April 25, 2012 ELSA WELCOMES FSA POLICY STATEMENT ON TLPIs
ELSA welcomes FSA policy statement on traded life policy investments (TLPis)
The European Life Settlement Association (ELSA) welcomes the FSA policy statement today that traded life policy investments (TLPIs) “should not be promoted to the vast majority of retail investors in the UK.”
Patrick McAdams, ELSA Chair and Investment Director of SL Investment Management, said: "Following our two meetings with the FSA in January and March 2012, we are pleased that the FSA has admitted that the use of the word toxic ‘may have led to some confusion for some customers’. The FSA has also made clear that the guidance does not apply to professional and institutional investors. ELSA will continue consulting with the FSA on the new proposed rules to protect investors.”
ELSA believes that the best way to protect investors’ interests is working closely with the FSA on industry self-regulation and on the promotion of ELSA's rigorous Code of Practice. ELSA will be inviting Peter Smith to address the Second ELSA Investor Summit on 26th September.
NOTES TO EDITORS
ABOUT LIFE SETTLEMENTS
Life settlements are the sale of a life insurance policy by its owner to a purchaser that pays the owner a cash settlement. As an alternative to the lapse or surrender of a life insurance policy American policy owners have the right to sell their policies and receive a market value for their property. Life settlements are regulated in 40 of the United States, covering almost 90 percent of the US population.
According to a 2010 US government report on life settlements, policy owners entering into a life settlement received $5.62 billion more than they would have received from their life insurer for the years 2006-2009. The report also estimated that the life settlement market grew from $200 million in 1998 to a between $5.5 and nearly $13 billion in the years 2006-2009. Today, the life settlement market today is estimated at between $4-7 billion.
A 2011 Conning Research & Consulting report, entitled “Life Settlements: An Asset Class Resets”, while detailing the risks and past performance of life settlement investments stated that “[a]s the life settlement market reboots, investors will continue to find an opportunity to make returns that are higher than other fixed income investments” and pointed out that investors “will find clearer, and more stable, regulation” and “a legal landscape that has seen several recent cases that strengthened their ability to receive death benefits.”
The European Life Settlement Association (ELSA) was founded in 2009 to set standards for the European life settlement industry. We represent European funding sources, service providers and intermediaries in the Life Settlement market who are looking to promote transparency by providing accurate, authoritative information to retail and institutional investors, regulatory bodies and the media. Our focus is on the promotion of best practice and the positive development of the European Life Settlement industry’s reputation amongst all stakeholders. We encourage fair competition and investor protection within the European market.
For further information please contact:
Investment Director of SL Investment Management, ELSA Chair
T: +44 1244 317 999
T: +44 (0)798 416 0102