Goldman Sachs has killed the "mortality index" it launched two years ago intended to profit from the upcoming mass aging of the baby boomer generation by buying their life insurance policies in the hopes of collecting on the death benefit.
Goldman saw the derivatives as a potential hedge for any institutional investor buying a security or note backed by another pool of life settlements, and initially planned to sell derivatives pegged to the index to investors seeking exposure to the estimated $15 billion life settlements market.
Goldman spokesman Michael DuVally confirmed that Goldman recently decided to end its involvement with the life settlements index, Reuters reports.
"It never really did much of a commercial business," he said.
However, observers — some of whom are in the life settlements business — say the Wall Street bank may also be killing the index because of possible "headline risk" of a speculative bet on when someone will die.
Goldman still owns Longmore Capital and Longmore Credit, subsidiaries it formed three years ago that are in the business of acquiring life settlements or providing financing for them.
An Austin judge recently approved the release of nearly $20 million back to defrauded investors who sunk money into National Life Settlements, Bizjournals.com reports.
About 320 investors will share $19.8 million, or about 69 percent of the amount they invested in the company, which is accused of selling promissory notes that were purportedly backed by life insurance policies.
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