PORTFOLIO MANAGEMENT
Due Diligence
After a purchase price has been agreed to, Living Benefits Asset Management conducts very thorough due
diligence on each individual policy inside the portfolio. Here are just a few things we do to ensure the buyer is
receiving exactly what they thought they were buying:
- Policy verification
- Final verification that the seller has complete authorization to sell the policy or portfolio
- Dating of illustrations and LEs
- Proper ID; OFAC
- VOC verification
- Properly signed and notarized
- Proper exhibits to the purchase agreement
- Carrier ratings obtained
- Current account values are obtained
- Correct expenses are extracted from each policy and each policy is rerun to create an updated minimized premium stream for servicing (if required) and to also validate the original portfolio pricing
To provide an example, in early 2007, an investment bank that represents several large institutional investors
retained our analytic team to perform portfolio analysis and policy due diligence. The portfolio was initially
comprised of 102 policies that had been purchased as individual life settlements in 2003 and 2004. During the
due diligence phase the team recommended acceptance of 92 policies. The team also uncovered discrepancies
on 10 of the policies which were analyzed, researched and corrected where possible. Of the 10 discrepancies
found, 7 were corrected and included in the trade while 3 policies were rejected as agreed to by both buyer and
seller. The trade consequently went forward through escrow as all policy ownership and beneficiary changes
were filed, processed and monitored. This portfolio is now serviced by LBAM.
