Suspended fund EEA Life Settlements has continued to return money to trapped shareholders, despite recent maturities becoming the subject of a US legal claim.
The ‘death bond’ fund redeemed $5.7 million (£4.3 million) shares across all continuing cells in July and October.
This followed eight maturities in the quarter to 29 September, with a total net death benefit of $14.63 million. At the end of September, the fund held 119 life insurance policies with a total net death benefit of $428 million.
In its latest update, seen by Wealth Manager, it said its board ‘will keep the cash position under review and make a further distribution to run-off shareholders as cash levels permit.’
Last month, it was revealed that Coventry Capital had 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’.
Sections of a document formerly redacted by the court reveal that, if policyholders died after 15 May 2017, the death benefits under their policies would be paid to Coventry.
However, it alleges that, when such deaths occurred in May, June and August, the fund booked them as its own earnings ‘in an attempt to alleviate its financial distress’.
The companies entered into a contract on 27 April, citing a purchase price of $204 million, the document says. However, Coventry claims that EEA, and two executives undermined the negotiations in an effort to continue collecting fees. Coventry says it suffered $75,000 in damages as a result.
The fund suspended redemptions in 2011 following a wave of withdrawal requests after the Financial Services Authority branded life settlement funds ‘toxic’.