New York (HedgeCo.net) – Institutional investors are pressuring hedge funds to buy key man life insurance to protect against the risk of a manager’s sudden demise, hedge fund risk management and insurance advisor SKCG Group reports.
“Hedge funds are unique. Their ‘product’ is achieving positive returns and that product is often completely dependent on the intelligence and skill of one or more individuals within the firm,” says David Parker, President of the Employee Benefits Division at White Plains, New York-based SKCG Group. “If a fund loses one of those individuals, the next step is often the dissolution of the company. Key man insurance can make the difference between an orderly wind down and a chaotic one.”
SKCG estimates insurance companies wrote 10% more key man policies in 2011, compared to 2008.
Institutional Investor magazine reports in it’s June cover story that more than $600 billion is currently managed by hedge funds whose founders will turn at least 60 in the next decade. “Billions of dollars worth of assets…are at stake,” the publication states.
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