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An unique asset class

The secondary market for life insurance policies is an alternative asset class offering attractive returns combined with good credit quality and low  correlation with bonds and equities. Over time the expected returns have become more predictable due to improved medical underwriting standards. However, the choice of medical underwriter is a key factor in the investment’s decision process.

— Attractive risk-adjusted return – the net annualized return is 7.5% in US dollars without leverage. The Sharpe ratio is 1.5, during the last five years.

—   Risk diversification – the return profile of a life insurance portfolio is characterized by a low correlation to other asset classes, which makes the strategy attractive for investors seeking risk diversification. The correlation to S&P 500 is 0.08 in the last five years.

—   Capital Preservation – During the last five years over 70% of monthly returns are positive with a realized volatility of 4.1%.

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