Policy Transactions By State
This section observes the prevalence of life settlement policies by issue state for several reasons. From a purely observational standpoint, it is interesting to see where in the country life settlements are more prevalent. Overall, 41 states were represented in the 2009 study, as was the case in the 2008 study.
The graph depicts the breakdown of number of policies settled by issue state. As one may expect, the New York and California markets dominate the sample, accounting for well over 40% of the total pool as this has held true for several years. However, for the first time, California surpassed New York to become the largest issuing state for policies that entered into life settlements in 2009. The significance of these two geographical markets lends itself to several reasons. Not only are they highly populous states with a notable number of high net worth residents, but they also house an abundance of large insurance and financial markets to generate awareness in life settlement.
Another interesting story is the growth in trading of Florida issued policies, which takes third place in the 2009 data behind the two majority states. This is especially significant as Florida issued policies ranked 8th in terms of settlement volumes in the 2008 report. As one of the more highly regulated states, there are fewer industry players able to facilitate the growth in the Floridian settlement market. One hypothesis is that as a buyer's market, investors were able to channel money through Florida licensed firms. Doing so would give the investor access to a greater pool of policies, allowing for a greater ability to select high-return policies.
As well as looking at the number of policies transacted by issue state, one can look at the face values of cases traded by issue state. Although California issued policies outnumbered New York issued policies in settlement volume, the average face amounts by state reveal that New York issued policies tended to be larger (NY: $2,896,13, CA: $2,687,052). More significantly, Florida issued cases had an average face value of $3,633,918, much higher than any other high volume state in the sample. As was the case last year, Delaware had the highest average face value per policy at $4,880,722. However, while the 2008 study found Delaware issued policies to be the fourth highest in terms of total face value settled, this was not the case this year, probably as a result of the considerable decrease in Delaware's settlement activity.