BroadRiver Buys Non-Cash Life Partners Assets

BroadRiver Asset Management is helping to end a long-running life settlement company bankruptcy story.

The New York-based alternative asset manager today announced that it has completed the purchase of the non-cash assets of Life Partners Position Holders Trust.

NorthStar Life Services will continue to provide customer service and accounting services for the Life Partners life settlement portfolio, BroadRiver said.

The trust itself, which was formed in 2016 to oversee the Life Partners operations as a result of the Life Partners bankruptcy proceedings, will shut down, according to BroadRiver.

Details about the assets transferred and the deal price were not immediately available.

What It Means

The deal could affect the investments of any clients who invested in Life Partners stock, including some who may have invested in the stock through IRAs.

Mike Quilling, the trust trustee, acknowledged that the deal “represents the end of a long and painful road for many original investors in Life Partners.”

But the deal appears to be in the best interests of the investors, Quilling said.

“We are pleased to find a buyer with deep longevity expertise,” he added.

The History

Life Partners was a Waco, Texas-based pioneer in efforts to help investors invest in pools of in-force life insurance policies. The company sold stock to members of the public in 2000, and its shares traded on Nasdaq.

The company also had investors who were classified as partners rather than as public shareholders.

The company ran into trouble when some investors and others alleged that the company had underestimated the life expectancy of life insurance policy insureds and given investors unrealistic return projections.

The company filed for bankruptcy in 2015, and Nasdaq delisted its stock later that year.

The Position Holders Trust

The bankruptcy court authorized the creation of the position holders trust to manage the Life Partners policy portfolio on behalf of the company’s investors.

On June 30, the trust was managing 2,435 policies, including 330 that were classified as life settlements and 2,105 classified as viaticals, or policies insuring the lives of people believed to have what were believed to be life-threatening illnesses when the policies were purchased.

The trust noted that the COVID-19 pandemic hurt its cash flow, by leading to delays in the process for filing life insurance claims and collecting death benefits.

In New York state, for example, the average time needed to get a death certificate increased to six months, from a few weeks before the pandemic hit, according to trust estimates.

The trust posts many details about its portfolio on the open web, including the date of death, check received date and benefit payment amount for 659 policy death benefit payments that it has administered between 2017 and mid-July.

On July 18, for example, it received $100,000 in benefits for a death that occurred May 21 and was discovered May 31.

It also received $150,000 for a death that occurred Oct. 9, 2021, but was not discovered until June 6, 2022.

The BroadRiver Deal

The Life Partners trust has served several classes of investors, including many who invested in Life Partners portfolios through IRAs.

The trust participants have had to pay for asset pool administration and compliance services.

Now that the trust is selling its remaining assets, it will pay cash to some trust participants and then dissolve, BroadRiver said.

Some types of portfolio investors could face problems if other parties default on paying the premiums for the policies in the Life Partners policy portfolio.

A cash pool will help compensate for premium payment defaults for six years, according to BroadRiver.

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