I have doing some research recently concerning Premium Financing (PF). I have had several calls from head hunters this year where the positions for which they were interviewing related to expertise in PF. It seems Wall Street has a bit of a battle going on with one firm stealing another firms PF expert and so on. I still do not know how my name got in anyone's cross hairs as I have no bank experience at all and that seems to be the primary focus of the experience that is being sought out.
It has gotten me to think about the changes occurring in the Life Insurance portion of the financial services industry. The recent roll out of no payment life insurance policies for High Net Worth Individuals (HNWI) and the activity of search firms seeking PF expertise tells me a couple of things but I would like to bounce them off some industry folk for feedback.
It seems to me the meltdown in the Leveraged Debt Obligations (LDO) Market caused by the sub prime mortgage debacle has caused a huge amount of cash to sit it out waiting for a new LDO opportunity to come along to invest in. With the growth of the Viatical market into the Life Settlements market and big players like Genworth ( Genworth is joining National Financial Partners, and Goldman Sachs to form Institutional Life Sevices LLC) stepping into it I surmise LDOs which are backed by life insurance has already been going on for a few years. So why not take it to the next level with PF policies as breed stock for debt funding to monetize into LDOs. Perhaps I am too off in my own space and not aware of the industry trends but that is why I am asking for feedback.
The recent advent of total financed life premiums as discussed by Ronald B. Caballero in the Nov issue of Society of FSP seems to me a continuance on this trend toward offering LDO's which are of better quality. After all with the underlying debt written against the collateral of HNWIs it seems an LDO is much more likely to actually be able to deliver on the promise of being investment grade than if it is backed up by a pool of sub prime mortgages.
I sure would like to hear peoples thoughts on this topic.