Senior Life Settlement Funds

whiteflag_3

steve62384 wrote: »

whiteflag

To be honest I did not even know what OP was? I presume that purch was saying that I know Latchmore and have been in cahoots with him?? Wow, I am pretty new to this ‘forum stuff’ and will probably not be continuing!

In my defence, what I was trying to do here and with my post on Martins 'Promotions' thread is actually try and help people with one of the most important decisions of there lives. Yes we are a business and have to make money, like every other business who has posted on Martins 'Promotions' page so I don’t see what was wrong in doing that?

But I stand by my original comment that Latchmore needs to do as much research as possible and make an informed decision. If he goes into an annuity he is committing to that product and income for the rest of his life and possibly a third of his life. If he goes into drawdown as an alternative he may get his fingers very badly burned and most 3rd way products (possibly with the exception of AIG’s living Time Plan) are almost dead in the water as they are equity based products (where Living Time is backed by short term gilts).

I am certainly not saying that SLS is right for him. We have many many clients, far more intelegent than I who love the asset class and have invested millions and some who fully understand the asset class but just dont like it or have chosen to go the lowest risk option of cash. But what they have all done is made an Informed Decision.

Thanks whiteflag

au revoir et salut

No problem, dont mention it.

By the way, are there many of you French blokes in Warmington?

dunstonh

I am certainly not saying that SLS is right for him. We have many many clients, far more intelegent than I who love the asset class and have invested millions and some who fully understand the asset class but just dont like it or have chosen to go the lowest risk option of cash. But what they have all done is made an Informed Decision.

What is worrying is that you dont appear to understand MiFID requirements and are very casual in writing off the risks on an experienced investor product.

If someone is not able to undestand the basics about an investment, then it is unlikely they are able to understand the risks that go with it. On a forum where the majority of consumers are not experienced investors, to ignore the risks and dismiss them so easily is quite frankly disgraceful.

Good potential is one thing but it doesnt overide the requirement to match the product/investment with the risk and ability to undestand.

EdInvestor

Rather than write off posters in the forum as a bit dim, let's make an effort to see where the risks and rewards of this investment might lie.

Steve is right I think to suggest that the closest match in the UK is traded endowment policies (TEPs) which are not, it must be said, mainstream ways to invest (though they are said to be popular with Germans who like the guarantees and don't mind the low returns - or apparently the high charges).

So let's see if we can look at some of the risks.It will be educashional, won't it, and that's part of the raison d'etre of this forum.

steve62384 wrote: »

The way the Asset Class works is quite simple. Mr Bush is a retired politician in America who has a life assurance policy worth half a million dollars.

OK, this product is foreign, and thus foreign currency risk is involved for a start.

He is a bit down on his luck and his hearing has never been good, he can have an operation but it is going to cost $100k. So he goes to AIG...

AIG - that's the company that had to be bailed out recently by the US Government I think. Plenty of UK investors have lost money on so-called safe, high yield products which were guaranteed by this lareg insurer.How will Life Settlement investments be different?

Mr Bush decides to sell his policy, no different in principal to an endowment policy here in the UK (except the US one you know the maturity value and is not dependent on bonuses). So he sells the policy on the open SLS market and is paid $100,000. So he is more than happy, he has doubled his money and can have the operation to restore his hearing.

OK, so far so good.

The organisation who now owns the policy will then be paid out $500,000 when Mr Bush dies. They don’t have to wait until he dies as that asset is now their's. They could choose to re-sell the policy in 2 years time for say $150,000 and make a profit that way.

So they will sell on this policy to another investor (such as the people in the UK you are trying to flog them to, did you think we were German?), for say, 3 times the amount they bought them for.

How is the investor providing this return to the US buyer (after fees paid to the UK intermediary) to judge whether this is a good deal?
What information is there on the likely date of death of Mr Bush?
If there are no bonuses, where does the income come from?Is it from the profits made by the fund trading the policies? What information is there about the fund?
Are there any hedging or other arrangments to deal with the currency risk?
Who is providing the underlying guarantee on the policies (which insurer)?
Who owns the fund?
If the insurer fails, what protection is available to the investor, which, is presumably not included in any onshore US protection scheme?

I'm sure other posters can think of more questions.

steve62384

dunstonh

So what you are saying is that you are assuming Latchmore is not an experienced investor and that he is not able to understand this asset class. And it is I who is disgraceful??

I really can’t be doing with all of this. What is wrong with you people? All I have said is that Latchmore should make an informed decision and that people should not assume Latchmore is an in-experienced investor and not cleaver enough to understand how the asset class works.

Latchmore, if you are still reading this post EdInvestor is spot on and asking all the right sort of questions and if you want to understand the asset class fully I am happy to fully explain it to you, privately (which I am sure will provoke some other negative comment somewhere!) as I will not be looking at this again.

dunstonh

So what you are saying is that you are assuming Latchmore is not an experienced investor and that he is not able to understand this asset class. And it is I who is disgraceful??

Latchmore gave a couple of lines only. What little was posted indicated a lack of undestanding despite reading up on them. The comments were written with the expectation that Latchmore would post again as a follow up, as most forum posters do. However, that never happened.

I really can’t be doing with all of this. What is wrong with you people? All I have said is that Latchmore should make an informed decision and that people should not assume Latchmore is an in-experienced investor and not cleaver enough to understand how the asset class works.

Actually, you have come across more as not understanding the risk. You have focused on the upward potential and not the downside. You are critical of me for pointing out the risks. The whole thing looks like some lame attempt at a financial promotion on your part.

purch

Latchmore gave a couple of lines only

and hasn't been heard from since.

But we have had the "expert" sales pitch, :T ...........so this thread hasn't been a waste anyway.

whiteflag_3

plus provided me with an hurs entertainment

If the FSA want an example of a "how not to website" they just have to ask Rockingham for a borrow of theirs!

Cant believe they can get away with the 10.25% stuff with no risk warnings, costs etc etc

Although it has to be said Mr Hunt has done well since he moved from admin jobs to selling with the Pearl in 2003.

that_guy_6

Be careful with those what looks like very attractive SLS products, I have worked in this exact industry for several years now.
To be honest, most of these SLS funds have not been able to deliver what they have promised.
To fool investors they will pay the coupons on time and in full, only to let you find out that you have lost all of your capital when this thing matures in 10 years.:mad:
SLS are an asset that has a very unique cash flow structure attached to it, investors pay policy purchase price and finance premiums on policies till maturity (expenses), in exchange for a one time fixed payment at maturity (income) when the policyholder dies in a few years time. It is very hard for a fund manager to pay SLS acquisition costs and premiums, while not having incoming cash for a long time and at the same time pay you a 10% coupon. So you see, your high coupon payments are nothing more than your own capital being repaid back to you, without it ever having a chance of earning any interest.
Why would you look your money for 10 years with no option of getting out anyways.:cool:
If you want a good SLS investment - let me know, I can help you out there - I have spent the last 9 months designing a SLS fund that cures all the typical risks associated with traditional SLS funds. PS: and if anybody tells you their SLS fund uses a lot of leverage - run.



By the way SLS fund simply take an arbitrage on an insured life expectacy while basing themselves on medical underwriting (AVS, 21st,... and other guys)

Of course you will need an actuarial model to do a few outcome simulations, but in the end if your population lives longer than expected (and it has in most cases in the past) you will take a hit.

The only winner is the fund manger by cashing in on his fees and paying the transaction expenses with your money.

Just wait and see - even if it might take you 10 years to find out

Latchmore wrote: »

Has anyone used these funds in a SIPP or Drawdown, or have an opinion of them? I recently came across one which gives 10% p.a. return on the amount invested for a 10year term. Very useful given the current volatile stockmarket, but I can't to judge how safe these plans are.

For details see the ARM fund details at catalystinvestment.co.uk.

Latchmore

EdInvestor

that_guy wrote: »

To fool investors they will pay the coupons on time and in full, only to let you find out that you have lost all of your capital when this thing matures in 10 years.:mad:

Same principle as a "precipice bond".

It is very hard for a fund manager to pay SLS acquisition costs and premiums, while not having incoming cash for a long time and at the same time pay you a 10% coupon. So you see, your high coupon payments are nothing more than your own capital being repaid back to you, without it ever having a chance of earning any interest.

So part of your capital is being paid back to you as 'income' and the other part is being used to finance the insurance premiums on the policies ands the acquisition cost of them. Plus you are locked in for 10 years.

How much does anyone want to bet that at the end of the 10 years there won;t be any money left? :mad:

By the way SLS fund simply take an arbitrage on an insured life expectacy while basing themselves on medical underwriting (AVS, 21st,... and other guys).Of course you will need an actuarial model to do a few outcome simulations, but in the end if your population lives longer than expected (and it has in most cases in the past) you will take a hit.

Actuaries have ceretainly got life expectancy seriously worong over the past few years.ei

The only winner is the fund manger by cashing in on his fees and paying the transaction expenses with your money.

Exactly.

AVOID.

whiteflag_3

See our old mucker steve62384 is at it again

http://www.moneymarketing.co.uk/pensions/rockinghams-rita-offers-drawdown-deal/1003679.article

I particularly like

Managing director Steve Hunt says: “Rita is easy to understand, offers low risk, high returns and, crucially, comes with no charges.”

Ive spent the last half hour looking at it and I cant see where its easy to understand, low risk and where the no charges come in. Perhaps Ive missed something?