Life Settlement Index Recap - January, 2010 Data

Amrita Financial developed the Amrita Life Settlement Index to track life settlement demand and industry buying activity. On Feb. 2nd, 2010 at 10:00 AM PST, Amrita Financial released the inaugural results of the Amrita Life Settlement Index revealing data collected in January 2010. The Amrita Life Settlement Index improved from its benchmarked 500 points to 528. As many expected the life settlement industry continues to see a slight increase in demand as not only the overall economy improves, but also the balance sheets of institutional investors. Wide spread buying activity has not returned to 2007 and early 2008 levels. However, the results of this month’s modest index improvement point to continued increases in the buying appetites of institutional investors.

Much of the Amrita Life Settlement Index’s increase was due to a relative increase in individual life insurance settlement originations and renewed optimism from life settlement providers that the industry is rebounding. Both cases received and cases closed by life settlement providers inched up in January 2010 from December 2009. However, market activity and competitive influences were not enough to drastically affect pricing or buying parameters. The life settlement industry still seems to be focused on “a flight to quality” at discounted levels.

The results show a slight up tick in life settlement buying activity. This is consistent with anecdotal feedback from life settlement providers and funding sources themselves. A number of life settlement providers are reporting that their funding sources remain affected by liquidity issues and are continuing to sit on the sidelines. However, the vast majority of industry participants are bullish on the life settlement industry going forward in 2010.

LS Index

Thank you for pulling together this index-we've utilized something similar in the life markets for years and it's quite helpful.

Going forward, it would be nice to see more detail on your index-summarizes types of policies, average LE, and average death benefits.


More detailed information?

Thank you very much for your thoughts and comments. We are glad to hear the index is helpful and adding some value in the marketplace. You raise some interesting points about capturing more detailed information with the life settlement provider surveys and ultimately the Amrita Life Settlement Index. We certainly appreciate the input and will absolutely discuss your suggestions when we next talk about ways to enhance the index.

I want to reply to your post with a little background information and context for this life settlement index. I can tell you the composition of the surveys and structure of the index was heavily debated by our team for a few months. One of the fundamental challenges we faced when developing the index was identifying a singular goal that the index would work towards. In essence, what is the main question it is trying to answer? There are really a limitless number of purposes the index could serve. Would it track market volume of face or settlement amounts? Preferred policy types? Insured lives/LE's? Ultimately we felt like the most beneficial information we could provide to consumers, life settlement providers and other industry participants is "marketplace demand". The index was set up to track the demand for policies on the secondary market. Essentially is there more demand for a policy this month than there was last month, two months ago, three months ago, etc.. This helps life settlement providers know what the competitive landscape looks like for policies, while empowering sell side parties with intelligence on market conditions (specifically expected discounting or premiums for policies) at the origination level.

Once we identified that as the goal we constructed life settlement provider surveys that are specifically geared towards tracking life settlement buyer demand. In such a compliance and privacy centric industry, the challenge we faced was asking life settlement providers questions they would be willing and able to answer. The Amrita Life Settlement Index is somewhat modeled after the CCI in that it asks relative questions on a month over month basis. We had to balance the desire for more specific information with the prospect that providers are less likely to participate if the surveys get too detailed. Ultimately we tried to strike the balance well enough that we could track the overall market's demand for policies.

With that being said, you are far from alone in wanting more detail. I will make sure your suggestions are heard by our team and hopefully we can work towards imroving the index for all involved. Thanks again for taking the time to post your thoughts.