View more on these topics

Policy Selection in retail push for life settlements fund

US life settlements specialist Policy Selection is marketing its assured fund to the retail market through IFAs.

The assured fund was launched for institutional investors and high net worth private clients four years ago. It aims for returns of 8-11 per cent a year by investing in a diverse portfolio of US senior life settlements. These are US life policies sold on the second-hand traded market by policyholders typically aged 75-85.

When a life policy is sold to the fund, the fund pays the policy premiums and the full value will be paid to the fund when the policy matures. Prices of the policies are based on acturarial calculations of life expectancy and are independently checked by Deloitte & Touche.

Policy Solutions can sell on the policy at a profit instead of waiting for it to mature but this is very rare and has only happened once in the fund’s four-year history.
One of the characteristics of investing in US life settlements is that although there is a fixed purchase price and the returns are known at the outset, it is not known when the policies will mature as people could die earlier or later than expected. This means the fund needs to invest in over 200 policies that will mature at different times to ensure that there is a steady stream of returns. Policies will diversified in terms of insurance company, age, gender and smoking status.

The fund is being marketed to advisers as an alternative asset class to equities at a time when stockmarkets are volatile. Returns from US senior life settlements are non-correlated and Policy Solutions has seen demand for non -correlated assets increase over the last few years.

Advisers in the UK can access this asset class through other funds, such as the recently launched Meteor Senior Life Settlements fund, but this feeds into another fund, EEA Life Settlements, which has appointed a number of partners to source the policies, hold them and administer the fund.

Policy Selection has a limited number of partnerships, but buys the policies itself. It says it has a reputation of always buying the policies it bids for, which means that even if it does not offer the best price for a policy, it may be preferred because it is able to complete deals quickly.

Some investors may be wary of investing in a fund that benefits from death but higher prices paid to policyholders on the open market can allow them to improve their standard of living in their final years.

However, returns could be adversely affected if the insured lives longer than expected, as the fund would pay premiums over a longer term.


Newcastle BS profits up 52 per cent

Newcastle Building Society group profits are up 52 per cent to £17.6m in 2007. The society has seen a 48 per cent increase in other income to the year ended December 31, 2007, largely its Solutions business and increasing demand for investment products through Newcastle Financial Services. Despite a turbulent second half of 2007, it […]

Armac returns as multi-strategy fund

Swiss hedge fund manager Insch Capital Management is relaunching a long-established hedge funds as a multi-strategy fund of hedge funds.Armac was set up in 1974 by David Anderson, who became chairman of ED&F Man, and Mike Collins, chairman of Bermuda-based Argonaut.They will serve on the boards of the new fund and the investment manager.At its […]

MPs probe orphan assets

The Treasury select committee is to look at the extent to which life offices can use inherited estates to subsidise corporate activity.

Steve Bee calls for Govt to improve womens’ pension provision

Scottish Life head of pensions strategy Steve Bee is callling on the Government to allow women to increase their pension contributions. He says with the 2010 deadline on the horizon for pensions reform, women must increase their deposits. He says currently, over 70 per cent of women end up with no state pension entitlement or […]

The FCA’s five fixes for retirement information

The Financial Conduct Authority (FCA) has started to change the way that people will be told about their pension options. In a recent market study paper, they lay out their final proposals on the information that should be delivered to people approaching retirement and how it should look and feel. During 2015, there will be […]


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm