Purchase instead Repurchase
WestLB AG, Düsseldorf/Münster, laid the financial foundations for MPC Münchmeyer Petersen Capital AG, Hamburg, to make use of a new concept in the form of two closed funds. The MPC High Yield Funds Life ("Rendite-Fonds Leben plus") purchase existing life insurance policies of renowned German insurance companies, take care of the remaining insurance contributions and collect the payments due at maturity of the contract. "The market potential is enormous, as almost half of all life insurance contracts in Germany are cancelled before maturity," says Frank Simon, insurance and banking expert at WestLB Global Financial Markets.
This purchase model, so far unique in Germany, offers advantages for all parties involved: The policy holders receive a higher amount than they would be paid by their insurers if they returned their policy. Furthermore, insurance coverage for the bereaved persists as the contract will be continued with only the policy holder being changed. At the same time the insurance company can reduce the cancellation rate and the broker retains the right to claim fees. Finally, the fund investors, MPC Münchmeyer Petersen Capital as originator of the product and WestLB as financing institution profit from the excellent collateral quality of the purchased policies.
The Financial Solutions Group of WestLB contributed the debt capital required for this business model, currently almost unheard of in Germany. Including equity capital the total volume of the funds (according to prospectus) is EUR 228 mn. In Europe, the purchase of life insurance companies via closed funds is currently only practised in Great Britain. Simon: "The "Rendite-Fonds Leben" prove in a sophisticated way how the product worlds in banks and insurance companies can be combined. And this is not some engrossed instrument for institutional investors, but a product which will find a broad interest in the market due to the popularity of life insurance in Germany."
Contact for further information about MPC-Deal:
Frank Simon is structuring financial solutions bridging the gap between capital and insurance markets at WestLB Global Financial Markets. Before he joined WestLB the engineer worked as an underwriter for a reinsurance company.
Contact: +49 211 826 5735, frank_o_simon@westlb.de
Contact for questions relating to Global Financial Markets:
Melanie Struve
WestLB Global Financial Markets, Marketing & Communication
'+49 211 826 71887
melanie_struve@westlb.de
Contact for issues relating to WestLB Group:
Dr. Michael Wilde
WestLB AG, Press & Information
+49 211 826 2210
michael_wilde@westlb.de