I recently read that some of the purchasers of securitizations of factoring companies, such as JG Wentworth and Peachtree Settlement Funding, are insurance companies.
While it the business of the insurance company's CFO how they choose to invest, one hopes the company recognizes the potential conflict that exists if the insurance company is directly, or through another subsidiary issuing structured settlement annuities. Even if one could argue that there is no conflict there could be a massive perception and confidence problem if it were to be discovered that on the one hand the insurer directly or indirectly sold structured settlement annuities to injured claimants and yet on the other hand invested in companies
Fortunately there is a conscience in the structured settlement industry. The short stay of the annuity issuer Security Life of Denver in the structured settlement industry was probably accelerated by the backlash that resulted from the discovery that its parent company,ING, participated in a 1997 securitization for JG Wentworth (see JG Wentworth security registration statement on SEC Edgar click here).
Imagine if it is discovered that you are the insurer that participated in the Peachtree Settlement Funding financing that gave rise to the 41.73% effective discount rate to Patricia Chambers? Perhaps it would be worthwhile to check the other side of the house to make sure.
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