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October 09, 2019

Factored Structured Settlement Payment Streams "Safer Than United States Treasuries"?

by Structured Settlement Watchdog

A structured settlement factoring origination firm associated with a New York structured settlement primary market agency seem to suggest to investors, that factored structured settlement payment streams have the same risk profile as United States Treasury Bonds.  Is this an Ice to Eskimos moment, or is it grounded in reality?

6 Big Reasons Why Factored Structured Settlement Payment Streams May Not Have The Degree of Safety Suggested by the Picture Below

  1. A factored structured settlement payment stream is not backed by the full faith and credit of the United States of America, which has been "in business" independently for 243 years
  2. Factored structured settlement payment streams are not annuities or insurance products according to the National Association of Insurance Commissioners.
  3. Investments in factored structured settlement payment streams bear transactional risk to the investor that could result in a loss of money.  There are documented cases where investors in such instruments (which again, ARE NOT annuities) have lost money.
  4. Factored structured settlement payment streams are very likely not covered by State Insurance Guaranty Funds in the event of the insolvency and liquidation of the obligor.  More and more states are amending their state guaranty laws to remove any doubt. 
  5. Factored structured settlement payments streams are not liquid like equities, corporate or treasury bonds.
  6. 12 month CDs are available for up to 2.3% at time of posting. That's more than double what is represented in the chart below. On further inspection the company that published the chart cites a source that ends with April 2016 rates.  30 Year Treasury's have lower yields. The cited link is to current yields which differ. The Equities chart cited a 50 year average ending in 2009,  a decade years prior to the publication of the chart. Are we looking at  Comparison by Discombobulation" or  " Apples to " Kumquats"?

The picture below is a screen shot of part of a web page used by the firm in question, to solicit investors in factored structured settlement payments streams.

Recycked Structured Settlements vs Other Investments Risk Profile to Be Questioned
Comparison by Discombobulation? 
Do you think this is a Reasonable and Accurate Depiction of Risk?

On September 28, 2019 I published a blog post in which we found that the structured settlement calculator on the site in question suggested a 6.9%-7.5% discount rate on two hypothetical deals to the seller. Thus one can deduce based on the test cases we ran, that the margins are between 1.9-3.4 % on the low side and  2.5%-4% on the high side.

Don't be baffled or bamboozled by impressive looking charts.  Factored structured settlement payment streams are what they are.

 

 

Posted at 03:28 PM in Bethesda Structured Settlements, Buffalo Structured Settlement Cash Now, Chevy Chase Structured Settlements, Factored Structured Settlement Payment Streams, Risks of Structured Settlement Investments, Structured Settlement Derivatives, Structured Settlement Factoring News, Structured Settlement Investments, Structured Settlement Watchdog® |

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Guide to Structured Settlements 2024

  • What is a Structured Settlement? What You Need to Know
    Structured settlements and what you need to know about them including a helpful introductory video featuring A.M. Best Client Recommended Structured Settlement Expert and Registered Settlement Planner John Darer of 4structures.com LLC
  • How Do Structured Settlements Work? How Structured Settlements Work
    How structured settlements work, including 4structures.com LLC's super helpful structured settlement flow chart/diagram showing how structured settlements fit in on the spectrum of settlement planning solutions.
  • Rated Ages and Structured Settlement Cost
    Rated Ages for Structured Settlement Annuities present advantages to all parties. Shift the mortality risk to a life insurance company whose business it it is to assess mortality risk to price its life insurance and annuities. Rated ages boost your structured settlement annuity benefit per premium dollar, or your yield on lifetime payments. Rated ages help to reduce the cost of funding a Medicare Set Aside arrangement where a Structured MSA, is being used { WCMSA LMSA or NFMSA].
  • Top Structured Settlement Annuity Companies 2024
    Which life insurance companies issue structured settlement annuities in 2024? A list of current structured annuity issuers, the location of their home offices and their financial ratings from A.M. Best, Moodys, Fitch, Standard & Poors and/or other Tier1 NAIC ratings, with links to their websites and other useful information. Last updated June 14, 2024
  • Treasury Funded Structured Settlements
    Treasury Funded Structured Settlements are a settlement option for the most conservative using the OTHER permissible qualified funding asset under IRC 130(d), United States Treasury Bonds in addition to, or instead of, structured settlement annuities. Treasury Funded Structured Settlements can also be used to fund installment sales, also known as structured sales and other non qualified structured settlements.
  • Compare Structured Settlement IRR to Other Settlement Alternatives
    Use the Taxable Equivalent Yield chart to help compare the Internal Rate of Return (IRR) of a structured settlement to other alternative or complementary investments. Need help with the chart? Call 4structures.com® LLC at 888-325-8640
  • Structured Settlement Payments | Types of Structured Settlements 2024
    Ways You Can Structure Your Settlement Payments in 2024. With a structured settlement you can have more than one type of payment in a single contract. Different types of structured settlement payments can be customized and combined to meet your needs on a stand-alone basis, or in conjunction with other financial products. Diversify your structured settlement, if you wish, by funding with more than one annuity issuer, with treasury funded structured settlements, index linked structured settlement payments and market based structured .
  • Structured Attorney Fees for Tax Deferral for Attorney Contingency Fees
    Structured attorney fees is a financial strategy that offers a unique way to defer taxes for lawyers and law firms. Lawyers CAN structure their legal fees even if the plaintiff doesn't structure their settlement. There are multiple ways to structure your attorney fees, such as capped or uncapped index linked structured settlement annuities where payments are adjusted based on upside changes in the S&P 500 or another index, Trial Lawyers may also use a special deferred pay/deferred compensation arrangement, if market based returns returns are desired with no cap. Plan NOW for year end! Put structured attorney fee expert John Darer® on your settlement planning team in 2024.
  • Structured Settlement Annuity Company Customer Service Phone Numbers
    Receiving structured settlement payments from your own structured settlement or inherited structured settlement? You'll like this huge time saver. Click the title for a link to a comprehensive list of customer service telephone numbers that includes both current AND former structured settlement annuity issuers and reinsurers. If you have simple bank or beneficiary changes, or if the insurance company that issued the structured annuity has merged, sold or spun off its block of structured annuity business (e.g. Aviva, Allstate, Transamerica, AEGON, GE Capital, Liberty, CNA, Confederation Life), oran annuity issuer has changed its name and you're trying to track them down. Here you go! The list is regularly updated. Last updated May 20, 2024.
  • Structured Settlement Quote Lock-Ins | What You Need To Know
    What does a Structured Settlement Lock-In Mean? How do plaintiffs, defendants and insurers benefit from a structured settlement quote lock in when finalizing a settlement? How does the defendant/insurer/court benefit from using a structured settlement lock-in? Where to be careful when using structured settlement lock ins.
  • What Are Structured Settlement Annuities?
    Structured settlement annuities are annuities that can provide one or more customized annuity payment streams in a single contract. Read about structured settlement annuities here.
  • History of Structured Settlements
    Tracing the roots of structured settlements history from 1918, when Congress exempted damages for personal injury or sickness from income tax, to the establishment of structured settlements as a core personal injury settlement planning tool to the present day.
  • What Are Market Based Structured Settlements?
    Market based structured settlements are an alternative or supplementary structured settlement solution for the plaintiff, attorney or law firm that: 1. Can afford to take some market risk 2. Have discretionary settlement dollars. Claimants and attorneys alike may find that market-based structured settlements provide the opportunity to receive tax-free income, or tax-deferred income, while enjoying growth potential.
  • iStructure |Uncapped Fixed Index Structured Settlement Annuity
    iStructure is an innovative game changing fixed index structured settlement annuity for plaintiffs or attorneys. with an intermediate to long term horizon
  • Structured Settlements and Longevity Risk| What Are the Odds?
    Do your financial resources give you enough road, or will the road run out before you do? A structured settlement annuity helps mitigate the risk of outliving your savings, no matter how long you live. A structured settlement can include one or more customized payment streams and types.

Qualified Settlement Funds

  • What is a Qualified Settlement Fund?
    Qualified Settlement Funds | What You Need to Know
  • Firmwide Qualified Settlement Funds Debunked
    Firmwide qualified settlement funds have been heavily promoted to trial lawyers, but have been debunked in a detailed analysis in a July 2022 legal opinion a tax partner at the law firm of Faegre Drinker Biddle & Reath, LLP. Trial lawyers and firms who have established Firmwide QSFs or coinsidering establishing a Firmwide QSF should read the analysis as part of their evaluation.

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