The life settlement market in 2019 enjoyed its fourth consecutive year of growth in the amount of face value settled. That said, the life settlement industry is likely to have some impact from the COVID-19 pandemic, according to the latest life settlement annual report from Conning.
Conning’s 15th annual life settlement review takes a preliminary look at the potential impacts COVID-19 could have on life settlements. Some of these impacts could represent longer-term challenges and opportunities for life settlement investors.
“Investors continued to show interest in life settlements in 2019. Several life settlement funds announced the launch of new funds or the successful closing of funds,” said Scott Hawkins, a Director, Insurance Research at Conning. “Looking ahead, the combination of a prolonged low interest rate environment, continued investment allocations to non-correlating alternative asset classes, and the stability of the life settlement landscape points toward a continuation of that trend. Of course, any forecast has to take into account the current and potential impact from the COVID-19 pandemic.”
The Conning study, “Life Settlements: The COVID-19 Impact on Life Settlements” analyzes how COVID-19 is interacting with the life settlement market and asset class. The study reviews the current market for life settlements and presents our forecast for 2020 – 2029. Further, the study analyzes the performance of insurers targeted by life settlements investors.
“There are several other drivers that favor continued growth in the life settlement market,” said Steve Webersen, Head of Insurance Research at Conning. “Investors will have a larger number of policies to select from because of the increasing number of retiring baby boomers. In addition, the economic disruption from COVID-19 may increase the appeal of life settlements to those retirees. The caution for investors, however, is the potential impact on cost of insurance charges due to increased pressure on insurers from extremely low interest rates.”