SL Investment Management, one of the UK’s largest full service life settlement product providers, is celebrating the second anniversary of its flagship Life Plus Life Settlement Fund.
The fund purchases US life insurance policies directly from the secondary market.
Policies are acquired at a substantial discount to maturity value along with responsibility for future premiums until the death of the life assured, at which time the fund collects the full maturity value.
Launched in the summer of 2008, the fund has achieved returns of 10.26 per cent with low volatility and minimal correlation to the wider markets.
USD13.3m has been delivered in maturities so far.
Patrick McAdams, SL’s investment director, says: “Of critical importance to our success is our valuation methodology. Not all valuation methodologies are created equal. Most valuation methods use mark-to-model and therefore can differ greatly, many of which overvalue policies, such as the straight-line method, meaning shareholders invest at too high a price. SL assumes very few maturities will occur shortly after policy acquisition, and use a very transparent actuarially based model to approximate market value. Some funds outsource this critical function, which is a big mistake.”
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