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Money, Insurance & Investments for Seniors
Buying Life Settlements
Reached Value of $6.1 Billion in 2006
Trading in life
insurance policies driven by investor demand, seniors needing cash
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A viatical or life
settlement is the sale to a third party of an existing life
insurance policy for more than its cash surrender value but less
than its net death benefit. Regulatory usage of the terms
“viatical settlement” and “life settlement” varies by state.
Life Insurance Settlement Association |
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Oct. 24, 2007 - From
virtually no activity just 10 years ago, investment managers are today
raising capital by the bushel and on a global scale to invest in the new
asset of life settlements. The result is an increasing number and value
of life insurance settlements being sold to meet growing capital
demands, according to a new study by Conning Research and Consulting,
Inc. Senior citizens in need of cash are hot targets for life settlement
buyers.
“We estimate that $6.1
billion in face amount was transferred in 2006, up from $5.5 billion in
2005. It’s all about investor demand in the life settlement market right
now,” said Scott Hawkins, analyst at Conning Research & Consulting.
“The current limits on
life settlement market growth have much more to do with policy
availability and consumer education than with provider capacity.”
The Conning Research
study, “Life Settlement Market: Increasing Capital and Investor Demand”
identifies the growth drivers and limitations in the market and explores
the infrastructure supporting life settlement investors. It goes further
to explore the emerging impact of this growing segment on the U.S. life
insurance market.
“We anticipate growth of
about $1 billion in additional life settlement transaction volume per
year for the foreseeable future,” said Stephan Christiansen, director of
research at Conning Research.
“In seeking that growth,
life settlements investors will need to be mindful of ‘criteria creep’
in candidate policies and resulting stress on profitability. On the life
insurer side, as those annual transactions accumulate, the impact on in
force business becomes a more significant profitability issue for the
insurer.”
“Life Settlement Market:
Increasing Capital and Investor Demand” is available for purchase from
Conning Research & Consulting, by calling (888) 707-1177 or by visiting
the company’s web site at
www.conningresearch.com.
About Conning Research &
Consulting, Inc.
Conning provides insurance industry analysis to insurers and industry
stakeholders. The Conning name has represented excellence in independent
insurance industry research for 50 years. As a result of its wealth of
experience and intimate knowledge of the insurance industry, Conning
understands industry challenges and opportunities and provides in-depth
insights and analyses on a wide range of industry products and issues.
Conning is headquartered in Hartford, CT.
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