by Structured Settlement Watchdog
Some settlement professionals have expressed concern (and even outrage) when a structured settlement annuity issuer has offered (or contemplated offering) hardship commutations to its insureds, while seemingly in blissful ignorance of what has really going on.
The Wikipedia entry for Burt Kroner's Client First Settlement Funding cites a 1997 Wall Street article listing its buyers as John Hancock Mutual Life Insurance Co., Boston; SunAmerica, Los Angeles and Great-West Life & Annuity Insurance Co., Englewood, Colorado**. That financial institutions, such as life insurance companies, purchase structured settlement payments rights (generally through a securitization of a pool of structured settlement payments rights) is used as a "follow the leader" sales pitch by purveyors of structured settlement payment rights (using the scam label "secondary market annuities") to individual investors, including injury victims via settlement planners and retirees via financial advisers.
Some of the worst fat profit structured settlement factoring deals for sellers have been sold to financial institutions by originators such as Seneca One. For example in the 2014 Lauren Nesbitt case, the acquired structured settlement payments were assigned to a Philadelphia life insurer, Reliance Standard Life Insurance Company with an estimated $1 million profit spread [see my April 5, 2016 post Seneca One Hosed MetLife Structured Settlement Annuitant for $1MM Spread to Profit Unrelated Life Insurer]. Reliance Standard also sells annuities to consumers according to its website.
Which is better, a life insurance company offering a controlled low discount rate option for its insureds, or a "free for all" in which annuitants are exposed to fat profit deals that are then assigned to life insurance companies and other financial institutions?
- There is a need for multiple solutions
- There is the simple fact that there is a large block of structured settlement payment rights associated with life insurers who no longer offer structured settlement annuities. Those annuitants may need a liquidity option down the road.
- A competitive market is a good thing.
- Why shouldn't a life insurer take steps to protect its insureds?
- Is it ok for an insurer to buy structured settlement payment rights as long as it is not from its own insureds (about whom it has a vested interest in keeping happy?)
** note WSJ article references lottery payouts