Monthly Archive for January, 2009

During this time of economic crisis, in particular when even established financial institutions are affected, one really has to assess the risk of all the financial products held. The most obvious instance will be that of Lehman mini-bonds, which prior to the crisis, have been marketed as a low risk structured product. Another instance of structured products are Structured Settlement Annuities, where for instance in an accident when certain conditions are satisfied for a payout, the payout is made on a regular basis and works like an annuity. An annuity is defined on the U.S. Securities and Exchange Commission’s website as ‘a contract between you and an insurance company, under which you make a lump-sum payment or series of payments. In return, the insurer agrees to make periodic payments to you beginning immediately or at some future date’.

Sometimes the holder of such structured settlement annuities may wish to obtain a lump sum payment upfront instead of waiting for the periodic hand outs from the insurance company. In this particular crisis, whereby even insurance companies are not spared, one may be motivated to “liquidate” such structured settlement annuity rather than to wait. Especially for these products, there is no upside unlike shares but rather the downside of holding seems to be higher in a situation where even established financial institutions could go under.

There are a number of companies that provide liquidity to owners and holders of such STRUCTURED SETTLEMENT ANNUITIES. For instance, companies like Settlement Capital buy the annuity payments from the holders of insurance or lottery winnings so that these people can have a lump sum upfront. If you are interested, just ask for a free quote and find out how much of the future payments are being discounted in these settlement transactions.