Abacus Global Management, Inc. Status update

Sure. Super interesting asset, and one thing to really take into consideration is where Abacus sits in this process is that, we're the origination company, the market maker of the asset. This is a highly regulated asset, where we're licensed in nearly every state that requires it. We're regulated by the state's insurance department. To source the asset, we typically source these from financial advisors, potentially their insurance agents, and/or the policyholder themselves. This is really just about an information campaign. It's really what it comes down to. We educate people that their life insurance policy is actually personal property, as set forth by the Supreme Court over 100 years ago. There's $14 trillion of life insurance assets in force today. 90% of those assets will not pay a claim.

Not because the insurance company has done anything nefarious, it's just that the way traditionally people have used their life insurance policy is that they use it for a certain amount of time, their kids age, their family grows up, they don't really need it anymore, and then they simply just return it back to the carrier by stop making payments. What Abacus does is steps into that process and says, "Wait a minute. It's personal property. What's the NPV of that contract today?" So if you're 80 years old, you have a million dollar life insurance policy you've been paying into, that NPV could be as high as $300,000 or $400,000. We do that by helping them better understand how much more time they have in that contract.

That's the solve for NPV, and we aggregate their medical files, we receive their signed HIPAA. Through the medical files we use excessive amount of data to help establish what their mortality outcome most probabilistically looks like by actual mortalities that have occurred based upon the same medical profile that they have. So, in a nutshell, where Abacus sits in this is, you look at our flywheel, the core of this is that we're an origination and market maker company that also asset manages the business. We sell the data and technology. We capitalize on that through our Abacus Intel. Now we're taking that and moving that into private wealth and wealth management because we create so much wealth for our clients. We'll pay out nearly a quarter of a billion dollars in new capital to people in retirement.

How is that liquidity ultimately going to get allocated? We want to make sure that we can kind of monetize that into our own fee structure.

Absolutely. The institutional interest in this asset has really grown significantly over the last decade. In the last 2 or 3 years, it's really grown, and I would even argue the last year. We've seen some volatility in private credit type products. What makes this asset so unique are, here's 3 unique qualities. One is that it's typically, if this is a form of credit, it's issued by an A-rated carrier that has a default ratio of near zero over the last 100 years. So you've got a very high credit-worthy type of counterparty here that has cash reserved regulatory against that contract. So now it's going, typically those contracts would trade at a much lower type of yield, but because there's some volatility around understanding the longevity of the contract, that volatility creates a higher yield profile.

In addition to that, creates a very little correlation, a very low correlation to the other markets. If you think about it, the example I just laid out, you have an 80-year-old who's going to sell his contract for, let's say, $300,000 or $400,000. Ultimately, every year this contract becomes more valuable. It's kind of like a mortality driven zero coupon. As you get closer to par, right, driven by the mortality, that's what drives your returns. Therefore, if you have market volatility, it's not subject to traditional interest rate volatility, bond volatility, or equity market volatility. So here you've got this kind of lower correlated or uncorrelated yielding products in the high to low single digits that is effectively an A-rated piece of paper. The issue from institutional investors isn't the underlying investment. It's instead how do they get it?

That's where Abacus sits, and we've been working really hard in building structured products to gain them access in a much more simplified format, like a securitization.