GWG Holdings Inc., a buyer of life insurance policies on the secondary market, is offering $1 billion in L Bonds, a publicly registered corporate debt, indicating an increase in the secondary life insurance market, says GWG.
The secondary life insurance market has grown from a base of zero when the market emerged in the mid-1990s to more than $35 billion today, according to industry sources, and is expected to continue its growth over the next few years.
GWG, based in Minneapolis, buys life insurance policies that are no longer needed or wanted by the policyholder at more than the cash surrender value, but less then the face value, and holds them until maturity.
The bonds are being offered at interest rates of 4.25 percent to 9 percent, depending on how long they are held, which can vary from six months to seven years. The bonds can be purchased in $25,000 increments.
The $1 billion bond is a follow up offering to the $250 million renewable secured debenture offering made in 2012, which was fully subscribed in December 2014.
This new bond offering is in response to increased investor and market demand for an uncorrelated fixed income investment, says GWG, and shows the increase in the market as well as the growth of GWG. GWG held $482 million in policies when the renewable secured debenture offering was made and now has almost $800 million in face value of life insurance policies, GWG says.