A life settlement is simply the sale of an existing life insurance policy by a terminally ill or elderly person to another party. The price of the policy is negotiated and sold by the owner at a discount to the face amount. The purchaser then collects the full amount paid out under the policy.

Life settlements are attractive to policyholders because they provide a secondary market for life insurance policies that are no longer needed or wanted. Investors are attracted to life settlements because they offer the opportunity for potentially high returns that are not tied to stock or bond markets, interest rates, or business cycles.

Over the past few years, the market for life settlement has grown substantially both from the demand and supply sides of the transaction with an increase in the average face amount of policies presented for sale. Based on our market research, we believe that the total face value of life settlement transactions completed during 2006 was approximately $5 billion in face amount. In 2005, Sanford C. Bernstein & Co., LLC, a research unit of Alliance Bernstein, L.P., estimated the market to be approximately $13 billion in face value of policies purchased from 1998 through 2005.

Because of the large number of policies available and the diversification that life settlements provide, we believe that interest from both individual and institutional purchasers will continue to grow steadily throughout the next fiscal year.