by Structured Settlement Watchdog
Factored structured settlement payments are not annuities or insurance products
So, what is the rationale for a factoring origination company co-founded and directed by a successful licensed insurance agent of more than 23 years, to have marketed and continue to market factored structured settlement payment streams as structured settlement annuities to investors? Here is a CrowFly Google Ad that appeared on March 12, 2022:
HOW STATE INSURANCE LAWS DEFINE ANNUITY
New York Department of Financial Services
An annuity is a contract between a purchaser and an insurance company in which the purchaser agrees to make a lump sum payment or series of payments in return for regular disbursements, beginning either immediately (within 12 months) or at some future date.
Maryland Insurance Administration
Title 31 MARYLAND INSURANCE ADMINISTRATION Subtitle 09 LIFE INSURANCE AND ANNUITIES Chapter 12 Suitability in Annuity Transactions
B. Terms Defined:
(1) “Annuity” means an annuity that is an insurance product under State law that is individually solicited, whether the product is classified as an individual or group annuity
NATIONAL ASSOCIATION OF INSURANCE COMMISSIONERS (NAIC)
Buyer's Guide " An annuity is a contract with an insurance company"
Statutory Issue Paper No. 160, finalized April 6, 2019 p 6 footnote 1
"This guidance is specific to acquired structured settlement income streams (legal right to receive future payments from a structured settlement) and does not capture accounting and reporting guidance for the acquisition of any insurance product (e.g., life settlement, annuities, etc.).
New Footnote 2: Reporting entities that hold qualifying structured settlement payment rights shall report the security on Schedule BA either as an “any other class of asset” or as a “fixed or variable interest rate investment with underlying characteristics of other fixed income instruments” if the structured settlement payment right qualifies for reporting within that reporting line (e.g., NAIC designation).
An annuity is a contract between you and an insurance company in which the company promises to make periodic payments to you, starting immediately or at some future time. You buy an annuity either with a single payment or a series of payments called premiums.
Annuities are often products investors consider when they plan for retirement—so it pays to understand them.
An annuity is a contract between you and an insurance company that requires the insurer to make payments to you, either immediately or in the future. You buy an annuity by making either a single payment or a series of payments. Similarly, your payout may come either as one lump-sum payment or as a series of payments over time.
HOW CROWFLY DEFINED ANNUITY
Cites Merriam-Webster "The dictionary definition of "Annuity", from Merriam Webster, is: “a sum of money payable yearly or at other regular intervals” June 16, 2020 CrowFly blog " What is an Annuity Anyway?"
ProTip: Don't rely on "Aunt Merriam's" definition of annuity for your state insurance exam, or your investment.
And if you need further proof of why a question should be raised concerning their use of Aunt Merriam, simply look at this document retrieved from the New York Court system, among the sampling of cases where CrowFly factored structured settlement payments from a structured settlement placed by its co-Founder, Director and former CEO. See Court Records Prove CrowFly Factored Structured Settlements Written by John Bair Structured Settlements 4Real blog 1/15/2022
This link Download 89967_CROWFLY_LLC_V_ROBERT_DUNGAN_ET_AL_EXHIBIT_S__3. takes you to the qualified assignment executed when Robert Dungan's structured settlement was established. All you need to do is have a look at paragraph 4 to see that the annuitant has no ownership rights in the annuity. Paragraph 7 refers to " payment rights". This is structured settlement factoring 101 folks.
"At their core, Annuities are all contracts providing for the payment of specific amounts of money in the future. A consumer deposits a specific amount of money with an insurance company (the price of the annuity). The insurance company then invests that money in safe, predictable investments like bonds that will support specifically defined payments back to the consumer, while providing enough excess earnings for processing overhead and profit (as an incentive for the insurance company)." June 16, 2020 CrowFly blog " What is an Annuity Anyway?"
Pro Tip: What is the name of the payee on the check that CrowFly or any other buyer/seller of structured settlement payment rights asks you to write to pay for the investment?
"A note for buyers of structured settlement payment rights. CrowFly does not sell insurance products and should not be relied on for advice regarding tax implications of any products " Ibid.
However, CrowFly's Co-Founder, Director and former CEO is a licensed insurance agent in all 50 states. To wit "He frequently advises attorneys on the complexities of closing a settlement and is licensed in all 50 states" Injury Board Directory Listing for John Bair, Milestone Consulting, co-Founder and Director of CrowFly, retrieved February 22, 2022.
CrowFly has said this in a published pitches to prospective investors in Structured Settlement Payment Rights
"Consider a discounted annuity from crowfly(dot)com, as the yields of 4% to 5% are attractive and are from some of the most highly rated insurers. Buying a secondary market annuity also helps out another person who is in need or has fallen on tough times. There is a strong social impact of buying an annuity from someone else. " How to Buy an Annuity" April 20, 2020 Blog on Crowfly, LLC Legal Examiner. Bair is a Founder and Director of CrowFly, LLC
"Structured settlement annuities have yields as high as five percent and are backed by insurance companies generally rated Superior (A+) or better. Risk profiles are aligned with—or sometimes better than—treasuries or other fixed-income assets." Should an Annuity Be Part of Your Retirement Portfolio? CrowFly Blog July 19, 2021
"Structured settlement annuities are especially attractive to individuals headed into retirement who are looking for a great yield. Through CrowFly, they also come with no sales commission, which means investors buy the asset directly. What you see is what you get on our platform". Ibid.
"Historically, everyday investors did not have access to structured settlement payment streams available for purchase; those assets were only reserved for institutions. But CrowFly’s proprietary platform makes purchasing these assets possible for individuals as well. In addition, CrowFly aims to get both buyers and sellers the most money possible from the transaction by simplifying the transaction and reducing overhead costs". Ibid.
Here CrowFly lists "sample annuities available for purchase" Ibid.
"Taking some risk out of your portfolio after retirement makes sense. However, current interest rates make new annuities a tough sell. Structured settlement annuities are akin to high-yield instruments without as much risk". Ibid.
If you’re interested in joining ....platform and browsing structured settlement annuities available for purchase..." Ibid.
In John T. Bair's March 12, 2020 published claim, with his Director of CrowFly, LLC factoring origination hat on, " Can Recycled Structured Settlement Annuities Replace U.S. Treasuries in Your Portfolio?", Bair recklessly claimed "These assets are life insurance products, guaranteed by the issuer, and in most states by the National Organization of Life and Health Insurance Guaranty Associations (NOLHGA). Are these regulatory safety nets as good as Uncle Sam?"
Are we to assume that there is some special dispensation by the 50 states' insurance departments that to make it kosher to make that statement? That is if the states are even aware that such claims are being made?
In closing, neither CrowFly nor any other entity acting as an intermediary and/or selling structured settlement payment rights to investors should be representing the investment as an annuity because it is not.
Postscript March 18, 2022
Will this ongoing misrepresentation in the CrowFly Google ad sales pitch to investors catch up with CrowFly? On March 18, 2022, CrowFly can again be seen soliciting investors with "Purchase Settlement Annuities" and "Want to buy a structured settlement annuity?" despite admitting that it has no insurance license. It goes further to call them "CrowFly structured settlements". So now they issue annuities? I believe that requires a license too. And, their ad says"its' a Buyer's Market". Ironically the CrowFly misrepresentation appears above an ad for legitimate structured settlement annuities from MetLife, a company, which ironically contracts Milestone Consulting, a company with a common co-founder and director to CrowFly that operates out of the same address in Buffalo New York.