The Fund has announced that it will be distributing approximately $102.2m (£68m, €93.9m) to those persons registered as holders of Run-Off shares at 1 December, 2015 in the EEA, Meteor and Way Life Settlement Funds.
“This amount is higher than was envisaged in September due to a number of recent policy maturities,” the fund said in a statement.
“In order to effect the distribution, a relevant portion of each holder’s Run-Off shares will be redeemed on 4 December 2015 using the 30 November 2015 valuations. The distribution amount will be paid in cash as soon as practicable… and no later than 8 January 2016,” it added.
Small benefit
The EEA Investors’ Group, an action group of investors in the Life Settlements Fund formed in October 2013, said it believes that the proposed distribution is far less beneficial to run-off investors than might at first appear.
“The Run-Off redemption payments confirmed by EEA for December 2015 are the first significant payments to be made to the stranded investors since the suspension."
“Especially when compared with the $900m (£600m) of losses expected to be incurred by investors compared with their original investment and expected returns,” it said.
The EEA Life Settlements Fund was launched in 2005 and suspended in November 2011 after the then UK regulator, the Financial Services Authority (FSA), said investments into traded life policies were “toxic” and possibly unsuitable for retail investors.
The fund’s directors agreed to sell about 188 of its US life insurance policies for £83.3m ($130m, €114m) in September in order to help fund the distribution to investors holding the Run-Off shares, who constitute around 60% of the shareholders in the fund.
Lost revenue concern
The EEA Investors’ Group, one of two action groups that have been formed since the suspension, said that while the short-term pay-outs would be very welcome for investors who have spent four years locked into the Fund, they were mostly possible only because of this sale which amounted to half the remaining policies in the EEA portfolio.
“The Run-Off redemption payments confirmed by EEA for December 2015 are the first significant payments to be made to the stranded investors since the suspension, and have been significantly boosted by the policy sale, rather than just relying on the maturity of the underlying life insurance policies,” said David Trinkwon, a director of Medley Systems, which is the coordinator of the EEA Investors’ Group.
