STONE STREET FINANCIAL ANNOUNCES LAUNCH OF INNOVATIVE PRODUCT TO PROVIDE SENIORS WITH NEW FINANCIAL PLANNING OPTION
BETHESDA, Md., March 4, 2002 - Stone Street Financial, Inc. has launched its new financial product that will, for the first time, provide large numbers of senior citizens with the opportunity to sell their no longer needed life insurance policies at a price higher than the cash surrender value. It has been estimated that there is approximately $400 billion of in-force life insurance presently owned by or insuring the lives of individuals age 65 or older.
The product, called Liquidity for Life, will be available throughout the United States through Stone Street Financial’s proprietary distribution network of insurance agents. The launch of Liquidity for Life involves a number of “firsts”:
This is the first time that the capital markets have invested in life settlements, as they are known in the industry, and the first time this type of investment is designed to be securitized. According to Lawrence Brown, CEO of Stone Street Financial: “We have achieved a breakthrough with our financing commitments that will essentially provide us with an abundant availability of capital. We intend to securitize these life policies in the same way that mortgages are securitized.”
Stone Street’s financial partner, a major international banking firm, will initially provide capital to purchase in excess of $500 million in insurance policies from individuals and corporations — and then plans to package these policies into securities to be sold to institutional investors.
As a result of Stone Street’s capital commitment, a larger segment of the senior population will be able to consider, and take advantage of, this financial planning option. Lee Jundanian, Chairman of Stone Street Financial, Inc. stated “Because we have created the largest capital structure in the industry, we can purchase more policies, and we can purchase policies of higher amounts than has ever been seen.”
Why would senior citizens want to sell their life insurance policies? According to Brown, “many individuals past the age of 65 may no longer need or want their policies for several reasons. First, their children have grown and they may no longer need to worry about providing for them in case of parental death. Second, they may be on a fixed income and not want to continue paying the life insurance premiums. Third, they may need the money for more pressing needs such as long term health care, or Fourth, they may want to move their assets to more appropriate investments for their stage in life. Fifth, since the estate tax has been restructured, many policies that were bought primarily to avoid that tax are no longer needed. This is a financial planning option that arrives at the perfect moment in time.”
In addition, a business that has purchased life insurance on an executive who is no longer associated with the firm may welcome an opportunity to convert that policy to a liquid asset. “Stone Street expects corporate policy holders to account for a significant portion of its total business,” according to Tom Bond, former Texas Insurance Commissioner, who is advising Stone Street on insurance regulatory matters.
In the past, the purchase of life insurance policies from seniors has been a niche market supported by small investors, often individuals, purchasing a few policies at a time. The financial partnership Stone Street has forged, providing hundreds of millions of dollars, will enable seniors throughout the U.S. to consider this option in the normal course of their financial planning.
“This large scale financial commitment is a testament to the quality, reputation and integrity of Stone Street Financial’s management team and business practices,” said Bill Gradison, a former member of Congress from Ohio and past president of the Health Insurance Association of America, who is an advisor to Stone Street Financial, Inc. on issues affecting senior citizens. “Also, Citibank is the trustee. It will monitor all transactions through an escrow account to ensure that all sellers of policies receive their funds, and also to ensure the highest standards to protect the sellers’ interests,” Gradison continued.
Michael Nocera, a senior advisor to Stone Street, is a former president of New York Life International who led that company’s entry into emerging markets around the world. He pointed out that "life settlements represent a multi-billion dollar emerging domestic market which is projected to expand significantly in the next 5 – 10 years.”
“In the past, most seniors who no longer wanted to maintain their policies had only one choice,” Nocera noted: “Let them lapse and take the cash surrender value. Not many seniors are even aware there is now another option.”
Needs change. Discover why many seniors are selling their unneeded or unwanted life insurance policies for cash.