Due Diligence Tools & Resources
Origination platforms and programs are relevant to policy value and market interest. It is important, therefore, to have an accurate understanding of the actual circumstances in which the policies in a portfolio were issued, regardless of whether those policies have been through a life settlement transaction.
MLA maintains a proprietary database of individuals, firms, and document forms associated with premium finance and beneficial interest programs. We are able, through the use of that database, and having reviewed thousands of premium financed policies, to quickly evaluate origination platforms and determine when policies represented to be “life settlements” were, in fact, issued as part of a different origination platform (such as program premium financing, stealth financing, or a beneficial interest program), and later transferred via a life settlement.
The Portfolio Snapshot captures the key attributes of the portfolio under review:
- Reports the concentrations of characteristics and demographics that impact risk and value
- Summarizes the distribution of policies across origination platforms and programs
- Identifies patterns in document deficiencies and diligence exceptions noted in the individual policy file reviews
- Highlights any policy that contains a major diligence exception.
Assessment and Diligence Report
The Policy Assessment and Diligence Report is a comprehensive summary of the document review and risk analysis performed on that policy. The scope and the detail reported in this report is customized to meet our client’s needs. Review modules include:
- Document Inventory and Integrity
- Data Consistency
- Substantive Risk Analysis
- Carrier policy defenses
- Insurable interest and STOLI Assessment
- Chain of title and seller authority/competencies review
- Identification and evaluation of potential third-party liens and interests
- Identification of potential reputational risks
- Medical Underwriting Reviews
- Fraud Review
- Risk Conclusions
- When possible, identify and implement remediation strategies for any issues
The ability to track the whereabouts and health condition of the insured, as well as periodically obtain updated medical records and life expectancy reports, is important to most investors. Maple Life Analytics performs an evaluation of the medical authorizations and agreements in the policy file to determine the age of the authorizations, whether the evaluations run to the benefit of future owners, and whether the insured (or designated contacts) are contractually obligated to cooperate with inquiries and to provide updated authorizations.
Deficiencies in the documentation necessary to conduct tracking can be resolved by a sophisticated servicer, but the process can be time-consuming and, in some cases, require the payment of additional compensation to insureds. Awareness of the status of tracking rights and options up front is therefore critical to the proper valuation and pricing of tertiary policies.