Life Settlements. Investment Product Guide

Transcription

1 Investment Product Guide Life Settlements

2 For more than a decade, Lexington Settlements Ltd. continues to help investors outperform traditional markets through life settlements. Soaring above the market HAMILTON Revolutionizing alternative financial investments, life settlements is uncorrelated to the performance of financial markets. This asset class is not directly affected by the stock market, bond market or price of commodities. Strategically, life settlement investments provides a prime place to diversify any investment portfolio. This emerging asset class is broadening investment opportunities for investors worldwide. It s a simple concept with powerful results. Headquartered in Hamilton Bermuda, Lexington Settlements, Ltd. is an innovative enterprise whose initiative promotes life settlements as a nontraditional instrument for investment diversification and portfolio completion. For over a decade, Lexington Settlements carries out a solid acquisition program in the secondary market of life insurance in the United States and has satisfied investors in over 20 countries. THE LEXINGTON SERIES HOW IT WORKS INVESTMENT SAFEGUARDS INVESTMENT PROCESS

3 INVESTING WITH LEXINGTON SETTLEMENTS Investing in Life Settlements A Life Settlement is a legal and regulated financial mechanism through which an investor purchases benefit rights in a Life Insurance Policy. Upon maturity, the investor will receive the original amount invested plus a pre-determined yield derived from death benefit proceeds. BENEFITS Attractive returns in U.S. Dollars Investment performance is not affected by changes of the stock market Policies issued by the most solid U.S. life insurance companies Easy and expeditious transfer of funds Benefits secured under U.S. laws and regulations Rescindable contract and investment refund Created by Lexington Settlements, the Lexington Series is a streamlined life settlement investment product designed for investors seeking transparency, above average yields and confidentiality while maintaining the highest levels of investment safeguards. It s Simple The investor decides how much to invest and the term of investment. Better yet, the investor has a clear picture of projected returns. Confidential Through the use of a trust managed by Appleby Services (Bermuda) Ltd., investors remain confidential and the investment integrity is protected. Manageable Risks In addition to industry leading investment safeguards, the investor may rescind the investment at anytime.* *The surrendering of the investment is at the option of Lexington Settlements Solid Partnership Appleby Services (Bermuda) Ltd. offers a comprehensive range of trust services. Appleby Services (Bermuda) Ltd. and Appleby Trust (Cayman) Ltd. are owned by the partners of Appleby Spurling Hunter, a largest provider of offshore legal and business services in the world. With origins that date to the late 1800 s, Appleby Spurling Hunter is able to provide Appleby Trust s local and international clients with advice in matters of trust, estate and corporate planning. All trust companies in Bermuda and the Cayman Islands are licensed in accordance with the Trusts (Regulation of Trust Business) Act 2001 and the Banks and Trust Companies Law respectively. All trust companies in Bermuda and the Cayman Islands are regulated and monitored by their respective monetary authorities

4 Tracking Services Timely determination of an insured s death and the collection of death benefits directly impact the return on investment for life settlements. Insurance Advisors & Administrators, Inc. excels in tracking insureds where permitted by law in a sensitive but diligent manner. Tracking occurs on a quarterly basis through various means. The preferred method of contact is with the insured s physician where Insurance Advisors & Administrators strives to stay informed of the insured s changing medical condition. Medical Evaluation Medical evaluation review of the insured is one of the most important factors in the life settlement business. Performed by highly specialized firms, the medical evaluation is used to produce a life expectancy report (LE). The LE report is a crucial component in determining policy price. In addition, the report determines the term of investment. Lexington Settlements has taken a leadership position in the industry by obtaining two life expectancies evaluations(le) performed by separate recognized entities. The most conservative LE report is used to price the investment, thus minimizing the deviation curve. Insurance Advisors & Administrators also has direct contact with the insured s designated contact. No tracking attempt is complete until they can conclusively state that an insured was seen or spoken to within the last days. Tracking services from Insurance Advisors & Administrators is included in the Lexington Series investment at no additional cost. LE REPORT Basing life expectancies on actual mortality statistics was pioneered by the life insurance settlement industry. The unique date is based on insured s lives using base tables from one of the world s largest actuarial firms. The tables provide mortality rates for gender, age and smoking status. The base tables are further refined with more than 130 risk DEATH CLAIM SUBMISSION AND COLLECTION Upon confirmation of the insured s demise, Insurance Advisors & Administrators will notify all interested parties, prepare all documents for death benefit collection, route documents for signatures, deliver claim forms to the insurance company and monitor claim processing and policy payout. UPDATED MEDICAL RECORDS Insurance Advisors & Administrators will collect updated medical records for reevaluation purposes. A brief summary of the history of the disease, including date of diagnosis (if known). Importance is placed on what the client has physically encountered. Justifications for the life expectancy decision are detailed. The physician may rely on personal clinical experience with similar illness, compliance of the client wit the medical regimens, future treatment options, failure of current treatment, failure of organs including future treatment, etc. A consulting physician may also note if the client is not being optimally treated by his physician and its impact on expected morality. factors that impact an individual s mortality. The risk factors were compiled from the Medical Information Bureau, governmental studies and private research. These risk factors tailor a standard mortality curve to an individual s health and lifestyle status. THE LEXINGTON SERIES HOW IT WORKS INVESTMENT SAFEGUARDS INVESTMENT PROCESS

5 INVESTING WITH LEXINGTON SETTLEMENTS $645,000 Benefit $100,00 Premium Payments $300,000 Policy Purchase Meet Joe! Joe currently invests in bonds, stocks and real estate. Since all his investments are closely related to the performance of the economy and the financial markets, he wishes to further diversify his portfolio. INVESTING With the support of his designated Lexington Settlement Agent, Joe finds the right policy to invest his $400,000. He purchases a $645,000 policy for $300,000 with an investment term of 72 months. The remaining $100,000 is deposited in an escrow account for premium payments during the investment term plus 12 months as a safeguard. WISE INVESTOR 12% POLICY MATURES IN 48 MONTHS The policy matured before the projected 72 Month term. The early maturity provided Joe with an increased annual return to 12%. POLICY MATURES IN 72 MONTHS THE RIGHT DECISION NO MAINTENANCE FEES After researching several companies, Joe decides to invest $400,000 with Lexington Settlements. Joe s decision was easy. In addition to offering a superior projected return on his investment, Lexington Settlements is reputable and long established in the industry. Lexington s product offers 360 investment safeguards and is backed by the due diligence of Appleby, the largest provider of offshore legal, fiduciary and administration services in the world. Since there are no maintenance fees associated with his investment, all Joe has to do is let time do its work. All policy premium payments are made on his behalf by Appleby Services (Bermuda) Ltd.. Trust Escrow Accounts open by Appleby Services (Bermuda) Ltd. at a major United States bank. Funds administered and safeguarded by Appleby Services (Bermuda) Ltd., Under the rigorous laws and regulations of Bermuda Medical evaluations are performed by two specialized independent and reputable firms Only policies issued by U.S. Life Insurance Companies with B+ rating or higher according to A.M. Best Rating Guide Annual external audits by auditors known worldwide Comply with the norms of the Life Insurance Settlement Association Confidentiality and Privacy Compliance 8% The policy matured as projected. The scheduled maturity provided Joe with an annual return of 8%. POLICY MATURES IN 84 MONTHS 6.8% The policy matured after the projected 72 Month term. The late maturity decreased Joe s annual return on investment to 6.8% 360 INVESTMENT SAFEGUARDS Fixed Return 30.6% 40.8% 51.0% 61.2% IN V E S T M E N T P R OC ES S LE Months INVESTMENT REFUND 100% 73 Months have passed and the policy has not yet matured. Joe ran into cash flow issues and wishes to redeem his investment before policy maturity. Lexington Settlements will refund Joe 100% of his $400,000 investment. I N V E S T M E N T S A F E G UARDS Investment HO W IT WO R KS $400, Months Looking for an alternative, Joe comes across Life Settlements. He is delighted to learn a life settlement investment capitalizes on longevity. Contrasting his current investments, the risks and performance of life settlements are uncorrelated to financial markets. This new financial instrument allows Joe to truly diversify his portfolio and project an above average rate of return. Investment Term & Yield $245, % Fixed Return TH E L E X I NG TO N S E RI E S How it Works To better understand this investment strategy, read the example presented below.

6 INVESTING WITH LEXINGTON SETTLEMENTS Investment Safeguards Raising the bar on investor protection, Lexington Settlements has developed the Life Settlement Series with an array of investment safeguards. We took a well rounded approach guided by over a decade of experience and our principle of building long-term relationships. Complete Approach Trust, reliability and results are key to developing longterm relationships. These are the driving principles behind Lexington Settlements. The result is composed of eight key components. Together, they bring investors the most comprehensive investment safeguard in the industry. It s so complete, we named it 360 Investment Safeguards. Fund Administration Funds administered and safeguarded by Appleby Services (Bermuda) Ltd.,under the rigorous laws and regulations of Bermuda. Trust Escrow Accounts Life Expectancy Evaluations Trust Escrow Accounts open by Appleby Services (Bermuda) Ltd. at a major United States bank. Compliance Medical evaluations are performed by two specialized independent and reputable firms. 360 INVESTMENT SAFEGUARDS In addition to external audits, Lexington Settlements boasts a comprehensive internal compliance program. Highly Rated Insurance Companies Only policies issued by U.S. Life Insurance Companies with B+ rating or higher according to A.M. Best Rating Guide. Confidentiality and Privacy External Audits All investments are confidential and in accordance to the laws of Bermuda. Annual external audits performed by auditors known worldwide. Life Insurance Settlement Association Lexington is a member of the Life Insurance Settlement Association and complies with the norms set by the industry association.

7 A Bermuda Corporation Investment funds at your fingertips In addition to the 360 Investment Safeguards, Lexington Settlement goes further by offering investors an alternative exit strategy. Investors have the option to rescind the investment contract at anytime. Rescind Prior to Investment Term Lexington Settlements will refund the full investment amount minus a 10% fee. 20% 80% 100% Investment Refund Investment refund on contracts rescinded prior to completion of investment term is subject to 20% cancellation fee. A 100% refund is issued to investment contracts rescinded past the investment term. Investing with Lexington Settlements gives you flexibility of investment and added peace of mind. Rescind Past Investment Term Lexington Settlements will refund the full investment amount. HAMILTON The Islands of Bermuda is a British Overseas Territory in the North Atlantic Ocean. Located off the east coast of the United States, Bermuda remains the leading single top offshore risk financing center. Many Lloyds of London insurers and reinsurers have moved from London to Bermuda. With over 13 of the world s top 40 reinsurers based in Hamilton, the territory is the fourth largest reinsurance market in the world after Germany, the US and Switzerland. Bermuda-based reinsurers total net written reinsurance premiums exceeds those of London-based reinsurers. The legal system is derived from that of the United Kingdom, with recourse to English courts of final appeal. Financial institutions operate under regulation established by the Bermuda Monetary Authority. The Bermuda Monetary Authority is responsible for the licensing, supervision and regulation of financial institutions including those conducting deposit-taking, insurance, investment and trust business in Bermuda. It is also the issuing authority for Bermuda s bank notes and coinage. The Authority encourages high standards of compliance and works with Government and industry professionals to ensure that Bermuda s reputation as a quality international financial center is protected. THE LEXINGTON SERIES HOW IT WORKS INVESTMENT SAFEGUARDS INVESTMENT PROCESS

8 INVESTING WITH LEXINGTON SETTLEMENTS Investment Process 6 Investing with Lexington Settlements is easy and rewarding. More than a decade of experience in life settlements translates into an efficient investment strategy designed with transparency and simplicity for all investors. Policy Procurement and Warehousing In addition to the 360 S T E P S Investment Safeguards, Lexington Settlements has developed a streamlined investment process. Lexington Settlements evaluates each policy in the secondary market according to the following strict requirements: Life Insurance Policy issued by a United States Company domiciled in the US with an B+ rating or higher according to A.M. Best. 01 POLICY PROCUREMENT AND SELECTION The contestability period and suicide clause of the policy have been satisfied. Insured person domiciled in the USA. Policy in force. Two independent life expectancy firms each perform a medical evaluation on the insured person. The most conservative life expectancy evaluation report is selected for calculating the term and yield of the investment POLICY INVENTORY All policies meeting Lexington Settlements procurement criteria are purchased and warehoused for investors. Lexington Settlements may also procure policies according to customized investor needs. Once a policy is purchased, the insurance company names Appleby Services (Bermuda) as the irrevocable beneficiary of the policy. A certificate is attached to the policy thus allowing Appleby to act as trustee. 02 INDEPENDENT MEDICAL EVALUATION

9 Trust Accounts Purchaser Escrow Account Premium Escrow Account Established to receive funds for policy investment/purchase. Used to hold funds for premium payments of policies. The amount of premium in escrow corresponds to the estimated term of investment plus one year. Maturity Escrow Account Designated account to receive death benefit proceeds from policies. Upon policy maturity, Appleby files a claim with the insurance company for payment of death benefits. The amounts of the death benefit are deposited by the insurance company in the Maturity Escrow Account. Once funds are credited, Appleby Services proceeds to pay the investor the corresponding share-participation in the policy benefits (principal plus investment returns). INVESTMENT ORDER 05 INVESTMENT CERTIFICATION 06 INVESTMENT PROCEEDS I N V E S T M E N T S A F E G UARDS Appleby Services, acting as trustee, registers the percentage of shareparticipation of each investor in the policy. Next, Appleby issues a certificate and signs the assignment notice, thus certifying the transaction. 04 HO W IT WO R KS After looking at the portfolio of available policies, the investor chooses the right policy(ies) for his investment plan. The investor may choose to invest in a share of a policy or in entire policies. Next, the investor completes the Investment Order and sends the purchase amount by means of a Check or an Electronic Transfer to the Purchaser Escrow Account. IN V E S T M E N T P R OC ES S Making the Investment TH E L E X I NG TO N S E RI E S The trust accounts are established at a major US bank by Appleby Services (Bermuda). As the trustee of the accounts, Appleby is the only entity with signature authority to the accounts.

10 This product is not available to citizens or residents of the United States or Canada. invest_rev.08/13-en Lexington Settlements Canons Court, 22 Victoria St. Hamilton HM-Ex, Bermuda Phone: (441) Fax: (441) A proud voting member of the