No securities regulatory authority has expressed an opinion about these annuities. It is an offense to claim otherwise.

Transcription

1 Put your money to work Fixed Term Annuities Presenting Higher Yield Returns A to AAA Rated (S&P) Flexible terms April 2, 2010 No securities regulatory authority has expressed an opinion about these annuities. It is an offense to claim otherwise. Genex Capital Fixed Term Annuities are only offered for sale in the United States and are exempt from registration with the U.S. Securities and Exchange Commission. 2010

2 INTRODUCTION This document contains selected important information to help you make an informed decision about buying Fixed Term Annuities and to help you understand your rights as a buyer. In this guide: All Amounts are expressed in U.S. Dollars. Average Life refers to the length of time that will pass before one-half of a debt obligation under a Fixed Term Annuity has been retired. Credit Rating refers to the credit rating of the insurance company paying the Fixed Term Annuity as determined by Standard and Poor s. Existing Annuitant refers to a person who sells an annuity to Genex Capital in return for a present value lump sum cash payment. Such person is usually a personal injury victim who was awarded an annuity as part of a structured settlement of their injury claim. Liquidity refers to the speed and ease with which an asset can be converted into cash. Term refers to the length of time before all principal and interest is paid under the Fixed Term Annuity. We, us, our and Genex Capital refer to Genex Capital Corporation. For more information you may contact us by calling or , by ing us at info@genexcapital.com, or by writing us at: Genex Capital Corporation 73 Green Tree Drive, #99 Dover, Delaware USA

3 WHAT IS A FIXED TERM ANNUITY AND WHAT ARE THE RISKS OF BUYING AN ANNUITY? Fixed Term Annuities offer a simple and affordable way for buyers to meet financial goals, such as saving for retirement or a child s education or improving overall returns on a balanced portfolio. But what exactly is a fixed term annuity and what are the risks? What is a Fixed Term Annuity? A Genex Capital fixed term annuity ( Fixed Term Annuity ) is a contract issued by an insurance company as part of a structured settlement to fund the payment of damages for personal injury over a period of time. It guarantees the holder or annuitant a payment stream over a fixed term at a fixed rate of interest. Unless otherwise specifically stated the Fixed Term Annuity is paid regardless of whether the measuring life is alive or deceased, meaning these payments are NOT life contingent. Fixed Term Annuities are sold by structured settlement annuitants to Genex Capital at a discount in exchange for a lump sum payment. Genex Capital, in turn, offers these Fixed Term Annuities for resale at a fixed rate of interest and fixed term to astute buyers such as you. Who makes the payments? Each Fixed Term Annuity is paid directly to you by a U.S. based Insurance Company with a credit rating that is generally AAA to A rated by Standard and Poor s. How is the Interest Rate determined? The interest rate for each Fixed Term Annuity is determined by the market, what a buyer is prepared to accept as a return on their purchase taking into consideration the Fixed Term Annuity attributes such as the Annuity term, insurance company credit rating, and average life. Generally the market interest rate is much higher than that offered on annuities with the same attributes paid by the same insurance companies directly. The interest rate for each Fixed Term Annuity is represented as an effective rate compounded annually based on a 365 day year. This is standard practice in the annuity industry. Interest rates are recorded to an accuracy of 2 decimal places (e.g. 6.50%). 3

4 Why are Interest Rates on the Fixed Term Annuities higher than those offered by Insurance Companies Direct? The rate of return on a Fixed Term Annuity is typically higher than the rate available for a comparable annuity purchased direct from the issuing insurance company for two reasons: A Fixed Term Annuity has been previously owned with attributes such as payment term, payment amounts and average life that cannot be changed. Because Genex Capital buys the Fixed Term Annuities at discount prices from Existing Annuitants it can pass along these preferred rates to its buyers. Why do I need Genex Capital to facilitate the purchase of Fixed Term Annuities? Payment rights to Fixed Term Annuities are transferred from the original structured settlement annuitant to the buyer pursuant to State law. The purchase and sale of each payment stream must be approved by a court which issues an order redirecting payments to the buyer. Genex Capital and its associates have expertise in legally transferring payment rights. Genex Capital arranges a court order in the buyer s name at no additional cost to the buyer. All of the court costs, transfer fees, lien search fees and legal costs are paid by Genex Capital. Genex Capital has a number of channels, including an extensive broker network, through which structured settlement annuities are acquired. Genex Capital s experience and due diligence practices insure the investment quality of the annuities offered for sale. Exclusivity Fixed Term Annuities are not widely known to the general public nor are they generally accessible. As such, they provide a limited opportunity to sophisticated investors to invest in safe, fixed return annuities at superior rates of interest. What is the typical Fixed Term Annuity term and investment amount? The present value of a Fixed Term Annuity generally ranges between $50, and $150, but can be higher or lower. Investments of this size tend to appeal to high net worth buyers. Terms can range from 1 to 35 year terms, but are typically 5 to 20 years. 4

5 Legal Structure of the Investment Genex Capital buys a Fixed Term Annuity from an existing annuitant and transfers the payment rights to you through a court transfer process. This process is available in 48 U.S. states through a state sanctioned transfer statute. Your name will be stated in the transfer court order, generally obtained in the residence state of the existing annuitant. The court order will direct the insurance company that issued the Fixed Term Annuity to pay the buyer all of the annuity payments as and when they are due. The method of payment is usually determined by the insurance company but usually consists of a check made payable to an address designated by the buyer or by direct deposit into the buyer s bank account. A buyer may change the address for payment or bank account designation at any time by informing the insurance company directly. If the buyer is a natural person and in the event the buyer dies, then the assigned payments will be made to the buyer s estate and administered in accordance with the buyer s will or applicable intestate succession laws. If the buyer is a joint tenancy of natural persons and in the event that one or more of the joint tenants die then the assigned payments will be made to the survivor(s) pursuant to the right of survivorship law. Minimum Set of Documents Received by Buyer at Closing Receivable Purchase Agreement Disclosure Statement Sale and Assignment Agreement Duplicate Annuity Policy or Benefits Letter or Issuer Acknowledgment Letter Authorization Letter Change of Beneficiary Designation Certificate of Marital Status/Spousal Consent, Divorce Decree, or Property Settlement Agreement, as applicable Court Order permitting the assignment of the Annuity Payments and naming Buyer as new payee Statement of independent Professional Advice or waiver, where applicable Satisfactory results of UCC (90 days of closing), judgments (90 days of closing), lien (90 days of closing), bankruptcy (90 days of closing), and evidence of lien resolution, as applicable Payee s identification Closing book 5

6 Benefits of Investing in Fixed Term Annuities A Fixed Term Annuity is generally considered to be a good vehicle for conservative buyers. Monies are invested by the insurance company primarily in government securities and high-grade corporate bonds, and they offer guaranteed interest rates. Because Genex Capital only offers annuities paid by insurance companies with among the highest Standard and Poor s credit ratings the annuities are among the safest form of fixed term financial products available today. Fixed Term Annuities can provide above average returns for the fixed income portion of a balanced portfolio. Because the typical return of fixed income products is often below average, Fixed Term Annuities can boost the overall portfolio performance by enhancing this lowest performing segment. What are the Risks? Like all financial products, Fixed Term Annuities are not risk free and every buyer must determine whether a Fixed Term Annuity meets their risk tolerance and financial objectives. The risks associated with Fixed Term Annuities are: The security of the annuity is directly related to the financial health of the insurance company that issued the annuity and its ability to pay claims and to the terms of the court order that accompanies each transaction. Fixed Term Annuities are not deposits and are not insured by the Federal Deposit Insurance Corporation (FDIC) or any other federal government agency. They may be partially guaranteed by State Guaranty Associations but Genex Capital makes no representations or warranties in this regard. Fixed Term Annuities are subject to interest rate risk. Market interest rates may rise while the rate of return on the Fixed Term Annuity is locked in. Fixed income products with longer terms to maturity are usually more sensitive to changes in interest rates. One method of hedging interest rate risk during a volatile rate period is to build an annuity ladder by buying a series of annuities over an extended period of time thereby rate averaging the changing interest rates. Fixed Term Annuities are monetized in U.S. Dollars. Foreign buyers may be subject to currency exchange risk. Fixed Term Annuities typically must be held to term and therefore are not liquid investments. 6

7 COMPARE GENEX CAPITAL See for yourself how the Genex Capital Fixed Term Annuity performs relative to other fixed term annuities offered by insurance companies direct. The following comparisons are based upon a $100, present value for a fixed term of 10 years. The Genex Capital example is based upon an AA rated payment source. Company Allianz AIG ING Integrity Life Midland National Genex Capital S&P Credit Rating of Annuity AA A+ AA- AA+ AA- Interest Rate 5.10% 4.50% 3.95% 4.97% 5.00% 7.00% What You Pay (Present Value) $ 100, $ 100, $ 100, $ 100, $ 100, $ 100, What You Get (Future Value) $ 164, $ $ 147, $ 162, $ 162, $ 196, Your Profit (Accrued Interest) $ 64, $ 55, $ 47, $ 62, $ 62, $ 96, Note: The S&P credit rating is based on the insurance company making the annuity payments. 7

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9 ORGANIZATION AND MANAGEMENT Seller Genex Capital 73 Green Tree Drive, #99 Dover, Delaware, As seller, we are responsible for the overall business and operation of the Fixed Term Annuity transfer and sale process. This includes: Entering into a sale agreement with existing annuitant to buy each annuity in return for an agreed upon present value cash amount. Assigning a buyer to buy the annuity at an agreed upon sale price and corresponding rate of interest. Completing the annuity transfer process, including obtaining a transfer court order, strictly in accordance with U.S. state and federal laws. Overseeing the transfer due diligence process as set out in the sale and assignment agreement with the existing annuitant and the receivable purchase agreement with the buyer. Safeguarding the buyer s funds until transaction closing. Closing the annuity purchase with the buyer and providing a closing book containing all documents set out in the receivable purchase agreement. PURCHASES, FEES AND EXPENSES OPENING AN ACCOUNT WITH GENEX CAPITAL The following is important information that you will need to know about opening a buyer account with Genex Capital. To help fight the funding of terrorism and money laundering activities it is important for Genex Capital to obtain, verify and record information that identifies each person who opens a buyer account. 9

10 Information Required when Opening a Genex Capital Account--Customer Identification Program Individual Buyers Name Date of birth Citizenship (if dual citizen all citizenships are required) Address Driver s license Identification Number: U.S. Citizen: Taxpayer identification number (Social Security Number) Non-U.S. Citizen: U.S. taxpayer identification number, passport number and country of issuance, alien identification card number of government-issued identification showing nationality, residence and a photograph of you. Corporations, Partnerships, Trusts or Other Legal entities Principal Place of Business (State of incorporation or organization) Employer Identification number (E.I.N.) Articles of Incorporation, Partnership or Trust Agreement Prohibited Uses You shall not use Genex Capital s services for any unlawful purpose. Information for Foreign Buyers Nothing in this document shall be considered a solicitation to buy or an offer to sell a Fixed Term Annuity, or any other product or service, to any person in any jurisdiction where such offer, solicitation, purchase or sale would be unlawful under the laws of such jurisdiction. To be eligible to buy Genex Capital s Fixed Term Annuities a foreign buyer must have a U.S. address, U.S. Tax ID and U.S. Bank Account. 10

11 Becoming a Buyer Prior to becoming a buyer you will be required to: 1. Execute a Receivable Purchase Agreement ( RPA ). The RPA sets out all of the terms of the relationship between you and Genex Capital and the transaction process. 2. Provide the information outlined in the Customer Identification Program (outlined above). 3. Fund and close transactions in accordance with the terms of the RPA. Paying for your Fixed Term Annuities Individuals You have to pay for your Fixed Term Annuities in two tranches: 10 percent deposit at the time the existing annuitant executes a sale and assignment agreement with Genex Capital. Balance of purchase price upon receipt of the issued court transfer order naming you as the new payee. All funds are held in a segregated account until closing. The Closing of each Fixed Term Annuity transaction will occur in accordance with the Receivable Purchase Agreement and only after all conditions precedent have been met, including but not limited to obtaining the court order that directs the insurance company to pay you the annuity payments as and when they are due. Institutions You have to pay for your Fixed Term Annuities at closing by paying the existing annuitant directly in accordance with Genex Capital s instructions. Selling your Fixed Term Annuities Once bought, you must hold your Fixed Term Annuities to the completion of their respective term. They are generally not liquid or marketable. The transfer court order states that there are no further assignment rights. Registered Plans We do not offer 401K, I.R.A., RRSP, profit sharing, defined benefits plans or other registered or qualified retirement savings plans per se. However, we do work with your existing retirement saving advisors and plans to try to facilitate purchases in those plans. 11

12 Fees and Expenses There are no fees or expenses paid by you when purchasing in the Fixed Term Annuities. Genex Capital earns its fee based on the net difference between the price it buys the annuities from the existing annuitants and the price it sells to buyers. Broker Compensation This section explains how we compensate buyer brokers should you decide to engage a broker to place your order and manage your account with Genex Capital. Sales Commission Your broker of record generally receives a sales commission when you buy each Fixed Term Annuity. The amount of the commission is negotiated as between your broker and us. The commission is paid by Genex Capital at the closing of each annuity transaction. The price you pay for each Fixed Term Annuity and the agreed upon rate of interest constitute the net price and actual rate of interest earned by you. The sales commission is an extra expense paid by Genex Capital and does not affect the price or rate of interest. Income Tax Considerations for Buyers The tax you pay on your Fixed Term Annuity depends on the jurisdiction of citizenship and jurisdiction of residency along with U.S. tax laws. We express no opinion on your tax obligation and recommend that you consult your tax advisor accordingly. 12