The Fund is a newly organized, non-diversified, closed-end investment company registered under the 1940 Act. The Fund intends to operate as an interval fund that will continually offer shares and make quarterly repurchases of a portion of the Fund’s shares at the net asset value (“NAV”) per share. See “QUARTERLY REPURCHASES OF SHARES” on page 39 of this Prospectus. The shares do not represent a deposit or obligation of, and are not guaranteed or endorsed by, any insurer, bank or other depository institution and are not federally insured by the Federal Deposit Insurance Corporation, the Federal Reserve Board, and state insurance guarantee fund, or any other government agency.
The Fund is an appropriate investment only for those investors who can tolerate a high degree of risk and do not require a liquid investment.
The Fund’s investment objectives are to deploy the proceeds of this offering into an actively managed, large and diversified portfolio of tertiary market, non-variable individual life insurance contracts (“Mortality Contracts”), and assets similar to or derivative of Mortality Contracts, and individual annuities and individual single premium income annuities, and similar or derivative assets (“Annuity Contracts” and together with Mortality Contracts, are referred to herein as “Longevity Assets”). The Manager expects that investments in the Longevity Assets will provide current income and an attractive return upon sale or maturity of such investments. Longevity assets, other than annuity contracts, generally do not pay dividends until maturity. Instead, most life insurance contracts will require the Fund to pay policy premium to keep the life insurance contracts in force until maturity or sale. We expect that the value of Mortality Contracts will appreciate up to face value over the term of the contract. Annuity contracts, on the other hand, pay regular distributions for the life of the settlor. We plan to use share proceeds to purchase annuity contracts for a lump sum discounted present value; the return on investment will be determined based on the settlor’s life as measured against the actuarial estimate upon which we based the purchase price.
- The “tertiary market” consists of a pool of in-force life insurance policies or portfolios available for purchase in the secondary market that are bought and sold between investors rather than directly from insureds.
- Non-variable life or “fixed” insurance contracts are life insurance policies that are not fractionalized, are unaltered from the original issue, and offer a pre-determined payout or death benefit to the policyholder upon the insured person’s death.
- Individual annuities are financial products offered by insurance companies that provide a series of regular payments to an individual in exchange for a lump-sum payment or a series of premium payments.
- Individual single premium income annuities are insurance contracts that require a single lump-sum payment from the policyholder. In return, they offer guaranteed regular income payments for a set period of the annuitant’s lifetime, with no investment risk and no access to the principal.
The Fund seeks to achieve its investment objective by utilizing proprietary computing to estimate the stochastic properties (random but probabilistic events or occurrences) of available Longevity Assets. By leveraging this technology, the Fund seeks to identify and acquire Longevity Assets that it believes offer attractive risk-adjusted returns (discount to face value, while accounting for the time-value of the invested capital and payment of premium to service the Mortality Contracts). We note that realization of investment returns, however, are limited to Quarterly Distributions (page 46) and Quarterly Repurchase of Shares (page 43) The Fund expects to purchase a pool of distinct Longevity Assets with unique terms and provisions with respect to the purchase price, premium payments, face amount and life expectancy of the insured. The Fund intends to diversify its portfolio by investing in a variety of Longevity Assets issued by several different insurance carriers. The Fund will also use the technology provided by the Sponsor’s affiliate, ABL Technologies, LLC (“ABL Technologies”) to monitor the performance of its investments and adjust the portfolio of Longevity Assets as needed to maximize the portfolio’s income and growth potential. The Fund cannot guarantee that it will achieve its investment objective.
The Manager, after considering advice from ABL Technologies, will determine to purchase, sell or hold a Longevity Asset for the Fund based primarily upon the following considerations: (i) the difference between market-place’s value of a Longevity Asset vs the Fund’s valuation of a Longevity asset, (ii) the diversity of the Fund’s investment portfolio, and (iii) the Fund’s cash flow needs and excess cash. The Fund and ABL Technologies will focus on the following factors to develop its estimate of the value of a Longevity Asset: (i) age of the insured, (ii) life expectancy of the insured, (iii) the life expectancy ratio of the insured (this is the ratio determined by the life expectancy of the insured as compared to the breakeven point of the investment), (iv) the survival probability as of the breakeven date of the insured, (v) maturity probability (the survival probability of the policies insured at which the policy’s coverage expires), and (vi) return on capital investment based upon the estimated purchase price discount to face value payout. The methodologies developed by ABL Technologies also enable the Manager to deploy a dual criterion evaluation system. The first criterion focuses on the valuation of Longevity Assets using a defined risk-adjusted market discount rate, coupled with a projected life expectancy. The second criterion derives its valuation from the cost basis of the Longevity Asset and incorporates the risk-adjusted historical trade spread. This inclusion ensures that the valuation considers the dynamics of historical trading patterns using over 1000 realized Longevity Asset trades spanning over a 4-year period. The final valuation would be determined by taking the lesser of these two figures.
The Fund expects to engage Abacus Settlements, LLC, an affiliate of the Manager, as its primary life settlement broker. LMA also intends to present Longevity Assets to the Manager that meet the Fund’s investment criteria for potential purchase by the Fund. Any transactions between an affiliate of the Manager and the Fund will be effected only in compliance with Rule 17e-1 of the Investment Company Act. In addition, any purchase brokered by an affiliate of the Manager and the Fund will be effected only at prices which are at or below market valuation price used in the Fund’s valuation guidelines and will be subject to the oversight and approval of the independent trustees.
Closed-end funds differ from open-end investment companies (commonly referred to as mutual funds) in that closed-end funds do not typically redeem their shares at the option of the shareholder. Rather, closed-end fund shares typically trade in the secondary market via a stock exchange. Unlike a traditional closed-end fund, however, the Fund’s shares will not be listed on a stock exchange and are subject to restrictions on transfer. Instead, the Fund will make quarterly repurchase offers to shareholders by offering to repurchase no less than 5% of the shares outstanding at the then-current NAV, as determined by the Manager by leveraging the proprietary Longevity Market MethodologiesTM (see “Investment Strategy and Criteria Used in Selecting Investments in Longevity Assets” at page 1). Similar to a mutual fund, the Fund is subject to continuous asset inflows. However, because the Fund is an interval fund, it will have only periodic (quarterly) outflows.
Risk of Fund Closure.
Notwithstanding the continuous nature of this offering, the Fund may close to new investors at the discretion of the Manager (subject to Board approval). If the Fund is closed to new investors, then only existing shareholders of the Fund will be eligible to purchase the Fund’s shares or receive shares from another existing investor in a peer-to peer transfer. The Fund may re-open to new investments and subsequently close again to new investors at any time at the discretion of the Manager (subject to Board approval). Any such opening and closing of the Fund will be disclosed to potential new investors and existing shareholders through a supplement to this prospectus.
An investment in the Fund involves a considerable amount of risk. It is possible that you will lose some or all of the money you invest in shares of the Fund. An investment in the Fund is suitable only for investors who can bear the economic risks associated with limited liquidity and should be viewed as a long-term investment. Before making your investment decision, you should (i) consider the suitability of this investment with respect to your investment objectives and personal financial situation; and (ii) consider various factors such as your personal net worth, income, age, risk tolerance, liquidity needs and retirement income goals.
The business and affairs of the Fund, including supervision of the duties performed by the Fund’s Manager, are under the direction of the Board. The names and business addresses of the members of the Board and officers of the Fund and their principal occupations and other affiliations during the past five years are set forth under “Management of the Fund” in the SAI. ABL Wealth Advisors, LLC serves as the Fund’s investment adviser. The principal executive office of the Manager is at 2101 Park Center Drive Ste 160, Orlando, FL 32835.
The Manager provides day-to-day advice regarding the Fund’s portfolio transactions and manages the Fund’s portfolio. The Manager reports to the Board of Trustees of the Fund (the “Board”) and is responsible for the Fund’s business affairs and other administrative and reporting matters. The Manager makes the investment decisions for the Fund and places purchase and sale orders for the Fund’s portfolio transactions. As permitted by applicable law, these orders may be directed to any broker, including LMA and its affiliates. While the Manager is ultimately responsible for the management of the Fund, it is able to draw upon the research and expertise of its management affiliates for portfolio decisions.
The Manager also performs the following additional services for the Fund:
- Supervises all non-advisory operations of the Fund;
- Provides personnel to perform necessary executive, administrative and clerical services for the Fund;
- Arranges for the preparation of all required tax returns, reports and notices to shareholders, prospectuses and statements of additional information and other reports filed with the SEC and other regulatory authorities;
- Maintains the records of the Fund; and
- Provides office space and all necessary office equipment and services.
The investment management agreement between the Fund and the Manager (the “Investment Management Agreement”) provides that the Manager shall not be liable for any error of judgment or mistake of law or for any loss suffered by the Fund in connection with the matters to which the Investment Management Agreement relates, except a loss resulting from the Manager’s willful misfeasance, bad faith or gross negligence in the performance of its duties or from reckless disregard of its obligations and duties under the Investment Management Agreement.
Acquisition of Longevity Assets.
Acquisition of Longevity Assets. The Fund intends to acquire Longevity Assets in the open market from industry specialists, including through our licensed life settlement provider affiliate, Abacus Settlements, LLC. Once the Manager identifies a Longevity Asset for purchase, the Fund will pay the purchase price into an escrow account maintained by Abacus Settlements, LLC, as required under life settlement regulatory laws, and the seller will deposit the change of ownership and beneficiary forms for the Longevity Asset with the same escrow. Upon completion of the trade, the purchase price for the Longevity Asset will be released to the seller less the fees or commission charged by the seller’s life settlement broker, if any. The Longevity Asset will then be delivered to the Fund’s custodian in paper form, digitized for ease of recordkeeping, and held in a sub-account for the benefit of the Fund. Fees, expenses and commissions paid to the service providers who facilitate the transaction, including any affiliated service provider such as Abacus Settlements, LLC, will be set at market rates and disclosed in our financial statements as a cost of acquisition.