New Exotic Investment Hatched by Wall Street Scumbags: Bundled Life Ins Settlements

Discussion in 'Wall St. News' started by ByLoSellHi, Sep 5, 2009.

  1. We don't make "things" anymore, thanks to the growing influence of the slimebag financial sector and the great influence and sway they hold in Washington D.C. (they've bought your government).

    This is typical of what what our great nation "makes" now; following in the footsteps of our former colonial master, Britain.

    And this is why we're doomed if we don't get a grip on the filthy bloodsuckers of Wall Street.

    After the mortgage business imploded last year, Wall Street investment banks began searching for another big idea to make money. They think they may have found one.

    The bankers plan to buy “life settlements,” life insurance policies that ill and elderly people sell for cash — $400,000 for a $1 million policy, say, depending on the life expectancy of the insured person. Then they plan to “securitize” these policies, in Wall Street jargon, by packaging hundreds or thousands together into bonds. They will then resell those bonds to investors, like big pension funds, who will receive the payouts when people with the insurance die.

    The earlier the policyholder dies, the bigger the return — though if people live longer than expected, investors could get poor returns or even lose money.

    Either way, Wall Street would profit by pocketing sizable fees for creating the bonds, reselling them and subsequently trading them.
  2. Its much dirtier.

    In chicago around 1999 - 2000 ish a company called viaticus was formed as a hush hush holy owned subsidiary of CNA insurance company.

    CNA would feed them leads of terminally ill they insured with large policies.

    Viaticus would tenaciously pursue the ill insured offering viatical settlements for 25 - 40 cents on the dollar.

    The company went from 0 to $60 million inside of 2 years.

    Seem to be hibernating right now.

  3. Banjo


    This buying of life ins. policies has been going on for a couple of yrs now. GS was one of the first involved in it. Another article from July.

    When I first discovered it I had this vision of GS interns visiting old people they hold policies on : Hi Mrs Shwartz,I'm Mickey with GS. Were always interested in our investments well being so I stopped by for chat to see how you're feeling , brought lunch for you, big mac, fries and a vanilla shake. By the way, we'll have this lunch delivered free to you for the next 3 mos. Did I mention we've heard some negative things re: those heart meds you take...........
  4. Policy resale belongs on craigslist or ebay.

    This is really gray-market/amateur finance built on flexible contract law - not any tangible market demand or real value.

    Its crap. And Goldman intends to shine this turd into something legitimate.

    I shouldn't be surprised. But I am. New low for Goldy-Locks.
  5. One problem with synthetic CDOs and credit default swaps is that the real estate market can become a bear market. With life insurance can there be a bear market? Imagine tranches of synthetic CDOs - collateralized death obligations - that have no direct relationship to life insurance. Synthetic CDOs might track life insurance if associated with credit default swaps.

    Do such off exchange, non standardized contracts exist?

    "financial institutions have also established a synthetic life settlement market, which offers institutional investors products that replicate the investment in a portfolio of life settlements."

    "These first generation assets are now complemented by a range of synthetic instruments including swaps, longevity linked notes and longevity indices with risk profiles linked to the survival of the reference pool of individuals. The attraction of using synthetic instruments to take on micro-longevity risk is that they are both standardised and tradable and so can add liquidity to a fund."
  7. this too can blow up. there used to be a business buying life insurance policies from aids victims. they all died withing a few years at first. now they they are keeping people alive with a combination of drugs. buying one of these policies turned into a bad investment.
  8. patchie


    And when the blowup occurs, we simply create yet another need for a federal bailout.
  9. Now I know why the current administration's Health Care Plan wants to "kill off the elderly".
    Vested interest in Viaticals, anyone?

  10. The private insurance company now can refuse to pay the treatment, instead of betting on death.
    #10     Sep 6, 2009