2019: Life Settlements - A Market Takes Off
This study provides Conning’s market review of the life settlements market in 2018 and our forecast of the markets’ development through 2028. It explores the key issues facing investors, including the cost of insurance increases on universal life policies, a key concern for many life settlements investors. Finally, the study reviews the performance of those insurers targeted by the life settlements industry.
2. Executive Summary
3. Life Settlement Market Review
- Life Settlement Market Review
4. Life Settlement Forecast Drivers
- Economic and Capital Drivers
- Consumer Drivers
- Industry Drivers
- Tertiary Market Drivers
5. Life Settlement Market Forecast
- Conning’s Life Settlement Market Forecast
- Conning Tertiary Market Forecast
6. Life Settlement Insurer Performance
- Insurers with Life Settled Policies Performance
- Portfolio Performance and Net Operating Gain
7. Cost of Insurance Increase
- COI Increases
- COI Litigation
- Reasons for COI Increases
Appendix—Life Settlement Market Structure and Risks
IntroductionThe 2018 life settlement market enjoyed the third consecutive year of growth in the amount of face value settled. This strong growth indicates a renewed interest in life settlements by investors. This interest reflects a combination of a prolonged low interest rate environment, continued investment allocations to non-correlating alternative asset classes, and the stability of the life settlement landscape.
The potential cloud on the horizon remains COI (cost of insurance) increases on UL policies. Investors continued to confront lower UL crediting rates in 2018. The combination of COI increases and lower crediting rates could raise premiums for settled policies and eventually reduce investor returns. Some of those increases have been challenged in court. That said, insurers remain under some degree of pressure created by lower investment returns on their assets. As a result, this study continues its analysis of the issues driving COI increases.
This study reviews this diverse secondary market for insurance products.
- We review the current market and provide our forecast for 2019-2028.
- We analyze the performance of those insurers targeted by life settlement investors and compare them to the broader life industry.
- We analyze the drivers for recent COI increases.
- As always, for new investors curious about life settlements, we provide an introductory primer of how life settlements operate.