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Daily Insurance Industry News
Friday 25th of May 2018
February 11, 2010

ACLI calls for ban on securitisation of life settlements

by Gill Montia

Story link: ACLI calls for ban on securitisation of life settlements

The European Life Settlement Association (ELSA) is opposing calls from the American Council of Life Insurers (ACLI) for policymakers to ban the securitisation of life settlements.

ELSA was set up in 2009 with the aim of promoting the development and reputation of the life settlement industry and now represents over 11 members across the sector.

According to the trade body, life settlement-backed investments (which turn life insurance policies into tradable assets) are an asset class that has expanded rapidly as a result of the financial crisis.

Investors looking for predictable returns that are not linked to the broader market cycle have been attracted by their lack of stock, bond or property exposure.

However, ACLI is arguing that allowing life settlements to be packaged into securities increases the risk of fraudulent policy applications.

ELSA “vigorously challenges” the claim, pointing to a growing understanding of the asset class being exhibited by financial intermediaries, institutions, discretionary wealth managers, and high net worth investors.

ELSA joint chairman, Patrick McAdams, comments: “It is absurd to suggest that all life settlements securitisation should be banned … you would never dream of suggesting other big-ticket purchases such as a house should not be transferable, so why a life insurance policy that is no longer wanted or has simply become unaffordable?”

He adds: “The financial crisis has underlined the need for investments that provide better diversification … life settlements have an important role to play in achieving this end as the growing interest in the asset class will testify.”

 

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