Wall Street Pursues Profit in Bundles of Life Insurance

Wall Street Pursues Profit in Bundles of Life Insurance

www.nytimes.com

After the mortgage business imploded last year, Wall Street investment banks began searching for another big idea to make money. They think they may have found one.

The bankers plan to buy “life settlements,” life insurance policies that ill and elderly people sell for cash — $400,000 for a $1 million policy, say, depending on the life expectancy of the insured person. Then they plan to “securitize” these policies, in Wall Street jargon, by packaging hundreds or thousands together into bonds.

(visit the link for the full news article)



Related AboveTopSecret.com Discussion Threads:
Insurers get preliminary OK for Treasury funds
Treasury Approved Billions to Be Given to Life Insurance Companies
The History Behind Insurance

A bit more....

... They will then resell those bonds to investors, like big pension funds, who will receive the payouts when people with the insurance die.

The earlier the policyholder dies, the bigger the return — though if people live longer than expected, investors could get poor returns or even lose money.

And away we go...

Another Wall Street financial 'brainstorm' like Derivatives, Credit Default Swaps, and Sub-Prime Mortgages.... Not to mention the NEW AND IMPROVED re-remics (re-securitization of real estate mortgage investment conduits).

Now they're going to gamble on the longevity of collected 'clientelle.' Having companies like Credit Suisse. play the "rating" game.

As one commenter said ..

“It’s bittersweet,” said James D. Cox, a professor of corporate and securities law at Duke University. “The sweet part is there are investors interested in exotic products created by underwriters who make large fees and rating agencies who then get paid to confer ratings. The bitter part is it’s a return to the good old days.”

Should we really be going down this road again?

Don't forget to check out

Insurers get preliminary OK for Treasury funds
www.abovetopsecret.com...

Treasury Approved Billions to Be Given to Life Insurance Companies
www.abovetopsecret.com...

The History Behind Insurance
www.abovetopsecret.com...

Frankly, this shows that the industry has not - and will not - change its profit paradigm... or at least the leaders of the financial industry are simply addicted to gambling....



www.nytimes.com
(visit the link for the full news article)

[edit on 6-9-2009 by Maxmars]