A Reflection on Investor Sentiment and Appetite for Life Settlements and Other Alternative Assets

The capital raising environment for alternative asset classes in recent years has been more difficult generally, thanks to higher interest rates (when compared to the post-Global Financial Crisis era) making liquid fixed income investments more attractive from a risk/return basis compared to their illiquid counterparts.

The life settlement market, as an alternative asset class, has therefore felt the impact, but thanks to the interest rate reductions by the US Federal Reserve in the fall of 2024, this year (2025) has provided increased investor interest as yields on government and corporate bonds cooled off a little.

So it was with interest that I read Insights into Life Settlement Investor Sentiment, a new report from the European Life Settlement Association (ELSA) and Conning, the insurance asset management firm.

The report surveys institutional, professional investors about their views towards the life settlement asset class and provides a comprehensive perspective of what we as an industry are doing well – and not so well – from the perspective of sophisticated capital allocators.

There are some areas we need to improve on, of course; the most obvious being the need for greater transparency when it comes to fees and medical underwriting. These two ‘issues’ – for want of a better word – jumped to the top of investor’s wish-lists this year.

More historical returns data was another one, which will be difficult given the lack of a publicly available benchmark for our industry.

And the requirement for more education is another. Not only is the lack of a publicly available industry benchmark a hurdle when it comes to positioning our asset class against other alternative assets, ours is a complex market, one that relies on sophisticated actuarial modelling and where the returns are driven by factors such as health and lifespan that exhibit a low correlation to financial markets.

Reports like the ELSA/Conning report help shape our industry’s awareness raising efforts in terms of where we should change, tweak or focus our messaging, so feedback such as this is invaluable.

The report provides plenty of optimism, however. Something that stuck out to me was that investor attitudes towards life settlements have improved quite significantly in recent years; more than half of those surveyed made this claim this year.

Despite my previous statement about raising money for alternative investments being more difficult in the past 18 months, there is a nuance to that. You need to sell investors on both the asset class you invest in and how it positions against others.

Another encouraging data point can be seen in what investors think are positive attributes of our industry. More than two-thirds of survey respondents said that the potential for relatively higher returns, diversification, and the ease of identifying risks are all important in terms of what features of life settlements contribute to their positive view of the asset class. Again, these are clearly areas which we as a market, both individually at the firm level, and collectively, should be looking to reinforce in our messaging.

It is clear that investors have a solid grasp of what the expected returns should be – two thirds of those surveyed said they would expect between 7-13% in annualised returns, which is probably about right for the median fund. And it is testament to the growth and maturity of our market over the past two-plus decades and the education efforts underway in the industry that many investors now see life settlements as a viable portfolio allocation. It has been difficult for any asset class to compete with liquid fixed income recently; the fundraising data for private equity, venture capital, infrastructure and real estate funds published by data providers such as Preqin and Pitchbook can attest to that.

But it says a lot about our market that some of the hesitancy and reluctance of the 2000’s and early-mid 2010’s is dissipating – albeit slowly – and life settlements are being judged more on what they offer a diversified portfolio – low-volatility, low-correlation, positive returns.

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Bill Corry is Managing Partner at Corry Capital Advisors