Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Jun. 30, 2019 | Jun. 29, 2018 | |
Document and Entity Information [Abstract] | |||
Entity Registrant Name | GWG Holdings, Inc. | ||
Entity Central Index Key | 0001522690 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2018 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2018 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | No | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Shell Company | false | ||
Entity Ex Transition Period | false | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | false | ||
Entity Public Float | $ 11,692,802 | ||
Entity Common Stock, Shares Outstanding | 33,033,420 | ||
Entity File Number | 001-36615 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
ASSETS | ||
Cash and cash equivalents | $ 114,587,084 | $ 114,421,491 |
Restricted cash | 10,849,126 | 28,349,685 |
Investment in life insurance policies, at fair value | 747,922,465 | 650,527,353 |
Life insurance policy benefits receivable | 16,460,687 | 16,658,761 |
Financing receivable from affiliate | 184,768,874 | |
Equity method investment | 360,841,651 | |
Other assets | 45,437,164 | 8,898,884 |
TOTAL ASSETS | 1,480,867,051 | 818,856,174 |
LIABILITIES | ||
Amended and Restated Senior credit facility with LNV Corporation | 148,977,596 | 212,238,192 |
L Bonds | 651,402,663 | 447,393,568 |
Seller Trust L Bonds | 366,891,940 | |
Accounts payable | 9,276,507 | 6,394,439 |
Interest and dividends payable | 18,555,293 | 15,427,509 |
Other accrued expenses | 4,705,170 | 3,730,723 |
TOTAL LIABILITIES | 1,199,809,169 | 685,184,431 |
STOCKHOLDERS' EQUITY | ||
REDEEMABLE PREFERRED STOCK (par value $0.001; shares authorized 100,000; shares outstanding 97,524 and 98,611; liquidation preference of $98,093,000 and $99,186,000 as of December 31, 2018 and December 31, 2017, respectively) | 86,910,335 | 92,840,243 |
SERIES 2 REDEEMABLE PREFERRED STOCK (par value $0.001; shares authorized 150,000; shares outstanding 148,359 and 88,709; liquidation preference of $149,225,000 and $89,208,000 as of December 31, 2018 and December 31, 2017, respectively) | 129,062,704 | 80,275,204 |
COMMON STOCK (par value $0.001; shares authorized 210,000,000; shares issued and outstanding 33,018,161 as of December 31, 2018 and 5,813,555 as of December 31, 2017) | 33,018 | 5,813 |
Additional paid-in capital | 249,662,168 | |
Accumulated deficit | (184,610,343) | (39,449,517) |
TOTAL STOCKHOLDERS' EQUITY | 281,057,882 | 133,671,743 |
TOTAL LIABILITIES & EQUITY | $ 1,480,867,051 | $ 818,856,174 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 210,000,000 | 210,000,000 |
Common stock, shares issued | 33,018,161 | 5,813,555 |
Common stock, shares outstanding | 33,018,161 | 5,813,555 |
Redeemable Preferred Stock [Member] | ||
Redeemable preferred stock, par value | $ 0.001 | $ 0.001 |
Redeemable preferred stock, shares authorized | 100,000 | 100,000 |
Redeemable preferred stock, shares outstanding | 97,524 | 98,611 |
Redeemable preferred stock, liquidation preference | $ 98,093,000 | $ 99,186,000 |
Series 2 Redeemable Preferred Stock [Member] | ||
Redeemable preferred stock, par value | $ 0.001 | $ 0.001 |
Redeemable preferred stock, shares authorized | 150,000 | 150,000 |
Redeemable preferred stock, shares outstanding | 148,359 | 88,709 |
Redeemable preferred stock, liquidation preference | $ 149,225,000 | $ 89,208,000 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
REVENUE | ||
Gain (loss) on life insurance policies, net | $ (14,104,572) | $ 62,114,403 |
Interest and other income | 13,714,281 | 2,019,515 |
TOTAL REVENUE | (390,291) | 64,133,918 |
EXPENSES | ||
Interest expense | 80,135,983 | 54,419,444 |
Employee compensation and benefits | 17,406,982 | 14,869,749 |
Legal and professional fees | 5,541,177 | 5,095,643 |
Other expenses | 15,994,487 | 12,478,676 |
TOTAL EXPENSES | 119,078,629 | 86,863,512 |
INCOME (LOSS) BEFORE INCOME TAXES | (119,468,920) | (22,729,594) |
INCOME TAX EXPENSE (BENEFIT) | (2,097,371) | |
NET INCOME (LOSS) BEFORE EARNINGS FROM EQUITY METHOD INVESTMENT | (119,468,920) | (20,632,223) |
Earnings from equity method investment | 17,507 | |
NET INCOME (LOSS) | (119,451,413) | (20,632,223) |
Preferred stock dividends | 16,662,731 | 12,702,341 |
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS | $ (136,114,144) | $ (33,334,564) |
NET INCOME (LOSS) PER SHARE | ||
Basic | $ (22.32) | $ (5.72) |
Diluted | $ (22.32) | $ (5.72) |
WEIGHTED AVERAGE SHARES OUTSTANDING | ||
Basic | 6,098,208 | 5,826,033 |
Diluted | 6,098,208 | 5,826,033 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net income (loss) | $ (119,451,413) | $ (20,632,223) |
Adjustments to reconcile net income (loss) to net cash flows used in operating activities: | ||
Change in fair value of life insurance policies | 10,344,029 | (66,760,811) |
Amortization of deferred financing and issuance costs | 10,036,955 | 8,780,847 |
Amortization of premium and accretion of discount on financing receivables | (13,953) | |
Provision for uncollectible policy benefit receivable | 4,300,000 | |
Earnings from equity method investment | (17,507) | |
Stock-based compensation | 2,182,125 | 1,424,625 |
Deferred income taxes | (2,097,371) | |
Preferred stock issued in lieu of cash dividends | 498,659 | |
(Increase) decrease in operating assets: | ||
Life insurance policy benefits receivable | (4,101,926) | (11,313,761) |
Interest receivable added to commercial loan principal | (10,533,632) | |
Other assets | 4,405,054 | 982,713 |
Increase (decrease) in operating liabilities: | ||
Accounts payable | 2,882,069 | 4,167,728 |
Interest and dividends payable | 3,268,969 | 2,708,623 |
Other accrued expenses | 1,220,176 | 1,198,197 |
NET CASH FLOWS USED IN OPERATING ACTIVITIES | (95,479,054) | (81,042,774) |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Investment in life insurance policies | (128,502,654) | (88,643,819) |
Carrying value of matured life insurance policies | 20,763,516 | 16,069,632 |
Equity investment acquired | (3,204,016) | |
Other investments acquired | (3,037,234) | |
NET CASH FLOWS USED IN INVESTING ACTIVITIES | (113,980,388) | (72,574,187) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Net borrowings on (repayments of) senior debt | (64,315,618) | 59,799,649 |
Payments for issuance of senior debt | (4,510,388) | |
Payments for redemption of Series I Secured Notes | (16,613,667) | |
Proceeds from issuance of L Bonds | 263,964,554 | 131,796,220 |
Payments for issuance of L Bonds | (17,379,101) | (10,896,925) |
Payments for redemption of L Bonds | (48,026,551) | (60,848,460) |
Issuance (repurchase) of common stock | 614,193 | (1,603,560) |
Proceeds from issuance of convertible preferred stock | 50,000,000 | |
Proceeds from issuance of redeemable preferred stock | 56,238,128 | 127,279,847 |
Payments for issuance of redeemable preferred stock | (4,142,294) | (9,027,190) |
Payments for redemption of redeemable preferred stock | (2,456,692) | (22,598,626) |
Common stock dividends | (25,709,412) | |
Preferred stock dividends | (16,662,731) | (12,702,341) |
NET CASH FLOWS PROVIDED BY FINANCING ACTIVITIES | 192,124,476 | 180,074,559 |
NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH | (17,334,966) | 26,457,598 |
CASH, CASH EQUIVALENTS AND RESTRICTED CASH | ||
BEGINNING OF PERIOD | 142,771,176 | 116,313,578 |
END OF PERIOD | 125,436,210 | 142,771,176 |
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION | ||
Interest paid | 67,058,000 | 45,990,000 |
Premiums paid, including prepaid | 49,467,000 | 55,471,000 |
Payments for exercised stock options | 346,000 | |
Financing receivable from affiliate: | ||
Financing receivable from affiliate acquired | 173,485,000 | |
Conversion of interest receivable to commercial loan principal | 10,534,000 | |
Exchangeable note acquired and converted to equity method investment | 156,422,000 | |
Equity method investment acquired | 201,828,000 | |
Equity security acquired | 38,562,000 | |
Seller Trust L Bonds issued | 366,892,000 | |
Common stock issued | 203,405,000 | |
Common stock issued for vendor services | 321,000 | |
L Bonds: | ||
Conversion of accrued interest and commissions payable to principal | 1,240,000 | 1,756,000 |
Conversion of L Bonds to redeemable preferred stock | 4,546,000 | 2,666,000 |
Preferred Stock: | ||
Issuance of Series A preferred stock in lieu of cash dividends | 499,000 | |
Conversion of Series B convertible preferred stock to common stock | 50,000,000 | |
Options and stock appreciation rights issued | 614,000 | 534,000 |
Investment in life insurance policies included in accounts payable | $ 6,377,000 | $ 3,913,000 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Stockholders' Equity - USD ($) | Preferred Stock | Common Stock | Additional Paid-in Capital | Accumulated Deficit | Total |
Beginning balance at Dec. 31, 2016 | $ 78,726,297 | $ 5,980 | $ 7,383,515 | $ (18,817,294) | $ 67,298,498 |
Beginning balance, shares at Dec. 31, 2016 | 2,699,704 | 5,980,190 | |||
Net income (loss) | (20,632,223) | (20,632,223) | |||
Issuance of common stock | $ 33 | 320,970 | 321,003 | ||
Issuance of common stock, shares | 33,810 | ||||
Redemption/Repurchase of common stock | $ (200) | (1,603,360) | (1,603,560) | ||
Redemption/Repurchase of common stock, shares | (200,445) | ||||
Issuance of Series A preferred stock | $ 498,659 | 498,659 | |||
Issuance of Series A preferred stock, shares | 71,237 | ||||
Redemption of Series A preferred stock | $ (20,199,792) | (20,199,792) | |||
Redemption of Series A preferred stock, shares | (2,711,916) | ||||
Issuance of redeemable preferred stock | $ 122,933,106 | (2,338,457) | 120,594,649 | ||
Issuance of redeemable preferred stock, shares | 129,622 | ||||
Redemption of redeemable preferred stock | $ (1,327,776) | (1,327,776) | |||
Redemption of redeemable preferred stock, shares | (1,328) | ||||
Preferred stock dividends | $ (8,925,807) | (3,776,534) | (12,702,341) | ||
Stock-based compensation | 1,410,760 | 13,866 | 1,424,626 | ||
Ending balance at Dec. 31, 2017 | $ 173,115,447 | $ 5,813 | (39,449,517) | 133,671,743 | |
Ending balance, shares at Dec. 31, 2017 | 187,319 | 5,813,555 | |||
Net income (loss) | (119,451,413) | (119,451,413) | |||
Issuance of common stock | $ 22,215 | 204,771,249 | 204,793,464 | ||
Issuance of common stock, shares | 22,214,641 | ||||
Redemption/Repurchase of common stock | $ (10) | (68,751) | (68,761) | ||
Redemption/Repurchase of common stock, shares | (10,035) | ||||
Issuance of redeemable preferred stock | $ 56,878,238 | 56,878,238 | |||
Issuance of redeemable preferred stock, shares | 61,021 | ||||
Redemption of redeemable preferred stock | $ (2,457,914) | (2,457,914) | |||
Redemption of redeemable preferred stock, shares | (2,457) | ||||
Common stock dividends | (25,709,413) | (25,709,413) | |||
Issuance of Series B convertible preferred stock | $ 50,000,000 | 50,000,000 | |||
Issuance of Series B convertible preferred stock, shares | 5,000,000 | ||||
Conversion of Series B convertible preferred stock to common stock | $ (50,000,000) | $ 5,000 | 49,995,000 | ||
Conversion of Series B convertible preferred stock to common stock, shares | (5,000,000) | 5,000,000 | |||
Preferred stock dividends | $ (11,562,732) | (5,099,999) | (16,662,731) | ||
Stock-based compensation | 64,669 | 64,669 | |||
Ending balance at Dec. 31, 2018 | $ 215,973,039 | $ 33,018 | $ 249,662,168 | $ (184,610,343) | $ 281,057,882 |
Ending balance, shares at Dec. 31, 2018 | 245,883 | 33,018,161 |
Nature of Business and Summary
Nature of Business and Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Nature of Business and Summary of Significant Accounting Policies | (1) Nature of Business — We have enhanced and extended our activities from our core competencies of providing liquidity to individuals owning illiquid assets and alternative asset ownership through our transaction with The Beneficient Company Group, L.P. (“BEN LP,” including all of the subsidiaries it may have from time to time — “Beneficient”). In addition, we continue to innovate in the life insurance industry through our insurance technology initiative which, is based upon the use of step -change -change GWG Holdings, Inc. and all of its subsidiaries are incorporated and organized in Delaware, other than GWG Life Trust, which is governed by the laws of the State of Utah. Unless the context otherwise requires or we specifically so indicate, all references in these footnotes to “we,” “us,” “our,” “our Company,” “GWG,” or the “Company” refer to GWG Holdings, Inc. and its subsidiaries collectively and on a consolidated basis. References to the full names of particular entities, such as “GWG Holdings, Inc.” or “GWG Holdings,” are meant to refer only to the particular entity referenced. The Exchange Transaction On August • • • • • On December • • • • • -A • A summary of the Exchange Transaction is set forth in our Current Report on Form 8 -K -K -K Description of the Assets Exchanged at the Initial Transfer Seller Trust L Bonds On August After the second anniversary of the Final Closing Date, the holders of the Seller Trust L Bonds will have the right to cause GWG to repurchase, in whole but not in part, the Seller Trust L Bonds held by such holder. The repurchase may be paid, at GWG’s option, in the form of cash, a pro rata portion of (i) the outstanding principal amount and accrued and unpaid interest under the Commercial Loan and (ii) BEN LP common units, or a combination of cash and such property. The Seller Trust L Bonds are senior secured obligations of GWG, ranking junior only to all senior debt of GWG (see Note 8), pari passu in right of payment and in respect of collateral with all “L Bonds” of GWG (see Note 10), and senior in right of payment to all subordinated indebtedness of GWG. Payments under the Seller Trust L Bonds are guaranteed by GWG Life (see Note 24). Series B Convertible Preferred Stock The Series B converted into 5,000,000 Commercial Loan The $192,508,000 principal amount under the Commercial Loan is due on August -year The principal amount of the Commercial Loan bears interest at 5.0% per year. From and after the Final Closing Date, one -half -half In accordance with the Supplemental Indenture issuing the Seller Trust L Bonds, upon a redemption event or at the maturity date of the Seller Trust L Bonds, the Company, at its option, may use the outstanding principal amount of the Commercial Loan, and accrued and unpaid interest thereon, as repayment consideration of the Seller Trust L Bonds. Exchangeable Note The Exchangeable Note accrued interest at a rate of 12.4% per year, compounded annually. Interest was payable in cash on the earlier to occur of the maturity date or the Final Closing Date; provided that Beneficient had the option to add to the outstanding principal balance under the Commercial Loan the accrued interest in lieu of payment in cash of such accrued interest thereon at the Final Closing Date. At the Final Closing date, the principal amount of the Exchangeable Note was exchanged for 14,822,843 common units of BEN LP, and the accrued interest on the Exchangeable Note was added to the principal balance of the Commercial Loan. Option Agreement In connection with the Final Closing, the Company entered into the Option Agreement with BEN LP. The Option Agreement gives us the option to acquire the number of common units in BEN LP that would be received by the holder of NPC -A Common Units in In connection with the Initial Transfer and Final Closing, the Seller Trusts and Beneficient delivered to us 40,505,279 common units of BEN LP. This represents an approximate 89.9% interest in the common units of BEN LP. Beneficient operates in a sector of the alternative asset market that is complementary to ours by providing a suite of innovative liquidity and trust products to mid -to-high -to-medium Principles of Consolidation — The Company has interests in various entities including corporations and limited partnerships. For each such entity, the Company evaluates its ownership interest to determine whether the entity is a variable interest entity (“VIE”) and, if so, whether it is the primary beneficiary of the VIE. The Company would consolidate any entity for which it was the primary beneficiary, regardless of its ownership or voting interests. Upon inception of a variable interest or the occurrence of a reconsideration event, the Company makes judgments in determining whether entities in which it invests are VIEs. If so, the Company makes judgments to determine whether it is the primary beneficiary and is thus required to consolidate the entity. If it is concluded that an entity is not a VIE, then the Company considers its proportional voting interests in the entity. The Company consolidates majority -owned -party Accounting for Limited Partnership Investments -30-S99-1 Related party transactions between the Company and its equity method investee have not been eliminated. Use of Estimates — (2) the Business Combinations Cash and Cash Equivalents — Cash, cash equivalents and restricted cash on our consolidated statements of cash flows include cash and cash equivalents of $114.6 Life Insurance Policies — -30 Investments in Insurance Contracts , -measure In a case where our acquisition of a policy is not complete as of a reporting date, but we have nonetheless advanced direct costs and deposits for the acquisition, those costs and deposits are recorded as other assets on our consolidated balance sheets until the acquisition is complete and we have secured title to the policy. On both December We also recognize realized gain (or loss) from a life insurance policy upon one of the two following events: (1) our receipt of notice or verified mortality of the insured; or (2) our sale of the policy (upon filing of change -of-ownership Life Insurance Policy Benefits Receivable We reserve for policy benefits when it becomes probable that we will not collect the full amount of the policy benefit. The reserve requirements are based on the best facts available to us and are reevaluated and adjusted as additional information becomes available. Uncollectible policy benefits are written off against the reserves when it is deemed that a policy amount is uncollectible. As of December Other Assets — In December 2018, in connection with the Final Closing of the Exchange Transaction, the Company entered into an Option Agreement with Beneficient. The agreement gives GWG the option to acquire the number of common units in BEN LP that would be received by the holder of NPC -A Financing Receivable — Receivables , -offs Losses on financing receivables are recognized when they are incurred, which requires us to make our best estimate of probable losses. Specific allowances are recorded for individually impaired loans to the extent we have determined that it is probable that we will be unable to collect all amounts due according to original contractual terms of the loan agreement. Certain loans classified as impaired may not require an allowance for loan loss because we believe that we will ultimately collect the unpaid balance (through collection or collateral repossession). The method for calculating the best estimate of losses depends on the type and risk characteristics of the related financing receivable. Such an estimate requires consideration of historical loss experience, adjusted for current conditions, and judgments about the probable effects of relevant observable data, including present economic conditions such as delinquency rates, financial health of market sectors, and the present and expected future levels of interest rates. The underlying assumptions, estimates and assessments we use to provide for losses are updated periodically to reflect our view of current conditions. Changes in such estimates can significantly affect the allowance and provision for losses. It is possible that we will experience credit losses that are different from our current estimates. We have no allowance for losses as of December 31, 2018. Write -offs -off Equity Method Investment -substance Our equity method investment is reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the investment might not be recoverable. These circumstances can include, but are not limited to: evidence that we do not have the ability to recover the carrying amount, the inability of the investee to sustain earnings, a current fair value of the investment that is less than the carrying amount, and other investors ceasing to provide support or reduce their financial commitment to the investee. If the fair value of the investment is less than the carrying amount, and the investment will not recover in the near term, then an other -than-temporary -than-temporary The Company reports its share of the income or loss of the equity method partner companies on a one -quarter For more information on equity method investments, see Note 6. Stock -Based Compensation -based -Scholes -average -based -based The risk -free Deferred Financing and Issuance Costs -line -in-capital Earnings (Loss) per Share — -average Reclassification — Recently Issued Accounting Pronouncements -02 Leases (Topic 842) (“ -02 -02 -of-use -lease In June 2016, the FASB issued ASU No. 2016 -13 Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, -to-maturity -looking In August 2016, the FASB issued ASU No. 2016 -15 Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments -15 In November 2016, the FASB issued ASU 2016 -18 Statement of Cash Flows (Topic 230): Restricted Cash, Statement of Cash Flows , -18 In August 2018, the FASB issued ASU No. 2018 -13 Fair Value Measurement (Topic 820): Disclosure Framework — Changes to the Disclosure Requirements for Fair Value Measurement |
Restrictions on Cash
Restrictions on Cash | 12 Months Ended |
Dec. 31, 2018 | |
Cash and Cash Equivalents [Abstract] | |
Restrictions on Cash | (2) Restrictions on Cash Under the terms of our amended and restated senior credit facility with LNV Corporation (discussed in Note 8), we are required to maintain collection and payment accounts that are used to collect policy benefits from pledged policies, pay annual policy premiums, interest and other charges under the facility, and distribute funds to pay down the facility. The agents for the lender authorize the disbursements from these accounts. At December 31, 2018 and December 31, 2017, there was a balance of $4,164,000 and $19,967,000, respectively, in these collection and payment accounts. To fund the Company’s acquisition of life insurance policies, we are required to maintain escrow accounts. Distributions from these accounts are made according to life insurance policy purchase contracts. At December 31, 2018 and December 31, 2017, there was a balance of $6,685,000 and $8,383,000, respectively, in the Company’s escrow accounts. |
Investment in Life Insurance Po
Investment in Life Insurance Policies | 12 Months Ended |
Dec. 31, 2018 | |
Investments, All Other Investments [Abstract] | |
Investment in Life Insurance Policies | (3) Investment in Life Insurance Policies Our investments in life insurance policies are valued based on unobservable inputs that are significant to their overall fair value. Changes in the fair value of these policies, net of premiums paid, are recorded in gain (loss) on life insurance policies, net in our consolidated statements of operations. Fair value is determined on a discounted cash flow basis that incorporates life expectancy assumptions generally derived from reports obtained from widely accepted life expectancy providers (other than insured lives covered under small face amount policies — those with $1 -reported -of-insurance Portfolio Information Our portfolio of life insurance policies, owned by our subsidiaries as of December Life Insurance Portfolio Summary Total life insurance portfolio face value of policy benefits $ 2,047,992,000 Average face value per policy $ 1,775,000 Average face value per insured life $ 1,984,000 Average age of insured (years)* 82.1 Average life expectancy estimate (years)* 7.8 Total number of policies 1,154 Number of unique lives 1,032 Demographics 77% Males; 23% Females Number of smokers 52 Largest policy as % of total portfolio face value 0.6 % Average policy as % of total portfolio 0.1 % Average annual premium as % of face value 2.9 % ____________ * Averages presented in the table are weighted averages. A summary of our policies, organized according to their estimated life expectancy dates as of the reporting date, is as follows: As of December 31, 2018 As of December 31, 2017 Years Ending Number of Estimated Face Value Number of Estimated Face Value 2018 — $ — $ — 8 $ 4,398,000 $ 4,689,000 2019 9 6,380,000 7,305,000 48 63,356,000 83,720,000 2020 41 46,338,000 59,939,000 87 79,342,000 127,373,000 2021 81 68,836,000 108,191,000 98 96,154,000 170,695,000 2022 104 97,231,000 177,980,000 90 85,877,000 181,120,000 2023 109 93,196,000 185,575,000 93 69,467,000 175,458,000 2024 107 84,150,000 211,241,000 100 77,638,000 228,188,000 Thereafter 703 351,791,000 1,297,761,000 374 174,295,000 704,905,000 Totals 1,154 $ 747,922,000 $ 2,047,992,000 898 $ 650,527,000 $ 1,676,148,000 We recognized life insurance benefits of $71,090,000 and $64,719,000 during 2018 and 2017, respectively, related to policies with a carrying value of $20,763,000 and $16,070,000, respectively, and as a result recorded realized gains of $50,327,000 and $48,649,000. A reconciliation of gain on life insurance policies is a follows: Years Ended 2018 2017 Change in estimated probabilistic cash flows (1) $ 75,444,000 $ 63,241,000 Unrealized gain on acquisitions (2) 28,017,000 31,019,000 Premiums and other annual fees (54,087,000 ) (53,296,000 ) Change in discount rates (3) — 14,931,000 Change in life expectancy evaluation (4) (4,890,000 ) (20,257,000 ) Change in life expectancy evaluation methodology (5) (87,100,000 ) — Face value of matured policies 71,090,000 64,719,000 Fair value of matured policies (42,579,000 ) (38,243,000 ) Gain (loss) on life insurance policies, net $ (14,105,000 ) $ 62,114,000 ____________ (1) Change in fair value of expected future cash flows relating to our investment in life insurance policies that are not specifically attributable to changes in life expectancy, discount rate or policy maturity events. (2) Gain resulting from fair value in excess of the purchase price for life insurance policies acquired during the reporting period. (3) The discount rate applied to estimate the fair value of the portfolio of life insurance policies we own was 8.25% as of December 31, 2018, compared to 10.45% as of December 31, 2017. (4) The change in fair value due to updating life expectancy estimates on certain life insurance policies in our portfolio. (5) The change in fair value due to the adoption of the Longest Life Expectancy methodology on life insurance policies in our portfolio, partially offset by the impact of a decrease in the discount rate associated thereto. We currently estimate that premium payments and servicing fees required to maintain our current portfolio of life insurance policies in force for the next five years, assuming no mortalities, are as follows: Years Ending December 31, Premiums Servicing Premiums and 2019 $ 65,536,000 $ 1,413,000 $ 66,949,000 2020 77,552,000 1,413,000 78,965,000 2021 90,290,000 1,413,000 91,703,000 2022 103,363,000 1,413,000 104,776,000 2023 115,597,000 1,413,000 117,010,000 $ 452,338,000 $ 7,065,000 $ 459,403,000 Management anticipates funding the majority of the premium payments and servicing fees estimated above from cash flows realized from life insurance policy benefits, and to the extent necessary, with additional borrowing capacity created as the premiums and servicing costs of pledged life insurance policies become due, under the amended and restated senior credit facility with LNV Corporation as described in Note -pledged |
Fair Value Definition and Hiera
Fair Value Definition and Hierarchy | 12 Months Ended |
Dec. 31, 2018 | |
Fair Value Disclosures [Abstract] | |
Fair Value Definition and Hierarchy | (4) Fair Value Definition and Hierarchy ASC 820, Fair Value Measurements and Disclosures , ASC 820 maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring the use of observable inputs whenever available. Observable inputs are inputs that market participants would use in pricing the asset or liability developed based on market data obtained from independent sources. Unobservable inputs are inputs that reflect assumptions about how market participants price an asset or liability based on the best available information. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., the “exit price”) in an orderly transaction between market participants at the measurement date. The hierarchy is broken down into three levels based on the observability of inputs as follows: Level 1 — Valuations based on quoted prices in active markets for identical assets or liabilities that the Company has the ability to access. Valuations are based on quoted prices that are readily and regularly available in an active market. Level 2 — Valuations based on one or more quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly. Level 3 — Valuations based on inputs that are unobservable and significant to the overall fair value measurement. The availability of observable inputs can vary by types of assets and liabilities and is affected by a wide variety of factors, including, for example, whether an instrument is established in the marketplace, the liquidity of markets and other characteristics particular to the transaction. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by management in determining fair value is greatest for assets and liabilities categorized in Level 3. Level 3 Valuation Process The estimated fair value of our portfolio of life insurance policies is determined on a quarterly basis by management taking into consideration a number of factors, including changes in discount rate assumptions, estimated premium payments and life expectancy estimate assumptions, as well as any changes in economic and other relevant conditions. The discount rate incorporates current information about discount rates observed in the life insurance secondary market, market interest rates, the estimated credit exposure to the insurance company that issued the life insurance policy and management’s estimate of the operational risk premium a purchaser would require to receive the future cash flows derived from our portfolio as a whole. Management has significant discretion regarding the combination of these and other factors when determining the discount rate. These inputs are then used to estimate the discounted cash flows from the portfolio using the ClariNet LS probabilistic and stochastic portfolio pricing model from ClearLife Limited, which estimates the expected cash flows using various mortality probabilities and scenarios. The valuation process includes a review by senior management as of each quarterly valuation date. We also engage ClearLife Limited to independently verify the accuracy of the valuations using the inputs we provide on a quarterly basis. A copy of a letter documenting the ClariNet LS calculation is filed as Exhibit 99.1 to this report. The following table reconciles the beginning and ending fair value of our Level 3 investments in our portfolio of life insurance policies for the periods ended December Years Ended 2018 2017 Beginning balance $ 650,527,000 $ 511,192,000 Purchases 128,502,000 88,644,000 Maturities (initial cost basis) (20,763,000 ) (16,070,000 ) Net change in fair value (10,344,000 ) 66,761,000 Ending balance $ 747,922,000 $ 650,527,000 Historically, for life insurance policies with face amounts greater than $1 With the adoption of the Longest Life Expectancy method (as described under “Fair Value Components — Life Expectancies”), we discontinued the practice of obtaining updated life expectancy reports (or updating specific life expectancies in any manner) except as may be required by lenders to comply with existing and future covenants within credit facilities. This change is being accounted for as a change in accounting estimate and affects current and future periods. To the extent such updated life expectancy reports are available, we do not expect to incorporate these life expectancy reports into our revised valuation methodology; however, we will monitor this data to determine over time if there exists any additive predictive value in relation to the basis of its mortality projections. The following table summarizes the inputs utilized in estimating the fair value of our portfolio of life insurance policies: As of As of Weighted-average age of insured, years* 82.1 81.7 Weighted-average life expectancy, months* (1) 93.2 82.4 Average face amount per policy $ 1,775,000 $ 1,867,000 Discount rate 8.25 % 10.45 % ____________ * Weighted -average (1) Increase primarily due to the adoption of the Longest Life Expectancy methodology. Life expectancy estimates and market discount rates for a portfolio of life insurance policies are inherently uncertain and the effect of changes in estimates may be significant. For example, if the life expectancy estimates were increased or decreased by four and eight months on each outstanding policy, and the discount rates were increased or decreased by 1% and 2%, with all other variables held constant, the fair value of our investment in life insurance policies would increase or decrease as summarized below: Change in Fair Value of the Investment in Life Insurance Policies Change in Life Expectancy Estimates minus 8 months minus 4 months plus 4 months plus 8 months December 31, 2018 $ 113,410,000 $ 57,611,000 $ (55,470,000 ) $ (110,473,000 ) December 31, 2017 $ 86,391,000 $ 42,886,000 $ (42,481,000 ) $ (84,238,000 ) Change in Discount Rate minus 2% minus 1% plus 1% plus 2% December 31, 2018 $ 95,747,000 $ 45,440,000 $ (41,179,000 ) $ (78,615,000 ) December 31, 2017 $ 68,117,000 $ 32,587,000 $ (29,964,000 ) $ (57,583,000 ) Other Fair Value Considerations The carrying value of policy benefit receivables, prepaid expenses, accounts payable and accrued expenses approximate fair value due to their short -term -based -average The Commercial Loan receivable from BEN LP has a below -market -half -half The carrying value of the amended and restated senior credit facility with LNV Corporation reflects interest charged at 12 -month GWG MCA Capital, Inc. (“GWG MCA”) participates in the merchant cash advance industry by directly advancing sums to merchants and lending money, on a secured basis, to companies that advance sums to merchants. Each quarter, we review the carrying value of these cash advances, determine if an impairment exists and establish or adjust an allowance for loan loss as necessary. At December Certain assets are subject to periodic impairment testing by comparing the respective carrying value of the asset to its estimated fair value. In the event we determine these assets to be impaired, we would recognize an impairment loss equal to the amount by which the carrying value of the impaired asset exceeds its estimated fair value. These periodic impairment tests utilize company -specific The following table summarizes outstanding common stock warrants (discussed in Note 17) as of December Month issued Warrants issued Fair value Risk free rate Volatility Term September 2014 16,000 $ 1.26 1.85 % 17.03 % 5 years 16,000 |
Financing Receivable from Affil
Financing Receivable from Affiliate | 12 Months Ended |
Dec. 31, 2018 | |
Financing Receivable from Affiliate [Abstract] | |
Financing Receivable from Affiliate | (5) Financing Receivable from Affiliate Commercial Loan On August -year -B Repayment of the Commercial Loan is subordinated in right of payment to other Beneficient obligations, including (i ) B The Commercial Loan Agreement contains negative covenants that limit or restrict, subject to certain exceptions, the incurrence of liens and indebtedness by Beneficient, fundamental changes to its business and transactions with affiliates. The Commercial Loan Agreement also contains customary affirmative covenants, including, but not limited to, preservation of corporate existence, compliance with applicable law, payment of taxes, notice of material events, financial reporting and keeping of proper books of record and account. The Commercial Loan Agreement includes customary events of default, including, but not limited to, non - payment -acceleration The principal amount of the Commercial Loan bears interest at 5.00% per year from the Final Closing Date. One -half -half C 80 Business Combinations he lo In accordance with the Supplemental Indenture issuing the Seller Trust L Bonds, upon a redemption event or at the maturity date of the Seller Trust L Bonds, the Company, at its option, may use the outstanding principal amount of the Commercial Loan, and accrued and unpaid interest thereon, as repayment consideration of the Seller Trust L Bonds (See Note 11). Exchangeable Note On August The following table summarizes outstanding principal, discount and accrued interest balances of the Commercial Loan receivable: As of As of Commercial Loan receivable – principal $ 192,508,000 $ — Discount on Commercial Loan receivable (7,846,000 ) — Accrued interest receivable on Commercial Loan 107,000 — Financing receivable from affiliate $ 184,769,000 $ — |
Equity Method Investment
Equity Method Investment | 12 Months Ended |
Dec. 31, 2018 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Equity Method Investment | (6) Equity Method Investment During 2018, in connection with the Initial Transfer and Final Closing of the Exchange Transaction, we acquired 40.5 In accordance with ASC 810, Consolidation, We have determined that Beneficient is a VIE but that we are not the primary beneficiary of the investment. GWG does not have the power to direct any activities of Beneficient, or any of its related parties, that most significantly impact Beneficient’s economic performance. GWG has no board representation at BEN LP or at its general partner. The general partner is exclusively assigned all management powers over the business and affairs of Beneficient, and the limited partners do not have the ability to remove the general partner. BEN LP’s limited partnership agreement specifies that any person or group that acquires beneficial ownership of 20% or more of BEN LP’s common limited partnership units (including us) forfeits all voting rights associated with all of its common units and such common units may not be voted on any matter. Therefore, we do not consolidate the results of Beneficient in our consolidated financial statements. The Company’s exposure to risk of loss in Beneficient is generally limited to its investment in the common units of BEN LP, its financing receivable from Beneficient and its equity security investment in the Option Agreement to purchase additional common units of BEN LP. The following table shows the classification, carrying value and maximum exposure to loss with respect to the Company’s investments in Beneficient at December Carrying Maximum Financing receivable from affiliate $ 184,769,000 $ 184,769,000 Equity method investment 360,842,000 360,842,000 Other asset 38,562,000 38,562,000 Total assets $ 584,173,000 $ 584,173,000 Our investment is presented in equity method investment on our consolidated balance sheets. Our proportionate share of earnings or losses from our investee is recognized in earnings from equity method investment in our consolidated statements of operations. We record our share of the income or loss of Beneficient on a one -quarter Financial information pertaining to Beneficient is summarized in the table below: August 10 to Total revenues $ 18,409,000 Net income 8,291,000 Net income attributable to Beneficient common unitholders 129,000 Net income attributable to GWG (1) 18,000 ____________ (1) Represents our portion of net earnings from August 10, 2018 (Initial Transfer Date) to September 30, 2018. Due to our accounting election to record the equity earnings of Beneficient on a one quarter -lag N L A substantial majority of the net assets of Beneficient are currently represented by intangible assets and goodwill. As such, we believe substantially all of our equity method investment is characterized as equity method goodwill as of December -than-temporary Beneficient has certain share classes outstanding other than and senior to BEN LP common units, namely Class S Ordinary units and Non -Participating |
Credit Facility - Autobahn Fund
Credit Facility - Autobahn Funding Company LLC | 12 Months Ended |
Dec. 31, 2018 | |
Line of Credit Facility [Abstract] | |
Credit Facility - Autobahn Funding Company LLC | (7) Credit Facility — Autobahn Funding Company LLC On September 12, 2017, we terminated our $105 million senior credit facility with Autobahn Funding Company LLC, the Credit and Security Agreement governing the facility as well as the related pledge agreement, pursuant to which our obligations under the facility were secured. We paid off in full all obligations under the facility on September 14, 2016. |
Credit Facility - LNV Corporati
Credit Facility - LNV Corporation | 12 Months Ended |
Dec. 31, 2018 | |
Line of Credit Facility [Abstract] | |
Credit Facility - LNV Corporation | (8) Credit Facility — LNV Corporation On September 27, 2017, we entered into an amended and restated senior credit facility with LNV Corporation as lender through our subsidiary GWG DLP Funding IV, LLC (“DLP IV”). The amended and restated senior credit facility with LNV Corporation makes available a total of up to $300,000,000 in credit with a maturity date of September 27, 2029. Additional advances are available under the amended and restated senior credit facility with LNV Corporation at the LIBOR rate as herein defined. Advances are available as the result of additional borrowing base capacity, created as the premiums and servicing costs of pledged life insurance policies become due. Interest will accrue on amounts borrowed under the amended and restated senior credit facility with LNV Corporation at an annual interest rate, determined as of each date of borrowing or quarterly if there is no borrowing, equal to (a) the greater of 12 -month -half As of December The amended and restated senior credit facility with LNV Corporation has certain financial and nonfinancial covenants, and we were in compliance with these covenants at December |
Series I Secured Notes
Series I Secured Notes | 12 Months Ended |
Dec. 31, 2018 | |
Debt Disclosure [Abstract] | |
Series I Secured Notes | (9) Series I Secured Notes Series I Secured Notes were legal obligations of GWG Life and were privately offered and sold from August 2009 through June 2011. On September 8, 2017, we redeemed all outstanding Series I Secured Notes for an aggregate of $6,815,000, and terminated all related agreements. |
L Bonds
L Bonds | 12 Months Ended |
Dec. 31, 2018 | |
L Bonds [Abstract] | |
L Bonds | (10) L Bonds We began publicly offering and selling L Bonds in January 2012 under the name “Renewable Secured Debentures”. These debt securities were re -named -on -financial We publicly offer and sell L Bonds under a registration statement declared effective by the SEC and have issued Seller Trust L Bonds under a Supplemental Indenture, as described in Note 11. We have temporarily suspended the offering of our L Bonds as a result of our delay in filing certain periodic reports with the SEC, including this report. We anticipate recommencing our L Bond offering early in the third quarter of 2019, however there is no assurance that we will be able to do so within that timeframe. The L Bonds and Seller Trust L Bonds are secured by substantially all the assets of GWG Holdings, a pledge of all our common stock held by Beneficient Capital Company, L.L.C. (“BCC”), an indirect subsidiary of BEN LP and AltiVerse Capital Markets, L.L.C. (“AltiVerse”) (which together represent approximately 12% of our outstanding common stock), and by a guarantee and corresponding grant of a security interest in substantially all the assets of GWG Life (1) (2) (1) The Seller Trust L Bonds (see Note 11) are senior secured obligations of GWG, ranking junior to all senior debt of GWG (see Note 8) and pari passu in right of payment and in respect of collateral with all L Bonds of GWG. Payments under the Seller Trust L Bonds are guaranteed by GWG Life. The assets exchanged in the Exchange Transaction are available as collateral for all holders of the L Bonds and Seller Trust L Bonds. Specifically, the common units of BEN LP and the Option Agreement are held by GWG Holdings and the Commercial Loan is held by GWG Life. (2) The terms of our amended and restated senior credit facility with LNV Corporation require that we maintain a significant excess of pledged collateral value over the amount outstanding on the amended and restated senior credit facility at any given time. Any excess after satisfying all amounts owing under our amended and restated senior credit facility with LNV Corporation is available as collateral for the L Bonds (including the Seller Trust L Bonds). The bonds have renewal features under which we may elect to permit their renewal, subject to the right of bondholders to elect to receive payment at maturity. Interest is payable monthly or annually depending on the election of the investor. At December -average Future contractual maturities of L Bonds, and future amortization of their deferred financing costs, at December Years Ending December 31, Contractual Unamortized 2019 $ 144,627,000 $ 1,548,000 2020 160,035,000 4,741,000 2021 117,230,000 4,898,000 2022 43,794,000 1,885,000 2023 73,646,000 4,013,000 2024 33,782,000 1,765,000 Thereafter 89,038,000 5,366,000 $ 662,152,000 $ 24,216,000 |
Seller Trust L Bonds
Seller Trust L Bonds | 12 Months Ended |
Dec. 31, 2018 | |
Seller Trust L Bonds [Abstract] | |
Seller Trust L Bonds | (11) Seller Trust L Bonds On August 10, 2018, in connection with the Initial Transfer of the Exchange Transaction, GWG Holdings, GWG Life and Bank of Utah, as trustee, entered into a Supplemental Indenture (the “Supplemental Indenture”) to the Amended and Restated Indenture. GWG Holdings entered into the Supplemental Indenture to add and modify certain provisions of the Amended and Restated Indenture necessary to provide for the issuance of a new class of securities titled “Seller Trust L Bonds”. The maturity date of the Seller Trust L Bonds is August 9, 2023. The Seller Trust L Bonds bear interest at 7.50% per year. Interest is payable monthly in cash. GWG issued Seller Trust L Bonds in the amount of $366,892,000 to the various related trusts (the “Seller Trusts”) in connection with the Exchange Transaction on August 10, 2018. After the second anniversary of the Final Closing, the holders of the Seller Trust L Bonds will have the right to cause GWG to repurchase, in whole but not in part, the Seller Trust L Bonds held by such holder. The repurchase may be paid, at GWG’s option, in the form of cash, a pro rata portion of (i) the outstanding principal amount and accrued and unpaid interest under the Commercial Loan Agreement and (ii) BEN LP common units, or a combination of cash and such property. Our L Bonds are offered and sold under a registration statement declared effective by the SEC, as described in Note 10 and we have issued Seller Trust L Bonds under a Supplemental Indenture. We have temporarily suspended the offering of our L Bonds as a result of our delay in filing certain periodic reports with the SEC, including this report. We anticipate recommencing our L Bond offering early in the third quarter of 2019, however there is no assurance that we will be able to do so within that timeframe. The L Bonds and Seller Trust L Bonds are secured by substantially all the assets of GWG Holdings, a pledge of all our common stock held by BCC and AltiVerse (which together represent approximately 12% of our outstanding common stock), and by a guarantee and corresponding grant of a security interest in substantially all the assets of GWG Life (1) . As a guarantor, GWG Life has fully and unconditionally guaranteed the payment of principal and interest on the L Bonds and Seller Trust L Bonds. GWG Life’s equity in DLP IV (2) serves as collateral for our L Bond and Seller Trust L Bond obligations. Substantially all of our life insurance policies are held by DLP IV or GWG Life Trust. The policies held by DLP IV are not direct collateral for the L Bonds as such policies are pledged to the amended and restated senior credit facility with LNV Corporation. (1) The Seller Trust L Bonds are senior secured obligations of GWG, ranking junior to all senior debt of GWG (see Note 8) and pari passu in right of payment and in respect of collateral with all L Bonds of GWG (see Note 10). Payments under the Seller Trust L Bonds are guaranteed by GWG Life. The assets exchanged in the Initial Transfer are available as collateral for all holders of the L Bonds and Seller Trust L Bonds. Specifically, the common units of BEN LP and the Option Agreement are held by GWG Holdings and the Commercial Loan is held by GWG Life. (2) The terms of our amended and restated senior credit facility with LNV Corporation require that we maintain a significant excess of pledged collateral value over the amount outstanding on the amended and restated senior credit facility at any given time. Any excess after satisfying all amounts owing under our amended and restated senior credit facility with LNV Corporation is available as collateral for the L Bonds (including the Seller Trust L Bonds). The principal amount of Seller Trust L Bonds outstanding was $366,892,000 and $0 at December 31, 2018 and 2017, respectively. |
Series A Convertible Preferred
Series A Convertible Preferred Stock | 12 Months Ended |
Dec. 31, 2018 | |
Series A Convertible Preferred Stock [Abstract] | |
Series A Convertible Preferred Stock | (12) Series A Convertible Preferred Stock From July 2011 through September 2012, we privately offered shares of Series A Convertible Preferred Stock of GWG Holdings at $7.50 per share (the “Series A”). In the offering, we sold an aggregate of 3,278,000 shares for gross consideration of $24,582,000. Holders of Series A were entitled to cumulative dividends at the rate of 10% per annum, paid quarterly. The Series A were only redeemable at our option. On October 9, 2017 all shares of Series A were redeemed with a redemption payment equal to the sum of: (i) $8.25 per Series A share and (ii) all accrued but unpaid dividends. |
Redeemable Preferred Stock
Redeemable Preferred Stock | 12 Months Ended |
Dec. 31, 2018 | |
Redeemable Preferred Stock [Abstract] | |
Redeemable Preferred Stock | (13) Redeemable Preferred Stock On November 30, 2015, our public offering of up to 100,000 shares of RPS at $1,000 per share was declared effective. Holders of RPS are entitled to cumulative dividends at the rate of 7% per annum, paid monthly. Dividends on the RPS are recorded as a reduction to additional paid -in -in-capital The RPS ranks senior to our common stock and pari passu with our RPS 2 and entitles its holders to a liquidation preference equal to the stated value per share (i.e., $1,000) plus accrued but unpaid dividends. Holders of RPS may presently convert their RPS into our common stock at a conversion price equal to the volume -weighted Holders of RPS may request that we redeem their RPS at a price equal to their stated value plus accrued but unpaid dividends, less an applicable redemption fee, if any, as specified in the Certificate of Designation. Nevertheless, the Certificate of Designation for RPS permits us in our sole discretion to grant or decline redemption requests. Subject to certain restrictions and conditions, we may also redeem shares of RPS without a redemption fee upon a holder’s death, total disability or bankruptcy. In addition, after one year from the date of original issuance, we may, at our option, call and redeem shares of RPS at a price equal to their liquidation preference. In March 2017, we closed the RPS offering to additional investors having sold 99,127 shares of RPS for an aggregate gross consideration of $99,127,000 and incurred approximately $7,019,000 of related selling costs. At the time of its issuance, we determined that the RPS contained two embedded features: (1) optional redemption by the holder and (2) optional conversion by the holder. We determined that each of the embedded features met the definition of a derivative and that the RPS should be considered an equity host for the purposes of assessing the embedded derivatives for potential bifurcation. Based on our assessment under Accounting Standards Codification 470 “ Debt” |
Series 2 Redeemable Preferred S
Series 2 Redeemable Preferred Stock | 12 Months Ended |
Dec. 31, 2018 | |
Series 2 Redeemable Preferred Stock [Abstract] | |
Series 2 Redeemable Preferred Stock | (14) Series 2 Redeemable Preferred Stock On February 14, 2017, our public offering of up to 150,000 shares of RPS 2 at $1,000 per share was declared effective. Holders of RPS 2 are entitled to cumulative dividends at the rate of 7% per annum, paid monthly. Dividends on the RPS 2 are recorded as a reduction to additional paid -in -in The RPS 2 ranks senior to our common stock and pari passu with our RPS and entitles its holders to a liquidation preference equal to the stated value per share (i.e., $1,000) plus accrued but unpaid dividends. Holders of RPS 2 may, less an applicable conversion discount, if any, convert their RPS 2 into our common stock at a conversion price equal to the volume -weighted Holders of RPS 2 may request that we redeem their RPS 2 shares at a price equal to their liquidation preference, less an applicable redemption fee, if any, as specified in the Certificate of Designation. Nevertheless, the Certificate of Designation for RPS 2 permits us in our sole discretion to grant or decline requests for redemption. Subject to certain restrictions and conditions, we may also redeem shares of RPS 2 without a redemption fee upon a holder’s death, total disability or bankruptcy. In addition, we may, at our option, call and redeem shares of RPS 2 at a price equal to their liquidation preference (subject to a minimum redemption price, in the event of redemptions occurring less than one year after issuance, of 107% of the stated value of the shares being redeemed). In April 2018, we closed the RPS 2 offering to additional investors having sold 149,979 shares of RPS 2 for an aggregate gross consideration of $149,979,000 and incurred approximately $10,284,000 of related selling costs. At the time of its issuance, we determined that the RPS 2 contained two embedded features: (1) optional redemption by the holder; and (2) optional conversion by the holder. We determined that each of the embedded features met the definition of a derivative and that the RPS 2 should be considered an equity host for the purposes of assessing the embedded derivatives for potential bifurcation. Based on our assessment under ASC 470 we do not believe bifurcation of either the holder’s redemption or conversion feature is appropriate. |
Series B Convertible Preferred
Series B Convertible Preferred Stock | 12 Months Ended |
Dec. 31, 2018 | |
Equity [Abstract] | |
Series B Convertible Preferred Stock | (15) Series B Convertible Preferred Stock On August On December |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | (16) Income Taxes We had a current income tax liability of $0 as of both December Years Ended December 31, December 31, Statutory federal income tax (benefit) $ (25,085,000 ) $ (7,728,000 ) State income taxes (benefit), net of federal benefit (9,243,000 ) (1,433,000 ) Impact of change in enacted rate — 2,605,000 Change in valuation allowance 33,999,000 4,222,000 Other permanent differences 329,000 237,000 Total income tax expense (benefit) $ — $ (2,097,000 ) The current and deferred components of tax expense (benefit) were as follows: Years Ended December 31, December 31, Current income tax expense (benefit) $ — $ — Deferred income tax expense (benefit) — (2,097,000 ) Total income tax expense (benefit) $ — (2,097,000 ) The tax effects of temporary differences that give rise to deferred income taxes were as follows: As of As of Deferred tax assets: Note receivable from related party $ — $ 1,437,000 Net operating loss carryforwards 10,491,000 9,995,000 Other assets 29,996,000 1,724,000 Subtotal 40,487,000 13,156,000 Valuation allowance (40,385,000 ) (6,386,000 ) Deferred tax assets 102,000 6,770,000 Deferred tax liabilities: Investment in life insurance policies — (6,630,000 ) Other liabilities (102,000 ) (140,000 ) Net deferred tax asset (liability) $ — $ — At December -year is believed that a change in ownership for income tax purposes only has occurred as of December -ownership We provide for a valuation allowance when it is not considered "more likely than not" that our deferred tax assets will be realized. As of December On December -measured ASC 740 requires the reporting of certain tax positions that do not meet a threshold of "more -likely-than-not -likely-than-not Under our accounting policies, interest and penalties on unrecognized tax benefits, as well as interest received from favorable tax settlements are recognized as components of income tax expense. At December Our income tax returns for tax years ended December |
Common Stock
Common Stock | 12 Months Ended |
Dec. 31, 2018 | |
Equity [Abstract] | |
Common Stock | (17) Common Stock In September 2014, we consummated an initial public offering of our common stock resulting in the sale of 800,000 shares of common stock at $12.50 per share, and net proceeds of approximately $8.6 million after the payment of underwriting commissions, discounts and expense reimbursements. In connection with this offering, we listed our common stock on the Nasdaq Capital Market under the ticker symbol “GWGH.” In conjunction with the initial public offering, we issued warrants to purchase 16,000 shares of common stock at an exercise price of $15.63 per share. As of December 31, 2018, none of these warrants had been exercised. The remaining life of these warrants at December 31, 2018 was 0.75 years. On August 10, 2018, the Company declared a special dividend of $4.30 per share of common stock payable to shareholders of record on August 27, 2018. On December 28, 2018, the Series B converted into 5,000,000 shares of our common stock at a conversion price of $10.00 per share immediately following the Final Closing of the Exchange Transaction. On December 28, 2018, in connection with the Exchange Transaction, we issued 22,013,516 shares of common stock to the Seller Trusts at a market value of approximately $203.4 million in exchange for BEN LP common units. The shares were offered and sold in reliance upon the exemption from registration provided by Section 4(a)(2) under the Securities Act of 1933, as amended. The common shares issued to the Seller Trusts were initially subject to a Stockholders Agreement between GWG and the Seller Trusts, under which the Seller Trusts, as long as they own at least 10% of the voting shares of GWG, agree to vote their shares in proportion to the votes cast by all other voting securities of GWG. In addition, the Seller Trusts agree, for the period of one year after the Final Closing, not to seek or propose to influence or control the management, Board or policies of GWG. The Stockholders Agreement was terminated in connection with the closing of the Purchase and Contribution Transaction. In addition, GWG and the Seller Trusts entered into a registration rights agreement and an orderly marketing agreement. Under these agreements, GWG and the Seller Trusts agreed to take steps to allow for the orderly marketing and resale of the common shares issued to Seller Trusts as part of the Exchange Transaction, and Seller Trusts agreed to sell their common share of GWG only as permitted under these agreements. On November 15, 2018, the Company’s Board of Directors approved a stock repurchase program pursuant to which the Company was permitted, from time to time, purchase shares of its common stock for an aggregate purchase price not to exceed $1,500,000. Stock repurchases were able to be executed through various means, including, without limitation, open market transactions, privately negotiated transactions or otherwise. The stock repurchase program did not obligate the Company to purchase any shares, and expired on April 30, 2019. The following table includes information about the stock repurchase program for the year ended December 31, 2018: Monthly Period Number of Average Price Total Number Maximum December 2018 10,035 $ 6.82 10,035 $ 1,432,000 Total 10,035 $ 6.82 10,035 $ 1,432,000 (1) ____________ (1) The stock repurchase program expired on April 30, 2019. |
Stock Incentive Plan
Stock Incentive Plan | 12 Months Ended |
Dec. 31, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock Incentive Plan | (18) Stock Incentive Plan We adopted our 2013 Stock Incentive Plan in March 2013, as amended on June 1, 2015, May 5, 2017 and May 8, 2018. The Compensation Committee of our Board of Directors is responsible for the administration of the plan. Participants under the plan may be granted incentive stock options and non-statutory stock options; stock appreciation rights; stock awards; restricted stock; restricted stock units; and performance shares. Eligible participants include officers and employees of GWG Holdings and its subsidiaries, members of our Board of Directors, and consultants. Option awards generally expire 10 years from the date of grant. As of December 31, 2018, 6,000,000 of our common stock options are authorized under the plan, of which 2,662,097 shares were reserved for issuance under outstanding incentive awards and 3,337,903 shares remain available for future grants. Stock Options As of December 31, 2018, we had outstanding stock options for 1,398,000 shares of common stock to employees, officers, and directors under the plan. Options for 833,000 shares have vested and the remaining options are scheduled to vest over three years. The options were issued with an exercise price between $6.35 and $10.38 for those beneficially owning more than 10% of our common stock, and between $4.83 and $11.56 for all others, which is equal to the market price of the shares on the date of grant. The expected annualized volatility used in the Black-Scholes model valuation of options issued during the period ranged from 20.45% to 25.83%. The annual volatility rate is based on the standard deviation of the average continuously compounded daily changes of stock price of five selected companies. The risk free rate used in the Black-Scholes calculation ranged from 2.36% to 2.77%, and the expected term was six years. As of December 31, 2018, stock options for 732,000 shares had been forfeited and stock options for 724,000 shares had been exercised. The total intrinsic value of stock options exercised during 2018 was $1,922,000. The aggregate intrinsic value of stock options outstanding and exercisable at December 31, 2018 was $805,000 and $481,000, respectively. Outstanding stock options: Vested Unvested Total Balance as of December 31, 2016 738,065 844,334 1,582,399 Granted during the year 61,099 367,500 428,599 Vested during the year 327,061 (327,061 ) — Exercised during the year (126,498 ) — (126,498 ) Forfeited during the year (142,535 ) (105,017 ) (247,552 ) Balance as of December 31, 2017 857,192 779,756 1,636,948 Granted during the year 63,950 314,000 377,950 Vested during the year 503,503 (503,503 ) — Exercised during the year (569,864 ) — (569,864 ) Forfeited during the year (21,582 ) (25,501 ) (47,083 ) Balance as of December 31, 2018 833,199 564,752 1,397,951 As of December 31, 2018, unrecognized compensation expense related to unvested options is $1,109,000. We expect to recognize this compensation expense over the next three years ($651,000 in 2019, $324,000 in 2020, and $134,000 in 2021). Stock Appreciation Rights (SARs) As of December 31, 2018, we had outstanding SARs for 272,000 shares of the common stock to employees. The strike price of the SARs was between $6.75 and $10.38, which was equal to the market price of the common stock at the date of issuance. SARs vest over varying terms of up to three years. As of December 31, 2018, 118,000 of the SARs were vested and 146,000 have been exercised. On December 31, 2018, the market price of GWG’s common stock was $8.83. Outstanding SARs: Vested Unvested Total Balance as of December 31, 2016 106,608 133,127 239,735 Granted during the year 13,001 91,986 104,987 Vested during the year 69,444 (69,444 ) — Forfeited during the year — (1,750 ) (1,750 ) Balance as of December 31, 2017 189,053 153,919 342,972 Granted during the year 2,625 111,025 113,650 Vested during the year 71,785 (71,785 ) Exercised during the year (145,622 ) — (145,622 ) Forfeited during the year — (39,235 ) (39,235 ) Balance as of December 31, 2018 117,841 153,924 271,765 The liability for the SARs as of December 31, 2018 and December 31, 2017 was $349,000 and $551,000, respectively, and was recorded within other accrued expenses on the consolidated balance sheets. Remaining compensation expense is expected to be recognized over the next three years. Employee compensation and benefits expense for SARs of $264,000 and $547,000 was recorded for the years ended December 31, 2018 and 2017, respectively. Upon the exercise of SARs, the Company is obligated to make cash payment equal to the positive difference between the fair market value of the Company’s common stock on the date of exercise less the fair market value of the common stock on the date of grant. The following summarizes information concerning outstanding options and SARs issued under the 2013 Stock Incentive Plan: December 31, 2018 Outstanding Weighted- Weighted- Fair Value at Vested Stock Options 833,199 $ 8.88 5.95 $ 2.02 SARs 117,841 $ 8.88 5.02 $ 2.02 Total Vested 951,040 $ 8.88 5.83 $ 2.02 Unvested Stock Options 564,752 $ 9.15 7.88 $ 2.35 SARs 153,924 $ 8.37 5.98 $ 2.09 Total Unvested 718,676 $ 8.98 7.47 $ 2.30 December 31, 2017 Outstanding Weighted- Weighted-Average Fair Value at Vested Stock Options 857,192 $ 8.05 6.17 $ 1.76 SARs 189,053 $ 8.54 5.86 $ 1.90 Total Vested 1,046,245 $ 8.14 6.11 $ 1.78 Unvested Stock Options 779,756 $ 9.21 7.50 $ 2.17 SARs 153,919 $ 9.16 6.24 $ 2.02 Total Unvested 933,675 $ 9.21 7.30 $ 2.15 Restricted Stock Units A restricted stock unit (“RSU”) entitles the holder thereof to receive one share of our common stock upon vesting. As of December 31, 2018, we had outstanding RSUs for 53,403 shares of common stock held by employees under the plan, of which all have subsequently vested. In 2018, 34,496 shares of common stock were issued as a result of the vesting of 68,993 RSUs. |
Other Expenses
Other Expenses | 12 Months Ended |
Dec. 31, 2018 | |
Other Expenses [Abstract] | |
Other Expenses | (19) Other Expenses The components of other expenses in our consolidated statements of operations for the years ended December Years Ended December 31, 2018 2017 Contract Labor $ 1,453,000 $ 550,000 Marketing 1,856,000 2,226,000 Information Technology 1,578,000 1,555,000 Servicing and Facility Fees 1,782,000 1,226,000 Travel and Entertainment 892,000 1,047,000 Insurance and Regulatory 1,562,000 1,591,000 Charitable Contributions — 462,000 Bad Debt Expense 4,300,000 — General and Administrative 2,572,000 3,822,000 Total Other Expenses $ 15,995,000 $ 12,479,000 |
Net Loss Attributable to Common
Net Loss Attributable to Common Shareholders | 12 Months Ended |
Dec. 31, 2018 | |
Earnings Per Share [Abstract] | |
Net Loss Attributable to Common Shareholders | (20) Net Loss Attributable to Common Shareholders We have outstanding RPS and RPS 2 as described in Notes 13 and 14. RPS and RPS 2 are anti-dilutive to our net loss attributable to common shareholders calculation for the years ended December 31, 2018 and 2017. Our vested and unvested stock options and warrants are anti-dilutive for the years ended December 31, 2018 and 2017. |
Segment Reporting
Segment Reporting | 12 Months Ended |
Dec. 31, 2018 | |
Segment Reporting [Abstract] | |
Segment Reporting | (21) Segment Reporting GWG has two reportable segments consisting of Secondary Life Insurance and Investment in Beneficient. In addition, the Company reports certain of its results of operations in Corporate & Other. The Secondary Life Insurance segment seeks to earn non-correlated yield from our portfolio of life insurance policies. Our Investment in Beneficient segment consists of our investment in the common units of the BEN LP, which we account for using the equity method, and related assets and liabilities. BEN LP provides a variety of trust services, liquidity products and loans for alternative assets and illiquid investment funds, and other financial services to mid-to-high net worth individuals. The Corporate & Other category consists of unallocated corporate overhead and administrative costs and the operations of operating segments that do not meet the quantitative criteria to be separately reported. These segments are differentiated by the products and services they offer as well as by the information used by the Company’s chief operating decision maker to determine allocation of resources and assess performance. Earnings before taxes (“EBT”) is the measure of profitability used by management to assess performance of its segments and allocate resources. Segment EBT represents net income (loss) excluding income taxes and includes earnings from equity method investments. Equity method investments and related earnings are allocated to the Investment in Beneficient segment. Summarized financial information for the Company’s reportable segments is presented for the periods indicated: Revenue: Segment EBT: 2018 2017 2018 2017 Secondary Life Insurance $ (11,633,000 ) $ 62,674,000 $ (96,578,000 ) $ (3,433,000 ) Investment in Beneficient 10,655,000 — (106,000 ) — Corporate & Other 588,000 1,460,000 (22,767,000 ) (19,296,000 ) Total $ (390,000 ) $ 64,134,000 (119,451,000 ) (22,729,000 ) Income tax benefit — 2,097,000 Net Loss $ (119,451,000 ) $ (20,632,000 ) Interest Expense Interest Income 2018 2017 2018 2017 Secondary Life Insurance $ 69,357,000 $ 54,409,000 $ 2,182,000 $ 432,000 Investment in Beneficient 10,778,000 — 10,655,000 — Corporate & Other 1,000 10,000 189,000 554,000 Total $ 80,136,000 $ 54,419,000 $ 13,026,000 $ 986,000 Total Assets 2018 2017 Secondary Life Insurance $ 889,665,000 $ 814,231,000 Investment in Beneficient 584,173,000 — Corporate & Other 7,029,000 4,625,000 Total $ 1,480,867,000 $ 818,856,000 |
Commitments
Commitments | 12 Months Ended |
Dec. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments | (22) Commitments We are party to an office lease with U.S. Bank National Association as the landlord. On September 1, 2015, we entered into an amendment to our original lease that expanded the leased space to 17,687 square feet and extended the term through October 2025. Under the amended lease we are obligated to pay base rent plus common area maintenance and a share of building operating costs. Rent expenses under this agreement were $435,000 and $442,000 for the years ended December 31, 2018 and 2017, respectively. Minimum lease payments under the amended lease are as follows: 2019 275,000 2020 284,000 2021 293,000 2022 302,000 2023 311,000 Thereafter 593,000 $ 2,058,000 |
Contingencies
Contingencies | 12 Months Ended |
Dec. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Contingencies | (23) Contingencies Litigation — |
Guarantee of L Bonds and Seller
Guarantee of L Bonds and Seller Trust L Bonds | 12 Months Ended |
Dec. 31, 2018 | |
Guarantee of L Bonds [Abstract] | |
Guarantee of L Bonds and Seller Trust L Bonds | (24) Guarantee of L Bonds and Seller Trust L Bonds Our L Bonds are offered and sold under a registration statement declared effective by the SEC, as described in Note 10, and we have issued Seller Trust L Bonds under a Supplemental Indenture, as described in Note 11. The L Bonds and Seller Trust L Bonds are secured by substantially all the assets of GWG Holdings, a pledge of all our common stock held by BCC and AltiVerse (which together represent approximately 12% of our outstanding common stock), and by a guarantee and corresponding grant of a security interest in substantially all the assets of GWG Life (1) . As a guarantor, GWG Life has fully and unconditionally guaranteed the payment of principal and interest on the L Bonds and Seller Trust L Bonds. GWG Life’s equity in DLP IV (2) serves as collateral for our L Bond and Seller Trust L Bond obligations. Substantially all of our life insurance policies are held by DLP IV or GWG Life Trust (“the Trust”). The policies held by DLP IV are not direct collateral for the L Bonds as such policies are pledged to the amended and restated senior credit facility with LNV Corporation. (1) The Seller Trust L Bonds are senior secured obligations of GWG, ranking junior to all senior debt of GWG (see Note 8), and pari passu in right of payment and in respect of collateral with all L Bonds of GWG (see Note 10). Payments under the Seller Trust L Bonds are guaranteed by GWG Life. The assets exchanged in the in connection with the Beneficent transaction are available as collateral for all holders of the L Bonds and Seller Trust L Bonds. Specifically, the common units of BEN LP are held by GWG Holdings and the Commercial Loan is held by GWG Life. (2) The terms of our amended and restated senior credit facility with LNV Corporation require that we maintain a significant excess of pledged collateral value over the amount outstanding on the amended and restated senior credit facility at any given time. Any excess after satisfying all amounts owing under our amended and restated senior credit facility with LNV Corporation is available as collateral for the L Bonds (including the Seller Trust L Bonds). The following represents consolidating financial information as of December 31, 2018 and December 31, 2017, with respect to the financial position, and as of December 31, 2018 and 2017, with respect to results of operations and cash flows of GWG Holdings and its subsidiaries. The parent column presents the financial information of GWG Holdings, the primary obligor for the L Bonds and Seller Trust L Bonds. The guarantor subsidiary column presents the financial information of GWG Life, the guarantor subsidiary of the L Bonds and Seller Trust L Bonds, presenting its investment in DLP IV and the Trust under the equity method. The non-guarantor subsidiaries column presents the financial information of all non-guarantor subsidiaries, including DLP IV and the Trust. Consolidating Balance Sheets December 31, 2018 Parent Guarantor Non-Guarantor Eliminations Consolidated ASSETS Cash and cash equivalents $ 113,293,682 $ 232,387 $ 1,061,015 $ — $ 114,587,084 Restricted cash — 7,217,194 3,631,932 — 10,849,126 Investment in life insurance policies, at fair value — 92,336,494 655,585,971 — 747,922,465 Life insurance policy benefits receivable — 5,000,000 11,460,687 — 16,460,687 Financing receivable from affiliate — 184,768,874 — — 184,768,874 Equity method investment 360,841,651 — — — 360,841,651 Other assets 42,944,402 1,730,581 762,181 — 45,437,164 Investment in subsidiaries 799,182,251 510,865,003 — (1,310,047,254 ) — TOTAL ASSETS $ 1,316,261,986 $ 802,150,533 $ 672,501,786 $ (1,310,047,254 ) $ 1,480,867,051 LIABILITIES & STOCKHOLDERS’ EQUITY LIABILITIES Senior credit facility with LNV Corporation $ — $ — $ 148,977,596 $ — $ 148,977,596 L Bonds 651,402,663 — — — 651,402,663 Seller Trust L Bonds 366,891,940 — — — 366,891,940 Accounts payable 1,126,327 1,674,494 6,475,686 — 9,276,507 Interest and dividends payable 14,047,248 — 4,508,045 — 18,555,293 Other accrued expenses 1,735,926 1,593,108 1,376,136 — 4,705,170 TOTAL LIABILITIES 1,035,204,104 3,267,602 161,337,463 — 1,199,809,169 STOCKHOLDERS’ EQUITY Member capital — 798,882,931 511,164,323 (1,310,047,254 ) — Redeemable preferred stock and Series 2 redeemable preferred stock 215,973,039 — — — 215,973,039 Common stock 33,018 — — — 33,018 Additional paid-in-capital 249,662,168 — — — 249,662,168 Accumulated deficit (184,610,343 ) — — — (184,610,343 ) TOTAL STOCKHOLDERS’ EQUITY 281,057,882 798,882,931 511,164,323 (1,310,047,254 ) 281,057,882 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 1,316,261,986 $ 802,150,533 $ 672,501,786 $ (1,310,047,254 ) $ 1,480,867,051 December 31, 2017 Parent Guarantor Non-Guarantor Eliminations Consolidated ASSETS Cash and cash equivalents $ 111,952,829 $ 1,486,623 $ 982,039 $ — $ 114,421,491 Restricted cash — 9,367,410 18,982,275 — 28,349,685 Investment in life insurance policies, at fair value — 51,093,362 599,433,991 — 650,527,353 Life insurance policy benefits receivable — 1,500,000 15,158,761 — 16,658,761 Other assets 1,912,203 1,986,312 5,000,369 — 8,898,884 Investment in subsidiaries 480,659,789 415,235,212 — (895,895,001 ) — TOTAL ASSETS $ 594,524,821 $ 480,668,919 $ 639,557,435 $ (895,895,001 ) $ 818,856,174 LIABILITIES & STOCKHOLDERS’ EQUITY LIABILITIES Amended and Restated Senior credit facility with LNV Corporation $ — $ — $ 212,238,192 $ — $ 212,238,192 L Bonds 447,393,568 — — — 447,393,568 Accounts payable 1,434,623 844,899 4,114,917 — 6,394,439 Interest and dividends payable 10,296,584 — 5,130,925 — 15,427,509 Other accrued expenses 1,728,303 1,610,773 391,647 — 3,730,723 TOTAL LIABILITIES 460,853,078 2,455,672 221,875,681 — 685,184,431 STOCKHOLDERS’ EQUITY Member capital — 478,213,247 417,681,754 (895,895,001 ) — Redeemable preferred stock and Series 2 redeemable preferred stock 173,115,447 — — — 173,115,447 Common stock 5,813 — — — 5,813 Accumulated deficit (39,449,517 ) — — — (39,449,517 ) TOTAL STOCKHOLDERS’ EQUITY 133,671,743 478,213,247 417,681,754 (895,895,001 ) 133,671,743 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 594,524,821 $ 480,668,919 $ 639,557,435 $ (895,895,001 ) $ 818,856,174 Consolidating Statements of Operations For the year ended December 31, 2018 Parent Guarantor Non-Guarantor Eliminations Consolidated REVENUE Gain on life insurance policies, net $ — $ 8,341,206 $ (22,445,778 ) $ — $ (14,104,572 ) Interest and other income 8,585,681 4,278,809 849,791 — 13,714,281 TOTAL REVENUE 8,585,681 12,620,015 (21,595,987 ) — (390,291) EXPENSES Interest expense 59,111,989 — 21,023,994 — 80,135,983 Employee compensation and benefits 9,979,989 5,741,776 1,685,217 — 17,406,982 Legal and professional fees 1,795,094 863,851 2,882,232 — 5,541,177 Other expenses 6,907,502 1,994,807 7,092,178 — 15,994,487 TOTAL EXPENSES 77,794,574 8,600,434 32,683,621 — 119,078,629 INCOME (LOSS) BEFORE EQUITY IN INCOME OF SUBSIDIARIES (69,208,893 ) 4,019,581 (54,279,608 ) — (119,468,920 ) EQUITY IN INCOME OF SUBSIDIARIES (50,260,027 ) (48,665,540 ) — 98,925,567 — NET INCOME (LOSS) BEFORE INCOME TAXES (119,468,920 ) (44,645,959 ) (54,279,608 ) 98,925,567 (119,468,920 ) INCOME TAX EXPENSE — — — — — NET INCOME (LOSS) BEFORE EARNINGS FROM EQUITY METHOD INVESTMENT (119,468,920 ) (44,645,959 ) (54,279,608 ) 98,925,567 (119,468,920 ) Earnings from equity method investment 17,507 — — — 17,507 NET INCOME (LOSS) (119,451,413 ) (44,645,959 ) (54,279,608 ) 98,925,567 (119,451,413 ) Preferred stock dividends 16,662,731 — — — 16,662,731 NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS $ (136,114,144 ) $ (44,645,959 ) $ (54,279,608 ) $ 98,925,567 $ (136,114,144 ) For the year ended December 31, 2017 Parent Guarantor Non-Guarantor Eliminations Consolidated REVENUE Gain on life insurance policies, net $ — $ 6,979,773 $ 55,134,630 $ — $ 62,114,403 Interest and other income 244,202 496,886 1,753,798 (475,371 ) 2,019,515 TOTAL REVENUE 244,202 7,476,659 56,888,428 (475,371 ) 64,133,918 EXPENSES Interest expense 37,754,984 930,837 15,813,944 (80,321 ) 54,419,444 Employee compensation and benefits 9,043,509 5,310,498 515,742 — 14,869,749 Legal and professional fees 1,937,714 962,778 2,195,151 — 5,095,643 Other expenses 7,058,209 2,715,374 3,100,143 (395,050 ) 12,478,676 TOTAL EXPENSES 55,794,416 9,919,487 21,624,980 (475,371 ) 86,863,512 INCOME (LOSS) BEFORE EQUITY IN INCOME OF SUBSIDIARIES (55,550,214 ) (2,442,828 ) 35,263,448 — (22,729,594 ) EQUITY IN INCOME OF SUBSIDIARIES 32,820,620 38,392,230 — (71,212,850 ) — NET INCOME (LOSS) BEFORE INCOME TAXES (22,729,594 ) 35,949,402 35,263,448 (71,212,850 ) (22,729,594 ) INCOME TAX BENEFIT (2,097,371 ) — — — (2,097,371 ) NET INCOME (LOSS) (20,632,223 ) 35,949,402 35,263,448 (71,212,850 ) (20,632,223 ) Preferred stock dividends 12,702,341 — — — 12,702,341 NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS $ (33,334,564 ) $ 35,949,402 $ 35,263,448 $ (71,212,850 ) $ (33,334,564 ) Consolidating Statements of Cash Flows For the year ended December 31, 2018 Parent Guarantor Non-Guarantor Eliminations Consolidated CASH FLOWS FROM OPERATING ACTIVITIES Net income (loss) $ (119,451,413 ) $ (44,645,959 ) $ (54,279,608 ) $ 98,925,567 $ (119,451,413 ) Adjustments to reconcile net income (loss) to net cash flows used in operating activities: Equity of subsidiaries 50,260,028 48,665,539 — (98,925,567 ) — Change in fair value of life insurance policies — (4,262,774 ) 14,606,803 — 10,344,029 Amortization of deferred financing and issuance costs 8,981,935 — 1,055,020 — 10,036,955 Amortization of discount or premium on financing receivables 628,528 (642,481 ) — — (13,953 ) Provision for uncollectible policy benefit receivable — — 4,300,000 — 4,300,000 Earnings from equity method investment (17,507 ) (17,507 ) Stock-based compensation 2,182,125 — — — 2,182,125 (Increase) decrease in operating assets: Life insurance policy benefits receivable — (3,500,000 ) (601,926 ) — (4,101,926 ) Interest receivable added to loan principal (7,045,791 ) (3,487,841 ) — — (10,533,632 ) Other assets (188,366,280 ) (144,146,549 ) 4,371,666 332,546,217 4,405,054 Increase (decrease) in operating liabilities: Accounts payable (308,295 ) 829,595 2,360,769 — 2,882,069 Interest and dividends payable 4,025,326 — (756,357 ) 3,268,969 Other accrued expenses 253,353 (17,665 ) 984,488 — 1,220,176 NET CASH FLOWS USED IN OPERATING ACTIVITIES (248,857,991 ) (151,208,135 ) (27,959,145 ) 332,546,217 (95,479,054 ) CASH FLOWS FROM INVESTING ACTIVITIES Investment in life insurance policies — (41,404,136 ) (87,098,518 ) — (128,502,654 ) Carrying value of matured life insurance policies — 4,423,779 16,339,737 — 20,763,516 Equity investment acquired (3,204,016 ) — — — (3,204,016 ) Other investments acquired (3,037,234 ) — — — (3,037,234 ) NET CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES (6,241,250 ) (36,980,357 ) (70,758,781 ) — (113,980,388 ) CASH FLOWS FROM FINANCING ACTIVITIES Net borrowings on (repayments of) senior debt — — (64,315,618 ) — (64,315,618 ) Proceeds from issuance of L Bonds 263,964,554 — — — 263,964,554 Payments for issuance of L Bonds (17,379,101 ) — — — (17,379,101 ) Payments for redemption of L Bonds (48,026,551 ) — — — (48,026,551 ) Issuance of common stock 614,193 — — — 614,193 Proceeds from issuance of convertible preferred stock 50,000,000 — — — 50,000,000 Proceeds from issuance of redeemable preferred stock 56,238,128 — — — 56,238,128 Payments for issuance of redeemable preferred stock (4,142,294 ) — — — (4,142,294 ) Payments for redemption of redeemable preferred stock (2,456,692 ) — — — (2,456,692 ) Common stock dividends (25,709,412 ) — — — (25,709,412 ) Preferred stock dividends (16,662,731 ) — — — (16,662,731 ) Issuance of member capital — 184,784,040 147,762,177 (332,546,217 ) — NET CASH FLOWS PROVIDED BY FINANCING ACTIVITIES 256,440,094 184,784,040 83,446,559 (332,546,217 ) 192,124,476 NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH 1,340,853 (3,404,452 ) (15,271,367 ) — (17,334,966 ) CASH, CASH EQUIVALENTS AND RESTRICTED CASH BEGINNING OF THE PERIOD 111,952,829 10,854,033 19,964,314 — 142,771,176 END OF THE PERIOD $ 113,293,682 $ 7,449,581 $ 4,692,947 $ — $ 125,436,210 For the year ended December 31, 2017 Parent Guarantor Non-Guarantor Eliminations Consolidated CASH FLOWS FROM OPERATING ACTIVITIES Net income (loss) $ (20,632,223 ) $ 35,949,402 $ 35,263,448 $ (71,212,850 ) $ (20,632,223 ) Adjustments to reconcile net income (loss) to net cash flows used in operating activities: Equity of subsidiaries (32,820,620 ) (38,392,230 ) — 71,212,850 — Change in fair value of life insurance policies — (7,746,744 ) (59,014,067 ) — (66,760,811 ) Amortization of deferred financing and issuance costs 6,939,841 208,829 1,632,177 — 8,780,847 Stock-based compensation 1,424,625 1,424,625 Deferred income taxes (2,097,371 ) — — — (2,097,371 ) Preferred stock issued in lieu of cash dividends 498,659 498,659 (Increase) decrease in operating assets: Life insurance policy benefits receivable — (1,500,000 ) (9,813,761 ) — (11,313,761 ) Other assets (15,870,956 ) (24,497,313 ) (1,084,860 ) 42,435,842 982,713 Increase (decrease) in operating liabilities: Accounts payable 581,153 113,202 3,473,373 — 4,167,728 Interest and dividends payable 3,771,709 (3,743,277 ) 2,680,191 — 2,708,623 Other accrued expenses 278,000 1,066,743 (146,546) — 1,198,197 NET CASH FLOWS USED IN OPERATING ACTIVITIES (57,927,183 ) (38,541,388 ) (27,010,045 ) 42,435,842 (81,042,774 ) CASH FLOWS FROM INVESTING ACTIVITIES Investment in life insurance policies — (3,022,439 ) (85,621,380 ) — (88,643,819 ) Carrying value of matured life insurance policies — 2,091,713 13,977,919 — 16,069,632 NET CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES — (930,726 ) (71,643,461 ) — (72,574,187 ) CASH FLOWS FROM FINANCING ACTIVITIES Net borrowings on (repayments of) senior debt — — 59,799,649 — 59,799,649 Payments for issuance of senior debt — (1,076,118 ) (3,434,270 ) — (4,510,388 ) Payments for redemption of Series I Secured Notes — (16,613,667 ) — — (16,613,667 ) Proceeds from issuance of L Bonds 131,796,220 — — — 131,796,220 Payments for issuance of L Bonds (10,896,925 ) — — — (10,896,925 ) Payments for redemption of L Bonds (60,848,460 ) — — — (60,848,460 ) Redemption of common stock (1,603,560 ) — — — (1,603,560 ) Proceeds from issuance of redeemable preferred stock 127,279,847 — — — 127,279,847 Payments for issuance of redeemable preferred stock (9,027,190 ) — — — (9,027,190 ) Payments for redemption of redeemable preferred stock (22,598,626 ) — — — (22,598,626 ) Preferred stock dividends (12,702,341 ) — — — (12,702,341 ) Issuance of member capital — 16,537,331 25,898,511 (42,435,842 ) — NET CASH FLOWS PROVIDED BY FINANCING ACTIVITIES 141,398,965 (1,152,454 ) 82,263,890 (42,435,842 ) 180,074,559 NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH 83,471,782 (40,624,568 ) (16,389,616 ) — 26,457,598 CASH, CASH EQUIVALENTS AND RESTRICTED CASH BEGINNING OF THE PERIOD 28,481,047 51,478,601 36,353,930 — 116,313,578 END OF THE PERIOD $ 111,952,829 $ 10,854,033 $ 19,964,314 $ — $ 142,771,176 |
Concentration
Concentration | 12 Months Ended |
Dec. 31, 2018 | |
Risks and Uncertainties [Abstract] | |
Concentration | (25) Concentration We mostly purchase life insurance policies written by life insurance companies having investment -grade Life Insurance Company December 31, December 31, John Hancock 13.71 % 15.57 % Lincoln National 11.33 % 10.80 % AXA Equitable 10.83 % 11.88 % The following summarizes the number of insurance policies held in specific states exceeding 10% of the total face value held by us: State of Residence December 31, December 31, California 18.02 % 18.60 % Florida 15.34 % 20.16 % During 2018, in connection with the Exchange Transaction, the Company (i) acquired a limited partnership investment in the common units of BEN LP, (ii) entered into a Commercial Loan with BEN LP as borrower, and (iii) received an Option Agreement to acquire additional common units of BEN LP. The total carrying value of these investments at December |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events | (26) Subsequent Events Subsequent to December Subsequent to December On April The closing of the Purchase and Contribution Transaction occurred on April • • • • • • • • • On April Employment Agreement with Murray T. Holland On April -renewal Under the employment agreement, Mr. If Mr. -rated Performance Share Unit Agreement with Murray T. Holland On May -in-Control ) M r c -K ) wh The PSUs are subject to forfeiture until they vest. If Mr. If a “Sale Transaction,” as defined in the Company’s 2013 Stock Incentive Plan, occurs during the performance period, Mr. If a Change -in-Control -in-Control -in-Control -in-Control -in-Control -in-Control -tax LiquidTrust Promissory Note On May -owned -1 -2 -5 -7 -8 -9 The Borrowers are common law trusts established as part of alternative asset financings extended by a subsidiary of BEN LP, of which the Company owns approximately 90% of the issued and outstanding common units of BEN LP. Although each Borrower is allocated a portion of the Loan equal to approximately 16.7% of the aggregate outstanding principal of the Loan, the Loan constitutes the joint and several obligations of the Borrowers. Proceeds of the Loan are to be used primarily to further Beneficient’s diversification into alternative assets and ancillary businesses by positioning Beneficient’s balance sheet, working capital and liquidity profile to satisfy audit and anticipated State of Texas regulatory requirements. An initial advance in the principal amount of $50,000,000 was funded on June The Loan is unsecured and is subject to certain covenants (including a restriction on the incurrence of any indebtedness senior to the Loan other than existing senior loan obligations to each of HCLP Nominees, L.L.C. (“HCLP”) and Beneficient Holdings, Inc. (“BHI”, and together with HCLP, the “Senior Lenders”), as lenders) and events of default. The Senior Lenders are directly or indirectly associated with Brad K. Heppner, who is Chairman of the Company’s Board of Directors. A special committee of the Board of Directors of the Company (the “Special Committee”) composed solely of independent and disinterested directors of the Company, together with the assistance of its independent legal advisors, reviewed, negotiated and approved the terms of the Loan. LiquidTrust Loan Intercreditor Agreements In connection with the Promissory Note, the Company also entered into two intercreditor and subordination agreements: (1) an Intercreditor Agreement between the GWG Life and HCLP and (2) an Intercreditor Agreement between the GWG Life and BHI (the “Intercreditor Agreements”). Under the Intercreditor Agreements, GWG Life agrees to subordinate the Loan to the secured obligations of Beneficient and its affiliates outstanding to the Senior Lenders (the “Senior Loan Obligations”), agrees to not take any liens to secure the Loan (and to subordinate such liens, if any, to the liens of the Senior Lenders), and agrees not to take enforcement actions under the Promissory Note until such Senior Loan Obligations are paid in full. The Intercreditor Agreements establish various other inter -lender Beneficient Adoption of Equity Incentive Plan The board of directors of Beneficient Management, L.L.C., Beneficient’s general partner, adopted an equity incentive plan (“Beneficient’s Equity Incentive Plan”) in September 2018. Under the Beneficient Equity Incentive Plan, Beneficient is permitted to grant equity awards representing ownership interests in BEN LP common units. Vested awards under the Beneficient Equity Incentive Plan dilute BEN LP’s common unitholders, including GWG. The total number of common units that may be issued under the Beneficient Equity Incentive Plan is equivalent to 15% of the number of fully diluted common units outstanding, subject to annual adjustment. In April 2019, initial equity awards in the form of Beneficient restricted equity units (“Beneficient REUs”) were granted under Beneficient’s Equity Incentive Plan. These awards are generally subject to service -based For the Beneficient REUs awarded under the Beneficient Equity Incentive Plan, Beneficient will recognize expense associated with the vesting of these awards based on the fair value of the BEN LP common units on the date of grant, discounted for the lack of participation rights in the expected distributions on unvested units and discounted for the lack of marketability associated with the post -vesting -line A total of 3.4 -year The expense, when recognized by Beneficient, will impact the earnings at BEN LP and GWG’s equity earnings from our equity method investment in Beneficient. The Beneficient REUs, when settled – commencing July Amendment of Beneficient Holdings Limited Partner Agreement Governing Beneficient Noncontrolling Interests BEN LP is a holding company of capital and financial services companies, the general partner of Beneficient Holdings, and owns 100% of the Class A Subclass 1 and Subclass 2 Units of Beneficient Holdings. Beneficient Holdings is a Delaware limited partnership formed on July As of December -Participating As shown on BEN LP’s Consolidated Statements of Changes In Equity (Deficit), attached at page 6 of Exhibit 99.4, at December The rights of all partners of Beneficient Holdings are governed by a Limited Partnership Agreement (“BCH LPA”). On April -capital The amendment affects several areas that could impact the value of our ownership in BEN LP such as allocations or distributions of income to the various classes of units issued by Beneficient Holdings, including the Class A Units (Subclass 1 and Subclass 2) owned by BEN LP, preferred returns paid to the holders of Class S Preferred Units, FLP Units and Preferred Series A Units (collectively, “BCH Preferred Units”), distribution of proceeds from the sale of assets, and future issuance of dilutive securities and future debt issuances, among other changes. The impact of the BCH LPA amendment on our investment in BEN LP may vary depending on multiple factors, including, among other things, (1) the economic performance of BEN LP, (2) the value of BEN LP’s common units, and (3) the timing, price and amount of any conversions of BCH Preferred Units or Class S Ordinary Units. |
Nature of Business and Summar_2
Nature of Business and Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Principles of Consolidation | Principles of Consolidation — The Company has interests in various entities including corporations and limited partnerships. For each such entity, the Company evaluates its ownership interest to determine whether the entity is a variable interest entity (“VIE”) and, if so, whether it is the primary beneficiary of the VIE. The Company would consolidate any entity for which it was the primary beneficiary, regardless of its ownership or voting interests. Upon inception of a variable interest or the occurrence of a reconsideration event, the Company makes judgments in determining whether entities in which it invests are VIEs. If so, the Company makes judgments to determine whether it is the primary beneficiary and is thus required to consolidate the entity. If it is concluded that an entity is not a VIE, then the Company considers its proportional voting interests in the entity. The Company consolidates majority -owned -party Accounting for Limited Partnership Investments -30-S99-1 Related party transactions between the Company and its equity method investee have not been eliminated. |
Use of Estimates | Use of Estimates — The preparation of our consolidated financial statements in conformity with the Generally Accepted Accounting Principles in the United States of America (GAAP) requires management to make significant estimates and assumptions affecting the reported amounts of assets and liabilities at the date of the consolidated financial statements, as well as the reported amounts of revenue during the reporting period. We regularly evaluate estimates and assumptions, which are based on current facts, historical experience, management’s judgment, and various other factors that we believe to be reasonable under the circumstances. Our actual results may differ materially and adversely from our estimates. The most significant estimates with regard to these consolidated financial statements relate to (1) the determination of the assumptions used in estimating the fair value of our investments in life insurance policies, (2) the assessment of potential impairment of our equity method investment and our equity security investment and determination of the allowance for credit losses on our financing receivable, and (3) the value of our deferred tax assets and liabilities. Periodically, we make significant estimates in assessing the fair value of assets acquired and consideration given in return for those assets, which are used to establish the initial recorded values of such assets in accordance with ASC 805, Business Combinations |
Cash and Cash Equivalents | Cash and Cash Equivalents — Cash, cash equivalents and restricted cash on our consolidated statements of cash flows include cash and cash equivalents of $114.6 |
Life Insurance Policies | Life Insurance Policies — Investments in Insurance Contracts, In a case where our acquisition of a policy is not complete as of a reporting date, but we have nonetheless advanced direct costs and deposits for the acquisition, those costs and deposits are recorded as other assets on our consolidated balance sheets until the acquisition is complete and we have secured title to the policy. On both December 31, 2018 and December 31, 2017, none of our other assets comprised direct costs and deposits that we had advanced for life insurance policy acquisitions. We also recognize realized gain (or loss) from a life insurance policy upon one of the two following events: (1) our receipt of notice or verified mortality of the insured; or (2) our sale of the policy (upon filing of change-of-ownership forms and receipt of payment). In the case of mortality, the gain (or loss) we recognize is the difference between the policy benefits and the carrying value of the policy once we determine that collection of the policy benefits is realizable and reasonably assured. In the case of a policy sale, the gain (or loss) we recognize is the difference between the sale price and the carrying value of the policy on the date we receive sale proceeds. |
Life Insurance Policy Benefits Receivable | Life Insurance Policy Benefits Receivable We reserve for policy benefits when it becomes probable that we will not collect the full amount of the policy benefit. The reserve requirements are based on the best facts available to us and are reevaluated and adjusted as additional information becomes available. Uncollectible policy benefits are written off against the reserves when it is deemed that a policy amount is uncollectible. As of December 31, 2018, the balance of the allowance for uncollectible receivables was $4.3 million, relating to an insurable interest challenge from an insurance carrier. |
Other Assets | Other Assets — In December 2018, in connection with the Final Closing of the Exchange Transaction, the Company entered into an Option Agreement with Beneficient. The agreement gives GWG the option to acquire the number of common units in BEN LP that would be received by the holder of NPC-A prime unit accounts in Beneficient Company Holdings, L.P., an affiliate of BEN LP. There is no exercise price and the Company may exercise the option at any time until the December 27, 2028, at which time the option will automatically settle. The Option Agreement is recorded in other assets at a value of $38.6 million at December 31, 2018. The Option Agreement is considered an equity security and the Company has elected the measurement alternative for equity securities without a readily determinable fair value. Under this measurement alternative, we record the Option Agreement at its cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions for the identical or similar investments of Beneficient. As at December 31, 2018, there were no indications of impairment. The instrument is eligible for certain cash distributions that will be recorded in earnings when earned. |
Financing Receivable | Financing Receivable — Receivables, Losses on financing receivables are recognized when they are incurred, which requires us to make our best estimate of probable losses. Specific allowances are recorded for individually impaired loans to the extent we have determined that it is probable that we will be unable to collect all amounts due according to original contractual terms of the loan agreement. Certain loans classified as impaired may not require an allowance for loan loss because we believe that we will ultimately collect the unpaid balance (through collection or collateral repossession). The method for calculating the best estimate of losses depends on the type and risk characteristics of the related financing receivable. Such an estimate requires consideration of historical loss experience, adjusted for current conditions, and judgments about the probable effects of relevant observable data, including present economic conditions such as delinquency rates, financial health of market sectors, and the present and expected future levels of interest rates. The underlying assumptions, estimates and assessments we use to provide for losses are updated periodically to reflect our view of current conditions. Changes in such estimates can significantly affect the allowance and provision for losses. It is possible that we will experience credit losses that are different from our current estimates. We have no allowance for losses as of December 31, 2018. Write-offs are deducted from the allowance for losses when we judge the principal to be uncollectible and subsequent recoveries are added to the allowance at the time cash is received on a written-off account. |
Equity Method Investment | Equity Method Investment Our equity method investment is reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the investment might not be recoverable. These circumstances can include, but are not limited to: evidence that we do not have the ability to recover the carrying amount, the inability of the investee to sustain earnings, a current fair value of the investment that is less than the carrying amount, and other investors ceasing to provide support or reduce their financial commitment to the investee. If the fair value of the investment is less than the carrying amount, and the investment will not recover in the near term, then an other-than-temporary impairment may exist. We recognize a loss in value of an investment deemed other-than-temporary in the period the conclusion is made. The Company reports its share of the income or loss of the equity method partner companies on a one-quarter lag where we do not expect financial information to be consistently available on a timely basis. For more information on equity method investments, see Note 6. |
Stock-Based Compensation | Stock-Based Compensation The risk-free interest rate is based on the U.S. Treasury rates at the date of grant with maturity dates approximately equal to the expected life at grant date. Volatility is based on the standard deviation of the average continuously compounded rate of return of five selected companies. |
Deferred Financing and Issuance Costs | Deferred Financing and Issuance Costs — Loans advanced to us under our amended and restated senior credit facility with LNV Corporation, as described in Note 8, are reported net of financing costs, including issuance costs, sales commissions and other direct expenses, which are amortized using the straight-line method over the term of the facility. We had no loans advanced to us under our senior credit facility with Autobahn Funding Company during the year ended December 31, 2017 and this credit facility was terminated in September 2017, as described in Note 7. The L Bonds, as described in Note 10, are reported net of financing costs, which are amortized using the interest method over the term of those borrowings. The Series I Secured Notes, as described in Note 9 have been redeemed, and were reported net of financing costs, all of which were fully amortized using the interest method as of December 31, 2017. The Series A Convertible Preferred Stock (“Series A”), as described in Note 12, were reported net of financing costs (including the fair value of warrants issued), all of which were fully amortized using the interest method as of December 31, 2017. All shares of Series A have been redeemed and the obligations thereunder satisfied. Selling and issuance costs of Redeemable Preferred Stock (“RPS”) and Series 2 Redeemable Preferred Stock (“RPS 2”), described in Notes 13 and 14, are netted against additional paid-in-capital, until depleted, and then against the outstanding balance of the preferred stock. The offerings of our RPS and RPS 2 closed in March 2017 and April 2018, respectively. There were no issuance costs associated with issuance of the Series B Convertible Preferred Stock (“Series B”), described in Note 15, in August 2018. |
Earnings (Loss) per Share | Earnings (Loss) per Share — Basic earnings (loss) per share attributable to common shareholders are calculated using the weighted-average number of shares outstanding during the reported period. Diluted earnings (loss) per share are calculated based on the potential dilutive impact of our Series A, RPS, RPS 2, Series B, warrants and stock options. Due to our net loss attributable to common shareholders for the years ended December 31, 2018 and 2017, there are no dilutive securities. |
Reclassification | Reclassification — |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements Leases (Topic 842) (“ In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash, Statement of Cash Flows, In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework — Changes to the Disclosure Requirements for Fair Value Measurement |
Investment in Life Insurance _2
Investment in Life Insurance Policies (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Investments, All Other Investments [Abstract] | |
Schedule of life insurance portfolio | Total life insurance portfolio face value of policy benefits $ 2,047,992,000 Average face value per policy $ 1,775,000 Average face value per insured life $ 1,984,000 Average age of insured (years)* 82.1 Average life expectancy estimate (years)* 7.8 Total number of policies 1,154 Number of unique lives 1,032 Demographics 77% Males; 23% Females Number of smokers 52 Largest policy as % of total portfolio face value 0.6 % Average policy as % of total portfolio 0.1 % Average annual premium as % of face value 2.9 % ____________ * Averages presented in the table are weighted averages. |
Summary of organized according to their estimated life expectancy dates as of the reporting date | As of December 31, 2018 As of December 31, 2017 Years Ending Number of Estimated Face Value Number of Estimated Face Value 2018 — $ — $ — 8 $ 4,398,000 $ 4,689,000 2019 9 6,380,000 7,305,000 48 63,356,000 83,720,000 2020 41 46,338,000 59,939,000 87 79,342,000 127,373,000 2021 81 68,836,000 108,191,000 98 96,154,000 170,695,000 2022 104 97,231,000 177,980,000 90 85,877,000 181,120,000 2023 109 93,196,000 185,575,000 93 69,467,000 175,458,000 2024 107 84,150,000 211,241,000 100 77,638,000 228,188,000 Thereafter 703 351,791,000 1,297,761,000 374 174,295,000 704,905,000 Totals 1,154 $ 747,922,000 $ 2,047,992,000 898 $ 650,527,000 $ 1,676,148,000 |
Schedule of reconciliation of gain on life insurance policies | Years Ended 2018 2017 Change in estimated probabilistic cash flows (1) $ 75,444,000 $ 63,241,000 Unrealized gain on acquisitions (2) 28,017,000 31,019,000 Premiums and other annual fees (54,087,000 ) (53,296,000 ) Change in discount rates (3) — 14,931,000 Change in life expectancy evaluation (4) (4,890,000 ) (20,257,000 ) Change in life expectancy evaluation methodology (5) (87,100,000 ) — Face value of matured policies 71,090,000 64,719,000 Fair value of matured policies (42,579,000 ) (38,243,000 ) Gain (loss) on life insurance policies, net $ (14,105,000 ) $ 62,114,000 ____________ (1) Change in fair value of expected future cash flows relating to our investment in life insurance policies that are not specifically attributable to changes in life expectancy, discount rate or policy maturity events. (2) Gain resulting from fair value in excess of the purchase price for life insurance policies acquired during the reporting period. (3) The discount rate applied to estimate the fair value of the portfolio of life insurance policies we own was 8.25% as of December 31, 2018, compared to 10.45% as of December 31, 2017. (4) The change in fair value due to updating life expectancy estimates on certain life insurance policies in our portfolio. (5) The change in fair value due to the adoption of the Longest Life Expectancy methodology on life insurance policies in our portfolio, partially offset by the impact of a decrease in the discount rate to reflect the higher certainty in future cash flows. |
Schedule of estimate that premium payments and servicing fees required to maintain our current portfolio of life insurance policies | Years Ending December 31, Premiums Servicing Premiums and 2019 $ 65,536,000 $ 1,413,000 $ 66,949,000 2020 77,552,000 1,413,000 78,965,000 2021 90,290,000 1,413,000 91,703,000 2022 103,363,000 1,413,000 104,776,000 2023 115,597,000 1,413,000 117,010,000 $ 452,338,000 $ 7,065,000 $ 459,403,000 |
Fair Value Definition and Hie_2
Fair Value Definition and Hierarchy (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Fair Value Disclosures [Abstract] | |
Schedule of reconciliation of investments in life insurance policies | Years Ended 2018 2017 Beginning balance $ 650,527,000 $ 511,192,000 Purchases 128,502,000 88,644,000 Maturities (initial cost basis) (20,763,000 ) (16,070,000 ) Net change in fair value (10,344,000 ) 66,761,000 Ending balance $ 747,922,000 $ 650,527,000 |
Schedule of inputs utilized in estimating the fair value of our portfolio of life insurance policies | As of As of Weighted-average age of insured, years* 82.1 81.7 Weighted-average life expectancy, months* (1) 93.2 82.4 Average face amount per policy $ 1,775,000 $ 1,867,000 Discount rate 8.25 % 10.45 % ____________ * Weighted -average (1) Increase primarily due to the adoption of the Longest Life Expectancy methodology. |
Schedule of change in fair value of the investment in life insurance policies | Change in Life Expectancy Estimates minus 8 months minus 4 months plus 4 months plus 8 months December 31, 2018 $ 113,410,000 $ 57,611,000 $ (55,470,000 ) $ (110,473,000 ) December 31, 2017 $ 86,391,000 $ 42,886,000 $ (42,481,000 ) $ (84,238,000 ) Change in Discount Rate minus 2% minus 1% plus 1% plus 2% December 31, 2018 $ 95,747,000 $ 45,440,000 $ (41,179,000 ) $ (78,615,000 ) December 31, 2017 $ 68,117,000 $ 32,587,000 $ (29,964,000 ) $ (57,583,000 ) |
Schedule of outstanding common stock warrants | Month issued Warrants issued Fair value Risk free rate Volatility Term September 2014 16,000 $ 1.26 1.85 % 17.03 % 5 years 16,000 |
Financing Receivable from Aff_2
Financing Receivable from Affiliate (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Financing Receivable from Affiliate [Abstract] | |
Schedule of outstanding principal, [discount] and accrued interest balances of the Commercial Loan and Exchangeable Note receivable | As of As of Commercial Loan receivable – principal $ 192,508,000 $ — Discount on Commercial Loan receivable (7,846,000 ) — Accrued interest receivable on Commercial Loan 107,000 — Financing receivable from affiliate $ 184,769,000 $ — |
Equity Method Investment (Table
Equity Method Investment (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Schedule of classification, carrying value and maximum exposure to loss | Carrying Maximum Financing receivable from affiliate $ 184,769,000 $ 184,769,000 Equity method investment 360,842,000 360,842,000 Other asset 38,562,000 38,562,000 Total assets $ 584,173,000 $ 584,173,000 |
Schedule of financial information pertaining to beneficient | August 10 to Total revenues $ 18,409,000 Net income 8,291,000 Net income attributable to Beneficient common unitholders 129,000 Net income attributable to GWG (1) 18,000 ____________ (1) Represents our portion of net earnings from August 10, 2018 (Initial Transfer Date) to September 30, 2018. |
L Bonds (Tables)
L Bonds (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
L Bonds [Abstract] | |
Schedule of future contractual maturities of L Bonds, and future amortization of deferred financing costs | Years Ending December 31, Contractual Unamortized 2019 $ 144,627,000 $ 1,548,000 2020 160,035,000 4,741,000 2021 117,230,000 4,898,000 2022 43,794,000 1,885,000 2023 73,646,000 4,013,000 2024 33,782,000 1,765,000 Thereafter 89,038,000 5,366,000 $ 662,152,000 $ 24,216,000 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Schedule of income tax expense (benefit) and reconciliation of statutory federal tax rate | Years Ended December 31, December 31, Statutory federal income tax (benefit) $ (25,085,000 ) $ (7,728,000 ) State income taxes (benefit), net of federal benefit (9,243,000 ) (1,433,000 ) Impact of change in enacted rate — 2,605,000 Change in valuation allowance 33,999,000 4,222,000 Other permanent differences 329,000 237,000 Total income tax expense (benefit) $ — $ (2,097,000 ) |
Schedule of current and deferred components of tax expense (benefit) | Years Ended December 31, December 31, Current income tax expense (benefit) $ — $ — Deferred income tax expense (benefit) — (2,097,000 ) Total income tax expense (benefit) $ — (2,097,000 ) |
Schedule of deferred tax assets and liabilities | As of As of Deferred tax assets: Note receivable from related party $ — $ 1,437,000 Net operating loss carryforwards 10,491,000 9,995,000 Other assets 29,996,000 1,724,000 Subtotal 40,487,000 13,156,000 Valuation allowance (40,385,000 ) (6,386,000 ) Deferred tax assets 102,000 6,770,000 Deferred tax liabilities: Investment in life insurance policies — (6,630,000 ) Other liabilities (102,000 ) (140,000 ) Net deferred tax asset (liability) $ — $ — |
Common Stock (Tables)
Common Stock (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Equity [Abstract] | |
Schedule of pertaining to stock repurchase program | Monthly Period Number of Average Price Total Number Maximum December 2018 10,035 $ 6.82 10,035 $ 1,432,000 Total 10,035 $ 6.82 10,035 $ 1,432,000 |
Stock Incentive Plan (Tables)
Stock Incentive Plan (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of outstanding stock options | Vested Unvested Total Balance as of December 31, 2016 738,065 844,334 1,582,399 Granted during the year 61,099 367,500 428,599 Vested during the year 327,061 (327,061 ) — Exercised during the year (126,498 ) — (126,498 ) Forfeited during the year (142,535 ) (105,017 ) (247,552 ) Balance as of December 31, 2017 857,192 779,756 1,636,948 Granted during the year 63,950 314,000 377,950 Vested during the year 503,503 (503,503 ) — Exercised during the year (569,864 ) — (569,864 ) Forfeited during the year (21,582 ) (25,501 ) (47,083 ) Balance as of December 31, 2018 833,199 564,752 1,397,951 |
Schedule of outstanding stock appreciation rights (SARs) | Vested Un-vested Total Balance as of December 31, 2016 106,608 133,127 239,735 Granted during the year 13,001 91,986 104,987 Vested during the year 69,444 (69,444 ) — Forfeited during the year — (1,750 ) (1,750 ) Balance as of December 31, 2017 189,053 153,919 342,972 Granted during the year 2,625 111,025 113,650 Vested during the year 71,785 (71,785 ) Exercised during the year (145,622 ) — (145,622 ) Forfeited during the year — (39,235 ) (39,235 ) Balance as of December 31, 2018 117,841 153,924 271,765 |
Schedule of outstanding shares options and SARs issued | December 31, 2018 Outstanding Weighted- Weighted- Fair Value at Vested Stock Options 833,199 $ 8.88 5.95 $ 2.02 SARs 117,841 $ 8.88 5.02 $ 2.02 Total Vested 951,040 $ 8.88 5.83 $ 2.02 Unvested Stock Options 564,752 $ 9.15 7.88 $ 2.35 SARs 153,924 $ 8.37 5.98 $ 2.09 Total Unvested 718,676 $ 8.98 7.47 $ 2.30 December 31, 2017 Outstanding Weighted- Weighted- Fair Value at Vested Stock Options 857,192 $ 8.05 6.17 $ 1.76 SARs 189,053 $ 8.54 5.86 $ 1.90 Total Vested 1,046,245 $ 8.14 6.11 $ 1.78 Unvested Stock Options 779,756 $ 9.21 7.50 $ 2.17 SARs 153,919 $ 9.16 6.24 $ 2.02 Total Unvested 933,675 $ 9.21 7.30 $ 2.15 |
Other Expenses (Tables)
Other Expenses (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Other Expenses [Abstract] | |
Schedule of other expenses in consolidated statements of operations | Years Ended December 31, 2018 2017 Contract Labor $ 1,453,000 $ 550,000 Marketing 1,856,000 2,226,000 Information Technology 1,578,000 1,555,000 Servicing and Facility Fees 1,782,000 1,226,000 Travel and Entertainment 892,000 1,047,000 Insurance and Regulatory 1,562,000 1,591,000 Charitable Contributions — 462,000 Bad Debt Expense 4,300,000 — General and Administrative 2,572,000 3,822,000 Total Other Expenses $ 15,995,000 $ 12,479,000 |
Segment Reporting (Tables)
Segment Reporting (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Segment Reporting [Abstract] | |
Summary of financial information of reportable segments | Revenue: Segment EBT: 2018 2017 2018 2017 Secondary Life Insurance $ (11,633,000 ) $ 62,674,000 $ (96,578,000 ) $ (3,433,000 ) Investment in Beneficient 10,655,000 — (106,000 ) — Corporate & Other 588,000 1,460,000 (22,767,000 ) (19,296,000 ) Total $ (390,000 ) $ 64,134,000 (119,451,000 ) (22,729,000 ) Income tax benefit — 2,097,000 Net Loss $ (119,451,000 ) $ (20,632,000 ) Interest Expense Interest Income 2018 2017 2018 2017 Secondary Life Insurance $ 69,357,000 $ 54,409,000 $ 2,182,000 $ 432,000 Investment in Beneficient 10,778,000 — 10,655,000 — Corporate & Other 1,000 10,000 189,000 554,000 Total $ 80,136,000 $ 54,419,000 $ 13,026,000 $ 986,000 Total Assets 2018 2017 Secondary Life Insurance $ 889,665,000 $ 814,231,000 Investment in Beneficient 584,173,000 — Corporate & Other 7,029,000 4,625,000 Total $ 1,480,867,000 $ 818,856,000 |
Commitments (Tables)
Commitments (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of minimum lease payments under amendment lease | 2019 275,000 2020 284,000 2021 293,000 2022 302,000 2023 311,000 Thereafter 593,000 $ 2,058,000 |
Guarantee of L Bonds and Sell_2
Guarantee of L Bonds and Seller Trust L Bonds (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Guarantee of L Bonds [Abstract] | |
Schedule of condensed consolidating balance sheets | December 31, 2018 Parent Guarantor Non-Guarantor Eliminations Consolidated ASSETS Cash and cash equivalents $ 113,293,682 $ 232,387 $ 1,061,015 $ — $ 114,587,084 Restricted cash — 7,217,194 3,631,932 — 10,849,126 Investment in life insurance policies, at fair value — 92,336,494 655,585,971 — 747,922,465 Life insurance policy benefits receivable — 5,000,000 11,460,687 — 16,460,687 Financing receivable from affiliate — 184,768,874 — — 184,768,874 Equity method investment 360,841,651 — — — 360,841,651 Other assets 42,944,402 1,730,581 762,181 — 45,437,164 Investment in subsidiaries 799,182,251 510,865,003 — (1,310,047,254 ) — TOTAL ASSETS $ 1,316,261,986 $ 802,150,533 $ 672,501,786 $ (1,310,047,254 ) $ 1,480,867,051 LIABILITIES & STOCKHOLDERS' EQUITY LIABILITIES Senior credit facility with LNV Corporation $ — $ — $ 148,977,596 $ — $ 148,977,596 L Bonds 651,402,663 — — — 651,402,663 Seller Trust L Bonds 366,891,940 — — — 366,891,940 Accounts payable 1,126,327 1,674,494 6,475,686 — 9,276,507 Interest and dividends payable 14,047,248 — 4,508,045 — 18,555,293 Other accrued expenses 1,735,926 1,593,108 1,376,136 — 4,705,170 TOTAL LIABILITIES 1,035,204,104 3,267,602 161,337,463 — 1,199,809,169 STOCKHOLDERS' EQUITY Member capital — 798,882,931 511,164,323 (1,310,047,254 ) — Redeemable preferred stock and Series 2 redeemable preferred stock 215,973,039 — — — 215,973,039 Common stock 33,018 — — — 33,018 Additional paid-in-capital 249,662,168 — — — 249,662,168 Accumulated deficit (184,610,343 ) — — — (184,610,343 ) TOTAL STOCKHOLDERS' EQUITY 281,057,882 798,882,931 511,164,323 (1,310,047,254 ) 281,057,882 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,316,261,986 $ 802,150,533 $ 672,501,786 $ (1,310,047,254 ) $ 1,480,867,051 December 31, 2017 Parent Guarantor Non-Guarantor Eliminations Consolidated ASSETS Cash and cash equivalents $ 111,952,829 $ 1,486,623 $ 982,039 $ — $ 114,421,491 Restricted cash — 9,367,410 18,982,275 — 28,349,685 Investment in life insurance policies, at fair value — 51,093,362 599,433,991 — 650,527,353 Life insurance policy benefits receivable — 1,500,000 15,158,761 — 16,658,761 Other assets 1,912,203 1,986,312 5,000,369 — 8,898,884 Investment in subsidiaries 480,659,789 415,235,212 — (895,895,001 ) — TOTAL ASSETS $ 594,524,821 $ 480,668,919 $ 639,557,435 $ (895,895,001 ) $ 818,856,174 LIABILITIES & STOCKHOLDERS' EQUITY LIABILITIES Amended and Restated Senior credit facility with LNV Corporation $ — $ — $ 212,238,192 $ — $ 212,238,192 L Bonds 447,393,568 — — — 447,393,568 Accounts payable 1,434,623 844,899 4,114,917 — 6,394,439 Interest and dividends payable 10,296,584 — 5,130,925 — 15,427,509 Other accrued expenses 1,728,303 1,610,773 391,647 — 3,730,723 TOTAL LIABILITIES 460,853,078 2,455,672 221,875,681 — 685,184,431 STOCKHOLDERS' EQUITY Member capital — 478,213,247 417,681,754 (895,895,001 ) — Redeemable preferred stock and Series 2 redeemable preferred stock 173,115,447 — — — 173,115,447 Common stock 5,813 — — — 5,813 Accumulated deficit (39,449,517 ) — — — (39,449,517 ) TOTAL STOCKHOLDERS' EQUITY 133,671,743 478,213,247 417,681,754 (895,895,001 ) 133,671,743 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 594,524,821 $ 480,668,919 $ 639,557,435 $ (895,895,001 ) $ 818,856,174 |
Schedule of condensed consolidating statements of operations | For the year ended December 31, 2018 Parent Guarantor Non-Guarantor Eliminations Consolidated REVENUE Gain on life insurance policies, net $ — $ 8,341,206 $ (22,445,778 ) $ — $ (14,104,572 ) Interest and other income 8,585,681 4,278,809 849,791 — 13,714,281 TOTAL REVENUE 8,585,681 12,620,015 (21,595,987 ) — (390,291) EXPENSES Interest expense 59,111,989 — 21,023,994 — 80,135,983 Employee compensation and benefits 9,979,989 5,741,776 1,685,217 — 17,406,982 Legal and professional fees 1,795,094 863,851 2,882,232 — 5,541,177 Other expenses 6,907,502 1,994,807 7,092,178 — 15,994,487 TOTAL EXPENSES 77,794,574 8,600,434 32,683,621 — 119,078,629 INCOME (LOSS) BEFORE EQUITY IN INCOME OF SUBSIDIARIES (69,208,893 ) 4,019,581 (54,279,608 ) — (119,468,920 ) EQUITY IN INCOME OF SUBSIDIARIES (50,260,027 ) (48,665,540 ) — 98,925,567 — NET INCOME (LOSS) BEFORE INCOME TAXES (119,468,920 ) (44,645,959 ) (54,279,608 ) 98,925,567 (119,468,920 ) INCOME TAX EXPENSE — — — — — NET INCOME (LOSS) BEFORE EARNINGS FROM EQUITY METHOD INVESTMENT (119,468,920 ) (44,645,959 ) (54,279,608 ) 98,925,567 (119,468,920 ) Earnings from equity method investment 17,507 — — — 17,507 NET INCOME (LOSS) (119,451,413 ) (44,645,959 ) (54,279,608 ) 98,925,567 (119,451,413 ) Preferred stock dividends 16,662,731 — — — 16,662,731 NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS $ (136,114,144 ) $ (44,645,959 ) $ (54,279,608 ) $ 98,925,567 $ (136,114,144 ) For the year ended December 31, 2017 Parent Guarantor Non-Guarantor Eliminations Consolidated REVENUE Gain on life insurance policies, net $ — $ 6,979,773 $ 55,134,630 $ — $ 62,114,403 Interest and other income 244,202 496,886 1,753,798 (475,371 ) 2,019,515 TOTAL REVENUE 244,202 7,476,659 56,888,428 (475,371 ) 64,133,918 EXPENSES Interest expense 37,754,984 930,837 15,813,944 (80,321 ) 54,419,444 Employee compensation and benefits 9,043,509 5,310,498 515,742 — 14,869,749 Legal and professional fees 1,937,714 962,778 2,195,151 — 5,095,643 Other expenses 7,058,209 2,715,374 3,100,143 (395,050 ) 12,478,676 TOTAL EXPENSES 55,794,416 9,919,487 21,624,980 (475,371 ) 86,863,512 INCOME (LOSS) BEFORE EQUITY IN INCOME OF SUBSIDIARIES (55,550,214 ) (2,442,828 ) 35,263,448 — (22,729,594 ) EQUITY IN INCOME OF SUBSIDIARIES 32,820,620 38,392,230 — (71,212,850 ) — NET INCOME (LOSS) BEFORE INCOME TAXES (22,729,594 ) 35,949,402 35,263,448 (71,212,850 ) (22,729,594 ) INCOME TAX BENEFIT (2,097,371 ) — — — (2,097,371 ) NET INCOME (LOSS) (20,632,223 ) 35,949,402 35,263,448 (71,212,850 ) (20,632,223 ) Preferred stock dividends 12,702,341 — — — 12,702,341 NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS $ (33,334,564 ) $ 35,949,402 $ 35,263,448 $ (71,212,850 ) $ (33,334,564 ) |
Schedule of condensed consolidating statements of cash flows | For the year ended December 31, 2018 Parent Guarantor Non-Guarantor Eliminations Consolidated CASH FLOWS FROM OPERATING ACTIVITIES Net income (loss) $ (119,451,413 ) $ (44,645,959 ) $ (54,279,608 ) $ 98,925,567 $ (119,451,413 ) Adjustments to reconcile net income (loss) to net cash flows used in operating activities: Equity of subsidiaries 50,260,028 48,665,539 — (98,925,567 ) — Change in fair value of life insurance policies — (4,262,774 ) 14,606,803 — 10,344,029 Amortization of deferred financing and issuance costs 8,981,935 — 1,055,020 — 10,036,955 Amortization of discount or premium on financing receivables 628,528 (642,481 ) — — (13,953 ) Provision for uncollectible policy benefit receivable — — 4,300,000 — 4,300,000 Earnings from equity method investment (17,507 ) (17,507 ) Stock-based compensation 2,182,125 — — — 2,182,125 (Increase) decrease in operating assets: Life insurance policy benefits receivable — (3,500,000 ) (601,926 ) — (4,101,926 ) Interest receivable added to loan principal (7,045,791 ) (3,487,841 ) — — (10,533,632 ) Other assets (188,366,280 ) (144,146,549 ) 4,371,666 332,546,217 4,405,054 Increase (decrease) in operating liabilities: Accounts payable (308,295 ) 829,595 2,360,769 — 2,882,069 Interest and dividends payable 4,025,326 — (756,357 ) 3,268,969 Other accrued expenses 253,353 (17,665 ) 984,488 — 1,220,176 NET CASH FLOWS USED IN OPERATING ACTIVITIES (248,857,991 ) (151,208,135 ) (27,959,145 ) 332,546,217 (95,479,054 ) CASH FLOWS FROM INVESTING ACTIVITIES Investment in life insurance policies — (41,404,136 ) (87,098,518 ) — (128,502,654 ) Carrying value of matured life insurance policies — 4,423,779 16,339,737 — 20,763,516 Equity investment acquired (3,204,016 ) — — — (3,204,016 ) Other investments acquired (3,037,234 ) — — — (3,037,234 ) NET CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES (6,241,250 ) (36,980,357 ) (70,758,781 ) — (113,980,388 ) CASH FLOWS FROM FINANCING ACTIVITIES Net borrowings on (repayments of) senior debt — — (64,315,618 ) — (64,315,618 ) Proceeds from issuance of L Bonds 263,964,554 — — — 263,964,554 Payments for issuance of L Bonds (17,379,101 ) — — — (17,379,101 ) Payments for redemption of L Bonds (48,026,551 ) — — — (48,026,551 ) Issuance of common stock 614,193 — — — 614,193 Proceeds from issuance of convertible preferred stock 50,000,000 — — — 50,000,000 Proceeds from issuance of redeemable preferred stock 56,238,128 — — — 56,238,128 Payments for issuance of redeemable preferred stock (4,142,294 ) — — — (4,142,294 ) Payments for redemption of redeemable preferred stock (2,456,692 ) — — — (2,456,692 ) Common stock dividends (25,709,412 ) — — — (25,709,412 ) Preferred stock dividends (16,662,731 ) — — — (16,662,731 ) Issuance of member capital — 184,784,040 147,762,177 (332,546,217 ) — NET CASH FLOWS PROVIDED BY FINANCING ACTIVITIES 256,440,094 184,784,040 83,446,559 (332,546,217 ) 192,124,476 NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH 1,340,853 (3,404,452 ) (15,271,367 ) — (17,334,966 ) CASH, CASH EQUIVALENTS AND RESTRICTED CASH BEGINNING OF THE PERIOD 111,952,829 10,854,033 19,964,314 — 142,771,176 END OF THE PERIOD $ 113,293,682 $ 7,449,581 $ 4,692,947 $ — $ 125,436,210 For the year ended December 31, 2017 Parent Guarantor Non-Guarantor Eliminations Consolidated CASH FLOWS FROM OPERATING ACTIVITIES Net income (loss) $ (20,632,223 ) $ 35,949,402 $ 35,263,448 $ (71,212,850 ) $ (20,632,223 ) Adjustments to reconcile net income (loss) to net cash flows used in operating activities: Equity of subsidiaries (32,820,620 ) (38,392,230 ) — 71,212,850 — Change in fair value of life insurance policies — (7,746,744 ) (59,014,067 ) — (66,760,811 ) Amortization of deferred financing and issuance costs 6,939,841 208,829 1,632,177 — 8,780,847 Stock-based compensation 1,424,625 1,424,625 Deferred income taxes (2,097,371 ) — — — (2,097,371 ) Preferred stock issued in lieu of cash dividends 498,659 498,659 (Increase) decrease in operating assets: Life insurance policy benefits receivable — (1,500,000 ) (9,813,761 ) — (11,313,761 ) Other assets (15,870,956 ) (24,497,313 ) ( 1,084,860 ) 42,435,842 982,713 Increase (decrease) in operating liabilities: Accounts payable 581,153 113,202 3,473,373 — 4,167,728 Interest and dividends payable 3 , 771 , 709 (3,743,277 ) 2,680,191 — 2 , 708 , 623 Other accrued expenses 278,000 1,066,743 (146,546) — 1,198,197 NET CASH FLOWS USED IN OPERATING ACTIVITIES (57,927,183 ) (38,541,388 ) (27,010,045 ) 42,435,842 (81,042,774 ) CASH FLOWS FROM INVESTING ACTIVITIES Investment in life insurance policies — (3,022,439 ) (85,621,380 ) — (88,643,819 ) Carrying value of matured life insurance policies — 2,091,713 13,977,919 — 16,069,632 NET CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES — (930,726 ) (71,643,461 ) — (72,574,187 ) CASH FLOWS FROM FINANCING ACTIVITIES Net borrowings on (repayments of) senior debt — — 59,799,649 — 59,799,649 Payments for issuance of senior debt — (1,076,118 ) (3,434,270 ) — (4,510,388 ) Payments for redemption of Series I Secured Notes — (16,613,667 ) — — (16,613,667 ) Proceeds from issuance of L Bonds 131,796,220 — — — 131,796,220 Payments for issuance of L Bonds (10,896,925 ) — — — (10,896,925 ) Payments for redemption of L Bonds (60,848,460 ) — — — (60,848,460 ) Redemption of common stock (1,603, 560 ) — — — (1,603, 560 ) Proceeds from issuance of redeemable preferred stock 127,279,847 — — — 127,279,847 Payments for issuance of redeemable preferred stock (9,027,190 ) — — — (9,027,190 ) Payments for redemption of redeemable preferred stock (22,598,626 ) — — — (22,598,626 ) Preferred stock dividends (12,702,341 ) — — — (12,702,341 ) Issuance of member capital — 16,537,331 25,898,511 (42,435,842 ) — NET CASH FLOWS PROVIDED BY FINANCING ACTIVITIES 141,398,965 (1,152,454 ) 82,263,890 (42,435,842 ) 180,074,559 NET INCREASE (DECREASE) IN CASH , CASH EQUIVALENTS AND RESTRICTED CASH 83,471,782 (40,624,568 ) (16,389,616 ) — 26,457,598 CASH , CASH EQUIVALENTS AND RESTRICTED CASH BEGINNING OF THE PERIOD 28,481,047 51,478,601 36,353,930 — 116,313,578 END OF THE PERIOD $ 111,952,829 $ 10,854,033 $ 19,964,314 $ — $ 142,771,176 |
Concentration (Tables)
Concentration (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Risks and Uncertainties [Abstract] | |
Schedule of the face value of insurance contracts | Life Insurance Company December 31, December 31, John Hancock 13.71 % 15.57 % Lincoln National 11.33 % 10.80 % AXA Equitable 10.83 % 11.88 % |
Schedule of the number of insurance contracts | State of Residence December 31, December 31, California 18.02 % 18.60 % Florida 15.34 % 20.16 % |
Nature of Business and Summar_3
Nature of Business and Summary of Significant Accounting Policies (Details) - USD ($) | Aug. 10, 2018 | Dec. 28, 2018 | Dec. 31, 2018 | Dec. 31, 2017 |
Nature of Business and Summary of Significant Accounting Policies (Textual) | ||||
Security acquired | $ 38,600,000 | $ 0 | ||
Prepaid expenses | 1,200,000 | 4,500,000 | ||
Net fixed assets | 1,500,000 | 1,900,000 | ||
Security deposits | 600,000 | 600,000 | ||
Cash advances | 500,000 | 1,700,000 | ||
Other miscellaneous assets | 3,100,000 | 300,000 | ||
Portfolio value | $ 2,050,000,000 | |||
Life insurance policies, description | We built our business providing value to consumers owning illiquid life insurance products across America, delivering more than $593 million in value for their policies since 2006. | |||
Exchangeable accrues interest, percentage | 12.40% | |||
Description of commercial loan | The Seller Trust L Bonds bear interest at 7.5% per year. | The $192,508,000 principal amount under the Commercial Loan is due on August 9, 2023; however, is extendable for two five-year terms. See Note 5 for a full description of the terms of the loan. Beneficient?s obligations under the Commercial Loan are unsecured. The principal amount of the Commercial Loan bears interest at 5.0% per year. From and after the Final Closing Date, one-half of the interest, or 2.5% per year, will be due and payable monthly in cash, and (ii) one-half of the interest, or 2.5% per year, will accrue and compound annually on each anniversary date of the Final Closing Date and become due and payable in full in cash on the maturity date. | ||
Interest payable rate | 5.00% | 5.00% | ||
Exchangeable note common units price per shares | $ 10 | |||
Initial transfer of beneficient transaction, description | • GWG issued to the Seller Trust L Bonds due 2023 (the “Seller Trust L Bonds”) in an aggregate principal amount of $403,234,866, as more fully described below; • Beneficient purchased 5,000,000 shares of GWG’s Series B Convertible Preferred Stock, par value $0.001 per share and having a stated value of $10 per share (“Series B”), for cash consideration of $50,000,000, which shares were subsequently transferred to the Seller Trusts, as more fully described below; • in consideration for GWG and GWG Life entering into the Master Exchange Agreement and consummating the transactions contemplated thereby, BEN LP, as borrower, entered into a commercial loan agreement (the “Commercial Loan Agreement”) with GWG Life, as lender, providing for a loan in a principal amount of $200,000,000 (the “Commercial Loan”); • BEN LP delivered to GWG a promissory note (the “Exchangeable Note”) in the principal amount of $162,911,379; and • the Seller Trusts delivered to GWG 4,032,349 common units of BEN LP at an assumed value of $10 per common unit. | |||
Final closing of beneficient transaction, description | The final closing of the transaction occurred and the following actions took place (the "Final Closing" and the date upon which the Final Closing occurs, the "Final Closing Date"): in accordance with the Master Exchange Agreement, and based on the net asset value of alternative asset financings as of the Final Closing Date, effective as of the Initial Transfer Date, (i) the principal amount of the Commercial Loan Agreement was reduced to $181,974,314, (ii) the principal amount of the Exchangeable Note was reduced to $148,228,432, and (iii) the principal amount of the Seller Trust L Bonds was reduced to $366,892,000; the Seller Trusts refunded to GWG $840,430 in interest paid on the Seller Trust L Bonds related to the Seller Trust L Bonds that were issued as of the Initial Transfer Date but cancelled, effective as of the Initial Transfer Date, on the Final Closing Date; the accrued interest on the Commercial Loan Agreement and the Exchangeable Note was added to the principal amount of the Commercial Loan Agreement, as a result of which the principal amount of the Commercial Loan Agreement as of the Final Closing Date was $192,507,946; the Seller Trusts transferred to GWG an aggregate of 21,650,087 common units of BEN LP and GWG received 14,822,843 common units of BEN LP in exchange for the Exchangeable Note, upon completion of which GWG owned (including the 4,032,349 common units received by GWG on the Initial Transfer Date) 40,505,279 common units of BEN LP; Beneficient issued to GWG an option (the "Option Agreement") to acquire the number of common units of BEN LP, interests or other property that would be received by a holder of the NPC-A Prime limited partnership interests of Beneficient Company Holdings, L.P., an affiliate of BEN LP ("Beneficient Holdings"); and GWG issued to the Seller Trusts 27,013,516 shares of GWG common stock (including shares issued upon conversion of the Convertible Preferred Stock). | |||
Common unit of beneficient for exchangeable note | 14,822,843 | |||
Allowance for uncollectible receivables | $ 4,300,000 | |||
Cash and cash equivalents | 114,587,084 | 114,421,491 | ||
Restricted cash | $ 10,849,126 | $ 28,349,685 | ||
Series B Convertible Preferred Stock [Member] | ||||
Nature of Business and Summary of Significant Accounting Policies (Textual) | ||||
Converted shares of preferred stock | 5,000,000 | |||
Seller Trusts and Beneficient [Member] | ||||
Nature of Business and Summary of Significant Accounting Policies (Textual) | ||||
Percentage acquired investment | 89.90% | |||
Common units of beneficient | 40,505,279 |
Restrictions on Cash (Details)
Restrictions on Cash (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Restrictions on Cash (Textual) | ||
Restricted cash collection and payment accounts | $ 4,164,000 | $ 19,967,000 |
Escrow account, balance | $ 6,685,000 | $ 8,383,000 |
Investment in Life Insurance _3
Investment in Life Insurance Policies (Details) | 12 Months Ended | ||
Dec. 31, 2018USD ($)PoliciesLivesSmokers | Dec. 31, 2017USD ($)Policies | ||
Investments, All Other Investments [Abstract] | |||
Total life insurance portfolio face value of policy benefits | $ 2,047,992,000 | $ 1,676,148,000 | |
Average face value per policy | 1,775,000 | ||
Average face value per insured life | $ 1,984,000 | ||
Average age of insured (years) | [1] | 82 years 1 month 6 days | |
Average life expectancy estimate (years) | [1] | 7 years 9 months 18 days | |
Total number of policies | Policies | 1,154 | 898 | |
Number of unique lives | Lives | 1,032 | ||
Demographics | 77% Males; 23% Females | ||
Number of smokers | Smokers | 52 | ||
Largest policy as % of total portfolio face value | 0.60% | ||
Average policy as % of total portfolio | 0.10% | ||
Average annual premium as % of face value | 2.90% | ||
[1] | Averages presented in the table are weighted averages. |
Investment in Life Insurance _4
Investment in Life Insurance Policies (Details 1) | Dec. 31, 2018USD ($)Policies | Dec. 31, 2017USD ($)Policies |
Summary of policies according to estimated life expectancy dates | ||
Number of Policies, 2018 | Policies | 8 | |
Number of Policies, 2019 | Policies | 9 | 48 |
Number of Policies, 2020 | Policies | 41 | 87 |
Number of Policies, 2021 | Policies | 81 | 98 |
Number of Policies, 2022 | Policies | 104 | 90 |
Number of Policies, 2023 | Policies | 109 | 93 |
Number of Policies, 2024 | Policies | 107 | 100 |
Number of Policies, Thereafter | Policies | 703 | 374 |
Number of Policies, Totals | Policies | 1,154 | 898 |
Estimated Fair Value, 2018 | $ 4,398,000 | |
Estimated Fair Value, 2019 | 6,380,000 | 63,356,000 |
Estimated Fair Value, 2020 | 46,338,000 | 79,342,000 |
Estimated Fair Value, 2021 | 68,836,000 | 96,154,000 |
Estimated Fair Value, 2022 | 97,231,000 | 85,877,000 |
Estimated Fair Value, 2023 | 93,196,000 | 69,467,000 |
Estimated Fair Value, 2024 | 84,150,000 | 77,638,000 |
Estimated Fair Value, Thereafter | 351,791,000 | 174,295,000 |
Estimated Fair Value, Totals | 747,922,000 | 650,527,000 |
Face Value, 2018 | 4,689,000 | |
Face Value, 2019 | 7,305,000 | 83,720,000 |
Face Value, 2020 | 59,939,000 | 127,373,000 |
Face Value, 2021 | 108,191,000 | 170,695,000 |
Face Value, 2022 | 177,980,000 | 181,120,000 |
Face Value, 2023 | 185,575,000 | 175,458,000 |
Face Value, 2024 | 211,241,000 | 228,188,000 |
Face Value, Thereafter | 1,297,761,000 | 704,905,000 |
Face Value, Totals | $ 2,047,992,000 | $ 1,676,148,000 |
Investment in Life Insurance _5
Investment in Life Insurance Policies (Details 2) - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | ||
Schedule of reconciliation of gain on life insurance policies | |||
Change in estimated probabilistic cash flows | [1] | $ 75,444,000 | $ 63,241,000 |
Unrealized gain on acquisitions | [2] | 28,017,000 | 31,019,000 |
Premiums and other annual fees | (54,087,000) | (53,296,000) | |
Change in discount rates | [3] | 14,931,000 | |
Change in life expectancy evaluation | [4] | (4,890,000) | (20,257,000) |
Change in life expectancy evaluation methodology | [5] | (87,100,000) | |
Face value of matured policies | 71,090,000 | 64,719,000 | |
Fair value of matured policies | (42,579,000) | (38,243,000) | |
Gain (loss) on life insurance policies, net | $ (14,105,000) | $ 62,114,000 | |
[1] | Change in fair value of expected future cash flows relating to our investment in life insurance policies that are not specifically attributable to changes in life expectancy, discount rate or policy maturity events. | ||
[2] | Gain resulting from fair value in excess of the purchase price for life insurance for policies acquired during the reporting period. | ||
[3] | The discount rate applied to estimate the fair value of the portfolio of life insurance policies we own was 8.25% as of December 31, 2018, compared to 10.45% as of December 31, 2017. | ||
[4] | The change in fair value due to updating life expectancy estimates on certain life insurance policies in our portfolio. | ||
[5] | The change in fair value due to the adoption of the Longest Life Expectancy methodology on life insurance policies in our portfolio, partially offset by the impact of a decrease in the discount rate to reflect the higher certainty in future cash flows. |
Investment in Life Insurance _6
Investment in Life Insurance Policies (Details 3) | Dec. 31, 2018USD ($) |
Premiums [Member] | |
Schedule of estimated premium payments and servicing fees | |
2019 | $ 65,536,000 |
2020 | 77,552,000 |
2021 | 90,290,000 |
2022 | 103,363,000 |
2023 | 115,597,000 |
Total | 452,338,000 |
Servicing [Member] | |
Schedule of estimated premium payments and servicing fees | |
2019 | 1,413,000 |
2020 | 1,413,000 |
2021 | 1,413,000 |
2022 | 1,413,000 |
2023 | 1,413,000 |
Total | 7,065,000 |
Premiums and Servicing Fees [Member] | |
Schedule of estimated premium payments and servicing fees | |
2019 | 66,949,000 |
2020 | 78,965,000 |
2021 | 91,703,000 |
2022 | 104,776,000 |
2023 | 117,010,000 |
Total | $ 459,403,000 |
Investment in Life Insurance _7
Investment in Life Insurance Policies (Details Textual) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Investment in Life Insurance Policies (Textual) | ||
Life insurance policies face value | $ 1,000,000 | |
Benefits recognized from insurance policies | 71,090,000 | $ 64,719,000 |
Carrying value of life insurance policies | 20,763,000 | 16,070,000 |
Realized gains from life insurance policies | $ 50,327,000 | $ 48,649,000 |
Discount rate applied to portfolio | 8.25% | 10.45% |
Fair Value Definition and Hie_3
Fair Value Definition and Hierarchy (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Schedule of reconciliation of investments in life insurance policies | ||
Beginning balance | $ 650,527,000 | $ 511,192,000 |
Purchases | 128,502,000 | 88,644,000 |
Maturities (initial cost basis) | (20,763,000) | (16,070,000) |
Net change in fair value | (10,344,000) | 66,761,000 |
Ending balance | $ 747,922,000 | $ 650,527,000 |
Fair Value Definition and Hie_4
Fair Value Definition and Hierarchy (Details 1) - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | ||
Fair value of our portfolio of life insurance policies | |||
Discount rate | 8.25% | 10.45% | |
Life Insurance Policies [Member] | |||
Fair value of our portfolio of life insurance policies | |||
Weighted-average age of insured, years | [1] | 82 years 1 month 6 days | 81 years 8 months 12 days |
Weighted-average life expectancy, months | [1],[2] | 93 years 2 months 12 days | 82 years 4 months 24 days |
Average face amount per policy | $ 1,775,000 | $ 1,867,000 | |
Discount rate | 8.25% | 10.45% | |
[1] | Weighted-average by face amount of policy benefits | ||
[2] | Increase primarily due to the adoption of the Longest Life Expectancy methodology. |
Fair Value Definition and Hie_5
Fair Value Definition and Hierarchy (Details 2) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Change in Life Expectancy Estimates [Member] | minus 8 months [Member] | ||
Summary of change in fair value of the investment in life insurance policies | ||
Change in fair value of the investment in life insurance policies | $ 113,410,000 | $ 86,391,000 |
Change in Life Expectancy Estimates [Member] | minus 4 months [Member] | ||
Summary of change in fair value of the investment in life insurance policies | ||
Change in fair value of the investment in life insurance policies | 57,611,000 | 42,886,000 |
Change in Life Expectancy Estimates [Member] | plus 4 months [Member] | ||
Summary of change in fair value of the investment in life insurance policies | ||
Change in fair value of the investment in life insurance policies | (55,470,000) | (42,481,000) |
Change in Life Expectancy Estimates [Member] | plus 8 months [Member] | ||
Summary of change in fair value of the investment in life insurance policies | ||
Change in fair value of the investment in life insurance policies | (110,473,000) | (84,238,000) |
Change in Discount Rate [Member] | minus 2% [Member] | ||
Summary of change in fair value of the investment in life insurance policies | ||
Change in fair value of the investment in life insurance policies | 95,747,000 | 68,117,000 |
Change in Discount Rate [Member] | minus 1 % [Member] | ||
Summary of change in fair value of the investment in life insurance policies | ||
Change in fair value of the investment in life insurance policies | 45,440,000 | 32,587,000 |
Change in Discount Rate [Member] | plus 1 % [Member] | ||
Summary of change in fair value of the investment in life insurance policies | ||
Change in fair value of the investment in life insurance policies | (41,179,000) | (29,964,000) |
Change in Discount Rate [Member] | plus 2 % [Member] | ||
Summary of change in fair value of the investment in life insurance policies | ||
Change in fair value of the investment in life insurance policies | $ (78,615,000) | $ (57,583,000) |
Fair Value Definition and Hie_6
Fair Value Definition and Hierarchy (Details 3) | 12 Months Ended |
Dec. 31, 2018$ / sharesshares | |
Summary of outstanding warrants | |
Warrants issued | 16,000 |
September 2014 [Member] | |
Summary of outstanding warrants | |
Month issued | Sep. 30, 2014 |
Warrants issued | 16,000 |
Fair value per share | $ / shares | $ 1.26 |
Risk free rate | 1.85% |
Volatility | 17.03% |
Term | 5 years |
Fair Value Definition and Hie_7
Fair Value Definition and Hierarchy (Details Textual) - USD ($) | Aug. 10, 2018 | Dec. 31, 2018 | Dec. 31, 2017 |
Fair Value Definition and Hierarchy (Textual) | |||
Description for change in discount factor | If the life expectancy estimates were increased or decreased by four and eight months on each outstanding policy, and the discount rates were increased or decreased by 1% and 2%, with all other variables held constant. | ||
Aggregate face value | $ 1,029,044,000 | ||
Estimated fair value of L Bonds | $ 1,034,729,000 | ||
Weighted average market interest rate | 7.11% | ||
Secured loan outstanding balance | $ 1,879,000 | ||
Allowance for loan loss | $ 1,879,000 | ||
Carrying value of the senior credit facility interest margin, description | 12-Month LIBOR | ||
Secured merchant cash advances, net of allowance for loan loss | $ 547,000 | $ 1,662,000 | |
Coupon interest rate | 5.00% | 5.00% | |
Loan receivable rate | 2.50% | ||
Description of loan receivable | (ii) one-half of the interest, or 2.5% per year, will accrue and compound annually on each anniversary date of the Final Closing Date and become due and payable in full in cash on the maturity date. We estimate the fair value of the Commercial Loan to be approximately $183,119,000 based on a market yield analysis for similar instruments with similar credit profiles. We utilized an implied yield of approximately 6.75%. |
Financing Receivable from Aff_3
Financing Receivable from Affiliate (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Financing Receivable from Affiliate [Abstract] | ||
Commercial Loan receivable - principal | $ 192,508,000 | |
Discount on Commercial Loan receivable | (7,846,000) | |
Accrued interest receivable on Commercial Loan | 107,000 | |
Financing receivable from affiliate | $ 184,769,000 |
Financing Receivable from Aff_4
Financing Receivable from Affiliate (Details Textual) - Beneficient Company Group, L.P. [Member] - USD ($) | Aug. 10, 2018 | Dec. 28, 2018 |
Note Receivable from Affiliate (Textual) | ||
Exchangeable note accrued interest rate | 12.40% | |
Principal amount | $ 162,911,000 | $ 148,220,000 |
Shares of equity method investment | 14,800,000 | |
Accrued interest | $ 7,000,000 | |
Commercial Loan [Member] | ||
Note Receivable from Affiliate (Textual) | ||
Initial transfer of beneficient transaction, description | The Initial Transfer of the Exchange Transaction, GWG Life, as lender, and Beneficient, as borrower, entered into the Commercial Loan Agreement. On December 28, 2018, the Final Closing Date of the Exchange Transaction, the agreement was amended to adjust the principal to $192,508,000. The principal amount under the Commercial Loan is due on August 9, 2023, but is extendable for two five-year terms under certain circumstances. The extensions are available to the borrower provided that (a) in the event Beneficient completes at least one public offering of its common units raising at least $50,000,000 which on its own or together with any other public offering of Beneficient’s common units results in Beneficient raising at least $100,000,000, then the maturity date will be extended to August 9, 2028; and (b) in the event that Beneficient (i) completes at least one public offering of its common units raising at least $50,000,000 which on its own or together with any other public offering of Beneficient’s common units results in Beneficient raising at least $100,000,000 and (ii) at least 75% of Beneficient Holding’s total outstanding NPC-B limited partnership interests, if any, have been converted to shares of Beneficient’s common units, then the maturity date will be extended to August 9, 2033. | |
Description of commercial loan bears interest | The principal amount of the Commercial Loan bears interest at 5.00% per year from the Final Closing Date. One-half of the interest, or 2.50% per year, is due and payable monthly in cash, and (ii) one-half of the interest, or 2.50% per year, accrues and compounds annually on each anniversary date of the Final Closing Date and become due and payable in full in cash on the maturity date. |
Equity Method Investment (Detai
Equity Method Investment (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Financing receivable from affiliate | $ 184,768,874 | |
Equity method investment | 360,841,651 | |
Other assets | 38,600,000 | $ 0 |
VIEs [Member] | Carrying Value [Member] | ||
Financing receivable from affiliate | 184,769,000 | |
Equity method investment | 360,842,000 | |
Other assets | 38,562,000 | |
TOTAL ASSETS | 584,173,000 | |
VIEs [Member] | Maximum exposure to loss [Member] | ||
Financing receivable from affiliate | 184,769,000 | |
Equity method investment | 360,842,000 | |
Other assets | 38,562,000 | |
TOTAL ASSETS | $ 584,173,000 |
Equity Method Investment (Det_2
Equity Method Investment (Details 1) - USD ($) | 2 Months Ended | 12 Months Ended | ||
Sep. 30, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | ||
Net income attributable to GWG | $ 17,507 | |||
Beneficient [Member] | ||||
Total revenues | $ 18,409,000 | |||
Net income | 8,291,000 | |||
Net income attributable to Beneficient common unitholders | 129,000 | |||
Net income attributable to GWG | [1] | $ 18,000 | ||
[1] | Our portion of net earnings from August 10, 2018 (Initial Transfer Date) to September 30, 2018 |
Equity Method Investment (Det_3
Equity Method Investment (Details Textual) - Beneficient [Member] - shares | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 28, 2018 | Sep. 30, 2018 | |
Equity Method Investment (Textual) | |||
Beneficient transaction, shares acquired | 40,500,000 | ||
Partnership interest of beneficient | 89.90% | 13.90% | 13.60% |
Maximum acquires beneficial ownership percentage | 20.00% | ||
Equity earnings of beneficient, description | We recorded $18,000 for our share of the net earnings of Beneficient for the period from August 10, 2018 to September 30, 2018. |
Credit Facility - Autobahn Fu_2
Credit Facility - Autobahn Funding Company LLC (Details) | Sep. 12, 2017USD ($) |
Autobahn Funding Company LLC [Member] | |
Credit Facility - Autobahn Funding Company LLC (Textual) | |
Senior credit facility | $ 105,000,000 |
Credit Facility - LNV Corpora_2
Credit Facility - LNV Corporation (Details) - LNV Corporation [Member] - USD ($) | 1 Months Ended | 12 Months Ended | |
Sep. 27, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | |
Credit Facility - LNV Corporation (Textual) | |||
Senior credit facility | $ 300,000,000 | ||
Maturity date | Sep. 27, 2029 | ||
Interest rate, description | Interest will accrue on amounts borrowed under the amended and restated senior credit facility at an annual interest rate, determined as of each date of borrowing or quarterly if there is no borrowing, equal to (A) the greater of 12-month LIBOR or the federal funds rate (as defined in the agreement) plus one-half of one percent per annum, plus (B) 7.50% per annum. | ||
Effective interest rate | 10.42% | ||
Outstanding amount of credit facility | $ 158,209,000 | $ 222,525,000 | |
Portfolio pledged, percentage | 65.20% |
Series I Secured Notes (Details
Series I Secured Notes (Details) | Sep. 08, 2017USD ($) |
Series I Secured Notes (Textual) | |
Redeemed aggregate value | $ 6,815,000 |
L Bonds (Details)
L Bonds (Details) - Renewable Secured Debentures [Member] | Dec. 31, 2018USD ($) |
Contractual Maturities | |
2019 | $ 144,627,000 |
2020 | 160,035,000 |
2021 | 117,230,000 |
2022 | 43,794,000 |
2023 | 73,646,000 |
2024 | 33,782,000 |
Thereafter | 89,038,000 |
Total | 662,152,000 |
Unamortized Deferred Financing Costs | |
2019 | 1,548,000 |
2020 | 4,741,000 |
2021 | 4,898,000 |
2022 | 1,885,000 |
2023 | 4,013,000 |
2024 | 1,765,000 |
Thereafter | 5,366,000 |
Total | $ 24,216,000 |
L Bonds (Details Textual)
L Bonds (Details Textual) - USD ($) | 12 Months Ended | |||
Dec. 31, 2018 | Dec. 31, 2017 | Jan. 31, 2018 | Dec. 01, 2017 | |
L Bonds (Textual) | ||||
Debentures offer for sale | $ 1,029,044,000 | |||
Weighted-average market interest rate | 7.11% | |||
Renewable Secured Debentures [Member] | ||||
L Bonds (Textual) | ||||
Debentures offer for sale | $ 1,000,000,000 | $ 1,000,000,000 | ||
Description of interest payment | Interest is payable monthly or annually depending on the election of the investor. | |||
Weighted-average market interest rate | 7.10% | 7.29% | ||
Amount outstanding under L bonds | $ 662,152,000 | $ 461,427,000 | ||
Amortization of deferred issuance costs | 8,982,000 | $ 6,940,000 | ||
Future expected amortization of deferred financing costs | $ 24,216,000 | |||
Amortization period of deferred financing cost | 7 years | |||
Common stock pledged as collateral, percentage | 12.00% |
Seller Trust L Bonds (Details)
Seller Trust L Bonds (Details) - USD ($) | 1 Months Ended | ||
Aug. 10, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | |
Seller Trust L Bonds (Textual) | |||
Interest rate | 7.11% | ||
Seller Trust L Bonds | $ 366,891,940 | ||
Principle amount outstanding | 1,029,044,000 | ||
GWG [Member] | |||
Seller Trust L Bonds (Textual) | |||
Seller Trust L Bonds | $ 366,892,000 | ||
Seller Trust L Bonds [Member] | |||
Seller Trust L Bonds (Textual) | |||
Maturity date | Aug. 9, 2023 | ||
Interest rate | 7.50% | ||
Description of interest payment | Interest is payable monthly in cash. | ||
Principle amount outstanding | $ 366,892,000 | $ 0 | |
Common stock pledged as collateral, percentage | 12.00% |
Series A Convertible Preferre_2
Series A Convertible Preferred Stock (Details) - Series A Convertible Preferred Stock [Member] - USD ($) | Oct. 09, 2017 | Sep. 30, 2012 |
Series A Convertible Preferred Stock (Textual) | ||
Preferred stock, liquidation preference per share | $ 7.50 | |
Series A preferred stock shares sold for cash | 3,278,000 | |
Consideration received on sale of Series A preferred stock | $ 24,582,000 | |
Cumulative dividends rate, percentage | 10.00% | |
Redemption payment, per share | $ 8.25 |
Redeemable Preferred Stock (Det
Redeemable Preferred Stock (Details) | Mar. 31, 2017USD ($)shares | Nov. 30, 2015Tradingdays$ / sharesshares | Dec. 31, 2018USD ($)$ / sharesshares | Dec. 31, 2017USD ($)$ / sharesshares |
Redeemable Preferred Stock (Textual) | ||||
Selling costs related to shares | $ | $ 4,142,294 | $ 9,027,190 | ||
Redeemable Preferred Stock [Member] | ||||
Redeemable Preferred Stock (Textual) | ||||
Company offering shares of redeemable preferred stock | shares | 100,000 | 100,000 | 100,000 | |
Par value per share | $ / shares | $ 1,000 | $ 0.001 | $ 0.001 | |
Dividend rate on redeemable preferred stock | 7.00% | |||
Redeemable preferred stock liquidation value per share | $ / shares | $ 1,000 | |||
Number of trading days | Tradingdays | 20 | |||
Minimum conversion price | $ / shares | $ 15 | |||
Preferred stock redemption, percentage | 15.00% | |||
Redeemable preferred stock, shares issued | shares | 99,127 | |||
Aggregate gross consideration | $ | $ 99,127,000 | |||
Selling costs related to shares | $ | $ 7,019,000 |
Series 2 Redeemable Preferred_2
Series 2 Redeemable Preferred Stock (Details) | Feb. 14, 2017Tradingdays$ / sharesshares | Apr. 30, 2018USD ($)shares | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) |
Series 2 Redeemable Preferred Stock (Textual) | ||||
Aggregate gross consideration | $ 56,238,128 | $ 127,279,847 | ||
Selling costs related to shares | $ 4,142,294 | $ 9,027,190 | ||
Series Two Redeemable Preferred Stock [Member] | ||||
Series 2 Redeemable Preferred Stock (Textual) | ||||
Public offering, shares | shares | 150,000 | |||
Market price for share | $ / shares | $ 1,000 | |||
Dividend rate, per annum | 7.00% | |||
Liquidation preference value, per share | $ / shares | $ 1,000 | |||
Number of trading days | Tradingdays | 20 | |||
Minimum conversion price | $ / shares | $ 12.75 | |||
Preferred stock redemption, percentage | 10.00% | |||
Preferred stock redemption, terms | The event of redemptions occurring less than one year after issuance, of 107% of the stated value. | |||
Number of shares offering to investors | shares | 149,979 | |||
Aggregate gross consideration | $ 149,979,000 | |||
Selling costs related to shares | $ 10,284,000 |
Series B Convertible Preferre_2
Series B Convertible Preferred Stock (Details) - USD ($) | Aug. 10, 2018 | Dec. 28, 2018 | Dec. 31, 2018 | Dec. 31, 2017 |
Series B Convertible Preferred Stock (Textual) | ||||
Series B Convertible Preferred Stock, Values issued | $ 50,000,000 | |||
Common Stock at a Conversion Price | $ 0.001 | $ 0.001 | ||
Series B Preferred Stock [Member] | ||||
Series B Convertible Preferred Stock (Textual) | ||||
Series B Convertible Preferred Stock, Values issued | $ 50,000,000 | $ 50,000,000 | ||
Series B Convertible Preferred Stock, Shares Issued | 5,000,000 | |||
Series B Convertible Preferred stock, Par value | $ 0.001 | |||
Preferred Stock, Per share Stated value | $ 10 | |||
Common Stock at a Conversion Price | $ 10 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | ||
Statutory federal income tax (benefit) | $ (25,085,000) | $ (7,728,000) |
State income taxes (benefit), net of federal benefit | (9,243,000) | (1,433,000) |
Impact of change in enacted rate | 2,605,000 | |
Change in valuation allowance | 33,999,000 | 4,222,000 |
Other permanent differences | 329,000 | 237,000 |
Total income tax expense (benefit) | $ (2,097,371) |
Income Taxes (Details 1)
Income Taxes (Details 1) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | ||
Current income tax expense (benefit) | ||
Deferred income tax expense (benefit) | (2,097,371) | |
Total income tax expense (benefit) | $ (2,097,371) |
Income Taxes (Details 2)
Income Taxes (Details 2) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Deferred tax assets: | ||
Note receivable from related party | $ 1,437,000 | |
Net operating loss carryforwards | 10,491,000 | 9,995,000 |
Other assets | 29,996,000 | 1,724,000 |
Subtotal | 40,487,000 | 13,156,000 |
Valuation allowance | (40,385,000) | (6,386,000) |
Deferred tax assets | 102,000 | 6,770,000 |
Deferred tax liabilities: | ||
Investment in life insurance policies | (6,630,000) | |
Other liabilities | (102,000) | (140,000) |
Net deferred tax asset (liability) |
Income Taxes (Details Textual)
Income Taxes (Details Textual) - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 28, 2018 | |
Income Taxes (Textual) | |||
Current income tax liability | |||
Valuation allowance against our total net deferred tax asset | 40,385,000 | ||
Federal net operating loss carryforwards | $ 36,501,000 | 34,775,000 | |
Net operating loss carryforwards expiration date | Dec. 31, 2031 | ||
Future utilization of net operating loss carryforwards, description | The NOL carryforward of $2,636,000 generated in 2018 is not subject to expiration. Future utilization of NOL carryforwards is subject to limitations under Section 382 of the Internal Revenue Code. This section generally relates to a more than 50 percent change in ownership over a three-year period. | ||
State NOL carryforwards | $ 36,475,000 | $ 34,749,000 | |
Annual Limitation on operating loss carryforward utilization | $ 7,564,000 |
Common Stock (Details)
Common Stock (Details) | 12 Months Ended | |
Dec. 31, 2018USD ($)$ / sharesshares | ||
Monthly Period December 2018 [Member] | ||
Number of Shares Purchased | 10,035 | |
Average Price Paid per Share | $ / shares | $ 6.82 | |
Monthly Period December 2018 One [Member] | ||
Number of Shares Purchased | 10,035 | |
Average Price Paid per Share | $ / shares | $ 6.82 | |
Share Repurchase Program[Member] | ||
Number of Shares Purchased | 10,035 | |
Maximum Dollar Value of Shares that May Yet Be Purchased Under the Program | $ | $ 1,432,000 | [1] |
Share Repurchase Program[Member] | Monthly Period December 2018 [Member] | ||
Number of Shares Purchased | 10,035 | |
Maximum Dollar Value of Shares that May Yet Be Purchased Under the Program | $ | $ 1,432,000 | |
[1] | The stock repurchase program expired on April 30, 2019. |
Common Stock (Details Textual)
Common Stock (Details Textual) - USD ($) | 1 Months Ended | 12 Months Ended | |||
Dec. 28, 2018 | Aug. 27, 2018 | Sep. 30, 2014 | Dec. 31, 2018 | Nov. 15, 2018 | |
Common Stock (Textual) | |||||
Aggregate purchase of common stock | $ 1,500,000 | ||||
Series B Converted [Member] | |||||
Common Stock (Textual) | |||||
Conversion of common stock shares | 5,000,000 | ||||
Conversion price per share | $ 10 | ||||
Beneficient transaction, description | The Beneficient Transaction, we issued 22,013,516 shares of common stock to the Seller Trusts at a market value of approximately $203.4 million in exchange for Beneficient common units. | ||||
IPO [Member] | |||||
Common Stock (Textual) | |||||
Issuance of common stock, shares | 800,000 | ||||
Common stock, par value | $ 12.50 | ||||
Net proceeds | $ 8,600,000 | ||||
Exercise price | $ 15.63 | ||||
Warrants issued | 16,000 | ||||
Warrants term | 9 months | ||||
Shareholders [Member] | |||||
Common Stock (Textual) | |||||
Dividend per share of common stock | $ 4.30 |
Stock Incentive Plan (Details)
Stock Incentive Plan (Details) - shares | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Stock Option [Member] | ||
Outstanding stock options: | ||
Beginning Balance | 1,636,948 | 1,582,399 |
Granted during the year | 377,950 | 428,599 |
Vested during the year | ||
Exercised during the year | (569,864) | (126,498) |
Forfeited during the year | (47,083) | (247,552) |
Ending Balance | 1,397,951 | 1,636,948 |
Vested [Member] | ||
Outstanding stock options: | ||
Beginning Balance | 857,192 | 738,065 |
Granted during the year | 63,950 | 61,099 |
Vested during the year | 503,503 | 327,061 |
Exercised during the year | (569,864) | (126,498) |
Forfeited during the year | (21,582) | (142,535) |
Ending Balance | 833,199 | 857,192 |
Un-vested [Member] | ||
Outstanding stock options: | ||
Beginning Balance | 779,756 | 844,334 |
Granted during the year | 314,000 | 367,500 |
Vested during the year | (503,503) | (327,061) |
Exercised during the year | ||
Forfeited during the year | (25,501) | (105,017) |
Ending Balance | 564,752 | 779,756 |
Stock Incentive Plan (Details 1
Stock Incentive Plan (Details 1) - Stock Appreciation Rights [Member] - shares | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Outstanding Stock Appreciation Rights: | ||
Beginning Balance | 342,972 | 239,735 |
Granted during the year | 113,650 | 104,987 |
Vested during the year | ||
Exercised during the year | (145,622) | |
Forfeited during the year | (39,235) | (1,750) |
Ending Balance | 271,765 | 342,972 |
Vested [Member] | ||
Outstanding Stock Appreciation Rights: | ||
Beginning Balance | 189,053 | 106,608 |
Granted during the year | 2,625 | 13,001 |
Vested during the year | 71,785 | 69,444 |
Exercised during the year | (145,622) | |
Forfeited during the year | ||
Ending Balance | 117,841 | 189,053 |
Un-vested [Member] | ||
Outstanding Stock Appreciation Rights: | ||
Beginning Balance | 153,919 | 133,127 |
Granted during the year | 111,025 | 91,986 |
Vested during the year | (71,785) | (69,444) |
Exercised during the year | ||
Forfeited during the year | (39,235) | (1,750) |
Ending Balance | 153,924 | 153,919 |
Stock Incentive Plan (Details 2
Stock Incentive Plan (Details 2) - $ / shares | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Vested [Member] | SARs [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Outstanding | 117,841 | 189,053 |
Weighted-Average Exercise Price | $ 8.88 | $ 8.54 |
Weighted-Average Remaining Life (years) | 5 years 7 days | 5 years 10 months 10 days |
Fair Value at Grant Date | $ 2.02 | $ 1.90 |
Vested [Member] | Total Vested [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Outstanding | 951,040 | 1,046,245 |
Weighted-Average Exercise Price | $ 8.88 | $ 8.14 |
Weighted-Average Remaining Life (years) | 5 years 9 months 29 days | 6 years 1 month 9 days |
Fair Value at Grant Date | $ 2.02 | $ 1.78 |
Vested [Member] | Stock Options [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Outstanding | 833,199 | 857,192 |
Weighted-Average Exercise Price | $ 8.88 | $ 8.05 |
Weighted-Average Remaining Life (years) | 5 years 11 months 12 days | 6 years 2 months 1 day |
Fair Value at Grant Date | $ 2.02 | $ 1.76 |
Unvested [Member] | SARs Unvested [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Outstanding | 153,924 | 153,919 |
Weighted-Average Exercise Price | $ 8.37 | $ 9.16 |
Weighted-Average Remaining Life (years) | 5 years 11 months 23 days | 6 years 2 months 27 days |
Fair Value at Grant Date | $ 2.09 | $ 2.02 |
Unvested [Member] | Total Unvested [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Outstanding | 718,676 | 933,675 |
Weighted-Average Exercise Price | $ 8.98 | $ 9.21 |
Weighted-Average Remaining Life (years) | 7 years 5 months 20 days | 7 years 3 months 19 days |
Fair Value at Grant Date | $ 2.30 | $ 2.15 |
Unvested [Member] | Stock Options Unvested [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Outstanding | 564,752 | 779,756 |
Weighted-Average Exercise Price | $ 9.15 | $ 9.21 |
Weighted-Average Remaining Life (years) | 7 years 10 months 17 days | 7 years 6 months |
Fair Value at Grant Date | $ 2.35 | $ 2.17 |
Stock Incentive Plan (Details T
Stock Incentive Plan (Details Textual) - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Stock Incentive Plan (Textual) | |||
Reserved for issuance under outstanding incentive awards | 2,662,097 | ||
Stock Appreciation Rights [Member] | |||
Stock Incentive Plan (Textual) | |||
Number of options vested | 118,000 | ||
Number of awards exercised | 146,000 | ||
Options exercise price description | The strike price of the SARs was between $6.75 and $10.38, which was equal to the market price of the common stock at the date of issuance. | ||
Market price for share | $ 8.83 | ||
Other accrued expenses | $ 349,000 | $ 551,000 | |
Employee compensation and benefits expense | $ 264,000 | $ 547,000 | |
Stock Appreciation Rights [Member] | GWG Holdings, Inc. [Member] | |||
Stock Incentive Plan (Textual) | |||
Outstanding stock options | 272,000 | ||
Stock Appreciation Rights (SARs) [Member] | |||
Stock Incentive Plan (Textual) | |||
Outstanding stock options | 271,765 | 342,972 | 239,735 |
Number of options vested | |||
Forfeited | 39,235 | 1,750 | |
Exercised during the year | 145,622 | ||
Restricted Stock Units (RSUs) [Member] | |||
Stock Incentive Plan (Textual) | |||
Restricted stock outstanding | 53,403 | ||
Restricted shares of common stock | 34,496 | ||
Restricted stock units vested current year | 68,993 | ||
2013 Stock Incentive Plan [Member] | |||
Stock Incentive Plan (Textual) | |||
Common stock options authorized | 6,000,000 | ||
Common stock options available for issuance | 3,337,903 | ||
Stock Options [Member] | |||
Stock Incentive Plan (Textual) | |||
Outstanding stock options | 1,398,000 | ||
Number of options vested | 833,000 | ||
Options exercise price description | The options were issued with an exercise price between $6.35 and $10.38 for those beneficially owning more than 10% of our common stock, and between $4.83 and $11.56 for all others, which is equal to the market price of the shares on the date of grant. | ||
Forfeited | 732,000 | ||
Exercised during the year | 724,000 | ||
Unrecognized compensation expense related to un-vested options | $ 1,109,000 | ||
Unrecognized compensation expense related to un-vested options, period of recognition | 3 years | ||
Compensation expense remaining vesting in 2019 | $ 651,000 | ||
Compensation expense remaining vesting in 2020 | 324,000 | ||
Compensation expense remaining vesting in 2021 | $ 134,000 | ||
Options vesting period | 3 years | ||
Expiry award grant term | 10 years | ||
Total intrinsic value of stock options exercised | $ 1,922,000 | ||
Aggregate intrinsic value of stock options outstanding | 805,000 | ||
Aggregate intrinsic value of stock options exercisable | $ 481,000 | ||
Stock Options [Member] | Minimum [Member] | |||
Stock Incentive Plan (Textual) | |||
Expected volatility rate | 20.45% | ||
Risk free rate | 2.36% | ||
Stock Options [Member] | Maximum [Member] | |||
Stock Incentive Plan (Textual) | |||
Expected volatility rate | 25.83% | ||
Risk free rate | 2.77% |
Other Expenses (Details)
Other Expenses (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Other Expenses [Abstract] | ||
Contract Labor | $ 1,453,000 | $ 550,000 |
Marketing | 1,856,000 | 2,226,000 |
Information Technology | 1,578,000 | 1,555,000 |
Servicing and Facility Fees | 1,782,000 | 1,226,000 |
Travel and Entertainment | 892,000 | 1,047,000 |
Insurance and Regulatory | 1,562,000 | 1,591,000 |
Charitable Contributions | 462,000 | |
Bad Debt Expense | 4,300,000 | |
General and Administrative | 2,572,000 | 3,822,000 |
Total Other Expenses | $ 15,994,487 | $ 12,478,676 |
Segment Reporting (Details)
Segment Reporting (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Segment EBT [Member] | ||
Total | $ (119,451,000) | $ (22,729,000) |
Income tax benefit | 2,097,000 | |
Net Loss | (119,451,000) | (20,632,000) |
Investment in Beneficient [Member] | Segment EBT [Member] | ||
Total | (106,000) | |
Revenue [Member] | ||
Total | (390,000) | 64,134,000 |
Revenue [Member] | Corporate & Other [Member] | ||
Total | 588,000 | 1,460,000 |
Revenue [Member] | Investment in Beneficient [Member] | ||
Total | 10,655,000 | |
Secondary Life Insurance [Member] | Segment EBT [Member] | ||
Total | (96,578,000) | (3,433,000) |
Secondary Life Insurance [Member] | Revenue [Member] | ||
Total | (11,633,000) | 62,674,000 |
Corporate & Other [Member] | Segment EBT [Member] | ||
Total | $ (22,767,000) | $ (19,296,000) |
Segment Reporting (Details 1)
Segment Reporting (Details 1) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Interest Expense [Member] | ||
Total | $ 80,136,000 | $ 54,419,000 |
Interest Expense [Member] | Corporate & Other [Member] | ||
Total | 1,000 | 10,000 |
Interest Expense [Member] | Investment in Beneficient [Member] | ||
Total | 10,778,000 | |
Interest Income [Member] | ||
Total | 13,026,000 | 986,000 |
Interest Income [Member] | Corporate & Other [Member] | ||
Total | 189,000 | 554,000 |
Interest Income [Member] | Investment in Beneficient [Member] | ||
Total | 10,655,000 | |
Secondary Life Insurance [Member] | Interest Expense [Member] | ||
Total | 69,357,000 | 54,409,000 |
Secondary Life Insurance [Member] | Interest Income [Member] | ||
Total | $ 2,182,000 | $ 432,000 |
Segment Reporting (Details 2)
Segment Reporting (Details 2) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Total | $ 1,480,867,000 | $ 818,856,000 |
Investment in Beneficient [Member] | ||
Total | 584,173,000 | |
Secondary Life Insurance [Member] | ||
Total | 889,665,000 | 814,231,000 |
Corporate & Other [Member] | ||
Total | $ 7,029,000 | $ 4,625,000 |
Commitments (Details)
Commitments (Details) | Dec. 31, 2018USD ($) |
Summary of minimum lease payments under amendment lease | |
2019 | $ 275,000 |
2020 | 284,000 |
2021 | 293,000 |
2022 | 302,000 |
2023 | 311,000 |
Thereafter | 593,000 |
Total | $ 2,058,000 |
Commitments (Details Textual)
Commitments (Details Textual) | Sep. 01, 2015ft² | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) |
Commitments (Textual) | |||
Description of lessor leasing arrangements | We entered into an amendment to our original lease that expanded the leased space to 17,687 square feet and extended the term through October 2025. | ||
Office space in square feet | ft² | 17,687 | ||
Lease term date | Oct. 31, 2025 | ||
Rent expenses | $ | $ 435,000 | $ 442,000 |
Guarantee of L Bonds and Sell_3
Guarantee of L Bonds and Seller Trust L Bonds (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
ASSETS | |||
Cash and cash equivalents | $ 114,587,084 | $ 114,421,491 | |
Restricted cash | 10,849,126 | 28,349,685 | |
Investment in life insurance policies, at fair value | 747,922,465 | 650,527,353 | |
Life insurance policy benefits receivable | 16,460,687 | 16,658,761 | |
Financing receivable from affiliate | 184,768,874 | ||
Equity method investment | 360,841,651 | ||
Other assets | 45,437,164 | 8,898,884 | |
Investment in subsidiaries | |||
TOTAL ASSETS | 1,480,867,051 | 818,856,174 | |
LIABILITIES | |||
Amended and Restated Senior credit facility with LNV Corporation | 148,977,596 | 212,238,192 | |
L Bonds | 651,402,663 | 447,393,568 | |
Seller Trust L Bonds | 366,891,940 | ||
Accounts payable | 9,276,507 | 6,394,439 | |
Interest and dividends payable | 18,555,293 | 15,427,509 | |
Other accrued expenses | 4,705,170 | 3,730,723 | |
TOTAL LIABILITIES | 1,199,809,169 | 685,184,431 | |
STOCKHOLDERS' EQUITY | |||
Member capital | |||
Redeemable preferred stock and Series 2 redeemable preferred stock | 215,973,039 | 173,115,447 | |
Common stock | 33,018 | 5,813 | |
Additional paid-in-capital | 249,662,168 | ||
Accumulated deficit | (184,610,343) | (39,449,517) | |
TOTAL STOCKHOLDERS' EQUITY | 281,057,882 | 133,671,743 | $ 67,298,498 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | 1,480,867,051 | 818,856,174 | |
Consolidation, Eliminations [Member] | |||
ASSETS | |||
Cash and cash equivalents | |||
Restricted cash | |||
Investment in life insurance policies, at fair value | |||
Life insurance policy benefits receivable | |||
Financing receivable from affiliate | |||
Equity method investment | |||
Other assets | |||
Investment in subsidiaries | (1,310,047,254) | (895,895,001) | |
TOTAL ASSETS | (1,310,047,254) | (895,895,001) | |
LIABILITIES | |||
Amended and Restated Senior credit facility with LNV Corporation | |||
L Bonds | |||
Seller Trust L Bonds | |||
Accounts payable | |||
Interest and dividends payable | |||
Other accrued expenses | |||
TOTAL LIABILITIES | |||
STOCKHOLDERS' EQUITY | |||
Member capital | (1,310,047,254) | (895,895,001) | |
Redeemable preferred stock and Series 2 redeemable preferred stock | |||
Common stock | |||
Additional paid-in-capital | |||
Accumulated deficit | |||
TOTAL STOCKHOLDERS' EQUITY | (1,310,047,254) | (895,895,001) | |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | (1,310,047,254) | (895,895,001) | |
Parent Company [Member] | |||
ASSETS | |||
Cash and cash equivalents | 113,293,682 | 111,952,829 | |
Restricted cash | |||
Investment in life insurance policies, at fair value | |||
Life insurance policy benefits receivable | |||
Financing receivable from affiliate | |||
Equity method investment | 360,841,651 | ||
Other assets | 42,944,402 | 1,912,203 | |
Investment in subsidiaries | 799,182,251 | 480,659,789 | |
TOTAL ASSETS | 1,316,261,986 | 594,524,821 | |
LIABILITIES | |||
Amended and Restated Senior credit facility with LNV Corporation | |||
L Bonds | 651,402,663 | 447,393,568 | |
Seller Trust L Bonds | 366,891,940 | ||
Accounts payable | 1,126,327 | 1,434,623 | |
Interest and dividends payable | 14,047,248 | 10,296,584 | |
Other accrued expenses | 1,735,926 | 1,728,303 | |
TOTAL LIABILITIES | 1,035,204,104 | 460,853,078 | |
STOCKHOLDERS' EQUITY | |||
Member capital | |||
Redeemable preferred stock and Series 2 redeemable preferred stock | 215,973,039 | 173,115,447 | |
Common stock | 33,018 | 5,813 | |
Additional paid-in-capital | 249,662,168 | ||
Accumulated deficit | (184,610,343) | (39,449,517) | |
TOTAL STOCKHOLDERS' EQUITY | 281,057,882 | 133,671,743 | |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | 1,316,261,986 | 594,524,821 | |
Guarantor Subsidiaries [Member] | |||
ASSETS | |||
Cash and cash equivalents | 232,387 | 1,486,623 | |
Restricted cash | 7,217,194 | 9,367,410 | |
Investment in life insurance policies, at fair value | 92,336,494 | 51,093,362 | |
Life insurance policy benefits receivable | 5,000,000 | 1,500,000 | |
Financing receivable from affiliate | 184,768,874 | ||
Equity method investment | |||
Other assets | 1,730,581 | 1,986,312 | |
Investment in subsidiaries | 510,865,003 | 415,235,212 | |
TOTAL ASSETS | 802,150,533 | 480,668,919 | |
LIABILITIES | |||
Amended and Restated Senior credit facility with LNV Corporation | |||
L Bonds | |||
Seller Trust L Bonds | |||
Accounts payable | 1,674,494 | 844,899 | |
Interest and dividends payable | |||
Other accrued expenses | 1,593,108 | 1,610,773 | |
TOTAL LIABILITIES | 3,267,602 | 2,455,672 | |
STOCKHOLDERS' EQUITY | |||
Member capital | 798,882,931 | 478,213,247 | |
Redeemable preferred stock and Series 2 redeemable preferred stock | |||
Common stock | |||
Additional paid-in-capital | |||
Accumulated deficit | |||
TOTAL STOCKHOLDERS' EQUITY | 798,882,931 | 478,213,247 | |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | 802,150,533 | 480,668,919 | |
Non-Guarantor Subsidiaries [Member] | |||
ASSETS | |||
Cash and cash equivalents | 1,061,015 | 982,039 | |
Restricted cash | 3,631,932 | 18,982,275 | |
Investment in life insurance policies, at fair value | 655,585,971 | 599,433,991 | |
Life insurance policy benefits receivable | 11,460,687 | 15,158,761 | |
Financing receivable from affiliate | |||
Equity method investment | |||
Other assets | 762,181 | 5,000,369 | |
Investment in subsidiaries | |||
TOTAL ASSETS | 672,501,786 | 639,557,435 | |
LIABILITIES | |||
Amended and Restated Senior credit facility with LNV Corporation | 148,977,596 | 212,238,192 | |
L Bonds | |||
Seller Trust L Bonds | |||
Accounts payable | 6,475,686 | 4,114,917 | |
Interest and dividends payable | 4,508,045 | 5,130,925 | |
Other accrued expenses | 1,376,136 | 391,647 | |
TOTAL LIABILITIES | 161,337,463 | 221,875,681 | |
STOCKHOLDERS' EQUITY | |||
Member capital | 511,164,323 | 417,681,754 | |
Redeemable preferred stock and Series 2 redeemable preferred stock | |||
Common stock | |||
Additional paid-in-capital | |||
Accumulated deficit | |||
TOTAL STOCKHOLDERS' EQUITY | 511,164,323 | 417,681,754 | |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ 672,501,786 | $ 639,557,435 |
Guarantee of L Bonds and Sell_4
Guarantee of L Bonds and Seller Trust L Bonds (Details 1) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
REVENUE | ||
Gain on life insurance policies, net | $ (14,104,572) | $ 62,114,403 |
Interest and other income | 13,714,281 | 2,019,515 |
TOTAL REVENUE | (390,291) | 64,133,918 |
EXPENSES | ||
Interest expense | 80,135,983 | 54,419,444 |
Employee compensation and benefits | 17,406,982 | 14,869,749 |
Legal and professional fees | 5,541,177 | 5,095,643 |
Other expenses | 15,994,487 | 12,478,676 |
TOTAL EXPENSES | 119,078,629 | 86,863,512 |
INCOME (LOSS) BEFORE EQUITY IN INCOME OF SUBSIDIARIES | (119,468,920) | (22,729,594) |
EQUITY IN INCOME OF SUBSIDIARIES | ||
NET INCOME (LOSS) BEFORE INCOME TAXES | (119,468,920) | (22,729,594) |
INCOME TAX EXPENSE | (2,097,371) | |
NET INCOME (LOSS) BEFORE EARNINGS FROM EQUITY METHOD INVESTMENT | (119,468,920) | (20,632,223) |
Earnings from equity method investment | 17,507 | |
NET INCOME (LOSS) | (119,451,413) | (20,632,223) |
Preferred stock dividends | 16,662,731 | 12,702,341 |
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS | (136,114,144) | (33,334,564) |
Eliminations [Member] | ||
REVENUE | ||
Gain on life insurance policies, net | ||
Interest and other income | (475,371) | |
TOTAL REVENUE | (475,371) | |
EXPENSES | ||
Interest expense | (80,321) | |
Employee compensation and benefits | ||
Legal and professional fees | ||
Other expenses | (395,050) | |
TOTAL EXPENSES | (475,371) | |
INCOME (LOSS) BEFORE EQUITY IN INCOME OF SUBSIDIARIES | ||
EQUITY IN INCOME OF SUBSIDIARIES | 98,925,567 | (71,212,850) |
NET INCOME (LOSS) BEFORE INCOME TAXES | 98,925,567 | (71,212,850) |
INCOME TAX EXPENSE | ||
NET INCOME (LOSS) BEFORE EARNINGS FROM EQUITY METHOD INVESTMENT | 98,925,567 | |
Earnings from equity method investment | ||
NET INCOME (LOSS) | 98,925,567 | (71,212,850) |
Preferred stock dividends | ||
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS | 98,925,567 | (71,212,850) |
Parent Company [Member] | ||
REVENUE | ||
Gain on life insurance policies, net | ||
Interest and other income | 8,585,681 | 244,202 |
TOTAL REVENUE | 8,585,681 | 244,202 |
EXPENSES | ||
Interest expense | 59,111,989 | 37,754,984 |
Employee compensation and benefits | 9,979,989 | 9,043,509 |
Legal and professional fees | 1,795,094 | 1,937,714 |
Other expenses | 6,907,502 | 7,058,209 |
TOTAL EXPENSES | 77,794,574 | 55,794,416 |
INCOME (LOSS) BEFORE EQUITY IN INCOME OF SUBSIDIARIES | (69,208,893) | (55,550,214) |
EQUITY IN INCOME OF SUBSIDIARIES | (50,260,027) | 32,820,620 |
NET INCOME (LOSS) BEFORE INCOME TAXES | (119,468,920) | (22,729,594) |
INCOME TAX EXPENSE | (2,097,371) | |
NET INCOME (LOSS) BEFORE EARNINGS FROM EQUITY METHOD INVESTMENT | (119,468,920) | |
Earnings from equity method investment | 17,507 | |
NET INCOME (LOSS) | (119,451,413) | (20,632,223) |
Preferred stock dividends | 16,662,731 | 12,702,341 |
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS | (136,114,144) | (33,334,564) |
Guarantor Subsidiaries [Member] | ||
REVENUE | ||
Gain on life insurance policies, net | 8,341,206 | 6,979,773 |
Interest and other income | 4,278,809 | 496,886 |
TOTAL REVENUE | 12,620,015 | 7,476,659 |
EXPENSES | ||
Interest expense | 930,837 | |
Employee compensation and benefits | 5,741,776 | 5,310,498 |
Legal and professional fees | 863,851 | 962,778 |
Other expenses | 1,994,807 | 2,715,374 |
TOTAL EXPENSES | 8,600,434 | 9,919,487 |
INCOME (LOSS) BEFORE EQUITY IN INCOME OF SUBSIDIARIES | 4,019,581 | (2,442,828) |
EQUITY IN INCOME OF SUBSIDIARIES | (48,665,540) | 38,392,230 |
NET INCOME (LOSS) BEFORE INCOME TAXES | (44,645,959) | 35,949,402 |
INCOME TAX EXPENSE | ||
NET INCOME (LOSS) BEFORE EARNINGS FROM EQUITY METHOD INVESTMENT | (44,645,959) | |
Earnings from equity method investment | ||
NET INCOME (LOSS) | (44,645,959) | 35,949,402 |
Preferred stock dividends | ||
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS | (44,645,959) | 35,949,402 |
Non-Guarantor Subsidiaries [Member] | ||
REVENUE | ||
Gain on life insurance policies, net | (22,445,778) | 55,134,630 |
Interest and other income | 849,791 | 1,753,798 |
TOTAL REVENUE | (21,595,987) | 56,888,428 |
EXPENSES | ||
Interest expense | 21,023,994 | 15,813,944 |
Employee compensation and benefits | 1,685,217 | 515,742 |
Legal and professional fees | 2,882,232 | 2,195,151 |
Other expenses | 7,092,178 | 3,100,143 |
TOTAL EXPENSES | 32,683,621 | 21,624,980 |
INCOME (LOSS) BEFORE EQUITY IN INCOME OF SUBSIDIARIES | (54,279,608) | 35,263,448 |
EQUITY IN INCOME OF SUBSIDIARIES | ||
NET INCOME (LOSS) BEFORE INCOME TAXES | (54,279,608) | 35,263,448 |
INCOME TAX EXPENSE | ||
NET INCOME (LOSS) BEFORE EARNINGS FROM EQUITY METHOD INVESTMENT | (54,279,608) | |
Earnings from equity method investment | ||
NET INCOME (LOSS) | (54,279,608) | 35,263,448 |
Preferred stock dividends | ||
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS | $ (54,279,608) | $ 35,263,448 |
Guarantee of L Bonds and Sell_5
Guarantee of L Bonds and Seller Trust L Bonds (Details 2) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net income (loss) | $ (119,451,413) | $ (20,632,223) |
Adjustments to reconcile net income (loss) to net cash flows used in operating activities: | ||
Change in fair value of life insurance policies | 10,344,029 | (66,760,811) |
Amortization of deferred financing and issuance costs | 10,036,955 | 8,780,847 |
Amortization of discount or premium on financing receivables | (13,953) | |
Provision for uncollectible policy benefit receivable | 4,300,000 | |
Earnings from equity method investment | (17,507) | |
Stock-based compensation | 2,182,125 | 1,424,625 |
Deferred income taxes | (2,097,371) | |
Preferred stock issued in lieu of cash dividends | 498,659 | |
(Increase) decrease in operating assets: | ||
Life insurance policy benefits receivable | (4,101,926) | (11,313,761) |
Interest receivable added to loan principal | (10,533,632) | |
Other assets | 4,405,054 | 982,713 |
Increase (decrease) in operating liabilities: | ||
Accounts payable | 2,882,069 | 4,167,728 |
Interest and dividends payable | 3,268,969 | 2,708,623 |
Other accrued expenses | 1,220,176 | 1,198,197 |
NET CASH FLOWS USED IN OPERATING ACTIVITIES | (95,479,054) | (81,042,774) |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Investment in life insurance policies | (128,502,654) | (88,643,819) |
Carrying value of matured life insurance policies | 20,763,516 | 16,069,632 |
Equity investment acquired | (3,204,016) | |
Other investments acquired | (3,037,234) | |
NET CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES | (113,980,388) | (72,574,187) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Net borrowings on (repayments of) senior debt | (64,315,618) | 59,799,649 |
Payments for issuance of senior debt | (4,510,388) | |
Payments for redemption of Series I Secured Notes | (16,613,667) | |
Proceeds from issuance of L Bonds | 263,964,554 | 131,796,220 |
Payments for issuance of L Bonds | (17,379,101) | (10,896,925) |
Payments for redemption of L Bonds | (48,026,551) | (60,848,460) |
Issuance of common stock | 614,193 | |
Proceeds from issuance of convertible preferred stock | 50,000,000 | |
Redemption of common stock | (1,603,560) | |
Proceeds from issuance of redeemable preferred stock | 56,238,128 | 127,279,847 |
Payments for issuance of redeemable preferred stock | (4,142,294) | (9,027,190) |
Payments for redemption of redeemable preferred stock | (2,456,692) | (22,598,626) |
Common stock dividends | (25,709,412) | |
Preferred stock dividends | (16,662,731) | (12,702,341) |
Issuance of member capital | ||
NET CASH FLOWS PROVIDED BY FINANCING ACTIVITIES | 192,124,476 | 180,074,559 |
NET INCREASE (DECREASE) IN CASH, AND CASH EQUIVALENTS AND RESTRICTED CASH | (17,334,966) | 26,457,598 |
CASH, CASH EQUIVALENTS AND RESTRICTED CASH | ||
BEGINNING OF PERIOD | 142,771,176 | 116,313,578 |
END OF PERIOD | 125,436,210 | 142,771,176 |
Eliminations [Member] | ||
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net income (loss) | 98,925,567 | (71,212,850) |
Adjustments to reconcile net income (loss) to net cash flows used in operating activities: | ||
Equity of subsidiaries | (98,925,567) | 71,212,850 |
Change in fair value of life insurance policies | ||
Amortization of deferred financing and issuance costs | ||
Amortization of discount or premium on financing receivables | ||
Earnings from equity method investment | ||
Stock-based compensation | ||
Deferred income taxes | ||
Preferred stock issued in lieu of cash dividends | ||
(Increase) decrease in operating assets: | ||
Life insurance policy benefits receivable | ||
Other assets | 332,546,217 | 42,435,842 |
Increase (decrease) in operating liabilities: | ||
Accounts payable | ||
Interest and dividends payable | ||
Other accrued expenses | ||
NET CASH FLOWS USED IN OPERATING ACTIVITIES | 332,546,217 | 42,435,842 |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Investment in life insurance policies | ||
Carrying value of matured life insurance policies | ||
Equity investment acquired | ||
Other investments acquired | ||
NET CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES | ||
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Net borrowings on (repayments of) senior debt | ||
Payments for issuance of senior debt | ||
Payments for redemption of Series I Secured Notes | ||
Proceeds from issuance of L Bonds | ||
Payments for issuance of L Bonds | ||
Payments for redemption of L Bonds | ||
Issuance of common stock | ||
Proceeds from issuance of convertible preferred stock | ||
Redemption of common stock | ||
Proceeds from issuance of redeemable preferred stock | ||
Payments for issuance of redeemable preferred stock | ||
Payments for redemption of redeemable preferred stock | ||
Common stock dividends | ||
Preferred stock dividends | ||
Issuance of member capital | (332,546,217) | (42,435,842) |
NET CASH FLOWS PROVIDED BY FINANCING ACTIVITIES | (332,546,217) | (42,435,842) |
NET INCREASE (DECREASE) IN CASH, AND CASH EQUIVALENTS AND RESTRICTED CASH | ||
CASH, CASH EQUIVALENTS AND RESTRICTED CASH | ||
BEGINNING OF PERIOD | ||
END OF PERIOD | ||
Parent [Member] | ||
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net income (loss) | (119,451,413) | (20,632,223) |
Adjustments to reconcile net income (loss) to net cash flows used in operating activities: | ||
Equity of subsidiaries | 50,260,028 | (32,820,620) |
Change in fair value of life insurance policies | ||
Amortization of deferred financing and issuance costs | 8,981,935 | 6,939,841 |
Amortization of discount or premium on financing receivables | 628,528 | |
Earnings from equity method investment | (17,507) | |
Stock-based compensation | 2,182,125 | 1,424,625 |
Deferred income taxes | (2,097,371) | |
Preferred stock issued in lieu of cash dividends | 498,659 | |
(Increase) decrease in operating assets: | ||
Life insurance policy benefits receivable | ||
Interest receivable added to loan principal | (7,045,791) | |
Other assets | (188,366,280) | (15,870,956) |
Increase (decrease) in operating liabilities: | ||
Accounts payable | (308,295) | 581,153 |
Interest and dividends payable | 4,025,326 | 3,771,709 |
Other accrued expenses | 253,353 | 278,000 |
NET CASH FLOWS USED IN OPERATING ACTIVITIES | (248,857,991) | (57,927,183) |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Investment in life insurance policies | ||
Carrying value of matured life insurance policies | ||
Equity investment acquired | (3,204,016) | |
Other investments acquired | (3,037,234) | |
NET CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES | (6,241,250) | |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Net borrowings on (repayments of) senior debt | ||
Payments for issuance of senior debt | ||
Payments for redemption of Series I Secured Notes | ||
Proceeds from issuance of L Bonds | 263,964,554 | 131,796,220 |
Payments for issuance of L Bonds | (17,379,101) | (10,896,925) |
Payments for redemption of L Bonds | (48,026,551) | (60,848,460) |
Issuance of common stock | 614,193 | |
Proceeds from issuance of convertible preferred stock | 50,000,000 | |
Redemption of common stock | (1,603,560) | |
Proceeds from issuance of redeemable preferred stock | 56,238,128 | 127,279,847 |
Payments for issuance of redeemable preferred stock | (4,142,294) | (9,027,190) |
Payments for redemption of redeemable preferred stock | (2,456,692) | (22,598,626) |
Common stock dividends | (25,709,412) | |
Preferred stock dividends | (16,662,731) | (12,702,341) |
Issuance of member capital | ||
NET CASH FLOWS PROVIDED BY FINANCING ACTIVITIES | 256,440,094 | 141,398,965 |
NET INCREASE (DECREASE) IN CASH, AND CASH EQUIVALENTS AND RESTRICTED CASH | 1,340,853 | 83,471,782 |
CASH, CASH EQUIVALENTS AND RESTRICTED CASH | ||
BEGINNING OF PERIOD | 111,952,829 | 28,481,047 |
END OF PERIOD | 113,293,682 | 111,952,829 |
Guarantor Subsidiaries [Member] | ||
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net income (loss) | (44,645,959) | 35,949,402 |
Adjustments to reconcile net income (loss) to net cash flows used in operating activities: | ||
Equity of subsidiaries | 48,665,539 | (38,392,230) |
Change in fair value of life insurance policies | (4,262,774) | (7,746,744) |
Amortization of deferred financing and issuance costs | 208,829 | |
Amortization of discount or premium on financing receivables | (642,481) | |
Earnings from equity method investment | ||
Stock-based compensation | ||
Deferred income taxes | ||
Preferred stock issued in lieu of cash dividends | ||
(Increase) decrease in operating assets: | ||
Life insurance policy benefits receivable | (3,500,000) | (1,500,000) |
Interest receivable added to loan principal | (3,487,841) | |
Other assets | (144,146,549) | (24,497,313) |
Increase (decrease) in operating liabilities: | ||
Accounts payable | 829,595 | 113,202 |
Interest and dividends payable | (3,743,277) | |
Other accrued expenses | (17,665) | 1,066,743 |
NET CASH FLOWS USED IN OPERATING ACTIVITIES | (151,208,135) | (38,541,388) |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Investment in life insurance policies | (41,404,136) | (3,022,439) |
Carrying value of matured life insurance policies | 4,423,779 | 2,091,713 |
Equity investment acquired | ||
Other investments acquired | ||
NET CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES | (36,980,357) | (930,726) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Net borrowings on (repayments of) senior debt | ||
Payments for issuance of senior debt | (1,076,118) | |
Payments for redemption of Series I Secured Notes | (16,613,667) | |
Proceeds from issuance of L Bonds | ||
Payments for issuance of L Bonds | ||
Payments for redemption of L Bonds | ||
Issuance of common stock | ||
Proceeds from issuance of convertible preferred stock | ||
Redemption of common stock | ||
Proceeds from issuance of redeemable preferred stock | ||
Payments for issuance of redeemable preferred stock | ||
Payments for redemption of redeemable preferred stock | ||
Common stock dividends | ||
Preferred stock dividends | ||
Issuance of member capital | 184,784,040 | 16,537,331 |
NET CASH FLOWS PROVIDED BY FINANCING ACTIVITIES | 184,784,040 | (1,152,454) |
NET INCREASE (DECREASE) IN CASH, AND CASH EQUIVALENTS AND RESTRICTED CASH | (3,404,452) | (40,624,568) |
CASH, CASH EQUIVALENTS AND RESTRICTED CASH | ||
BEGINNING OF PERIOD | 10,854,033 | 51,478,601 |
END OF PERIOD | 7,449,581 | 10,854,033 |
Non-Guarantor Subsidiaries [Member] | ||
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net income (loss) | (54,279,608) | 35,263,448 |
Adjustments to reconcile net income (loss) to net cash flows used in operating activities: | ||
Equity of subsidiaries | ||
Change in fair value of life insurance policies | 14,606,803 | (59,014,067) |
Amortization of deferred financing and issuance costs | 1,055,020 | 1,632,177 |
Amortization of discount or premium on financing receivables | ||
Provision for uncollectible policy benefit receivable | 4,300,000 | |
Earnings from equity method investment | ||
Stock-based compensation | ||
Deferred income taxes | ||
Preferred stock issued in lieu of cash dividends | ||
(Increase) decrease in operating assets: | ||
Life insurance policy benefits receivable | (601,926) | (9,813,761) |
Interest receivable added to loan principal | ||
Other assets | 4,371,666 | (1,084,860) |
Increase (decrease) in operating liabilities: | ||
Accounts payable | 2,360,769 | 3,473,373 |
Interest and dividends payable | (756,357) | 2,680,191 |
Other accrued expenses | 984,488 | (146,546) |
NET CASH FLOWS USED IN OPERATING ACTIVITIES | (27,959,145) | (27,010,045) |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Investment in life insurance policies | (87,098,518) | (85,621,380) |
Carrying value of matured life insurance policies | 16,339,737 | 13,977,919 |
Equity investment acquired | ||
Other investments acquired | ||
NET CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES | (70,758,781) | (71,643,461) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Net borrowings on (repayments of) senior debt | (64,315,618) | 59,799,649 |
Payments for issuance of senior debt | (3,434,270) | |
Payments for redemption of Series I Secured Notes | ||
Proceeds from issuance of L Bonds | ||
Payments for issuance of L Bonds | ||
Payments for redemption of L Bonds | ||
Issuance of common stock | ||
Proceeds from issuance of convertible preferred stock | ||
Redemption of common stock | ||
Proceeds from issuance of redeemable preferred stock | ||
Payments for issuance of redeemable preferred stock | ||
Payments for redemption of redeemable preferred stock | ||
Common stock dividends | ||
Preferred stock dividends | ||
Issuance of member capital | 147,762,177 | 25,898,511 |
NET CASH FLOWS PROVIDED BY FINANCING ACTIVITIES | 83,446,559 | 82,263,890 |
NET INCREASE (DECREASE) IN CASH, AND CASH EQUIVALENTS AND RESTRICTED CASH | (15,271,367) | (16,389,616) |
CASH, CASH EQUIVALENTS AND RESTRICTED CASH | ||
BEGINNING OF PERIOD | 19,964,314 | 36,353,930 |
END OF PERIOD | $ 4,692,947 | $ 19,964,314 |
Concentration (Details)
Concentration (Details) | Dec. 31, 2018 | Dec. 31, 2017 |
John Hancock [Member] | ||
Summary of the face value of insurance contracts with specific life insurance companies | ||
Face value percentage of insurance policies with specific life insurance companies | 13.71% | 15.57% |
Lincoln National [Member] | ||
Summary of the face value of insurance contracts with specific life insurance companies | ||
Face value percentage of insurance policies with specific life insurance companies | 11.33% | 10.80% |
AXA Equitable [Member] | ||
Summary of the face value of insurance contracts with specific life insurance companies | ||
Face value percentage of insurance policies with specific life insurance companies | 10.83% | 11.88% |
Concentration (Details 1)
Concentration (Details 1) | Dec. 31, 2018 | Dec. 31, 2017 |
California [Member] | ||
Summary of the number of insurance contracts held in specific states exceeding 10% of the total face value held by the Company | ||
Percentage of insurance policies held in specific states | 18.02% | 18.60% |
Florida [Member] | ||
Summary of the number of insurance contracts held in specific states exceeding 10% of the total face value held by the Company | ||
Percentage of insurance policies held in specific states | 15.34% | 20.16% |
Concentration (Details Textual)
Concentration (Details Textual) | 12 Months Ended |
Dec. 31, 2018 | |
Concentration (Textual) | |
Percentage of portfolio | 10.00% |
Description of credit risk arising from financial instruments | The Company (i) acquired a limited partnership investment in the common units of BEN LP, (ii) entered into a Commercial Loan with Beneficient as borrower, and (iii) received an Option Agreement to acquire additional common units of BEN LP. The total carrying value of these investments at December 31, 2018 is $584,173,000, representing 39.4% of the Company's consolidated assets. Currently there is no liquid market for the common units of BEN LP and it is possible none will develop. Although we intend to hold the Commercial Loan to maturity, there is currently no liquid market for this loan and it is possible none will develop. |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) | 1 Months Ended | 12 Months Ended | ||||
Jul. 03, 2019 | May 31, 2019 | Apr. 30, 2019 | Apr. 26, 2019 | Apr. 15, 2019 | Dec. 31, 2018 | |
Beneficient Company Holdings, L.P. [Member] | ||||||
Subsequent Events (Textual) | ||||||
Subsequent events, description | As shown on BEN LP's Consolidated Statements of Changes In Equity (Deficit), attached at page 6 of Exhibit 99.4, at December 31, 2018, there was $1,013,693,448 of Preferred Series A Subclass 1 Unit accounts (the "Preferred Series A") and $58,129,760 of Class S Ordinary Units issued. A description of each of these interests is included in footnote 12 - Equity of BEN LP's audited consolidated financial statements. | |||||
Subsequent Events [Member] | ||||||
Subsequent Events (Textual) | ||||||
Face value of insurance benefits | $ 53,957,000 | |||||
Issue of L bonds | $ 178,938,000 | |||||
Agreed to transfer shares of outstanding common stock | 3,952,155 | |||||
Employees will collectively receive bonuses amount | $ 4,500,000 | |||||
Annual base salary | $ 650,000 | |||||
Percentage of annual cash bonus | 150.00% | |||||
Award grant performance share | 129,717 | |||||
Target maximum award | 259,434 | |||||
Principal amount | $ 65,000,000 | |||||
Ownership percentage | 90.00% | |||||
Aggregate outstanding principal | 16.70% | |||||
Description of advance to principal amount | The principal amount of $50,000,000 was funded on June 3, 2019 and, subject to satisfaction of certain customary conditions, it is anticipated that the second advance, in the principal amount of $15,000,000, will be funded no sooner than September 15, 2019 and no later than December 31, 2019. The Loan bears interest at 7.0% per annum, with interest payable at maturity, and matures on June 30, 2023. | |||||
Subsequent Events [Member] | Beneficient Company Holdings, L.P. [Member] | ||||||
Subsequent Events (Textual) | ||||||
Ownership percentage | 100.00% | |||||
Subsequent events, description | The Preferred Series A holders can convert up to 20% of the sub-capital balance in any calendar year into Class S Ordinary Units on or after January 1, 2021. Upon such an election, a holder of Preferred Series A will be issued Class S Ordinary Units necessary to provide the holder with a number of Class S Ordinary Units that, in the aggregate, equal (a) the balance of the holder's capital account associated with the Preferred Series A Subclass 1 Unit accounts being converted divided by (b) $8.50. | |||||
Subsequent Events [Member] | Beneficient [Member] | ||||||
Subsequent Events (Textual) | ||||||
Minimum retained ownership percentage | 15.00% | |||||
Maximum ownership percentage | 15.00% | |||||
Beneficient REUs (Restricted equity units) description | A total of 3.4 million Beneficient REUs have been approved for granting in 2019 that will vest upon the grant date, subject to the performance condition vesting described above. A total of 6.1 million Beneficient REUs have been approved for granting in 2019 that will vest over the completion of a 3-year service period beginning on the grant date, subject to the performance condition described above. All awards are anticipated to be classified in equity. Based on the grant date fair value, the estimated total Beneficient compensation expense attributable to these awards, assuming all vest, is approximately $90 to $100 million. |