by John Darer CLU ChFC CSSC
Settlement consultants have an obligation to their clients and the industry to achieve and maintain the highest level of financial literacy. Those who also hold a Series 7 license and present themselves as "financial advisors" should undoubtedly be held to an even higher standard.
John S. Bat a settlement consultant with High Impact Structures, LLC, a firm which claims a business method patent pending for discounting collateral services in exchange for giving them structured settlement consideration, sent a blast email to a number of the nation's attorneys today and the claims made by Bat in that email are subject for discussion.
Download John Bat Email Blast Saying Annuities Backed By T Bonds <—-click here
"For the most part (structured settlements) offer the best rate of return around"
"Every annuity issued in this country must be backed dollar for dollar by a secure and liquid asset in that insurance company's General Account. The majority of assets backing up each annuity are the safest possible asset, U.S. Treasury Bonds. U.S. Treasury Bonds are so safe that they do not require a credit rating attached to them. They are above that."-
"The safest investment vehicle today"
quotes from an email blast sent by John S. Bat, High Impact Structured Settlements to several of the nation's trial lawyers on December 3, 2008. See above link.
Points for Discussion (related to the above quotes)
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General Account – All premiums are paid into an insurer's general account. Thus, buyers are subject to credit-risk exposure to the insurance company, which is low but not zero. Source : AM Best Glossary
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Majority means "greater than half". John S. Bat therefore implies that greater than 50% of insurer assets backing every annuity in the United States are backed by United States Treasury Bonds.
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At the close of business December 3, 2008 the 10 year U.S. bond was yielding 2.6% and the 30 year U.S. Treasury Bond was yielding 3.16%. If annuities pay 4% commission and have other underwriting cost what must the companies be investing in to pay significantly higher yields?
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With a structured settlement that carries a security interest, the security interest is in the assignee or annuity contract owner which pledges the annuity as collateral. There is no security interest in the specific United States Treasury Bonds in the reserves of the insurance company's general account, as for example there might be in the specific United States Treasury Bonds held in trust with a United States Treasury Bond Structured Settlement.
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An Insurance Annuity is backed by the full faith and credit of the life insurance company issuing the annuity.
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A U.S. Treasury Bond is backed by the full faith,credit and taxing power of the United States government.
7. And there is another Bat Blooper…Bat claims a copyright for 2007, an impossibility given the subject matter of the email blast.
Need I go on?
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