Emergent Capital, Inc. Announces First Quarter 2017 Results

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May 15, 2017 2:40 PM EDT

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 EndedMarch 31, 2017

Three Months EndedMarch 31, 2016

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 StatementThis 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 EndedMarch 31,

2017

2016

(in thousands, except share and per share data)

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, 2017

December 31, 2016*

(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 March 31, 2017 and December 31, 2016; 29,021,844 issued and 28,413,844 outstanding as of March 31, 2017 and December 31, 2016

290

290

Preferred stock (par value $0.01 per share, 40,000,000 authorized; 0 issued and outstanding as of March 31, 2017 and December 31, 2016)

—

—

Treasury Stock, net of cost (608,000 shares as of March 31, 2017 and December 31, 2016)

(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

 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/emergent-capital-inc-announces-first-quarter-2017-results-300457666.html

SOURCE Emergent Capital, Inc.


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