Patent ID: 7451104

Claim:
A method for funding an organization, said method comprising the steps of: (a) establishing a special purpose entity for the benefit of said organization; (b) identifying life insurance policies, said life insurance policies being on individuals in whom said organization and said special purpose entity have an insurable interest, said policies having premiums, death benefits and a beneficiary; (c) calculating the timing and amount of predicted cash flows from said death benefits, using a suitably programmed computer, along with a census of said individuals and mortality projections, said predicted cash flows from said premiums and said predicted cash flows from said death benefits having an internal rate of return (IRR): (d) utilizing an asset-backed securities transaction for the purpose of funding said organization by issuing debt securities, proceeds from the issuance of said debt securities to be used to initiate said life insurance policies by paying said premiums, said predicted cash flows from said death benefits from said life insurance policies to be used to repay said debt together with interest and servicing thereon, while a portion of said predicted cash flows is to be used to fund said organization, said asset-backed security transaction having a borrowing rate; (e) calculating the interaction of said predicted cash flows with said asset-backed securities transaction using said computer to determine funding of said organization; (f) issuing, by said special purpose entity, said debt securities in an asset-backed securities market in exchange for said proceeds; (g) using said proceeds from the issuance of said debt securities to initiate said life insurance policies by paying premiums on said life insurance policies, said life insurance policies being owned by said special purpose entity, said special purpose entity being sole beneficiary of said life insurance policies; (h) receiving, by said special purpose entity, actual cash flows from said death benefits of said policies as said policies mature, said actual cash flows being lumpy; (i) directing, by said special purpose entity, a repayment portion of said actual cash flows to repaying said debt together with interest and servicing thereon and a funding portion of said actual cash flows to said organization (j) arranging for a swap provider to physically transform said lumpy cash flows from said death benefits into smooth, guaranteed cash flows, resulting in a schedule of payments for funding of said organization regardless of said actual cash flows from said death benefits; and (k) paying said organization according to said schedule of Payments by the swap provider.