Integrity Capital Partners Blog

Integrity Capital Partners Facilitates Disposition of $130 Million of Life Insurance Policies For X-Rite, Inc.

Monday, January 11th, 2010

BETHESDA, Md., Nov. 17 /PRNewswire/ — Integrity Capital Partners (ICP), a leader in the secondary life insurance market, has facilitated a very unique transaction to assist X-Rite, Inc., a publicly-traded color science and technology company, in increasing its cash and eliminating expenses of unwanted life insurance policies.

ICP was given the task of evaluating the viability and continued ownership of life insurance policies owned by X-Rite that were placed upon the lives of X-Rite founders who are no longer involved with the company. The life insurance policies ranged between $5 million and $20 million in face value. ICP marketed the policies to nearly 40 institutional capital sources in an effort to achieve the best possible price for X-Rite, Inc.

“We were excited to have been able to achieve a valuation in excess of 50% over the cash surrender value for X-Rite on the policies that were sold,” commented Robert Finfer, CEO of Integrity Capital Partners. “By removing the policies from X-Rite’s balance sheet, the company received a cash payout of approximately $20.6 million and freed up its ongoing obligation to pay the costly insurance premiums for these policies which were in excess of $6.7 million annually.”

“We are always excited when we see a financial transaction of this type provide such a great result for the client, and it’s always great to work with organizations like X-Rite who are wiling to utilize unique and very creative ways of increasing a company’s cash position,” Finfer said.

“Robert Finfer’s facilitation of this life settlement transaction was a key part of the overall recapitalization of X-Rite,” said David Rawden, CFO of X-Rite. “He was able to exceed our expectations in a very difficult economic environment.”

This untraditional way for companies to increase cash and eliminate the costly expense of premiums through life settlements is likely to become more common as companies become more familiar with how this type of transaction can maximize the value of their assets.

About Integrity Capital Partners

Integrity Capital Partners (http://www.integrityp.com) is a leading life insurance settlement and premium finance broker located in Bethesda, MD. Offering Life Settlement Brokering Services and Premium Finance Concepts, Integrity extends E&O Coverage to all of its producer clients and is a proud member of NAIFA and LISA, as well as an MDRT “Top of the Table” producer. Integrity Capital Partners was recently ranked as the 2nd fastest growing insurance related company in the U.S. by Inc. magazine, and is recognized annually as one of the largest insurance companies in the Washington Metropolitan area by the Washington Business Journal.

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Robert Finfer quoted in The Washington Business Journal “Sources Say” Column

Monday, January 11th, 2010

What challenges have you had in getting financing in the past year?

“Financing continues to be challenging for our industry. While we saw a huge pullback during the last quarter of 2008 and in the first quarter of 2009, we are beginning to see cash come back into the market. The financing that is currently being offered and the terms at which we are being provided funds still need to come a long way to get back to the levels we saw in late 2007.”

— Robert Finfer, CEO, Integrity Capital Partners LLC and Integrity Settlement Group Inc.

“We haven’t needed growth capital recently, but certainly our banking relationship is ‘financing’ based. This relationship has remained positive, but that’s likely due to the fact we’ve had great success in managing our business around potential pitfalls by tightening our control of cash flow and boosting performance at all levels. Also, Spadac’s increased visibility as a leader in spatial analytics services and technologies has helped support this growth. We closed 2008 strong, our profits have continued to rise over the past three quarters, and we have strong expectations for 2009 and beyond.”

—Mark Dumas, CEO, Spadac Inc.

“We have not experienced any challenges getting financing, and I would say that there are two key reasons for this. First is past performance. We grew our top line significantly during the boom years (2006 and 2007), but unlike many companies that experience growth in sales, we did not sacrifice our bottom line. Similarly, we avoided both wasteful overhead spending and getting overleveraged during these same boom years. Instead, we hoarded cash. Second is a strong balance sheet. Our growth, coupled with conservative practices, has translated into a very strong balance sheet for our bankers to lend against.”

— Barry Lake, president, Rollins-PCI Construction Inc.

“Lately, financing has been tough. We thought we had a bulletproof business plan to get investors, but when we started talking to people it seemed as if everybody was burying their money in their backyard. We have had to scrape money out of wherever we could find it to keep our business afloat. We have not pursued bank financing as of yet.”

— Gregory Korthase, president, Etreev

“In executing an ‘alternative investment strategy,’ we’ve seen wonderful opportunities. With the cost of capital at all-time lows, we would love to finance as many opportunities as possible. The lending community is in disarray. Their margins have been all but eliminated, and it is coming to light that their financial reserves have been drastically understated. Yet the financial community says they want to issue good loans to good customers. We are learning how important it is that bankers understand our business, but it is equally important for us to illustrate how we as a client will be profitable for their business in the long term.”

— Craig Kendall, president, Financial Investments Inc.

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Life Settlement Basics

Thursday, January 7th, 2010

As boomers head into retirement, insurance agents are increasingly interested in the thriving life settlement industry. If you think you have a settlement opportunity, follow these basic rules to help you lock in the best deal for you and your client.

 Rule #1: Work With a Specialized Broker
Unlike direct providers, specialized brokers are interested in getting your clients the best purchase price for their policies and are positioned to complete the transaction expeditiously. They have actionable knowledge of all of the processes required to submit a case, and they will complete the fiduciary responsibility to achieve the highest price and be able to provide that information to the policy owner.

 Rule #2: Research Your Broker
When choosing a broker, make sure that he or she is a member of a reputable association, such as LISA, which vets its members to ensure they have the necessary compliance and professionalism. Request references and do some background checking to confirm that your broker has not experienced any prior litigation or license infractions. Finally, make sure that he or she is licensed to transact life settlement business in the policy owner’s state.

 During the selection process, remember that presenting your case to several brokers is unlikely to result in a better offer, and can actually result in a lower bid or no bid. Dealing with a single broker will help you avoid impinging upon existing relationships, creating questions about the “Broker of Record,” and generating an overall negative impression of the case.

 Rule #3: Understand the Timeframe
Even the most seamless life settlement case can take four or five months to complete. Allow up to 12 weeks to procure medical records and life expectancies and up to three weeks for providers to make final offers. The policy owner will need time to make a decision after an offer is made, and the carrier has 30 days to make changes after the package has been sent to escrow. Once they have received the change forms, escrow agents have three days to pay the client. Contracts are typically written with a 15 business-day rescission period, and agents should not expect to be paid until at least three weeks after the client is paid.

 Properly managing expectations is essential to completing a successful settlement transaction. In addition to a realistic timetable, make certain that your broker is not only willing to disclose the amount being paid by the provider, but that he or she will provide proof of multiple bids at the end of the process in order to confirm that the policy was properly shopped. Familiarize yourself with the process and communicate frequently with your client and broker.

 Robert Finfer is President and CEO of Integrity Capital Partners, a secondary life insurance leader and one of the largest insurance companies in the Washington Metropolitan area. Robert is a “Top of The Table” Producer and member of LISA, NAIFA and MDRT, and can be contacted at rob@integrityp.com.

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