Interesting news this morning from Tranen Capital, a provider of alternative investment opportunities particularly around life settlements, who have issued a press release about their life settlements fund which they say is the first to offer investors protection against longevity risk.
They’ve launched a note program which allows investors to link protective investments such as longevity risk insurance to their life settlement policies investment. It’s an interesting way to allow investors to hedge the longevity risks associated with having a stake in a life settlements fund and should help to increase investor interest. The full press release follows below.
Tranen Capital Launches Tranen Capital Longevity Notes Ltd. — the First Life Settlements Fund to Offer Protection Against Longevity Risk
TORTOLA, British Virgin Islands, January 24, 2011
Tranen Capital Ltd. is pleased to announce the launch of a new Note Program, Tranen Capital Longevity Notes Ltd., offering investors the option to link protective investments to the Tranen Capital Growth Fund Ltd., a Fund that manages life settlement policies opportunistically, with several risk-protected structures. These structures will reduce investors’ risk by providing (i) A-rated protection against longevity risk (that of insureds living beyond their life expectancies, the single most important factor in determining the relative success of an investment in life settlements) through the purchase of longevity mitigation insurance that will pay the face amount of any policy held by the Fund that does not mature within the projected life expectancy, and/or (ii) A-rated principal protection through the purchase of a structured (zero-coupon term) note, which will return 100% of investors’ principal at the end of the term. In addition, (iii) investors may choose to hedge, or protect against, the investment risk by purchasing a bond to be used as collateral for an investment in the Growth Fund.
The focus of the Growth Fund will be to exploit opportunities in the Life Settlements market that many of the traditional players have ignored, such as policies issued by carriers having credit ratings outside the usual bounds, convertible term policies, distressed policies, as well as other opportunistic acquisitions.
“Investors, such as pension plans, endowments, family offices, and high net-worth individuals, have wanted access to the life settlements market, but have expressed the need to have additional protection measures in place. Tranen Capital brings a suite of protection measures that can be elected based on the risk appetite of each investor,” states Arthur Bowen, Managing Director at Tranen Capital.
About Tranen Capital: Tranen Capital manages the Tranen Capital Alternative Investment Fund, a non-correlated alternative investment fund started in July 2008 that trades in the Life Settlements market. This Fund, which has had positive performance since inception, represents investors from Asia, Europe and Central America, which include corporations, pension plans, banks, and high net-worth individuals.