Emergent Capital, Inc. Announces Second Quarter 2016 Results

BOCA RATON, Fla., Aug. 3, 2016 /PRNewswire/ -- Emergent Capital, Inc. (NYSE: EMG) ("Emergent" or the "Company"), today announced its financial results for the three- and six-month periods ended June 30, 2016.

Three Months Ended June 30, 2016

Total income from continuing operations was a loss of $15.8 million for the three-month period ended June 30, 2016 compared to income of $28.0 million for the same period in 2015. The loss was impacted by the adoption of the U.S. Society of Actuaries 2015 Valuation Basic Table ("2015 VBT"), which reduced the fair value of the Company's life settlements by approximately $17.6 million, due to a change in estimated probabilistic cash flows. This reduction was offset by a gain of $7.1 million due to lower discount rates.  

The following table provides a summary of the components of income from the Company's life settlements.

 

 

Total expenses from continuing operations resulted in income of $6.0 million for the three-month period ended June 30, 2016 compared to $27.4 million in expenses for the same period in 2015. The change in total expenses for the quarter is primarily due to the adoption of the 2015 VBT, which resulted in a $15.7 million reduction for the change in the fair value of the White Eagle and Red Falcon Revolving Credit Facilities (together the "Revolving Credit Facilities"). The adoption of the 2015 VBT resulted in an expected increase in borrowings. The net impact of the adoption of the 2015 VBT was a loss of approximately $1.9 million for the three-month period ended June 30, 2016.

The Company reported a net loss from continuing operations of $9.8 million, or $(0.36) per diluted share for the three-month period ended June 30, 2016, compared to net income of $1.0 million, or $(0.04) per diluted share for the same period in 2015.

Six Months Ended June 30, 2016

Total income from continuing operations for the six-month period ended June 30, 2016 was a loss of $7.3 million compared to total income of $41.0 million during the same period in 2015. The loss is primarily due to the adoption of the 2015 VBT, which reduced the fair value of the Company's life settlements by $17.6 million. This reduction was offset by a gain of $7.1 million due to lower discount rates. Also, the total dollar amount of maturities during the six-month period ended June 30, 2016 was lower than it was for the same period in 2015.

 

 

Total expenses from continuing operations were $9.9 million for the six-month period ended June 30, 2016 compared to $46.5 million for the same period in 2015. The reduction was primarily associated with the adoption of the 2015 VBT, which resulted in a $15.7 million reduction in the fair value of the Revolving Credit Facilities. Legal expenses also decreased by $3.4 million for the six-month period ended June 30, 2016 as compared to the same period in 2015.

The Company reported a net loss from continuing operations of $17.2 million, or $(0.63) per fully diluted share, for the six-month period ended June 30, 2016 compared to a net loss of $3.2 million, or $(0.15) per fully diluted share, for the same period in 2015. The net loss for the six-month period ended June 30, 2015 includes an income tax benefit of $2.3 million. The Company did not recognize an income tax benefit during the six-month period ended June 30, 2016.

Life Settlements Portfolio Highlights

On June 30, 2016, the estimated fair value of the Company's 625 life insurance policies was $473.0 million compared to $461.9 million for 632 life insurance policies on December 31, 2015. The weighted average discount rate was 16.49% on June 30, 2016 compared to 17.02% on December 31, 2015. The aggregate face value of the Company's portfolio of life insurance policies was approximately $3.0 billion on June 30, 2016. During the quarter, two life insurance policies that served as collateral under the revolving credit facilities matured totaling $4.2 million.

Antony Mitchell, Chief Executive Officer of Emergent, commented, "As we announced earlier this week, in light of several inbound inquiries into the Company, the Board of Directors has formed a Special Committee and retained FBR to analyze the best path forward for the organization." Mr. Mitchell concluded, "The Special Committee will undertake a rigorous process to evaluate the current risks, opportunities and strategic alternatives presented to the Company."

As of June 30, 2016, the Company had cash and cash equivalents and certificates of deposit of $31.6 million and a Book Value per share of $7.31.

Conference Call

The Company will be hosting a conference call today at 5:00 pm ET. To join the call, please dial toll free (855) 656-0929, or from outside the U.S. (412) 317-6021. The conference call will also be broadcast live through a link on the Investor Relations section of the Company's website at www.emergentcapital.com. Please visit the website at least 10 minutes prior to the call to register, download and install any necessary audio software.

About Emergent Capital, Inc.

Emergent (NYSE: EMG) 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-

 

 

 

 

 

 

 

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SOURCE Emergent Capital, Inc.