As 2010 draws to a close and the dawn of a new year beckons, those in
the life settlement industry look forward with renewed optimism. By
most accounts, the life settlement industry's bottom is behind it and
the secondary life insurance market is now in the process of recovering.
How much and how fast is still to be determined. However, below are the
Top 10 Predictions For Life Settlements in 2011.
1) Secondary Market To See Increased Buying. As everyone knows, capital has been slowly reentering the life settlement market but it is still off the highs experienced prior to the Great Recession. Much of the activity in 2010 was focused on tertiary trades and investors looking for distressed policies or portfolios. As those opportunities become less available in 2011, capital will be redirected to secondary market activities and policy origination.
2) Private Equity Will Arrive: As the investment banks and other types of investors left the market in 2009 and 2010, everyone has been anxious to identify the next big player. Much attention has been paid to Private Equity and in 2011 it will arrive. Rumors have been swirling that PEG's have been looking for acquisitions of established market players and have recently started funding some providers.
3) Higher Life Settlement Broker Utilization In the past, it has been relatively easy for producers to act as de facto life settlement brokers. However, new industry best practices suggest life settlement brokers are preferred as intermediaries for policy owners interested in a life settlement. Not only are brokers more able to source small pockets of capital, but more stringent licensing, regulatory and compliance requirements make it difficult for anyone but brokers to effectively navigate the landscape. 2011 will see producers more likely to refer cases to life settlement brokers than try to handle them autonomously as they may have in the past.
4) Small investors will make a splash: Many have been waiting for institutional investors to flood the life settlement market with capital, while forgetting that high net worth individuals and family offices in aggregate have the potential to play a serious role. With an eye towards diversification and predictable returns, expect accredited investors and family offices to be active buyers, as never before, in 2011.
1) Secondary Market To See Increased Buying. As everyone knows, capital has been slowly reentering the life settlement market but it is still off the highs experienced prior to the Great Recession. Much of the activity in 2010 was focused on tertiary trades and investors looking for distressed policies or portfolios. As those opportunities become less available in 2011, capital will be redirected to secondary market activities and policy origination.
2) Private Equity Will Arrive: As the investment banks and other types of investors left the market in 2009 and 2010, everyone has been anxious to identify the next big player. Much attention has been paid to Private Equity and in 2011 it will arrive. Rumors have been swirling that PEG's have been looking for acquisitions of established market players and have recently started funding some providers.
3) Higher Life Settlement Broker Utilization In the past, it has been relatively easy for producers to act as de facto life settlement brokers. However, new industry best practices suggest life settlement brokers are preferred as intermediaries for policy owners interested in a life settlement. Not only are brokers more able to source small pockets of capital, but more stringent licensing, regulatory and compliance requirements make it difficult for anyone but brokers to effectively navigate the landscape. 2011 will see producers more likely to refer cases to life settlement brokers than try to handle them autonomously as they may have in the past.
4) Small investors will make a splash: Many have been waiting for institutional investors to flood the life settlement market with capital, while forgetting that high net worth individuals and family offices in aggregate have the potential to play a serious role. With an eye towards diversification and predictable returns, expect accredited investors and family offices to be active buyers, as never before, in 2011.