Q Life Fund

Why life insurance policies?

Life Insurance as an Investment

Life insurance is personal property that can be bought and sold like any other asset.

With more than US$18 trillion in-force coverage outstanding, life insurance is a huge asset class with minimal investment penetration. In recent years, approximately US$3 trillion of life insurance coverage was issued while approximately an equal amount was either surrendered or lapsed annually. The investment opportunity lies in those policies that are cancelled each year.

With a certain future payment known at the time of investment (the policy face value) and excellent underlying credit characteristics, life insurance policies offer an attractive investment opportunity.

Life insurance as an investment, when held to maturity, has no correlation to general market or economic conditions.

What is a life settlement?

Life Settlements

A life settlement is the sale of an existing life insurance policy to a third-party for more than its cash surrender value but less than its face value.

In a life settlement transaction, a specialty finance company (known as a Provider), on behalf of an investor, purchases a life insurance policy from the current owner-in most states the Provider is regulated by the state insurance department. Over the past five years, over $30 billions of life insurance policies have been sold in life settlement transactions.

The market for life settlements is growing annually due to:

Favorable demographic trends-the aging U.S. population increases the target market
Attractive financial alternative for consumers-people are looking for new ways to raise cash and lower expenses
Regulated industry-increased regulatory oversight in recent years has led to improved market conduct and transparency

Life Settlement Fund

A life settlement fund is a pool of capital that is used to aggregate a portfolio of life insurance policies.

An individual life insurance policy is an unpredictable asset. While the investor knows the ultimate investment amount to be collected, the timing of the collection of one policy, and amount of premium to be paid, is highly variable and uncertain.

However, by building a portfolio of many policies, an investor can transform this unpredictable asset into a pool of highly predictable cash flows.

It is important that a portfolio is carefully constructed to facilitate predictability. Working with a knowledgeable industry leader with a proven track record ensures that a fund will have the right policy criteria established at the outset.

A life settlement fund is managed by industry experts that know how to buy policies efficiently and effectively and maximize portfolio investment returns.

Policy Aggregation

The Fund Manager works with one or more Providers to source life insurance policies that are available for purchase. The Fund Manager performs extensive analysis and due diligence to ensure policies meet the Fund’s criteria.

The goal of policy aggregation is to build a well diversified portfolio with predictable cash flows.

Diversification

A fund provides predictable returns by mitigating risks inherent in the life settlement market. Key to this strategy is diversification:

Number of Policies and Insureds Targeted minimum of 100 insureds
Insurance Companies No single company comprises more than 20% of the total face value of the portfolio
Health Impairment Categories Ample diversification factors
Range of Life Expectancies Ensures distribution of cash flows

Investment Characteristics

An investment in a life settlement fund provides:

Attractive Returns High targeted risk-adjusted investment returns
Low Correlation Asset Life settlements, when held to maturity, are not correlated to general market or economic conditions
Predictable Cash Flows When a large, diversified portfolio of life settlements is aggregated, the cash flows become very predictable
Low Credit Risk The ultimate credit risk relates to an insurance company’s ability to pay claims-there is no historical precedent for non-payment
Pooled Assets No matter what the investment amount, investors benefit from the diversification inherent in exposure to a pool of policies without the financial commitment required to do so independently
Exposure to a New and Growing Market A well constructed portfolio of life settlements can provide an attractive risk adjusted reutn over the long-term

What is Q Life Fund?

Q Life Fund I LP

Q Life Fund I LP is an independent fund with the sole objective of aggregating a diversified, balanced portfolio of life insurance policies. Q Life Fund will purchase these policies through life settlement transactions. By partnering with industry leaders, Q Life Fund aims to achieve superior returns while minimizing risks. The Fund will invest in physical policies issued by U.S. life insurance carriers on U.S. insureds.

Fund Manager: Q Fund Management LLC

The Fund will rely on the Fund Manager’s expertise to guide the purchasing criteria and investment analysis. The Fund Manager has industry leading experts who know how to buy policies efficiently and effectively and maximize portfolio investment returns. The Fund Manager will be responsible for all operational decisions related to the Fund and will work closely with its partners to continually monitor investment opportunities and Fund performance.

Investment Analysis

The Fund Manager will utilize several key variables to determine the appropriate price of a policy:

Medical underwriting analysis
Investment return target
Actuarial analysis
Premium optimization
Sensitivity analysis and variability of projected investment return

What is the strategy behind Q Life Fund?

Fund Strategy

Q Life Fund will aggregate a diversified pool of life insurance policies through life settlement transactions, targeting a net return of 10%-12% per annum.

The general policy characteristics comprise the following:

U.S. life insurance policies in force at least two years
Universal life, survivorship, convertible term, and whole life policies considered
Minimum insured age of 60
Minimum insurance company rating of A- (or equivalent) for 95% of the portfolio’s face value
Life expectancy average of 7 to 9 years, with a range of 2 to 15 years
Face value range from US$100,000 to US$10,000,000

The Fund’s core strategy is to buy and hold policies until maturity, but the Fund Manager will actively manage the investment portfolio and analyze potential trading opportunities.

Why Q Life Fund?

Q Life Fund has partnered with industry leaders to provide the most robust investment platform for life settlement investors:

Origination and Servicing Activities

Q Capital Strategies, LLC

Pristine industry reputation
Best in industry origination platform that ensures consistent,high quality deal flow for policy purchases
Turnkey servicing operation known for protecting investors’ assets and maximizing investor returns
Industry-leading compliance and regulatory infrastructure
Transacted over $4 billion in life settlements

Fund Manager

Q Fund Management LLC

Extensive asset management and investment experience in the life settlement industry since 2004
Over US$200 million in assets under management and in managed account relationships

Why Q?