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Life Partners Holdings (LPHI -19.4%), already notified by the SEC that it could face civil...

Life Partners Holdings (LPHI -19.4%), already notified by the SEC that it could face civil charges, forecasts a ~60% drop in FQ4 revenue and says it will delay filing its annual report while reassessing the value of life policies it holds for its own portfolio. Such a step suggests that policies owned by some clients also may be worth less than they originally paid.
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Comments (5)
  • Tom Armistead
    , contributor
    Comments (5410) | Send Message
     
    Great potential scam, it would work along the same lines as subprime mortgages, everybody's making money, nobody asks any questions or checks any answers....
    17 May 2011, 03:33 PM Reply Like
  • NgaruToa
    , contributor
    Comments (42) | Send Message
     
    Tom it's healthy to be cynical on occasion, but this industry isn't the subprime game by any means...but there are some games that have been played by the company in question that has undermined the integrity of the industry.
    17 May 2011, 08:35 PM Reply Like
  • Tom Armistead
    , contributor
    Comments (5410) | Send Message
     
    Ngaru, the industry has a valid reason for existence, AIDS patients or others who are seriously ill and have large medical expenses can cash in their policies and use the proceeds to pay for their care or replace lost wages if they are too sick to work.

     

    I was in the insurance business for many years, and sold a modest amount of life insurance although my primary interest was P&C. Insurance generally invites fraud, for the fact that the considerations exchanged are unequal and the consequences of many actions don't show up until well into the future.

     

    Quality control would have to be intense, otherwise the idea of turning 2 or 3 thousand dollars worth of premiums into a 250,000 cash settlement would draw flim flam artists. I don't think I'm being cynical here, I'm just applying my life experience.

     

    I worked in an office with a man who sold autombile insurance ID cards, collected the premiums and never sent the applications in to the company. His class of customers didn't care, all they wanted was proof of insurance so they could register the cars. This same individual pocketed a 10,000 payment on a variable annuity, never sent the money on to the company.

     

    I had a fellow agent and a competitor who sold professional liability policies to lawyers, the only problem was he issued the policies himself, there was no insurance company involved. Claims are infrequent and he got away with it for years.
    18 May 2011, 07:46 PM Reply Like
  • NgaruToa
    , contributor
    Comments (42) | Send Message
     
    Tom, I'm in the Life Settlement industry as an analyst and investor and pointed out some of the issues at Life Partners back in 2005. Well aware of the nuances of the product and the value it can bring to certain parties. My point was that LPHI has neither played by the "rules" nor have they maximized anything on either side of the equation (sellers/viators or end investors) other than for themselves under the cover of being public and supposedly creating Shareholder value (hich IMHO will go to zero here soon). When you understand the nuts and bolts on how they "manufactured" their margin and swiftly siphoned off dividends to the largest shareholder when they true fundamentals didn't warrant it, you'll see my point.
    23 May 2011, 01:51 PM Reply Like
  • warrejt
    , contributor
    Comments (61) | Send Message
     
    It's a viable industry in its infancy, and with that comes fraud.

     

    I hope the space is properly regulated so the companies that do operate with integrity can thrive.
    17 May 2011, 03:40 PM Reply Like
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