Stable Value Wraps
The overwhelming majority of stable value wraps today put BOLI/COLI portfolio managers at significant risk of long-term underperformance.
These wraps provide low returns for the risk taken, do not allow policyowners to manage the credit or duration risks of their portfolios, and come with other poor terms and high fees.
Atlas SV Partners designs, provides, and administers stable value wraps that relax the guidelines and provide policyowners with the ability to manage the credit and duration risks of their portfolios, earn higher returns, and benefit from better features (e.g. no change of tax law, long-term crawl-out, or surrender-all provisions). Our team has developed and administered several SV businesses over the past 20 years that together have generated $50 billion in AUM
We offer a diverse list of fixed income strategies, both passively and actively-managed, based upon the requests of the life insurance companies and their policyowners. The combination of features we provide results in 100-300 bpts pa of additional after-tax return.
The investment options are easily added to any life insurance companies’ policy menu and then reallocated to by the policyowner. No surrender or exchange is required.
Credit Protection from Goldman Sachs & Co
Atlas SV Partners has acquired a credit hedge, documented under an ISDA CSA, from Goldman Sachs & Co. If Atlas SV Partners does not meet a Stable Value Surrender Payment obligation, Goldman Sachs & Co will make the required payment.
The Impact of Pooling
The SV Series offers these benefits through pooled investment funds that minimize the potential impact of a policyowners’ actions on another policyowner. Minimal impact on a portfolio’s crediting rate results from inflows into the portfolios, reallocations between SV Series portfolios, or market value surrenders. Impacts on a portfolio’s crediting rate may occur when there are stable value surrenders. If market value is greater than stable value, the effect on the crediting rate is positive; if market value is less than stable value the effect on the crediting rate is negative. If the anticipated impact on the crediting rate is -.05% or worse, the wrap provider will report the surrender event to all of the policyowners in the portfolio and they will be able to reallocate to another similar portfolio. In other words, the maximum negative impact on any policyowner of the actions of other policyowners cannot be more than 5 bpts.
Atlas SV Contract Compared to Existing Contracts