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EEA suspends dealing in life settlements fund

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The board of the EEA Life Settlements Fund decided to suspend dealings in the fund after receiving unprecedented levels of redemption requests from advisers and institutional investors.

Earlier this week, the FSA labelled life settlement funds as high risk, toxic products and said it aimed to ban TLPIs from being marketed to retail investors.

The suspension follows a board meeting with the dealing suspension introduced at 5pm on November 30. A spokesman for the firm says the suspension does not affect the ability of the fund to pay premiums as usual.

The Guernsey-domiciled EEA life settlements fund launched in November 2005 and is currently £600m in size, according to the firm’s November factsheet.

Life settlement policies were the underlying investment behind Keydata’s Lifemark products. The collapse of Keydata triggered an industry interim levy of £326m, with advisers paying £93m and fund managers paying £233m.

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Readers' comments (20)

  • Got to love panicing investors pulling out of a potentially good fund (not reviewed) to make it fail....

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  • i remember some Thinc guys had these as core holdings

    There is some way to run on the compensation i suspect

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  • May I be one of the first on here to congratulate the FSA on driving a nail into its own coffin, in addition to creating untold problems for advisers and clients alike through publicising its hysterical intentions on these funds.

    I would also like to congratulate those4 journos and investment professionals who helped fan the flames.

    I predicted a couple of days ago that the way in which this issue had been handled would lead to a self-fulfilling prophesy.

    It gives me no pleasure in saying that I told you so.

    Ian Coley
    Medical Investment Services

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  • To be fair to the FSA, they've been rumbling on about Life Settlement Funds for well over a year, which should have been long enough for advisers to take the hint.

    If the valuations of this fund have been accurate (even though the performance suggests mark to model rather than mark to market) there shouldn't be a problem dealing with redemptions.

    If, however, the assets are largely illiquid with a limited secondary market, this should have been run as a closed-ended fund.

    Regardless, advisers and clients who think they can get a steady 9% a year return (on top of fat commissions) in the current environment probably need to pay a bit more attention.

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  • Another charge from the FSCS will be the intended consequence if any investors cannot get their money back.

    The FSA has to stop ruining our industry with its ill considered, idiotic, ill informed, badly researched and totally inaccurate commentary on products.

    If we are to have product regulation and approval then let us have it, not this back door, not our problem lamentable behaviour by a so called "world class regulator"

    No wonder consumers don't really trust the industry, it is because the regulator has no common sense, anyone with half a brain could see this coming about.

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  • I would love to have the time to research to conclusion my following statement.

    But at face value:-
    It apears the largest contributor to consumer detriment is the FSA itself.

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  • Unfortunately Clive People don't die to order. Left alone as long as the policy has been purchased at the right price the rest falls into place over time. The FSA are a shambles. Yes steady returns despite all these 'high charges' etc. Is this the real reason the FSA label this as Toxic?

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  • I agree with Clive, this asset class was widely promoted as being a low risk core holding for pretty much anyone, forgive me for my old fashioned approach but I'd have thought that Equities, Bonds and Cash represent retail client investments and not Life Policies on US residents wrapped up in a structure who's valuation model is almost impossible to understand by even the most qualified amongst us....Timber Funds, Recycling Funds, Land Funds this space advisers!

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  • Not having transacted any of these Life Settlement funds, doesn't stop my bemusement, each side of the argument has its own merits, but I cannot stop thinking, death & taxes are the given certainties in life, we're all very much aware of the taxes at present and of course death is inevitable. Consequently, providing the premiums are continued, which are stated as sustainable as well as being auditable, the actuaries will not be far out on life expectancy, leads me to believe the only problem is the FSA! I may be wrong, we'll find out wont we, but I would ask you to recall the pension transfer costs incurred by our industry, I would ask are these final salary schemes doing what they said originally on the tin or is there some spillage? I will leave you to contemplate this and place the FSA in the equation in both calculations!

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  • I can't help thinking that making a statement that was likely to induce panic was a really stupid thing to do.

    Nor can I help thinking that whoever said it must have known it was a really stupid thing to do.

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