By Email and Royal Mail

Mr. Jean-Michel Pacaud,

Ernst and Young,

7, rue Gabriel Lippman,

Parc d’Activite Syrdall 2,


L-5365 Munsbach.


29 November 2011


Dear M. Pacaud,


On the 27 October last, Catherine Phillips at the CSSF in replying to Steve Hunt at Rockingham Retirement suggested that “In future, you may also find it a good idea to channel any other queries through the newly created Bondholder Steering Group.”

As a member of that group I have been asked to do precisely that in the matter of XXXXXdec’d and XXXXXXXXXdec’d, both of whom passed away last summer.   You as the appointed Supervisory Commissionaire by the Luxembourg District Court have the authority to dispense with this matter within your remit as the court “decided that the written authorisation of the supervisory commissioner is required for all actions or measures other than protective actions or measures and for the performance of all contracts…..”,

There would appear to be considerable confusion here with what should in essence be a simple matter, for there have been a string of emails between Rockingham, Catalyst/ARM and the CSSF requesting that ARM be allowed to pay the sums owing to the estates of the deceased which have achieved nothing. This despite the sums involved being a tiny fraction of the cash in the fund.

I’m advised that you are considering whether or not paying the funds out on death redemptions could be seen as something which the other investors might challenge.   I put it to you Sir that this is, in my view, a wholly disingenuous consideration as the payment of death redemptions is not purely one of law but one of sensitivity within a moral structure.  The families of the deceased do not deserve to have their grief enhanced by unnecessary delays in the settlement of their affairs.  And how could any right thinking investor object to a payout in these circumstances when this is exactly what they would wish for themselves?

I appeal to you in the name of simple common humanity that you bring this matter to a positive conclusion without further delay.

Yours truly,

Bob Sharpe


Countersigned by members Brian Love and Ian Ward


27 November 2011


The Honourable Alice Walpole

British Embassy

5 Boulevard Joseph ll

L-1840 Luxembourg



Dear Ambassador,

I have received your letter of the 11th November 2011. Thank you very much for taking the time in the Embassies’ busy schedule to consider and register your interest in what for the investors of the ARM asset bond is a stressful and worrying period. The phrase ‘We had to do some chasing’ epitomises a situation with which we are familiar.

Unfortunately, I did not find the response to my letter satisfactory coming as it did one month after they received the correspondence. By that time they had made application to the Court for the appointment of a Supervisory Commissioner which was granted, the result of which, enabled them to put up another ‘wall of silence’ by referring questions to the Commissioner. Shortly after receipt of the response, I called Christiane Camphill who returned my call and announced that she had a solicitor, Tom Becker sat alongside. I asked questions that I believed were relevant to their period of supervision of the problem all of which they refused to answer.

I have attached a letter to the recently appointed Supervisory Commissioner which understandably has not yet been answered.  But we are continually frustrated by a process that seemingly moves at a very slow pace indeed during which the fund is not working as it should be and investor’s assets, upon which there is great dependency, are being eroded.

There is a proposal tabled that following a communication to Investors to register an expression of interest in the Insetco proposal returned the following result. This in spite of the CSSF reservations outlined in Press Release 11/37.

–     60.30% of the holders of the ARM Bonds, Tranches 1-8 voted in the poll of which 94.51% have voted in favor of the Proposed ARM Offer.
–     Holders of 73.06% of the ARM Bond Tranches 9-11 voted and of those, 62.07% have voted in favor.
Therefore in total, holders of 54.6 percent of the ARM Bond have indicated that they are in favor of the Proposed ARM Offer.
Under the terms of transfer of the Assets to Insetco, assets of those investors who were not in favor of the Insetco offer would be returned to the Supervisory Commissioner for him to administer as appropriate.
We are concerned that CSSF Press Release  11/42 states amongst other points:

“The Commission de Surveillance du Secteur Financier (“CSSF”) informs that on 10 November 2011, at its request, the Luxembourg district court, sitting in commercial matters……”

“decided that the written authorisation of the supervisory commissioner is required for all actions or measures other than protective actions or measures and for the performance of all contracts including the proposed transaction between ARM Asset Backed Securities S.A. and Insetco plc,”

In view of that I wonder if you would be prepared to approach the Supervisory Commissioner to request of him that if he believes the interest of Investors is paramount, he respects those wishes and avoids any further undue delay that will damage further the assets of investors.

Yours sincerely

Brian Love




This paper and it’s corresponding 10 answers were submitted to the FSA, who have reviewed, confirmed and agreed publication of it by the ARMSG 29/11/2011

“We think it is now the time for all of us to start focusing on the immediate future.

Until such time as we have the Full Insetco Proposal in our hands to view and the subsequent vote which will follow, it would be far more constructive if we reflect on what information we have to date, and what information is either missing or not clear, and what additional pertinent questions we need to ask and get answers to.

We also feel we need to keep the questions and the answers as simple as possible.

Many investors have become confused reading comments full of conjecture posing as the truth, but based on nothing more than ill informed opinions.

In the interests of clarity we have set down the 10 most asked questions and the corresponding answers we have reasonable confidence in knowing to be correct.”

Q1: Will I get all the money back that I have invested?

A1: The agreement sets out that if 100% of investors (bondholders and pending investors) accept the Insetco offer they will receive the equivalent value of perpetual bonds from Insetco that they held / intended to hold in ARM. If only a proportion of investors accept the Insetco deal then this will be reduced proportionately.

It is the intention of Insetco that at some undetermined point in the future the value of the bonds issued will be redeemed in full. However, it should be highlighted that this will depend on the success of Insetco going forward.

Q2: Will I be paid a coupon at the previous rate?

A2: No. Insetco are proposing to only pay 7.5% on their bonds.

Q3: Does that mean I will be worse off?

A3: In relation to coupons initially yes. However, it is the intention of Insetco that when your bond is redeemed the difference between what you would have earned in interest from ARM will be repaid on redemption. Again this will depend on the success of Insetco going forward.

In relation to original capital then this depends on the number of investors accepting the Insetco offer (see questions 5 below). The agreement outlines that investors will also receive shares, which depending on the success of Insetco could make up any shortfall in your original capital.

Q4: What happens if a proportion of bondholders chose to remain in ARM?

A4: If a proportion of Pending Investors and Bondholders wish to remain with ARM, the relevant proportion of pending investor’s cash and income from the portfolio will be paid to ARM. If ARM’s appeal to the CSSF is unsuccessful, following the full appeal process, ultimately a Luxembourg court will place the firm in liquidation. If this happens the liquidator will determine how to wind up ARM’s business and distribute its assets to investors.

Q5: How will it effect my situation with some bondholders remaining in ARM?

A5: The overall situation will be decided proportionately on the value of the bonds either remaining in ARM or being transferred to Insetco. To clarify; the least value remaining in ARM will increase proportionately the value to those who wish to take up the Insetco Offer.

Q6: What if I decide to stay with ARM, what will the outcome be?

A6: If you stay with ARM and ARM’s appeal to the CSSF is unsuccessful, then following the full appeal process, ultimately a Luxembourg court will place the firm in liquidation. If this happens the liquidator will determine how to wind up ARM’s business and distribute its assets to investors. We are unable at this stage to provide further details on this.

Q7: Do you think a liquidator would be able to make some sort of coupon payment especially on compassionate grounds?

A7: Only the appointed liquidator will be qualified to make those decisions.

Q8: Is it possible to know the total fees that will come out of the liquidation process?

A8: No

Q9: Do you suggest a way in which the fees could be determined?

A9: It is suggested that you look at past, current and ongoing cases as an example where liquidation has taken or is taking place, to better judge the possible outcome of your current situation. “(Information researched and noted.)”

Q10: If I accept the Insetco offer and were to die, what happens to my money?

A10: If you accept the Insetco deal, Insetco have confirmed that either:

  • Your estate will continue to receive income at 7.5% until Insetco redeem bond. Or,
  • ·       Your estate can seek redemption of the bond at a mark to market price, which may be less than the nominal amount of the bond.

“We have come this far because of the efforts all four of us have put in by way of various forms of influence since our initial meeting on the 18th October 2011. We all agreed the aim was to find out, as much factual information as was possible, thereby giving individual investors, the opportunity to decide which is the best option for them.

We hopefully will now have the opportunity over the next few weeks to explore those choices, which this site will facilitate, in an effort to ensure all investors have enough factual information to make a reasonable decision regarding their own particular circumstances.”


By e-mail and letter post.


Mr Jean-Michael Pacaud                                                                  23rd November 2011

Ernst & Young SA
7, Rue Gabriel Lippmann,Parc d’Activité Syrdall 2,Luxembourg,L-5365 Munsbach


Dear Mr Pacaud

Thank you for your time on Thursday past when we were able to have a short discussion on your appointment as Supervisory Commissioner in the matter of ARM. As promised I now write to set out the key issues as they affect Investors. For the purpose of clarity reference to Investors means Bondholders and Pending Investors


Before setting out the Key Issues I hope that we can agree that for this type of fund to be successful it has to be managed and working on a continuous basis in the marketplace. Any interference with that process is almost certain to damage Investors.


There is clearly a complex dispute between Commission de Surveillance du Secteur Financier a regulatory body and ARM Asset Backed Securities S.A. that has dragged on for two years so far and shows no sign of being resolved in the foreseeable future. Investors are intrinsically locked into the dispute but are faced with a wall of silence from the parties to the dispute. The result of that situation is that in a world of increased communication, Investors are able to create discussion and information sites on the World Wide Web and in the absence of factual information, human nature being what it is, speculate to the extent of further damaging by division an already difficult dispute.


While I respect the right of the Grand Duchy to make and enact its own law I believe that in Europe there is a demand for an increasing awareness of the need for greater transparency when the ordinary individual is disadvantaged. In that climate I believe that it is perfectly reasonable for individuals to probe and challenge the wisdom of Luxembourg’s regulations on secrecy.


As I understand the situation, ARM senior management are subject to non-disclosure regulations that has prevented them communicating with Investors for the past two years. I dislike speculation, but in the absence of factual information, (if this is correct) such action has prevented a provider accounting to their investors. CSSF have not provided ongoing financial information. That sort of reporting is an absolute necessity and indeed a right to allow Investors to be in control of their own portfolio. Lack of transparency has been the driving instrument that has sometimes generated ferocious criticism of ARM management who appear to have been prevented from defending themselves. Unless these regulations are explained or subsequently relaxed, it may be years before Investors are given an explanation by ARM as to the activities that may or may not have contributed or been the cause of the dispute.


If the speculation is not correct, then Investors are entitled to a precise determination of the constraints placed upon ARM in a less generalist format than we have seen so far. As an example, I refer to Press Release 11/36 which states that ARM, under penalty of voidance, is prohibited from taking measures other than protective measures. Do those measures extend to protection of the value of the fund and if no one is protecting the fund does that mean that the fund is in the process of fatal decline? I ask that question because there is a similar case, that of Keydata where it appears that a healthy fund has been dissipated.





We understand from RNS Number 8155Q dated 25October 2011 that at the 30 Sept 2010 the face value of SLS held by the US Trust was US$412,643,893 and that as a consequence of being unable to issue new bonds this had reduced to US$319,906,127 as at 15September 2011.


In view of that, I wish you please to provide the following information:-


1)            The face value of the SLS policies in US$ at the 29August 2011 when the CSSF refused to grant a license to ARM as a regulated securitisation undertaking under the law?


2)  The face value of the SLS policies in US$ at the date of your appointment as Supervisory Commissioner on 10 November 2011?


3)            The value of the Policies in US$ today?


4)            The daily rate by which the fund is Increasing/Decreasing?


5)            The Supervisory fee structure and the Hour/Day cost of supervision of the fund by Ernst & Young?


6)            The similarities that can be drawn from the Lifemark/Keydata case where fees totalling over £800,000 expenses per annum are reported to have been applied by Price Waterhouse Cooper.


There is a perception among many Investors that while this regulatory and supervisory process moves at what is felt, an unacceptable slow pace that our funds are in an irreversible state of decline. The ARMSG urges all parties to the dispute who claim that Investors are the priority, to increase transparency and bring about a solution to the problem at the earliest possible date.



Yours sincerely




Brian M Love


This letter is endorsed by the three remaining members of the ARM Steering Group


Mr Alan Shanks.  Mr Robert Sharp.  Mr Ian Ward.


Thursday 24 November, 2011
Insetco PLC
Proposed Acquisition Update
RNS Number : 6968S
Insetco PLC
24 November 2011

24 November 2011

Insetco plc

Update Re: Proposed acquisition of ARM Asset Backed Securities S.A.

The Board announced on 1 September 2011 that it had conditionally
agreed to acquire the assets of ARM Asset Backed Securities S.A
(“ARM”) and also to purchase Catalyst Investment Group Limited
(“CIGL”). The acquisitions of ARM and CIGL were of a size that the
transactions will be regarded as a reverse takeover pursuant to the
AIM Rules for Companies which required that trading in the Company’s
shares be suspended pending publication of details of the

The proposed acquisition of ARM has involved extensive discussions and
negotiations with the relevant regulatory bodies, and in particular
with the Commission de Surveillance du Secteur Financier (the “CSSF”),
the Luxembourg financial regulator and their appointed agents.
Following agreement with CSSF, the ARM bondholders have been
approached by ARM to establish the level of support for the proposed
acquisition of ARM by Insetco as set out in the announcement of 1
September (the “Proposed ARM Offer”).

The Bondholders have been contacted by ARM to ascertain the level of
support for the Proposed ARM Offer through a non binding poll of the
Bondholders.  ARM received indications of support for the Proposed ARM
Offer as follows:

–     60.30% of the holders of the ARM Bonds, Tranches 1-8 voted in
the poll of which 94.51% have voted in favour of the Proposed ARM

–     Holders of 73.06% of the ARM Bond Tranches 9-11 voted and of
those, 62.07% have voted in favour.

Therefore in total, holders of 54.6 percent of the ARM Bond have
indicated that they are in favour of the Proposed ARM Offer.

Under the terms of the Acquisition Agreement entered into between
Insetco and ARM on 1 September 2011 the conditions of the agreement
are required to be satisfied or waived by not later than 30 November
2011. Despite the indications of support for the acquisition of ARM by
Insetco from the advisors to the ARM Bondholders it is clear that the
conditions of the acquisition agreement will not be met by 30 November
2011, and therefore the acquisition agreement will lapse from 1
December 2011, unless extended with the agreement of both parties.
Negotiations are continuing between the parties, and with the relevant
regulatory bodies to seek an appropriate extension to the agreement,

It is anticipated that should the acquisition agreement lapse, whilst
further discussions will continue between the parties with a view to
eventual re-engagement, the suspension from trading in the Company’s
shares on AIM will be lifted and trading will be restored.

A further announcement will be made shortly.


Insetco plc

Clive Cooke

Sanjeev Joshi
020 7887 7840

Charles Stanley Securities

Nominated Adviser

Russell Cook / Darren Vickers
020 7149 6000

This information is provided by RNS
The company news service from the London Stock Exchange



Yesterday I had a first telephone discussion with Jean-Michel Pacaud following his appointment outlined in CSSF Press Release 11/42.


There is little to report at this stage. I now have to set out in letter format key issues that most affect bondholders and to differentiate between closed subjects where it will be difficult to exert influence and open subjects where we will want to express our views clearly.


In that respect I was able to convey the worries of those bondholders who are very dependant on coupon payments to maintain the standard of living that they have worked and saved for. Mr Pacaud expressed sympathy for this situation and said that this would also be a high priority for him.


I also asked that we could have regular updates on cost and details of their fee structure. He indicated that we could work something out around that but advised that he could not say more on the fee structure until it had been agreed in the Luxembourg court.


Mr Pacaud will be unable to consider sanction of the transfer of assets to Insetco until such time as he is fully appraised of all aspects in the case. That means that the offer is on hold and we expect to hear further the views of Insetco in due course.


There will be further discussion next week and I will report as appropriate as matters develop.


Brian Love




Yesterday evening the Steering Group were made aware that matters concerning our investments had become rather urgently in need of our attention.

You will all be aware that every day that passes costs are eroding the value of our funds.  The ARM Bond was based on a carefully researched model and this was built around the continuing injection of cash over a number of years raised through issuing bonds.   An important aspect of this was the inbuilt currency hedge occasioned by the company selling bonds in three currencies US$, Sterling and Euro giving them flexibility in managing the fund and the timing of redemptions and of policy purchases.  This has been lost and the last two years have demonstrated the effects of stagnation on our assets.

It might help readers to picture our fund like a shark, unless it keeps moving it will die and this, in stages, is what is happening to the ARM Bond, these are longevity assets which will waste away if not managed correctly and this management is now absent.

We were reminded today that the Insetco deal expires on the 30th November, after that date the model which they would manage to will have to be recalculated.   Every delay in moving our fund into Insetco causes stagnation and erosion of our assets and adding the costs of E & Y supervision causes further erosion of our net wealth.

Insetco advised us that they will restructure the portfolio of policies to more closely match the need to generate coupon and eventually redemption.  A delay beyond 30th November will require them to update the model dependant on the asset value at the time of the closing of the transaction.  This may lead to a reduction in the coupon payable on the replacement Insetco Bonds.  They will be unable to confirm the figure before they know the true asset value, and this will be subject to independent valuation, but we would be failing in our duty if we did not indicate to you that we believe that there is a considerable risk this will be lower than the 7.5% currently on offer.

We also believe that the option of finding an alternative partner to Insetco in the next 12 days is a non starter, had we all been made aware of the situation a year or so earlier there may have been a chance, but there simply isn’t time.

We also believe that the chances of finding anybody else to manage the stagnation and prevent further erosion for a few more months while judgements are sorted and Administrators are  appointed is an illusion.

This morning the four of us will hold a conference call to discuss final plans for a direct approach on behalf of all investors to Jean Michel Pacaud, Christiane Camphill and Catherine Philips to request that the ARM assets are handed over to Insetco without further delay, so they may begin managing our fund.  Following the vote in the Formal Offer all monies belonging to investors not wishing to take up the Insetco offer will be remitted to ARM and the fate of those investors will remain with the CSSF and the Luxembourg courts.

Should it be necessary to go to Luxembourg on your behalf we are planning to do so and briefing notes are being prepared for this eventuality.


The Steering Group.





Can I warn readers this is going to be a long post, so spare yourself now unless you have the stamina.

I would like to use the post as if it were a direct response to Andrew Cannon (15th at 00:47) who expresses exactly what I would feel if I were in his position, reading what has been posted on this website over the last few days.

Firstly I have no vested interest in either website. The new one, as I understand it,was created to overcome the deficiences of the existing RR website which have been discussed often enough by it’s contributors. I do also think it’s capability to easily conduct votes could be useful in future in relation to defining and formalising mandates or actions on behalf of the whole investor group.

It appears the other members of the original steering group mistakenly thought I was trying to create a rival website and took steps to remove my moderator status from the RR site. Whoever carried this out got it wrong and created a situation that any attempt I made to access the website resulted in “Internal Server Error 500” so I was unable to post at any level. Also for the sake of clarity I am not a moderator(administrator) of the new website.

This situation has highlighted a difference of approach amongst the four members of the original steering group. This has probably been the case since day one, but became more obvious with the publication of the Insetco Offer letter. I am not against the Insetco offer, it may well prove to be the least worst option we have. But I do want to continue to dig for more information relating to this and any other possible options.

I spend the majority of my time at present trying to secure information and push actions that I think will help my wife and me decide what is the best solution for us. I presume other investors will be interested in that information also. I plan to continue doing this until the decision point arrives, and after that I may wish to delve in to the history to form my own views on why this has happened and who could have or should have prevented it from damaging investors.

In a strange way I actually feel more free to write now, not as part of the steering group, but working closely with them, passing them whatever I find but free to publish with my own thoughts.

There are two main issues which in an ideal world should be resolved before any decision has to be made on a formal offer for ARM.

The first is the status of Pending Investors. I have an ongoing dialogue with the FSA on this issue in the hope that they can help get a judgement.

The second is investors’ rights on seeking compensation. I am trying to determine what is the effect of investors accepting a formal offer, on their right to pursue any future compensation claim, once the history is clearer. Again the FSA are assisting me with this to introduce me to the appropriate contact, probably in the FSCS or Financial Ombudsman office.

I fully accept that I may not get clarity on either of those issues before the fomal offer, but it is only time I’m losing, and I would rather do that than be left in a “what if” or “why didn’t I” frame of mind afterwards.

I also want to be prepared for an administration or liquidation scenario should this come about. It could be that ARM as a whole was in liquidation, or just the component of ARM represented by investors who decline a formal offer.

In any event I have been discussing with other life settlement companies proposals for them taking on management of the portfolio until all policies mature and then distributing funds to the investors (or creditors). I am doing this to try and secure an indication of the likely annual management fees so I could counteract any excessively expensive alternative which may be proposed in future.

In those discussions it has also been clear to me that other companies recognise that ARM have built up a portfolio of good quality, well diversified policies and other full offers could be possible. However with the portfolio bleeding away ,time has always been against us and the transfer of supervision to Ernst & Young probably makes speed of resolution even more imperative.

On the Ernst & Young appointment the CSSF have enabled me to exchange contact details with them and I am proposing to begin discussion with them when the results of the indicative vote is published, unless readers want that done in some other way.

So to summarise, this wee squabble has been more public and more exaggerated than it should have been. But I remain convinced that all four individuals are seeking the best solution for each investor depending on their own circumstances. So I would ask that readers do not treat this as an either or, but re-focus on the problem before us all, and try to harness all the skills and funding if need be to get the best solution.

Alan Shanks


Within the next few days this site will be an information site which will be run independently  by ARM Steering Group, comprising of Brian Love, Bob Sharpe and Ian Ward.


The new forum created by Alan Shanks and Alan Wood will be for exchange of information and views.


This revised site will return to its original idea of giving information to bondholders with a specific question and answer section added.


New pages will be created on this site concerning the facts of the Insetco Offer and the alternatives which could include Liquidation.


All the facts and figures will be published.

CSSF Announcement

On 11th November the CSSF transferred supervision of ARM to Ernst & Young through the Luxembourg courts. The press release has been added to the linked documents section. (Click on the tab in the black band at the top of the website).