The quality of life expectancy estimates is one key consideration for an investor in life settlements. The predominant metric for assessing this quality is the so-called A-to-E ratio, which relies on a comparison of the actual to the predicted number of deaths. In this article, we explain key issues with this metric: In the short run, it is subject to estimation uncertainty for small and moderately sized portfolios; and, more critically, in the long run, it converges to 100% even if the underwriting is systematically biased. As an alternative, we propose and discuss a set of new metrics based on the difference in (temporary) life expectancies. We examine the underwriting quality of a leading U.S. life expectancy provider based on this new methodology. To view the full [...]

This month we are publishing Actual to Expected performance results for our Structured Settlement underwriting business.  The results are good, with an Actual to Expected ratio of 98% for the 2012 through 2016 period, assuming IBNR of 7%.  Without IBNR, the A to E ratio would be 91%. But the real story here is not the results, but the learning curve behind the results.  When we started underwriting structured settlements in 2007, our initial results were terrible.  We were reviewing files with Attending Physician Statements (APSs) and Paramedical Exams, and our life expectancies were far too long.  We learned that underwriting tools that worked for life insurance and life settlement underwriting do not work in the secondary market for structured settlements.  The demographic of people wanting to convert their structured settlement annuity [...]

Fasano Associates President, Mike Fasano, discusses the valuable new medical information that will be available from wearable devices, as well as possible underwriting applications for Big Data analyses. If you are unable to view this link, please contact us at techsupport@fasanoassociates.com or 202-457-8188.

Fasano Associates, a premier life expectancy provider in the life settlement space, has developed a new proprietary mortality table and underwriting methodology for the Life Contingent – Structured Settlement business. View the video below; Fasano Associates President, Michael Fasano, demonstrates and explains the ground breaking underwriting enhancements that have improved life expectancy predictions in the growing structured settlement market. If you are unable to view this link, please contact us at techsupport@fasanoassociates.com or 202-457-8188.