Press Releases

Emergent Capital, Inc. Announces Third Quarter 2016 Results

BOCA RATON, Fla., Nov. 7, 2016 /PRNewswire/ -- Emergent Capital, Inc. (NYSE: EMG) ("Emergent" or the "Company"), today announced its financial results for the three and nine month periods ended September 30, 2016.

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

Three Months Ended September 30, 2016

Total income from continuing operations was $4.8 million for the three month period ended September 30, 2016 compared to $2.8 million for the same period in 2015. The increase was primarily due to a $4.0 million gain on the maturity of two policies compared to a $2.4 million gain on maturity of two policies for the same period in 2015.

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



Three Months Ended
September 30, 2016


Three Months Ended
September 30, 2015

Change in estimated probabilistic cash flows


$

21,143


$

19,870

Premiums paid during period


(18,414)


(16,826)

Change in life expectancy evaluation


(2,008)


(4,258)

Unrealized gain on acquisitions



1,460

Realized gain on maturities


4,014


2,421

Change in fair value of life settlements


$

4,735


$

2,667






 

Total expenses from continuing operations were $13.3 million for the three month period ended September 30, 2016 compared to $21.0 million for the same period in 2015. The decrease was primarily attributable to an $8.8 million charge related to the extinguishment of the Secured Notes during the quarter ended September 30, 2015, and a reduction of $1.5 million, $719,000 and $642,000 in legal fees, interest expense and personnel costs, respectively.

The Company reported a net loss from continuing operations of $8.5 million, or $(0.31) per diluted share for the three month period ended September 30, 2016, compared to a net  loss of $13.5 million, or $(0.48) per diluted share for the same period in 2015. The net loss for the quarter ended September 30, 2015 includes an income tax benefit of $4.7 million. There was no income tax benefit during the quarter ended September 30, 2016.

Nine Months Ended September 30, 2016

Total income from continuing operations for the nine month period ended September 30, 2016 was a loss of $2.6 million compared to total income of $43.8 million during the same period in 2015.  The loss is primarily due to a $25.4 million reduction in realized gains due to policy maturities and further impacted by the adoption of the 2015 VBT, which reduced the fair value of the Company's life settlements by $17.6 million.

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



Nine Months Ended
September 30, 2016


Nine Months Ended
September 30, 2015

Change in estimated probabilistic cash flows


$

57,762


$

60,588

Premiums paid during period


(52,750)


(48,243)

2015 VBT Adoption


(17,638)


Change in life expectancy evaluation


(12,252)


(18,700)

Change in discount rates


7,149


3,841

Unrealized gain on acquisitions


262


5,856

Realized gain on maturities


14,777


40,240

Change in fair value of life settlements


$

(2,690)


$

43,582






Total expenses from continuing operations were $23.2 million for the nine month period ended September 30, 2016 compared to $67.5 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, an $8.8 million reduction associated with the extinguishment of the Secured Notes, and a $5.7 million reduction in operating expenses primarily due to a $5.0 million decrease in legal expenses compared to the nine month period ended September 30, 2015.

The Company reported a net loss from continuing operations of $25.8 million, or $(0.94) per fully diluted share, for the nine month period ended September 30, 2016 compared to a net loss of $16.7 million, or $(0.70) per fully diluted share, for the same period in 2015. The net loss for the nine month period ended September 30, 2015 includes an income tax benefit of $7.0 million.  The Company did not recognize an income tax benefit during the nine month period ended September 30, 2016.

Life Settlements Portfolio Highlights

On September 30, 2016, the estimated fair value of the Company's 623 life insurance policies was $483.4 million compared to $461.9 million for 632 life insurance policies at December 31, 2015. The weighted average discount rate was 16.52% on September 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 September 30, 2016.

During the quarter, two life insurance policies that served as collateral under the revolving credit facilities matured totaling $12.8 million.

As of September 30, 2016, the Company had cash and cash equivalents and certificates of deposit of $24.9 million and a Book Value per share of $6.95.

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-

 


Emergent Capital, Inc.

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)






For the Three Months Ended
September 30,


For the Nine Months Ended
September 30,


2016


2015


2016


2015


(in thousands, except share and per share data)

Income


Change in fair value of life settlements

$

4,735



$

2,667



$

(2,690)



$

43,582


Other income

32



102



125



201


Total income (loss)

4,767



2,769



(2,565)



43,783


Expenses








Interest expense

7,895



8,614



21,330



21,491


Extinguishment of Secured Notes



8,782





8,782


Change in fair value of Revolving Credit Facilities

(551)



(4,203)



(16,121)



13,489


Personnel costs

1,303



1,945



5,133



5,425


Legal fees

1,833



3,370



5,361



10,345


Professional fees

2,136



1,579



5,347



5,284


Insurance

200



309



639



966


Other selling, general and administrative expenses

494



585



1,511



1,671


Total expenses

13,310



20,981



23,200



67,453


Income (loss) from continuing operations before income taxes

(8,543)



(18,212)



(25,765)



(23,670)


Benefit for income taxes



(4,721)





(6,981)


Net income (loss) from continuing operations

$

(8,543)



$

(13,491)



$

(25,765)



$

(16,689)


Discontinued Operations:








Income (loss) from discontinued operations

(54)



(147)



(248)



(640)


Benefit for income taxes



(34)





(224)


Net income (loss) from discontinued operations

(54)



(113)



(248)



(416)


Net income (loss)

$

(8,597)



$

(13,604)



$

(26,013)



$

(17,105)


Basic and diluted income (loss) per share:








Continuing operations

$

(0.31)



$

(0.48)



$

(0.94)



$

(0.70)


Discontinued operations

$



$



$

(0.01)



$

(0.02)


Net income (loss)

$

(0.31)



$

(0.48)



$

(0.95)



$

(0.72)


Weighted average shares outstanding:








Basic and Diluted

27,614,441



28,084,254



27,529,120



23,827,030


 

 

 


Emergent Capital, Inc.

CONSOLIDATED BALANCE SHEETS



September 30,
 2016


December 31,
 2015*


(Unaudited)




(In thousands except share data)

ASSETS




Assets




Cash and cash equivalents

$

9,801



$

12,946


Cash and cash equivalents (VIE)

9,098



7,395


Certificates of deposit

6,008



2,501


Prepaid expenses and other assets

1,488



1,017


Deposits - other

1,347



1,347








Life settlements, at estimated fair value

7,810



11,946


Life settlements, at estimated fair value (VIE)

475,585



449,979


Receivable for maturity of life settlements (VIE)

20,088



18,223


Fixed assets, net

256



322


Investment in affiliates

2,384



2,384


Total assets

$

533,865



$

508,060


LIABILITIES AND STOCKHOLDERS' EQUITY




Liabilities




Accounts payable and accrued expenses

3,550



$

3,051


Accounts payable and accrued expenses (VIE)

521



419


Other liabilities

395



360


Interest payable - Convertible Notes

768



2,272


Convertible Notes, net of discount and deferred debt costs

59,532



56,812


Interest payable - Senior Secured Notes

200




Senior Secured Notes, net of discount and deferred debt costs

29,209










White Eagle Revolving Credit Facility, at estimated fair value (VIE)

182,128



169,131


Red Falcon Revolving Credit Facility, at estimated fair value (VIE)

61,451



55,658


Total liabilities

337,754



287,703






Commitments and Contingencies




Stockholders' Equity




Common stock (par value $0.01 per share, 80,000,000 authorized at September 30,
2016 and December 31, 2015; 28,836,573 issued and 28,228,573 outstanding as of
September 30, 2016; 28,130,508 issued and 27,522,508 outstanding at December 31,
2015)

288



281


Preferred stock (par value $0.01 per share, 40,000,000 authorized; 0 issued and outstanding as of September 30, 2016 and December 31, 2015)




Treasury Stock, net of cost (608,000 shares as of September 30, 2016 and December
31, 2015)

(2,534)



(2,534)


Additional paid-in-capital

307,210



305,450


Accumulated deficit

(108,853)



(82,840)


Total stockholders' equity

196,111



220,357



Total liabilities and stockholders' equity

$

533,865



$

508,060



    *      Derived from audited consolidated financial statements.

 

 

 

Selected Operating Data (dollars in thousands):




Three Months Ended
September 30,


Nine Months Ended
September 30,



2016


2015


2016


2015

Period Acquisitions — Policies Owned









Number of policies acquired




3



1



41


Average age of insured at acquisition




85.4



90.3



85.0


Average life expectancy — Calculated LE (Years)




5.6



2.3



5.4


Average death benefit


$

$



6,232

$



690

$



2,924


Aggregate purchase price


$

$



2,679

$



16

$



30,534


End of Period — Policies Owned









Number of policies owned


623



634



623



634


Average Life Expectancy — Calculated LE (Years)


9.2



10.0



9.2



10.0


Aggregate Death Benefit


$

2,953,796

$



2,997,903

$



2,953,796

$



2,997,903


Aggregate fair value


$

483,395

$



457,810

$



483,395

$



457,810


Monthly premium — average per policy


$

10.6

$



8.9

$



10.6

$



8.9


Period Maturities









Number of policies matured


2



2



10



14


Average age of insured at maturity


85.2



86.8



85.6



84.1


Average life expectancy - Calculated LE (Years)


1.8



5.4



3.7



7.4


Aggregate death benefit


$

12,800

$



3,700

$



29,980

$



53,468


Gains on maturity


$

4,014

$



2,421

$



14,777

$



40,240



















Proceeds collected


$

7,000

$



28,280

$



27,980

$



47,519


 

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SOURCE Emergent Capital, Inc.

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