Life Partners Confirms SEC Investigation

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Life Partners confirms SEC investigation - Bloomberg

NEW YORK (AP) — Federal regulators are investigating Life Partners Holdings Inc., the insurance company confirmed Thursday.
The announcement came after the Wall Street Journal reported that the Securities and Exchange Commission was looking into the way the company estimates the life expectancies of insured individuals.
The Waco, Texas-based company buys life-insurance policies of terminally ill patients and the elderly at a discount to the policies' face value.
The Journal had previously reported on questions surrounding the accuracy of Life Partners' methodology for its life-expectancy projections. The projections are important because Life Partners can charge investors more for policies that have shorter life expectancies, and therefore faster payouts.
If the insured individual's death comes later than estimated, the payout is delayed and investors must continue paying premiums, reducing their eventual returns.
According to the Journal, Life Partners uses a physician based in Reno, Nev., to provide its life-expectancy estimates.
Life Partners said in a statement that it's cooperating with the investigation but that it did not know how long the investigation would take.
The company did not provide further details and a representative was not immediately available for comment.
Shares of Life Partners slid $2.61, or about 17 percent, to $12.43 in late trading.
 
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