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Jay Jackson. (Photo: Abacus Life)

Life Health > Life Insurance > Life Settlements

Life Settlement Firm Hopes to Have Stock on Nasdaq by July

By Allison Bell

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What You Need to Know

  • Abacus Life hopes to become a public company by completing a SPAC transaction.
  • It has arranged for up to $50 million in financing through an affiliate of Blue Owl Capital.
  • Originally, Abacus Life hoped to complete the SPAC transaction by Dec. 31, 2022.

Abacus Life, a life settlement firm, said Monday that it’s on track to have a listing on the Nasdaq stock exchange by the first week of July.

The Orlando, Florida-based company representatives also said that it has arranged for up to $50 million in financing from Blue Owl Capital’s Owl Rock direct lending program.

Abacus Life buys life insurance policies from the insureds or other companies that invest in in-force life insurance policies and then holds the policies or sells the policies to other investment firms.

What It Means

Abacus Life could soon be able to use quarterly communications with shareholders to promote the idea that people with certain types of life insurance policies can sell the policies.

The History

Abacus Life has been operating in the life settlement market since 2004. It started a life settlement asset management affiliate, Longevity Market Assets, in 2017.

Life settlement firms typically focus on investing in life insurance policies that build up cash value, such as universal life policies and whole life policies.

They also invest in term life policies that give the insureds the ability to replace the term coverage with permanent life policies that are designed to build up cash value.

In August 2022, Abacus Life announced plans to get a Nasdaq listing through a merger with East Resources Acquisition Co., a Boca Raton, Florida-based special purpose acquisition company, or SPAC.

Originally, Abacus Life hoped to complete the SPAC transaction by Dec. 31, 2022.

In October 2022, the companies postponed the deadline to Jan. 27, 2023, and Eastern Resources then sought and received approval from its shareholders for a second extension, to July 27, 2023.

The Results

East Resources itself had no significant revenue in 2022.

Abacus Life itself focuses on buying and selling policies for investors. It lost $52,495 in 2022 on $25 million in revenue and $3.2 million in assets, according to a deal-related document filed with the U.S. Securities and Exchange Commission.

The firm estimated that $12 million of its 2022 revenue came from transactions involving life insurance agents, $9.9 million from transactions involving life settlement brokers and $3.1 million from working directly with clients.

Abacus Life reported that its Longevity Market Assets affiliate, which invests in life insurance policies itself and services life insurance policy portfolios for Abacus Life and other companies, earned $32 million in 2022 on $45 million in revenue and $59 million in assets.

Longevity Market Assets earned $1.5 million of its revenue from servicing life insurance policy assets; $38 million from life insurance policy investment income; and $5.4 million from increases in the fair value of the policies in its portfolio.

The affiliate ended 2022 owning 53 life settlement policies, including 32 policies insuring the lives of people who appeared to have more than five years to live.

In a review of the value of intangible assets, Abacus Life estimated that the total value of the relationships that it and Longevity Market Assets have with life insurance agents is about $12.1 million.

Abacus Life noted that the companies’ combined origination fees amount to about 2% of the death benefit amounts of the policies involved in the transactions.

In 2021, the companies originated 455 life settlement transactions.

Growth

Abacus Life last week announced that it has hired Nicholas Sawuk, a Life Policy Traders and Cantor Fitzgerald alumnus, to be a managing director.

Abacus Life CEO Jay Jackson said the firm needs more people to handle an increase in business volume.

“We’ve increased our employee numbers by 43% in the last year,” Jackson said.

Risks

Abacus Life acknowledged in the SEC filing that many of the policies it buys are up for sale because the insureds are facing difficulties.

In a discussion of factors that could hurt the supply of life insurance policies, it cited improvements in the investment performance of cash-value life insurance policies.

The firm also cited improvements in health insurance as a possible risk.

If health insurance worked better, it would limit “the need of insureds to obtain funds to pay the cost of their medical treatment by selling their life insurance policies,” according to Abacus Life.

Abacus Life identified moves by life insurers to offer “enhanced cash surrender value payments” for some life insurance policies as another challenge.

The life insurers doing that are, in effect, competing with firms like Abacus Life for the life insurance policies, the company said.

Jay Jackson. (Photo: Abacus Life)

Allison Bell

Think_Allison

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