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Exec: Actuarial Shift To Force Some Life Settlement Firms Out Of Market

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NU Online News Service, Jan. 27, 2009, 4:15 p.m. EST

Recent mortality table changes could doom some life settlement firms, according to the top executive at First Equity Benefits of America Inc.

Firms that have revised their life settlement mortality tables recently include 21st Services L.L.C., Minneapolis; AVS Underwriting L.L.C., Kennesaw, Ga.; and Insurance Strategic Services L.L.C., Clearwater, Fla., which does business as ISC Services.

“We are not at all surprised by these changes, as we have always held the opinion that mortality projections were understated,” Leonard Goodman, chairman of First Equity, New York, says in a comment on the changes.

The portfolios of some life settlement providers and investors now are worth much less than their original “perceived value,” and the holders of those portfolios are seeking funding to cover the additional premium payments they expect to incur, Goodman says.

“The adjustments by 21st, AVS and ISC will undoubtedly result in some providers closing their doors,” Goodman says. “While this is unfortunate, it nonetheless is a positive industry correction which will bring stability and move yields more in line with what investors should expect.”

Goodman says his own company has used its own analytical and statistical techniques to project life expectancies.