2016: Life Settlements, Secondary Annuities, and Structured Settlements - Rate Increases Squeeze Returns
This study provides Conning’s market review of the life settlements and secondary annuity markets industry and associated transactions in 2015 and our forecast of the markets’ development through 2025. It explores the key issues facing investors, including the cost of insurance increases on universal life policies. Finally, the study reviews the performance of those insurers targeted by the life settlements industry and compares them to the broader life industry.
2. Executive Summary
3. Life Settlement Market Review and Forecast
- Life Settlement Market Review
- Conning’s Life Settlement Market Forecast
- Conning Tertiary Market Forecast
- Small Shifts in Capital Drive Market Dynamics
4. Performance Analysis of Insurers Focused on by Life Settlement Investors
- Insurers with Life Settled Policies
- Portfolio Performance and Net Operating Gain
5. Cost of Insurance Increase
- COI Increases
- Reasons for COI Increases
6. Additional Life Settlement Markets
- Non-U.S. Secondary Markets for Insurance Products
- Life Settlements for Long-Term Care Funding
7. Secondary Annuity and Structured Settlement Market
- SPIA Market Overview
- Structured Settlement Market Review
Appendix—Life Settlement Market Structure and Risks
Since 1999, Conning has reviewed developments in the life settlement market. With this edition, we continue our market review and forecast.
In 2015, we expanded our review to include non-US markets as well as secondary market annuities and structured settlements. In this study, we further refine those expansions.
In 2015 and into 2016, some life settlement investors have grown concerned about COI (cost of insurance) increases on universal life policies. These COI increases could significantly affect some investors’ return on their life settlement portfolios. In response, we are expanding our review to provide an analysis into the drivers of those COI increases.
At the same time, we are now including an analysis of those life insurance companies whose policies life settlement investors purchased. This analysis provides useful insight for investors on the financial performance of the companies that issued the policies in their portfolios and the possible impact life settlements may have on those companies.
This study reviews this diverse secondary market for insurance products.
- We review the current market and provide our forecast for 2016-2025.
- We review the German, U.K., and Medicaid settlement market.
- 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 the COI increases by some insurers in 2015 and 2016.
- We review the secondary annuity market and structured settlements.
- Finally, for new investors curious about life settlement we provide an introductory primer of how life settlements operate.