Troubled life settlement fund may get reprieve despite bid collapse

Life settlement specialist Insetco is ready to renew talks with troubled life settlement vehicle ARM Asset Backed Securities, according to its chief executive, despite abandoning its bid to take over the struggling fund this morning.

Chief executive Clive Cook made the comments shortly after Insetco confirmed that its proposed acquisition had lapsed due to a failure to agree terms with ARM, the Luxembourg regulator and Ernst & Young, the fund’s supervisory commissioner.

Despite talks having been extended, Insetco said, the proposed deal had now expired and it was to resume trading on the Luxembourg stock exchange – having been suspended during the negotiations under to exchange rules.

Cook told New Model Adviser®: ‘We obviously made an offer to ARM, which lapsed on 30 November, and have attempted to keep a potential deal alive by offering to extend the offer. But we don’t seem to be getting very far, to be honest, so we’ve walked away.’

He added: ‘Quite a few weeks have passed by since we felt that there was any material change in anybody’s stance... although we’re more than happy to re-engage with Ernst & Young or with the board of ARM.’

The bid had raised hopes that ARM would escape liquidation, preventing consumers – such as the 800 clients of Rockingham Retirement who invested in the fund – from suffering losses.

The Insetco bid to buy ARM’s assets could have given clients up to a 7.5% return and their capital back, and avert complaints falling on the Financial Services Compensation Scheme.

Insetco launched the bid after the Luxembourg regulator, the Commission de Surveillance du Secteur Financier (CSSF), refused to grant ARM a licence, citing a lack of compliance with prudential and legal requirements.
 
The fund has been criticised by advisers for paying out more than £20 million in pre-paid commission, while the fund now does not having enough cash to meet redemptions.