Canadian Life Settlement Market


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LISA webinar on May 26 2010

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Canadian Life Settlement Market

  1. 1. The Good, Bad and “Ugly” (& Twilight Zone) Canadian LS investment vehicles By Daniel Kahan ASA
  2. 2. Daniel Kahan ASA <ul><li>Daniel Kahan is an actuarial consultant from Toronto. Provides Fair Market Valuation Reports of life policies donated to Canadian charities or transferred to corporations. </li></ul><ul><li>Investor confidence in life settlements is crucial to creating a two-way Canadian-US life-settlement investment market. </li></ul><ul><li>Broad international experience : from the Blue Cross Blue Shield Association in Chicago and Metropolitan Life in Cape Town to a director of a small public life settlement company that trades life-settlements. With years of creating actuarial and analytical software solutions and viatical loans, he is planning to create an online life-settlement market in Canada. </li></ul>
  3. 3. Canadian Life Options <ul><li>Founded in 2009 by Amnon Fisch, a Wharton MBA grad with hedge fund experience </li></ul><ul><li>Based in Quebec to create a secondary market for Canadian life policies </li></ul><ul><li>Looking for institutional and HNW investors </li></ul><ul><li>Willing to represent foreign investor funds </li></ul><ul><li> </li></ul>
  4. 4. International Partners for Life <ul><li>Founded by Victor Lansdown in Toronto in early 90s as a viatical settlement company and became a member of the VAA </li></ul><ul><li>Moved to Montreal for regulatory reasons </li></ul><ul><li>Moved to Vancouver for health reasons </li></ul><ul><li>Died last September from leukemia </li></ul><ul><li>Bought/sold portfolios for foreign investors </li></ul>
  5. 5. In Loving Memory Of Victor Gregory Lansdown <ul><li>On Tuesday September 15, 2009, Victor passed away with his best friends at his side. Throughout his battle, Victor showed incredible courage, dignity and strength. He was so full of life and had so much to give. He was far too young. Victor was kind and generous to those who knew him well, nothing was too much trouble. </li></ul><ul><li>One in a million! </li></ul>
  6. 6. The Invisible – Life Partners <ul><li>Canadian accredited investors can and are buying pooled life settlements </li></ul><ul><li>They are given the policy summary and internal LE and must invest in 5 policies </li></ul><ul><li>Premium reserve set up for LE period </li></ul><ul><li>Estimated 10 to 14% ROI </li></ul><ul><li>No breakdown of Canadian data available </li></ul>
  7. 7. The Good- Ontario Teachers <ul><li>One of the largest Canadian pension plans </li></ul><ul><li>Former President is an actuary </li></ul><ul><li>Over $100 m. invested in LS portfolios </li></ul><ul><li>Treated as an alternative asset class </li></ul><ul><li>In ’08 bought portfolios for 15-17% ROI </li></ul>
  8. 8. The Good – Magna LS Fund <ul><li>Mutual Fund established in June 2008 </li></ul><ul><li>Managed by Chartwell Asset in Vancouver </li></ul><ul><li>$12 m. of funds invested in 36 policies </li></ul><ul><li>Accredited Investors – min. invest C$ 150K </li></ul><ul><li>ROI since inception - 25.06% </li></ul><ul><li>Invest in C$, units in C$ - currency risk hedged </li></ul><ul><li>More details – see Appendix </li></ul>
  9. 9. The Good – MaxLife Fund <ul><li>Wyoming corporation based in Toronto </li></ul><ul><li>Went public as MXFD in July ’07 on OTC BB </li></ul><ul><li>Started at $1, hit $29 in June ‘08,now $10 </li></ul><ul><li>Thinly traded, short sellers squeezed </li></ul><ul><li>Initial plan – buy contestables, resell later </li></ul><ul><li>Current plan – issue pref units and create liquid “REIT”s for LS portfolios </li></ul><ul><li> </li></ul>
  10. 10. The Bad – New Life Capital <ul><li>Toronto company raised money from private investors to buy policies </li></ul><ul><li>Promised to pay out an annual 10% dividend </li></ul><ul><li>Put into receivership by OSC in Nov. ‘08 </li></ul><ul><li>Founders absconded with $7 m. to Bahamas </li></ul><ul><li>KPMG hired Proverian to sell 22 policies with $83 m. of face last October – none sold </li></ul><ul><li> </li></ul>
  11. 11. The “UGLY”- USI <ul><li>Universal Settlements International founded in Ontario in mid-90s to allow retail investors to invest in viaticals and later life settlements as “guaranteed” by Italian reinsurer </li></ul><ul><li>FSCO went after them for “trafficking” but they won as US policies not covered by sec. 115 of Ontario Insurance Act </li></ul><ul><li>OSC went after them because they considered life settlements to be securities and they lost – so OM or prospectus required </li></ul><ul><li>USI went into “Chapter 11” in Dec. 08 and came out in July 09 with E&Y staying on as Monitor </li></ul><ul><li> </li></ul>