administrative law judge in Florida today ruled that state insurance regulators were exceeding their authority in how much detail they were demanding from life settlement providers who submit annual reports on transactions.
The 18-page decision by Suzanne Hood, an administrative law judge with the Florida Division of Administrative Hearings in Tallahassee, is a victory for the Life Insurance Settlement Association (LISA), which argued that the state was overreaching its authority
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The U.S. Senate Special Committee on Aging has scheduled a hearing on life settlements for April 29.
The session, titled “Betting on Death in the Life Settlement Market - What’s at Stake for Seniors?” will be chaired by Sen. Herb Kohl, D-Wis. It will start at 2 p.m. East Coast time and will be webcast. The committee’s website is at http://aging.senate.gov/.
The witness list is not yet complete, but is not likely to exceed six or eight people on two panels, according to a committee investigator.
The committee has met with a number of players in the life settlement and life insurance industries and has sent questionnaires to them as well as follow-up letters, the investigator said.
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One of the major life expectancy underwriters in the life settlements market, 21st Services, said yesterday that it will provide lifespan forecasts for the financial planning market.
The Minneapolis-based company said it’s developed a new product for clients of financial planners.
The new product, based on medical, health and lifestyle information provided by clients themselves, is significantly less costly at $60 than the traditional life expectancy report that costs about $300 and involves expert analysis of a client’s medical records.
“We see plenty of room to grow in our original market, life settlements,” said Jeanne Bailey, chief marketing officer for 21st, in a statement. “A natural extension is into the financial planning arena.”
She said the company’s new product will be especially helpful for people planning their retirements.
“We know that a primary financial concern for consumers, particularly Baby Boomers and retirees, is making sure their money will last as long as they do,” Bailey added. “We can offer planners, for the first time, a way to get a truly scientific estimate of how long, in each client’s individual case, that needs to be.”
21st Services shook the life settlement market in September when it lengthened its lifespan estimates by 20% to 25%.
Ohio insurance regulators have at least for now called off an extensive self-audit that was required of life settlement providers and brokers.
Instead, the Ohio Department of Insurance said today it will meet with settlement industry representatives to learn about their objections to the audit before it is reinstated.
“We got a lot of feedback from the industry and we thought there were some valid concerns and we should withdraw and hear from the industry,” said Carly Glick, a spokeswoman for the Ohio department.
The Life Settlements Wire obtained a copy of the self-audit request that was sent to providers Jan. 14. It asked for 91 different pieces of information for each transaction that the providers took part in for the past three years.
Originally, the companies had 30 days to complete the forms, but the department relented after hearing objections and planned to grant two more extensions of 30 days each, according to Barbara Farrington, staff attorney for the department.
A policy owner can keep on paying even though the policy is no longer of value due to changing personal circumstances. He or she could stop paying premiums and allow the policy to lapse. Or, the policy owner could sell the policy to an investor for an amount that is often much greater than its current cash surrender value with your help - and ours. In some cases, the client can retain a portion of the death benefit with no additional premiums due.
Hedge fund manager Ritchie Capital Management re-filed a lawsuit against Coventry First almost a year after dropping its original complaint against the provider.
Ritchie renewed its case against Fort Washington, Pa.,-based Coventry on Friday in U.S. District Court for the Southern District of New York, claiming breach of contract.
The hedge fund manager previously lodged a seven-count case against Coventry, but a federal judge decided that Ritchie could only proceed on the breach-of-contract claim.
Ritchie of Lisle, Ill., dropped its lawsuit against Coventry in March 2008, but said at the time that it planned to re-file.
Ritchie said that the New York attorney general’s 2006 bid-rigging lawsuit against Coventry prevented Ritchie from issuing a securitization of policies that it had purchased from the provider. Ultimately, Ritchie was forced to sell more than 1,000 policies that it obtained from Coventry in a bankruptcy sale.
In its latest filing, Ritchie said it only was able to recoup $586.5 million of the $752 million it paid for the policies.
Ritchie said it generated $452.5 million from the bankruptcy sale in January 2008, obtained another $35 million in death benefits from 20 policies that matured, and $99 million in funds it recovered from loans on policies.
EMSI Revises Life Expectancy Mortality Tables
Examination Management Services Inc. (EMSI), one of the major life expectancy underwriters in the life settlement market, said it’s revised its mortality tables.
The firm is now the fourth underwriting company to make changes to its estimates in recent months. Life expectancy estimates are used to price policies on the secondary market. Previous changes by three other life expectancy underwriters have reduced the value of policies.
EMSI said in a statement that it expects to implement its new tables on Feb. 2. The underwriter said it based its updated tables on the Society of Actuaries 2008 Valuation Basic Table, which forecast longer lifespans. EMSI said its revisions also reflect “different patterns of mortality between the life insurance and life settlement industries.”
An EMSI representative was not immediately available to provide further details.
A previous change to life expectancy tables by 21st Services of Minneapolis sent the market reeling by extending estimates by 20% to 25% in September. AVS Underwriting of Kennesaw, Ga., extended its tables by almost 16% in November and ISC Services of Clearwater, Fla., lengthened its estimates by 4% as of Jan. 1.
the chief executive of the Lifeline Program, an Atlanta-based provider, said his company is negotiating with a U.K.-based hedge fund to invest a “substantial” amount in life settlements.
William Scott Page, chief executive of Lifeline, said a confidentiality agreement with the hedge fund prevents him from naming it. Page said this will be the fund’s first foray into the life settlements market. He expects to begin buying policies for the fund in the first quarter.
Page said he believes the fund intends to buy the policies with the intention of holding them until maturity or until insureds die and the death benefits are paid. But he said that Lifeline is aggregating the policies with the option to sell them for the hedge fund.
The company said in a statement that despite continued worldwide financial market turmoil, interest in life insurance settlements as an institutional investment is growing in the U.K.
“I think people are looking for non-correlated assets,” Page said. “I think we’re going to see capital come back into the industry.”