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Emergent Capital, Inc. Announces First Quarter 2017 Results

May 15, 2017

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.

Emergent Capital, Inc. logo (PRNewsFoto/Emergent Capital, Inc.)

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
March 31, 2017


Three Months Ended
March 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 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
March 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


 

SOURCE Emergent Capital, Inc.

For further information: David Sasso, Emergent Capital, Inc., Senior Vice President, Corporate Development & Investor Relations, 561.995.4300, IR@emergentcapital.com


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