the Brochure

Investment Product Guide
Life
Settlements
Headquartered in Hamilton Bermuda,
Lexington Settlements, Ltd. is an
innovative enterprise whose initiative
promotes life settlements as a nontraditional instrument for investment
diversification and portfolio completion.
H AM I LTO N
For over a decade, Lexington Settlements
carries out a solid acquisition program
in the secondary market of life insurance
in the United States and has satisfied
investors in over 20 countries.
| HO W IT WO R KS
This emerging asset class is broadening
investment opportunities for investors
worldwide. It’s a simple concept with
powerful results.
TH E L E X I NG TO N S E RI E S
Soaring
above the
market
Revolutionizing alternative financial
investments, life settlements is
uncorrelated to the performance of
financial markets. This asset class is not
directly affected by the stock market,
bond market or price of commodities.
Strategically, life settlement investments
provides a prime place to diversify any
investment portfolio.
| I N V E S T M E N T S A F E G UARDS
| IN V E S T M E N T P R OC ES S
For more than a decade, Lexington
Settlements Ltd. continues to help
investors outperform traditional
markets through life settlements.
INVESTING WITH LEXINGTON SETTLEMENTS
BE N E F ITS
Investing in
Life Settlements
Attractive returns in U.S. Dollars
Investment performance is not affected
by changes of the stock market
Policies issued by the most solid U.S. life
insurance companies
Easy and expeditious transfer of funds
Benefits secured under U.S. laws and
regulations
Rescindable contract and investment
refund
A Life Settlement is a legal and regulated financial
mechanism through which an investor purchases benefit
rights in a Life Insurance Policy. Upon maturity, the
investor will receive the original amount invested plus
a pre-determined yield derived from death benefit
proceeds.
Created by Lexington Settlements, the Lexington
Series is a streamlined life settlement investment
product designed for investors seeking transparency, above
average yields and confidentiality while maintaining the highest
levels of investment safeguards.
It’s Simple
The investor decides how much to invest and the term of
investment. Better yet, the investor has a clear picture of
projected returns.
Confidential
Through the use of a trust managed by Appleby Services
(Bermuda) Ltd., investors remain confidential and the
investment integrity is protected.
Manageable Risks
In addition to industry leading investment safeguards, the
investor may rescind the investment at anytime.*
*The surrendering of the investment is at the option of Lexington Settlements
Solid
Partnership
Appleby Services (Bermuda) Ltd. offers a comprehensive range of
trust services. Appleby Services (Bermuda) Ltd. and Appleby Trust
(Cayman) Ltd. are owned by the partners of Appleby Spurling
Hunter, a largest provider of offshore legal and business services in
the world.
With origins that date to the late 1800’s, Appleby Spurling Hunter
is able to provide Appleby Trust’s local and international clients
with advice in matters of trust, estate and corporate planning.
All trust companies in Bermuda and the Cayman
Islands are licensed in accordance with the Trusts
(Regulation of Trust Business) Act 2001 and the
Banks and Trust Companies Law respectively. All
trust companies in Bermuda and the Cayman
Islands are regulated and monitored by their
respective monetary authorities
Tracking
Services
Medical
Evaluation
Medical evaluation review of the insured is
one of the most important factors in the life
settlement business. Performed by highly
specialized firms, the medical evaluation
is used to produce a life expectancy report
(LE). The LE report is a crucial component
in determining policy price. In addition, the
report determines the term of investment.
Insurance Advisors & Administrators will
collect updated medical records for reevaluation purposes.
A brief summary of the history of the disease,
including date of diagnosis (if known).
Importance is placed on what the client has
physically encountered.
LE
REPORT
Lexington Settlements has taken a leadership
position in the industry by obtaining two
life expectancies evaluations(LE) performed
by separate recognized entities. The most
conservative LE report is used to price the
investment, thus minimizing the deviation
curve.
Basing life expectancies on actual mortality statistics was
pioneered by the life insurance settlement industry. The
unique date is based on insured’s lives using base tables
from one of the world’s largest actuarial firms. The tables
provide mortality rates for gender, age and smoking status.
The base tables are further refined with more than 130 risk
Justifications for the life expectancy decision
are detailed. The physician may rely on
personal clinical experience with similar
illness, compliance of the client wit the
medical regimens, future treatment options,
failure of current treatment, failure of organs
including future treatment, etc. A consulting
physician may also note if the client is not
being optimally treated by his physician and
its impact on expected morality.
factors that impact an individual’s mortality. The risk factors
were compiled from the Medical Information Bureau,
governmental studies and private research. These risk factors
tailor a standard mortality curve to an individual’s health and
lifestyle status.
| IN V E S T M E N T P R OC ES S
UPDATED MEDICAL RECORDS
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Tracking services from
Insurance Advisors &
Administrators is included
in the Lexington Series
investment at no additional
cost.
Upon confirmation of the insured’s demise,
Insurance Advisors & Administrators will
notify all interested parties, prepare all
documents for death benefit collection, route
documents for signatures, deliver claim forms
to the insurance company and monitor claim
processing and policy payout.
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Insurance Advisors &
Administrators also has direct
contact with the insured’s
designated contact. No tracking
attempt is complete until they
can conclusively state that an
insured was seen or spoken to
within the last 30 - 45 days.
TH E L E X I NG TO N S E RI E S
Timely determination of
an insured’s death and the
collection of death benefits
directly impact the return on
investment for life settlements.
Insurance Advisors &
Administrators, Inc. excels
in tracking insureds where
permitted by law in a sensitive
but diligent manner. Tracking
occurs on a quarterly basis
through various means. The
preferred method of contact
is with the insured’s physician
where Insurance Advisors
& Administrators strives to
stay informed of the insured’s
changing medical condition.
DEATH CLAIM SUBMISSION AND
COLLECTION
INVESTING WITH LEXINGTON SETTLEMENTS
$645,000
Benefit
$100,00
Premium Payments
$300,000
Policy Purchase
Meet Joe!
Joe currently invests in bonds,
stocks and real estate. Since all his
investments are closely related to the
performance of the economy and the
financial markets, he wishes to further
diversify his portfolio.
INVESTING
With the support of his designated
Lexington Settlement Agent, Joe finds
the right policy to invest his $400,000.
He purchases a $645,000 policy for
$300,000 with an investment term of
72 months. The remaining $100,000
is deposited in an escrow account
for premium payments during the
investment term plus 12 months as a
safeguard.
WISE INVESTOR
12%
POLICY MATURES IN 48 MONTHS
The policy matured before the projected 72 Month term. The early
maturity provided Joe with an increased annual return to 12%.
POLICY MATURES IN 72 MONTHS
THE RIGHT DECISION
NO MAINTENANCE FEES
After researching several companies, Joe decides to invest
$400,000 with Lexington Settlements. Joe’s decision was
easy. In addition to offering a superior projected return
on his investment, Lexington Settlements is reputable
and long established in the industry. Lexington’s product
offers 360 investment safeguards and is backed by the
due diligence of Appleby, the largest provider of offshore
legal, fiduciary and administration services in the world.
Since there are no
maintenance fees associated
with his investment, all Joe
has to do is let time do its
work. All policy premium
payments are made on his
behalf by Appleby Services
(Bermuda) Ltd..
• Trust Escrow Accounts open by
Appleby Services (Bermuda) Ltd. at
a major United States bank.
• Funds administered and safeguarded
by Appleby Services (Bermuda)
Ltd., Under the rigorous laws and
regulations of Bermuda
• Medical evaluations are performed
by two specialized independent and
reputable firms
• Only policies issued by U.S. Life
Insurance Companies with B+ rating
or higher according to A.M. Best
Rating Guide
• Annual external audits by
auditors known worldwide
• Comply with the norms of the Life
Insurance Settlement Association
• Confidentiality and Privacy
• Compliance
8%
The policy matured as projected. The scheduled maturity provided
Joe with an annual return of 8%.
POLICY MATURES IN 84 MONTHS
6.8%
The policy matured after the projected 72 Month term. The late
maturity decreased Joe’s annual return on investment to 6.8%
360
INVESTMENT
SAFEGUARDS
Fixed Return
30.6%
40.8%
51.0%
61.2%
| IN V E S T M E N T P R OC ES S
LE Months
36
48
60
72
INVESTMENT REFUND
100%
73 Months have passed and the policy has not yet matured. Joe ran
into cash flow issues and wishes to redeem his investment before
policy maturity. Lexington Settlements will refund Joe 100% of his
$400,000 investment.
| I N V E S T M E N T S A F E G UARDS
Investment
| HO W IT WO R KS
$400,000
72 Months
Looking for an alternative, Joe
comes across Life Settlements. He is
delighted to learn a life settlement
investment capitalizes on longevity.
Contrasting his current investments,
the risks and performance of life
settlements are uncorrelated to
financial markets. This new financial
instrument allows Joe to truly diversify
his portfolio and project an above
average rate of return.
Investment Term
& Yield
$245,000
61.2% Fixed Return
TH E L E X I NG TO N S E RI E S
How it Works
To better understand this investment strategy, read the
example presented below.
INVESTING WITH LEXINGTON SETTLEMENTS
Investment
Safeguards
Raising the bar on investor protection,
Lexington Settlements has developed the
Life Settlement Series with an array of
investment safeguards. We took a well
rounded approach guided by over a decade
of experience and our principle of building
long-term relationships.
Complete
Approach
Trust, reliability and results are key to developing longterm relationships. These are the driving principles
behind Lexington Settlements.
The result is composed of eight key
components. Together, they bring investors
the most comprehensive investment
safeguard in the industry. It’s so complete,
we named it 360 Investment Safeguards.
Fund Administration
Funds administered and
safeguarded by Appleby Services
(Bermuda) Ltd.,under the
rigorous laws and regulations of
Bermuda.
Trust Escrow Accounts
Life Expectancy Evaluations
Trust Escrow Accounts open
by Appleby Services (Bermuda)
Ltd. at a major United States
bank.
Compliance
Medical evaluations are
performed by two specialized
independent and reputable
firms.
360
INVESTMENT
SAFEGUARDS
In addition to external audits,
Lexington Settlements boasts
a comprehensive internal
compliance program.
Highly Rated Insurance Companies
Only policies issued by U.S. Life
Insurance Companies with B+
rating or higher according to
A.M. Best Rating Guide.
Confidentiality and Privacy
External Audits
All investments are confidential
and in accordance to the laws of
Bermuda.
Annual external audits
performed by auditors known
worldwide.
Life Insurance Settlement Association
Lexington is a member of
the Life Insurance Settlement
Association and complies with
the norms set by the industry
association.
In addition to the 360
Investment Safeguards,
Lexington Settlement goes
further by offering investors
an alternative exit strategy.
Investors have the option
to rescind the investment
contract at anytime.
Investment refund on
contracts rescinded prior to
completion of investment
term is subject to 20%
cancellation fee. A 100%
refund is issued to investment
contracts rescinded past the
investment term.
20%
Investing with Lexington
Settlements gives you
flexibility of investment
and added peace of
mind.
Rescind Prior to
Investment Term
Rescind Past
Investment Term
80%
100%
Lexington
Settlements will
refund the full
investment amount
minus a 10% fee.
Lexington
Settlements will
refund the full
investment amount.
Investment Refund
The Islands of Bermuda is a British Overseas
Territory in the North Atlantic Ocean.
Located off the east coast of the United States,
Bermuda remains the leading single top
offshore risk financing center.
Many Lloyds of London insurers and
reinsurers have moved from London to
Bermuda. With over 13 of the world’s top 40
reinsurers based in Hamilton, the territory is
the fourth largest reinsurance market in the
world after Germany, the US and Switzerland.
Bermuda-based reinsurers’ total net written
reinsurance premiums exceeds those of
London-based reinsurers.
The legal system is derived from that of the
United Kingdom, with recourse to English
courts of final appeal. Financial institutions
operate under regulation established by the
Bermuda Monetary Authority.
The Bermuda Monetary Authority is
responsible for the licensing, supervision and
regulation of financial institutions including
those conducting deposit-taking, insurance,
investment and trust business in Bermuda.
It is also the issuing authority for Bermuda’s
bank notes and coinage. The Authority
encourages high standards of compliance
and works with Government and industry
professionals to ensure that Bermuda’s
reputation as a quality international financial
center is protected.
| I N V E S T M E N T S A F E G UARDS
at your fingertips
| HO W IT WO R KS
Investment funds
TH E L E X I NG TO N S E RI E S
HAMILTON
| IN V E S T M E N T P R OC ES S
A Bermuda
Corporation
INVESTING WITH LEXINGTON SETTLEMENTS
Investment
Process
6
Investing with Lexington Settlements is easy and
rewarding. More than a decade of experience in life
settlements translates into an efficient investment
strategy designed with transparency and simplicity for all
investors.
Policy Procurement and Warehousing
In addition
to the 360
S T E P S Investment
Safeguards, Lexington
Settlements has developed
a streamlined investment
process.
Lexington Settlements evaluates
each policy in the secondary market
according to the following strict
requirements:
• Life Insurance Policy issued by a
United States Company domiciled in
the US with an B+ rating or higher
according to A.M. Best.
01
POLICY
PROCUREMENT
AND
SELECTION
• The contestability period and suicide
clause of the policy have been satisfied.
• Insured person domiciled in the USA.
• Policy in force.
Two independent life expectancy firms
each perform a medical evaluation
on the insured person. The most
conservative life expectancy evaluation
report is selected for calculating the
term and yield of the investment.
03
01
POLICY
INVENTORY
All policies meeting Lexington Settlements procurement criteria are purchased
and warehoused for investors. Lexington Settlements may also procure
policies according to customized investor needs.
Once a policy is purchased, the insurance company names Appleby Services
(Bermuda) as the irrevocable beneficiary of the policy. A certificate is attached
to the policy thus allowing Appleby to act as trustee.
02
INDEPENDENT
MEDICAL
EVALUATION
Trust Accounts
Purchaser Escrow Account
Premium Escrow Account
Established to receive funds for policy
investment/purchase.
Used to hold funds for premium payments of
policies. The amount of premium in escrow
corresponds to the estimated term of investment
plus one year.
Maturity Escrow Account
Designated account to receive death benefit
proceeds from policies.
Upon policy maturity, Appleby files
a claim with the insurance company
for payment of death benefits. The
amounts of the death benefit are
deposited by the insurance company
in the Maturity Escrow Account.
Once funds are credited, Appleby
Services proceeds to pay the investor
the corresponding share-participation
in the policy benefits (principal plus
investment returns).
INVESTMENT
ORDER
05
INVESTMENT
CERTIFICATION
06
INVESTMENT
PROCEEDS
| I N V E S T M E N T S A F E G UARDS
Appleby Services, acting as trustee,
registers the percentage of shareparticipation of each investor in
the policy. Next, Appleby issues a
certificate and signs the assignment
notice, thus certifying the transaction.
04
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After looking at the portfolio of
available policies, the investor chooses
the right policy(ies) for his investment
plan. The investor may choose to
invest in a share of a policy or in entire
policies. Next, the investor completes
the “Investment Order” and sends
the purchase amount by means of a
Check or an Electronic Transfer to the
Purchaser Escrow Account.
| IN V E S T M E N T P R OC ES S
Making the Investment
TH E L E X I NG TO N S E RI E S
The trust accounts are
established at a major US bank
by Appleby Services (Bermuda).
As the trustee of the accounts,
Appleby is the only entity with
signature authority to the
accounts.
W W W. L E X I N G T O N . B M
This product is not available to citizens or residents of the United States or Canada.
invest_REV.08/13-EN | © Lexington Settlements
Canons Court, 22 Victoria St.
Phone:
(441) 295-1443
Hamilton HM-Ex, Bermuda
Fax:
(441) 295-9216
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