Discount rates in the U.S. life settlement market have increased in recent years, reflecting a shift in supply-demand dynamics. Higher interest rates have made traditional fixed-income investments more attractive, while inflation, higher living costs and economic uncertainty appear to have prompted more policyholders to sell their insurance policies in the secondary market. This combination has led to more attractive pricing for life insurance policies, creating a compelling opportunity for active managers such as Ress Life Investments.
To capitalize on this opportunity, Ress Life Investments has agreed to sell the majority of its existing portfolio at a price corresponding to net asset value. The divestment will be executed in quarterly tranches through the end of Q3 2026, with proceeds reinvested in newly acquired policies offering higher expected returns. “The background to the transaction is the current market opportunity of selectively buying polices at higher internal rates of return,” explains Hanna Persson, Head of Sales at Ress Capital. “Discount rates in the life settlement market have increased over the last two to three years and we believe this trend will continue in the coming 15 months.”
“The background to the transaction is the current market opportunity of selectively buying polices at higher internal rates of return.”
Hanna Persson, Head of Sales at Ress Capital.
The higher-rate environment and ongoing economic uncertainty have contributed to this repricing. While increased yields have made life settlements relatively less attractive compared to other asset classes, the corresponding pressure on policyholders – through inflation and rising living costs – has driven more people to sell their policies. This increase in supply has pushed discount rates higher, enabling buyers to secure more attractive entry points. “As an active manager, we saw an opportunity to protect the current portfolio’s value while freeing up capital to reinvest at more attractive return levels,” Persson adds.
“As an active manager, we saw an opportunity to protect the current portfolio’s value while freeing up capital to reinvest at more attractive return levels.”
Hanna Persson, Head of Sales at Ress Capital.
Ress Life Investments, which targets a net annual return of 7 percent in U.S. dollars, has delivered an annualized return of 5.9 percent over both the past five and ten years. With the portfolio rotation strategy now underway, the fund aims to gradually raise its target return to 8-10 percent in U.S. dollars. “The predefined sale structure allows us to reinvest proceeds as each tranche is completed, avoiding the need to maintain a large liquidity buffer,” says Persson.
Ress Life Investments is an alternative investment fund specializing in life settlements –acquiring life insurance policies from policyholders who no longer want or need them. Managed by a five-person investment team, the fund seeks to exploit pricing inefficiencies in the life settlement market, aiming to build a diversified, positively skewed, and uncorrelated return stream by aggregating individual policies with attractive risk-reward profiles.
