The Financial Services Compensation Scheme and the Investment Management Association are hammering out a deal to provide a loan facility to Lifemark to maximise the value of its life settlement portfolios, Money Marketing understands.
A minimum funding target of £18m is required to secure enough money to meet the policy premium payments and to pay operating costs related to the life settlements for 2011.
Keydata products were underpinned by the Lifemark policies and are designed to generate a return based on life insurance payouts.
A lack of mortalities in March and April has meant Lifemark is facing an urgent liquidity issue. Estimates suggest maturing policies will be enough to fund premium payments and operating costs for 2012 but meeting payments for 2011 is at risk.
Money Marketing understands the FSCS and the IMA agree that a loan to Lifemark is the most secure funding option rather than a forced asset sale.
An FSCS spokesman says: “We continue to be in close dialogue with the provisional administrator in Luxemburg and other interested parties in seeking to maximise value from the Lifemark vehicle.”
If there are no mortalities in May, a loan will have to be agreed by the end of June.
The IMA and Lifemark administrator Eric Collard, of KPMG Luxemburg, declined to comment on the issue.
In February, KPMG Luxemburg was given an extra three months to try to prevent Lifemark going into liquidation. In October, US hedge fund CarVal and Norwich & Peterborough Building Society loaned Lifemark £7.8m to meet premium payments, which was repaid.
Any forced sale of Lifemark policies may be hampered by legal proceedings brought by Keydata founder Stewart Ford through a family trust vehicle called Billericay Trading. It follows a £10.4m subordinated loan made by Billericay in 2009, meaning Billericay would be last in line for any monies recovered. A spokesman for Ford says: “This action has been taken as a last resort.”