The Life Settlements Wire

Life Care Funding, a Lewiston, Maine-based broker, said Tuesday that it's formed a strategic partnership with Aging with Grace, a senior housing information and support service.

Life Care Funding specializes in working with seniors to sell their policies so they can move into assisted living and other housing. The company said it works with more than 60 providers of senior housing and long-term care in 1,500 facilities throughout the country.

Aging with Grace offers its services to more than 13 million families through benefit consultants, employer groups and health and welfare funds in the workplace, Life Care said in a statement.

Source: Press Release

Browndorf PEM, a Newport Beach, Calif., investment bank and fund manager, named Craig Taggart as managing director of marketing.

Browndorf said in a statement Tuesday that Taggart will be in charge of marketing the company's synthetic longevity-linked senior life settlement hedge fund as well as the company's wealth advisory services.

Source: Press Release

Clearlife, a database servicing company for the life settlement and premium finance industries, said it launched its ClariNet case management system on June 26. The product includes web-based pricing, redaction capabilities, and medical record and life expectancy retrieval systems.

Clearlife said it will later release document verification, portfolio management, and servicing modules.

Current and prospective users of the ClariNet system include brokers, providers, investors, medical underwriters, attorneys, premium administrators and tracking companies in the life settlement and premium finance markets, Clearlife said.

The company is based in Alexandria, Va., and London.

Source: Press Release

21st Services, a Minneapolis-based life expectancy company, said that it cut in half the price of its online longevity report generator, known as eCLPR.

The product, which will cost $30 to use through the end of the year, was introduced in February and is intended to help clients of financial planners, insurance producers and life settlement brokers.

"It can be used as a pre-screening tool to see if someone is a candidate for a life settlement," Brad Bahr, vice president of sales for the firm, told The Life Settlements Wire.

The firm said it also can help financial planners and insurance agents advise their clients on how long their assets need to last.

The evaluation tool is based on medical, health and lifestyle information provided by clients and avoids the more costly alternative in which a person's medical records are analyzed by 21st Services' underwriters to develop a life expectancy report.

Source: Press Release

Life Settlement Financial, a San Rafael, Calif.-based provider, obtained a viatical license from California on Thursday.

Chief executive Peter Mazonas said in an email it took his company 18 months to acquire the license, which included review of the firm's audited financial statements and assistance from attorneys.

Viaticals are sales of policies for people with no more than two years to live. California currently regulates viaticals, but not other life settlements.

Life Settlement Financial buys policies from seniors who need money to move into assisted living facilities and other senior housing, or from current residents of such housing. Many policies that the firm purchases are viaticals, Mazonas said.

Life Settlement Financial markets its program to 1,000 senior communities in 10 western states with more than 100,000 residential units, he said.

Danny Pang, a California financier, took at least $83 million in fees, loans and pay from his former investment company before it was seized by the Securities and Exchange Commission in April, The Wall Street Journal reported.

Citing unsealed documents from the U.S. District Court in Los Angeles, the newspaper reported today that a court-appointed temporary receiver estimated losses by investors ranging from $287 million to $654 million.

The SEC said that Pang and his company, Private Equity Management Group of Newport Beach, Calif., falsely told investors that their returns would come from proceeds on timeshare or life insurance investments, but instead were paid from money raised from new investors.

The receiver said that Pang allegedly received $52 million from "commissions' paid to companies he controlled to buy life-insurance assets for investors, according to the newspaper. This was 400% to 700% over market rate, according to a consultant cited by the receiver.

Source: News Story

Despite opposition from several insurers, a life settlement trade group in California and others, the California state Assembly's insurance committee voted 10-0 yesterday to support legislation that would regulate the settlement market for the first time in the state.

SB 98 adheres closely to the provisions of model legislation developed by the National Conference of Insurance Regulators (NCOIL).

The bill must now go to the Assembly Appropriations Committee and the full Assembly for action. The legislation was adopted on April 15 by the Senate Banking and Insurance Committee.

Opposition at yesterday's hearing in Sacramento focused largely on an amendment sought by Pacifica Group, a premium finance company in Irvine, Calif. The amendment would prohibit carriers from denying insurance to people based solely on whether they planned to finance the policy. Several carriers, including ING, MassMutual and John Hancock Life Insurance Co., opposed the amendment, contending that it would tie their hands in rejecting stranger-originated life insurance (STOLI) policies.

But there also was wide support for the legislation by trade groups from the life insurance and life settlement industries, including the Life Insurance Settlement Association, the American Council of Life Insurers and the Association of California Life & Health Insurance Cos. Life settlement provider Coventry First and Pacific Life Insurance Co. of Newport Beach, Calif., also endorsed the bill.

The Life Insurance Settlement Association (LISA) lauded the passage of a law in Maine that will require more disclosures to consumers by life insurance companies. The trade group said it expects similar legislation to pass in other states this year and next.

The Maine bill was signed by Gov. John Baldacci on June 12.

It requires insurers to tell people who are 60 or older or who suffer from chronic or terminal illnesses that they have options other than lapsing or surrendering their policies.

The superintendent of insurance will prepare a brochure on the alternatives that insurers must distribute.

"These new laws are terrific developments for senior consumers, and are expected to be adopted in numerous states," Doug Head, executive director of LISA, said in a statement Tuesday. "These measures respond to the documented evidence of carriers trying to block life settlements through threats to insurance agents and providing misleading information to seniors."
Source: Press Release

A California life insurance agent is scheduled to be sentenced Aug. 20 after he pleaded guilty to stealing funds from seniors in a fraudulent life settlement investment scheme.

Raymond Joseph Dohse, 48, of El Cajon, Calif., pleaded guilty June 11 in San Diego Superior Court to two felony counts of theft from an elder, the California Department of Insurance said in a June 19 statement. The San Diego District Attorney's office is prosecuting the case.

Dohse persuaded a senior in 2007 to invest $50,000 in a fraudulent life settlement investment he created. Dohse guaranteed the woman a 20% return on her investment over the next two years. But instead of investing the funds, he kept the money.

In March 2008, the woman's adult children learned about the deal and requested that Dohse return the money. They also filed a complaint with the state insurance department, which launched an investigation.

In April 2008, Dohse convinced another senior to invest $45,000 in the scheme. He diverted these funds for his own use and used a portion to repay the other senior.

The California Department of Insurance Enforcement Branch has made nearly 1,900 insurance fraud-related arrests since Insurance Commissioner Steve Poizner took office in 2007. This is more arrests than have been made during any other two-year period by any previous insurance commissioner, the department said.

Source: Press Release

Legislation to regulate the life settlement market in New York passed the state Assembly on Monday, but has stalled in the state Senate due to an ongoing power struggle over which party is in control.

A 7131 was previously approved by the Assembly Insurance Committee on May 27. A similar bill, S 3655, passed the Senate Insurance Committee on June 2.

The bill, authored by the state insurance department, follows along the lines of model legislation developed by the National Conference of Insurance Legislators (NCOIL) that would allow new policies to be settled after two years.

The legislation also has unique provisions, some of which are opposed by the life settlement industry

Meanwhile, the power struggle in the Senate went to court yesterday. A hearing was held on a petition filed by two Republican senators against Senate Secretary Angelo Aponte seeking to prevent him from "interrupting" sessions the Republicans were trying to hold by turning off the lights and microphones and switching off the video cameras, the Times Union of Albany reported. Acting State Supreme Court Justice Thomas McNamara said he would issue a ruling tomorrow morning.

In a previous decision on June 16, the judge dismissed a suit filed by Democratic Leader Malcolm Smith against Sen. Pedro Espada, Jr., a Democrat who had switched sides to vote with the Republicans. Smith had claimed that the new position held by Espada as president pro tem is illegitimate because the June 8 Republican coup that led to a 31-31 tie vote on who controls the Senate didn't follow Senate rules.
Source: News Story

The Oregon Legislature passed a bill that would impose a five-year waiting period before new life insurance policies could be sold, but would also require insureds to be told of their options if surrendering or lapsing policies.

SB 973, which was proposed by the American Council of Life Insurers (ACLI), caught the settlement industry by surprise when it was introduced and left industry lobbyists little time to fight it.

But the settlement industry did manage to get a provision inserted into the bill that would require new disclosures by insurers. Insurers would be required to tell seniors who are 60 or older, who are considering lapsing or surrendering their policies, or who are seeking accelerated death benefits that they have other options, according to a spokesman for Sen. Suzanne Bonamici, a sponsor of the bill.

The notices sent by insurers would tell seniors that they could contact the state Insurance Division for more information on their alternatives. The division could then tell them of common products that are available, including life settlements.

"We are pleased Oregon has passed legislation to strengthen the regulation of life settlements, but feel Oregon could have done a better job of balancing consumer protection and disclosure for the sensitive senior's market," said Peter Mazonas, chief executive of Life Settlement Financial, a San Rafael, Calif.-based provider, in an email. "Seniors must now rely upon the Department of Consumer Affairs to inform them of their rights, specifically that a life settlement is an alternative to allowing a policy to lapse whereby the policyowner gets nothing."

The bill passed the Oregon House of Representatives yesterday and the state Senate on Monday.

The California state Assembly insurance committee is set to consider an amended life settlement bill that would require providers to disclose to insureds how much their brokers would receive in any transaction.

SB 98, which previously passed the state Senate, has moved over to the Assembly with this new amendment. The Assembly committee was scheduled to hold a hearing on the bill tomorrow, but it has been rescheduled for Thursday.

Jack Kelly, a spokesman for the Institutional Life Markets Association (ILMA), representing institutional investors, said his group supports the bill, along with the new amendment, which he said would bring greater transparency to transactions.

At an April hearing of the state Senate Banking and Insurance Committee, lobbyists for ILMA and Peachtree urged that fee disclosure be made part of the legislation. John Norwood, a lobbyist for provider Coventry First, said after the hearing that such a requirement would "blow up the bill" because agents are not used to disclosing their commissions when they sell life insurance.

The California Life Settlement Association (CALSA), the John Hancock Life Insurance Co., Roycroft Funding and ING remain opposed to the bill, according to an analysis by Manny Hernandez, principal consultant for the Assembly insurance committee.

The director of an actuarial research center at the University of Connecticut said he plans to conduct an older-age mortality study to identify trends in the life settlement market.

The study will be conducted by Jay Vadiveloo, the Watson Wyatt professor-in-residence in actuarial science at the university. Vadiveloo also manages the Hartford, Conn., office of actuarial firm Watson Wyatt.

He said that obtaining the data will be the most challenging part of his project. Vadiveloo said he's already encountered resistance from some providers so he's decided to work with investors to gather data on settled policies.

Vadiveloo said he's hitting up investors to fund the study, but may also decide to use part of a $1 million gift that was made to the actuarial program. The university said today that the gift was made by Janet and Mark Goldenson of Ventura, Calif. The actuarial center will be named after them, the university said. Vadiveloo is Janet Goldenson's brother and Mark Goldenson is a certified public accountant.

Vadiveloo said he would like to analyze the data and determine the mortality slope showing whether deaths are more likely to occur in the earlier or later years for people whose policies have been purchased.

Vadiveloo said he would like this to be an ongoing process so the table can be used as a benchmark for the life settlement industry.

"I think the biggest advantage of this is it will add credibility to the industry," he said. "It will draw investors and they'll have a bigger understanding and awareness of the mortality risk."

Provider Life Partners said Tuesday that it expects to report 26% profit growth for its fiscal first quarter.

The Waco, Texas-based company said it expects to report net income of $7.8 million, or 53 cents a share, for the period ending May 31, compared with earnings of $6.2 million, or 42 cents a share, in the year-earlier quarter. Revenue rose about 12% to $27.4 million.

Life Partners said it plans to report its results about July 10.

The company's stock fell $1.49 to $15.35 on Tuesday after the preliminary earnings report.

Source: Press Release

Barry Kaye, a charismatic figure in the life settlement industry, may not be able to fulfill his $16 million pledge to Florida Atlantic University, the Palm Beach Post reported on Tuesday.

The pledge was announced in 2007 by the longtime insurance industry member and author of the book, "You Buy, You Die, It Pays."

The donation prompted university officials to rename their business school the Barry Kaye College of Business, the newspaper said. His pledge was expected to generate $32 million in all with state matching funds.

The $16 million pledge was the largest in the university's history, according to the Post.

Other donations resulted in the engraving of Kaye's and his wife's names on the Carole and Barry Kaye Performing Arts Auditorium, the Carole and Barry Kaye Great Hall in the university's alumni center and the Barry Kaye School of Finance Insurance and Economics, the paper reported.

But reports of problems with the donations surfaced in April after a faculty meeting in which the business dean was asked about the status of the gift. Professors were told there were "substantial economic problems" involving Kaye, the paper said.

Kaye apparently has moved out of Florida after putting his Boca Raton home on the market, listed at $16.7 million as of a year ago, as well as a condominium in West Palm Beach for sale at $6.7 million.

Reached at his $2.8 million condominium in New York's Plaza Hotel, Kaye declined to comment, according to the paper. But his wife, Carole, said they had tried "to be extremely generous people."

Source: News Story

A bill that would impose a five-year waiting period before new policies could be settled passed the Oregon state House of Representatives yesterday.

SB 973, which previously passed the Senate, also includes other provisions opposed by the life settlement industry.

The bill will now return to the Senate for concurrence on a provision that the settlement industry managed to get inserted into the bill in the House. The provision would require carriers to let seniors know of other options besides lapsing or surrendering their policies.

Oregon currently only regulates viaticals.

The state Legislature is scheduled to adjourn June 30.

A life settlement bill that would require insurers to make new disclosures to consumers is on its way to Gov. John Baldacci after passing the House on June 1 and the Senate on June 2.

Under LD 1063, insurers would be required to tell people who are at least 60 or have a chronic or terminal illness that they have options other than lapsing or surrendering their policies.

The superintendent of insurance would prepare a brochure on the alternatives to giving up a policy that insurers would distribute.

The provision mirrors a similar disclosure requirement adopted earlier this legislative season by the state of Washington.

Gov. Baldacci has 10 legislative days to sign the bill, said Colleen McCarthy Reid, legislative analyst for the Maine Legislature's Joint Standing Committee on Insurance and Financial Services. The Legislature hopes to adjourn by Friday, she said.

The disclosure provision was supported by the settlement industry, but opposed by the life insurance industry. Insurers are waging a campaign to persuade the governor to hold the bill over until the next session, according to Michael Bartholomew, chief counsel for state relations for the American Council of Life Insurers (ACLI).

A Republican takeover of the New York state Senate today makes it less likely that life settlement legislation will be adopted this session, representatives of the life settlement and life insurance industries said.

A leadership fight erupted on the Senate floor at 3 p.m. when two Democrats, Pedro Espada Jr. of the Bronx and Hiram Monserrate of Queens, joined the 30 Senate Republicans to wrest control of the chamber, according to The New York Times.

"It is apparent that there will be new leadership, new committees and new action, entirely shifting the ground on which we are trying to play," said Doug Head, executive director of the Life Insurance Settlement Association (LISA), in an email to The Life Settlements Wire. "I am uncertain of the direction which any particular bill may take at this stage, but complex legislation is unlikely."

LICONY, which represents insurers in New York, also believes that the chances of the legislation passing are now slimmer, said Diane Stuto, executive vice president of the group.

The new Republican majority would have to hire staff for legislative committees, she said. But she said that that would be difficult at this late date, with the legislative session scheduled to end June 22. That makes it unlikely that the Legislature will get much more done this year.

Until the Republican takeover, progress was being made on the settlement legislation, which LICONY supports, Stuto said. "I think you had two very engaged sponsors," she said, referring to Assemblyman Joe Morelle and Sen. Neil Breslin, who chair insurance committees in their respective chambers. Both are Democrats.

The insurance committees in both chambers had passed life settlement legislation. Life settlement representatives objected to parts of the bills. The insurance department was to address those issues in amendments.
Source: News story

EAGil Life Settlements, a Woodcliff Lake, N.J.-based life settlement provider, said yesterday that it recently obtained licenses in Maine, West Virginia and Tennessee.

The firm said it now does business in 39 states.

Source: Press Release

A reorganization plan for J.G. Wentworth was approved by a U.S. Bankruptcy Court judge in Delaware on Monday, two weeks after the Bryn Mawr, Pa.-based company that purchased annuities and life settlements filed for Chapter 11, according to the Philadelphia Business Journal.

Scott Willkomm, who previously headed the company's life settlement business, told The Life Settlements Report in January that the firm's life settlements business was going in "hibernation" and its portfolio was being sold off. He later left to work for provider Coventry First.

J.G. Wentworth had concentrated on buying small-face policies.

The reorganization plan calls for J.G. Wentworth's parent company, private equity firm JLL Partners of New York, to put $100 million into J.G. Wentworth to pay for ongoing operations, the Business Journal said.

JLL will also provide as much as $35 million to buy loans from J.G. Wentworth's lenders in exchange for preferred interests in the company, the newspaper said.

Source: Press Release