Conservative Buying Forces Invescor To Close
Earlier this month, Invescor Ltd. unexpectedly announced it was leaving the life settlement brokerage business citing conservative buying activity. While the company played an important role in the industry, many chalked up its departure as a casualty of the perceived anemic conditions of the life settlement market and economy in general.
Invescor Ltd. offered a niche life settlement brokerage service providing back office operations for life settlement cases. They worked with a number of broker dealers as an outsourced case processing service. Essentially broker dealer representatives would work with their clients to identify an unwanted or unneeded life insurance policy. If one was found, it was referred to Invescor for the actual sale on the secondary market. They provided the behind the scenes life settlement case management and transaction processing to institutional buyers. Invescor’s model was unique but the market challenges they faced were quite common among life settlement brokers.
Cases would often not close because of unrealistic seller expectations and a general lack of funding with providers. As a result of the market conditions, 2010 has seen negative announcements from recognizable names in the life settlement industry such Credit Suisse, Goldman Sachs and Invescor. While the bearish headlines this year have garnered much of the attention, they don’t tell the whole story. Promising signs have been appearing, but have gone somewhat unnoticed, for a few months.
A number of life settlement providers are seeing funding sources reemerge and capital entering the market. Life settlement providers seem to be a story of the haves and have-nots. Those with capital are active, while others without funding are dying on the vine. As with any economic “bust,” there will be numerous companies that don’t make it. Those that do weather the storm usually come out stronger.
In fact, last quarter the Amrita Life Settlement Index posted sharp gains two out of the three months. In addition, some providers are aggressively buying with lower IRR’s than we’ve seen in the past year. New funding sources are appearing from Asia, Europe and domestically. Capital is returning as fear dissipates in the investment world.
It may be a bit premature to say the ills of the life settlement industry and the broader economy are cured. They are not. However, life settlements are seeing green shoots and the market is getting healthier.
Signs of a life settlement recovery may be a little too late for some companies such as Invescor, but they are slowly appearing nonetheless. Hopefully, other companies will be able to take advantage of the growth and consumers will ultimately fare better in their life settlements.