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Life Health > Life Insurance

Execs Expect Growth In Life Settlement Volume

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About 60% of top insurance executives expect the secondary market for life insurance to be significantly larger in 5 years than it is today.

The executives expressed that opinion while participating in an informal poll here during a life settlement session at the 18th annual Executive Conference for the Life Insurance Industry.

The conference is sponsored by The Conference Group Ltd. and National Underwriter, part of Summit Business Media L.L.C., New York.

About 33% of survey participants predicted that the life settlement market will be moderately larger; 2%, about the same size; and 5%, smaller.

During the session, moderated by Julie Burke, a managing director at Fitch, New York, attendees also were asked how their organizations would treat life settlements.

About 52% said they would root it out, and 12% said they would let life settlements occur but would want to see them rooted out. The other participants – 36% – said they would want to participate in a growing market.

Alan Buerger, chief executive of Coventry First L.L.C., Fort Washington, Pa., and James Poolman, former North Dakota insurance commissioner, both said during the session that they support regulation of the secondary market.

Buerger distinguished between life settlements and investor-initiated life insurance, or “stranger-owned life insurance.”

“Candidly,” Buerger said, “I believe the effort to equate life settlements and STOLI is really a desire to stop the life settlement business.”

Poolman talked about how the industry has “morphed over the last 7 years.”

Many insurance companies “are speaking out of both sides of their mouth,” and are participating in the market both directly and by buying life settlement securities for their investment portfolios, Poolman said.

Buerger complained about the involvement of trusts in IOLI arrangements.

One well-known private equity fund is using trusts to make $250 million in life settlements per month, Buerger said.

Buerger predicted that the life secondary market will continue to grow rapidly for a few years, then start to consolidate as volume stabilizes.

Responsibility for the rise of the life secondary market lies “directly at the feet of the carriers” because of underwriting and a failure to try and conserve policies through company conservation departments, Buerger said.

A representative for New York Life Insurance Company, New York, disagreed with that remark and pointed to a new New York Life program that enables a contract holder to borrow beyond cash value to keep a policy in force.


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