As experts are whispering about the prospects of a global double dip recession, the life settlement industry has now started showing some signs of life. In 2009 and in the early parts of 2010, the secondary life insurance market had faced some difficult times, but some indications are now pointing to a strengthening side.
In recent anecdotal evidence given by life settlement providers is encouraging. Providers who were before sitting on the sidelines, due to a lack of funding, have now returned with money to spend on life insurance policies. There are some who are now representing multiple funding sources and are aggressively looking for cases from life settlement brokers.
This year in the beginning, it was hoped by many that Europe could provide a shot in the arm of the US life settlement market. With the events such as the European trade mission and international institutions signaling towards increased interest in US life insurance policies, optimism became high that foreign money could add liquidity to the American market. Recent events in Europe have measured all those hopes.
The Euro has fallen to multi- year lows against the US dollar that creates an additional incentive for European investors of US life policies. US denominated assets become an perfect hedging vehicle against a continued Euro slide. Though, European macro economics are undermining the investment climate there and eroding the ability of institutions to make these kinds of investments. Now European investment banks and funds are concerned with liquidity as they watch other assets lose value during the PIGS crisis.
While European money might not come to the rescue of the US life settlement market, there are several reasons to believe a recovery is underway. Based on the current market activities there are signs of a more balanced equilibrium between sellers and buyers. Unfortunately, only time can tell if the current wave of optimism is misguided or is well placed.
