View more on these topics

Suspended death bond fund fights back in valuation row


The chairman of suspended EEA Life Settlements fund has responded to criticism by the fund’s auditor questioning the valuation of the portfolio.

In the fund’s recently published annual report for the year ended 31 December 2011, Ernst & Young says it considers the fund to be worth around $100m (£65.6m) less than the $871m valuation given by its directors.

Responding in a letter to shareholders, EEA Life Settlements chairman Mark Colton notes that 2011 was the only year in which the fund and its auditor has disagreed over the portfolio’s valuation and explains that an independent valuation exercise has been commissioned.

The fund suspended trading in 2011 after the FSA branded life settlement funds “toxic products”, which led an increase in redemption request and the withdrawal of subscriptions.

Colton says: “At the end of the 2011 financial year the underlying policies remained highly illiquid. The effect of this was that their valuation for the purposes of International Financial Reporting Standards was considerably more difficult than in previous years.

“As as result, the board and its auditors arrived at different assessments of the IFRS value of the policies. This contrasted with several previous years where there was no disagreement.”

Colton adds that since 31 December 2011, the fund’s underlying policies have been subject to continuing activity with premiums being paid and maturities, which are paid out when policyholders die, being collected. However, maturities have occurred at a slower rate than anticipated.


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