SLS Strategies has retained the Capstone Capital Management Trust in a post-portfolio-subscription engagement to provide an Extended Longevity Risk (any one or more insureds live beyond their medically underwritten life expectancy assessment plus a margin of an additional two years) Transfer and Senior Life Settlement portfolio asset management services. The potential for Premium or Capital Calls exists in the event that an insured lives beyond LE+2 and all premium reserves have been exhausted.
In each SLS Strategies Investment portfolio offering, a segregated primary premium reserve account is established by the Capstone Capital Management Trust, held and cash managed at the Union Bank of Switzerland (UBS) throughout the maturation cycle. Each SLS Strategies portfolio’s Premium Reserve is funded at subscription completion in an amount equal to each policy’s average life expectancy (LE) assessment plus an additional twenty-four months (LE+2).
The Capstone Capital Management Trust Risk Transfer is effected by three (3) inherent longevity risk hedging mechanisms:
– Initial Premium Reserves are funded at subscription by an amount equal to LE+2.
– Premium Reserves are cash managed to create additional yield to elongate the Capstone Capital Management Trust’s premium paying ability.
– In the event of an early policy maturity (prior to LE+2) in any Capstone Capital Management Trust segregated account, all surplus premium remaining at maturity will be transferred to the Capstone Capital Management Trust general account, retained and cash managed to further elongate premium paying ability on any policy under management that remains un-matured at or beyond LE+2.
The Capstone Premium Reserve Management (PRM) Algorithm is designed to mitigate the risk of extended longevity to any single investor by applying the hedges enumerated above to all policies under management. The algorithm provides the benefit of spreading the extended longevity risk across a statistically significant universe of policies thereby effectuating a higher degree of diversification as it relates to premium call exposure than if the investor was solely relying on the mortality experience in a smaller, captive portfolio.
All Capstone Capital Management Trust segregated premium reserve accounts are overseen by an independent corporate trustee. In the event that the Capstone Companies would cease to operate, the trustee is directed to continue to pay premiums until all reserves are depleted and the portfolio is completely matured.
As a secondary measure in the event of Capstone Capital Management’s insolvency, SLS Strategies would assume responsibility for paying premiums on any un-matured policy in an SLS Strategies Investment portfolio. Only as a result of the Capstone Capital Management Trust and SLS Strategies exhausting their collective reserves, could an investor be at risk of receiving a premium call. In the unlikely event that the above scenario was to occur, premium call notices would be transmitted to the individual portfolio subscribers well in advance of a policy lapse. As a result of any subscriber that is unable or unwilling to satisfy the premium call notice, the trustee is directed to offer the defaulting subscriber’s position to the remaining subscribers participating in the portfolio. Please see the The Dicke Company d/b/a SLS Strategies Private Placement Memorandum (PPM) for complete details.
Any performance data shown represents many possible scenarios and is no way indicative of past performance. Past performance does not guarantee future results and current performance may be lower or higher than the performance data quoted.
Investment return and principal value of an SLS Strategies investment will not fluctuate so that an investor’s pro rata share is redeemed, it will be worth the amount of the gain plus the return of the subscriber’s original cost basis. This summary is for informational purposes only. The contents are based on information from sources believed to be reliable, but accuracy and completeness cannot be guaranteed. The summary has been prepared solely to determine investor interest in SLS Strategies. The Hypothetical Portfolio Exhibit has been being furnished on a confidential basis to a limited number of prospective investors who are both “Accredited Investors” and/or “Qualified Clients” and may not be used or reproduced for any purpose. This summary is not an offer to sell or a solicitation of an offer to buy an interest in an SLS Strategies Portfolio. Such offer or solicitation can only be made by means of a Confidential Private Offering Memorandum and related exhibits, which should be carefully reviewed. To obtain a Confidential Private Offering Memorandum, please telephone Kevin Dicke, President – The Dicke Company d/b/a SLS Strategies at 614.286.1296 or via email at kdicke@slsstrategies.com.