SLS Fund

Currently, the affiliates are  involved in the development of a new investment fund that will employ a managed program implementing TAT’s methodology to acquire a structured SLS portfolio (the “Fund”). When organized, the Fund intends to exploit that program in three inter-related ways:

• to create closed pool of not less than 300 SLS (the “SLS Pool”), with a targeted IRR of 13% through the date when at least 80% of the death benefits from the policies in the SLS Pool have been received by the Fund (and the remaining policies are sold), with a risk profile level that has been pre-established as being acceptable to the investor or investors who commit to make the Final Investment (as defined below; such investor or investors being referred to hereinafter as the “Final Investor(s)”);

•  to allow the Final Investor(s) to assess, prior to committing to the Final Investment, what effect various selected changes in the risk profile would have on the target IRR, thereby enabling the Final Investor(s) to evaluate the Fund’s risk-reward profile with the potential to adjust the level of acceptable risk (and the target IRR) to the extent they may desire, and to take advantage of RSL’s unique approach to accessing the SLS marketplace to acquire the SLS Pool; and

• to apply an exit strategy for the Fund utilizing the significant industry contacts that the group of companies affiliated with RSL has developed. Possible exit transactions can range from (a) treating the Fund as a “warehouse facility” for later investment scenarios by subsequent SLS investors  and selling the SLS Pool to them within a specified period of time after the  Fund’s creation; or (b) maintaining the  Fund until at least 80 % of the policies in the SLS Pool have matured, and then  selling or liquidating it; or (c) any number of intermediate sales scenarios, in each case on an effective, efficient basis. The exit strategy is flexible.

Taking into account US Federal income tax considerations, the Fund will be organized as a “sub-fund” of an existing Qualified Investment Fund (“QIF”) structure in Ireland. The Fund will be managed by an advisor; the advisor will, on behalf of the Fund, engage specialized service providers, including TAT (which will provide the core analytics for policy selection) and the advisor’s Investment Committee, which will include Ms. Giuffre. Each policy within the SLS Pool will undergo a qualitative due diligence review by a top-tier law firm with experience in the SLS field (currently anticipated to be Stroock & Stroock & Lavan, LLP). The policies within the SLS Pool will be sourced by the Fund’s advisor in the tertiary market directly and through a handful of SLS Providers (firms who are required to be specially licensed by insurance industry regulatory authorities to provide services as SLS Providers) and in the secondary market through SLS Providers. No SLS Provider will have a preferred relationship with the Fund in connection with sourcing policies for the SLS Pool.