Insurance Settlement Valuation

Average Life Broken Down by Geography

Case Study

Analyze and value a portfolio of insurance settlements with variable cash flows and attached optionality, for the structured settlements investments team at a hedge fund. Our client was evaluating whether to acquire the portfolio and analyzing the potential payouts.

Solution:

• Combine data from the insurance servicer with both internal proprietary research and demographic information in the public domain
• Determine future cash flows with associated probabilities, and identify all attached optionality and calculate option values
• Visualize drivers of value through traditional charts and new data visualization techniques

Benefits:

• Provide transparency into the underlying settlement and the ability to independently value the portfolio
• Quickly test scenarios by changing assumptions, parameters, and data sets
• Online tools enabled the hedge fund to both use the analytics internally and easily collaborate with partners and investors