LONDON (Alliance News) - Alternative Asset Opportunities PCC Ltd, which invests in traded life interests on the lives of US citizens, is keen to monitor its position following a six-month drought of policy maturities.
When Alternative Asset Opportunities invests, the US citizens in question are aged between 78 and 92.
Net asset value per share was 43.9 pence on June 30, the end of its financial year. Adjusted for a 4 pence distribution to shareholders during the year, NAV per share was up 7.1% on the 44.7p reported one year prior.
Alternative Asset Opportunities was boosted by the relative strength of the US dollar during the year, which provided a 3.5p lift to NAV.
Alternative Asset Opportunities presented a view of the company's year in three stages.
The first of those began towards the end of the prior financial year, with a "good flow" of policy maturities leading to a move to allow B shares to be issued to permit capital distributions. A "very satisfactory influx" of funds allowed the company to repay debt and distribute 2.0 pence per share to shareholder on August 8, 2014.
Then, in the second phase, further policy maturities allowed another 2.0p per share capital distribution in March. Residual cash was withheld to meet expenses and premium payments for a further period.
Alternative Asset Opportunities said that its caution turned out to be justified, citing a "maturity drought". A USD4 million policy maturity in August was the first since January, an "unusually long" period.
"While this lack of maturities mainly has a negative effect on cash flow, the board accepts the importance of continuing to monitor the accuracy of life expectancy (LE) data used. Recent LE assessments have if anything been shorter than before, which may reflect factors specific to individual policies, but is reassuring in this context," Chairman Charles Tracy said in a statement.
"Meanwhile it is very helpful to have extended the company's overdraft facility for a further two years to March 2018, with a modest reduction in charge," Tracy said.
The chairman said the lack of maturities over the six months to August makes the board "acutely aware" of the need for Alternative Asset Opportunities to pay close attention to its cash position, life expectancy updates, and the valuation of its policies.
"While aiming to make cash distributions to shareholders when appropriate, the board will need to take into account the fluctuating nature of portfolio maturities when deciding on the timing and quantum of such distributions," Tracy said.
"It remains the intention of the board to hold the majority of policies to maturity, but the possibility of policy sales will continue to be kept under review," Tracy added.
Shares in Alternative Asset Opportunities were up 0.5% at 39 pence on Wednesday.
By Samuel Agini; samagini@alliancenews.com; @samuelagini
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