Electronic transactions seem to be playing a bigger role in the life settlement market.
Dematco Inc., Encino, Calif., says it will be converting life insurance policies with a face value of about $100 million into “senior life settlement units” for a European investment group.
The “dematerialization” contract is the fifth Dematco has received, Dematco says.
Dematco has placed $380 million in SLSUs under contract in the last 9 weeks, according to Dematco Chairman Robert Stevens.
“Once the news gets out to the investor community that a previously untradeable paper SLSU can be actually traded on the PETS exchange with immediate clearance into the client’s account, that’s when we anticipate extraordinary growth,” Stevens says.
Dematco charges a 2% fee based on the face value of the SLSUs for the conversion, and 3% of the face value upon completion of the structuring of new sub-products.
Under the newest contract, Dematco will receive an initial stage payment of $250,000, with $1.75 million due upon execution of the dematerialization and $3 million due upon completion of the sub-products, Dematco says.