Niche Investment Strategy
US Life Settlements
Demographic trends, particularly the aging of the baby boomer generation, are leading to an increasing supply of life insurance policies for sale. Approximately 10,000 Americans reach retirement age of 65 every day, resulting in a population of 73 million people over 65 by 2030.
Currently, approximately 57% of Americans age 65 and older have life insurance.
According to the latest reports, approximately 3,400 policies with a total notional value of over USD 5 billion were traded in 2024. This represents only a fraction of the estimated market potential of over USD 200 billion in policies.
The US life insurance market is on a stable growth path, supported by demographic trends, product innovations, and a robust economic foundation. A diverse range of opportunities awaits investors and market participants in an evolving market environment.
-
The life insurance policies sold on the US secondary market had a total face value of > $5 billion in 2024.
-
The strategy is to purchase US life insurance policies institutionally through a highly regulated secondary market, where they have been sold by the original owner at a discount to their future, predetermined payout value.
-
Important parameters for the purchase are:
-
Life expectancy (LE);
-
Policyholders and insurers
-
Policy structure
-
Purchase price vs. earnings potential
-
Legal structure & documentation
-
Diversification
-
-
The advantage of Life Settlements lies in knowing exactly how much profit will be made prior to purchasing the assets. This enables stable and predictable investment returns, even in challenging economic conditions.
Investment Strategy
Niche Investment Strategy
US Life Settlements
The US life settlement market, with an estimated total volume of $1.46 trillion, is expected to remain robust and grow by 5.2% in 2024 despite economic uncertainty. Institutional investors value this asset class's low correlation to traditional markets and its attractive risk-return profile.
Life settlements offer investors attractive returns, often in the high single-digit to low double-digit annual percentage range. They are characterized by low correlation to traditional markets and thus serve as an effective means of diversification.
They are considered an inflation-resistant investment because the payouts are usually fixed and not directly affected by rising consumer prices.
