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Despite the recent turmoil in the investment markets, life settlement securitization volume is going to continue to increase, an industry executive says.
The U.S. Securities and Exchange is well aware of what is happening, and officials there are “all over this in terms of responsiveness,” says Peter Mazonas, chief executive officer of Life Settlement Financial L.L.C., San Rafael, Calif.
Mazonas is one of the life settlement industry experts who have been interviewed by the SEC staff in their Washington offices since SEC Chairman Mary Schapiro launched a life settlement securitization inquiry in October. Few know how many securitization deals for settlements have been originated, Mazonas says. “Maybe 20 to 25 next year is my guess,” he says, but he thinks the total could be as high as 50. “There’s a whole bunch under the radar.”
Mazonas himself has been approached by more than 20 investor groups interested in creating settlement pools, he says.
Settlement funders are “getting greedy” and looking for extraordinary rates of return, he says—as much as 18%-20%, whereas 18 months ago they had sought perhaps 10% to 12%.
“Once you see securitization start in earnest, funders will start to lower that to 12% to 16%,” he predicts.