The liquidity crunch has reduced the amount of capital available for buying life settlements, but many more institutional investors are considering that asset class.

Larry Simon, president of Life Settlement Solutions Inc., San Diego, gives that assessment in a comment on the state of the market.

The same turbulent conditions that are affecting liquidity are causing investors to explore investment alternatives, including life settlements, Simon says.

Many of the investors are attracted to the idea of getting returns backed by the credit ratings of the insurers issuing the underlying insurance policies, Simon says.

The investors exploring life settlement options include “household-name investment banks, hedge funds, pension plans, major foundations and endowments, and insurers,” Simon says.

Meanwhile, in the short term, the liquidity crunch has “created one of the best buying opportunities for investors that this industry has experienced,” Simon says.