BOCA RATON, Fla., May 15, 2017 /PRNewswire/ -- Emergent Capital, Inc. (OTCQB: EMGC) ("Emergent" or the "Company"), today announced its financial results for the three month period ended March 31, 2017.
Three Months Ended March 31, 2017
Total income from continuing operations was $25.6 million for the three month period ended March 31, 2017 compared to $8.5 million for the same period in 2016. The increase was primarily due to a $16.3 million gain on the maturity of four policies compared to an $8.3 million gain on maturity of six policies for the same period in 2016.
The following table provides a summary of the components of income from the Company's life settlements.
|
Three Months Ended |
Three Months Ended | |||||||
|
Change in estimated probabilistic cash flows |
$ |
22,600 |
$ |
18,480 |
||||
|
Premiums paid during period |
(20,582) |
(16,653) |
||||||
|
Change in life expectancy evaluation |
7,298 |
(2,067) |
||||||
|
Change in discount rates |
(40) |
— |
||||||
|
Unrealized gain on acquisitions |
— |
349 |
||||||
|
Realized gain on maturities |
16,264 |
8,279 |
||||||
|
Change in fair value of life settlements |
$ |
25,540 |
$ |
8,388 |
||||
Total expenses from continuing operations were $23.7 million for the three month period ended March 31, 2017 compared to $15.9 million for the same period in 2016. The increase was primarily attributable to an increase of $7.7 million on the loss in fair value of the Revolving Credit Facility and a $1.5 million increase in interest expense associated with increased borrowings on the Company's Revolving Credit Facility, 8.5% Senior Unsecured Convertible Notes, and 15% Senior Secured Notes. These were offset by a reduction in operating expenses of $1.4 million primarily related to a decrease in legal fees and personnel costs.
The Company reported net income from continuing operations of $1.9 million, or $0.07 per diluted share for the three month period ended March 31, 2017, compared to a net loss of $7.4 million, or $(0.27) per diluted share for the same period in 2016.
Life Settlements Portfolio Highlights
On March 31, 2017, the estimated fair value of the Company's 617 life insurance policies was $506.7 million compared to $498.4 million for 621 life insurance policies at December 31, 2016. The weighted average discount rate was 16.37% at March 31, 2017 and December 31, 2016. The aggregate face value of the Company's portfolio of life insurance policies was approximately $2.9 billion on March 31, 2017. During the quarter, four life insurance policies that served as collateral under the revolving credit facility matured totaling $37.9 million.
As of March 31, 2017, the Company had cash and cash equivalents and certificates of deposit of $19.0 million and a Book Value per share of $6.15.
About Emergent Capital, Inc.
Emergent (OTCQB: EMGC) is a specialty finance company that invests in life settlements. More information about Emergent can be found at www.emergentcapital.com.
Safe Harbor Statement
This press release may contain certain "forward-looking statements" relating to the business of Emergent Capital, 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 Emergent 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. Other than as required under the securities laws, Emergent does not assume a duty to update these forward-looking statements.
-SELECTED FINANCIAL TABLES FOLLOW-
|
Emergent Capital, Inc. CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) | |||||||
|
For the Three Months Ended | |||||||
|
2017 |
2016 | ||||||
|
(in thousands, except share | |||||||
|
Income |
|||||||
|
Change in fair value of life settlements |
$ |
25,540 |
$ |
8,388 | |||
|
Other income |
50 |
66 | |||||
|
Total income |
25,590 |
8,454 | |||||
|
Expenses |
|||||||
|
Interest expense |
7,535 |
6,050 | |||||
|
Change in fair value of Revolving Credit Facilities |
11,831 |
4,097 | |||||
|
Personnel costs |
1,085 |
1,557 | |||||
|
Legal fees |
995 |
1,818 | |||||
|
Professional fees |
1,604 |
1,643 | |||||
|
Insurance |
192 |
244 | |||||
|
Other selling, general and administrative expenses |
464 |
490 | |||||
|
Total expenses |
23,706 |
15,899 | |||||
|
Income (loss) from continuing operations before income taxes |
1,884 |
(7,445) | |||||
|
Benefit for income taxes |
— |
— | |||||
|
Net income (loss) from continuing operations |
$ |
1,884 |
$ |
(7,445) | |||
|
Discontinued Operations: |
|||||||
|
Income (loss) from discontinued operations |
(189) |
(68) | |||||
|
Benefit for income taxes |
— |
— | |||||
|
Net income (loss) from discontinued operations |
(189) |
(68) | |||||
|
Net income (loss) |
$ |
1,695 |
$ |
(7,513) | |||
|
Basic and diluted income (loss) per share: |
|||||||
|
Continuing operations |
$ |
0.07 |
$ |
(0.27) | |||
|
Discontinued operations |
$ |
(0.01) |
$ |
— | |||
|
Net income (loss) |
$ |
0.06 |
$ |
(0.27) | |||
|
Weighted average shares outstanding: |
|||||||
|
Basic and Diluted |
28,148,632 |
27,481,249 | |||||
|
Emergent Capital, Inc. CONSOLIDATED BALANCE SHEETS | ||||||
|
March 31, |
December 31, | |||||
|
(Unaudited) |
||||||
|
(In thousands except share data) | ||||||
|
ASSETS |
||||||
|
Assets |
||||||
|
Cash and cash equivalents |
$ |
2,100 |
$ |
2,246 | ||
|
Cash and cash equivalents (VIE) |
15,923 |
9,072 | ||||
|
Certificates of deposit |
1,004 |
6,025 | ||||
|
Prepaid expenses and other assets |
2,601 |
1,112 | ||||
|
Deposits - other |
1,377 |
1,347 | ||||
|
Life settlements, at estimated fair value |
708 |
680 | ||||
|
Life settlements, at estimated fair value (VIE) |
505,964 |
497,720 | ||||
|
Receivable for maturity of life settlements (VIE) |
32,850 |
5,000 | ||||
|
Fixed assets, net |
208 |
232 | ||||
|
Investment in affiliates |
2,384 |
2,384 | ||||
|
Total assets |
$ |
565,119 |
$ |
525,818 | ||
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
||||||
|
Liabilities |
||||||
|
Accounts payable and accrued expenses |
3,873 |
$ |
2,590 | |||
|
Accounts payable and accrued expenses (VIE) |
683 |
593 | ||||
|
Other liabilities |
273 |
359 | ||||
|
Interest payable - Convertible Notes |
806 |
2,272 | ||||
|
Convertible Notes, net of discount and deferred debt costs |
65,002 |
60,535 | ||||
|
Interest payable - Senior Secured Notes |
213 |
213 | ||||
|
Senior Secured Notes, net of discount and deferred debt costs |
29,387 |
29,297 | ||||
|
White Eagle Revolving Credit Facility, at estimated fair value (VIE) |
290,200 |
257,085 | ||||
|
Total liabilities |
390,437 |
352,944 | ||||
|
Commitments and Contingencies |
||||||
|
Stockholders' Equity |
||||||
|
Common stock (par value $0.01 per share, 80,000,000 authorized at |
290 |
290 | ||||
|
Preferred stock (par value $0.01 per share, 40,000,000 authorized; 0 issued |
— |
— | ||||
|
Treasury Stock, net of cost (608,000 shares as of March 31, 2017 and |
(2,534) |
(2,534) | ||||
|
Additional paid-in-capital |
307,760 |
307,647 | ||||
|
Accumulated deficit |
(130,834) |
(132,529) | ||||
|
Total stockholders' equity |
174,682 |
172,874 | ||||
|
Total liabilities and stockholders' equity |
$ |
565,119 |
$ |
525,818 | ||
|
* Derived from audited consolidated financial statements. |
||||||
|
Emergent Capital, Inc. Selected Operating Data (dollars in thousands): | ||||||||
|
For the Three Months Ended March 31, | ||||||||
|
2017 |
2016 | |||||||
|
Period Acquisitions — Policies Owned |
||||||||
|
Number of policies acquired |
— |
— |
||||||
|
Average age of insured at acquisition |
— |
— |
||||||
|
Average life expectancy — Calculated LE (Years) |
— |
— |
||||||
|
Average death benefit |
$ |
— |
$ |
— |
||||
|
Aggregate purchase price |
$ |
— |
$ |
— |
||||
|
End of Period — Policies Owned |
||||||||
|
Number of policies owned |
617 |
626 |
||||||
|
Average age of insured |
82.7 |
81.7 |
||||||
|
Average death benefit per policy |
$ |
4,715 |
$ |
4,744 |
||||
|
Average Life Expectancy — Calculated LE (Years) |
8.9 |
9.7 |
||||||
|
Aggregate Death Benefit |
$ |
2,908,876 |
$ |
2,969,670 |
||||
|
Aggregate fair value |
$ |
506,672 |
$ |
475,360 |
||||
|
Monthly premium — average per policy |
$ |
11.4 |
$ |
9.6 |
||||
|
Period Maturities |
||||||||
|
Number of policies matured |
4 |
6 |
||||||
|
Weighted average age of insured at maturity |
82.8 |
84.9 |
||||||
|
Weighted average life expectancy - Calculated LE (Years) |
3.5 |
5.5 |
||||||
|
Aggregate death benefit |
$ |
37,850 |
$ |
12,980 |
||||
|
Gains on maturity |
$ |
16,264 |
$ |
8,279 |
||||
|
Proceeds collected |
$ |
10,000 |
$ |
15,480 |
||||
SOURCE Emergent Capital, Inc.