Rhonda Bentzen, author of the Ben Fun Blog and doyenne of structured settlement factoring, lambastes Allstate Life Insurance Company over perceived "factoring" practices and concerning the purported experience of one of her callers and suggests that "they should stick to what they know". Frankly, despite all the rumor spreading nobody has supplied me with any "smoking guns"of malfeasance and my own investigation leaves me questioning the motivation of these voices of Allstate criticism.
There have been a number of false rumors spread about what happens with the Allstate Life Insurance Company Advanced Funding Exchange Notice (AFEN rider), attached to all structured settlement annuities funded with Allstate (also extended to structured settlement annuitants prior to the introduction of the AFEN), which provides controlled liquidity to an Allstate Life Insurance Company, or Allstate Life Insurance Company of New York, structured settlement annuitant with unexpected needs who has exhausted all other opportunities.
Besides Bentzen's recent posting, Jack Meligan of Settlement Professionals, Inc, in West Linn Oregon (see "Water Buffaloes or Oz?") and one or two others have squawked that (1) Allstate purportedly doesn't give a competitive discount rate to annuitants who want to sell their structured settlement payment rights (2) That Allstate is as aggressively in the structured settlement factoring business as Symetra is with Clearscape Funding Corporation, and therefore they should be kicked out of the NSSTA, or that NSSTA is hypocritical for allowing Allstate to be a member, but not Benzten (3) will not do a deal unless a minimum $25,000 is needed and snoozing yada yada yadas...
Despite my prior investigation which revealed that Allstate Life Insurance Company's AFEN unit only sends out one letter per year informing annuitants of the existence of the AFEN rider, a usually reliable "informant" supposedly had "piles of letters" that would prove Allstate's alleged "bad intent. I told the informant that my investigation revealed that such letters are sent out to each annuitant annually and asked him or her if he or she could show me evidence that any two or more within the "pile of letters" were to the same person within a 12 month period. It turns out they couldn't and that all of these letters were to different Allstate Life annuitants. This is consistent with what I learned in my investigation.
Regarding the discount rate used by Allstate it's 11%. And if you are a factoring company and can beat it for an annuitant who really needs it and has no other alternatives , great for the annuitant. At the very least, members of the public should know that if you have to initiate a settlement transfer you can use Allstate for a "pick and roll" with other factoring companies. You know you will do 11% or better instead of the 19+% that one also sees. As for Bentzen she benefits if she blows them away.
As far as the $25,000 minimum, where's the beef? There are transaction costs with any factoring transaction and Allstate has decided it will not incur such costs on small likely repetitive deals which only serve to give the annuitant the belief that the annuity is some form of bank account. Again this is a competitive point for Bentzen and others so why complain?
As I stated in one of my prior posts Allstate will not do an AFEN deal when the annuity has been in force less than 2 years. We cannot say that of other companies that buy structured settlement payment rights. I am aware of a case that JG Wentworth was willing to engage the guardian of a minor annuitant on before the case was even funded as a structure.
An executive from Allstate told me on Friday that they may do one out of 60 AFEN deals. Bentzen says that they should stick to what they know. Clearly they are.
Structured Settlement Professionals, Settlement Planners can expect a release from Allstate Life Insurance Company, including an updated Question and Answer on the AFEN rider in the near future. If anyone has any concern I suggest that you stay in touch with your structured settlement professional, structured settlement broker or settlement planner for an update on this.
It is nice to see that someone supports Allstate in its attempts to provide fair and honest dealings in a somewhat shady market place.
Posted by: Joel Cohn | December 18, 2006 at 09:46 AM