Structured Settlements 4Real® Blog: Structured Settlements | Settlement Planning News and Commentary

Houston is "Poach-E-Min City" in Harris County Structured Settlement Decision as Gazumper Wins Peachtree Poach

by Structured Settlement Watchdog

Houston is "Poach-E-Min City" in a Harris County Structured Settlement Decision as Gazumper RSL Funding poached a structured settlement factoring deal from Peachtree. The long standng standing structured settlement buyout poaching case, has ended with a judgment in favor of RSL Funding over JG Wentworth Originations LLC, Peachtree Settlement Funding and Settlement Funding LLC that supports poaching of structured settlement transfer cases in Texas  [ Cause No. 2006-23366]

What is Poaching in the Context of Structured Settlement Factoring?

Poaching is the undercutting of the price offered by a competing structured settlement factoring company  to the chagrin of the gazumped . The poached company tends to get all "Magoo-ey", because they found the annuitant and stand to lose possibly thousand of dollars invested in marketing, hiring counsel and filing fees only to be dumped at the last minute by a competing offer from a competitor, who has laid back stalking the court records for recent filings.  Some say its fair competition. Others are vehemently against it.

No "Sunny Side Up" for Settlement Funding, LLC and Peachtree Settlement Funding LLC

On March 6, 2019, Judge Rabeea Sultan Collier issued a final judgment in a home town decision that:

• Pursuant to the agreement of the parties' counsel entered on the record on February 20, 2019, Settlement Funding, LLC and Peachtree Settlement Funding LLC dismiss with prejudice their tortious interference with prospective relations claim against RSL Funding.
• Pursuant to the Court's November 21 Summary Judgment Order, the claims of Settlement Funding, LLC and Peachtree Settlement Funding LLC for tortious interference with existing contract were dismissed with prejudice.
• The Court, having considered the evidence, arguments, and applicable law, entered the following declaration under the Texas Declaratory Judgment Act ("TDJA"): RSL Funding has a right to make a competing offer to purchase the same structured settlement payment rights that are the subject of pending transfer agreements with the Peachtree Entities, prior to court approval of those transfer agreements.
• The Court, having considered the evidence, arguments, and applicable law, finds and orders that it is equitable and just for RSL Funding to recover its reasonable fees for its attorneys' necessary services in the amount of $651,463 for representation through trial. The Court enters judgment in RSL Funding's favor against the Peachtree Entities, jointly and severally, for $651,463.  Interest runs at 5%.
• The Court also assigned further costs to the losers, if they choose to appeal and lose.

Aviva Structured Settlements and the Athene Buyout of Aviva USA Business

by John Darer CLU ChFC CSSC RSP CLTC

The New York Department of Financial Services (DFS) agreed to bless Athene Holding Ltd.'s pending $1.55 billion acquisition of UK insurer Aviva PLC's  U.S. operations after a series of negotiations with Athene Annuity and Apollo representatives, the agency said August 14, 2013.  Athene is largely funded through an Apollo affiliate, and the Apollo manages money for the insurance company.

Apollo and Athene agreed to a set of new rules not typically required of insurers, the agency said. They include heightened capital standards to protect against potential losses and tougher disclosure requirements.

Recently,  New York DFS has highlighted a spike in private equity firms and other investment companies moving into the annuity business. This trend raised concerns since such firms typically have a more short-term oriented business model than traditional insurers, and the annuity business is focused on ensuring long-term security for policyholders

As part of the new set of rules, New York Department of Financial Services wanted higher capital standards because they serve as a buffer to absorb unexpected losses. Athene Life Insurance Company of New York agreed to capital levels of not less than 450 percent and a separate backstop account with $35 million to top off those funds if they fall below a certain level. The New York regulator will also scrutinize Athene's operations, dividends, investment strategies and potential reinsurance transactions. If Athene pursues a so-called material change in its operations, it will need written approval from the New York agency first. Athene will also now have to file quarterly reports detailing its capital position.

Link to New York DFS statement on the Athene acquisition of Aviva New York dated August 14, 2013.

Aviva and Structured Settlement Annuities

A substantial amount of structured settlement annuity business has been placed with Aviva life companies and their predecessors until Aviva ceased writing new structured settlement annuity business at the end of 2008. The company has roots going back 300 years. Through a series of mergers and renamings the following compnanies wrote structured settlement annuity business and current structured settlement annuitants may be receiving payments from Aviva that originally had structured settlements paid from the following life insurance companies.

• CU Life Insurance Company
• CU Life Insurance Company of New York
• CGU Life Insurance Company
• CGU Life Insurance Coompany of New York
• Aviva Life Insurance Company
• Aviva Life Insurance Company of New York

The following qualified assignment companies applied to

• CGU Annuity Service Corporation (later  Aviva Assignment Corporation)
• CGNU London Annuity Service Corporation  (later Aviva London Assignment Corporation)The obligations of certain structured settlements funded with CU Life annuities were backed by a  surety bond issued by Commerical Union Insurance Company.

The obligations of certain obligations assigned to Aviva London Assignment Corp had a Capital Management Agreement (CMA) with Aviva UK based affiliate, CGU International Insurance.  As stated therein the agreement ensures that Aviva London Assignment will have the funds necessary to satisfy all Structured Settlement obligation to make funds available to Aviva London Assignment Corp is absolute, unconditional and continuing.

What is the impact of the Athene acquistion of Aviva on the structured settlement portfolio?

I telephoned Aviva customer service on August 22, 2013 and the response, as I expected, was that what is in the contracts will be honored. I specifically asked about the surety bonds and the Capital Maintenance Agreement obligations with those structured settlements where periodic payment obligations were assigned to Aviva London Assignment Corporation and was informed that these would still apply.

Structured settlement annuitants who wish to confirm for themselves or who have any concerns whatsoever, should contact their structured settlement consultant or Aviva directly at their toll-free number, which is 888-285-4332

Who is Athene Annuity? 

Athene annuity is the number two provider of fixed indexed annuties in the United States when the Aviva deal closes.

The roots to Athene Annuity go back to 1905, when Liberty Life Insurance Company was started by one "Hipp"  guy,  Here is a helpful timeline from the Athene website. The company, which previously acquired former structured settlement annuity issuer Presidential Life Insurance Company,  offers some innovative retirement annuity products. At the time of publication Athene Annuity held a B++ (good) rating from A.M. Best and a BBB+(Good) from Fitch ratings.

 

 

 

 

RSL Funding Writes "We Plead Guilty As Charged" as Appellate Judges Make Peachtree "Smoothie" Over

by Structured Settlement Watchdog

A Texas appeals dissolved and reversed a temporary injunction against structured settlement purchasing company RSL Funding LLC that had prevented RSL from competing with Peachtree Settlement Funding over clients throughout the United States.

The injunction was originally issued in a dispute in which Peachtree Settlement Funding alleged that RSL gazumped it by offering Peachtree's customers more money than Peachtree was willing to offer for their structured settlement payments. RSL had allegedly obtained the client information via public records of court filings. RSL readily admitted to offering customers more money for their annuity payments than the now J.G. Wentworth affiliate Peachtree Settlement Funding was offering. “We plead guilty as charged!” commented RSL senior account executive Rudy Ramirez, in a February 7, 2012 press release.

Initially Peachtree convinced a Houston trial judge that RSL’s gazumping violated Texas law. At Peachtree’s request, the state court judge, granted a nationwide injunction against RSL, preventing it from offering a better deal to sellers of annuities. Texas legal commentators were not surprised when the Texas appellate court disagreed with the former trial judge and reversed the trial court in a recent opinion noting that Peachtree’s actions were “an unreasonable restraint on trade” (1) and anti-competitive. Peachtree and RSL are competitors in the secondary market for structured settlement payment rights. Each is in the business of buying future income streams from settlement recipients in exchange for a cash lump sum.

In what appears to be an important win for structured settlement annuitants who find themselves in need of liquidity down the road and cannot tap other sources, the Texas appellate court upheld the annuity recipient's right to shop around and continue seeking competitive offers, apparently allowing competitors to figuratively, "cut in during the middle of a dance" . And in the instant decision, the Texas appellate court upheld the right of RSL Funding (and other factoring companies for that matter) to make competitive offers to prospective sellers of structured settlements.

The structured settlement watchdog has written about opportunitistic low hanging fruit grabbing in the factoring industry when factoring companies come in with a high teens above market discount rates and serve to prey on sellers of structured settlement payment rights who do not shop around due to desperation or ignorance. That is fine under the lemonade stand metaphor for the free market system. Charge what they will the consumer buys the most expensive cup because it is the first, the most prominent, or he/she is too damn thirsty to walk any further to see if there is a better price. The other side of this story is that when it comes to the business of factoring in the State of Texas, "it really ain't over, until it's over"

Footnote:
1.The full text of the 14th Court of Appeals opinion can be found at www.leagle.com/xmlResult.aspx?page=11&xmldoc=In%20TXCO%20... . See also the full text of the opinion at Rapid Settlements, Ltd v. Settlement Funding, LLC, 2012 Tex. App. LEXIS 156 (Tex. App. Houston 14th Dist. Jan. 10, 2012).

 

Further Reading

 

Court Validated" Gazumping Of Imperial Structured Settlements is Victory For Sellers, RSL Funding July 1, 2011

 

RSL Funding Leaves a "Scent Mark" on Imperial Structured Settlements' Fire Hydrant

by Structured Settlement Watchdog

RSL Funding has "lifted its leg" on the Imperial Holdings and Peachtree Settlement Funding fire hydrants, with a press release announcing an office opening that is tantamount to leaving a "scent mark" on the latter two cash now pushers' Boca Raton Florida territory. The press release specifically mentions that the office opening is in view of the recent troubles faced by its two competitors.

According to published sources, "markings with scent not only indicate ownership, but also act as a canine bulletin board. You could call it doggy Pee-Mail. Scent communication left by urine tells other dogs who has been there before them, how long ago the mark was left, and other important information".

The scent of urine tends to fade as soon as it contacts the air. That’s why dogs constantly freshen up with new markings on top or nearby the original. That appears to be the case here.  Last October, in "RSL Funding Bitch Slaps Imperial" we provided commentary on the original "scent mark". Sources say that "some pups become so enthusiastic, they seem intent on throwing their hip out of joint to "baptize" everything they can reach"  That's our "Stewie"!  

One thing that needs to be corrected about the recent RSL press release. Imperial Holdings and Peachtree Settlement Funding are mischaracterized as "structured settlement companies". They are, in fact, factoring companies, or, as I "affectionately" refer to them, "cash now pushers". They do not create structured settlements, they acquire structured settlement payment rights from annuitants who sell those rights to them, subject to a state court approval process.

 

Victory For Structured Settlement Sellers, RSL Funding, as "Court Validated" Gazumping Of Imperial Structured Settlements Strands

by John Darer CLU ChFC CSSC RSP

RSL Funding claims victory in the tortious interference battle between it and competing factoring company Imperial Structured Settlements in a Harris County Texas Court.  Imperial sued RSL claiming it had a selling structured settlement annuitant under contract, before RSL gazumped them with a better offer  (see: Washington Square Financial LLC (DBA Imperial Structured Settlements) v RSL Funding LLC Cause 201049166  Judge : Jeff Shadwick)

Order Granting RSL's Summary Judgment v Imperial structured Settlements on June 14, 2011 Download Order Granting RSL Summary Judgment Over Imperial Structured Settlements  . A copy of the relevant Court documents can be purchased here

According to RSL, Imperial argued that its proposed transfer agreement that had not yet been approved by a court is an enforceable contract with its customer, so that any competitor offering more money to the customer is subject to a claim for "tortious interference with an existing contract," when in fact, Imperial has no legal right to prohibit competition.  RSL contended that a consumer deserves the best price and that the rights under the contact do not vest until the judge actually approves the deal.

In the "home town" win for RSL, the Texas court upheld the annuity recipient's right to continue seeking competitive offers until an enforceable contract with the customer is in place. As a matter of law, no structured settlement (factoring) company can bind a customer to a transfer agreement until an application for transfer of structured settlement payment rights has been approved by the courts and not until an order of transfer has been entered by a court. Until these contractual prerequisites are met, customers are welcome (and encouraged) to continue looking for offers that serve their best interests.

Other Court structured settlement protection acts such as California, which this author understands to be the largest market for structured settlement factoring allow the payee to back out at any time right up until the court hearing.

Why shouldn't a structured settlement annuitant be able to shop around like "their mama" told them?

 

The RSL press releases continually cite to the Structured Settlement Institute, which the press release states is " a not-for-profit organization established to educate sellers of structured settlements regarding fair and equitable industry practices"

On the other hand the "About Us" section of the website for The Structured Settlement Institute say SSI "works with you and your long-term insurance based payments, to help you gain liquidity fast from the right company." I

It goes on to say...

"In a time of settlement buyers resorting to lumping your annuities or settlements in a large group in order to sell off  (sic), The Structured Settlement Institute alone (sic). The Structured Settlement Institute is a principal that uses their own resources  (i.e. $$$) and money to close the transaction. We don’t sell your annuity or settlement, instead we do what is responsible. We maintain our position of responsibility for the entirety of your transaction. Which will guarantee the court’s rulings are upheld and your money is distributed as agreed. The Structured Settlement Institute is bonded for all transactions"

According to Whois records with GoDaddy that were just updated June 14, 2011 (the day of the Court victory that RSL Funding claims against Imperial) the site is registered to Stewart Feldman, a Houston lawyer who is in charge at RSL. While I'm not suggesting any wrong doing, I think it would be behoove the Structured Settlement Institute to be a little more transparent.

Who runs it? Who are its directors? Who funds it? Is there an IRS form 990 that someone can supply to this author?

Cash Now Pushers Claim to Give " Annuity Quotes"

by Structured Settlement Watchdog

Several structured settlement cash now pushers continue to misrepresent that they give structured "annuity quotes". In doing so, they are making the false implication that they are licensed insurance agents or brokers.Download Structured annuity quote - Google Search.pdf 3-21-2011

Woodbridge Structured Funding, LLC (nee Woodbridge Investments), and RSL Funding are the focus of today's story. Woodbridge Structured Funding, LLC even offers a $500 gas card as a kickback, for a completed transaction. If Woodbridge truly were able to deliver an "annuity quote" as a licensed insurance agent or broker,  the payment of such inducement (in exchange for a completed transaction) would likely be considered illegal under state insurance laws.  

Meanwhile, as legislators  and regulators fiddle, "Rome IS burning" and Woodbridge announces record sales quarter after quarter. Legislative and regulatory inaction has allowed these sort of inducements to go on for years.

 So again I ask state insurance commissioners, attorneys general in the respective states, lawmakers in the respective states, and members of Congress who "the leaders of the structured settlement industry" were hobnobbing with at the AAPD gala in Washington DC last week, WHAT THE HECK ARE YOU GOING TO DO ABOUT THIS?

This is not an indictment of the entire factoring industry (many of whom provide a valuable service), it is an indictment of the wanton and reckless actions of a few significant advertisers who have been allowed to thrive due to legislative and regulatory ignorance or impotence (I'll let you decide which applies).

 

Structured Settlement Factoring Leaders by Estimated Transactions

JG Wentworth and Peachtree dominate the structured settlement factoring industry representing close to 70% of the industry's structured settlement factoring transactions each year, according to a survey posted on the Settlement Quotes, LLC website. It is no coincidence that the leading two companies invest substantial amount of money on saturation advertising campaigns that are memorable but universally annoying.

1. J.G. Wentworth 5,000
2. Peachtree 3,500
3. Strategic Capital 500
4. Stone Street Capital 400
5. Imperial Holdings 400
6. Structured Asset Funding/123 Lump Sum 300
7. Prosperity Partners 300
8. RSL Funding 300
9. Settlement Capital 200
10. Woodbridge Structured Funding, LLC 200
11. Novation Capital/ Encore 200
12. Patriot Funding 200
13. CBC Settlement Funding 150
14. Singer Asset Finance 150
15. Annuity Transfers, Ltd. 140
16. Client First  120
17. Fairfield Funding 120
18. Olive Branch Funding 120

Settlement Quotes' survey does not explain how estimates were derived. Factoring companies who believe that these estimates are not accurate are free to contact this author with adjusted numbers. The  Settlement Quotes report includes contact information, links to each company's website as well as a description of key personnel and Better Business Bureau record. If you are a "yelper", Settlement Quotes also gives you the ability for those who have patronized these companies to write a review.

Setting aside the obvious, that J.G. Wentworth and Peachtree have made spectacular returns on their advertising dollars, one wonders how many of the 70% who have embraced "Peachworth" are actually shopping around for the best deal?  Structured settlement sellers may be tempted to jump at the first offer for their structured settlement payments, when it might be a wise and strategic move to preserve more  capital with another factoring company and/or negotiate with one of the big advertisers.

 

Structured Settlement Cash Now Pushers Sue Competitors To Stick The Fork Deeper Into Desperate Consumers?

 by Structured Settlement Watchdog®

For the second time in a few weeks, RSL Funding has issued a press release accusing a competing buyer of structured settlement payment rights of unsavory business practices. 

"Stewie"

 "Stewie" Feldman  and Co. say that  "In an effort to dissuade more competitive companies like RSL Funding from competing with it, Peachtree has more recently resorted to suing its competitors to at least temporarily maintain Peachtree’s high interest rates. Lawyers for Peachtree were asked for comment but did not return our calls".  Last week a similar accusation was made about Imperial Holdings, whose executive team is composed by a number of Peachtree alumni.

 

This IS something to be taken seriously. It has become apparent that this is not random behavior.The structured settlement watchdog is aware of a civil complaint filed in another case which alleges that yet another cash now pusher attempts to stretch model structured settlement protection act provisions, which state that say one cannot force an annuity issuer to split annuity payments, as justification for the cash now pusher servicer to "fleece" the consumer for a discount rate that is less competitive than they could obtain in the open market.

Like the cameras that brought the reality of war to American living rooms during the Vietnam War, raising public anti-war sentiment, it is critical that the cash now pushers' behavior be exposed and documented.  It just does not seem right that some poor bastard needs to be shackled to an uncompetitive cash now pusher.

Peachtree is invited to justify. This author will be in Las Vegas at the NASP meeting on November 12, 2010.

RSL Funding "Bitch Slaps" Imperial Holdings, LLC in Latest Press Release

by Structured Settlement Watchdog®

There's trouble in the structured settlement factoring industry "sandbox" as RSL Funding issued a press release on October 13, 2010,  referring to the Imperial Holdings,LLC Initial Public Offering as a "Repeat of the Dot.com bust" and stated the stock was "overvalued".

RSL accuses Imperial Holdings of "seeking to cash out at the peak" and publishing a prospectus (for the IPO) that " ignores that rates have drastically fallen since 2008"

Then, in a blog post dated October 18, 2010, RSL Funding observes that Imperial stated in its SEC filing, that “at certain points, we (they) were unable to get any debt financing”. RSL Funding goes on to state that this "alone should worry investors, but the company’s inflated value, based on interest rates from 2008 and 2009, should make attracting backers difficult.

RSL goes on to state that "Imperial, formerly known as Washington Square Financial, LLC, has been filing lawsuits against competitors who offer lower rates to Imperial customers for their structured settlements"

 The structured settlement watchdog even observes some humor in the RSL press release where it states:

"It is well known among structured settlement factoring companies, as those businesses acquiring structured settlements are known, that discount rates charged to customers this year have fallen drastically, making Imperial's business model a dinosaur of sorts". The thing is that as of October 23, 2010, at 11:30am EDT, the link to "Imperial's business model goes to the RSL Funding website!

  Dinosaur business "model"?

 

Imperial Holdings is invited to explain the "lawsuits against competitors who offer lower interest rates to Imperial customers for their structured settlements"

Footnotes:

Urban Dictionary Definition of "Bitch Slap"

Imperial SS Company Exec Testifies Discount Rates "Averaging 18-20% a Year"- Report

by John Darer

RSL Funding proboscis, "Stewie" Feldman has a simple message for Imperial Funding's Structured Settlement buying operation:

  It's about time the structured settlement factoring industry started asking questions of itself, particularly with the abject failure of states and the federal government to regulate and enforce advertising and business practices.

As we previously reported, the registration statement that Imperial Holdings, Inc. filed with the SEC for its Initial Public Offering stated that its discount rates for the first portion of 2010 were averaging 16.3 to 17%. RSL now corroborates our assertion that these are among the highest in the industry.  These discount rates are the rates charged to tort victims who sell their structured settlement payment rights. Assuming you know the "effective discount rate"  (which accounts for all other costs associated with the transaction) you can then compare the rate to the cost of other sources of capital that may be available to you. RSL then reports that a senior executive of Imperial testified that rates were "averaging 18-20% ( even higher than reported on the S1 and S1-A!)

In an October 2, 2010 press release, RSL Funding reports:

"When questioned in a pending legal proceeding as to how Imperial can offer such little value to its customers, Imperial's Senior Vice President, (Deborah) Benaim, explained that Imperial spends upwards of $5,000,000.00 in marketing costs a year, including almost $4,000,000.00 on television advertising. According to an industry source, it is well known that customers that respond to television ads tend not to competitively shop, resulting in these customers receiving among the lowest prices paid. According to Benaim and the government filing, One industry analyst figures that a customer not bearing this cost each customer, on average, bears $14,000.00 in marketing costs.would receive on the average a full one-third more money up-front" .  (underlines for emphasis).

ABSOLUTELY CHILLING!

In a recent court decision, the New York Supreme Court wrote that Imperial's interest rates were "neither fair nor reasonable taking into account the actual amount [the customer] would be receiving. [The customer] would be receiving less than 1/3rd of the discounted present value . . . after legal fees and administrative fees".

Given the animus and pending litigation between Rapid Settlements and Peachtree (where "they know how to hammer customers" and as the report suggests a number of the Imperial staff came from) some could, at first blush, dismiss the report for potential bias. But the message IS important and relevant.

"Stewie" says:

"Smart customers shop rates. Many judges question customers to ensure that they are getting a fair deal by requiring evidence of competitive shopping,"

Judges in some New York jurisdictions require evidence of competitive shopping on infants compromise cases prior to approving a structured settlement. So why not require a reasonable amount of competitive shopping when someone is seeking Court approval to liquidate them. Given the time sensitivity of those in need of cash, in my opinion this will require a more efficient market place and elevate the factoring exchange concept. An electronic factoring exchange simplifies the competitive bidding process.

RSL Funding opines that the new Consumer Financial Protection Bureau will have a dramatic, adverse impact on the structured settlement factoring industry.