The Wall Street Journal is reporting that the SEC is investigating Life Partners Holdings, Inc. (LPHI) over its much-maligned life expectancy estimates, sending shares down more than 7% in early trading.
The Journal calculated that for policies sold from 2002 to 2005, “insured people outlived Life Partners’ projections about 90% of the time. Many of those policies were on HIV-positive people; Life Partners since 2004 mostly has sold policies on older people.” Back in 1996, Life Partners won a federal appeals court ruling that its life-settlement transactions weren’t subject to federal securities laws.
Shares of LPHI fell as low as $13.91 (-7.51%) in the first hour of today’s session, where they carry a 7.19% dividend yield, not counting special payouts.
Life Partners closed out 2010 ranked fifth on my list of The 100 Best Values Among Dividend Paying Stocks and has since risen to #2 on the most recent release of my weekly Dividend Stock Value Rankings, based largely on the company’s exceptional fundamentals outweighing the clear risk of its unique business model.