Berkshire Hathaway Confirms it Bought $300M Coventry...
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A top executive of Berkshire Hathaway Life Insurance Company of Nebraska confirmed Friday, July 19, that it purchased a life settlement portfolio with $300 million in face value from provider Coventry First for $60 million. Mike Lawler, vice president of Berkshire’s insurance company in Stamford, Conn., told The Deal that the portfolio contains just over 100 policies. Berkshire hadn’t invested in this asset since about 2006, Lawler said. He said that Coventry and Miravast Asset Management Ltd. repre- sentatives approached Berkshire to sell it the portfolio. “We tried to understand it and move quickly on it,” Lawler said. “I’m sure it will lead to other opportunities coming to us. We’re not working on anything” else currently in the market. The purchase was completed about a month ago, he added. “We had a lot of respect for Bill Taylor. We were happy to have him helping us,” Lawler said. Taylor, who is president of Miravast, announced the deal in a July 11 press statement, although he de- clined to name the seller or purchaser. Miravast said it had structured the deal, selecting the policies, conducting medical reviews of the insureds and performing an actuarial analysis of the policies, which were recently acquired in the secondary market. Lawler said the age distribution of insureds whose lives were rep- resented in the portfolio was fairly typical of what he’s seen in the market. Over the past years, he said Berkshire has seen a handful of portfolios, but it hasn’t invested in the asset since about 2006. As to evaluating the life expectancy of the insureds in the portfo- lio, he said in addition to Miravast, the company relied on its own, internal models. Lawler said that Berkshire anticipates earning an internal rate of return on the portfolio of less than 20%, although he declined to say specifically what the company expects. “It’s always interesting to jump into a new asset class,” he said. “You can learn about it by reading it in the press,” but holding its own portfolio will help the company learn how the asset actually works, he added. “We’re open to other investments in this space. We’re going to look at other opportunities as they come to us,” Lawler said. In 2006, Berkshire Hathaway Inc. reported $92 million in gains on its life settlement investments. It lost $82 million on life settle- ments in 2005 and $207 million in 2004. During the second quarter of 2006, Berkshire reported that certain life settlement contracts were disposed of for proceeds of about $330 million. It said its investments in life settlement con- tracts as of Dec. 31, 2006, were insignificant. In 2001, Living Benefits Financial Group, a Minnetonka, Minn.- based provider, obtained what chief executive Paul Moe believed was the first institutional funding in the life settlement market when he got up to a $400 million facility from Gen Re Securities, a subsidiary of Berkshire. Gen Re has been in long-term run-off since 2002. Stroock & Stroock & Lavan LLP, a New York-based law firm ac- tive in the life settlement space, represented Berkshire on its new purchase. By Donna Horowitz Berkshire Hathaway Confirms it Bought $300M Coventry Portfolio The Life Settlements Report™ (ISSN1545-830X) is published twice monthly, on the first and third Thursday of each month, except the first Thursday in January and the first Thursday in August. © Copyright 2013 The Deal. The Copyright Act of 1976 prohibits the reproduction by photocopy machine or any other means of any portion of this publication except with the permission of the publisher. The Daily Deal is a trademark of The Deal. www.dealflowmedia.com AS FEATURED IN
Transcript of Berkshire Hathaway Confirms it Bought $300M Coventry...
A top executive of Berkshire Hathaway Life Insurance Company of Nebraska confirmed Friday, July 19, that it purchased a life settlement portfolio with $300 million in face value from provider Coventry First for $60 million.
Mike Lawler, vice president of Berkshire’s insurance company in Stamford, Conn., told The Deal that the portfolio contains just over 100 policies.
Berkshire hadn’t invested in this asset since about 2006, Lawler said.
He said that Coventry and Miravast Asset Management Ltd. repre-sentatives approached Berkshire to sell it the portfolio.
“We tried to understand it and move quickly on it,” Lawler said. “I’m sure it will lead to other opportunities coming to us. We’re not working on anything” else currently in the market.
The purchase was completed about a month ago, he added.
“We had a lot of respect for Bill Taylor. We were happy to have him helping us,” Lawler said. Taylor, who is president of Miravast, announced the deal in a July 11 press statement, although he de-clined to name the seller or purchaser.
Miravast said it had structured the deal, selecting the policies, conducting medical reviews of the insureds and performing an actuarial analysis of the policies, which were recently acquired in the secondary market.
Lawler said the age distribution of insureds whose lives were rep-resented in the portfolio was fairly typical of what he’s seen in the market. Over the past years, he said Berkshire has seen a handful of portfolios, but it hasn’t invested in the asset since about 2006.
As to evaluating the life expectancy of the insureds in the portfo-lio, he said in addition to Miravast, the company relied on its own, internal models.
Lawler said that Berkshire anticipates earning an internal rate of return on the portfolio of less than 20%, although he declined to say specifically what the company expects.
“It’s always interesting to jump into a new asset class,” he said. “You can learn about it by reading it in the press,” but holding its own portfolio will help the company learn how the asset actually works, he added.
“We’re open to other investments in this space. We’re going to look at other opportunities as they come to us,” Lawler said.
In 2006, Berkshire Hathaway Inc. reported $92 million in gains on its life settlement investments. It lost $82 million on life settle-ments in 2005 and $207 million in 2004.
During the second quarter of 2006, Berkshire reported that certain life settlement contracts were disposed of for proceeds of about $330 million. It said its investments in life settlement con-tracts as of Dec. 31, 2006, were insignificant.
In 2001, Living Benefits Financial Group, a Minnetonka, Minn.-based provider, obtained what chief executive Paul Moe believed was the first institutional funding in the life settlement market when he got up to a $400 million facility from Gen Re Securities, a subsidiary of Berkshire. Gen Re has been in long-term run-off since 2002.
Stroock & Stroock & Lavan LLP, a New York-based law firm ac-tive in the life settlement space, represented Berkshire on its new purchase.
By Donna Horowitz
Berkshire Hathaway Confirms it Bought $300M Coventry Portfolio
The Life Settlements Report™ (ISSN1545-830X) is published twice monthly, on the first and third Thursday of each month, except the first Thursdayin January and the first Thursday in August. © Copyright 2013 The Deal. The Copyright Act of 1976 prohibits the reproduction by photocopy machineor any other means of any portion of this publication except with the permission of the publisher. The Daily Deal is a trademark of The Deal.
www.dealflowmedia.com
AS FEATURED IN
