Indiana Democratic Senate candidate Evan Bayh has up to $1 million in a portfolio that was created by his hedge fund invested in life settlements, which have been characterized as "death bets" by critics.
Bayh's financial disclosure forms show that he has between $500,000 and $1 million invested in partnerships with FCI Co-Investors, which were created by Apollo Global Management in 2010—before Bayh was brought on—for its "foray into life settlement policies."
Apollo was just one of many hedge funds that entered the life settlement business, which entails investors buying life insurance policies from cash-strapped elderly or ill people. Life settlements have been characterized as "death bets" because the quicker the person dies, the more money an investor makes.
"Investors bet the future death benefit will exceed the cash spent to buy the policy and premiums they will need to pay while waiting for the person to die," the Wall Street Journal wrote.
Shanthi Bharatwaj, formerly a financial reporter from TheStreet, said that to main street, life settlements come off as a "ghoulish trade on death."
"To the casual observer on main street, investing in life settlements is a morbid bet on mortality, a ghoulish trade on death that only Wall Street can possibly have the stomach for," Bharatwaj wrote.
Apollo is reportedly looking to increase its stake in the life settlement business.
The investments in FCI were first noted by the Indy Star on Wednesday morning, when it reported that Bayh holds between $1 million and $5 million in an offshore company based in Bermuda.
The companies, FCI Co-Investors I and FCI Co-Investors II, are both based offshore in the Cayman Islands, according to filings with the Securities and Exchange Commission.
Bayh's campaign did not respond to a Washington Free Beacon request for comment on his involvement with the life settlement investments.
Bayh's investment portfolio, which was made public last month, shows that he has dramatically increased his bottom line since leaving the Senate in 2011. Most of his assets are in companies that, like FCI, are partnered with Apollo, where Bayh is a senior adviser.
The Indy Star report took aim at Bayh's investments in offshore tax havens such as Bermuda and the Cayman Islands given his 2004 statement that moving offshore to avoid paying U.S. taxes was "unpatriotic."
Bayh told the paper that he does not know why companies decide to move offshore.
"Bermuda is a popular place for insurance companies," Bayh said. "Why? I don't know."