On September 12, 2017, the BVZL and the European Life Settlement Association (ELSA) held their joint convention for the 4th time in a row: this year, the largest European trade conference on “investments in tradeable life insurance policies“ took place at Canary Wharf, London. The conference brought together the major representatives of the international secondary and tertiary life insurance markets, investors and an interested audience of professionals active in the segment.
In their speeches, the international experts discussed current trends, challenges and market opportunities, with a particular focus on the investors’ view of the different life insurance markets. The problems of the past were openly approached and debated as well as potential solutions and new investment opportunities pointed out.
With regard to the secondary life insurance market in Germany, the BVZL can announce that the general market environment is again very positive: this is reflected above all by the fact that purchase volumes of German policies increased by 50% to reach EUR 275m in 2016; thus, a larger number of consumers were able to profit from the clear advantages a policy sale has over a surrender to the insurance company. Consequently, purchase prices too have risen substantially. Also, the “policy purchase barometer” (implemented on the BVZL’s website), an indicator of the probability of a policy for sale to be purchased by a BVZL member, is again on “high” and has been clearly above the 60 percent mark since the beginning of the year.
Besides, the BVZL is positive about insurers’ financial standing, despite the ongoing low interest environment. This is also underlined by the solvency ratios, which were this year declared by the German insurers for the first time and which stand at an average of approx. 340% of the required solvency capital.
The expert speeches on the US-American “life settlement” market put a particular focus on the question of whether and if so, how the positive development on the secondary and tertiary life insurance market will continue in the US and also whether investments in US life settlement policies will also become attractive to a much stronger degree for the so-called ILS funds, which are currently mostly invested in natural disaster risks. What was also emphasized and intensively discussed by the experts at the conference, particularly with the participants representing the investor side, was the issue of cost of insurance (CoI) increases implemented by US primary insurers – for which there are currently several litigations pending. It should be noted that US life settlements, after a phase of market shakeout and professionalization, today represent a highly interesting investment opportunity, offering professional and institutional investors attractive returns in times of low interest rates, apart from the aspect of non-correlation to other financial instruments.
The conference program was rounded off by an introductory guest speech held by Baroness Altmann (former British Minister of State for Pensions), who talked about the future of retirement provision markets in Great Britain and the EU and strongly and openly emphasized the various challenges ahead. In her speech, she was strongly calling on the economy and politics to approach these issues as fast as possible.
In 2018, the BVZL and ELSA will once again host the International Life Settlement Investor Conference in a joint effort, this time in Munich.