Read Now The STOLI Worm: A Practitioner's Guide to Managing Life Settlements and Micro Longevity Risk MOBI
The STOLI Worm describes the last fifteen years in the life settlements market, through the eyes of a portfolio manager; highlighting the tricks, traps, games, (and meta-games) along the way that contributed to the industry's chequered history.The story begins in the early/mid 2000's when investment banks entered the market seeking novel risk assets to incorporate into their booming securitisation businesses. Savvy insurance operators engineered ways to manufacture policies to satisfy the banks' demand, and an institutional market developed. The mismatch between the worlds of finance and insurance provided fertile ground for misdirection and some perverse incentive structures, which would ultimately take the market close to self destruction. 2008 was the perfect storm for life settlements when the Global Financial Crisis coincided with announced extensions in life expectancies and the market took a double hit. This prompted a more rigorous approach to risk management and the ascendancy of dedicated fund managers. More recently, machine learning techniques are making inroads into valuation, risk management and the supply chain.
