Life settlement market rebounds in 2013

The life settlement market appears to be rebounding, as transactions stopped their precipitous decline last year and showed an increase over 2012, according to The Deal, TheStreet’s institutional business.

According to The Deal, the face value of life insurance policies sold in 2013 reached $2.57 billion, an increase from $2.13 billion the year before.

The survey, compiled from information obtained through public records requests to state insurance departments, includes data from 36 life settlement providers, including seven that reported no transactions at all.

Dan Young

“This is the first time in several years in which the number of life settlement transactions has gone up. This can only mean the market is starting to bounce back after years of being in the doldrums following the recession,” said Donna Horowitz, senior editor for The Deal. “One of the main challenges that lies ahead for the market to continue to grow is consumer awareness. Most people still do not know that they have the right to sell their policies. Unlike the reverse mortgage market, the life settlement market remains largely unknown to the public.”

Dan Young, president of Magna Life Settlements in Austin, Texas, said the dark days of the industry might be over.

“I think a lot of the bad news is behind us and people see life settlements as a viable opportunity for investment,” Young was quoted as saying by The Deal. “We’re definitely seeing good capital flow. The quality of policies is improving.”

Highlights from the report include:

• The number of policy sales, at 1,356, represented 10 more deals than in 2011 when the total face value purchased was $5.07 billion and 160 more transactions than in 2012. In all, $406.2 million was paid to purchase policies last year compared to $319.4 million paid the year before.
• The total face value of policies sold reached $2.57 billion, an increase from $2.13 billion the year before.

The Deal also listed the Top five settlement buyers:

• Coventry First led the market in the total number of transactions, buying 637 policies in 2013 compared to 597 policies the year before. Coventry, which is based near Philadelphia, paid $71.8 million and purchased $340.1 million in policies.
• Magna Life Settlements Inc. overtook long-time market leader Coventry First LLC in the amount paid and the face value of policies purchased in 2013. Magna paid $153 million, more than double the amount paid by Coventry. Policies purchased by Magna totaled $930 million in face value, almost triple the value of Coventry’s policies.
• Settlement Group Inc. came in third place in the ranking, with 71 transactions last year, compared to 53 in 2012 and a fourth-place ranking. Settlement Group paid $12.5 million for 71 policies with $107.2 million in face value last year. Although it did fewer deals in 2012—53 of them—Settlement Group paid almost twice as much for them at $24.7 million. The face amount, at $149.7 million in 2012, also was higher than last year.
• Life Equity LLC had a better year last year, jumping to fourth place with 65 transactions from fifth place with 50 transactions in 2012. The Hudson, Ohio-based provider paid $10.2 million for policies with $121.9 million in face value last year compared to spending $12 million for $137.7 million in death benefits in 2012, reflecting a trend toward smaller policies.
• Abacus Settlements LLC ranked fifth with 56 settlements, $13.5 million paid and a face value of $119.4 million.

Read/download the full Life Settlements Report from The Deal.

Click on the chart above for a larger image.

 Original sources: http://ifawebnews.com/2014/06/23/life-settlement-market-rebounds-in-2013