A custom portfolio of period certain, guaranteed cash flows backed by annuities from major life and annuity insurance carriers offers geographic diversity, minimal carrier concentration risk, competitive yields, and zero market correlation or yield fluctuation. These cash flows are variously referred to as “Secondary Market Annuities” and abbreviated SMAs, or structured receivables.
Benefits of a Custom Portfolio:
When purchased properly through our system, the portfolio can be balanced, and individual cash flows can be added, removed, and re-sold in the future if needed.
Defining Portfolio Needs
Purchasing a portfolio of Structured Settlement payments involves acquiring multiple cash flows in distinct transactions that, in aggregate, fill a predefined yield, maturity, and duration goal.
Step 1, therefore, is to determine the desired cash flow. This allocation goal is input into the Letter of Intent or a Custom Order Escrow Agreement, which guides the purchasing team as they source in the marketplace.
Desired guaranteed outcomes can vary significantly among different institutions so it’s imperative to understand the asset class in general first, then specifically define the goal of the allocation.
Here are three example allocations for custom orders:
- $10 M Present Value (PV) allocation for principal and interest income starting in 2020 through 2035, S&P A- or better’
- $5M present value allocation to lump sum payouts with maturity 10 to 15 years- eg, maturing 2025 to 2030
- $10 M PV allocation returning interest in the first 10 years then returning principal and interest over an additional 20 years.
Here are three example goal oriented custom orders:
- Create $50,000 monthly income starting in 2020 lasting to 2040, with 3% increase per year, from S&P A- or better carriers
- Guarantee $5M payout in 2025, from S&P A- or better carriers
- Stabilize 25% of a portfolio with a guaranteed fixed deferred compounding yield over 10 years.
Portfolio orders of Structured Settlement annuities are made directly thru the DCF Exchange. Contact Nathaniel M. Pulsifer, President of the DCF Exchange, for further details