Institutional investors targeting dramatic increases in life settlements

Written by Adam Cadle

05/07/2023

Institutional investors, including insurers, are targeting dramatic increases in allocations to the life settlements asset class due to increasingly attractive valuations and consistent returns, new research has shown.

A study by international asset manager, Managing Partner Group (MPG), found that 45% of institutional investors and wealth managers who are collectively responsible for $325bn AuM predict rapid increases in allocations over the next three years.

The annual gross market potential capacity for life settlements is estimated to be as large as US$220bn compared to the US$8.5bn paid out to life insurance policyholders who sold to life settlement funds between 2021 and 2022.

The current attraction to the asset class is driven by the pricing which currently delivers 12% IRR for its investors.

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