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, today announced its
financial and operating results for the fourth quarter and full
year ended December 31, 2018.
In 2018 and in the second quarter of 2019 GWGH
consummated a series of transactions with The Beneficient Company
Group, L.P. and related entities (BEN) which has resulted in a
significant reorientation of GWGH’s business and capital allocation
strategy, the replacement of the Board of Directors and changes in
executive management. BEN provides liquidity to the owners of
alternative assets and illiquid investment funds, including
mid-to-high net worth individuals, family offices, and
small-to-mid-size institutional investors. In addition to its
liquidity offerings, BEN plans to offer a variety of services
including custody and clearing of alternative assets, fund and
trust administration, retirement funds, and insurance services for
covering risks attendant to owning or managing alternative
assets.
GWGH believes its expanded strategic
relationship with BEN will accelerate GWGH’s growth, financial
capability and diversification as well as BEN’s efforts to build
the most comprehensive and innovative liquidity provider for
alternative asset investors.
Recent Corporate Events
- In the second quarter of 2019, GWGH and BEN completed a
significant expansion of their strategic relationship:
- BEN and certain of its founders acquired all of Jon and Steven
Sabes’ interest in GWGH;
- Jon Sabes resigned as Chairman and CEO of GWGH and was named
CEO of GWGH’s insurtech subsidiary, InsurTech Holdings, LLC;
- Murray T. Holland, a trust advisor to the seller trusts which
in the aggregate own approximately 79 percent of GWGH’s outstanding
common stock, was named CEO of GWGH;
- GWGH’s Board was succeeded by 11 new board members designated
by BEN, including BEN Chairman and CEO Brad K. Heppner and Thomas
O. Hicks and was subsequently increased to 14 members;
- GWGH intends to facilitate the separation of InsurTech
Holdings, LLC to become independent of GWGH on commercially
reasonable terms as soon as practicable; and
- GWGH anticipates funding a total of $20 million in capital to
InsurTech Holdings, LLC over the next two years.
- See the Current Report on Form 8-K filed with the Securities
and Exchange Commission on April 16,
2019.
- Announced expansion of the use of proceeds for its L Bond
offering to encompass growth in alternative asset exposure
primarily through additional investments in BEN; and
- GWGH’s wholly owned subsidiary GWG Life, LLC entered into a $65
million promissory note with certain liquid trusts, the ultimate
proceeds of which will be used to position BEN’s balance sheet,
working capital, and liquidity profile.
Financial and Operating
Highlights
- Reported total assets of $1.5 billion representing an 81
percent increase over the prior year-end;
- Increased total equity by $147 million versus the prior
year-end, more than doubling total equity versus December 31,
2017;
- Ended 2018 with a life insurance portfolio of $2.048 billion in
face amount of policy benefits consisting of 1,154 policies;
- Acquired 318 life insurance policies for a total of $441
million of face amount of benefits during 2018;
- Realized $71 million of face amount of benefits from 62 life
insurance policies in 2018;
- Adopted a new life insurance portfolio valuation methodology
that combines the continued use of independent life expectancy
reports and the actual performance of the portfolio resulting in a
net pre-tax, non-cash charge of $87 million in the fourth quarter
of 2018; and
- Reported a net loss attributable to common shareholders,
excluding non-recurring items, of $49 million or $8.04 per basic
and fully diluted share compared to a net loss attributable to
common shareholders of $33 million or $5.72 per basic and fully
diluted share for the prior year.
“This significant expansion of our strategic
relationship with BEN is a milestone – and yet just a first step
for GWGH and Beneficient,” said Murray Holland, GWGH’s Chief
Executive Officer. “We have brought together two innovative
providers of liquidity to owners of alternative assets with
complementary capabilities into a publicly traded platform. We will
continue working toward our goal of leveraging this platform to
meet the vast, growing and underserved market for products and
related services targeted to the owners of illiquid alternative
investments and secondary transactions in private-equity
funds.”
1. Financial & Operating
Highlights
($ Thousands except
per share information) |
|
Q4 2018 |
|
Q4 2017 |
|
FY 2018 |
|
FY 2017 |
Revenue |
|
$ |
(60,184 |
) |
|
$ |
17,681 |
|
|
|
$ |
(390 |
) |
|
|
$ |
64,134 |
|
Revenue Excl. Non-Recurring
Item1 |
|
|
26,916 |
|
|
|
|
|
|
|
86,710 |
|
|
|
|
|
|
Expenses |
|
|
39,528 |
|
|
|
24,127 |
|
|
|
|
119,079 |
|
|
|
|
86,864 |
|
Per Share Data2: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (Loss)3 |
|
|
(15.16 |
) |
|
|
(2.77 |
) |
|
|
|
(22.32 |
) |
|
|
|
(5.72 |
) |
Excluding Non-Recurring
Item1 |
|
|
(2.46 |
) |
|
|
|
|
|
|
(8.04 |
) |
|
|
|
|
|
Capital Raised |
|
|
97,883 |
|
|
|
85,367 |
|
|
|
|
370,203 |
|
|
|
|
259,076 |
|
Liquidity4 |
|
|
141,897 |
|
|
|
159,430 |
|
|
|
|
141,897 |
|
|
|
|
159,430 |
|
Life Insurance Portfolio5 |
|
|
2,047,992 |
|
|
|
1,676,148 |
|
|
|
|
2,047,992 |
|
|
|
|
1,676,148 |
|
Life Insurance Acquired5 |
|
|
107,478 |
|
|
|
78,582 |
|
|
|
|
440,569 |
|
|
|
|
378,947 |
|
Face Value of Matured
Policies |
|
|
20,991 |
|
|
|
25,061 |
|
|
|
|
71,090 |
|
|
|
|
64,719 |
|
TTM Benefits / Premiums6 |
|
|
135.0 |
% |
|
|
123.8 |
% |
|
|
|
135.0 |
% |
|
|
|
123.8 |
% |
(1) Adoption of a new life insurance portfolio valuation
methodology (the Longest Life Expectancy method)(2)
Attributable to common shareholders(3) Per basic and fully
diluted share outstanding(4) Includes cash, restricted cash
and policy benefits receivable(5) Face amount of policy
benefits(6) The ratio of policy benefits recognized to
premiums paid on a trailing twelve month (TTM) basis
2. Revenue and Expense Discussion
Fourth Quarter 2018 vs. Fourth Quarter 2017:
- Total revenue was ($60.2) million in the current period,
compared to $17.7 million in the prior period primarily related to:
- A net charge of $87.1 million resulting from the adoption of a
new life insurance portfolio valuation methodology;
- Higher unrealized gain from policy acquisitions reflecting
higher policy acquisition volume – $107.4 million of face value
acquired in the current period compared to $78.6 million in the
prior period; and
- Lower gain from policy benefits due to decreased realization of
policy benefits – $21.0 million of life insurance policy benefits
realized in the current period compared to $25.1 million in the
prior period.
- Total expenses were $39.5 million in the current period,
compared to $24.1 million in the prior period primarily related to:
- Increased interest expense of $9.5 million due to increased
debt outstanding and higher interest rates on its senior credit
facility partially offset by a lower balance outstanding on this
facility during the period;
- Increased incentive compensation costs including expense
related to stock-based compensation;
- Costs of $2.3 million relating to the YouSurance and Life
Epigenetics wholly owned insurtech subsidiaries compared to $0.6
million in the prior period; and
- Bad debt expense of $4.5 million compared to $0.4 million in
the prior period. The increase is related to a specific life
insurance policy that GWGH deemed uncollectable during the
period.
Full Year 2018 vs. Full Year 2017
- Total revenue was ($0.4) million in the current period,
compared to $64.1 million in the prior period primarily related to:
- A net charge of $87.1 million resulting from the adoption of a
new life insurance portfolio valuation methodology;
- Higher realization of policy benefits – $71.1 million of life
insurance policy benefits realized in the current period compared
to $64.7 million in the prior period;
- Lower charges relating to the fair value impact of updated life
expectancy estimates on certain policies in the portfolio: a charge
of $4.9 million in the current period compared to a charge of $20.3
million in the prior period; and
- Lower unrealized gain from policy acquisitions due to lower
purchase yields in the broker and tertiary markets partially offset
by a higher amount of policy purchases.
- Total expenses were $119.1 million in the current period,
compared to $86.9 million in the prior period primarily related to:
- Increased interest expense of $25.7 million due to increased
debt outstanding and higher interest rates on its senior credit
facility partially offset by a lower balance outstanding on this
facility during the period;
- Higher employee compensation and benefits expenses;
- Increased technology costs relating to systems development and
cybersecurity initiatives;
- Costs of $4.2 million relating to YouSurance and Life
Epigenetics wholly owned insurtech subsidiaries in the current
period compared to $1.6 million in the prior period; and
- Higher bad debt expense related to a specific life insurance
policy that GWGH deemed uncollectable during the period.
3. Life Insurance Portfolio
Statistics
Portfolio Summary:
Total life insurance portfolio face value of policy benefits |
|
$ |
2,047,992,000 |
|
Average face value per
policy |
|
$ |
1,775,000 |
|
Average face value per insured
life |
|
$ |
1,984,000 |
|
Average age of insured
(yrs.) |
|
|
82.1 |
|
Average life expectancy
estimate (yrs.) |
|
|
7.8 |
|
Total number of policies |
|
|
1,154 |
|
Number of unique lives |
|
|
1,032 |
|
Demographics |
|
|
77% Male; 23% Female |
|
Number of smokers |
|
|
52 |
|
Largest policy as % of total
portfolio |
|
|
0.6 |
% |
Average policy as % of total
portfolio |
|
|
0.1 |
% |
Average annual premium as % of
face value |
|
|
2.9 |
% |
|
|
|
|
|
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 |
|
|
|
100 |
|
|
|
16 |
|
|
$ |
23,483,000 |
|
|
|
1.4 |
% |
|
|
1.1 |
% |
|
|
2.0 |
|
|
90 |
|
|
|
94 |
|
|
|
129 |
|
|
|
257,877,000 |
|
|
|
11.2 |
% |
|
|
12.6 |
% |
|
|
3.6 |
|
|
85 |
|
|
|
89 |
|
|
|
232 |
|
|
|
519,107,000 |
|
|
|
20.1 |
% |
|
|
25.3 |
% |
|
|
5.5 |
|
|
80 |
|
|
|
84 |
|
|
|
243 |
|
|
|
458,529,000 |
|
|
|
21.1 |
% |
|
|
22.4 |
% |
|
|
7.5 |
|
|
75 |
|
|
|
79 |
|
|
|
230 |
|
|
|
407,087,000 |
|
|
|
19.9 |
% |
|
|
19.9 |
% |
|
|
10.3 |
|
|
70 |
|
|
|
74 |
|
|
|
213 |
|
|
|
275,933,000 |
|
|
|
18.4 |
% |
|
|
13.5 |
% |
|
|
11.4 |
|
|
60 |
|
|
|
69 |
|
|
|
91 |
|
|
|
105,976,000 |
|
|
|
7.9 |
% |
|
|
5.2 |
% |
|
|
12.0 |
|
|
Total |
|
|
|
|
|
|
|
1,154 |
|
|
$ |
2,047,992,000 |
|
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
7.8 |
|
|
4. Life Insurance Policy Origination
Life Insurance Portfolio Activity:
|
|
|
Three Months Ended |
|
|
Twelve Months Ended |
|
|
|
|
December 31, 2018 |
|
|
December 31, 2017 |
|
|
December 31, 2018 |
|
|
December 31, 2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total policy benefits
purchased |
|
$ |
107,478,000 |
|
$ |
78,582,000 |
|
$ |
440,569,000 |
|
$ |
378,947,000 |
|
Total life insurance policies purchased |
|
|
85 |
|
|
68 |
|
|
318 |
|
|
255 |
|
Average policy benefit purchased |
|
$ |
1,264,000 |
|
$ |
1,156,000 |
|
$ |
1,385,000 |
|
$ |
1,486,000 |
|
Direct policy benefits purchased |
|
$ |
12,870,000 |
|
$ |
6,340,000 |
|
$ |
42,432,000 |
|
$ |
50,218,000 |
|
Direct insurance policies purchased |
|
|
12 |
|
|
11 |
|
|
51 |
|
|
51 |
|
- Life insurance policy purchases were higher in both the fourth
quarter of 2018 and full year 2018 reflecting more aggressive
pricing and improved pipeline pull-through rates. All of the
company’s policy acquisition channels were highly price competitive
during the reported periods. While the company is continuing to
work to maximize the value of its secondary life insurance
business, it has made the strategic decision to begin reducing
capital allocated to additional life insurance policies in the
secondary market and to begin increasing capital allocated toward
providing liquidity to a broader range of alternative assets,
primarily through investments in BEN.
- Direct purchases of life insurance policies (not through a
broker) were higher in the fourth quarter of 2018 and lower in the
full-year period versus a year earlier and continue to remain at
lower levels than GWGH had anticipated.
5. Longest Life Expectancy
Methodology
The fair value of the portfolio of life
insurance policies owned by GWGH is determined as the net present
value of the life insurance portfolio’s future expected cash flows
(net of policy benefits received and required premium payments).
The net present value of the future expected cash flows incorporate
life expectancy estimates and current discount rate assumptions.
The life expectancy estimates used by GWGH for acquiring and
valuing life insurance policies has in the past been typically
based upon the average of two life expectancy reports received from
independent third-party medical actuarial underwriting firms (Life
Expectancy Providers). After the acquisition of a life insurance
policy, GWGH has sought to update these life expectancy reports on
a periodic basis.
During the fourth quarter of 2018, GWGH
undertook a comprehensive study to determine a more accurate,
transparent and cost-effective method of pricing, valuing, and
modeling the performance of its portfolio of life insurance
policies. GWGH’s goal was to incorporate life expectancy estimates
from Life Expectancy Providers, the historical experience of the
portfolio, the diversification and mortality factors of the
portfolio, and relevant market-based observations and inputs.
GWGH has resolved to use the Longest Life
Expectancy methodology going forward based upon using the longest
life expectancy report received from the Life Expectancy Providers
used for pricing at the time a life insurance policy is purchased
(the Longest Life Expectancy). GWGH believes that its portfolio of
life insurance policies has grown sufficiently large in size and
diversity to establish that, while individual mortality experience
is inherently unpredictable, the actual mortality experience of the
portfolio should be expected to approach the mean modeled
prediction.
GWGH believes that a Longest Life Expectancy
methodology that incorporates the actual mortality experience of
its portfolio and the use of third-party estimates is superior to
its historical methodology. GWGH believes this methodology should
minimize future fluctuations of valuation, decrease its reliance on
Life Expectancy Providers for updated reports, and improve its
ability to finance the portfolio and forecast future revenues and
earnings.
The implementation of the Longest Life
Expectancy methodology required GWGH to take a net non-cash charge
to revenue of $87.1 million, reflecting a decrease in the fair
value of its portfolio of life insurance at December 31, 2018. This
non-cash charge represents approximately 10 percent of the fair
market value of the portfolio prior to adjustment.
6. Insurtech Initiatives
Since 2017, GWGH has been investing in the
development of epigenetic technology through its wholly owned
subsidiary Life Epigenetics Inc. GWGH believes it can serve as
foundational technology for a new era of medical underwriting in
life insurance. The strategic expansion with BEN included a
leadership change that will lead to the further development of the
insurtech businesses that are applying technology to the insurance
industry with the potential to significantly disrupt the historical
approach to assessing and selecting acceptable underwriting
risks.
In order to continue developing these
businesses, former Chief Executive Officer and Chairman Jon Sabes,
will serve as the CEO of a new wholly owned subsidiary InsurTech
Holdings, LLC, which will be the parent company of two direct
subsidiaries, Life Epigenetics Inc. and YouSurance General Agency,
LLC, that hold all insurtech assets. In addition, consistent with
prior approval by the Board of Directors, GWGH anticipates funding
a total of $20 million in capital to InsurTech Holdings over the
next two years and plans a future separation of the wholly owned
subsidiary to unlock shareholder value.
7. Additional Information
Gain (Loss) on Life Insurance Policies:
|
|
Three Months Ended December 31, |
|
|
Year Ended December 31, |
|
|
|
2018 |
|
|
2017 |
|
|
2018 |
|
|
2017 |
|
Change in estimated probabilistic cash flows (1) |
|
$ |
19,961,000 |
|
|
|
23,208,000 |
|
|
|
75,444,000 |
|
|
|
63,241,000 |
|
Unrealized gain on
acquisitions (2) |
|
|
6,227,000 |
|
|
|
5,156,000 |
|
|
|
28,017,000 |
|
|
|
31,019,000 |
|
Premiums and other annual
fees |
|
|
(14,417,000 |
) |
|
|
(17,173,000 |
) |
|
|
(54,087,000 |
) |
|
|
(53,296,000 |
) |
Change in discount rates
(3) |
|
|
- |
|
|
|
2,801,000 |
|
|
|
- |
|
|
|
14,931,000 |
|
Change in life expectancy
evaluation (4) |
|
|
- |
|
|
|
(6,283,000 |
) |
|
|
(4,890,000 |
) |
|
|
(20,257,000 |
) |
Change in life expectancy
evaluation methodology (5) |
|
|
(87,100,000 |
) |
|
|
- |
|
|
|
(87,100,000 |
) |
|
|
- |
|
Face value of matured
policies |
|
|
20,990,000 |
|
|
|
25,062,000 |
|
|
|
71,090,000 |
|
|
|
64,719,000 |
|
Fair value of matured
policies |
|
|
(12,696,000 |
) |
|
|
(15,774,000 |
) |
|
|
(42,579,000 |
) |
|
|
(38,243,000 |
) |
Gain (loss) on life insurance
policies, net |
|
$ |
(67,035,000 |
) |
|
|
16,997,000 |
|
|
|
(14,105,000 |
) |
|
|
62,114,000 |
|
(1) Change in fair value of expected
future cash flows relating to our investment in life insurance
policies that are not specifically attributable to changes in life
expectancy, discount rate 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.(3)
The discount rate applied to estimate the fair value of the
portfolio of life insurance policies we own was 8.25% as of
December 31, 2018, compared to 10.45% as of December 31,
2017.(4) The change in fair value due to updating life
expectancy estimates on certain life insurance policies in our
portfolio.(5) The change in fair value due to the adoption of
the Longest Life Expectancy methodology on life insurance policies
in our portfolio, partially offset by the impact of a decrease in
the discount
rate. Policy
Benefits Recognized and Premiums Paid (TTM):
Quarter End Date |
|
PortfolioFace Amount ($) |
|
|
12-MonthTrailingBenefits
Realized ($) |
|
|
12-MonthTrailing Premiums Paid
($) |
|
|
12-MonthTrailingBenefits/PremiumCoverage
Ratio |
June 30, 2015 |
|
|
806,274,000 |
|
|
|
47,125,000 |
|
|
|
24,348,000 |
|
|
|
193.5 |
% |
September 30, 2015 |
|
|
878,882,000 |
|
|
|
44,482,000 |
|
|
|
25,313,000 |
|
|
|
175.7 |
% |
December 31, 2015 |
|
|
944,844,000 |
|
|
|
31,232,000 |
|
|
|
26,650,000 |
|
|
|
117.2 |
% |
March 31, 2016 |
|
|
1,027,821,000 |
|
|
|
21,845,000 |
|
|
|
28,771,000 |
|
|
|
75.9 |
% |
June 30, 2016 |
|
|
1,154,798,000 |
|
|
|
30,924,000 |
|
|
|
31,891,000 |
|
|
|
97.0 |
% |
September 30, 2016 |
|
|
1,272,078,000 |
|
|
|
35,867,000 |
|
|
|
37,055,000 |
|
|
|
96.8 |
% |
December 31, 2016 |
|
|
1,361,675,000 |
|
|
|
48,452,000 |
|
|
|
40,239,000 |
|
|
|
120.4 |
% |
March 31, 2017 |
|
|
1,447,558,000 |
|
|
|
48,189,000 |
|
|
|
42,753,000 |
|
|
|
112.7 |
% |
June 30, 2017 |
|
|
1,525,363,000 |
|
|
|
49,295,000 |
|
|
|
45,414,000 |
|
|
|
108.5 |
% |
September 30, 2017 |
|
|
1,622,627,000 |
|
|
|
53,742,000 |
|
|
|
46,559,000 |
|
|
|
115.4 |
% |
December 31, 2017 |
|
|
1,676,148,000 |
|
|
|
64,719,000 |
|
|
|
52,263,000 |
|
|
|
123.8 |
% |
March 31, 2018 |
|
|
1,758,066,000 |
|
|
|
60,248,000 |
|
|
|
53,169,000 |
|
|
|
113.3 |
% |
June 30, 2018 |
|
|
1,849,079,000 |
|
|
|
76,936,000 |
|
|
|
53,886,000 |
|
|
|
142.8 |
% |
September 30, 2018 |
|
|
1,961,598,000 |
|
|
|
75,161,000 |
|
|
|
55,365,000 |
|
|
|
135.8 |
% |
December 31, 2018 |
|
|
2,047,992,000 |
|
|
|
71,090,000 |
|
|
|
52,675,000 |
|
|
|
135.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
About GWG Holdings,
Inc.
GWG Holdings, Inc. (Nasdaq: GWGH), the
parent company of GWG Life, Life Epigenetics and YouSurance, is a
leading provider of liquidity to consumers owning life insurance
policies, an owner of a portfolio of alternative assets, and the
developer of epigenetic technology for the life insurance and
related industries. GWG Life provides value to consumers owning
illiquid life insurance products across America, delivering $593
million more for their policies since 2006 than the cash surrender
value on those policies. GWG Life owns a life insurance policy
portfolio of $2.05 billion in face value of policy benefits as of
December 31, 2018. Life Epigenetics is working to commercialize
epigenetic technology for the life insurance and related
industries. YouSurance, a digital life insurance agency, is working
to embed epigenetic testing into life insurance purchasing to
provide consumers a value-added ecosystem that supports their
health and wellness while reducing the cost of their insurance.
GWGH also has a strategic investment in The Beneficient Company
Group, L.P., a financial services company providing proprietary
liquidity solutions to owners of alternative assets.
For more information about GWG Holdings,
email info@gwgh.com or visit www.gwgh.com.
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. 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
Securities and Exchange Commission. 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)
746-1935dcallahan@gwgh.com
GWG HOLDINGS, INC. AND
SUBSIDIARIESCONSOLIDATED BALANCE
SHEETS
|
|
December 31, 2018 |
|
|
December 31, 2017 |
|
ASSETS |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
114,587,084 |
|
|
$ |
114,421,491 |
|
Restricted cash |
|
|
10,849,126 |
|
|
|
28,349,685 |
|
Investment in life insurance
policies, at fair value |
|
|
747,922,465 |
|
|
|
650,527,353 |
|
Life insurance policy benefits
receivable |
|
|
16,460,687 |
|
|
|
16,658,761 |
|
Financing receivable from
affiliate |
|
|
184,768,874 |
|
|
|
— |
|
Equity method investment |
|
|
360,841,651 |
|
|
|
— |
|
Other assets |
|
|
45,437,164 |
|
|
|
8,898,884 |
|
TOTAL ASSETS |
|
$ |
1,480,867,051 |
|
|
$ |
818,856,174 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES & STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
LIABILITIES |
|
|
|
|
|
|
|
|
Senior credit facility with
LNV Corporation |
|
$ |
148,977,596 |
|
|
$ |
212,238,192 |
|
L Bonds |
|
|
651,402,663 |
|
|
|
447,393,568 |
|
Seller Trust L Bonds |
|
|
366,891,940 |
|
|
|
— |
|
Accounts payable |
|
|
9,276,507 |
|
|
|
6,394,439 |
|
Interest and dividends
payable |
|
|
18,555,293 |
|
|
|
15,427,509 |
|
Other accrued expenses |
|
|
4,705,170 |
|
|
|
3,730,723 |
|
TOTAL LIABILITIES |
|
|
1,199,809,169 |
|
|
|
685,184,431 |
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
REDEEMABLE PREFERRED
STOCK |
|
|
|
|
|
|
|
|
(par value $0.001; shares authorized 100,000; shares outstanding
97,524 and 98,611; liquidation preference of $98,093,000 and
$99,186,000 as of December 31, 2018 and December 31, 2017,
respectively) |
|
|
86,910,335 |
|
|
|
92,840,243 |
|
SERIES 2 REDEEMABLE PREFERRED
STOCK |
|
|
|
|
|
|
|
|
(par value $0.001; shares authorized 150,000; shares outstanding
148,359 and 88,709; liquidation preference of $149,225,000 and
$89,208,000 as of December 31, 2018 and December 31, 2017,
respectively) |
|
|
129,062,704 |
|
|
|
80,275,204 |
|
COMMON STOCK |
|
|
|
|
|
|
|
|
(par value $0.001; shares authorized 210,000,000; shares issued and
outstanding 33,018,161 as of December 31, 2018 and 5,813,555 as of
December 31, 2017) |
|
|
33,018 |
|
|
|
5,813 |
|
Additional paid-in
capital |
|
|
249,662,168 |
|
|
|
— |
|
Accumulated deficit |
|
|
(184,610,343 |
) |
|
|
(39,449,517 |
) |
TOTAL STOCKHOLDERS’
EQUITY |
|
|
281,057,882 |
|
|
|
133,671,743 |
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES &
EQUITY |
|
$ |
1,480,867,051 |
|
|
$ |
818,856,174 |
|
GWG HOLDINGS, INC. AND
SUBSIDIARIESCONSOLIDATED STATEMENTS OF
OPERATIONS
|
|
Three Months Ended |
|
|
Year Ended |
|
|
|
December 31, 2018 |
|
|
December 31, 2017 |
|
|
December 31, 2018 |
|
|
December 31, 2017 |
|
|
|
(unaudited) |
|
|
(unaudited) |
|
|
|
|
|
|
|
REVENUE |
|
|
|
|
|
|
|
|
|
|
|
|
Gain (loss) on life insurance policies, net |
|
$ |
(67,034,580 |
) |
|
$ |
16,996,965 |
|
|
$ |
(14,104,572 |
) |
|
$ |
62,114,403 |
|
Interest and other income |
|
|
6,850,640 |
|
|
|
683,980 |
|
|
|
13,714,281 |
|
|
|
2,019,515 |
|
TOTAL REVENUE |
|
|
(60,183,940 |
) |
|
|
17,680,945 |
|
|
|
(390,291 |
) |
|
|
64,133,918 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EXPENSES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
25,125,464 |
|
|
|
15,653,797 |
|
|
|
80,135,983 |
|
|
|
54,419,444 |
|
Employee compensation and benefits |
|
|
4,879,843 |
|
|
|
4,173,294 |
|
|
|
17,406,982 |
|
|
|
14,869,749 |
|
Legal and professional fees |
|
|
1,789,856 |
|
|
|
1,161,615 |
|
|
|
5,541,177 |
|
|
|
5,095,643 |
|
Other expenses |
|
|
7,732,162 |
|
|
|
3,138,060 |
|
|
|
15,994,487 |
|
|
|
12,478,676 |
|
TOTAL EXPENSES |
|
|
39,527,325 |
|
|
|
24,126,766 |
|
|
|
119,078,629 |
|
|
|
86,863,512 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME (LOSS) BEFORE INCOME TAXES |
|
|
(99,711,265 |
) |
|
|
(6,445,821 |
) |
|
|
(119,468,920 |
) |
|
|
(22,729,594 |
) |
INCOME TAX EXPENSE (BENEFIT) |
|
|
- |
|
|
|
4,384,546 |
|
|
|
- |
|
|
|
(2,097,371 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME (LOSS) BEFORE EARNINGS FROM EQUITY METHOD
INVESTMENT |
|
|
(99,711,265 |
) |
|
|
(10,830,367 |
) |
|
|
(119,468,920 |
) |
|
|
(20,632,223 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings from equity method investment |
|
|
17,507 |
|
|
|
- |
|
|
|
17,507 |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME (LOSS) |
|
|
(99,693,758 |
) |
|
|
(10,830,367 |
) |
|
|
(119,451,413 |
) |
|
|
(20,632,223 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock dividends |
|
|
4,306,218 |
|
|
|
5,255,318 |
|
|
|
16,662,731 |
|
|
|
12,702,341 |
|
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS |
|
$ |
(103,999,976 |
) |
|
$ |
(16,085,685 |
) |
|
$ |
(136,114,144 |
) |
|
$ |
(33,334,564 |
) |
NET INCOME (LOSS) PER SHARE |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
(15.16 |
) |
|
$ |
(2.77 |
) |
|
$ |
(22.32 |
) |
|
$ |
(5.72 |
) |
Diluted |
|
$ |
(15.16 |
) |
|
$ |
(2.77 |
) |
|
$ |
(22.32 |
) |
|
$ |
(5.72 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WEIGHTED AVERAGE SHARES
OUTSTANDING |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
6,861,799 |
|
|
|
5,813,555 |
|
|
|
6,098,208 |
|
|
|
5,826,033 |
|
Diluted |
|
|
6,861,799 |
|
|
|
5,813,555 |
|
|
|
6,098,208 |
|
|
|
5,826,033 |
|
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