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LE*SETTLEWARE™ allows a provider to competitively and successfully acquire life settlement contracts, while gaining a better understanding of how the cash flows will emerge and why.
LIFE SETTLEMENT PRICING: There are three industry recognized life settlement pricing methodologies (Deterministic, Probabilistic, and Stochastic). The Lewis & Ellis Microsoft Excel based life settlement pricing model (LE*SETTLEWARE™) calculates all three; whereby, these calculations serve as a valuable resource when bidding on the acquisition of a life settlement contract. In the beginning, most providers used the Deterministic approach, which consistently yields inefficient lower purchase prices. LE*SETTLEWARE™ provides a life settlement acquirer a distinct competitive advantage by allowing for a much purer mathematical approach to pricing.
LIFE EXPECTANCY CALCULATION: In the world of life settlements, the life expectancy (LE) calculation forms the initial and most important input item in pricing a contract. The original industry norm for measuring an LE was called the Lloyd's Method. The Lloyd's method determines the LE in months, whereby 85% of the specifically rated class would be deceased by. Next was the advent of the 50% Method, which is the same as the Lloyd's, where the 85% is replaced with 50%. It is also a median measure of life expectancy. A third, the Actuarial Method, is the mean measure of life expectancy, and is real close to the 50% measure. This is now the most prevalent used in the industry today. It does not matter which of the three methods is employed as long as you know which it is. LE*SETTLEWARE™ handles all three LE calculation inputs.
MINIMUM PREMIUM CALCULATION: LE*SETTLEWARE™ actuarially calculates the minimum premiums required to keep an acquired life settlement contract inforce. This minimizes early premium outlays, thereby either greatly increasing the internal rate of return (IRR) for a given purchase price or significantly increasing the purchase price needed to achieve a desired IRR. Either way, we have created yet another competitive advantage, since many providers are still basing their pricing on planned projected premiums.
FINANCIAL PROJECTING AND PLANNING: LE*SETTLEWARE™ allows a provider to competitively and successfully acquire life settlement contracts, while gaining a better understanding of how the cash flows will emerge and why. Financial projecting and planning becomes more of a science and less guesswork. The basic principles behind LE*SETTLEWARE™ are the same that actuaries have been using for years in pricing life insurance and annuities.
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