Carlisle Management Company, a Luxembourg headquartered global alternatives investment firm, has announced the successful raising of $290 million for its latest life insurance-linked settlements fund.
The new closed-end life settlements focused investment fund, named the Luxembourg Life Fund: Absolute Return Fund II FCP RAIF, beat a $250 million target thanks to attracting a diverse group of institutional investors across Europe, the Middle East, Asia, and the U.S.
Carlisle said that its “robust independent sourcing model” has enabled the firm to have access to unique life settlements opportunities in niche and underserved tertiary market segments.
Access to life insurance policies is critical for those building life settlements portfolios, so origination is key and a differentiator for investment fund managers targeting the sector.
The new Absolute Return Fund II is expected to capitalise on Carlisle’s sourcing advantage going forwards, while offering investors limited liquidity risks due to its closed-end structure, and without any cash flow disruptions to its valuation, as Carlisle says assets are valued at cost and income only recognised when realised
“We are extremely proud to have closed our Absolute Return Fund II above target, particularly during a period of significant global economic distress,” explained Oleksandra Polishchuk, Carlisle’s Chief Marketing Officer. “This achievement is not only a testament to investors’ confidence in Carlisle and its diligence processes, but also the fundamental importance and advantages of the life settlements industry, which is driven by an isolated mortality variable and thus has limited correlation to the state of traditional financial markets.”
Carlisle expects its Absolute Return Fund I and new Absolute Return Fund II to deliver investors near-zero correlation to financial markets, with liquidity provided as originally projected.
“Today’s milestone builds upon decades of Carlisle’s industry experience and complete access to the life settlement markets,” Jose Garcia, CEO of Carlisle added. “Smart institutional capital is recognizing the benefit of entering the market now, which has been demonstrated through ARF II’s robust capital raise. We expect the current temporary lack of liquidity to soften the tertiary markets, creating sourcing opportunities. Further, we believe that closed-end life settlement funds represent a solid hedge, particularly within the context of the ongoing COVID-19 pandemic.”
The life settlements fund includes several hundred life insurance policies, with deployment of the $290 million raised having commenced in late 2020
The portfolios is diversified across multiple parameters, including face value, insurance carrier, age, mortality profile, carrier rating, and gender, among others.
All life insurance policies featured in the fund have been sourced at predicted return levels in line with Carlisle’s expectations, the manager said, adding that it believes that gross expected returns at purchase have the potential to exceed the fund’s original return targets.
Carlisle Management is focused on the life settlements area of the insurance-linked securities (ILS) market and its funds are backed by institutional clients including pension funds and family offices.