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Investors Increasingly Eye Life Settlements

May 29, 2024

Investor interest in life settlements has become increasingly favorable in recent decades not only due to their ability to outperform the S&P 500, but also given their low correlation to other asset classes, low volatility, and power to provide diversification.  

AIR Asset Management Symposium Discusses Trends in Life Settlement  

At AIR Asset Management’s 3rd Annual Private Life Settlement Symposium, practitioners discussed the increased appetite for this asset class from sophisticated investors and how life settlements benefit both allocators and policyholders.  

The symposium featured a distinguished lineup of speakers, including:  

  • Industry executives from AIR Asset Management 
  • Joe Siprut, CIO/CEO of Kerberos Capital Management, a sub-adviser to AIR’s Legal Finance Fund
  • Steven Shapiro, President & CEO, Q Capital Strategies
  • Bryan Nicholson, Executive Director, Life Insurance Settlement Association 
  • Michael Easter, New York Times Bestseller
  • Alex Weber, Award-Winning Author, Speaker, TV Host and American Ninja Warrior 

The Evolution of Life Settlements

The symposium walked attendees through the evolution of life settlements from their inception until where they are today. Including:  

  • Early Beginnings (1911): The foundations of life settlements began in 1911 when the U.S. Supreme Court Ruling, Grigsby vs. Russell stated that insurance policies are a financial asset that may be sold to a third party at the owner’s discretion. 
  • Growth in the 1980s: Fast forward to the 1980s during the AIDS crisis, life settlements picked up steam since they provided immediate cash to support individuals who were battling this epidemic. In turn, during this time, life settlements also gave opportunities to senior citizens, the terminally ill, and those unable to maintain their policies. 
  • Regulatory Measures and Technological Advancements: At the turn of the Century, when both individuals and institutions recognized their value-add leading to robust growth, regulatory measures for consumer protection were instated. By 2010, technology advancements streamlined life settlement transactions, enhancing their efficiency and accessibility. 
  • Life Settlements Today: Today, life settlements are globally recognized as a smart financial option by sophisticated investors, including family offices, endowments, and institutions, all contributing to their robust asset growth.  

When quantifying the growth of the life settlements industry, statistics show a 35% annual increase. This surge is attributed to two key factors: an aging population and low retirement savings. 

Benefits for Investors

“Investors in life settlements are attracted to the asset class not only for the perceived safety of owning insurance company credit but also because it’s a way to get socially responsible exposure to a differentiated asset class that has little correlation to the broader financial markets,” said Richard Beleutz, Founder and Chief Executive Officer, AIR Asset Management. 

A Multi-Strategy Approach  

"At AIR Asset Management, our multi-strategy approach offers a degree of resilience in the investment portfolio by integrating longevity-related assets such as life insurance policies and structured settlements, which are known to have minimal correlation to the returns of traditional markets,” said Steve Luongo, Chief Investment Officer, AIR Asset Management. “By expanding our allocations into complementary private credit areas such as legal finance, we enhance our ability to provide historically attractive risk-adjusted returns.”

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Elana Margulies-Snyderman

Elana Margulies-Snyderman is an investment industry reporter and writer who develops articles, opinion pieces and original research designed to help illuminate the most challenging issues confronting fund managers and executives.

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