The immediate future of the life settlement industry may be similar to its not-so-distant past.
A new report by Conning Life Settlements an Asset Class Resets 2011 suggests that in the next year, the annual volume of life settlements in face value will average around $4 billion per year, essentially resetting the asset class to the levels of growth that it had from 2002-2004.
After the confluence of events that aggravated growth models industry wide in 2008 and 2009, a buyer’s market emerged that continues on to this day as capital dwindles from the market, shaping and shrinking the overall size of the asset class.
The report notes that although the annual volume of life settlement transactions has decreased, the overall outlook of the industry is stable due to an increase an in the level of consumer cognizance and comprehension as well as demand for life settlements.
The report estimates that sales decreased for a third straight year in 2010, this is likely to continue as investors look to acquire distressed portfolios rather than purchase new policies. Compounding this issue is the general ambiguity of the life settlement industry; the landscape of the industry is constantly changing in terms of policy criteria, expected returns, competitions and especially regulation.
Life settlements, however, have not lost their cardinal appeal to both policy owners and investors and the industry is believed to remain competitive as the overall economy finds its footing.