RE: Fees and profit14 Oct 2018 22:28
Introduction
PART I
INFORMATION ON THE COMPANY AND BUSINESS OVERVIEW
The Company’s business is to provide advice in connection with SLS Assets to existing and prospective holders of such assets. In doing so, the Company will provide holders and prospective holders with acquisition strategies, performance monitoring, and analytical services.
The Company will advise only Institutions. It will not be engaged in originating or selling such assets directly to retail investors. The Company believes that through its management and expertise it will be able to offer its clients access to its knowledge base and the US SLS market.
The secondary market in SLS Assets allows policy owners the ability to realise the market value of their policy by receiving a cash lump sum and to eliminate the requirement to pay on-going monthly premiums. For investors, the Company considers SLS Assets to be a highly predictable asset class with predictable cash flows for better than average risk adjusted returns, particularly where portfolio purchases can be achieved at an appropriate discount to expected value.
The Company believes that owners of SLS Assets, whether in the secondary or tertiary markets, will be willing to dispose of them if the economic cost of continuing to fund premium payments no longer meets the benefits or original reasons for owning the underlying policies to their maturity. It is this dynamic that creates the business opportunity for the Company’s clients and for the Company.
The Company will not advise its clients or consider transacting business in an SLS Asset other than that which relates to an underlying US exposure. This is because the SLS market in the US is highly regulated. The Company will only advise on business relating to policies that are over two years old in order to avoid the statutory contestability period. The Policies which the Company will focus on are those with low face values (typically US$250,000 - $1.5m) allowing the greater number of policies to be aggregated with relevant funds available, with an average age of insured of 80 years or more and life expectancies of less than 10 years. A holding of a large number of well diversified Policies increases the probability of achieving target returns and avoiding incorrectly assessed Policies.
The Company will initially finance its business through the Net Proceeds and then from the fees generated by its advisory business.
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