Conning: Life Settlement Market Still Growing

By Matt Brady

October 14, 2008 at 11:51 AM

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The life settlement market grew well in 2007 and should continue to grow through 2010.

Life settlement players settled $12 billion in life insurance face value in 2007 and had $23 billion in face value in force at the end of 2007, according to analysts at Conning Research and Consulting Inc., Hartford.

There is "still potential room for growth" for another 2 years, at a minimum, the analysts write in a review of the life settlement market.

But the strong 2007 growth raises questions about how much life settlement face amounts can continue to grow, and for how long, the analysts write.

The analysts predict the amount of face amount settled to reach $21 billion in 2012 and then level off.

"This growth pattern reflects the maturation of the life settlement market," the analysts write.

The analysts note the arrival of life settlement alternatives, such as synthetic policies, which are based on actual lives but do not require investors to actually obtain physical policies, and extra-contractual loans, which give policyholders the ability to borrow amounts higher than the cash value of their policies.

In addition, continuing financial turmoil could affect investors' ability to use credit to pay the premiums on the policies they have purchased, and credit difficulties could make getting accurate life expectancy reports even more difficult that it is today, the analysts write.

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