Current Practices

Current thinking in the Life Settlement market contends that a portfolio is diversified if the underwriting, disease groups, carriers and individual life expectancies of the component policies are well mixed.
Nevertheless, variations in mean-extension of life expectancy may cause the net value of the single policy and/or the financial instrument with underlying Life Settlements to decrease sharply.
As of today, numerous different portfolio valuation philosophies coexist and the recent release of new VBT 2008 induced major underwriters to lengthen their life-expectancy estimates, causing upheaval in the industry and leading major investors to pull back from subscriptions and remain on hold.