FORT WASHINGTON, PA — Coventry has announced the findings of a new study conducted by Professors Daniel Bauer and Nan Zhu, which exposes critical inaccuracies in life expectancy estimates produced by Lapetus Solutions, Inc. The analysis reveals that Lapetus significantly understates the actual life expectancies of insured individuals, raising concerns about the reliability of its projections for life settlement investors.
Examining 4,378 underwritten reports, the study found a wide gap between expected and actual mortality outcomes. Based on Lapetus’s calculations, 648 deaths were projected to occur in the study timeline, but only 203 deaths were reported—resulting in an alarmingly low actual-to-expected (A/E) death ratio of 31%. This discrepancy suggests significant underperformance in life settlement portfolios relying on the Lapetus data.
These findings are consistent with earlier assessments, including a July 2024 analysis showing Lapetus life expectancy estimates were, on average, 31 months shorter than those of other underwriters for the same sample. The study’s authors conducted multiple robustness checks, consistently finding A/E Ratios far below 100%, underscoring the stark misalignment between Lapetus’s mortality predictions and real-world outcomes.
“This study confirms that Lapetus’s life expectancies are too short,” said Alan H. Buerger, Co-Founder and Executive Chairman of Coventry. “When policies are valued based on life expectancies that are too short, the resulting valuations will be higher than they should be. Funds and companies relying on these estimates, like Abacus, could face mounting challenges and serious consequences for their investors and the broader life settlement industry.”
The implications for life settlement investors include potential misvaluation of policies, jeopardizing portfolio performance. The findings underscore a critical need for greater scrutiny and transparency within the life expectancy underwriting process.
Coventry and industry leaders are urging Lapetus to revisit its methodologies and mortality assumptions to align with actuarial best practices and real-world data. Moving forward, this study could serve as a turning point, prompting industry-wide discussions about improving the accuracy and reliability of life expectancy assessments. These changes will be key to maintaining investor confidence and safeguarding the stability of the life settlement market.
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