New Retirement Vehicle for Long-Term Care

Wm. Scott Page 1 7/31/14

THE ULTIMATE INVESTMENT VEHICLE - DRIVING RETURNS TO WALL STREET

WM. SCOTT PAGE, PRESIDENT & CEO THE LIFELINE PROGRAM®

Wm. Scott Page 2 7/31/14

THIS IS NOT YOUR FATHER’S INVESTMENT VEHICLE Life settlements are quickly becoming a mainstream planning vehicle, designed to be an integral part of estate plans and financial portfolios, which can create a need for large institutional investors to meet the growing demand by retiring baby boomers.

Wm. Scott Page 3 7/31/14

READ YOUR DRIVER’S MANUAL

A life settlement is the purchase of a life insurance policy by a third party (investor) from a policy owner (seller) for less than the death benefit of the policy but more than its surrender value. The U.S. Supreme Court held the sale of a life insurance policy to a third party a valid transaction in 1911 (Grigsby v. Russell), a right upheld numerous times since.

Policyholder Investor Insurance Carrier

Beneficial Rights

Cash Consideration

Premium Payments

Mortality Payment

Pro

vid

er

Wm. Scott Page 4 7/31/14

TURBO OR PINTO?

YOU CAN NOT LARGE NUMBER YOUR WAY OUT OF BAD UNDERWRITING. Aligning

incentives so that everyone has

‘skin in the game’, in addition to

knowing how to analyze and

assess mortality at the individual

policy level allow for impairment

risks to be recognized.

AIG, the largest holder of life

settlements in the world recently

announced another significant

impairment charge on its $15 billion

portfolio.

Wm. Scott Page 5 7/31/14

THE GUZZLERS

The ‘Used Car Salesmen’ Era of life settlements

²  STOLI (free insurance)

²  Other People’s Money

²  Ripe for bad business practices ²  Get rich quick schemes… Large investors

thought they had discovered alchemy. It’s not alchemy. It is hard work, experience, underwriting, etc.

Wm. Scott Page 6 7/31/14

$   $   $   $   $   $  

WILD-WILD-WEST: BEFORE GPS

²  No alignment of incentives ²  Box checking mortality

Providers (Box Checkers)

Capital Sources

Capital Sources 2

$   $   $   $   $   $   $   $   $   $   $   $   $   $   $   $   $   $  

LE’s

9 2 3 4 5 6 7 8 1

Broker

BGA

Agent

Insured

Wm. Scott Page 7 7/31/14

TODAY’S VERTICAL INTEGRATION MEANS ACCELERATION

²  Removing Middlemen ²  Proprietary life expectancy analysis ²  Stream Lining / Controlling the Transaction

$   $   $   $   $   $  

Providers Providers Providers

Advisor

$$ Provider/Investor

Broker

Insured

Capital Sources

Wm. Scott Page 8 7/31/14

THE HIGH PERFORMANCE VEHICLE

²  Inventory Supply ²  Financial Professionals ²  Asset Managers ²  Other Policy Sources

²  Life Expectancy Appraisals: Reliability/

Predictable/Verifiable

²  Investors as Partners

²  Having Skin in the Game ²  Shared Incentives

Wm. Scott Page 9 7/31/14

²  Better underwriting

²  Improved life expectancy projections

²  More predictable cash flow

²  Reliable Return Projections = High Teens

WHERE CAN THIS NEW & IMPROVED VEHICLE TAKE THE INSTITUTIONAL INVESTOR?

Wm. Scott Page 10 7/31/14

PUTTING INSTITUTIONAL INVESTORS IN THE DRIVERS SEAT

Settlement Market: Life Settlements are now regulated in 90% of the United States; legitimizing the industry for both consumers and investors.

Lower Extension Risk: Today companies that produce mortality tables have access to more data. Which means, underwriters with more experience, providing Life Expectancy estimates that are more accurate. Must be vetted! Add  photo  of  be+y  

standing  by  the  door  

Duration Matched Capital: Realistic Expectations. Alignment of capital and policy acquisition leads to better constructed portfolios.

Wm. Scott Page 11 7/31/14

²  BUILD IT AND BUY IT CORRECTLY

²  REQUIRED MAINTENANCE & SERVICE

²  EXPERIENCED SERVICE PROFESSIONALS

²  HANDS-ON DIAGNOSTICS

IN ORDER TO KEEP YOUR ENGINE RUNNING CLEAN…

Wm. Scott Page 12 7/31/14

AWARENESS IS GROWING

LIFE SETTLEMENTS ARE RECOGNIZED AS A VALUABLE FINANCIAL PLANNING TOOL BY…

Wm. Scott Page 13 7/31/14

KEYS TO SUCCESS / GET IN THE DRIVERS SEAT

²  FIND THE RIGHT PARTNER

²  MANAGE EXPECTATIONS

²  GET SKIN IN THE GAME

Wm. Scott Page 14 7/31/14

Wm. Scott Page 15 7/31/14

Wm. Scott Page 16 7/31/14