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October 2011, Issue 2 Priority Life Newsletter: October 17th Grandma’s Pumpkin Fudge Ingredients: 2 cups sugar ½ cup pureed cooked pumpkin ½ cup evaporated milk ¼ teaspoon cornstarch ¼ teaspoon pumpkin pie spice ¼ cup butter ½ teaspoon vanilla 1 cup chopped nuts Directions: 1. Combine sugar, pumpkin, milk, cornstarch and spice in a medium Imperial’s Raid Not Related to Life Settlements Busi- saucepan. Bring to a boil over ness September 29th, 2011 In response to an FBI raid that high, then reduce to a gentle sim- took place on September 27th, 2011, Imperial Holdings, mer. Cook until it forms a soft ball Inc.’s Board of Directors formed a special committee to when dropped in cold water, or conduct an independent investigation in connection with until reaches 236°F. Remove from the. (Continued on Page 2.) heat Pennsylvania Court Decision, Another Victory for Life 2. Add the nuts, butter, and va- Settlements. October 12, 2011 A federal court decision nilla; beat until mixture is creamy. in Pennsylvania has notched a win for life settlement in- vestors, deflating carriers’ argument...(Continued on Page 3. Pour into a buttered plate and 2.) allow to cool. Cut into small chunks and serve. Assets Under Management increase dramatically for Managing Partners Limited. October 12, 2011 The net asset value of the firm’s Traded Policies Fund has risen from $126.6m (£81m) in September 2010 to $176.9m (£113.1m) in September 2011 – an increase of nearly 40 per cent.(Contin- ued on page 3.) Top LE Providers Form Best Practices Focus Group October 1, 2011 Four life expectancy firms in the life This is a publicaton by Priority Life Holdings, settlement market formed a focus group to further refine Inc., located at 4040 Lake Washington Blvd. best practices to guide their profession (Continued on Suite305, Kirkland, WA 98033. For more in- Page 4.) formation please call (425) 952-6311. This report is for informational purposes only and is not a recommendation to trade securities in the companies mentioned in this newsletter. October 2011, Issue 1 Priority Life Newsletter: October 17th Imperial’s Raid Not Related to Life its Chairman and Chief Executive Settlements Business Officer, President and Chief Operating Of- ficer, its Chief Financial Officer and Chief Septermber 29th, 2011 Credit Officer, its Director of Finance and In response to an FBI raid that took Accounting, the members of its Board of place on September 27th, 2011, Imperial Directors who signed the Company’s reg- Holdings, Inc.’s Board of Directors formed istration statement, and the underwriters a special committee to conduct an inde- of the Company’s initial public offering al- pendent investigation in connection with leging certain violations of the Securities the U.S. Attorney’s Office for the District Act of 1933, as amended. The Company of New Hampshire’s investigation of the and its directors and officers named as Company’s life finance business (the “gov- defendants intend to vigorously defend ernment investigation”). The special com- against this claim. mittee is comprised of all of the Compa- ny’s independent directors and is chaired Pennsylvania Court Decision, Another by Walter M. Higgins III. The special com- Victory for Life Settlements. mittee has retained the law firm of Dewey & LeBoeuf LLP to assist it in carrying out October 11th, 2011 its investigation. Separately, the Compa- A federal court decision in ny has retained the law firm of Latham & Pennsylvania has notched a win for life Watkins LLP to represent the Company in settlement investors, deflating carriers’ the government investigation. The Com- argument against it being permissible for pany has been informed that the focus of an insured person to apply for a life settle- the government investigation concerns its ment with the express intent to sell it to a premium finance loan business and that third party. In a suit filed by Principal Life federal investigators are not looking into Insurance Co. against brothers Matthew the Company’s Structured Settlements and Mark DeRose, trustees of their moth- business segment or the Company’s ac- er’s family trust, Judge Christopher C. Con- tivities as a life settlement provider in its ner of the U.S. District Court for the Middle Life Finance business segment. District of Pennsylvania in Harrisburg ruled that under state statute, insurable interest Although the Company has not yet been is determined solely based on the relation- served with any complaint, the Company ship between the insured person and the has learned that on September 29, 2011, policy beneficiary. a putative securities class action com- plaint was filed in the Circuit Court of the State laws don’t refer to the “intent of the 15th Judicial Circuit in and for Palm Beach parties” at the time coverage begins, nor County, Florida entitled Martin J. Fuller v. does it require that the transfer of a policy Imperial Holdings, Inc., et al., against the must be in “good faith,” the judge wrote in Company, his Oct. 5 ruling. That finding on “intent” Page 2. October 2011, Issue 1 Priority Life Newsletter: October 17th is similar to recent rulings made in Dela- (£113.1m) in September 2011 – an in- ware State Supreme Court (PHL Variable crease of nearly 40 per cent. Mr. Leach Insurance Co. v. Price Dawe 2006 Insur- said in the same period the fund generat- ance Trust) and in the New York Court of ed $40.5m (£25.9m) of new subscriptions Appeals (Alice Kramer vs. Phoenix Life In- from investors in the UK, Europe and Asia. surance Co., Lincoln Life & Annuity Co. of He added that an extra 1 per cent com- New York). mission enhancement was still on offer to advisers – or investment enhancement for The fact that several courts have al- clients – on new investments into its Trad- ready rejected the “intent” argument could ed Policies Fund between 13 October and shape the outcome of other stranger-orig- 12 November. inated-life-insurance lawsuits filed by car- riers which claim that an insured person Russell Golledge, IFA with Essex- applied for a policy with a plan to sell it to based DG Financial Services, said: “I an investor in the secondary market, law- would agree that traded life policies are an yers say. “There aren’t any states that out- uncorrelated asset class and people can right address intent; all of the statutes are benefit from this within a diverse portfolio. within three or four degrees of everyone There are people who need the income else’s,” said Jule Rousseau, partner with stream from these and, likewise, there are Arent Fox LLP. “These decisions are really many sellers of these policies who need coming together to build a body of law.” the money rather than the policy. We have never really been asked about the ‘death Assets Under Management increase fund’ side of it, only about the safety of it dramatically for Managing Partners and the potential returns.” Limited. October 12, 2011 MPL’s Traded Policy Fund was Jeremy Leach, managing director of Man- launched in 2004 and by using prudent aging Partners Limited, said: “The govern- actuarial analysis to invest in a diversi- ment debt crises on both sides of the Atlan- fied portfolio of life settlements, it has de- tic have spooked investors. Commodities livered returns of 8-10% per annum. Life are being seen as a store of value but trad- settlements are US-issued, whole of life ed life policies offer steady, incremental assurance policies sold before the matu- returns irrespective of what is happening rity date to allow the original owner to en- in financial markets and that is highly at- joy some of the benefits during their life- tractive to investors.” time. MPL has also now created a Ringgit share class for the Malaysian market. The The net asset value of the firm’s Trad- longest-running share class in the fund, ed Policies Fund has risen from $126.6m the US dollar Institutional, was launched (£81m) in September 2010 to $176.9m on 30 June 2004 and has returned 83.98% net of charges over the seven years from launch to 1 August 2011. Page 3. October 2011, Issue 1 Priority Life Newsletter: October 17th Top LE Providers Form Best Practices It was not clear specifically what ar- Focus Group eas of best practices that the group wants to expand. Kevin Malone, president of un- October 1, 2011 derwriting services for EMSI, who sent Four life expectancy firms in the life the group’s statement to The Life Settle- settlement market formed a focus group ments Wire, said he could not elaborate at to further refine best practices to guide this time. Fasano said as an officer and their profession, although one major life board member of LISA, he didn’t believe expectancy firm, Fasano Associates, is it was appropriate to participate. He said not participating. A statement issued by LISA’s previous effort, which began two the group today said founding members years ago, was “responsive to everyone’s of Major Life Expectancy Providers (LEPr) concerns.” His committee put out best are Advanced Underwriting Solutions, AVS practices guidelines a year ago and then Underwriting, Examination Management published a common mortality table of ac- Services (EMSI), ISC Services and 21st tual-to-expected results of life expectancy Services. Advanced Underwriting merged providers at LISA’s spring conference ear- last week with EMSI. lier this year. The table was intended to The life expectancy firms were members help investors compare life expectancy of a previous Life Insurance Settlement estimates among various underwriters. Association (LISA) Best Practices Commit- He said four of six life expectancy under- tee, which was headed by Mike Fasano, writers supported the table at the time, president of Fasano Associates, based in adding that 21st Services dissented while Washington, D.C. ISC Services abstained originally but then changed its vote and dissented. The new group said it “recognized the need to further expand the scope and definition of ‘best practices’ by continuing this effort as an independent group.” It said all life expectancy providers in the market were invited to join. “The goal of the LEPr focus group is to provide a comprehen- sive and consistent set of best practices and performance standards to all longev- ity markets that may benefit from life ex- This is a publicaton by Priority Life Holdings, Inc., located at 4040 Lake Washington Blvd. pectancy and mortality information,” the Suite305, Kirkland, WA 98033. For more in- group said in a statement. “It is also the formation please call (425) 952-6311. This intent that all major life expectancy pro- report is for informational purposes only and viders participate and adhere to our best is not a recommendation to trade securities in practices and professional standards.” the companies mentioned in this newsletter. life settlement industry. Page 4.
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