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October 08, 2009 at 08:00 PM
The life settlements market was hit hard in 2008 by an increase in the number of policies available for settlement and a decrease in the number of buyers, according to Conning Research and Consulting.
Policies settled in 2008 carried a total face value of $11.7 billion, down from $12.8 billion in policy face value settled in 2007, Conning, Hartford, estimates.
The total amount of in-force coverage involved in settlement deals totaled $30.7 billion at the end of 2008, compared with about $22.6 billion the year before, Conning reports.
Although the amount of capital available for settlement deals held steady at about $2.5 billion, the increase in the number of policies available and the effects of the economic turmoil helped bring down the average offer, says Scott Hawkins, a Conning analyst. In recent years, offers for policies have averaged about 20% of face value, but the prices being offered now are probably lower, he says.
