Jonathan Sadowsky of Browndorf PEM Discusses Longevity, An Asset Class for These Turbulent Times
Businesswire
Published: October 28, 2008
NEWPORT BEACH, Calif.--(BUSINESS WIRE)--Jonathan Sadowsky of Browndorf PEM, LLC, today provided the following information:
Longevity, also known as Senior Life Settlements, is a fast-growing asset class that may be the prescription for the current markets’ ills. Based upon the third-party ownership of universal life insurance, this asset class has grown exponentially both in the physical markets, long dominated by regional brokers, as well as the synthetic markets, where a number of Wall Street firms have been ramping up their offerings the past few years.
Known for low price volatility and a return that is uncorrelated with most traditional, and lately very erratic, markets including equities, credit, commodities and real estate, Longevity assets can provide an investor with a more stable investment that could both reduce his overall risk profile while providing attractive returns, and diversify a portfolio in a new innovative way. Historical returns have been shown to be independent of global macroeconomic events such as recessions, capital liquidity events, extreme market volatility and crises of investor confidence or flights to quality, all of which are occurring now.
In a diversified Longevity-based portfolio, a large number of policies are held to maximize the possibility of performing as close to mortality expectations as possible, which are based on historical observations and future life extension assumptions as published by the IRS, the Social Security Administration and the Society of Actuaries.
Usually investment is done by investing in a pool of physical policies and servicing them over the life of the insured individuals within the portfolio. Recent innovations on Wall Street allow investors to optimally invest in portfolios of Senior Life Settlements in synthetic form.
Synthetic senior life settlements allow the investor to specifically target longevity risk, also known as mortality risk. The myriad of benefits of using a synthetic structure include higher portfolio diversification, faster investment of capital, mitigation of policy risks and costs including legal, regulatory, origination, administrative, operational, policy servicing and carrier credit risks and the elimination of extraneous fees such as brokerage and settlement fees.
Because synthetic portfolios allow the investor to enjoy the advantageous economics and cash-flows of a diversified portfolio of policies without most of the physical policy risks and costs, they are the wave of the future for investing in Longevity assets.
Browndorf PEM, LLC is a California Registered Investment Advisor that manages assets in Longevity.
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