What? Life insurers are starting to buy life expectancy data from life settlement companies? That is what one of many interesting trends discussed during National Underwriter’s 4th Life Settlements Roundtable—Part II of which is shown in this month’s issue of Settlement Watch.

 

This particular trend was pointed out by Bryan Freeman, president and managing member of Habersham Funding, LLC, Atlanta, Ga. His exact words were:

 

“We’re beginning to learn a lot about life expectancies. I think for the first time in the history of this business we know about life expectancies. What is interesting is the life insurers are now buying our data about life expectancies because they have now figured out we know more about it than they do, which is an interesting turnabout.”

 

Of course, life expectancy analyses can vary, as several of the settlement executives pointed out. No one is claiming to have the one true LE map.

 

Still, this switch-a-roo by life companies is significant. The insurers have moved from spurning life settlement practitioners several years ago to seeking them out for data in today’s market. This is yet another sign of acceptance of the settlement business, or at least of its expertise, by the larger insurance marketplace.

 

As noted in this space some months ago, acceptance by the entrenched interests got its first big lift when institutional investors stepped in as settlement funders a few years ago. Then, this year, two big insurance companies, Transamerica and Phoenix Companies, announced they would enter the business. The solidification of the business, as reflected in the new regulations being adopted in many states, is further testimony to the business being taken seriously by the establishment.

 

The landscape is by no means fixed, however. In recent months, certain institutional funders have reportedly been tightening up on settlement activities--this, one of the many casualties of the ongoing credit crisis. And the activities by insurance companies in this market are not yet easy to view or assess, creating some doubt about how soon and how far these initiatives will go.

 

Then again, several settlement executives point out that they have options--private equity for funding and their own moxie, for example. And, now, of course, they have growing recognition of their underwriting expertise. Given the many twists and turns of this business, that’s nothing to sneeze at.

 

--Linda Koco
  Senior Editor, Managing Editor, e-Publications
National Underwriter Life & Health