BOCA RATON, Fla.--(BUSINESS WIRE)--Imperial Holdings, Inc. (NYSE: IFT) ("Imperial" or the "Company"), a specialty finance company with a focus on providing liquidity solutions to owners of illiquid financial assets, announced today its financial results for the three and six months ended June 30, 2013.
Three Months Ended June 30, 2013
Total income was $69.1 million for the three months ended June 30, 2013, a $53.0 million increase over the same period in 2012. The increase was driven by the addition of 422 life insurance policies to the Company’s life settlements portfolio and a corresponding increase in the fair value of the Company's investments in life settlements. Total expenses were $21.4 million for the three months ended June 30, 2013 compared to $16.8 million during the same three month period in 2012. Expenses in the period were driven by charges associated with the establishment of the Company's long-term credit facility of $10.3 million, or $0.48 per share, that could not be capitalized over the life of the facility.
The Company reported net income of $47.7 million, or $2.25 per fully diluted share, for the three months ended June 30, 2013, compared to a net loss of $625,000, or ($.03) per fully diluted share, for the same period in 2012.
Six Months Ended June 30, 2013
Total income was $75.5 million for the six months ended June 30, 2013, a $49.4 million increase over the same period in 2012. Total expenses were $32.0 million for the six months ended June 30, 2013 compared to total expenses of $35.7 million incurred during the same period in 2012.
The Company reported net income of $43.4 million, or $2.04 per fully diluted share for the six months ended June 30, 2013, compared to a net loss of $9.5 million, or ($.45) per fully diluted share, for the same period in 2012.
Life Finance Segment- Second Quarter
In our life finance segment, total income was $65.6 million for the three months ended June 30, 2013, a $53.3 million increase over the same period in 2012. The Company recorded an increase in the fair value of its life settlements portfolio of $64.8 million. The increase was primarily attributable to the addition of 422 life insurance policies, the majority of which were either acquired through the purchase of CTL Holdings, LLC or previously classified as off balance sheet contingent assets. Segment expenses were $13.4 million during the three months ended June 30, 2013 compared to $5.2 million for the same period in 2012. As discussed above, segment expense increases were driven by closing costs associated with the Company’s long-term credit facility and repayment of its bridge loan.
At June 30, 2013 the estimated fair value of the Company’s life insurance policies was $265.8 million compared to $113.4 million at December 31, 2012. The weighted average discount rate used in the Company's fair value model was 20.61% at June 30, 2013 compared to 24.01% at December 31, 2012. The aggregate face value of the Company's portfolio of life insurance policies was approximately $3.0 billion at June 30, 2013.
Structured Settlements Segment- Second Quarter
In our structured settlements segment, total income was $3.5 million for the three months ended June 30, 2013 compared to $4.0 million for the same period in 2012, a decrease of $500,000. During the three months ended June 30, 2013, 150 structured settlements were sold that resulted in a gain of $3.1 million compared to 265 structured settlements that were sold for a gain of $3.1 million during the same period in 2012. Structured settlement segment expenses were $4.0 million during the three months ended June 30, 2013 compared to $5.5 million for the same period in 2012. The decrease in expenses was mostly attributable to lower personnel and marketing costs. Segment operating loss was $480,000 for the second quarter of 2013 compared to a segment operating loss of $1.6 million for the same period in 2012.
As of June 30, 2013, the Company had $23.6 million of cash and cash equivalents and its book value was $8.06 per share.
Antony Mitchell, Chief Executive Officer, commented, “I am pleased to report our first quarter reflecting our now significantly larger life settlements portfolio. We recognized a meaningful increase in book value and will look to pursue additional investment opportunities in order to increase shareholder value.”
The Company will host a conference call today at 5:00 P.M. ET. To join the call please dial US Toll Free (877) 450-6528 or from Outside of the US (281) 616-8820 and provide Conference ID 29828984 when prompted.
A recording of this call will be available until August 27, 2013. To access the recording of the call please dial US Toll Free (800) 585-8367 or from Outside of the US (404) 537-3406 and enter Conference ID 29828984 when prompted.
The conference call will also be broadcast live through a link on the Investor Relations section of the Company’s website at www.imperial.com. Please visit the Web site at least 10 minutes prior to the call to register, download and install any necessary audio software.
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 purchases and sells life insurance policies. In its Structured Settlements unit, Imperial purchases from individuals long-term annuity payments issued by highly rated U.S. 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 the absence of a material adverse change affecting the Company and its subsidiaries or the value of its portfolio of life insurance policies; unanticipated issues that prevent or delay the Company’s independent registered public accounting firm from concluding its procedures for the then applicable reporting period or that require additional efforts, procedures or review; the investigation by the Securities and Exchange Commission, and potential adverse outcomes associated with the investigation, including payments or fines the Company may be required to make, restrictions placed upon the Company and legal proceedings that may relate to these matters; the possibility that payments due to the Company under certain policies may be delayed; the Company's ability to manage and source capital for the life insurance policies it owns that it cannot borrow against under the revolving credit facility; the amount of legal expenses for which the Company is obligated to reimburse under its certain indemnification obligations; and the accuracy of actuarial assumptions underlying the Company’s models. 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.
|Imperial Holdings, Inc. and Subsidiaries|
|CONSOLIDATED BALANCE SHEETS|
|June 30,||December 31,|
|(In thousands except share data)|
|Cash and cash equivalents||$||21,283||$||7,001|
|Cash and cash equivalents (VIE restricted)||2,280||-|
|Investment securities available for sale, at estimated fair value||-||12,147|
|Deferred costs, net||-||7|
|Prepaid expenses and other assets||14,690||14,165|
|Deposits - other||1,603||2,855|
|Interest receivable, net||42||822|
|Loans receivable, net||206||3,044|
|Structured settlement receivables, at estimated fair value||1,393||1,680|
|Structured settlement receivables at cost, net||1,584||1,574|
|Investment in life settlements, at estimated fair value||47,645||113,441|
|Investment in life settlements, at estimated fair value (VIE restricted)||218,128||-|
|Fixed assets, net||140||232|
|Investment in affiliates||2,315||2,212|
|LIABILITIES AND STOCKHOLDERS' EQUITY||
|Accounts payable and accrued expenses||$||7,573||$||6,606|
|Accounts payable and accrued expenses (VIE restricted)||1,452||-|
|Note payable, at estimated fair value (VIE restricted)||101,775||-|
|Income taxes payable||6,295||6,295|
|Commitments and Contingencies|
|Common stock (80,000,000 authorized; 21,237,166 and 21,206,121 issued|
|and outstanding as of June 30, 2013 and December 31, 2012, respectively)||212||212|
|Accumulated other comprehensive loss||-||(3||)|
|Total stockholders' equity||171,091||126,645|
|Total liabilities and stockholders' equity||$||311,309||$||160,342|
|* Derived from audited consolidated financial statements.|
|Imperial Holdings, Inc. and Subsidiaries|
|CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)|
For the Three Months Ended
|For the Six Months Ended|
|June 30,||June 30,|
|Income||(in thousands, except share and per share data)|
|Interest and dividends on investment securities available for sale||-||132||14||260|
|Origination fee income||-||188||-||438|
|Realized gain on sale of structured settlements||3,128||3,134||6,670||5,609|
|(Loss) gain on life settlements, net||(1,247||)||55||(1,247||)||291|
|Change in fair value of life settlements||64,846||4,874||66,686||9,129|
|Unrealized change in fair value of structured settlements||236||569||781||1,178|
|Servicing fee income||76||327||310||684|
|Gain on maturities of life settlements with subrogation|
|Unrealized change in fair value of note payable||(5,361||)||-||(5,361||)|
|Loss on extinguishment of debt||3,991||-||3,991||-|
|Provision for losses on loans receivable||-||441||-||441|
|(Gain) loss on loan payoffs and settlements, net||(65||)||162||(65||)||153|
|Amortization of deferred costs||-||516||7||1,497|
|Other selling, general and administrative expenses||1,036||955||1,730||1,959|
|Income (loss) before income taxes||47,721||(625||)||43,429||(9,537||)|
|(Provision) benefit for income taxes||-||-||(40||)||41|
|Net income (loss)||$||47,721||$||(625||)||$||43,389||$||(9,496||)|
|Income (loss) per share:|
|Weighted average shares outstanding:|
|Life Finance Segment Data|
|For the Three Months Ended||For the Six Months Ended|
|June 30,||June 30,|
|Period Acquisitions — Policies Owned|
|Number of policies acquired||422||11||430||20|
|Average age of insured at acquisition||77.7||74.1||77.7||74.7|
|Average life expectancy - Calculated LE (Years)||12.7||15.5||12.7||13.7|
|Average death benefit||$||4,756||$||4,192||$||4,744||$||5,381|
|Aggregate purchase price||$||56,875||$||617||$||58,400||$||2,780|
|End of Period — Policies Owned|
|Number of policies owned||627||204||627||204|
|Average Life Expectancy - Calculated LE (Years)||11.9||10.5||11.9||10.5|
|Aggregate Death Benefit||$||3,015,140||$||1,017,806||$||3,015,140||$||1,017,806|
|Aggregate fair value||$||265,773||$||110,610||$||265,773||$||110,610|
|Monthly premium — average per policy||$||7.8||$||11.2||$||7.8||$||11.2|
|End of Period Loan Portfolio|
|Loans receivable, net||$||206||$||10,616||$||206||$||10,616|
|Number of policies underlying loans receivable||2||53||2||53|
|Aggregate death benefit of policies underlying loans receivable||$||12,000||$||244,575||$||12,000||$||244,575|
|Number of loans with insurance protection||-||24||-||24|
|Loans receivable, net (insured loans only)||$||-||$||4,588||$||-||$||4,588|
|Average Per Loan:|
|Age of insured in loans receivable||72.1||76.2||72.1||76.2|
|Life expectancy of insured (years)||19.4||15.2||19.4||15.2|
|Loan receivable, net||$||103||$||200||$||103||$||200|
|Structured Settlements Segment Data|
|For the Three Months Ended||For the Six Months Ended|
|June 30,||June 30,|
|Number of transactions||144||262||315||503|
|Number of transactions from repeat customers||80||99||165||169|
|Average purchase discount rate||17.5||%||18.8||%||17.4||%||18.8||%|
|Face value of undiscounted future payments purchased||$||29,849||$||34,951||$||60,570||$||65,380|
|Amount paid for settlements purchased||$||6,136||$||6,263||$||11,675||$||11,915|
|Selling, general and administrative (excluding marketing costs)||$||3,339||$||4,238||$||6,845||$||8,166|
|Average Per Origination During Period:|
|Face value of undiscounted future payments purchased||$||207||$||133||$||192||$||130|
|Amount paid for settlement purchased||$||43||$||24||$||37||$||24|
|Time from funding to maturity (months)||141||146||149||151|
|Marketing cost per transaction||$||4||$||5||$||3||$||7|
|Segment selling, general and administrative|
|(excluding marketing costs) per transaction||$||23||$||16||$||22||$||16|
|Number of transactions originated and sold||151||265||314||440|
|Realized gain on sale of structured settlements||$||3,128||$||3,134||$||6,670||$||5,609|
|Average sale discount rate||9.4||%||10.8||%||9.6||%||10.7||%|
|End of Period Portfolio:|
|Number of transactions on balance sheet||91||129||91||129|