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U.S. Life Settlements Will Likely Impact Some Insurers and Reinsurers of Large-Face Policies

Source: Conning Research

Posted on 12 Nov 2010

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Despite a decrease in new life policies settled in 2009, the cumulative in-force block of settled policies will likely have an impact on some insurers and reinsurers, according to a new study by Conning Research & Consulting.

“The life settlements industry has generally targeted a small number of insurers’ universal life policies with higher face amounts,” said Scott Hawkins, analyst at Conning Research & Consulting. “Our analysis of the targeted firms’ universal life experience indicates that we may well see a significant impact to either primary insurers, or to reinsurers to the extent that the primaries have been able to reinsure the higher face amount policies.”

The Conning Research study, “Life Settlements: The Market Stabilizes as Insurer Impact Grows,” presents Conning’s analysis of the life settlements market’s potential impact on insurers and reinsurers, along with estimates of current market size and a long term forecast and analysis of market conditions.

“Given our estimate of the amount of in force life settlements, and a reasonable estimate of life expectancy distribution, our analysis indicates that the current block of settled policies represents a potential to significantly increase the average death claim incurred per policy,” said Stephan Christiansen, director of research at Conning. “Additionally, the high historic lapse rates of high value universal life policies may well be challenged by the life settlements industry. These potential impacts, and others that stem from unique life settlements policy management techniques, may well be felt the strongest by those insurers targeted by life settlements investors and their reinsurers.”

“Life Settlements: The Market Stabilizes as Insurer Impact Grows” is available for purchase from Conning Research & Consulting by calling (888) 707-1177 or by visiting the company’s web site at