Attached files
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| 8-K - FORM 8-K - EMERGENT CAPITAL, INC. | d255112d8k.htm |
Exhibit 99.1
November 14, 2011
Imperial Holdings, Inc. Announces Third Quarter 2011 Results
BOCA RATON, Fla.—Imperial Holdings, Inc. (NYSE: IFT) (“Imperial”), a specialty finance company providing liquidity solutions with a focus on individual life insurance policies and purchasing structured settlement payments, today announced financial results for its third quarter and nine months ended September 30, 2011.
Financial Results
Imperial reported a total loss of $1.8 million for the third quarter of 2011, compared to third quarter 2010 total income of $20.0 million. In the life finance segment, total income decreased by $22.3 million during the third quarter to a total loss of $5.5 million, compared to total income of $16.8 million for the same period in 2010. The decrease was primarily driven by a non-cash, unrealized change in fair value expense of $14.1 million in its investment in life settlements during the third quarter of 2011 compared to a $3.5 million non-cash unrealized change in fair value gain during the same period in 2010, resulting from a lower estimated fair value of these Level 3 assets due to a change in the discount rate in the Company’s fair value model. The decrease was also due in part to agency fee income, interest income and origination income declining in total by $4.5 million to $5.0 million during the third quarter of 2011 compared to $9.5 million during the third quarter of 2010. In the Structured Settlements segment, total income increased $137,000 during the third quarter of 2011 to $3.4 million from $3.2 million for the same period in 2010.
Total expenses were $18.6 million for the three months ended September 30, 2011 compared to total expenses of $26.8 million incurred during the three months ended September 30, 2010, a decrease of $8.2 million. Loss before income taxes for the three months ended September 30, 2011 was approximately $20.4 million compared to a loss before income taxes of $6.8 million for the three months ended September 30, 2010, an increase of $13.6 million.
Net loss for the three months ended September 30, 2011 was $12.6 million as compared to a net loss of $6.8 million for the three months ended September 30, 2010. Fully diluted earnings per share for the third quarter was a loss of $(0.59) compared to a loss per share of $(1.90) for the same period last year.
For the first nine months of 2011, the Company reported total income of $52.3 million, compared to total income of $60.4 million for the same period in 2010. Income before taxes was $836,000 for the first nine months of 2011 compared to a loss of $16.4 million during the same period last year, an increase of $17.2 million. Net loss was $516,000 for the first nine months of 2011 compared to a net loss of $16.4 million for the same period in 2010, an increase of $15.9 million. Total expenses were $51.5 million for the period compared to total expenses of $76.8 million incurred during the nine months ended September 30, 2010, a reduction of $25.3 million.
The Company had cash, cash equivalents and investment securities available for sale of approximately $95.1 million at September 30, 2011 compared to $131.4 million at the end of the second quarter 2011. The Company had a book value of $9.87 at September 30, 2011.
Government Investigation
On September 27, 2011, the Company learned of a government investigation of the Company and certain of the Company’s employees, including its chairman and chief executive officer and its president and chief operating officer, by the U.S. Attorney’s Office for the District of New Hampshire (“government investigation”). The Company has been informed that the focus of the government investigation concerns its premium finance loan business and the Company continues to cooperate with the government investigation. There can be no assurances that the ultimate outcome of the investigation will not result in administrative, civil or criminal actions against us or our employees.
1
Antony Mitchell, Chairman and Chief Executive Officer, commented, “As a result of the government investigation late in the third quarter we have initiated several internal measures to conserve cash while still being able to maintain our investment in life settlement assets. We made adjustments to account for their estimated fair value in the market today. We remain committed to preserving our assets and we will curtail cash deployment in life settlements for the remainder of the year.” Mr. Mitchell continued, “We are in the process of reevaluating our premium finance loan business and have suspended the origination of premium finance loans.”
Mr. Mitchell continued, “On the Structured Settlements side of the business, we continued to deliver strong transactional growth during the quarter, originating 211 transactions, a 53% increase over the third quarter of 2010. Since we have learned of the government’s investigation, there have been no advances made under our Structured Settlements financing facilities. We look to resolve the necessary banking relationships and financing arrangements needed to resume normal funding operations in the near future.”
Conference Call Information
Imperial will host a conference call Tuesday, November 15, 2011, at 9:00 a.m. ET to discuss its third quarter 2011 results. To listen to the live call, please dial (888) 437-9364 or log on to the investor relations page of the company’s website at www.imperial.com. In addition, an audio replay of the call will be available two hours after its conclusion and archived through November 29, 2011. This archived call may be accessed by dialing (877) 870-5176; replay pin number “4791826”.
About Imperial Holdings, Inc.
Imperial is a leading specialty finance company that, through its operating subsidiaries, provides customized liquidity solutions to owners of illiquid financial assets. Imperial’s primary operating units are Life Finance and Structured Settlements. In its Life Finance unit, Imperial provides premium finance loans to policyholders for the payment of premiums and purchases life insurance policies. In its Structured Settlements unit, Imperial purchases from individuals long-term annuity payments issued by highly rated U.S. domestic insurance companies. More information about Imperial can be found at www.imperial.com.
Safe Harbor Statement
This press release may contain certain "forward-looking statements" relating to the business of Imperial Holdings, Inc. and its subsidiary companies. All statements, other than statements of historical fact included herein are "forward-looking statements." These forward-looking statements are often identified by the use of forward-looking terminology such as "believes," "expects" or similar expressions, and involve known and unknown risks and uncertainties. Although Imperial believes that the expectations reflected in these forward-looking statements are reasonable, they do involve assumptions, risks and uncertainties, and these expectations may prove to be incorrect. Investors should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Imperial's actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those discussed in Imperial's periodic reports that are filed with the Securities and Exchange Commission and available on its website at www.sec.gov. All forward-looking statements attributable to Imperial or persons acting on its behalf are expressly qualified in their entirety by these factors. Other than as required under the securities laws, Imperial does not assume a duty to update these forward-looking statements.
Contact:
David Sasso
Imperial Holdings, Inc.
Director- Investor Relations
561.672.6114
IR@imperial.com
www.imperial.com
-SELECTED FINANCIAL TABLES FOLLOW-
2
Imperial Holdings, Inc. and Subsidiaries
CONSOLIDATED AND COMBINED BALANCE SHEETS
| September 30, | December 31, | |||||||
| 2011 | 2010 | |||||||
| (Unaudited) | (Audited) | |||||||
| (In thousands except share data) | ||||||||
| ASSETS | ||||||||
| Assets |
||||||||
| Cash and cash equivalents |
$ | 18,840 | $ | 14,224 | ||||
| Restricted cash |
691 | 691 | ||||||
| Certificate of deposit — restricted |
1,013 | 880 | ||||||
| Investment securities available for sale, at estimated fair value |
76,274 | — | ||||||
| Agency fees receivable, net of allowance for doubtful accounts |
301 | 561 | ||||||
| Deferred costs, net |
3,038 | 10,706 | ||||||
| Prepaid expenses and other assets |
2,109 | 1,868 | ||||||
| Deposits on purchases of life settlements (life insurance policies) |
1,083 | — | ||||||
| Deposits — other |
636 | 692 | ||||||
| Interest receivable |
7,848 | 13,140 | ||||||
| Loans receivable, net |
46,446 | 90,026 | ||||||
| Structured settlement receivables, net |
5,578 | 2,536 | ||||||
| Investment in life settlements, at estimated fair value |
91,967 | 17,138 | ||||||
| Fixed assets, net |
685 | 876 | ||||||
| Investments in affiliates |
1,341 | 79 | ||||||
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| Total assets |
$ | 257,850 | $ | 153,417 | ||||
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| LIABILITIES AND STOCKHOLDERS’/MEMBERS’ EQUITY | ||||||||
| Liabilities |
||||||||
| Accounts payable and accrued expenses |
$ | 3,117 | $ | 3,425 | ||||
| Accrued expenses — related parties |
— | 71 | ||||||
| Payable for purchase of structured settlements |
— | 224 | ||||||
| Other liabilities |
1,614 | 7,913 | ||||||
| Lender protection insurance claims received in advance |
— | 31,154 | ||||||
| Interest payable |
8,119 | 13,765 | ||||||
| Interest payable — related parties |
— | 55 | ||||||
| Notes payable and debenture payable, net of discount |
28,178 | 89,207 | ||||||
| Notes payable — related parties |
— | 2,402 | ||||||
| Income taxes payable |
6,295 | — | ||||||
| Deferred tax liability |
1,325 | — | ||||||
|
|
|
|
|
|||||
| Total liabilities |
48,648 | 148,216 | ||||||
| Member units —preferred (zero and 500,000 authorized in the aggregate as of September 30, 2011 and December 31, 2010, respectively) |
||||||||
| Member units — Series A preferred (zero and 90,796 issued and outstanding as of September 30, 2011 and December 31, 2010, respectively) |
— | 4,035 | ||||||
| Member units — Series B preferred (zero and 25,000 issued and outstanding as of September 30, 2011 and December 31, 2010, respectively) |
— | 2,500 | ||||||
| Member units — Series C preferred (zero and 70,000 issued and outstanding as of September 30, 2011 and December 31, 2010, respectively) |
— | 7,000 | ||||||
| Member units — Series D preferred (zero and 7,000 issued and outstanding as of September 30, 2011 and December 31, 2010, respectively) |
— | 700 | ||||||
| Member units — Series E preferred (zero and 73,000 issued and outstanding as of September 30, 2011 and December 31, 2010, respectively) |
— | 7,300 | ||||||
| Member units — common (zero and 500,000 authorized; zero and 337,500 issued and outstanding as of September 30, 2011 and December 31, 2010, respectively) |
— | 11,462 | ||||||
| Common stock (80,000,000 and zero authorized; 21,202,614 and zero issued and outstanding as of September 30, 2011 and December 31, 2010, respectively) |
212 | — | ||||||
| Additional paid-in-capital |
237,346 | — | ||||||
| Accumulated other comprehensive income |
(44 | ) | — | |||||
| Accumulated deficit |
(28,312 | ) | (27,796 | ) | ||||
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|||||
| Total stockholders’/members’ equity |
209,202 | 5,201 | ||||||
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| Total liabilities and stockholders’/members, equity |
$ | 257,850 | $ | 153,417 | ||||
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3
Imperial Holdings, Inc. and Subsidiaries
CONSOLIDATED AND COMBINED STATEMENTS OF OPERATIONS (UNAUDITED)
| For the Three Months Ended September 30, |
For the Nine Months Ended September 30, |
|||||||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||||||
| (In thousands, except share and per share data) | ||||||||||||||||
| Agency fee income |
$ | 937 | $ | 1,382 | $ | 6,564 | $ | 9,099 | ||||||||
| Interest income |
2,289 | 4,254 | 7,031 | 15,795 | ||||||||||||
| Origination fee income |
1,753 | 3,837 | 5,858 | 16,728 | ||||||||||||
| Realized gain on sale of structured settlements |
2,240 | 1,585 | 5,457 | 4,848 | ||||||||||||
| Realized gain on sale of life settlements |
— | 1,480 | 5 | 1,954 | ||||||||||||
| Gain on forgiveness of debt |
198 | 2,435 | 4,880 | 6,968 | ||||||||||||
| Unrealized change in fair value of life settlements |
(14,074 | ) | 3,501 | 14,811 | 3,300 | |||||||||||
| Unrealized change in fair value of structured settlements |
928 | 1,505 | 2,145 | 1,505 | ||||||||||||
| Servicing fee income |
376 | — | 1,447 | — | ||||||||||||
| Gain on maturities of life settlements with subrogation rights, net |
3,188 | — | 3,188 | — | ||||||||||||
| Other income |
402 | 42 | 922 | 195 | ||||||||||||
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|||||||||
| Total income (loss) |
(1,763 | ) | 20,021 | 52,308 | 60,392 | |||||||||||
| Interest expense |
1,660 | 5,299 | 7,141 | 18,342 | ||||||||||||
| Interest expense — related parties |
— | 1,550 | 290 | 5,902 | ||||||||||||
| Provision for losses on loans receivable |
3,583 | 495 | 3,712 | 3,514 | ||||||||||||
| Loss on loan payoffs and settlements, net |
261 | 1,007 | 3,927 | 4,320 | ||||||||||||
| Amortization of deferred costs |
1,409 | 10,968 | 4,913 | 22,601 | ||||||||||||
| Selling, general and administrative expenses |
11,701 | 7,242 | 31,403 | 21,401 | ||||||||||||
| Selling, general and administrative — related parties |
— | 283 | 86 | 717 | ||||||||||||
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| Total expenses |
18,614 | 26,844 | 51,472 | 76,797 | ||||||||||||
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| Income (loss) before income taxes |
(20,377 | ) | (6,823 | ) | 836 | (16,405 | ) | |||||||||
| Provision (benefit) for income taxes |
(7,827 | ) | — | 1,352 | — | |||||||||||
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| Net income (loss) |
$ | (12,550 | ) | $ | (6,823 | ) | $ | (516 | ) | $ | (16,405 | ) | ||||
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| Earnings (loss) per share: |
||||||||||||||||
| Basic |
$ | (0.59 | ) | $ | (1.90 | ) | $ | (0.03 | ) | $ | (4.56 | ) | ||||
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| Diluted |
$ | (0.59 | ) | $ | (1.90 | ) | $ | (0.03 | ) | $ | (4.56 | ) | ||||
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| Weighted average shares outstanding: |
||||||||||||||||
| Basic |
21,202,614 | 3,600,000 | 18,728,435 | 3,600,000 | ||||||||||||
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| Diluted |
21,202,614 | 3,600,000 | 18,728,435 | 3,600,000 | ||||||||||||
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The following table highlights certain selected operating data in our life finance segment for the periods indicated (in thousands except number of loans, percentage, age and life expectancy):
| For the Three Months Ended | For the Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||||||
| Period Originations: |
||||||||||||||||
| Number of loans originated (by type): |
||||||||||||||||
| Type 1* |
6 | 14 | 44 | 84 | ||||||||||||
| Type 2** |
2 | 1 | 11 | 2 | ||||||||||||
| Principal balance of loans originated |
$ | 2,549 | $ | 2,788 | $ | 18,385 | $ | 18,245 | ||||||||
| Aggregate death benefit of policies underlying loans originated |
$ | 38,000 | $ | 62,500 | $ | 311,850 | $ | 417,275 | ||||||||
| Selling general and administrative expenses |
$ | 4,318 | $ | 2,574 | $ | 9,475 | $ | 7,313 | ||||||||
| Average Per Origination During Period: |
||||||||||||||||
| Age of insured at origination |
76.0 | 75.0 | 75.7 | 74.0 | ||||||||||||
| Life expectancy of insured (years) |
13.8 | 14.1 | 14.5 | 14.1 | ||||||||||||
| Monthly premium (year of origination) |
$ | 7.3 | $ | 13.1 | $ | 11.2 | $ | 13.9 | ||||||||
| Death benefit of policies underlying loans originated |
$ | 4,750.0 | $ | 4,166.7 | $ | 5,376.7 | $ | 4,852.0 | ||||||||
| Principal balance of the loan |
$ | 318.7 | $ | 185.8 | $ | 334.3 | $ | 212.1 | ||||||||
| Interest rate charged |
14.0 | % | 11.5 | % | 14.0 | % | 11.5 | % | ||||||||
| Agency fee |
$ | 117.6 | $ | 92.1 | $ | 110.2 | $ | 105.8 | ||||||||
| Agency fee as % of principal balance |
||||||||||||||||
| Type 1* |
43.4 | % | 51.0 | % | 39.0 | % | 50.2 | % | ||||||||
| Type 2** |
29.1 | % | 43.2 | % | 20.7 | % | 39.3 | % | ||||||||
| Origination fee |
$ | 79.7 | $ | 76.5 | $ | 79.5 | $ | 88.5 | ||||||||
| Annualized origination fee as % of principal balance |
18.9 | % | 29.2 | % | 24.3 | % | 21.0 | % | ||||||||
| End of Period Loan Portfolio |
||||||||||||||||
| Loans receivable, net |
$ | 46,446 | $ | 121,564 | $ | 46,446 | $ | 121,564 | ||||||||
| Number of policies underlying loans receivable |
179 | 426 | 179 | 426 | ||||||||||||
| Aggregate death benefit of policies underlying loans receivable |
$ | 868,752 | $ | 2,120,587 | $ | 868,752 | $ | 2,120,587 | ||||||||
| Number of loans with insurance protection |
121 | 403 | 121 | 403 | ||||||||||||
| Loans receivable, net (insured loans only) |
$ | 29,923 | $ | 116,115 | $ | 29,923 | $ | 116,115 | ||||||||
| Average Per Loan: |
||||||||||||||||
| Age of insured in loans receivable |
75.2 | 74.3 | 75.2 | 74.3 | ||||||||||||
| Life expectancy of insured (years) |
15.2 | 15.1 | 15.2 | 15.1 | ||||||||||||
| Monthly premium |
$ | 6.1 | $ | 6.7 | $ | 6.1 | $ | 6.7 | ||||||||
| Loan receivable, net |
$ | 277.7 | $ | 285.4 | $ | 277.7 | $ | 285.4 | ||||||||
| Interest rate |
12.2 | % | 11.3 | % | 12.2 | % | 11.3 | % | ||||||||
| Period Acquisitions — Policies Owned |
||||||||||||||||
| Number of policies acquired |
52 | 20 | 131 | 20 | ||||||||||||
| Average age of insured at acquisition |
78.4 | 78.1 | 78.2 | 78.1 | ||||||||||||
| Average life expectancy — Calculated LE (Years) |
10.1 | 13.3 | 10.1 | 13.3 | ||||||||||||
| Average death benefit |
5,547 | 4,858 | 5,056 | 4,858 | ||||||||||||
| Aggregate purchase price |
24,451 | 2,986 | 50,155 | 2,986 | ||||||||||||
| Aggregate fair value at acquisition |
31,675 | 7,292 | 80,004 | 7,292 | ||||||||||||
| Policies acquired, Percent of fair value paid |
77.2 | % | 40.9 | 62.7 | % | 40.9 | ||||||||||
| End of Period — Policies Owned |
||||||||||||||||
| Number of policies owned |
170 | 31 | 170 | 31 | ||||||||||||
| Average Life Expectancy — Calculated LE (Years) |
10.5 | 13.6 | 10.5 | 13.6 | ||||||||||||
| Aggregate Death Benefit |
853,492 | 131,632 | 853,492 | 131,632 | ||||||||||||
| Aggregate fair value |
$ | 91,967 | $ | 8,846 | $ | 91,967 | $ | 8,846 | ||||||||
| Monthly premium — average per policy |
$ | 11.0 | $ | 5.2 | $ | 11.0 | $ | 5.2 | ||||||||
| * | We define Type 1 loans as loans that are collateralized by life insurance policies that have been in force less than two years. |
| ** | We define Type 2 loans as loans that are collateralized by life insurance policies that have been in force longer than two years. |
The following table highlights certain selected operating data in our structured settlements segment for the periods indicated (dollars in thousands):
| For the Three Months Ended September 30, |
For the Nine Months Ended September 30, |
|||||||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||||||
| Period Originations: |
||||||||||||||||
| Number of transactions |
211 | 138 | 618 | 385 | ||||||||||||
| Number of transactions from repeat customers |
78 | 48 | 218 | 96 | ||||||||||||
| Weighted average purchase discount rate |
17.6 | % | 20.1 | % | 18.0 | % | 19.3 | % | ||||||||
| Face value of undiscounted future payments purchased |
$ | 26,033 | $ | 13,458 | $ | 67,749 | $ | 33,713 | ||||||||
| Amount paid for settlements purchased |
$ | 5,774 | $ | 2,959 | $ | 14,425 | $ | 9,099 | ||||||||
| Marketing costs |
$ | 1,806 | $ | 1,168 | $ | 4,266 | $ | 3,561 | ||||||||
| Selling, general and administrative (excluding marketing costs) |
$ | 5,095 | $ | 1,957 | $ | 10,969 | $ | 5,294 | ||||||||
| Average Per Origination During Period: |
||||||||||||||||
| Face value of undiscounted future payments purchased |
$ | 123.4 | $ | 97.5 | $ | 109.6 | $ | 87.6 | ||||||||
| Amount paid for settlement purchased |
$ | 27.4 | $ | 21.4 | $ | 23.3 | $ | 23.6 | ||||||||
| Time from funding to maturity (months) |
147.9 | 147.3 | 151.9 | 134.3 | ||||||||||||
| Marketing cost per transaction |
$ | 8.6 | $ | 8.5 | $ | 6.9 | $ | 9.2 | ||||||||
| Segment selling, general and administrative (excluding marketing costs) per transaction |
$ | 24.2 | $ | 14.2 | $ | 17.8 | $ | 13.8 | ||||||||
| Period Sales: |
||||||||||||||||
| Number of transactions originated and sold |
178 | 72 | 586 | 291 | ||||||||||||
| Realized gain on sale of structured settlements |
$ | 2,243 | $ | 1,585 | $ | 5,460 | $ | 4,848 | ||||||||
| Average sale discount rate |
10.6 | % | 9.6 | % | 10.3 | % | 9.1 | % | ||||||||