Activity in Secondary and Tertiary Markets & Future Evolution

Episode 1 – Part 2, Jose Garcia, CEO

What has the activity been like in both the secondary and tertiary markets since COVID-19, and what is your view on the evolution of the industry in the future?
COVID-19 put a put a bit of a hamper on the life settlement space. I think there was a liquidity shortage in the marketplace. I think many alternative assets had significant drops in capital injections. We saw the market drop to about 60% of pre-pandemic levels, so that’s a significant 40% drop. We are now seeing the market return. We did have about a 5.5% increase in 2022 over 2021, which leads us to believe that the market found its sort of bottom in 2021. We hope that this is going to increase increased institutional investment activity. We have more capital in the industry. We are seeing a number of lenders coming into the live sediments space, which is usually a positive sign that there is capital injections being made.
And if that’s the case, I think the life settlement could sort of return to pre-pandemic levels, but also to continue in its path of evolution. We’ve seen a lot of different evolutionary structures. We saw swaps, we saw structured products. I think that not far away, we’re actually seeing now what could be a big publicly traded company coming into the space. The announcement was made late last year. And I think that the next logical evolutions are the security stations or permanent capital vehicles, which is something that we should see in the light sediment space in the future. Ultimately, because the asset base is so large, and we’re talking about the seniors in the United States, which is one of the largest demographic segments in the US, there’s a lot to build on. There’s a lot of prospective supply to build on. And I think the industry needs to play catch up on that.