I have some food for thought, but first a question… why does JG Wentworth have a AAA rating for the securitization of structured settlement payments?
Upon Court approval, JG Wentworth pays structured settlement annuitants "cash now" in return for their structured settlement payment rights. In other words they receive the factored (sold or transferred) structured settlement payments from the structured settlement annuity issuer in lieu of the original annuitant. JG Wentworth then packages (securitizes) the cash flows out to Wall Street and other capital markets. Independent financial rating agencies rate the quality of the cash flow obligations for potential investors. A "AAA" rating is the highest rating by Standard & Poors and Fitch.
Could it be that the "paper", behind the structured settlement payment rights, is of high quality? The "paper" is only as strong as the financial soundness of the insurance companies backing the financial obligations that are being securitized (the future structured settlement payments). Even though JG Wentworth is not in the structured settlement industry, the AAA rating given to JG Wentworth’s securitizations supports the fact that structured settlements are a secure financial vehicle for long term financial security.
It also brings to mind the question of why JG Wentworth cannot offer a better "effective discount rate" to consumers selling their payment rights, when the risk of default in the annuity contracts underlying the structured settlement payment rights is sufficiently low to justify the AAA rating by the independent rating agency.
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