2016 Most Innovative Hedge Fund Manager - USA
Vida Capital is an alternative asset manager focused exclusively on longevitycontingent assets, including life settlements, annuities, notes, and structured settlements. Vida seeks to provide strong absolute and risk-adjusted returns. The Vida team are value investors and take a fundamental, bottoms-up approach to analysing investment opportunities.
Considered investments require significant data-driven analysis and mathematic rigor, and as such, the firm has developed significant in-house resources. In addition, Vida has internal proprietary models and stress-testing capabilities, which enhance the investing approach. Vida believes that the best investment outcomes are achieved through a 100 % dedicated and focused approach.
Vida Capital is focused exclusively on longevitycontingent investing and both managing and pricing longevity risk. Vida is a vertically-integrated asset manager and all key investment processes are performed in-house by experienced and fully dedicated professionals. Vida believes that longevity risk and other life-contingent products may enhance investment portfolios by providing diversification and attractive risk-adjusted outcomes. Moreover, Vida believes that longevity-contingent investments may show little correlation to the return drivers associated with other asset classes. Vida has 36 employees and over $1.1 billion in equity under management.
What Vida Capital Specialises in
Vida is an alternative investment firm focused on the purchase of unwanted and/or unneeded life insurance policies. When an individual no longer wants or needs his or her life insurance policy, the insured can surrender the policy to the insurance carrier, or he or she can sell the policy in the life settlement market, often for a premium to the policy’s cash surrender value. 1Vida is able to re-underwrite the health of the insured at the time of purchase, and is thereby able to establish a more current value of the policy based on the insured’s health, age, and actuarial science. Assets are priced individually, and are held within large diversified investment pools. The risk profile in a pool of assets versus an investment into a single asset is significantly different, and Vida aims to benefit from the more predictable outcomes that are derived from a large diversified pool. By holding a pool of policies, Vida is able to diversify away idiosyncratic risk such as carrier concentration and the variability of life expectancies.
Once Vida purchases the policy, Vida assumes the funding of all the premium payments and becomes the ultimate beneficiary of the policy. Vida’s inhouse originator, Magna Life Settlements, Inc. has consistently been ranked as a top secondary market life settlement provider.2 Magna is an active player in both the regulated and unregulated sides of the market. The U.S. life insurance market is vast, with approximately $20 trillion3 of face value currently in force. Moreover, it is estimated that $182 billion of face value lapses irrationally each year. 4
In addition to life settlements, Vida has experience with other longevity-contingent assets, including asset backed loans and synthetic structures. The expertise of the team in the pricing and managing of these specific risks is highly developed and specific.
How Vida Capital Stands out from the Crowd Vida believes that the firm’s unique dedicated strategy is what separates Vida from other alternative managers. Furthermore, Vida believes that the focused knowledge of actuarial science and pricing of longevity risk that the firm contains differentiates itself from other competitors. The firm has significantly outperformed the HFRX Global Hedge Fund Index based on the unique attributes of its investment focus and the depth of its in-house capabilities.
With regards to the life settlement market, one of the most notable differentiators between Vida and its competitors is the firm’s integration with Magna, a leading, regulated life settlement provider. While most of Vida’s competitors outsource their sourcing and underwriting to third party vendors, Vida’s integration with Magna provides the opportunity to directly participate in regulated secondary market transactions, and provides confidence to Vida that each policy is thoroughly analysed and vetted prior to its acquisition. Vida believes that thorough and detailed due diligence is the greatest responsibility of the investment manager.
The Role People Play in the Success of Vida Capital
The staff at Vida is a critical element in the management of life settlement assets, with 36 employees who have extensive experience in the life settlement and longevity-contingent market. Vida’s senior management team has over 100 years of life settlements and life insurance experience, cumulatively, and extensive knowledge of alternative investing. The firm’s asset management team is highly specialised and involved with industry groups, with employees sitting on the Board of the Life Insurance Settlements Association (LISA) and Institutional Longevity Markets Association (ILMA) and serving as the Co-Head of the US chapter of BVZL.
Vida sees the life settlement market as having a large potential for growth as more insureds and investors become more aware of the space. With increasing awareness of the market, more insureds who are considering lapsing their policy may look to the life settlement market to extract value. Vida will continue to develop its team and proprietary resources with a focus on being a market leader and innovator. With more data and a larger market, the firm anticipates that longevity-contingent assets will become more understood and commonplace within institutional portfolios. The opportunity set is compelling, and the Vida anticipates continued growth and interest in the life settlement and longevity-contingent space.
1 Empirical Investigation of Life Settlements: The Secondary Market for Life Insurance Policies, Januário and Naik 2014
2 The Deal produces an annual life settlement report which outlines the top 15 providers in the secondary space. Magna has been ranked in the top 10 annually since 2011.
3 https://www.soa.org/files/research/exp-study/ research-2007-2009-us-ind-life-pers-report.pdf
4 Conning Life Settlement Report 2015, 7.
General Disclosure: The information contained in this article is distributed for informational purposes only and should not be considered investment advice or a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed. The information contained in this article is accurate as of the date submitted, but is subject to change.
Company: Vida Capital Inc.
Name: William Tice
Address: 805 Las Cimas
Parkway Suite 350 Austin,