BusinessWeek – From the Lowinger clan to hedge funds, investors are cashing in on the business of trading unwanted life insurance policies. From the Lowinger clan to hedge funds, investors are cashing in on the business of trading unwanted life insurance policies.
The Lowinger family has always been early to spot a trend. In the 1950s, clan patriarch Maurice Lowinger was one of the first importers of consumer electronics from Japan. Two decades later, the Lowingers recognized the potential of pocket calculators, marketing one of the first devices under the Unisonic brand in early 1970s.
Now the close-knit Lowingers, whose personal wealth is estimated to reach into the hundreds of millions of dollars, are hoping to cash in on what they see as the next hot thingâ€â€life settlements.
The life settlements industryâ€â€the business of buying and selling unwanted life insurance policiesâ€â€is attracting people from a variety of backgrounds. In the past eight years, business has blossomed as the elderly look to unload unwanted policies. The main buyers of these policies are hedge funds, speculators, and Wall Street banks, all betting that the sellers will die sooner rather than later, so they can collect on the hefty death benefits.
AN OPEN FIELD But because of lax oversight, virtually anyone can get into the game, making life settlements fertile ground for everyone from erstwhile experts to novices to rogues. Scandals have been commonplace in the business, with some scam artists taking advantage of elderly sellers and investors in specialized life settlement funds. Yet new players keep joining the market every day, seemingly undeterred by the prospect of getting burned by bad actors.
The Lowingers began eyeing the life settlements market some three years ago. The family decided it needed to branch out beyond consumer electronics. So two years ago, the Lowinger family, which runs all of its businesses out of its New York City headquarters on Madison Avenue, opened up shop as NAF Funding. In short order, NAF became one of the fastest-growing life settlement brokers in the nation. “We are not in business for the short term,” says Andrew Lowinger, 58, who oversees all the family businesses. “We saw this as an area where we could build.”
