Profile: Who is GWG Holdings, Inc.?

GWG Holdings, Inc. is a specialty finance company and a leader in the life insurance secondary market. GWG, through its subsidiaries, purchases life insurance policies from seniors who no longer want, need or can afford their policies. Since 2006, GWG has purchased more than $1.7 billion in life insurance policy benefits and paid seniors in excess of $291 million for their policies – approximately $274 million more than the surrender or lapse value offered by insurance carriers. 

GWG finances their business in two primary ways, one being senior credit facility financing through Autobahn/DZ Bank, the other being retail investment offerings that are distributed through independent broker dealers, RIA’s, and financial advisors across the country.  GWG Holdings, Inc. trades publicly on the NASDAQ exchange under the ticker symbol GWGH.  

Raising Capital 

GWG has been raising capital through independent broker-dealers and RIA’s since January of 2009.  Since then, GWG has successfully completed two Reg D, private placement offerings (one debt and one equity), one publicly registered, non-traded debt offering, and an IPO listing of common shares on NASDAQ.  

In January 2015, GWG launched an alternative bond offering that is available to investors nationwide on a continuous basis. GWG primarily uses the net proceeds to purchase and finance life insurance assets, and to service and retire outstanding debt obligations.

Overcoming Challenges

One of the most significant challenges in the marketplace that GWG is seeking to overcome is the lack of consumer awareness. This lack of awareness includes the seniors of America who own life insurance, the financial professionals who serve those seniors, and even the regulatory bodies that oversee these professionals. Overcoming this hurdle requires a relentless pursuit of industry growth and education. GWG has been at the forefront of this pursuit by implementing direct-to-consumer television, radio, print, and internet campaigns nationwide. Their involvement with senior organizations and trade associations has supplemented this effort, as well. Additionally, GWG’s focus on educating the financial professionals in its broker dealer, RIA, and life agent networks has helped increase consumer awareness. Lastly, GWG is actively supporting state legislation that promotes life settlements as an alternative to the lapse or surrender of life insurance policies and, in particular, as an alternative to Medicaid to pay for long-term care.

One of the most difficult challenges to overcome is clarifying what individuals think they know about the life settlement industry. It is no secret that the industry was largely unregulated and abuses did occur in the past decade. Unfortunately, this is not uncommon in new, burgeoning asset classes. In order to overcome this, GWG has taken a 100 percent transparent approach to its business, has dedicated itself to being a consumer-first company, and has embraced all aspects of suitability and compliance. At the core of GWG’s business, they provide a social benefit – changing lives of the seniors of America and their families by providing them with options previously unknown. GWG believes their unwavering dedication to transparency and this social purpose will allow them, and the industry, to break free from the negative perceptions of the past.  

Investment Offerings

Since 2009, GWG has successfully launched and closed two Reg D, private placement offerings (one debt and one equity), one publicly registered, non-traded debt offering, and an IPO listing of common shares on NASDAQ.  Additionally, GWG launched its second publically registered, non-traded debt offering in January of this year and is continuing to experience significant distribution growth in the independent broker dealer space. As of June 30, 2015, GWG has raised nearly $314 million in debt and $37 million in equity capital. 

The GWG Difference 

While most companies in the life settlement industry are “intermediary-led,” GWG is also “investor-led”. GWG  raises its own capital and sources many of its own policies, thereby streamlining the buying process and often providing seniors greater value for their policies. As the end investor, GWG is financially incentivized to maximize its investment results. 

GWG also strives to differentiate itself through advisor marketing tools that are often unavailable with other alternative investment product sponsors. For example, FINRA-reviewed advertisements that allow financial advisors in their selling group to publicly advertise the terms and interest rates GWG offers. GWG is committed not only to providing durable income to its advisors’ clients, but to helping advisors grow their book of business by finding new prospects and clients.  

GWG’S DISTRIBUTION TEAM 

Selling Agreements

GWG currently has 72 selling agreements in place and anticipates another 20 by the end of 2015.

Advisor Support

GWG hosts due diligence forums for its advisor network. These forums provide educational opportunities for financial advisors to learn more about life settlements and GWG’s fixed- income, alternative investment product. GWG also hosts educational webinars, provides marketing materials, and has wholesaling teams to support advisor partners. In addition, educational materials and blog posts about the industry are available at gwglife.com.

Commitment

GWG offers investors access to an alternative asset class with attractive returns compared to other fixed-income investments. Also, investors are looking to allocate more capital to asset classes uncorrelated to the traditional equity, real estate and oil markets.

GWG strives to be viewed as an investment issuer and wholesale team committed to suitability and compliance. Publicly traded on NASDAQ (GWGH), the company is a leader in the life settlement industry with an unprecedented dedication to transparency. GWG understands this is the only way the industry will grow and thrive and has consciously chosen to be the tip of that spear.  

OUTLOOK AND INITIATIVES

The Future

There is a tremendous growth opportunity both in the short-term and the long-term, and GWG expects the industry to continue to grow at a rapid pace. In order to unlock this asset class for seniors across the country, GWG is engaged in educational campaigns to bring more awareness to both seniors and their financial advisors. GWG is actively supporting state legislation that promotes life settlements as an alternative to the lapse or surrender of life insurance policies and, in particular, as an alternative to Medicaid to pay for long-term care.

Opportunity

The recent Conning reports estimate the potential size of the life settlements market to be $185 billion annually. Currently, only about $2 billion of life insurance policies are sold on the secondary market each year. This is a tremendous growth opportunity! The primary driver of this opportunity is the sheer number of life insurance policies that lapse or surrender each year.  In 2013 alone, according to the American Council of Life Insurers report, $639 billion of insurance benefits lapsed or surrendered. That is $1.75 billion worth of policies lapsing or surrendering in the U.S. per day. 

Growth

In 2014, GWG completed its IPO, and expanded its board of directors. In 2015, GWG commenced its alternative bond offering, and has partnered with three lead generation companies to source policies and raise awareness about the asset class. The company has also expanded their management team to provide leadership and advance the Company’s value proposition to investors, advisors and life insurance policy owners. These important initiatives have GWG poised to purchase more policies and reach more investors in 2015 and beyond.

The Importance of Life Settlements

Life insurance policies are one of the most valuable assets many seniors hold. However, according to the ACLI, about 90 percent of universal life insurance policies issued in the United States ultimately do not result in a death claim, and 75 percent of life insurance policies owned by seniors aged 65 and over do not result in a death claim. These two statistics show how billions of dollars in potential retirement savings for seniors are instead converted to billions of dollars in unpaid claims, and therefore, profits for insurance companies. Additionally, life settlements are important because they provide a social purpose within our society. The seniors of America are in desperate need of financial resources to help pay for long-term care and retirement expenses. GWG is dedicated to providing these financial resources to policy holders who may otherwise lapse or surrender their life insurance policies.