The Advantages of a Multi-Strategy Approach in the Longevity-Based Arena
Our Portfolio Management team explains our strategy’s proven ability to provide compelling risk-adjusted returns and long-term capital appreciation by investing in a proprietary portfolio of life insurance policies, life-contingent annuities, and related private credit opportunities.
TRANSCRIPT
Steven Luongo. Chief Investment Officer, AIR Asset Management.
Jeff Black. Director of Portfolio Management, AIR Asset Management.
Q: WHY INVEST IN ALTERNATIVES?
A: The main reason to invest in alternative assets is to diversify more traditional portfolios. Due to the high-level of volatility in many public markets, large institutions are investing in assets like our own to generate higher risk-adjusted returns. We believe all classes of investors should have access to alternatives for these same reasons. This is especially true for any alternatives that can also generate consistent returns, as the longevity space has in many instances been able to do. As an alternative manager, we focus on longevity-related assets, which include investments such as life insurance, annuities, and various forms of structured settlements. This is what sets us apart. Most longevity managers focus exclusively on life settlements, whereas we look to enhance our performance by complementing life settlements with other instruments from both a direct investment and private credit perspective. We believe this multi-strategy approach helps us generate a stronger risk-reward profile for our investors.
Q: HOW DO ANNUITIES COMPLEMENT LIFE SETTLEMENTS?
A: Generally, we believe annuities and life-contingent structured settlements are ideal complements to life settlements. Life settlement assets tend to exhibit negative cash flow characteristics, while annuities are typically positive cash flow, also, an investor in life settlements is directly exposed to mortality risk, while annuities are short mortality risk; therefore, the two investments can complement each other from a cash flow and risk perspective.
Q: HOW DOES PRIVATE CREDIT FIT INTO THE STRATEGY?
A: We add the private credit element to further diversify our risks and to generate an absolute return through interest and fee income. Our primary focus is longevity-based lending. We believe it is an area where we possess an edge due to our experience in lending and understanding longevity. We have the ability to structure credits and understand the underlying collateral. By issuing loans with attractive loan-to-value ratios, we strengthen the overall performance of the strategy through reliable income streams.
Q: WHY AIR ASSET MANAGEMENT?
A: Every investment carries risk. That's why it's critical for investors to choose skilled and experienced asset managers they can trust. At AIR Asset Management, we look to build upon proven success by identifying new opportunities that deliver for our investors. Our multi-strategy approach is a great example of how we do this.