Life Settlement Firm Gears Up To Launch Hedge Fund

Jul 28 2006 | 4:32pm ET

Life Settlement Solutions —which originates, purchases and services life settlements for institutional investors —is launching a hedge fund that will invest in life insurance policies of high-net-worth individuals who no longer need or want their life insurance plans, according to Larry Simon, president and CEO of the San Diego-based firm.

The new offering, which is slated to be unveiled in September, is being domiciled in Dublin because of tax benefits. It will be marketed to institutions, funds-of-funds and high-net worth individuals.

The firm has previously managed a hedge fund for a sister company, "so this is not our first hedge fund," Simon said.

He added that the terms of the fund are still being hammered out, though the minimum investment will likely be $500,000 and fees will be "less than the typical 2/20 structure."

A portfolio manager has yet to be chosen for the fund, but Simon is in talks with various candidates, all of whom have experience both in the hedge fund and life settlement industries. The firm is also planning to hire a marketer to tout the new offering.

According to a recent report conducted by Bernstein Investment Research and Management, the life settlement business is currently around $13 billion and is projected to grow to $160 billion within 25 years, partly driven by aging baby boomers looking to fund their retirements.

In a life settlement, a person who no longer wants his or her life insurance policy, sells the policy to a third party, gaining more than he or she would if it were sold back to the company backing the policy. The third party then continues to pay the premium on the policy, and when the original holder dies, the third party collects the insurance payout.

"[The life settlement industry] is still in its infancy," said Simon, who hopes to roll out more hedge funds as demand grows. "It is our feeling that a financial advisor has an obligation to make their clients aware of different opportunities…and selling a life insurance is one of those opportunities."


In Depth

Q&A: Brevan Howard’s Charlotte Valeur Talks Strategy

Sep 18 2014 | 11:18am ET

Charlotte Valeur chairs the board of Brevan Howard Credit Catalysts, an LSE listed...

Lifestyle

Griffin Donates $1M To Rauner's Illinois Gov. Campaign

Sep 22 2014 | 9:29am ET

Hedge fund billionaire Kenneth Griffin definitely has a dog in this fight. The Citadel...

Guest Contributor

Top 5 Predicted Outcomes Of CalPERS' Hedge Fund Divestment

Sep 22 2014 | 8:35am ET

CalPERS’ announcement to divest of hedge funds has created a significant buzz...

 

Videos

Editor's Note

    Get A Sneak Peak Of The Alpha Pages

    Aug 25 2014 | 11:21am ET

    As many of you know, FINalternatives was recently acquired by the owners of Futures magazine, a firm called The Alpha Pages LLC. Today marks the soft-launch of a new sister site for both publications. As its name suggests, The Alpha Pages will cover all types of alternative investments, going far beyond the more well-known ones such as hedge funds and private equity. Read more…

 

Futures Magazine

September 2014 Cover

The London Whale: Rogue risk management

Credit default swaps brought down the London Whale and cost JPMorgan $6.2 billion. Here is how it happened.

The Alpha Pages

TAP July/August 2014 Cover

The Alpha Pages Interview: Senator Rand Paul

Senator Paul sat down in the debut series of the Alpha Pages Interview to discuss the broken tax code, regulation surrounding Bitcoin, and his plans for the 2016 Presidential election.