Well, the fledgling market in structured sales annuities, those contracts designed to fund installment real estate or real property sales just got bigger and more competitive with the entrance of Prudential into the market. The formal announcement will come tomorrow but the initial emails and updates have been sent, and the long rumored move into a market that heretofore had been dominated by Allstate Insurance just got more competitive and more viable.
Prudential Insurance, which has made a major push into the non-qualified structure area has decided to take the next step and compete in this new arena, and I think it's going to be a winner for Prudential. Their name recognition, financial size, and their installed base of real estate agents through Prudential Reality are almost tailor made for this niche market. Couple that with the fact that the major competing concept, that being private annuity trusts, was just shot out of the water by the IRS and you have an almost ideal time for them to announce and kick this off.
Structured sales, for those of you who aren't aware, as essentially structured settlement annuity products used with an assignment company, in this case Pruco Assignment, or with Allstate, NABCO Assignment, to take proceeds of a real estate sale, avoid constructive receipt and allow the seller to engage in a secured installment sale with guaranteed payments over a set period of time. It is one of the very few tax deferral tools available to real estate, estate and tax planning professionals, and as public and professional awareness increases you are going to see it become a large part of the selling of real estate for those with highly appreciated, low cost basis property.
I expect there will be one or more additional firms that roll out a similar product in the next six months as life markets realize the potential for growth in this area, as well as the opportunity to broaden their product line.