GWG Portfolio Surpasses $1 Billion in the First Quarter of 2016, up 36 percent from 2015
GWG Holdings Inc. (NASDAQ: GWGH), sponsor of non-traded life settlement investment programs, announced its financial results for the first quarter ended March 31, 2016.
“This quarter marks our 10-year anniversary of being in business and we are pleased to have celebrated this milestone with continued positive momentum, further strengthening our leadership position in the secondary life insurance market,” said Jon Sabes, GWG Holdings’ chief executive officer.
He added, “Our life insurance portfolio surpassed the $1 billion mark in face value of benefits, a year-over-year net increase of 36 percent. In addition, we had another strong quarter of capital raise and are well positioned to lead the growth and development of the largely untapped life insurance secondary market. We are confident that we are on our way to another successful year for GWG.”
Highlights for the Three Months Ended March 31, 2016:
• Total revenue of $17.9 million, up 6.4 percent from the prior year
• Net income attributable to common shareholders of $1.4 million, or $0.24 and $0.18 per basic and fully diluted share, respectively
• Adjusted Non-GAAP income of $13.4 million, or $2.26 per basic share
• Non-GAAP Net Asset Value of $15.56 per basic share
• Continued to experience returns on matured policies that when blended with the expected yield of our current portfolio validate our long term pricing and return assumptions
• Recognized $19.2 million in policy benefits from maturities on six life insurance policies
• Purchased 75 policies with $102 million in face value of policy benefits
• Grew the Company’s portfolio of life insurance to over $1.0 billion in face value of policy benefits covering 419 unique lives; a net sequential growth of $83.0 million
• Raised a combined total of $35 million in capital from the sale of the company’s $1 billion L bond and redeemable preferred stock offerings
• Of the more than 3,500 financial advisors selling GWG’s investment products, 64 percent are authorized to source policies through GWG’s Appointed Agent Program
• Direct originations from GWG’s Appointed Agent Program accounted for 23 percent of all life insurance policies in GWG’s current pipeline and 13 percent of policies purchased for the quarter
• Maintained a total liquidity position of $66.7 million as of March 31, 2016
First Quarter 2016 Financial Summary
Total revenue for the three months ended March 31, 2016 was $17.9 million, as compared to $16.8 million for the same period in 2015. Realized gain from policy benefits was $14.6 million and $25 million
for the first quarter of 2016 and 2015, respectively. The company recognized $19.2 million of life insurance policy benefits in the first quarter of 2016 versus $28.6 million in the same period of 2015.
Included in the increase in total revenue was an increase in revenue of approximately $8.0 million as a result of unrealized gains associated with new life insurance policy purchases. Total operating expenses for the first quarter of 2016 were $15.7 million, as compared to $11.0 million for the same period in 2015.
The company explained that most of the increase was due to higher interest expenses relating to higher debt balances outstanding and increased expenditures on sales, marketing, and business development, including employee compensation and benefits, relating to servicing our growing family of independent financial advisors and life insurance professionals.
For the quarter, total net income attributable to common shareholders was $1.4 million, or $0.24 and $0.18 per basic and fully diluted share, respectively. This compares to net income of $3.6 million attributable to common shareholders or $0.62 and $0.46 per basic and fully diluted share, respectively, for the same period in 2015.
According to the company, the decline for the first quarter of 2016 was driven by lower realized gains associated with the receipt of life insurance policy benefits as compared to the year earlier period, partially offset by higher unrealized gains associated with new life insurance policy purchases.
GWG Holdings is a specialty finance company in the life insurance secondary market. Through its subsidiaries, the firm purchases life insurance policies from seniors who no longer want, need or can afford their policies. Since 2006, GWG has purchased nearly $2 billion in life insurance policy benefits and paid seniors more than $335 million for their policies.
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