J.G. Wentworth Institutional Investors Getting Fatter At Annuitants' Expense

by John Darer® CLU ChFC MSSC RSP CLTC

J.G. Wentworth announced today that it has completed a $212.5 million securitization of payment rights under structured settlement and fixed-annuity purchase contracts. The press release claims the following facts:

1. J.G. Wentworth was the first issuer to securitize structured settlement payment streams in the asset-backed markets in 1997.
2. Since then, the company has issued 22 securitizations backed by structured settlement and fixed-annuity receivables totaling nearly $3 billion.
3. So far in 2010, J.G. Wentworth has sponsored a total of three securitizations.

J.G. Wentworth Chief Investment Officer Stefano Sola is quoted in the release, “We believe that our continued access to the capital markets demonstrates our commitment to the securitization program by delivering a consistent flow of product to a growing and diversified investor pool. We are pleased with the execution of our latest securitization and glad that a growing pool of institutional investors recognize the strength of our program.”

J.G. Wentworth Chief Executive Officer David Miller, “This latest securitization demonstrated strong demand from our historical investor base while attracting new investors who, after conducting substantial due diligence, recognize and appreciate the underlying strength of the cash flows. The participation from new investors will continue to benefit this sector by driving continued liquidity both in purchasing these receivables from consumers and the secondary market for institutional investors.”

A question to be answered next week in Las Vegas by J.G. Wentworth and the factoring industry at large is WHAT ARE YOU ACTUALLY DOING FOR ANNUITANTS?

I know, I know, you are providing liquidity where it is needed. But that's old news.

But instead of , or along with , issuing securitizations to sell to institutional investors, WHY are you not doing a better job of developing a methodology, and developing strategic alliances with individuals or companies in the primary market who can use the same cash flows to solve the needs of other tort victims?

For example, if any of you factoring companies or intermediaries can give 5% on a cash flow for 5-7 years I'm interested in that because it means that I can provide an enhanced solution over that time segment, that blends a primary market annuity (or alternative periodic payment solution) around that (or dove tailing from that) at a far more efficient cost than starting it on day 31. 

Why don't WE, yes WE, figure out a win win solution so that the secondary market can save millions of dollars in advertising expenses, with the resulting savings used to help tort victims on both the front end AND the back end (if necessary)!