Cultivated from our principals’ decades of experience in the asset class, Preston’s investment approach is built on a foundation of integrity, discipline, ingenuity, and strong alignment.
Over the past 20 years, Preston has aggregated comprehensive data on the policies it has purchased, sold, or underwritten, and has systematically developed this information into one of the largest performance-based life settlement datasets in the industry. We believe analysis of this asymmetric information gives Preston an edge in our modeling capabilities and predictive forecasting of longevity.
Preston is a longstanding, consistent, and high-volume buyer in the asset class, with extensive experience in both the secondary and tertiary markets. We have a wide network of industry connections to source bilateral transactions, a deep understanding of market terms and contracts, and a longitudinal and comprehensive market view of the happenings in the industry. Through our experience, our relationships, and our scale, we have developed an expansive network of information flow and sourcing avenues, giving Preston an edge.
Having represented some of the largest pools of capital in the life settlement market since 2004, we have established a reputation for closing when and where committed. We believe this reputation, which makes Preston a go-to buyer, leads to regular invitations to participate in life settlement auctions and sale processes. Our diversified business model, including working directly with insurance carriers and as an advisor to multiple large sellers over the past decade, has allowed us to participate in bespoke transactions. This regular access to high-quality deal flow is a key aspect of Preston’s value proposition.
Over 20 years ago, our founders identified the lack of precision in the life expectancy underwriting of life settlements and had the foresight to begin aggregating data on every life settlement they reviewed. This data has evolved into LifeEdge, a ground-breaking life settlements analytics engine derived from what we believe is the largest longitudinal data set in the asset class. Containing over 20 years of aggregated life settlement medical records and data from over 165,000 insurance policies, LifeEdge provides Preston with a differentiated perspective on longevity and morbidity. This proprietary viewpoint into the history of the actual performance of various cohorts and the bona fide asset value, is a driving factor in Preston’s mission of generating disproportionate risk-adjusted returns.
In addition to our in-house analytics team of 10 data scientists and 12 software engineers dedicated to the continual improvement of LifeEdge, Preston employs four medical underwriters for deeper insight into the human element of life expectancy underwriting.
Preston’s proprietary analytical models are validated by our highly experienced medical underwriters. They come with extensive clinical experience and undergo rigorous ongoing medical education to stay abreast of medical breakthroughs and changes in mortality expectations. Underwriters engage in a dynamic process of human validation to answer two critical questions: Are the inputs correct? And does the output make sense medically and consistently with scientific studies, mortality data and their own medical expertise? Through our medical professionals’ expertise, we establish nuances to conditions such as severity of impairment, dated impairments that are no longer relevant, and lifestyle factors that can contribute to shorter or longer life expectancies.
Today, multiple factors are driving fundamental changes in the life settlements market, including inconsistencies in life expectancy forecasts, litigation, and shifting supply and demand dynamics. Further, each life insurance product is unique, and specific policy features can add value or create risks, changing the longevity outlook meaningfully. We acknowledge that the value of each life in our portfolio evolves daily, necessitating timely information and precise decision-making to maximize potential return. To combat this ever-changing environment, we take a highly active approach to managing our portfolios. With Preston’s distinctive method of unlocking value and mitigating risks, we can navigate these constant shifts and adapt with agility.
When it comes to executing on our investment strategy, we prioritize risk management to avoid unnecessary exposure. In the life settlement asset class, the highest level of risk mitigation is performed at the time of policy acquisition through establishing the appropriate life expectancy. However, life settlements are often long duration assets which require constant cash outflows in the form of premium payments. Preston employs robust reserve methodologies and liquidity management techniques to properly protect our portfolios and policies from lapse risk. Further, we actively manage diversification amongst carriers, products, insureds, and third-party service providers as part of our risk management process.
Preston has deep operational experience in sourcing, analyzing, and executing leverage solutions specific to life settlement portfolios. We have sourced over $3.7 billion in debt financing with multiple lending facilities and executed on the first ever and largest-to-date life settlement backed securitization. We believe in buying and exiting policies opportunistically in order to derive the most value for our investors.
At Preston, we recognize that our most invaluable asset is our human capital and have created a culture characterized by the interplay of collaboration, intellectual rigor, and an entrepreneurial ethos. All of which is underpinned by a steadfast commitment to the highest ethical principles.