Hedge Fund Investments in Life Insurance Policies Is the Life Settlement Market a Safe Bet?

Financial Services Alert

PUBLISHED ON: April 24, 2006

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Hunting for the next investment horizon, private equity and hedge fund shave entered into the life insurance market with a full head of steam. State regulators have struggled to keep pace with this investment rush. By 2007, an estimated $15 billion to $18 billion could be riding on life insurance policies controlled by private investor groups. However, when the regulators do catch up (and they will), the courts could turn billions of dollars into zero dollars in the blink of a judicial eye. The New York attorney general is investigating the accounting of such arrangements. Private equity and hedge funds need to seek counsel to determine their potential liabilities before betting the house on the secondary life insurance or life settlement market.