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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Spekulatius who wrote (40530)	12/11/2010 2:47:07 PM
From: Jurgis Bekepuris	Respond to of 78715

LPHI - I agree with your observations regarding regulatory risk and P/book. I also don't see any moat, except perhaps long experience in business + reputation (if it's positive). I don't see why insurance companies would not get into this business if it's so lucrative. Perhaps conflict of interest or unwillingness to appear shady? The company seems to be cheap in terms of E/EV, however the earnings have been on an upswing for last 2 years, so I wonder if this is sustainable. Especially since the revenues have not grown. I am afraid that this may be volatile business and if there's sparsity of policies to be bought cheap or competition develops, the earnings can dive down really fast. Regarding business, selling the policy for partial sum instead of letting it lapse and getting nothing might be positive ( finance.yahoo.com ). Sure, this is LPHI's press release, I don't know how much this is a good thing for average Joe. ;) (Personally, I don't carry life insurance and I think it's a bad investment, so I don't have experience with life insurance policies first hand).

To: Spekulatius who wrote (40530)	12/12/2010 8:59:48 AM
From: Mr.Gogo	Read Replies (1) \| Respond to of 78715

I kept researching today and the fact is that this is not an insurance company and it doesn't have the risk of an insurance company. And talking about the book value of an insurance company is very difficult IMO because we don't know the risks they have taken (example: AIG) unless we are very well informed insiders. So why would this be a shady business. It has been done for 100 years. Practically I don't see any risk for losses unless they run out of customers. I don't see that happening. Obviously they have a good network and reputation among the customers and the sellers. Wikipedia Life Settlement providers must be licensed in the state where the policy owner resides. Approximately 41 states have regulations in place regarding the sale of life insurance policies to third parties. This is from the annual report and wikipedia: "We act as a purchasing agent for life settlement purchasers. In performing these services, we identify, qualify and purchase policies on behalf of our clients that match their buying parameters and return expectations. Because we are obliged to work within these parameters, we must make offers that are competitive from the seller’s point of view, but still fit within the buying parameters of our clients." The Policy as Transferable Property Wikipedia The Supreme Court case of Grigsby v. Russell (1911) established the policyowner’s right to transfer an insurance policy. Justice Oliver Wendell Holmes noted in his opinion that life insurance possessed all the ordinary characteristics of property, and therefore represented an asset that a policyowner could transfer without limitation. Wrote Holmes, “Life insurance has become in our days one of the best recognized forms of investment and self-compelled saving.” This opinion placed the ownership rights in a life insurance policy on the same legal footing as more traditional investment property such as stocks and bonds. As with these other types of property, a life insurance policy could be transferred to another person at the discretion of the policyowner. This decision established a life insurance policy as transferable property that contains specific legal rights, including the right to: * Name the policy beneficiary * Change the beneficiary designation (unless subject to restrictions) * Assign the policy as collateral for a loan * Borrow against the policy * Sell the policy to another party A second milestone occurred in 2001 when The National Association of Insurance Commissioners (NAIC) took a crucial step by releasing the Viatical Settlements Model Act defining guidelines for avoiding fraud and ensuring sound business practices. Around this time, many of the life settlement providers that are prominent today began purchasing policies for their investment portfolio using institutional capital. The arrival of well-funded corporate entities transformed the settlement concept into a regulated wealth management tool for high-net-worth policyowners who no longer needed a given policy. Strong demand for life settlements policies is driving a rapid market expansion that continues today.

To: Spekulatius who wrote (40530)	5/13/2011 9:03:11 PM
From: Steve Felix	Read Replies (1) \| Respond to of 78715

Quite a call. Above $21 at the time, now sub $6. < a shady business and could easily get into the regulators crosshairs > 12:48PM Life Partners Holdings discloses on May 9, 2011, they received a "Wells notice" from the staff of the SEC stating that the staff will recommend that the SEC bring a civil injunctive action against them (LPHI) 6.58 -0.46 : "As Life Partners Holdings previously disclosed, the SEC has been investigating our life settlement business. We have cooperated in the SEC's investigation and have provided information and testimony. On May 9, 2011, we received a "Wells notice" from the staff of the SEC stating that the staff will recommend that the SEC bring a civil injunctive action against us and two of our directors and executive officers, Brian D. Pardo and R. Scott Peden, for possible violations of Section 17(a) of the Securities Act of 1933, Sections 10(b) and 13(a) of the Securities Exchange Act of 1934, and certain rules thereunder. We understand at present that the primary basis for the proposed civil action relates to our knowledge of and disclosures about the accuracy of the estimates of the life expectancies of settlors... We intend to respond by setting forth our positions and explaining why we believe an enforcement action is not warranted."