Wall Street Pursues Profit in Bundles of Life Insurance

Source: NY Times

After the mortgage business imploded last year, Wall Street investment banks began searching for another big idea to make money. They think they may have found one.

The bankers plan to buy “life settlements,” life insurance policies that ill and elderly people sell for cash — $400,000 for a $1 million policy, say, depending on the life expectancy of the insured person. Then they plan to “securitize” these policies, in Wall Street jargon, by packaging hundreds or thousands together into bonds. They will then resell those bonds to investors, like big pension funds, who will receive the payouts when people with the insurance die.

The earlier the policyholder dies, the bigger the return — though if people live longer than expected, investors could get poor returns or even lose money.

Either way, Wall Street would profit by pocketing sizable fees for creating the bonds, reselling them and subsequently trading them. But some who have studied life settlements warn that insurers might have to raise premiums in the short term if they end up having to pay out more death claims than they had anticipated.

Read more: http://www.nytimes.com/2009/09/06/business/06insurance.html?_r=1&hp

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Is this the next bubble? The next planned crisis?

Add that to the reverse mortgages which their already turning into bonds and you have real death panels.

No surprising though. Wall Street is the "giant vampire sucking on the face of humanity!

WHat are they going to bet on next, our bank accounts?

Corporations will commit the murder/manslaughter. That way, nobody goes to prison. They just pay a fine.

http://community.nytimes.com/comments/www.nytimes.com/2009/09/06/business/06insurance.html">Worth reading.

Ms. Anderson's article overlooks the most important party in these transactions - the person whose life is insured. For that person privacy considerations go out the window. Since the key to the expected ROR on the investment is how long people will live, investors will want as much information as possible about the health of each person insured in the pool. Furthermore, the pool would have to be fairly large in order for the law of averages to have any chance of working. That means the security holders would have to have some mechanism for tracking the obituary columns worldwide. The insured's family has no obligation or interest in keeping the insurance company informed about the status of the insured. That means additional scrutiny from someone, perhaps a giant database searching death records, hospitalizations etc.

Also, the insured suddenly has a lot of people very interested in their death. Life settlement companies will argue that the names of the insureds in a pool is confidential, but that is not realistic. Once again, investors, rating agencies, brokers etc. will all want to know a lot about the makeup of the pool, including who is in it and the status of thbeir health. In the hands of most investors the information would no dout be relatively safe. But certainly it is not hard to imagine unscrupulous investors, foreign interests for example, seeing a real opportunity to accelerate the ROR. A life settlement used properly can be a real boon to a family. But in the wrong hands, it can be an unexpected and major complication in the lives of the insureds in the pool.

There is little regulation of the life settlement industry, not unlike credit default swaps etc. I hope both securities and insurance regulators can find a way quickly to put this trend on hold while regulations are developed to make sure the interests of all parties are protected, primarily the lives of those who are insured.

http://community.nytimes.com/comments/www.nytimes.com/2009/09/06/business/06insurance.html

gee that sounds like it could be interrupted as insurance company death panels!.....they deny coverage so people die sooner...they make more money.... Where is all the outrage?!!! Sarah, Betsy.....anyone...Bueller??????

Real death panels.

Someone took that old scheme and wants to take this to a financial derivative level. Nobody has learned from their mistakes after they were bailed out by Uncle Sam. This literary picking the bones of the dead for every last copper/zinc cent.

Next we'll hear Congress suggesting we need to mandate life insurance, too. Anything to keep the monied interests fat and happy.

However they do it, it's sure to be done. There's money to be made. Soon they'll start to do this with younger, privately health-insured people. Peoples' own health insurers will have a stake in their deaths. Then, guess what? Health insurance goes "poof".

and incentive in our dieing, and as quickly as possible. Very scary.

HOW in the hell can they even thinkg about doing this shit? Is hell already unleashed on earth and working through Wall Street?
I mean damn!!!!!!111

If they kill us all off before the bubble bursts, then, voilla: no outrage.

I still don't understand why this thread was moved...

:puke: