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|Source: ||A.M. Best Company, Inc.|
Life Partners Holdings Inc. has confirmed the U.S. Securities and Exchange Commission is conducting an investigation into its life insurance settlement company subsidiary, Life Partners Inc.
A spokesperson with the SEC declined to comment. Attempts to speak with Life Partners Holdings (NASDAQ: LPHI) weren't successful.
Texas-based Life Partners said it's among the most active U.S. companies in the secondary market for life insurance, also known as life settlements.
In 2009, the SEC said it created a life settlements task force to examine emerging issues in the market. The issues to be examined included the role of securitizations, sales practices and disclosure issues (BestWire, Sept. 21. 2009).
The credit crunch was among the factors that hurt the U.S. life settlement market in 2008, a study by Conning Research & Consulting showed. Major underwriters of life expectancy also changed their methodologies, calling into question the accuracy and valuation of existing portfolios, a Conning analyst said in a statement at that time (BestWire. Oct. 12, 2009).
Last year, Life Partners was to pay $170,000 for failing to register its securities with the Virginia State Corporation Commission's division of securities and retail franchising. The commission requires disclosures be made to investors before investing in life, or related viatical, settlements in Virginia (BestWire, May 12, 2010).
Since it was incorporated in 1991, Life Partners said it's completed more than 127,000 transactions for more than 27,000 high net worth individuals and institutions related to the purchase of more than 6,400 policies totaling about $2.8 billion in face value.
The company facilitates these transactions and provides purchasing-agent services for about 12,000 individuals and institutions (BestWire, May 12, 2010).
(By Fran Matso Lysiak, senior associate editor, BestWeek: mailto:[email protected])