Structured Settlements 4Real® Blog: Structured Settlements | Settlement Planning News and John Darer Reviews

Structured Settlement Factoring Company Fined in Securities Enforcement Action

by Structured Settlement Watchdog

According to a Consent Agreement and Order, in  or about January 2014 through August 2015,  at least one Pennsylvania individual (PA Individual), representing Woodbridge Structured Funding LLC and affiliates of Woodbridge, attempted to effect purchases or sales of securities issued by Woodbridge and affiliates of Woodbridge in Pennsylvania for compensation, and although the PA Individual was not an officer or employee of Woodbridge, the PA Individual was neither registered pursuant to Section 301 of the 1972 Act, 70 P.S. §1-301 nor exempt from registration as an agent for Woodbridge or affiliates of Woodbridge.

The Commonwealth of Pennsylvania, acting through the Department of Banking and Securities, Bureau of Securities Compliance and Examination conducted an investigation of the business practices of Woodbridge Structured Funding, LLC its affiliates and products and its officers, employees and agents. Based on the results of its investigation the Bureau concluded that Woodbridge operated in violation of the Pennsylvania Securities Act of 1972 , 70 P.S. §1-101 et seq. The violation was that Woodbridge employed at least one unregistered agent in violation of 70 P.S. §1-301(b). Woodbridge Structured Funding was fined $30,000.00

The Consent Order made clear that Woodbridge voluntarily entered into the Consent Order and that the Order is not intended to disqualify Woodbridge from any business that otherwise are qualified, licensed or permitted to perform under applicable law in Pennsylvania., The US, or any other state.

Source: Commonwealth of Pennsylvania Department of Banking an Securities Compliance and Examinations v Woodbridge Structured Funding, LLC  Docket 17-0008 (SEC-OSC)  April 24, 2017.

Pennsylvania Statutes Title 70 P.S. Securities § 1-301 § 1-301. Registration requirement

(b) It is unlawful for any broker-dealer or issuer to employ an agent to represent him in this State unless the agent is registered under this act.  The registration of an agent is not effective during any period when he is not associated with a specified broker-dealer registered under this act or a specified issuer.  No agent shall at any time represent more than one broker-dealer or issuer, except that where affiliated organizations are registered broker-dealers, an agent may represent one or more of such organizations.  When an agent begins or terminates an affiliation with a broker-dealer or issuer, or engages in activities which make him an agent, the agent as well as the broker-dealer or issuer shall promptly notify the department.  The department may adopt a temporary registration procedure to permit agents to change employers without suspension of their registrations hereunder.

In February 2016, Woodbridge Structured Funding launched a successor company Woodbridge Wealth. The company sells First Position Commercial Mortgagees, "Secondary Market Annuities" and Bridge Loan Funds.  What some call " Secondary Market Annuities" are not annuities.

Does the action of the Pennsylvania securities regulator open the door to greater regulation of how structured settlement derivatives are sold to investors? We'll have to wait and see.

Can Lawyers Get Rated Ages for Structured Attorney Fees?

by John Darer CLU ChFC MSSC RSP CLTC

Structured attorney fees are a tax deferral option available to personal injury lawyers and one of several attorney fee deferral options we offer in addition to more traditional attorney fee deferred compensation.  [ see Attorney Fee Deferral]

Are lawyers eligible for a rated age if he or she structuring attorney fees over their lifetime? 

A rated age is a pricing consideration for annuity funded structured attorney fees, where in the opinion of the life insurance company underwriter, the attorney has a shorter than normal life expectancy, and therefore less expensive pricing can be used based on the older rated age than the actual age of the attorney. 

Only Three Companies Give Rated Ages for Annuities Funding Structured Attorney Fees

American General Life Insurance Company and United States Life Insurance Company in the City of New York (US Life) will consider medical documentation outlining an attorney's current medical condition and current prescriptions to provide a rated age. American General and USLife are two on a shortlist of three structured annuity issuers at this time offering medical underwriting on trial lawyers. .

In addition to the two Corebridge subsidiaries, The Prudential Insurance Company of America will also consider medical documentation outlining an attorney's current medical condition and current prescriptions to provide a rated age

Structured Attorney Fees Can Address Longevity Risk

Longevity is a guessing game.  A lifetime structured settlement annuity funded structured attorney fee is an option for a lawyer to address longevity risk.  To the extent a trial lawyer structures a portion of his or her attorney fees over a lifetime, mortality risk can be shifted to the annuity issuer. It can be used as a financial backstop. Putting things into perspective on the topic of longevity,  Corebridge's New York underwriting company US Life has been in business since the 1850 and Prudential since 1875 which, taking into account shifts in mortality over time, is in the realm of three normal human life expectancies!

Rated Age May or May Not Give the Best Price

As with the pricing of structured settlement annuities for plaintiffs, even with a rated age the best pricing is not a given.  When calculating the cost of a particular stream of payments, the rated age is applied to the current rate series of the annuity issuer. Depending on the rated age and the rate series a company without a rated age could still be competitive.

If you would like to explore attorney fee deferral options or have any questions feel free to call me at 888-325-8640

 

Rated Ages Boost Yield on Lifetime Structured Settlements, Reduce Cost of NY Structured Judgments

by John Darer® CLU ChFC MSSC RSP CLTC

A rated age will be issued if the structured settlement annuity issuer believes the plaintiff has an impaired life expectancy.  The rated age is simply the age used to price the structured settlement annuity, or New York structured judgement annuity, as opposed to the actual age

Rated Age Structured Settlements Can Boost Your Potential Lifetime Annuity Payout

• From the plaintiff's perspective,  rated age will serve to boost the yield per settlement dollar allocated to a structured settlement.
• From a defendant or insurer's perspective,  a rated age will serve to reduce the cost of settlement offers for paying life contingent future damages.

How Does a Rated Age Help Reduce the Cost of A New York Structured Judgment?

A rated age could reduce the cost of a structured judgment in New York for a Defendant.  Certain aspects of a structured judgment, pursuant to CPLR 50A or CPLR 50B are life contingent, future medical expenses and future pain & suffering.  A rated age would most likely impact future medicals, which stretch many years into the future,  Under New York law, future pain & suffering is compressed into 8 years for Article 50-A and 10 years for Article 50-B structured judgments,  so it would need an exceptionally high rated age to have any impact.

High rated age structured settlements may hold an advantage over other vehicles and even a modest amount allocated from a large settlement, can effectively be used as an  "investment backstop" to assure a certain level of future income, even if everything else is lost.

Moreover payments from structured settlements are income tax-free pursuant to Sections 104(a)1 or Section 104(a)(2) and 130(c) of the Internal Revenue Code. A structured settlement offers contractual certainty as opposed to hypothetical investment possibility. A structured settlement blended with a settlement trust,such as a Settlement Preservation Trust or Special Needs Trust (Supplemental Needs Trust in New York state),in tandem, may offer a plaintiff a measure of liquidity, contractual guarantees, upside potential along with downside protection.

What is a Rated Age with a Structured Settlement Annuity?

by John Darer® CLU ChFC MSSC CeFT RSP CLTC

A rated age is an important component of a structured settlement pricing when there are life contingent payments* such as:

• Pricing out and funding a life care plan
• Providing a backstop to a special needs trust or to an investment strategy
• Funding a Structured Medicare Set Aside Arrangement (MSA) at the maximum discount.
• Funding the temporary life elements of a New York CPLR 50A or 50B structured judgment such as future pain and suffering, or future medicals in excess of statutory thresholds.
• Funding lifetime retirement benefits or any other lifetime payment stream
• Longevity Insurance

A Rated Age Puts a Younger Person Into an Older Person's Body For Structured Settlement Pricing Purposes

Structured settlements are one place where acting your age (or less) results in more expensive pricing! Your good habits result in you being rewarded with a longer life, but a more expensive annuity.

To obtain the best rated age, it is important to take the time to have the structured settlement consultant review medicals before they send them to the annuity issuer. This helps to eliminate redundant reports and may identify salient points for the underwriter's consideration.

Period certain payments and guaranteed lump sum payments are not affected by a rated age. Such payments are guaranteed to be paid whether or not the payee survives the entire payment schedule.

Image: Dreamstime.com

Benefits of Structured Settlements: Stable Income, Safety, Security and Guarantees

by John Darer® CLU ChFC MSSC RSP CLTC

Structured settlements appeal to people who want safety, security and guarantees provided through a financial core of stable income payments.  The tax benefits of structured settlements are almost secondary.

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Structured Settlement Term of The Day: Rated Age

by John Darer® CLU ChFC MSSC RSP CLTC

Faster than you can say " cheap Rolex" it appears that one structured settlement firm's value proposition is to "knock off" their clients

"To hold down the cost for the client the structured settlement broker will try to obtain ...an impaired life expectancy for the claimant". - from another Structured Settlement Company web site

Pick your poison...?

 

At 4structures.com, LLC we actually like to keep our clients: (1) alive; and (2) to live as long and productive lives as possible. If during the course of the settlement planning process we can obtain a rated age from a life insurance company that issues structured settlement annuities,  we will be in a position to offer a reduced cost solution to providing the needed future benefits. With a rated age, an improved structured settlement payout can be provided per settlement dollar allocated to a structured annuity which includes lifetime payments. A rated age does not affect structured settlement payments for a fixed period certain or guaranteed lump sum payments.

For more information please watch this video:

Note: This video, is an update from the original video that appeared with this post

Flood of "Unrequited" Structured Settlement Rated Age Requests Presents Insurer Challenge

by John Darer CLU ChFC MSSC CeFT RSP CLTC

Does the submission of huge volume of rated age requests to life insurance companies, with little to no expectation of submitting business to those companies, all the while taking a big fee for acting as the middleman, constitute theft of services?

A good rated age helps drive cost savings on Medicare Set Aside arrangements.

The explosion of the Medicare Set aside industry subset has pushed many insurers to the brink of capacity on rated age delivery, drastically affecting turnaround times on both workers compensation cases and liability cases (from a few hours to a few days in some cases!).

In a significant number of cases the life insurers have not seen any business in return. Let's call it "unrequited love".

Insurers have significant overhead costs associated with the medical underwriting and actuarial interplay that is required to deliver rated ages

The costs associated with potential heavy volumes of unrequited rated ages requests have got to be a consideration for insurers evaluating the profitability of entering the structured settlement annuity marketplace. While competition for business is a given on both the liability level and the workers comp level, there must be a reasonable chance to earn the business.

Allstate Life Insurance Company at first stopped medical underwriting on workers comp cases and subsequently stopped doing rated ages at all. Other companies have analyzed broker rated age requests by compiling good tracking data against business submitted and have actually begun a cull of the culprit brokers. 

Without a rated age the broker will find difficulty to compete in cases where there is a life contingency.

This includes  workers compensation MSAs. If the offending broker passes the baton on to another broker and that broker also "unrequited love" develops with the insurer, the problem continues to snowball.

Several years ago this author was approached by a well known firm in the workers comp industry offering to pay the author a significant retainer to obtain rated ages with an expected weekly volume in the hundreds.  This author turned the offer down.  Other broker(s) apparently have not. At the time, which coincided with Allstate's withdrawal from medical underwriting of annuities, this author expressed concerns about the industry capacity to handle the volume of requests as well as (perhaps more significantly) the possibility that accepting such money to essentially tie up the insurer with no assurance of business might eventually be construed as a "theft of services".  

Being able to receive rated ages is a privilege earned by licensed and appointed agents and brokers, It is not a right. 

Do Brokers, agents and those who (1) continuously assign large volumes of rated age requests without intention; or (2), ability to perform in the other direction and (3) charge a fee for what amounts to the pimping of the labor hours of someone else's employees to the detriment of other industry stakeholders (and customers of the life companies), deserve to have their morals questioned?

This author encourages the industry to come up with a long range solution that restores the efficiency of rated age delivery as a priority and addresses the MSA rated age.

Previous posts about Rated Age Abuse

More Information on Rated Ages

More Information About Medicare Set Aside

A song seems appropriate and relevant: (to the tune of the to Bonnie Raitt ballad  "I Can't Make You Love Me)

"We Can't Make You Love Us" -Ode of Medical Underwriter

Turn Down the lights, turn down the "bread"

Rated age abusers inside our heads

Lay down with us, tell us no lies

Just hold us close, please patronize, PLEASE PATRONIZE us

 

'Cause we can't make you love us if you won't...

You submit all those meds, business to follow you don't

Here in our cubes, in these final hours

We lay down our hearts and you abuse ours.

But you won't, no you won't

"Cause we can't make you love us if you won't

 

We'll cut you off, then you won't see

Rated ages no more, then we'll be free

Morning will come and we'll do what's right

Serve the greater good, a more worthy fight

A more worthy fight

 

Cause we can't make you love us if you won't...

You submit all those meds, business to follow  you don't

 

Rated Ages and Structured Annuities, Structured MSA and Structured Judgments - Part 2 Video Podcast

by John Darer CLU ChFC CSSC RSP

In second part of a two part series which explores rated ages and the challenges of impaired risk underwriting for structured settlement annuities John Darer's special guests include Rosemary Brindamour, Chief Medical underwriter for John Hancock Life Insurance Company (U.S.A.) and John Hancock Life Insurance Comapny of New York, and Robert Shavelle PhD of the Life Expectancy Project. The podcast was stimulated by the Ron Houben case in which the patient was initially diagnosed as being in a persistent vegetative state for many years but later was discovered to be in a locked in syndrome.

Link to Part 1 of our podcast series on Rated Ages and Structured Settlement Annuities, Structured MSA and Structured Judgments

More on Rated Age and Structured Settlements

Learn more about the Ron Houben, the Belgian man misdiagnosed for 23 years as being in a persistent vegetative state

Rated Ages and Stuctured Settlement Annuities, Structured MSA and Structured Judgments

In this video, John Darer and Mark Wahlstrom discuss the subject of structured settlement rated ages and impaired risk underwriting as it applies to structured settlements and structured judgments. Attorneys, judges, plaintiffs and claims adjusters can all benefit from the information in this podcast, which is the first of a two part series. How do you benefit from a rated age?

The Roth "Why Are They?" ...Rated Age Abuse of Insurers -2

by Structured Settlement Watchdog

On June 4, 2009 I discussed how the number of rated age requests going to structured annuity underwriting departments without legitimate intent for business to follow (on the rated age lives) is a blood gorged clot, clogging the structured settlement service artery and affecting everyone's ability to service business in the structured settlement industry. 

See Rated Age Abuse By Structured Settlement Brokers Under Investigation

Why is this Happening?

Ryan D. Roth, President of MedVal, has a perspective and brow beats American General Life Insurance Company on the Medicare Set Aside blog for "balking at issuing rate ages for cases they deem to be Medicare Set-Asides" and for a lack of understanding of the MSA Process.

Roth states that the problem is that MSAs are often prepared months before settlement offer and a broker has no way of knowing which cases will ultimately settle and/or settle with a structured settlement.  Roth suggests as a certainty that if a company refuses to produce a rated age that they have virtually no chance of getting the business when and if it does settle. He attacks "beleaguered" American General for leaving business on the table.

Oddly Roth beats his chest with the worn disgruntled settlement planner mantra that "American General behaves as though they are still the 800 pound gorilla of the structured settlement industry". Get over it dude! Frankly American General is entitled to make a business decision as to which market segment it wishes to focus, just like companies such as Aviva, Massachusetts Mutual, AEGON and others who decided to completely withdraw from writing new business in the market to focus on other lines of business. 

While Roth's company may indeed handle rated age requests ethically, others may not. It's the unethical SOB's who abuse the process that affect the rest of us, not just on the MSA side of things, but on the liability side too.

Showing a "sense of maturity" commensurate with his years of experience, Roth refers to losing an American General appointment as a minor annoyance at worst or a "badge of honor" at best. Judging by the aforementioned, with "friends" like Roth it's no wonder that companies want to leave the industry.

Instead of attacking American General, how about simply giving business to the markets that want the MSA business? Let market forces prevail

Furthermore,  how about working with those interested markets about increasing capacity and /or bringing in new markets? With one out of every five MSAs purportedly resulting in the MSA  funded with a structured annuity (according to Roth's company metric) Roth and his minions should be able to demonstrate how cost effective such business is.