Best Practices for LE Providers

1. LE Providers shall have and make available a stated policy on handling multiple file submissions received at the same time, when the files contain different information.

2. LE Providers should retain a qualified, independent actuary or actuarial firm to conduct regular analyses of Actual to Expected performance. Such analyses should be performed at least every three years.

Best Practices: Major Elements3. A to E analyses should be made available to qualified investors and

prospective investors in the Life Settlement market

4. Analyses should include all fully underwritten viatical and life settlement experience available and not arbitrarily limit the duration or certain segments of the data, covered by the study. (Life expectancy estimates for life, disability or annuity business should be excluded.) Only estimates based on incorrect DOB or incorrect SSN, or when it is learned that the death occurred prior to underwriting, or preliminary, informal or otherwise qualified estimates should be excluded from the analysis. All exclusions from analysis should be detailed in Actual to Expected analysis.

Best Practices: Major Elements (cont.)5. Multiple File Reviews:

In the case of files reviewed multiple times, one review (the most recent) per calendar year should be included in the study.

6. At least one set of results should be presented in a “claims triangle” format to facilitate evaluation of results by:

- year of underwriting- calendar year- any combination of consecutive calendar years

7. Results should indicate number of cases reviewed each year, to facilitate evaluation of the significance of the results. In order to avoid misleading A to E ratios, “NA” may be entered in any Actual to Expected Ratio cell in which the number of expected deaths is less than 50 deaths.

Best Practices: Claims Triangle Format

2005 2006 2007 Total

2005 8 18 27 53

2006 18 40 58

2007 ____ ____ 30 30

Total 8 36 97 141

2005 2006 2007 Total

2005 10 20 30 60

2006 20 40 60

2007 ____ ____ 30 30

Total 10 40 100 150

2005 2006 2007 Total

2005 80.0% 90.0% 90.0% 88.3%

2006 90.0% 102.5% 98.3%

2007 _____ _____ 96.7% 96.7%

Total 80.0% 90.0% 97.0% 94.0%

Total Deaths

Expected Deaths

Actual to Expected Ratio

Best Practices: Major Elements (cont.)

8. IBNR (incurred but not reported deaths) assumptions shall be explicitly disclosed so that the users of the study can make their own assumptions as to IBNR

9. At least one set of results should be based on an agreed upon common table that either is in the public domain or shall be made publicly available. Results based on alternative mortality tables may also be presented, but not to the exclusion of presenting one set of results on the agreed upon common table.

10. A to E shall be estimated based on the following methodology:

• Use the LE as given and solve for the mortality rating for each life included in the study.

• Generate the mortality distribution for each life expectancy estimate based on the calculated mortality rating.

• Aggregate the mortality distributions from each of the life expectancy estimates.

• Compare actual deaths with expected deaths based on an agreed upon Mortality Table that is either in the public domain or made available to the public.

Best Practices: Agreed Upon Methodology