February 18, 2019

New Approaches in Asset Class US Life Settlements

For a long time, investment in US Life Settlements was no longer a subject of discussion in Germany. Problems in the market resulted in losses for investors, and interest in this asset class declined significantly. There has been no bad news in this investment category for a long time, but we still need to rebuild investor confidence, especially in Germany.

Co-Investments as an Initial Opportunity for Investments in US Life Settlements

“As a bank that specializes in financing investments in US Life Settlements, we intend to give investors the opportunity to get to know this asset class as a senior secured lender with manageable risk,” says Stefan Rensinghoff, Managing Director of North Channel Bank.”As a co-investor with us, you can participate in a customer loan portfolio with US Life Settlements that is senior secured and in which we always hold at least 50%. Alternatively, as a co-investor, we offer you the option of investing in the bank’s own policy portfolio. In this case, you can be sure that we have a particular interest in the quality of the asset and its performance.”

US Secondary Market for Life Settlements Established and Regulated

The US secondary market for Life Settlements has been a lucrative investment alternative for more than 100 years. A significant market has been established since the 1990s. However, market growth slowed from 2009 due to inadequate life expectancy estimates and the resulting losses for investors. The financial crisis of 2007/2008 also had a lasting impact on investor confidence.

Policy buyers as well as politicians reacted after this turning point. The secondary Life Settlements market was regulated and supervisory procedures introduced. In the meantime, policy providers and dealers are subject to comprehensive rules in almost all US states and must acquire licenses in order to be approved. This created the basis for fair pricing and greater transparency in the purchasing process. North Channel Bank is very close to the market through the expertise of its affiliate NorthStar Life Services, a US servicer.

North Channel Bank GmbH & Co. KG was founded in 1924 as the privately owned bank Bankhaus Oswald Kruber, located in Berlin. In 2009, a group of North American investors with expertise in the US Life Settlement sector acquired the bank and renamed it North Channel Bank. In the following years the bank developed into one of the leading institutes in US Life Settlement financing. 2013 with the takeover of its affiliate NorthStar Life Services, LLC, Irvine, California the bank gained direct access to and influence on a reliable, experienced, and renowned service provider. Today, in addition to financing, the bank also offers investments in US Life Settlements. In the structured finance division the bank focuses in particular on financing in the renewable energies sector, (especially equity interim financing), capital goods financing, and acquisition finance.