Returns Up But Sales Still Down for Settlements: ISI

The internal rate of return on life settlement investments has risen to 15% to 20% from 9% to 10% in previous years, but there is still a lack of investors in the market, a research group notes.

Transaction volume recently reported by the U.S. General Accountability Office for the life insurance settlement market (LISM) has fallen 40% to 50% since 2008, the Insurance Studies Institute (ISI), Keystone, Colo., says in a new report on the market.

Part of the problem may be that mortality estimates increased by as much as 30% in 2008, lowering the expected rate of return for settled policies, ISI states.