If Medicare changes to a voucher system where seniors will be at the mercy of Health & Life Insurance companies, these securities will be HOT!

2) In order to feed the sudden demand for these types of securities, life insurance companies will actively seek out elderly seniors to add to their pool. This is one case where having a poor health history would make you attractive to the insurance companies! This is what happened with the Subprime housing market. The need to feed the demand for Subprime Mortgage Security market encouraged lenders to grant mortgages to anyone with a pulse (sometimes a name was enough).

3) As seniors with poor health histories are eaten up by these “pools”, they’ll start going after people who are in relatively good health, but are suffering from financial difficulties. These are the people that will find themselves making a choice between suicide and burdening their families with massive debts after their money runs out. The insurance company nor the investor won’t care because the benefit pays out whether the insured dies from suicide, homicide or natural causes! In other words, the insurance industry and their investors would have an incentive to ENCOURAGE your death, whether you are in bad health or not!

4) Seniors that stubbornly hold on to life years after the policy has run out may find their medical insurance claims mysteriously held up or denied. Families may find themselves in time-consuming appeals with health insurers as grandma slowly fades away. Doctors may find themselves under increased pressure from their insurance carriers to refrain from life-saving treatments or to pressure families to include DNR (Do Not Resuscitate) orders with every patient over 75 years-old who enters the hospital.

Besides the obvious “ick” factor when it comes to this practice, it is yet another example of how the extremely wealthy will take your very last dollar in order to protect their wealth from a financial system that is designed to push all wealth from the very poor to the very rich.

This has to stop

http://www.nolanchart.com/article8594_New_Investment_Vehicle__Death_Bet_Securities.html

Commentary by Michael Abraham :

‘This has to stop’ – true this negative sensationalist reporting has to stop.  The journalist is supposed to be a serious reporter of events and while some of his points are reasonable and valid, the need to emphasize his/her points by using such emotive language is to react in kind ‘quite sickening’.  Write the article properly why not!  Afraid it won’t get printed?

Author: David Martin

A lot of investors are investing in investment policies that are of great help to them . If you also are looking for some superior and beneficial investment policy where you can make vast proceeds on your investments, then life settlement investment funds is the correct investment policy for you. Life settlements are now playing a more significant role as a part of a diversified portfolio.

It’s been almost 3 to 4 decades that life settlements have assisted numerous massive depositors to earn good profits on their investments made. However, earlier this investment policy was meant for high profile people or huge business entities were able to enjoy the benefits of this plan. Still today, even individual investors can enjoy the advantage of life settlement investment fund where you need not buy the entire life settlement at one time, you can purchase different plans in small parts. This also saves you from the high risk on investment in single policy, provided you are investing in the right company.

The companies producing life settlement investment funds sign a contract with the policy customers after the transaction is complete and closes. There is a written agreement between the investor and the provider where the investor agrees to provide the sufficient amount of fund to purchase the policy. This denotes that the investor is solely responsible for the fiscal transaction yet in specific cases, the provider acts on behalf of the depositor and invests his personal income to acquire the life settlement investment policy for its portfolio.

Hedge funds are the popular life settlement investment funds that are commonly purchased by several investors. The US investment corporations provide great concessions and different incentive schemes to elders who purchase the policy and the corporation collects the amount of the policy after the policy owner dies. Other popular life settlement funds are the Global Macro Hedge funds. The advisor of the company foresees the global overall monetary changes and assists them get profits by laying a bet on them. The other profitable fund is the Multi strategy hedge fund where the organizers use several effective strategies to earn profit from the assets that are pooled by several other investors. Green hedge funds, Event driven hedge funds and the African hedge funds are some different kind of investment funds that might prove to be beneficial to the financiers.

Due to the rising financial constraints in the financial market, life settlement funds are the best way to earn returns on investments, where most of them offer greater than average returns. Due to several other plans, the risk is somewhat less because the depositor is able to vary the threat and income during the investment period. You will find numerous banks and authorized lenders from where you can purchase these life settlement policies. However, before purchasing the scheme, it is important for the investor to understand the fees and charges which are stated by any economic organization supplying their financial products. The greater the investment the greater is the risk involved, so it is recommended to invest in some reliable product that will surely yield profits in future.

Commentary by Michael Abraham:

this is really a clumsy article where the point gets somewhat lost but all in all I have to agree’ life settlements are good’,  in fact, ‘now life settlements are legal’, to paraphrase Gordon Gekko!

DOW JONES NEWSWIRES

The Securities and Exchange Commission charged Provident Capital Indemnity Ltd., its president and the firm’s purported outside auditor, with conducting an alleged life settlement bonding fraud.

According to the agency’s complaint, which was filed in a Virginia District Court, PCI is an offshore company located in Costa Rica that provides financial guarantee bonds on life settlements and claims to protect investors’ interests in life insurance policies by promising to pay the death benefit if the insured lives beyond his or her estimated life expectancy.

From at least 2004 to March of last year, PCI issued about 197 bonds backstopping numerous bonded offerings of investments in life insurance policies with a face value of more than $670 million.

The SEC alleges that PCI, as well as President Minor Vargas Calvo, and auditor Jorge L. Castillo misrepresented PCI’s ability to satisfy its obligations under its bonds. They allegedly made “material misrepresentations about the assets that backed PCI’s bonds, PCI’s credit rating, the availability of reinsurance to cover claims on PCI’s bonds, and whether PCI’s financial statements had been audited,” the SEC said.

The complaint further alleges that Castillo never conducted an audit of PCI and instead issued clean audit reports at Vargas’s bidding, thereby supporting the illusion that PCI had materially larger assets and greater financial wherewithal to support its obligations under the life settlement bonds.

The SEC also alleged PCI and Vargas represented that PCI was backed by a ” bouquet” of “reputable reinsurers” that would backstop PCI’s obligations under its life settlement bonds. PCI didn’t have that bouquet of reinsurance, the SEC alleges.

PCI’s website touts the company has a “fully recognized insurance company” with “strict underwriting guidelines” that is reflected in the company’s high rating with Dunn and Bradstreet. The SEC alleges that PCI’s “audited” financial statements were provided to Dunn and Bradstreet, which then issued the company’s favorable rating based on PCI’s reported net worth.

The investigation into the allegations is still ongoing. A PCI representative wasn’t immediately available to comment on the allegations.

-By John Kell

  (END) Dow Jones Newswires

  01-19-111727ET

  Copyright (c) 2011 Dow Jones & Company, Inc

Commentary by Michael Abraham:

 Unfortunately there is nothing positive one can say about this – string em up!

http://www.nasdaq.com/aspx/stock-market-news-story.aspx?storyid=201101191727dowjonesdjonline000480&title=sec-alleges-offshore-company-conducted-life-settlement-bond-fraud

SEC Probes Company Over Life-Span Data

By MARK MAREMONT And LESLIE SCISM

The Securities and Exchange Commission is investigating Life Partners Holdings Inc., a Waco, Texas, company that has arranged for investors to buy several billion dollars of life-insurance policies from their original owners, according to four people who have been contacted recently by the agency.

As part of its probe, the SEC’s enforcement division has been seeking experts to analyze the way Life Partners has estimated the life expectancies of the insured individuals, these people say. The estimates—projections of how long the people might have to live—are a crucial part of the investment equation.

The shorter an insured person’s expected life span, the more Life Partners generally can charge for that policy, because investors expect a faster payout. If the death comes later than anticipated, not only is the policy payout delayed, but investors who buy policies or parts of them must continue to pay premium bills while they wait to collect on a death benefit.

Life Partners executives on Wednesday didn’t respond to requests for comment.

Questions about the accuracy of Life Partners’ life-expectancy estimates were the focus of a December Page One article in The Wall Street Journal. The article reported that many of the insured people are living well beyond the company’s estimates, suggesting that the 10% or 15% yearly returns promoted to Life Partners’ investor clients may prove elusive for many.

The company has said it remains confident in its methodology, and that even if many insured people outlive their projected life spans, investors likely will still make respectable single-digit annual returns.

Attractive projected returns for clients are a key part of Life Partners’ formula for success. One of the fastest-growing small companies in the U.S. in recent years, Life Partners reported earnings of $29.4 million on $113 million of revenue for its fiscal year ended Feb. 28, 2010.

Life Partners says it has sold 6,400 policies with a face value of $2.8 billion to 27,000 clients since its 1991 founding. Life Partners extracts often-hefty fees in the deals, averaging $308,000 apiece for the 201 policies sold in its most recent fiscal year. Investors often buy pieces of multiple policies.

The company uses a Reno, Nev., physician, Donald T. Cassidy, to provide its life-expectancy estimates. Wednesday, Dr. Cassidy didn’t respond to requests to his office for comment. He declined to be interviewed for the Journal’s earlier story.

Rick Bergstrom, an actuary in Bellevue, Wash., who has worked in the life-settlements field since 1997, said an attorney from the SEC’s Fort Worth, Texas, office called him last week, to ask whether he could help analyze Life Partners’ life-expectancy projections.

Mr. Bergstrom said he and a partner five years ago examined Dr. Cassidy’s work for an institutional investor that was thinking of hiring the physician. They concluded Dr. Cassidy was using an “unrealistic” approach that tended to produce inaccurately short life expectancies, Mr. Bergstrom said.

Scott Gibson, an actuary at Lewis & Ellis Inc. in Richardson, Texas, said he recently received a similar call from an SEC attorney, adding that “nothing has come of it at this point.”

An SEC spokesman said he couldn’t confirm or deny the existence of any investigation into Life Partners.

In an interview with the Journal last week, an investor from St. Augustine, Fla., said he was personally assured in 2007 by Life Partners’ chief executive, Brian Pardo, that the company’s accuracy record on life-expectancy projections was “extremely high.”

The investor, Charles A. Snell, a 71-year-old commercial real-estate developer, said in 2007 he invested $750,000 in Life Partners’ fractional policies after traveling to Waco to meet with Mr. Pardo. Mr. Snell said he asked Mr. Pardo: “How accurate? Like 70 to 80%?” He said Mr. Pardo nodded and replied: “In that ballpark.”

Of the six policies Mr. Snell invested in, most of the insureds were estimated to have five years or less to live. None have yet died, and he said he recently received a notice he will owe $20,000 in additional premiums by May. Mr. Snell, who hasn’t yet earned any return on his investment, said he feels misled.

It isn’t clear what action, if any, the SEC could take involving Life Partners. Although the company is publicly traded, it won a federal appeals court ruling 15 years ago that its life-settlement transactions weren’t subject to federal securities laws.

Some states have claimed Life Partners’ fractional-policy sales make it subject to state securities law. Life Partners in 2008 settled a fraud suit filed by Colorado regulators, agreeing to repurchase policies from many investors in that state. The settlement came with no finding of fraud.

Based on data Life Partners filed with the Texas Department of Insurance, the Journal found that, for policies sold from 2002 through 2005, insured people outlived Life Partners’ projections about 90% of the time. Many of those policies were on HIV-positive people; Life Partners since 2004 mostly has sold policies on older people.

http://newsroom-magazine.com/2011/governance/justice-department/justice-charges-provident-capital-indemnity-in-massive-fraud-scheme/

Justice Charges Provident Capital Indemnity In Massive Fraud Scheme

“PCI is accused of lying to investors across the globe to sell more than half a billion dollars worth of ‘guaranteed’ bonds which turned out to be worthless,” said U.S. Attorney MacBride. “This case is another example of how the members of the Virginia Financial and Securities Fraud Task Force are working to detect, deter and punish financial fraudsters who target investors throughout Virginia, the nation and the world.”

Commentary by Michael Abraham:

 This is a real worry – can someone please explain the difference between the Life Partners business model and that of the now defunct Mutual Benefits Corporation – which cost this writer dear! I feel sorry for their investors but do hope that should this collapse a manager is appointed not a self serving liquidator!

http://online.wsj.com/article/SB10001424052748703951704576092300545767640.html

Posted on08 January 2011

Jan 07, 2011 08:06 ET

ORLANDO, FL–(Marketwire – January 7, 2011) – Recent buying activity affirms institutional investors’ growing interest in making life settlements an important part of their investment portfolios.

To meet the increased demand of investors seeking to learn more about life settlements, the Life Insurance Settlement Association (LISA) will host its first conference on March 2 tailored to the needs of institutional investors. The conference will be held in New York at the Harvard Club.

“Life settlements provide a double benefit for institutional investors. They are uncorrelated to other assets and can provide attractive returns compared with fixed income alternative investments,” Darwin Bayston, LISA’s executive director explains.

“Investors really want to understand what this asset class is all about. As the voice of the life settlement industry, we are on a mission to present an informative, unbiased and valuable one day program.” Experts will cover topics that will give institutional investors specific, technical knowledge that will facilitate their participation in the life settlement market. Among the areas to be covered are life expectancies, life settlement valuations and portfolio construction, optimizing cash flows from a life settlement portfolio and measuring a portfolio’s performance.

The conference provides a perspective particularly suitable to long-term institutional investors. It will be particularly beneficial to public and private pension fund sponsors, endowment and foundation sponsors, private equity investors, hedge fund sponsors, mutual fund managers and wealth fund managers.

Institutional investors need to understand this maturing and viable asset class which is now regulated in 40 states offering potential investors greater transparency and full disclosure. Conning & Company estimates that there was approximately $35 billion in life settlement face value in force at year-end 2009. And, the firm continues, the market has the potential to grow to roughly $100 billion over the next decade.

Qualified institutional investors will receive one complimentary registration to attend this inaugural conference.

LISA’s mission is to promote the development, integrity and reputation of the life settlement industry and to promote a competitive market for the people it serves.

For more information, contact: on LISA Darwin Bayston Executive Director (407) 894-3797 on Conference Registration or Press Credentials Events Department (407) 894-3797

Commentary by Michael Abraham 

a great initiative!

Author: Laura Miller

Troubled building society Norwich & Peterborough (N&P) has admitted its advisers gave “inappropriate” advice to a customer who invested the bulk of their SIPP in Keydata, in a case lawyers involved say mirrors dozens of other claims.

N&P, which is being circled by rivals as a potential takeover target, faces a multi-million pound claim of poor advice from hundreds of angry Keydata investors.

They allege they were mis-sold or over-exposed to life settlement fund Lifemark, which was marketed by Keydata before its collapse in 2009, following advice from N&P advisers.

Related articles

N&P have staunchly defended their advice process. But in a letter responding to one investor’s complaint seen by IFAonline it admits its 2007 recommendation was wrong for the customer.

The letter says investing £50,000, or around two-thirds of his SIPP, in a single Lifemark-backed Keydata product exposed the investor to “a greater risk” should Keydata fail.

This risk could have been “better accommodated” by investing the £50,000 across a wider range of investment funds, it adds.

Lawyers say the concession by N&P could now set a precedent for other claims against the building society from SIPP investors who believe they were over exposed to Keydata plans.

N&P has made no offer of compensation to the investor, who has now hired law firm Regulatory Legal to get his cash back.

The letter shows the investor initially wanted to buy an annuity, but was instead advised to invest two-thirds of their SIPP into a Keydata growth plan.

They were also advised to transfer their equity ISA into the monthly income option of the Keydata plan.

Regulatory Legal is poised to lodge a 390-strong group of claims with the Financial Ombudsman (FOS) against N&P amounting to about £18m.

However, CEO Matthew Bullock has said the society could suffer losses of around £50m because of its Keydata exposure.

Regulatory Legal’s clients claim they have been forced to reject an FSCS’ offer to compensate investors who relied mainly on Keydata brochures, as N&P failed to follow FSA rules to provide the documents at the point of sale.

FSCS claims are paid for by levy payers out of a shared pool. However, N&P would be forced to meet the cost of FOS rulings, which offer more generous compensation terms to investors, out of its own pocket.

As a building society N&P is not allowed to tap the stock market to raise fresh capital, but could use the merger route to consolidate its balance sheets and augment reserves.

Coventry Building Society is understood to be the front runner to take over its ailing rival, though this has not been confirmed by N&P.

Keydata was put into administration by the FSA for insolvency as a result of a tax liability on 8 June 2009.

Investors have been unable to access their investments since. Lifemark is facing severe liquidity problems and the threat of insolvency, despite receiving an emergency loan of about £7m in October, including £1.5m from N&P.

An N&P spokesperson says: “The customer has not yet suffered a loss as their investment has not yet matured.

“We are continuing to work with the regulatory community to reach a resolution for all of our Keydata customers and not only those who have made formal complaints, and we hope a final resolution is reached in the early part of 2011.”

Commentary by Michael Abraham:

This is really painful for the life settlement industry particularly as Life settlements and their operation have nothing to do with what is an out and out  fraud, but unfortunately the investment funds that were stolen were earmarked for policy purchase.  Just more grist to the mill of those who criticise settlements!
Read more: http://www.ifaonline.co.uk/ifaonline/news/1935055/-admits-66-sipp-investment-keydata-inappropriate#ixzz1CDqxVKdh

Betting on death

Puget Sound Business Journal – by Kelly Gilblom , Staff Writer

Date: Friday, January 7, 2011, 3:00am PST

Source: Conning Research & Consulting

Frenzied sales of securities backed by bad mortgages nearly toppled the financial system two years ago. Now, a new kind of security is on the rise, this one backed by the life insurance policies of senior citizens.

The securities, known as “death bonds,” and “senior life settlements,” are being sold in significant amounts in Washington state, and could be putting local banks and other investors at risk, regulators say.

The securities are created by bundling together the ordinary life insurance policies of owners who want to cash out. Owners typically sell the policies for a fraction of their payout value, …

Read more: Washington state banks are at risk buying ‘senior life settlements’ | Puget Sound Business Journal

Commentary by Michael Abraham

Let’s sell some papers – call life settlements death bonds! This article is so puerile it is not worth further comment! 

By Noah Buhayar -

Gerova Financial Group Ltd., the Bermuda-based investment company, said it acquired about $1.2 billion of insurance policies and loans and arranged financing for further purchases in the life-settlements market.

Gerova purchased the portfolio from Los Angeles-based hedge fund HM Ruby Fund LP with $11 million in cash and $94 million in stock, according to a statement released on PR Newswire today. The company said it arranged a five-year, $50 million line of credit.

Commentary by Michael Abraham:

 Thank god another blighted portfolio out of circulation!