High Level Avgs
Overall 19% extension.
But that's not the best part.
No Smoke 23% extend
No smoke 13%
Impair the Trust baby? Tell the fractional holders whom bought as of late, you are getting a new LE issued and their probabilty for a premium call went up dramatically.
21st may have singlehandedly handed LPHI its own death warrant. Surely people remember that LPI started to use 21st LE alongside the Cassidy LE umder the guise thatbthey would rely on, price and reserve premiums based upon the longest of the two. No doubt this new Table and underwriting done at 21st is a margin killer. Ouch!! What do you think of that George?
Does anyone on this board realize how serious and troubling this is for any small or medium investor in this asset class? does anyone recall the first time 21st did their revision in late 2007, early 2008? It not only sent ripples through the settlement industry, it was the first nail in its coffin. From that time the market has steadily decreased due to lack of confidence. While the big 3 LE companies continue to improve their methodolgy, this is killing the investor. How often can you write down your assets before you either write them off or sell them to get them completely off of your balance sheet? How many large settlement providers have been shuttered due to this issue? how can any investor, sophisticated or simple, continue investing in this asset class when their maturity date keeps changing, in the wrong way? While this is all IMHO, i cannot see how any decent attorney or regulator doesnt see this. How can any person contiue promoting this in good conscience??
Sentiment: Strong Sell
Welcome to the board.
Not every mortality provider is that wrong. Fasano and EMSI are pretty good at what they do. 21st Services is another matter, and they did revise twice. Dr. Cassidy is not even in the ballpark of anything reasonable, if the LPHI filing are a guide. Did you see the "Thereafter" category? Yikes, Charlie Brown!
How can anyone promote the LPI fractional deals knowing this? I don't know, either. I think at the very least a lack of ethical conduct is involved. What about the regulators? They don't seem to regulate very well in Texas. In fact, some people think at least one regulator has a relative involved with the selling of the fractional investments. You can find amazing stuff on LinkedIn and Facebook, as noted on an earlier posting. I tried it...and found a link or two or three...
Is the stock a "Strong Sell?" I sometimes wonder how this can trade about $0.85, let alone $2.72. Someone is buying hype, and based upon that trust not paying off they may be disappointed.
Let me get this straight. The plaintiff's allege Dr. Cassidy's LE is off by 50%. Now we find out the 21st is off by at least 19% and likely 24% since most of the insured are men. But wait. The rich live longer than the general population and these policies are on rich people. This means a fractional investor isn't reserving enough by a significant amount. Even if the reserve is just 20% off, and it has to be closer to 33% since the reserve is calculated on a Cassidy/21st blend, a whole lot of people are going to be getting a premium call sometime in the future, and that isn't good for them.
This is no longer speculation but fact. If that trust used 21st Services as a mortality provider it must be written down to reflect both the 2008 VBT and the January 2013 21st Services extension. You get a minimum 20% write-down in 2008 and again in 2013. This means the LEs are off by a approximately a third, which should kill any profit potention from a highly levered investment.
You want to know what is worse than getting the LE wrong? Not doing anything about it. There are people advertising 14% potential returns for other companies since before 2008, and the advertising never changes. LPI continues to stand by Dr. Cassidy despite him never reviewing his results for accuracy. If he ever did review his results the LEs could double if the plaintiffs are correct, reflecting the LEs used to originally market policies before being purchased by LPI.
suvacrew is correct in that 21st Services will kill the LPI margins even when blended with the much shorter LEs from Dr. Cassidy. It may not even matter, though. There are no receivables from last quarter and this possibly means the game of buying a policy at the end of the quarter and creating instant revenue (legal) has ended. With sales slowed, LPI and LPHI have to get rid of the resold (extended) policies and sell them to the public. I wouldn't be surprised if more people started to get rid of poorly performing policies in light of the 21st Services revisions. I imagine these policies are being peddled out of state right now. I wonder who will go to marketing events held in suburban locations to see how investments backed by life settlements are sold. Glengarry, Glen Ross(moor):
George Aaronow: When I talk to the police I get nervous.
Ricky Roma: Yes. You know who doesn't?
George Aaronow: Who?
Ricky Roma: Thieves.
My guess is that the impact will be 50% of what it should be.....assuming that Dr. Cassidy (the other LE) does not change his life expectancies. And why should he feel the need to change. He doesn't check his past life expectancies for accuracy.
My question is: Does this mean that the premium escrow shortfall could be even worse than previously thought?
Seems like things could be going from bad to worse for fractionals with male insureds....and better hope your's is not a smoker.
Lonesome, come on, Smokers are a slam dunk!!! LOL. Then based upon the latest data on those that stop smoking, they can add even more years to their lives.
So what do you get when an LE on smoker, doesnt accomodate on that person then quitting. Where there's smoke, there's fire.