Q Capital leverages its operational expertise in the industry to offer third-party clients advice, research, and general information on life settlements.  Q Capital’s founder, Steven Shapiro, has an extensive background in investment banking and private equity investing which, combined with his and the rest of the team’s life settlement expertise, provide a unique skill set for clients.  Q Capital offers a variety of advisory and consulting services, including:

Through its daily activities and involvement in the life settlement market, Q Capital has exposure to all aspects of the life settlement market and has insight into current trends and active market participants.

Policy and Portfolio Valuation

Q Capital offers policy and portfolio valuation services to policy owners, investors and lenders in the life insurance, life settlement, and premium finance industries.  Q Capital provides in depth policy and portfolio statistical analysis as part of its valuation reports, enabling its clients to best understand the factors that affect the value of a life insurance policy.  Q Capital can also take into account current market conditions due to its active participation in the market.

The valuation parameters can be determined by the client, or Q Capital can use its knowledge of current market conditions to provide an accurate and timely valuation report indicating what valuation the policy/portfolio may hold in the current market.  Q Capital provides a viable alternative to understanding the value of the policy/portfolio even if there is no intent to sell at the present time.  For example, valuation analysis can be utilized for accounting purposes.

Q Capital leverages the experience and expertise from its policy origination activities, but these businesses are independent of each other in order to provide an honest and accurate valuation to its clients.  If after receiving a valuation report, a client wants to pursue a policy/portfolio sale, the Q Capital can facilitate this process.

Q Capital has provided independent valuations on policies with a face value in excess of $800 million.

Sell-Side and Buy-Side Advisory Services

Q Capital has experience workings as a buy-side and sell-side advisor on portfolio transactions.  In a sell-side transaction, Q Capital offers the following services:

  • Portfolio valuation analysis, including sensitivity analysis
  • Identify potential buyers
  • Preparation of files for buyer review to bring policy files up to date, including ordering current life expectancy analyses
  • Preparation of sales materials and portfolio/policy data sheets
  • Set up data room and document management system
  • Management and coordination of the sales process
  • Communication with potential purchases
  • Contract negotiation and advice (market standards, etc.)
  • Verification of coverage processing
  • Change of ownership and beneficiary processing and oversight

In a buy-side transaction, Q Capital offers the following services:

  • Industry and market research, analysis, and review
  • Portfolio valuation analysis, including premium optimization, sensitivity analysis, and key statistical measures of projected portfolio cash flows and returns
  • Due diligence services, including a full review of each policy for accuracy, completeness, “quality of origination,” marketability, anti-fraud and regulatory compliance
  • Advice regarding third-party service providers
  • Contract negotiation and advice (market standards, etc.)
  • Document acquisition, if policy documentation is incomplete or outdated (either pre- or post-acquisition)
  • Change of ownership and beneficiary processing and oversight
  • Transition to Q Capital’s servicing platform if client wishes to engage Q Capital as servicer

If required, Q Capital has template sales and purchase agreements that can be made available to its clients as a basis for a transaction.  In addition, Q Capital has extensive experience with most of the leading attorneys in the life settlement industry and can provide guidance and recommendations and other service providers that may be needed (escrow agent, collateral agent, securities intermediary, etc.)

In 2011, Q Capital completed four advisory assignments on behalf of four different clients – one buy-side and three sell-side transactions.  Clients included a private equity firm, closed-ended fund managers, and an insurance company.

Due Diligence Services

It is important to understand that modeled valuation is not the only factor that affects the purchase/sale price of a policy in the life settlement market.  The “quality” of the policy and the “quality” of the specific purchase process (including documentation and discipline) is also, and in some cases, more important than the actual policy valuation.  At a minimum, the quality of a policy complements the valuation and has a major impact on the market price of a policy, whether analyzing for internal purposes or for a potential purchase/sale transaction.

Through expertise gained in its affiliated life settlement provider business, Q Capital has tremendous experience reviewing policy documents, the facts around policy sales, and the legality and regulations surrounding such sales.  In particular, the initial life settlement transaction must be carefully reviewed so as to ensure that the current and/or prospective future owner does not face any adverse claims (from the insured’s family or regulator) when ultimately trying to collect on a policy.  In particular, Q Capital has expertise in reviewing policy document packages for the contents (completeness, accuracy, correct set of documents, etc.) and looking for STOLI transactions.  Q Capital’s due diligence services include a full review of anti-fraud and regulatory compliance matters.

Q Capital will provide a risk assessment on policy files so as to allow its clients the ability to determine whether an individual policy within a portfolio (or individually) meets its criteria.  Q Capital can also advise on steps that can be taken to improve the fact pattern and perhaps improve the quality of a case file even after the original transaction was completed.

Premium Optimization Analysis

Q Capital analyzes all available insurance policy information (in-force illustrations, policy contract, annual statements, etc.) to calculate the optimal premium payments for a policy.  Q Capital uses its proprietary pricing system to calculate the minimum required cost of insurance (“COI”) that is needed to keep a policy in-force.  Q Capital updates premium estimates based upon the most recent policy information available.  The process can be performed continuously to ensure a policy is maintained as efficiently as possible.   The premium optimization tool ensures that a client can maximize its investment in a policy by streamlining the cash flows of a policy.

Premium optimization is included in policy and portfolio valuation services but can also be offered separately on individual policies or a portfolio of policies.

Portfolio and Policy Sourcing and Origination

Q Capital is actively involved in originating and sourcing policies in the life settlement market, both in the secondary and tertiary markets.  Q Capital focuses its tertiary market sourcing for its advisory and consulting clients, making this inventory of portfolios for purchase available for review.  In addition, Q Capital can work with clients to source policies not currently available in the marketplace that meet specific target criteria.  Q Capital has differentiated itself in this area by finding small pockets of proprietary policies available that are not widely auctioned.

In 2011, Q Capital reviewed and sourced in more than 800 policies with a face value of approximately $4.4 billion available for purchase on the tertiary market.

Industry and Market Research, Analysis, and Review

Q Capital has in-depth knowledge about all aspects of the life settlement industry.  The Company offers clients research and analysis to better understand the industry, its intricacies and current trends.  Q Capital provides clients insight into:

  • Pricing trends/market IRRs
  • Policy and portfolio trading volumes
  • Competitive environment
  • Trend analysis
  • Future market estimates and projections
  • Analysis of secondary and tertiary markets, including comparative statistics and analysis
  • Market history

Through its activities as an advisor and operator, the company keeps abreast of all of the past, present, and expected future activities in the industry.  The Company also quickly sees pricing and valuation trends through its provider activities and tertiary market sourcing and origination.

Document Acquisition

Q Capital offers clients the service of document acquisition to get case files up to date and complete.  The document acquisition process can be challenging at times, as the policy may not be owned by the original purchaser, and the original policy owner/seller/insured may not be cooperative.  Q Capital has an excellent track record of meeting this challenge and obtaining hard to get documents and signatures from sellers/insureds, where required.  Document acquisition typically includes one or more of the following:

  • Updated medical release forms from insureds
  • Updated medical records
  • Updated life expectancy certificates
  • Updated illustrations from the insurance companies
  • Verification of coverage from the insurance company
  • Death certificates of insureds

Regulatory Environment Review

Q Capital has extensive experience in dealing with the life settlement regulatory environment and can provide clients with a review and assessment of such.  In addition, Q Capital can advise its clients on licensing requirements needed for its activities (or potential activities) in the industry.  Furthermore, given its position and activity in the industry, Q Capital can provide its guidance on the expected trends and anticipated changes that could have an impact on a client’s business or proposed business activities.