DBRS Releases Methodology for Rating Life Settlement Securitizations

DBRS has today release a methodology for rating U.S. life settlement (LS) securitization transactions. A life settlement is the sale of a life insurance policy to a third party in which the policy owner receives cash for the sale and the purchaser often securitizes its interest into an LS securitization.

“DBRS applies both a qualitative and quantitative approach to reviewing an LS securitization transaction,” says Michael Nelson, Managing Director of U.S. Structured Finance. “Qualitatively, the ratings process focuses on the operational risk associated with the sourcing, origination and underwriting of the life insurance policies serving as collateral for the rated debt. Quantitatively, DBRS has developed a proprietary model to evaluate each major dimension of the life insurance policy assets.”