The Financial Services Authority (FSA) has announced that it is to address the life settlements industry, an investment class on which it has rarely commented.

On 24 February 2010, Peter Smith, head of investment policy at the regulatory body, will speak to the industry and potential investors at the European Life Settlement Trade Mission, organised by the European Life Settlement Association (ELSA) and the US Life Insurance Settlement Association (LISA).

This is an unusual stance for the FSA, as it regularly takes part in conferences, but does not tend to provide a focused discussion on a specific asset class. This, the statement said, reflects the growing interest in the market in this asset class.

The products turn unwanted US life insurance policies into tradable assets, which can then be purchased and held in a diversified fund backed by many policies. They are lowly correlated with the broader economic and market cycle, which increases their appeal for investors.

"The FSA's address indicates its recognition of the mounting interest within the market in life settlements," commented Andrew Wilkins, executive director at Catalyst Investment Group, and the retail spokesman for ELSA. "Once a little-known asset class, dominated by institutions, we have seen life settlements opened up to a hungry retail market looking for greater choice and increased diversification from their investments following the financial crisis. This is due to the character of life settlements, which provide valuable returns uncorrelated with traditional investments such as stocks, bonds or property."

LISA/ELSA will embark upon a four-day trade mission from 23 February, which will begin with a two-day conference in London before hitting Luxembourg, and ending in Zurich. The mission will bring together US and European life settlement professionals.

"The FSA's presence at the ELSA trade mission sends a clear message to the market that this is a growing asset class that is gaining the attention of everyone. As part of ELSA's exercise in promoting greater understanding, it is heartening to see the FSA come to the table and join in the discussion to increase the maturity and transparency of the industry for the benefit of all," Wilkins concluded.

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