MPG: Life settlement more attractive as asset class, say institutional investors

MPG: Life settlement more attractive as asset class, say institutional investors

19 juni 2024

Asset Allocatie Pensioenfondsen
Algemeen (34) richting pijl

Institutional investors agree that life settlements should be designated as responsible investments.

‘The growing trend of pension funds, endowments and foundations investing in the life settlement asset class is set to increase further enhancing transparency in the sector,’ concludes Managing Partners Group (MPG) today from own research.

‘The study covering global institutional investors and wealth managers holding assets of € 107 billion under management found 69% believe pension funds, endowments and foundations will continue to increase investment in the sector over the next five years.’

Also, ‘90% of investors agree that life settlements should be designated as responsible investments because of the robust regulatory environment that gives potential life insurance policy sellers more confidence has been put in place.

The market for life settlements, which are US-issued life insurance policies that have been sold by the original owner at a discount to their future maturity value, is also likely to benefit from further improvements to regulation after 43 out of 50 US states implemented specific regulations governing how individuals can sell their policies. Over the next three years, 62% of those surveyed say regulation of the sector will improve and that is feeding through to potential investors.

Nearly two out of three (65%) questioned say they are extremely or moderately likely to invest in the asset class over the next 12 to 24 months.

The key reason for life settlement becoming more attractive as an asset class over the next three to five years identified by the study was valuations. Around 70% say valuations are currently extremely attractive, while two-fifths of respondents say life settlement funds can deliver consistently attractive returns.

More than half of investors (55%) say regulatory changes have made investing in life settlements much safer, and one-third say low correlation with other asset classes makes the asset class increasingly attractive for investors.’

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