GWG Holdings, Inc. Reports Results For the First Quarter Ended March 31, 2020

Reported total liquidity (cash, restricted cash, policy benefits receivable and fees receivable) increased to $188.7 million at March 31, 2020. “In this unprecedented time, we are working hard to support our advisors and the clients they serve,” said Murray Holland, GWGH’s Chief Executive Officer. “We believe our products are uniquely positioned to provide a combination of yield and stability as advisors and broker-dealers report a need for liquidity at a previously unseen level among our target market of individual and small institutional investors.” 1. Financial & Operating Highlights ($ Thousands except per share information)Q1 2020  Q1 2019 Revenue$33,557  $25,217 Expenses 124,050   37,904 Income Tax Benefit 14,507   — Loss from Equity Method Investments (1,530)  (1,927)Net Loss, including Loss from Equity Method Investment (77,516)  (14,614)Loss Attributable to Noncontrolling Interests 32,084   — Preferred Stock Dividends 3,952   4,296 Net Loss Attributable to Common Shareholders (49,384)  (18,910 Per Share Data:       Net Loss1 (1.62)  (0.57)Capital Raised from L Bonds 110,825   125,985 Liquidity2 188,661   183,896 Life Insurance Portfolio3 2,000,680   2,098,428 Life Insurance Acquired3 —   80,211 Face Value of Matured Policies 25,502   30,459 TTM Benefits / Premiums4 184.3%  154.8%         (1) Per diluted common share outstanding(2) Includes cash, restricted cash, policy benefits receivable and fees receivable as of the end of the period presented(3) Face amount of policy benefits(4) The ratio of policy benefits realized to premiums paid on a trailing twelve month (TTM) basis             2. Revenue and Expense Discussion First Quarter 2020 vs. First Quarter 2019: • Total revenue was $33.6 million in the current period, compared to $25.2 million in the prior period primarily due to: The Ben consolidation added $9.4 million of interest income from its financing receivables portfolio, after intercompany eliminations, and $5.0 million in trust services and other fee revenue.Interest income of $1.1 million on the LiquidTrusts promissory note.These increases were partially offset by $7.0 million of lower gains on life insurance policies primarily due to slightly lower average face value of matured policies and no gains on acquisitions. • Total expenses were $124.1 million in the current period, compared to $37.9 million in the prior period primarily due to: Employee compensation and benefits increased by $72.6 million for this period primarily due to the inclusion of Ben’s operations, which included the recognition of $68.9 million of non-cash, equity-based compensation expense under Ben’s equity incentive plans.Interest and fees increased by $8.9 million due to $6.1 million of additional interest expense on L Bonds as a result of increased amounts outstanding, increased interest expense of $2.3 million from the consolidation of Ben related to its borrowings, and increased interest expense of $0.5 million on GWGH’s senior credit facility.Legal and professional fees increased by $3.2 million primarily due to additional legal and consulting fees recognized with the full consolidation of Ben’s operations beginning in the first quarter of 2020. 3. Life Insurance Portfolio Statistics as of and for the quarter ended March 31, 2020 Portfolio Summary: Total life insurance portfolio face value of policy benefits (in thousands)$2,000,680 Average face value per policy (in thousands)$1,769 Average face value per insured life (in thousands)$1,900 Weighted average age of insured (years) 82.6 Weighted average life expectancy estimate (years) 7.2 Total number of policies 1,131 Number of unique lives 1,053 Demographics 74% Males; 26% Females Number of smokers 47 Largest policy as % of total portfolio face value 0.7%    Average policy as % of total portfolio 0.1%Average annual premium as % of face value 3.5%     Distribution of Policies and Benefits by Current Age of Insured:           Percentage of Total    Min Age Max Age Number of Policies  Policy Benefits  Number of Policies  Policy Benefits  Wtd. Avg. LE (yrs.) 95 101  20  $42,602   1.7%  2.1%  2.1 90 94  147   289,269   13.0%  14.5%  3.2 85 89  232   544,264   20.5%  27.2%  5.0 80 84  247   439,948   21.9%  22.0%  7.2 75 79  223   369,024   19.7%  18.4%  9.9 70 74  199   247,346   17.6%  12.4%  11.1 60 69  63   68,227   5.6%  3.4%  11.3 Total    1,131  $2,000,680   100.0%  100.0%  7.2                         4. Ben’s Collateral Portfolio Information         As of March 31, 2020, Beneficient’s loan portfolio had exposure to 118 professionally managed alternative investment funds, comprised of 350 underlying investments, and approximately 92 percent of Beneficient’s loan portfolio was collateralized by investments in private companies. Beneficient’s loan portfolio diversification spans across these industry sectors, geographic regions and exposure types: A graphic accompanying this announcement is available at Assets in the collateral portfolio consist primarily of interests in alternative investment vehicles (also referred to as funds) that are managed by a group of U.S. and non-U.S. based alternative asset management firms that invest in a variety of financial markets and utilize a variety of investment strategies. The vintages of the funds in the collateral portfolio as of December 31, 2019 ranged from 1998 to 2011. 5. Additional Information       Gain (Loss) on Life Insurance Policies (in thousands):  Three Months Ended March 31,  2020  2019 Change in estimated probabilistic cash flows(1)$17,851  $17,131 Unrealized gain on acquisitions(2) —   4,459 Premiums and other annual fees (17,199)  (15,832)Face value of matured policies 25,502   30,459 Fair value of matured policies (11,709)  (14,721)Gain (loss) on life insurance policies, net$14,445  $21,496          (1) Change in fair value of expected future cash flows relating to the investment in life insurance policies that are not specifically attributable to changes in life expectancy, discount rate changes or policy maturity events.(2) Gain resulting from fair value in excess of the purchase price for life insurance policies acquired during the reporting period. Policy Benefits Realized and Premiums Paid (TTM):   Quarter End Date Portfolio Face Amount(in thousands)  12-Month Trailing Benefits Realized(in thousands)  12-Month Trailing Premiums Paid(in thousands)  12-Month Trailing Benefits/Premium Coverage Ratio March 31, 2016 1,027,821  21,845  28,771  75.9%June 30, 2016 1,154,798  30,924  31,891  97.0%September 30, 2016 1,272,078  35,867  37,055  96.8%December 31, 2016 1,361,675  48,452  40,239  120.4%March 31, 2017 1,447,558  48,189  42,753  112.7%June 30, 2017 1,525,363  49,295  45,414  108.5%September 30, 2017 1,622,627  53,742  46,559  115.4%December 31, 2017 1,676,148  64,719  52,263  123.8%March 31, 2018 1,758,066  60,248  53,169  113.3%June 30, 2018 1,849,079  76,936  53,886  142.8%September 30, 2018 1,961,598  75,161  55,365  135.8%December 31, 2018 2,047,992  71,090  52,675  135.0%March 31, 2019 2,098,428  87,045  56,227  154.8%June 30, 2019 2,088,445  82,421  59,454  138.6%September 30, 2019 2,064,156  101,918  61,805  164.9%December 31, 2019 2,020,973  125,148  63,851  196.0%March 31, 2020 2,000,680  120,191  65,224  184.3%              Webcast Details Management will host a webcast Monday, May 18, 2020 at 4:30 p.m. EDT to discuss financial and operating results. The webcast will give viewers audio and access to PowerPoint slides that illustrate points made during the presentation. To register for the webcast, go to After the webcast is completed, a replay of it can be accessed at About GWG Holdings, Inc.  GWG Holdings, Inc. (Nasdaq: GWGH), a financial services holding company committed to transforming the alternative asset industry through innovative liquidity products and related services for the owners of illiquid alternative investments, is the parent company of GWG Life, LLC, which owns a portfolio of $2.0 billion in face value of life insurance policy benefits as of March 31, 2020. GWGH has executed a series of strategic transactions with The Beneficient Company Group, L.P., a financial services company providing proprietary liquidity solutions to owners of alternative assets, resulting in the closer alignment of the two companies.  For more information about GWG Holdings, email or visit For more information about Beneficient, email or visit Cautionary Statement Regarding Forward-Looking Statements This press release contains forward-looking statements that involve substantial risks and uncertainties. All statements, other than statements of historical facts, included in this press release regarding our strategy, future operations, future financial position, future revenue, projected costs, prospects, plans and objectives of management are forward-looking statements. The words "anticipate," "believe," "estimate," "expect," "intend," "may," "plan," "would," "target" and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. These forward-looking statements include, among other things, statements about our estimates regarding future revenue and financial performance. We may not actually achieve the expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the expectations disclosed in the forward-looking statements that we make. More information about potential factors that could affect our business and financial results is contained in our filings with the Securities and Exchange Commission, including our Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission (“SEC”) on May 15, 2020, and our Annual Report on Form 10-K filed with the SEC on March 27, 2020. Additional information will also be set forth in our future quarterly reports on Form 10-Q, annual reports on Form 10-K and other filings that we make with the SEC. We do not intend, and undertake no duty, to release publicly any updates or revisions to any forward-looking statements contained herein. Media Contact:Dan CallahanDirector of CommunicationGWG Holdings, Inc.(612) GWG HOLDINGS, INC. AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS(dollars in thousands)  March 31, 2020 (unaudited) December 31, 2019 ASSETS    Cash and cash equivalents$116,432  $79,073 Restricted cash 26,446   20,258 Investment in life insurance policies, at fair value 802,181   796,039 Life insurance policy benefits receivable, net 15,330   23,031 Loans receivable, net of unearned income 219,296   232,344 Allowance for loan losses (700)  — Loans receivable, net 218,596   232,344 Fees receivable 30,453   29,168 Financing receivables from affiliates 68,290   67,153 Other assets 33,906   30,135 Goodwill 2,372,595   2,358,005 TOTAL ASSETS$3,684,229  $3,635,206        LIABILITIES & STOCKHOLDERS’ EQUITY      LIABILITIES      Senior credit facility with LNV Corporation$188,793  $174,390 L Bonds 1,009,781   926,638 Seller Trust L Bonds 366,892   366,892 Other borrowings 152,597   153,086 Interest and dividends payable 22,403   16,516 Deferred revenue 39,651   41,444 Accounts payable and accrued expenses 21,139   27,836 Deferred tax liability, net 40,206   57,923 TOTAL LIABILITIES 1,841,462   1,764,725        Redeemable noncontrolling interests 1,241,641   1,269,654        STOCKHOLDERS’ EQUITY             REDEEMABLE PREFERRED STOCK      (par value $0.001; shares authorized 100,000; shares outstanding 69,756 and 84,636; liquidation preference of $70,163 and $85,130 as of March 31, 2020 and December 31, 2019, respectively) 59,142   74,023 SERIES 2 REDEEMABLE PREFERRED STOCK      (par value $0.001; shares authorized 150,000; shares outstanding 146,812 and 147,164; liquidation preference of $147,668 and $148,023 as of March 31, 2020 and December 31, 2019, respectively) 127,516   127,868 COMMON STOCK      (par value $0.001; shares authorized 210,000,000; shares issued and outstanding 30,535,249 and 30,533,793 as of March 31, 2020 and December 31, 2019, respectively) 33   33 Common stock in treasury, at cost (2,500,000 shares as of both March 31, 2020 and December 31, 2019) (24,550)  (24,550)Additional paid-in capital 229,207   233,106 Accumulated deficit (121,933)  (76,501)TOTAL GWG HOLDINGS STOCKHOLDERS’ EQUITY 269,415   333,979 Noncontrolling interests 331,711   266,848 TOTAL STOCKHOLDERS’ EQUITY 601,126   600,827 TOTAL LIABILITIES & STOCKHOLDERS’ EQUITY$3,684,229  $3,635,206          GWG HOLDINGS, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF OPERATIONS(dollars in thousands)(unaudited)  Three Months Ended March 31,  2020  2019 REVENUE     Gain on life insurance policies, net$14,445  $21,496 Interest and other income 19,112   3,721 TOTAL REVENUE 33,557   25,217         EXPENSES       Interest expense 35,871   26,975 Employee compensation and benefits 77,704   5,154 Legal and professional fees 6,163   2,947 Provision for loan losses 700   — Other expenses 3,612   2,828 TOTAL EXPENSES 124,050   37,904         LOSS BEFORE INCOME TAXES (90,493)  (12,687)INCOME TAX BENEFIT (14,507)  —         NET LOSS BEFORE LOSS FROM EQUITY METHOD INVESTMENT (75,986)  (12,687)        Loss from equity method investment (1,530)  (1,927)        NET LOSS (77,516)  (14,614)        Net loss attributable to noncontrolling interests 32,084   —         Less: Preferred stock dividends 3,952   4,296 NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS$(49,384) $(18,910)NET LOSS PER COMMON SHARE       Basic$(1.62) $(0.57)Diluted$(1.62) $(0.57)        WEIGHTED AVERAGE COMMON SHARES OUTSTANDING       Basic 30,534,977   32,984,741 Diluted 30,534,977   32,984,741         Beneficient's Loan Portfolio

GWG Holdings Inc Logo
Published by: GWG Holdings Inc
Nobody has commented on this yet. Why not be the first?

leave a reply

read the most recent from GWG Holdings Inc

Press Releases