Portfolio Management

Capstone was first to market with our proprietary Premium Reserve Management (PRM) System. The central mission of the PRM is to manage and minimize extension risk for issuers to avoid Premium or Capital Calls.

The Capstone Advantage

No two policy contracts are the same. Most life insurance carriers engineer cash accumulation components into their policy designs. Bloated premiums designed to build cash value are unattractive to the life settlement buyer. Large premium payments mean lower offers to the seller.

In order to maximize capital reserve efficiency, each policy must be premium optimized to drill down to its nominal approximation of the minimum cost of insurance (COI). Our team of insurance industry veterans are experts at disintermediating the various policy riders and benefits to the lowest possible cost component while assuring the integrity of the contract.

CAS - Marketing - Life Expectancy Assessment - Infographic - 20210526_page-0001
CAS - Marketing - Life Expectancy Assessment - Infographic - 20210526_page-0001

Life Expectancy Assessment

At the center of the life settlement industry is the core matter of Life Expectancy (LE) Assessment. The LE of a policy is the only common valuation metric to all life settlement contracts. Capstone believes that a Top-Down underwriting methodology blending both a probabilistic and deterministic pricing approach to policy selection significantly increases value.

CAS - Marketing - The Relevance of the 85th Percentile Infographic - 20210526_page-0001
CAS - Marketing - The Relevance of the 85th Percentile Infographic - 20210526_page-0001

The Relevance of the 85th Percentile

In a Standard Distribution Mortality Curve, the Median LE represents the midpoint where the assessment assigns a 50/50% probability of the insured being alive or deceased. The addition of twenty-four months of premium to establish Capitalized Premium Reserve, cash management and surplus reserve generated from early maturity experience creates the hedge against extension risk. The Extended Longevity Risk Transfer Pricing Model is designed to elongate the issuer’s premium paying ability throughout a policy’s life cycle to hedge the risk of Premium or Capital Calls.

CAS - Marketing - PRM Portfolio Distribution Infographic - 20210526_page-0001
CAS - Marketing - PRM Portfolio Distribution Infographic - 20210526_page-0001

Capstone PRM Portfolio Distribution

Diversification is a key risk mitigation strategy with any asset portfolio. Capstone's portfolio construction disciplines include laddering policies differentiated by the insured's attained age, gender, life expectancy, health impairments, life insurance carrier and face amount.

CAS - Marketing - PRM Portfolio Detail Infographic - 20210526_page-0001
CAS - Marketing - PRM Portfolio Detail Infographic - 20210526_page-0001

PRM Portfolio Detail

Capstone's Premium Reserve Management (PRM) System is designed to optimize a life settlement policy to achieve its maximum economic value.

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