609 Deep Valley Drive
Suite 200
Rolling Hills Estates, CA 90274
Ph (310) 265-9009
Fax (310) 347-4191
www.acclivitywest.com
jc@acclivitywest.com
This information is for broker/agent use only. Not for public use. This information does not
comprise an offer to sell securities. All information and representations regarding our service can
be found in our Purchase Agreements.
Life Settlements
The Secondary
Life Insurance Market
What is a Life Settlement?
 In 1911 the Supreme Court ruled in Grigsby Vs Russell that insurance
policies are legally viewed as financial assets which may be sold to a third
party, just as any other tangible investment can be sold at the owner's
discretion.
 Life Settlements are an important development in the financial services
industry in that they have opened a large and growing secondary market
for life insurance in which policy owners can access fair market value for
their policies, rather than letting the policy lapse or accepting the lower
cash surrender value from the issuing life insurance company.
 Many states now require Insurance Companies to advise their insured's of
this market place as an option to letting a policy lapse or cancelling for the
current cash values
Defining the Terms
 A Life Settlement is a financial transaction in which a life
insurance policy owner possessing an unneeded or unwanted
life insurance policy sells the policy to a third party at a discount
of the face value. Generally speaking, life settlements represent
insureds which are 65 years of age or older with life
expectancies ranging between 3 and 15 years. These insureds
typically have age related health concerns.
 A Viatical Settlement is a financial transaction in which a
terminally ill life insurance policy owner sells their policy to a third
party at a discount of the face value. Viatical‘s typicaly represent
insureds with a life expectancy of 2 years or less.
Life Settlements
“A Robust Market“
Why would
a policy owner
sell their policy?
Premiums paid by the policy holder
become unaffordable and the policy
may lapse
Estate planning needs have changed
Funds may be needed for long term
care
Beneficiaries may have changed due
to death or divorce
Disposal of key man insurance or
other business related insurance
Changes in needs for the coverage
A GROWING
MARKET
 Life Settlements are considered to
be a new asset class and is a
thriving industry in many
countries throughout the world.
 The market includes buyers such
as hedge funds, private equity
groups and banks in the US, Asia
and Europe.
 As indicated in the graph to the right;
the life settlement industry has shown a
positive growth year after year for the
last 10 years. *Estimates project
transactions to exceed $160 Billion in
year 2030.
* 1. Life Insurance Long View — Life Settlements Need
Not Be Unsettling; Bernstein Research Call; Kamath,
Suneet and Timothy Sledge, March 4, 2005; page 8.
Who is investing?
Robust Secondary Market
o Healthy
o Legitimate
o Well-Funded
o Growing
Mature Institutional Market
o Recognizable and Credible Buyers Include…
•
Deutsche Bank, Chase, GE Capital, Citibank, Barclays
Capital, Lloyds of London, Wachovia, US Bank & Trust,
Raymond James, Berkshire Hathaway, Credit Suisse
Why do institutional buyers
purchase life settlements?
Essentially for two reasons:
1.
Settlements are inexpensive in relation to their intrinsic
value.
2.
They represent a non-correlating asset class. One that is
not predicated upon stock or bond market performance.
Life Settlements
“The Opportunity“
Measuring the History
of the Markets
5 Year Rate of Return of the
Major Indexes
• In Feb 01, 2005 the Dow
was at 10,551.
• As of Feb 01, 2010 the
Dow closed at 10,185
• Over the last 60 months
the Dow returned 3.49%
DJIA
• In Feb 01,2005 the
Nasdaq was at 2068
• As of Feb 01, 2010 the
Nasdaq closed at 2171
• Over the last 60 months
the Nasdaq returned
+4.74%
Nasdaq
• In Feb 01, 2005 the S&P
500 was at 1189.
• As of Feb 01, 2010 the
S&P 500 closed at 1089
• Over the last 60 months
the S&P 500 returned 8.41%
S&P 500
 Strong Returns


Potential for early maturities
Viable alternative to traditional fixed instruments
 Diversification


Non-correlating asset to the stock or bond markets, thereby shielded by it’s
fluctuations and losses
Separate and distinct asset class
 Inexpensive


Deeply discounted A rated or better life insurance policies
Strong intrinsic value
 Unique


Low maintenance
Easy to manage with complete control
How Does This Investment Work?
Calculate “Total Investment Return”
Policy Face
Amount
Policy
Acquisition
Cost
Annual
Premiums
# Years
Paid*
Total
Investment
Return
* Variable in Equation is # Years Paid
Calculate “Average Annual Return”
Total
Investment
Return
# Years
Paid*
Average
Annual
Return
IRR Calculator
Life settlements have been referred to as sum certain investments. This is
because the death benefit is a set amount. The determining variable is when
the investor collects the benefit.
*Typical Annual Premium Range: 3% - 8%
**IRR is calculated at year end maturity values which include the cost of annual premium.
HOLDING PERIOD IN YEARS
LE (years)
*Annual % of
Prem/Face
Annual Premium in
$USD
Face
Amount
Initial Acquisition
Cost
**Year 1 **Year 2 **Year 3 **Year 4 **Year 5 **Year 6 **Year 7 **Year 8 **Year 9 **Year 10
3
8.00%
$20,000
$250,000
$112,500
88.67% 31.96%
4
5.00%
$12,500
$250,000
$106,500
110.08% 45.05% 24.53%
5
3.00%
$7,500
$250,000
$106,000
120.26% 53.30% 31.51% 20.95%
15%
7.47%
3.53%
1.25%
-0.14%
-1.03%
-1.61%
-2.00%
15%
9.58%
6.29%
4.12%
2.63%
1.57%
0.79%
15%
10.92%
8.25%
6.33%
4.89%
3.81%
This chart is for illustrative purposes only and is to be used as a reference tool.
No specific return on investment for any particular policy is guaranteed. Actual
return will depend on the individual circumstances of each specific policy.
Additionally the above numbers may include slight rounding.
Investment Characteristics
 Minimum Investment:
$50,000.00
 Type:
Non-Qualified (Trusts, Individual, Joint) and Qualified
(IRAs, 401(k) Rollovers)
 Life Expectancy Range:
Between 1 & 6 years
 Insurance Policies:
All policies are past the two year contestability period and
are A rated or better at time of sale.
Investment Characteristics
 Safety:
Policies are issued by some of the oldest and most financially
sound insurance carriers in the industry. All policies are
rated A or better by A.M. Best at time of purchase.
 Liquidity:
This is a buy & hold investment without an exact maturity
date such as a zero coupon bond.
“What Acclivity West Provides”
 Services similar to that of a Real Estate Agency, i.e. Remax Realtors.
 We act as the listing agency for life settlements which are already on the secondary
market.
 We facilitate the acquisition of these policies according to the buyers specifications.
 We enable retail buyers to participate in a market which is dominated by multi billion
dollar institutions.
 Timely and efficient service.
 As in a Real Estate transaction the purchaser never writes a check to the agency but
rather the funds are held in escrow with an intermediary company.
 Therefore the funding of transactions are handled by Sunwest Trust, Inc., which means
purchasers never write a check to Acclivity West.
Escrow & Trust Services
 Sunwest Trust serves as an
independent escrow agent.
 Sunwest Trust is empowered
to act as an escrow agent on
behalf of
the client’s
transaction.
 Sunwest Trust establishes an
escrow account that facilitates
the flow of funds among the
parties.
 Acclivity West LLC does not
actively manage any funds
within the account.
To contact Acclivity West, LLC.:
609 Deep Valley Drive
Suite 200
Rolling Hills Estates, CA 90274
Ph (310) 265-9009
Fax (310) 347-4191
www.acclivitywest.com
jc@acclivitywest.com
THE END