Our Industry Leading Performance

CMG historically has been one of the most active purchasers of life settlements having invested, as of January 1, 2015, over $1.8 billion to acquire portfolios of life insurance policies (known as “life settlements”) with an aggregate face amount of approximately $6 billion representing more than 1,300 policies. Of the policies purchased, CMG also currently manages approximately 771 of these policies representing approximately $3.7 billion of policy face value. To date, CMG has focused on the upper-end of the life settlement market (i.e. policies of $5 million or greater) where policy quality is higher and there is less competition. Over the last ten years, CMG has assembled life settlement portfolios that now reside in three distinct pools, two held by private sovereign pension funds and the third held by a public Irish fund (Global Insurance Settlements Funds) that is focused solely on life settlement investments. The two pools assembled prior to 2009 have experienced maturities on 139 policies (~25.0% of the pools) generating an average IRR on those policies of 16.6%. Also of significance is the fact that at the current time, some five years after the last policy was purchased for these pools, approximately 45.6 of the policies are still within the life expectancy estimate used when these policies were originally purchased. The third pool (which has been assembled between 2010 and the present) already has experienced maturities on 66 policies (~8.8% of pool) generating 170% IRR on these policies. As this pool is relatively new, 96.4% of the policies are still within the life expectancy estimate used when these policies were originally purchased. These results have been verified by CMG’s independent audit firm.

All 205 total maturities have generated $847.1 million (death benefit) and profit of more than $374 million. These returns are inclusive of all transactional fees incurred by investors through maturity of the policies. Management believes that the early maturities and excellent IRRs being generated in the third pool validate the proprietary analytical tools and processes that CMG has developed and provide an indication of the excellent buying opportunities that currently exist in the life settlement market.

While the Company always strives to achieve the highest overall return possible for its investors, CMG’s target returns are in the 15-20% range. CMG’s proprietary model and analytical tools, which have been developed over the past nine years, and cannot be easily replicated by competitors, provide the competitive advantage CMG uses to achieve superior returns. CMG management believes its track record is superior to that of other participants in the life settlement industry as measured by the realized returns provided to its investors.

This superior performance is a result of:

  • A business model that is reinforced by proprietary, trade-secret protected analytics and models, based on data and market knowledge derived from hundreds of policies acquired by CMG

  • An executive team comprised of industry veterans with experience in complementary fields including life insurance, securities, and law

Why Are We the Industry Leader?

Using our team of experienced securities, finance, and insurance professionals, we believe that we are leaders in the industry in large part because of our arsenal of unique analytical tools. Others in this industry, including fund managers, analyze policies using probabilistic actuarial modeling to predict future performance of a pool of policies. This approach, however, must assume that all policies in a particular pool are of equal “quality” and that no policy will perform better than another in terms of its internal dynamics – items such as rate of premium growth, cost basis compared to fair value over time, and sensitivity to possible life extension.

In contrast, our analytical tools are based on the premise that the performance of a portfolio of policies is dependent on the internal dynamics (i.e., the internal “quality” of behavior) of each of the individual policies that make up the pool. Moreover, our analytical tools have evolved over the past 10 years based on our experience in selecting policies that are expected to make a positive contribution to a fund environment that demands predictable and positive monthly growth in asset value. Unlike the pool modeling tools that we understand are used by others, each policy that we review, whether as a single policy or as a part of a larger portfolio of policies, must individually pass multiple tests for internal policy dynamics over time before it is selected and acquired. This includes comparing the internal dynamics of every policy that we review against a number of critical benchmarks based on the study of hundreds of policies that we have acquired and manage.

The benchmarks that we have created address the weakness of traditional actuarial modeling and establish minimum thresholds that all policies acquired must equal or exceed. This ensures that the highest level of risk management is achieved in an actuarially meaningful and statistically significant way. In the end, our ability to select policies of higher quality allows our clients to enjoy superior and more predictable results. The power of our approach is underscored by our industry leading performance described above.