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Life Settlement Players Say They Still Have Room to Grow

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Life settlement industry players predicted Monday that, in the long run, their sector will continue to do well, despite temporary fluctuations in volume.

The players went to Washington, D.C., for Fasano Associates’ latest annual longevity conference.

Life settlement companies buy in-force life insurance policies from the insureds, or from other investors. The buyers pay the premiums until the insureds die and then collect the death benefits.

Fasano Associates provides underwriting services for life settlement industry players as well as for other types of life insurance and annuity transactions.

Jay Jackson, CEO of Abacus Life, talked about his company’s move to go public through a special purpose acquisition company (SPAC) transaction.

He acknowledged that The Life Settlements Report recorded only $715 million in capital spent on 2,937 life insurance policy purchases in 2021, down from $848 million in capital spent on 3,241 policies purchased in 2020.

But Jackson contended that improvements in technology, capital structure and insurance company relations can make the market work better.

Interest rates might be rising, but they’re still low by historical standards, and the relatively low cost of capital is another factor creating opportunities in the life settlement sector, Jackson said.

Jackson suggested that, in the end, life insurers have an incentive to work with life settlement companies, because life settlement companies know important things about the insureds.

Most life insurers have only general information about insured mortality, he said.

“There can be a win-win situation,” he said. “We know about the back-end mortality.”

Emily Pollack, a partner at Cornell Capital, a private equity firm with an interest in the life settlement market, suggested that companies like Abacus Life appear to have relatively low price-to-earnings ratios and other financial performance indicators when compared to other specialty insurance and alternative asset management firms.

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