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UK pension funds
should be looking to the US life settlements market for solid investment,
according to Policy Selection Ltd’s (PSL) Rogan Redfarn.
The company, which has an Assured Fund investing in this sector
of the market, believes that a predicted worth of $160bn within
the next decade makes the US traded life settlement market a perfect
match for the exacting requirements of the UK pensions industry.
According to Redfarn, who is business development director at PSL,
the attraction of the 250 policy fund is that life settlements are
not correlated to traditional markets and therefore not constricted
by the credit crunch as noticeably as other assets. The policies
traded are generally those of senior citizens, and in the Assured
Fund the average age is 82.
Redfarn estimates the Fund’s performance in quarter one of
2009 at about $1bn, and said they are on target in terms of maturities,
hitting seven out of the aimed-for eight so far.
Redfarn told Pensions Age that so far nothing has happened
that has impacted negatively on the fund, and cited interest rates,
cures for illness which would increase longevity, lapses in operational
aspects of the fund, inflation and currency hitching as small risks
to the continued success of the fund. He also said that credit risk
could be a problem, should insurance companies involved collapse,
although to minimise this PSL buys only those which are S&P
‘A’ rated or above.
“I’m hoping some of our institutions do not have a dire
need for cash,” Redfarn said, as this could also impact on
the success.
However, Redfarn is optimistic for the future of the Fund. It is
Deloitte approved, and some big names already have their finger
in PSL’s Assured Fund pie. “There is interest from big
names for the future,” Redfarn reveals, “Some names
that do not get better.”
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Pensions Age July 2008
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