According to the Willis Towers Watson Global Alternative Survey, $6.5 billion is allocated to alternative assets around the globe.
The top 100 alternative investment managers' allocations by asset class reported in the survey:
- Real Estate - 35% and over $1.4 Trillion
- Private Equity Funds - 18% and $695 Billion
- Hedge Funds - 17% and $675 Billion
- Private Equity Funds of Funds (PEFoFs) - 12% and $492 Billion
- Illiquid Credit - 9% and $360 Billion
- Funds of Hedge Funds (FoHFs) - 6% and $228 Billion
- Infrastructure - 4% and $161 Billion
- Commodities - 1%
Notably, insurance company assets managed by the top 100 alternative asset managers grew from 10% to 12% of total assets.
It is estimated that of the alternative asset allocations attributed to Insurance Linked Securities (ILS), the broad market for life settlement transactions in 2016 accounted for approximately $25 Billion of the total.
There is one principal difference between the list above and Senior Life Settlements in terms of how they perform that is obvious and yet, overlooked. The underlying asset valuations above are all subject to market volatility, credit risk, geo-political risk, natural disaster risk and so on. Such is the nature of an investment.
Asset managers deploy their solutions and experience to anticipate the most advantageous market segments and strategies and hope to get it right over time.
Life Insurance-backed assets have one differentiating factor that make them unique. The value to the owner of the asset is printed on the contract. The face amount.
Risk-based assets don't usually appreciate drastically over night. Time is equally weighted between market growth patterns and longevity based asset classes. The difference that seems to allude all but some, is a life insurance contract is never worth more or less than the face amount.
Apparently, given the interest rate environment, the liquidity objection to life settlements is losing ground to the illiquidity yield factor. Illiquid Credit facilities enjoyed the greatest gains in the survey at nearly a $280 Billion increase over the prior year.
We all know the story of The Little Engine That Could. Senior Life Settlements are coming into prominence. The National Association of Insurance Commissioners (NAIC) endorsed life settlements in 2017 for the instrumental role they can play in funding long-term care obligations for seniors.
Capstone Alternative Strategies is a leader in Senior Life Settlement Education. To learn more, please visit us at www.capaltstrategies.com or email us at contact@capaltstrategies.com.