Socially Responsible Investment
U.S. senior citizens are currently enduring multiple social issues related to insufficient retirement savings.
By providing much needed liquidity to senior citizens, life settlements make a positive impact on society.
"According to the American Council of Life Insurers’ Life Insurance Factbook 2021, around 5% of all in-force life insurance policies in the United States lapsed last year. Given that the total amount of life coverage in force at the end of 2020 was approximately $20.4trn, that amounts to around $1trn worth of cover that pretty much vanished.
A recent survey of its members by U.S.-based trade association the Life Insurance Settlement Association suggests that its members paid out 7.8 times more on average than the cash surrender value of the life settlements they bought in 2021, good for an additional $600mn going directly into the pockets of sellers."
Life Settlement Market Still Held Back by Lack of Awareness. Life Risk News, 2022
What is a life settlement?
A Life Settlement is the sale of an existing U.S. life insurance policy to a third-party buyer. For those who can no longer afford their policy, or no longer need it, the price received from a life settlement is often multiple times the Cash Surrender Value that their insurance company would offer.
The buyer becomes the owner and beneficiary of the policy in exchange for the price paid to the insured/seller. The buyer pays all future premium obligations and ultimately receives the benefit when the policy matures.
The purchase price is based on:
Discounted values of Premium Payments and Face Value of Policy
Life expectancy based the insured's health profile and actuarial models
Discount rate equal to the expected IRR
Investment Advantages
Low Market Correlation
Life Settlement returns are not correlated to traditional capital markets.
Diversification
Portfolios are crafted to include numerous policies with diverse characteristics.
Returns
Current market conditions enable a superior average return profile, compared to other investment strategies.
Low Volatility
Few external variables affect the price of policies, making this strategy less volatile over time than traditional markets.
Security
Policies are backed by large insurance companies, so defaults are expected to be zero.
Social Benefit
Life Settlements provide an option to policy holders to sell their policies for any reason and for a price well above surrender value.
Key Investment Considerations
Longevity
Insured may live longer than first anticipated, thus postponing cash inflows and increasing future premium commitments. This can lead to lower returns for investors.
Liquidity
If the LP is not able to hold enough liquidity to pay all premiums, it may have to sell policies in the tertiary market, potentially at a discount to carry value.
Supply
Due to the competitive nature of the life settlement market, if market activity drives prices to unreasonable levels, there can be times of constrained deal flow.
Legal
Life settlements are a relatively new asset class and there are continuous legal cases in the US that may change legislation.
The Process
Themis Capital Advisors is an investment advisory firm specializing in purchasing, managing, and reselling policies in the life settlement secondary and tertiary markets. The partners of the firm have substantial experience working for big banks, family offices and asset managers. One of the Themis managed funds, The Exis Opportunities Fund, launched with a target return of 12-14% net to investors. Historically, the Fund has returned 18%+ to investors.
The Themis Team
Eleni Vlahakis
Eleni Vlahakis is the co-founder and Managing Partner of Themis Advisors. Themis provides asset management and advisory functions for insurance and longevity-linked assets.
Ms. Vlahakis has over 20 years of experience in insurance markets, specifically as an actuary and leading the front office of large investment groups. Most recently, she is also the founder of Thyme Consulting, LLC., a Life Settlements ("LS") advisory and investment management practice which currently manages $350M of Face, advises an additional $150M of Face, and provides valuation and analytics metrics for the greater LS market. Prior to Thyme Consulting, LLC., Ms. Vlahakis was hired by Highland Capital Management in 2011 as Director in the Specialty Finance group where she managed $3.2B of Face in LS assets. From 2007 to 2011, Ms. Vlahakis was Vice President of the Life Finance Desk at JP Morgan where she oversaw the deployment of $350M of investments in Insurance Linked Securities ("ILS") including $250M in LS, worked on regulatory capital ("XXX" and "AXXX"), structured mortality and longevity swaps for large pension funds, and developed JP Morgan's internal analytics and VaR frameworks. As the head of the trading team in the NY office, she managed all trading personnel and oversaw all aspects of the business. Previously, as an Actuarial Manager for Policy Selection, Ltd. in Grand Cayman, she oversaw the investment of $250M into LS assets, created all analytics and ran all the day to day operations of the investment management team. She developed her own proprietary model which handled premium optimization, survival curve generation, with multiple stress scenarios to analyze risks more rigorously than any “off the shelf” model at the time. Prior to her work in LS, Ms. Vlahakis worked as a consulting actuary with PricewaterhouseCoopers LLC and Bank of NY Mellon, where she advised several Fortune 500 companies on their pension and healthcare plans. Ms. Vlahakis graduated Magna Cum Laude from New York University with a B.S. in Mathematics from the prestigious Honors Program in Mathematics, with minors in Economics and Physics.
Andrew “Andy” Williams
Andy Williams is a co-founder and Managing Partner of Themis Capital Advisors. Themis provides asset management and advisory functions for insurance and longevity-linked assets.
In addition to Themis, Mr. Williams is also the CEO of Eagle Equity Advisors. Eagle is a portfolio company of NexPoint, a $10B asset advisor based in Dallas TX. Through Eagle, Mr. Williams helps lead the global insurance platform for NexPoint which includes an operating insurance company, multiple life settlement funds, and various other insurance offerings.
Prior to Themis, Mr. Williams was the Managing Director of Specialty Finance for Highland Capital Management, a $13.9bn Private Equity Fund that managed and/or owned over $2bn of life settlement assets. Mr. Williams oversaw all insurance derivative products for the firm which has included creation of a life insurance platform as well as life settlement funds and offerings.
A long time financial and insurance executive, Andy has been responsible for creating insurance products and longevity platforms for investment banks (including Deutsche Bank and CSFB) , asset managers, family offices, and funds across multiple disciplines including: life settlements, commercial insurance, life and annuity products, as well as other insurance derivative products. Specifically his Private Equity arm (Lakeview Family Holdings) has purchased, co-owns, and manages “life assets” totaling over $500M. Through his career he has aggregated or managed over $6B of mortality products.