This week, I participated in a virtual fireside chat with Autonomous Research’s Patrick Davitt to talk in depth about Abacus’s near-term outlook and longer-term strategic plan. The purpose of this fireside chat was to build on the themes covered in our July Investor Day, but focus more concretely on how we are evolving from a balance sheet-driven life settlement business towards a recurring fee-driven asset and wealth management business.

As I discussed last week with respect to our $400 million securitization, most of Abacus’s earnings have traditionally come from origination: the spread between what we pay for a life insurance policy and what we sell it for. It’s a transactional business with one deal garnering one profit. But we have been working intentionally to shift that model and are committed to an ambitious five-year target of 70% fee-related earnings.

This matters because it transforms the value of our business. You can’t always forecast transactions cleanly, whereas recurring revenue compounds. Every client you add generates fees year after year, and those fees scale with assets.

Where the Recurring Revenue Comes From

Our recurring revenue model starts with management fees from our asset management business, where we are paid to manage longevity-linked assets. In three years, we’ve grown AUM from $50 million to $3.5 billion today.

Next (as I wrote about last week), we have securitization servicing fees. When we package life insurance policies into securities and sell them to pension funds and insurance companies, we retain the right to service those policies. That’s recurring revenue that looks and feels like a management fee: predictable, annual asset fees that compound.

Then we have interval fund fees. In the fireside chat, I talked about our first interval fund dedicated to longevity assets. Individual investors and institutions buy shares and we, in turn, charge asset management fees on money invested.

Beyond these fees, we also have Abacus Intel, which provides pension funds and other clients with the most comprehensive mortality data available under multi-year contracts. These contracts provide recurring revenue for three to five years, with fees increasing each year.

Finally, we have LifeARC platform fees. We’ve already signed two major RIA firms to agreements where they pay us a fee to access our lifespan-based financial planning platform. And we’re in daily conversations with some of the largest advisory firms in the country about similar arrangements.

Every one of these revenue streams is recurring, contractual, and scales with the business.

Why This Changes Everything

A fee-based business is durable. Every policy you originate and securitize generates fees for years. Every advisor who signs on generates fees on their entire client AUM. Every pension fund contract generates at least three to five years of revenue.

It must be said that our origination business isn’t going away. In fact, it’s growing at 20% annually. But instead of just keeping our business as a transaction-based model, we’re leveraging the origination business to supercharge our ability to collect fees year after year.

Asset management fees compound as AUM scales. Securitization servicing fees scale with every securitization, and we’re planning three per year. Interval fund fees grow as custodian platforms activate and advisors get access. Abacus Intel contracts grow in dollar value over time. And platform fees climb with advisor adoption.

The path to 70% isn’t heroic growth in a single channel. It’s all of them working together.