Secondary Market Annuities as a Source of Secure Investment Returns

            In 2008, when large institutional investors began to suffer severe financial distress from the “un-winding” of various real estate “mortgage backed asset securitizations”, cash flow in the banking sector and financial markets all but ceased to exist. One immediate solution to the problem was to make available to “private investors”, the same low risk, high yield, commercial grade paper arising from primary market “factored” annuities; previously only available to large institutional investors.

“Factored Annuities” are “pre-issued” or “secondary market” annuities arising from structured settlements, lottery winnings, casino jackpots, and/or similar payment streams that have been previously sold by an original annuitant.  And, the rates of return that are available to “private investors” generally range anywhere from 4.00 to 9.00% (based on an annual effective return).

Most important, is the low level of risk that accompanies the purchase of a “pre-issued” annuity as a “private investor” will “step into the shoes” of the original annuitant and will generally be entitled to same guarantees and protections initially offered the original annuitant by various rated insurance carriers that originally issued the underlying annuity.

The “purchase” is also generally accomplished through the use of a 3^rd party “factoring company”; as a highly regulated Federal and State Court approval process is first required. Once completed, however, the “private investor” ultimately receives the initial annuitant’s “vested rights” to a future payment stream”.