SAN FRANCISCO (AP) - An unnamed Silicon Valley billionaire has purchased the world's most valuable life insurance policy.
The man who cobbled the deal together said Saturday that it took seven months and 19 insurance companies to put together a deal that surpasses a $100 million policy sold to Hollywood mogul David Geffen in 1990.
"No one company can afford to take a $201 million hit," said Dovi Frances, the financial adviser who represents who he calls a "well-known billionaire."
The Guinness Book of World Records announced the surpassing of Geffen's record on Thursday. Guinness officials spent about three months reviewing records, Frances said.
"It was worse than any audit you can think of," he said.
Guinness credits Frances with the record for selling the policy, surpassing United Kingdom life insurance salesman Peter Rosengard who helped put together Geffen's policy.
Frances is president of Santa Barbara-based S.G. LLC. The firm has represented the billionaire since he responded to a direct mail solicitation in 2010.
Frances said the billionaire wants to remain anonymous for two reasons: privacy and keeping the news from his benefactors.
"He wants his next of kin to keep working hard," Frances said.
Frances said the billionaire purchased the insurance to help his heirs avoid paying a 45 percent inheritance tax upon his death. Frances also said, generally speaking, that many super-wealthy people are taking out big loans because interest rates are low. Those loans are to be paid in full immediately upon death, further cutting into a billionaire's cash holdings.
"Most billionaires have their value tied up in hard assets and maybe don't have so much cash immediately available for such a big hit," Frances said.
Frances said that the annual premium is in "the low, single digits of millions of dollars." He said the insurance companies benefit from the deal by immediately investing the premium, and their risk is if the billionaire dies too soon.
Frances wouldn't disclose the billionaire's age.
Several billionaires have connections to Frances' firm, including Google Chairman Eric Schmidt and Palantir Technologies co-founder Joe Lonsdale. Frances declined to discuss identity of the policyholder. Elon Musk, the founder of Paypal, Tesla Motors and other startups, declined to discuss with the San Jose Mercury News whether he was the policyholder.
Forbes reports that California can lay claim to 111 billionaires, with about a third of them considered high-tech investors.