Question-and-Answer Session
Unidentified Participant
Is there much variance in institutional ownership. Most of them seem to be (inaudible)?
Scott Peden
The question was, there are a great deal of variance within the institutional players as far as the return – I assume by the returns that are actually received as opposed to what the targets are? Is that what your question is? Yes. What we have seen is and it’s a little bit, you were targeting a little bit higher than that, 16%. We’ve seen it -- the ranges of policies or the IRRs four [ph] targets range between 12% and 16%.
We don’t really see a whole lot pass that. Certainly, you can get individual returns that are like that. But from an institutional standpoint, you are looking for, as you say, a momentum player and what is the entire portfolio going to yield, and so about 12% to 14% within the current market and that remains fairly stable. That continues to deliver – that price point continues to deliver value to the person selling your policy as well as a substantial return to the institutional investor as well.
It is possible that could come down, but because of the volume of policies that’s out there as well as the lack of viable alternatives from the insurance companies, I mean as I said, your alternative is getting zero, so really I think that there is a -- going to be a tremendous degree of stability in that regard. I don’t think that you're going to see a lot of margins being pushed down in that for quite some time because that’s you know that's one of the things that you are looking at, you are going to -- in order to have a secondary market for as a seller, you are going to you know be willing to accept the prices that will yield those kinds of returns.
And that’s another reason that the institutions are looking at this just easily modeled kind of asset class which you can look at. I mean the kinds of policies that we are -- if you are going to increase those returns, there are a couple of tweaks that you can do but they require the acceptance of more risk and we have not really seen that hasn’t been necessary. You know if you are not old enough to sell your policy, that you are only 68 or 70 something like that, you're probably not ready to sell it any way even if – or even if you were to wait a couple of years and that decreases the risk for the purchaser and that the pool of policies that can be bought still continues to increase. So it's not the same level of risk or volatility like in the stock market where you have a very small window in order to capture those kinds of gain.
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