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Embattled death bond fund returns $20m to trapped investors

Embattled death bond fund returns $20m to trapped investors

Stricken death bond fund EEA Life Settlements has returned a further $20 million (£14.4 million) to trapped investors.

According to its latest update, the fund has redeemed $5.46 million of shares across all continuing cells after its redemption day on 2 January.

The fund’s board of directors have also confirmed it is distributing approximately $15.1 million to investors who have run-off shares, by way of a compulsory redemption of a portion of each holder’s stakes in the fund.

In the fourth quarter last year, there were three reported maturities with a total net death benefit of $7.5 million, bringing last year’s total to $63.8 million. This was within its expected range for 2017.

As a result of the maturities, the net asset value (NAV) per share of the dollar-denominated cells rose over the last quarter, ranging from 4.6% to 4.88% depending on the cell. 

It comes after the fund redeemed $5.7 million (£4.3 million) in shares across all continuing cells in July and October last year.

The pay-outs come despite maturities in the third quarter of 2017 becoming the subject of a US legal claim.

Coventry Capital, which claims to be the creator of the secondary market for life insurance policies, filed a suit against EEA, alleging that the firm had thwarted its efforts to buy the portfolio of life settlements following a ‘pattern of fraudulent, bad faith conduct’.

EEA ‘categorically [rejected] the allegations’.

The fund initially suspended redemptions in 2011 following a wave of withdrawal requests after the Financial Services Authority branded retail life settlement funds ‘toxic’.

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