Coventry: Flaws of Lapetus Life Expectancy Estimates Evaluated in New Study

February 11, 2025 at 17:28 PM EST

Understatement of Life Expectancies has Investment Implications

Coventry today announced the availability of a new study conducted by Professors Daniel Bauer and Nan Zhu, which revealed that life expectancy estimates produced by Lapetus Solutions, Inc. significantly understate the actual life expectancies of insureds. This serious flaw raises concerns about the accuracy of Lapetus’s mortality predictions, which could have significant repercussions for investors in life settlements.

The study evaluates the accuracy of Lapetus's life expectancy estimates in accordance with the Actuarial Standard of Practice on Life Settlements Mortality (ASoP. 48). The study emerged from a discussion hosted by the Life Insurance Settlement Association, where Alan H. Buerger, Coventry’s Co-Founder and Executive Chairman, and Dr. Jay Olshansky, Co-Founder and Chief Scientist of Lapetus Solutions, exchanged insights. A recording of that discussion can be accessed at https://www.lisa.org/blog_home.asp?Display=25.

The analysis covered a total of 4,378 underwritten reports. Based on Lapetus’s calculated life expectancies, the study indicated that 648 deaths of policyholders should have occured in the relevant period. However, the actual number of reported deaths was just 203, resulting in an alarmingly low 31% ratio of actual to expected deaths. To life settlement investors, this could result in significant underperformance in their portfolio compared to the Lapetus data projection. This is consistent with a July 2024 analysis that Lapetus life expectancies were shorter by an average of approximately 31 months compared with other life expectancy underwriters on the same data set.

To support their findings, Professors Bauer and Zhu conducted several robustness analyses, including comparing Lapetus’s own tables to several other tables in wide use. Across all analyses, the A/E Ratios consistently remained far below 100%, showing that Lapetus's life expectancies are at odds with actual mortality experience.

In light of these results, Mr. Buerger emphasized the urgent need for Lapetus to reassess its mortality assumptions, underwriting models, and methodologies to provide more accurate life expectancy estimates. “This study confirms that Lapetus’s life expectancies are too short,” said Mr. Buerger. “When policies are valued based on life expectancies that are too short, the resulting policy valuations will be higher than they should be. Funds and companies like Abacus (NASDAQ: ABL) that rely on Lapetus to provide life expectancies for their policy valuations could soon face growing challenges with serious consequences for investors and the broader life settlement industry.”

The full study is available at coventry.com/research.

About Coventry

Coventry is the leader and creator of the secondary market for life insurance. For more than 25 years, we have been driving the industry forward and expanding opportunities for life insurance policyowners. Our deep experience combined with a fierce commitment to consumer rights makes Coventry the clear market leader, a position we use to raise industry standards and expand consumer choice. To date, we have delivered more than $5.7 billion to policyowners who no longer need their policies. To learn more about Coventry, please visit coventry.com.

For further information or to schedule an interview, please contact Brian Glicklich at Digital Strategy Ltd., Brian@DigitalStrategyLtd.com or 818-867-9096