Beyond Structured Settlements

Structured Settlements in 2009 - 2

This S2KM post follows "Structured Settlements in 2009 - 1" and features topical links to S2KM 2009 blog reports.

For 2010 industry updates, please continue to visit S2KM's blog as well as S2KM's structured settlement wiki.

Prior S2KM annual industry reports:

• Structured settlements in 2008
• Structured settlements in 2007
• Structured settlements in 2006

Professional Association Meetings

• NSSTA - National Structured Settlement Trade Association
  • Winter meeting
  • Annual meeting
  • Fall meeting
• SSP - Society of Settlement Planners
  • Preview
  • Annual meeting
• NASP - National Association of Settlement Purchasers
  • Part 1
  • Part 2
  • Part 3
• ASNP - Academy of Special Needs Planners
  • Annual meeting
  • Tim Nay interview

Settlement Consulting

• Part 1
• Part 2
• Part 3
• Part 4

Spencer v. Hartford

• Report 1
• Report 2
• Report 3
• Report 4

IRC 468B Qualified Settlement Funds

• Single Claimant 468B QSF Update
• IRC 468B and 5891
• Robert Wood's QSF Book
  • Summary and Review
  • Robert Wood Interview
• Jeremy Babener's QSF Paper
  • Summary
    
  • Review
    • Part 1
    • Part 2
  • Jeremy Babener Interview
• US Treasury Priority Guidance Plan 2009-2010

Dissipation Studies

• Introduction
• Jeremy Babener's Dissipation Paper
  • Summary and Review
  • Jeremy Babener Interview
  • Jeremy Babener Responds

Structured Settlement Credo

• Part 1
• Part 2
• Part 3
• Part 4
• Part 5

Rapid Settlements

• Pacific Life v. Rapid Settlements
• Allstate v. Rapid Settlements

Fresno County Factoring Cases

• Report 1
• Report 2
• Report 3

Additional S2KM Analysis

• Re-Thinking Structured Settlements
• Structured Settlement 2009 Mid-Year Update
• Structured Settlement 2009 Strategic Analysis
• Structured Settlements and Government Benefits
• Settlement Trust Due Diligence

Additional Primary Market Developments

• Forge Purchases TSSG
• Richard Halpern

Additional Secondary Market Developments

• S&P Withdraws JG Wentworth Credit Ratings
• Structured Settlement Securitizations

"Structured Settlements and Periodic Payment Judgments"

• S2P2J Release 45
• S2P2J Release 46

Structured Settlement Securitizations - 1

Standard & Poor's Rating Services (S&P) has announced a refinement of its methodology and assumptions for rating structured settlement payment securitizations. The revised criteria, effective December 2, 2009 for all new and outstanding structured settlement securitizations, incorporate:

• New corporate default targets and supplemental stress tests to access insurance carrier default targets; and
• Supplemental stress tests to access insurance carrier default risk in structured settlement transactions.

S&P's new criteria for structured settlement securitizations appear in an S&P article titled "Update to Methodology And Assumptions And New Supplemental Tests for U.S. Structured Settlement Payment Securitizations".

S&P's revised ratings for structured settlement securitizations will:

• Use the latest version of CDO Evaluator (version 5.0) when analyzing structured settlement securitizations. The CDO Evaluator is S&P's analytical tool for estimating the defaults and losses of collateralized debt obligation (CDO) transactions at different rating levels.
• Typically apply:
  • the largest-obligor default test to tranches at all rating levels to access a given tranche's ability to withstand specified combinations of insurance company defaults, assuming an immediate flat rate of 50%;
  • the largest-industry default test or the alternative-industry default test, which ever is applicable, to tranches at the 'AAA', 'AA+', 'AA', and 'AA-' rating levels, assuming an immediate flat recovery of 60%.
• Use the results of the two supplemental tests without running cash flows to assess whether the tranche in question is likely to have sufficient credit enhancement to absorb the losses at each rating level.

To achieve an S&P rating, a structured settlement transaction tranche:

• must have sufficient credit enhancement to withstand the level of defaults the CDO Evaluator generates in relation to the asset portfolio under the associated cash flow stresses, and
• must also pass the two supplemental tests applicable at the given rating level.

The complete S&P article is available on RatingsDirect and S&P's website.

This is the first post for a new S2KM series about structured settlement securitizations. For additional information about the secondary structured settlement market, see:

• Wikipedia's entry for "structured settlement factoring transaction"
• S2KM's reports about the NASP 2009 Annual Meeting
• "Structured Settlements and Periodic Payment Judgments" - Release 47.