Why Life Settlement? Where Does It Fit in My Portfolio? Why Does APAC Region Invest?

10 June, 2024

Episode 7, with Stephane Haot

My name is Stephane. I was born in in Belgium. I’ve been privately investing for almost 25 years. Started in my early 20s. From the corporate side, I’ve been working with a certain number of institutions for 25 years, always in finance, helping investors and asset managers to basically maximize growth and also minimize risks. I did that for 11 years with Royal Bank of Canada, both in Europe and in Asia. I’ve been a partner from 2010 – 2013 with KPMG. I was leading a line of business that is very much involved into alternative investments. I was leading it across audit, tax and advisory, actually, and after that I privately invested into a global accounting and tax firm. I was also one of the executive board, board members, and we elbowed the firm in 2016. And this is basically when I got involved with Carlisle in terms of like increasing the awareness of the company, mostly in Asia and the awareness about life settlements. I’ve done that for six years now, but I have known Carlisle for the last 13 years through both the private investing side as well as basically my background at KPMG.

How and when did you get in touch with the asset class?
So I got in touch with life settlements in 2010 for the first time. This is when I was at KPMG. Basically one of the partners in my management team was the audit person, both for the management company and the funds of Carlisle. And that person really came to me and said, hey, you know, this looks interesting, you know, different. And I started to look into the asset class as such. And what I found really interesting is that it was very much the first time that an asset manager would manage this asset and hold it through regulated structures in Europe, in this case Luxembourg. But also they did it in a very transparent way. And I found that pretty unique, and this is very much when, you know, when I got to know about it.

Why did you personally invest in Life Settlements?
So I started investing into life settlements in 2014 or 2015. Basically after I left KPMG and I got to learn about that asset class and Carlisle. I invested with Carlisle, at least in some of the funds at the time. I suppose I’m more a kind of like conservative investor. I like to sleep at night with my investments. I like the compounding nature of the returns and as a general rule, I never wanted to have any, uh, overall negative return any single year since I invest. I won’t mention was I’ve been successful or not, but, uh, this has been for me like something extremely important. Always. Life settlement seemed like a really good fit.

Where does Life Settlement fit within your portfolio?
In my portfolio, Life settlement would be part of my core conservative investments, if you like. Um, so basically the ones that are supposed to generate consistent, stable returns. So this is where I like to, to put it next to other similar assets. In terms of the characteristics, I like the fact that life settlement brings a sort of like equity return profile to this base portfolio, but at the same time it has a bond type or high credit bond type of, of risk profile. And I think this is very unique. Also, life settlement brought some diversification, right, as a sort of like alternative credit type of investment. It brought diversification to the other assets I had. And then next to that core, I do have more like high risk, high volatility type of assets which, which are meant to beef up the whole performance. So this is basically how, you know, I’ve been structuring things for quite some time.

Why do your investors in APAC invest in the asset class?
Asia Pacific investors, I think, today represent like 25 to 30% of the AUM we manage. The investors are mostly high net worth individuals, ultra high net worth family offices and, um, and institutional investors. I think they’re pretty representative to the entire investor base in general through my contacts, what they have liked or what they what they’re seeking is, first of all, to preserve their equity, their capital, if not entirely, at least a big part, especially for the family offices. Next to this they certainly like these days the uncorrelated nature of the returns because the world has become extremely volatile. So this is something recurrent. They’re looking as well at minimizing the unknown performance variables. If you know what I mean. So they’re trying to really understand where the performance is coming from, which is something that can be achieved really well with, with life settlement, because it’s all basically mathematical and actuarial. And very important they’re looking for an asset manager which, which for sure has some, uh, good track record, but most importantly, an asset manager that can add value to what is being managed, because otherwise the investors would just invest directly. They would do it themselves. Right? They would not have to basically, uh, do it through a fund. So this has been extremely important. And of course, the fact that the returns are predictable is an add-on. And the fact that the market in the US, where the funds are buying is regulated brings also a lot of comfort to, to these investors. So it has proven to be a very relevant asset class for the investors in Asia Pacific and beyond.