Life Settlement Financial's CEO Testifies before SEC Life Settlement Task Force

WASHINGTON, Nov. 2 /PRNewswire/ -- Peter Mazonas, Life Settlement Financial
(LSF) CEO testified today before the SEC Life Settlement Task Force in support
of the use of accounting standards to enforce consistency in the valuation of
securitized pools of life settlements. As investment banks ramp up their
efforts to create new investment opportunities, the SEC Life Settlement Task
Force is studying how this can be done in ways that protect investors in this
emerging market. Hoping to avoid the catastrophic events brought about by
misvalued mortgage pools, the SEC heard from an industry leader who described
new methods of individual life settlement evaluation.

A life settlement is the sale of a life insurance policy to a third party. The
new owner continues to pay the premiums and receives the face value of the
policy at maturity. The original policy owner gets out from under the burden
of paying premiums and receives a lump sum cash payment. An increasing number
of states have adopted or rewritten life settlement legislation in light of
the demand for such transactions.

Now, as investment banks are looking to create securitized pools of these
assets, the need for even greater transparency becomes crucial. Whether in an
individual policy or pool of policies, the key variable in pricing involves
the estimation of the life expectancy of the insured. The shorter the life
expectancy (LE), the fewer years of premiums necessary to keep the policy in
force. The longer the LE, the more years that premiums will have to be paid
out before collecting the death benefit. This is the key determinate in
pricing a life settlement policy.

FASB auditing standards require that there be two methods to evaluate or value
the policy pool. Since the only real variable is the LE, this would suggest
the need for two methods of predicting life expectancy. The currently
available method is based on underwriter's review of the medical records of
the insured. The nationally recognized underwriters all use the same medical
records but apply their own interpretation of the information within. Although
this method has been the basis for LE prediction, it contains some inherent
errors that can result in significant mispricing.

For the SEC to apply the necessary two methods of evaluation, Mazonas
suggested the need for another predictive tool, "A distinctly different
methodology exists which is based on current health and accurately predicts
the decline of health at the individual level." Based on eighteen years of
data from the National Long Term Care Survey, award-winning actuary Eric
Stallard, research professor at a major research university, has created a
model that utilizes more, and more relevant, information than is found in a
medical records only LE estimate. This peer reviewed and published model is
based on over 317,000 person years of data.

The mortality model has since been independently implemented in the Longevity
Cost Calculator (LCC), owned by Life Settlement Financial, and a working
Web-based model is available at https://www.lifesettlementfinancial.com. The
LCC takes into account functional and cognitive impairments as well as range
of motion and behavioral changes of the insureds. Health care workers in
senior residences and hospitals have long witnessed that these impairments are
a greater predictor of mortality than medical conditions. LSF has made this
available in a computer model based on 76 questions about the insured that
include medical conditions.

Mazonas applauded the SEC's desire to get it right at the beginning as this
new wave of securitizations takes shape. "It would seem a shame to squander
this opportunity, especially given the problems concerning other types of
securitizations that we have all witnessed during the recent past."

Life Settlement Financial, LLC was founded in 2006 and is located in Northern
California. Its management believes that life settlements are a consumer
benefit as well as a public policy enhancement. Giving seniors who own life
insurance the possibility of finding cash that they did not realize that they
had should be encouraged in this economy. As seniors struggle to avoid relying
on state and federal Medicaid aid, they should be rewarded for remaining
solvent and a life settlement can go a long way toward allowing this to occur.

For more information about life settlements and LSF go to
www.lifesettlementfinancial.com or call 888-321-5970.

Media Contact: Dr. Bob Rosenberg, 415 526-5973,
bob.rosenberg@lifesettlementfinancial.com

SOURCE Life Settlement Financial, LLC

Dr. Bob Rosenberg, Life Settlement Financial, LLC, +1-415-526-5973,
bob.rosenberg@lifesettlementfinancial.com