Structured settlement sellers continue to exhibit poor shopping habits if the Imperial Holdings Q2 results are anything to go by. With a "weighted average purchase discount rates" of 18.3%, according to its press release, Imperial's business grew 73% from the same period in 2010.
Moreover, repeat business grew 283% over the same period in 2010 as people could not get enough of " a good deal". Imperial states that a whopping "38% of all transactions come from existing customers".
In the August 11, 2011 press release Antony Mitchell, Imperial Holding's Chairman and Chief Executive Officer, commented, ""Our Structured Settlements (factoring*) business segment delivered exceptionally strong transaction growth during the quarter originating 245 transactions, a 73% increase over the second quarter of 2010 and 51% over the first quarter of 2011. Our repeat business grew 283% over the second quarter of 2010 with 38% of all transactions now coming from existing customers." Mr. Mitchell concluded, "Overall, we are excited with the increased business activity since the IPO (initial public offering) and are encouraged by the opportunities we see in the third quarter."
Under the "lemonade stand theory" of free enterprise, there is nothing illegal about the rates that Imperial Holdings (or any other factoring company that charges high discount rates) is getting away with charging and nothing herein is intended to be construed that way. Free enterprise is business governed by the laws of supply and demand, not restrained by government interference, regulation or subsidy. As it stands today there is no government regulation or interference with advertising and solicitation of structured settlement factoring transactions. Time as shown that dealing with solicitation of structured settlement factoring transactions appear to be too small potatoes for the Federal Trade Commission. Generally, as long as a court approves the transactions as being in the best interest of the seller (and if applicable, their dependents the deal goes through. It is critical however. to understand that the judge is under no obligation to do your shopping.
The structured settlement watchdog observes that Boca Raton based Imperial Holdings has a "lemonade stand" and their "lemonade" happens to be very pricey. He opines that when it comes to raising cash from structured settlement payments, those that settle for high discount rates may be doing so through laziness or ignorance (or perhaps because they have such a good relationship with the rep) they don't mind paying "over the odds", particularly those who are repeat customers. If customers were to simply shop around the market, in each instance, they might discover superior rates to the rates that Imperial Holdings publishes as their "weighted average" and even use these to try and bargain with Imperial. A lower discount rate will bring a seller more cash and will mitigate the amount of their guaranteed future income that they need to destroy.
Consider these facts from the Imperial Holdings press release
Weighted average purchase discount rate 18.3%<——- weighted average discount rate Imperial charged to sellers like you to price out how much they were going to pay you for your structured settlement payments.
Weighted average sale discount rate 11.6% <—- this is the weighted average discount rate that THEY are charged to unload the cash flow they bought from you.
Get my drift, yet?
* Imperial purchases structured settlement payment rights through a process legally defined under the United States Internal Revenue Code as a "structured settlement factoring transaction".To the best of this author's knowledge they do not place structured settlement annuities for plaintiffs or defendants.
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