Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Jun. 30, 2017 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | Life Partners Position Holder Trust | |
Entity Central Index Key | 1,692,144 | |
Current Fiscal Year End Date | --12-31 | |
Entity Well-known Seasoned Issuer | No | |
Entity Voluntary Filers | No | |
Entity Current Reporting Status | No | |
Entity Filer Category | Smaller Reporting Company | |
Entity Public Float | $ 0 | |
Entity Common Stock, Shares Outstanding | 0 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | FY | |
Document Type | 10-K | |
Amendment Flag | false | |
Document Period End Date | Dec. 31, 2017 |
BALANCE SHEET
BALANCE SHEET - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Assets | ||
Cash | $ 1,800,047 | $ 23,927,247 |
Maturities receivable | 19,438,534 | 7,386,420 |
Premiums receivable, net | 0 | 661,878 |
Prepaids and other assets | 81,703 | 164,867 |
Restricted cash | 76,304,593 | 86,404,674 |
Life insurance policies | 272,140,787 | 263,579,040 |
Total assets | 369,765,664 | 382,124,126 |
Liabilities | ||
Notes Payable | 74,086,192 | 94,010,671 |
Assumed tax liability | 2,243,302 | 4,102,099 |
Creditors trust funding | 0 | 10,000,000 |
Premium liability | 30,225,729 | 25,776,263 |
Maturity liabilities | 23,643,936 | 38,026,076 |
Accounts payable | 34,507 | 200,072 |
Assumed liabilities | 18,293 | 5,741,922 |
Accrued expenses | 572,317 | 517,469 |
Commitments and contingencies (Note 2) | ||
Total liabilities | 130,824,276 | 178,374,572 |
Net assets | 238,941,388 | 203,749,554 |
Life Partners IRA Holder Partnership, LLC [Member] | ||
Assets | ||
Investment in Life Partners Position Holder Trust | 150,752,520 | 139,451,651 |
Total assets | 150,752,520 | 139,451,651 |
Liabilities | ||
Due to the Life Partners Position Holder Trust | 35,526 | 0 |
Total liabilities | 35,526 | 0 |
Net assets | $ 150,716,994 | $ 139,451,651 |
STATEMENT OF OPERATIONS
STATEMENT OF OPERATIONS - USD ($) | 1 Months Ended | 12 Months Ended |
Dec. 31, 2016 | Dec. 31, 2017 | |
Income | ||
Change in fair value of life insurance policies | $ 2,559,020 | $ 49,930,097 |
Other income | 0 | 672,712 |
Total income | 2,559,020 | 50,602,809 |
Expenses | ||
Interest expense | 741,855 | 7,083,398 |
Legal Fees | 728,198 | 4,116,354 |
Insurance | 88,952 | 105,100 |
Professional fees | 70,515 | 3,277,443 |
Other general and administrative | 30,925 | 828,680 |
Total expenses | 1,660,445 | 15,410,975 |
Net increase in net assets resulting from operations | 898,575 | 35,191,834 |
Life Partners IRA Holder Partnership, LLC [Member] | ||
Income | ||
Equity income from Life Partners Position Holder Trust | 615,008 | 11,300,869 |
Expenses | ||
Professional fees | 0 | 35,526 |
Net increase in net assets resulting from operations | $ 615,008 | $ 11,265,343 |
STATEMENT OF CHANGES IN NET ASS
STATEMENT OF CHANGES IN NET ASSETS - USD ($) | 1 Months Ended | 12 Months Ended |
Dec. 31, 2016 | Dec. 31, 2017 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||
Net assets, beginning of period | $ 0 | $ 203,749,554 |
Contributed assets | 478,504,933 | 0 |
Liabilities assumed | (275,653,954) | 0 |
Net income from operations | 898,575 | 35,191,834 |
Net assets, end of period | 203,749,554 | 238,941,388 |
Life Partners IRA Holder Partnership, LLC [Member] | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||
Net assets, beginning of period | 0 | 139,451,651 |
Capital contributions | 138,836,643 | 0 |
Net income from operations | 615,008 | 11,265,343 |
Net assets, end of period | $ 139,451,651 | $ 150,716,994 |
STATEMENT OF CASH FLOWS
STATEMENT OF CASH FLOWS - USD ($) | 1 Months Ended | 12 Months Ended |
Dec. 31, 2016 | Dec. 31, 2017 | |
Cash flows from operating activities: | ||
Net income from operations | $ 898,575 | $ 35,191,834 |
Adjustments to reconcile net increase in net assets to net cash used in operations: | ||
Change in fair value of life insurance policies | (2,559,020) | (49,930,097) |
Change in assets and liabilities: | ||
Premiums receivable, net | 2,382,480 | 661,878 |
Prepaids and other assets | (10,587) | 83,164 |
Assumed tax liability | 0 | (1,858,797) |
Creditor trust funding | 0 | (10,000,000) |
Premium liability | 0 | 4,449,466 |
Maturity liabilities | (98,098,679) | (14,382,140) |
Accounts payable | 198,750 | (165,565) |
Assumed liabilities | (27,720,460) | (5,723,629) |
Accrued expenses | 517,469 | 54,848 |
Net cash flows (used in) operating activities | (124,391,472) | (41,619,038) |
Cash flows from investing activities: | ||
Premiums paid on life settlements | 0 | (37,545,076) |
Net proceeds from maturity of life settlements | (183,744) | 66,861,312 |
Net cash flows provided by (used in) investing activities | (183,744) | 29,316,236 |
Cash flows from financing activities: | ||
Contributed cash | 207,083,599 | 0 |
Proceeds from issuance of notes payable | 55,000,000 | 0 |
Payment of maturity funds facility | (27,176,462) | 0 |
Payments on notes payable | 0 | (19,924,479) |
Net cash flows provided by (used in) financing activities | 234,907,137 | (19,924,479) |
Net increase (decrease) in cash | 110,331,921 | (32,227,281) |
Cash, beginning of period | 0 | 110,331,921 |
Cash, end of period | 110,331,921 | 78,104,640 |
Supplemental cash flow information: | ||
Cash | 23,927,247 | 1,800,047 |
Restricted cash | 86,404,674 | 76,304,593 |
Cash paid for interest | 273,974 | 7,325,023 |
Life Partners IRA Holder Partnership, LLC [Member] | ||
Cash flows from operating activities: | ||
Net income from operations | 615,008 | 11,265,343 |
Adjustments to reconcile net increase in net assets to net cash used in operations: | ||
Change in Investment in Life Partners Position Holder Trust | (615,008) | (11,300,869) |
Change in assets and liabilities: | ||
Change in Due to/from Life Partners Position Holder Trust | 35,526 | |
Net cash flows (used in) operating activities | 0 | 0 |
Cash flows from financing activities: | ||
Net increase (decrease) in cash | 0 | 0 |
Cash, beginning of period | 0 | 0 |
Cash, end of period | $ 0 | $ 0 |
Operations and Significant Acco
Operations and Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2017 | |
Operations and Significant Accounting Policies [Abstract] | |
Operations and Significant Accounting Policies | Note 1 - Operations and Significant Accounting Policies Operations Life Partners Position Holder Trust (the “Trust”) was created on December 9, 2016, pursuant to the Revised Third Amended Joint Plan of Reorganization of Life Partners Holdings, Inc., et al. In connection with its formation and the inception of its activities on December 9, 2016, the Trust issued a total of 1,012,355,948 units of beneficial interest (the “Units”) to the fractional interest holders having claims in the Debtors bankruptcy, pursuant to the Plan. Each fractional interest holder received a Unit for each dollar of expected death benefit such holder contributed to the Trust. As of December 31, 2017, there were 10,187 holders of the 1,162,059,511 Units outstanding. As of December 31, 2016, there were 12,243 holders of the 1,012,364,792 Units outstanding. The Trust owns a portfolio of life insurance policies; a portion of the policies is encumbered by the economic interest of continuing fractional interest holders. As of December 31, 2017, the Trust’s portion of the portfolio consists of 3,140 life insurance policies, with a fair value of $272.1 million and an aggregate face value of approximately $1.3 billion. As of December 31, 2016, the Trust’s portion of the portfolio consists of 3,252 life insurance policies, with a fair value of $263.6 million and an aggregate face value of approximately $1.3 billion. The fair value of the interests in the life insurance policies owned by continuing fractional interest holders are not reflected in the financial statements of the Trust. A summary of contributed assets and liabilities assumed by the Trust on December 9, 2016 were as follows: Contributed assets Cash $ 207,083,599 Life insurance policies 267,769,937 Premiums receivable 3,044,358 Prepaids and other assets 607,039 $ 478,504,933 Assumed liabilities Maturity funds facility $ 27,176,462 Maturity liability 136,124,755 Premium escrow liability 25,776,263 Assumed tax liability 4,102,099 Notes payable 39,010,671 Creditor's trust funding 10,000,000 Assumed liabilities 33,462,382 Other 1,322 $ 275,653,954 Description of Securities Units represent beneficial interests in the Trust, and all holders of Units are entitled to receive cash distributions from the Trust in accordance with their respective pro rata shares. A Trust beneficiary’s respective ‘‘Pro Rata Share’’ means the ratio, expressed as a percentage, of (i) the number of Units which such Trust Beneficiary is the registered owner, to (ii) the total number of Units outstanding as of the measurement date, subject to modification for purposes of distributing any recovered assets. Under the Plan, the Trustee will distribute at least annually to the Unit holders all of the distributable cash (as defined in the Position Holder Trust Agreement) generated during each calendar year, subject to any reserve established by the Trustee reasonably necessary to maintain the value of the Registrant’s assets or to meet claims and contingent liabilities. All distributions by the Trust will be made in accordance with such holder’s Pro Rata share of the outstanding Units. Summary of Significant Accounting Policies Basis of Presentation The Trust's primary purpose is the liquidation of the Trust's assets and the distribution of proceeds to its beneficial interest holders. The Trust expects that fulfilling its purpose requires a significant amount of time, and that the Trust will have significant ongoing operations during that period due to the nature of its assets and its plan to maximize the proceeds to its beneficiaries by maintaining the majority of its life insurance policies until maturity. As a result, the Trust has concluded that its liquidation is not imminent, in accordance with the definitions under accounting principles generally accepted in the United States of America, and has not applied the liquidation basis of accounting in presenting its financial statements. The Trust will continue to evaluate its operations to determine when its liquidation becomes imminent and the liquidation basis of accounting is required. Investments in Life Insurance Policies The Trust accounts for its interests in life insurance policies at fair value in accordance with ASC 325-30, Investments in Insurance Contracts Fair Value of Life Insurance Policies The Trust follows ASC 820, Fair Value Measurements and Disclosures As a basis for considering such assumptions, the guidance establishes a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. Level 1 relates to quoted prices in active markets for identical assets or liabilities. Level 2 relates to observable inputs other than quoted prices included in Level 1. Level 3 relates to unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. The Trust's investments in life insurance policies are considered to be Level 3 as there is currently no active market where the Trust is able to observe quoted prices for identical assets and the Trust's valuation model incorporates significant inputs that are not observable. The Trust's valuation of life insurance policies is a critical estimate within the financial statements. The Trust currently uses a probabilistic method of valuing life insurance policies, which the Trust believes to be the preferred valuation method in its industry. The Trust calculates the assets' fair value using a present value technique to estimate the fair value of the projected future cash flows. The most significant assumptions in estimating the fair value are the Trust's estimate of the insureds' life expectancy and the discount rate. See Note 6, "Fair Value Measurements". Income Recognition The Trust's investments in life insurance policies are its primary source of income. Gain or loss is recognized from ongoing changes in the portfolio's estimated fair value, including any gains or losses at maturity. Gains or losses from maturities are recognized at receipt of a death notice or verified obituary for an insured party, and determined based on the difference between the death benefit and the estimated fair value of the policy at maturity. Premiums Receivable The Trust assumed the Debtors' receivables related to life insurance policy premiums and service fees that were paid by the Debtors on behalf of fractional interest holders prior to the Trust's effective date. After December 9, 2016, the policy premiums allocable to continuing fractional interest holders are those persons' obligations and not the Trust. If a continuing fractional interest holder defaults on future premium obligations, such position is deemed contributed to the Trust in exchange for the number of Units provided by the Plan, as recently modified by the Bankruptcy Court. The Trust maintains an allowance for doubtful accounts for estimated losses resulting from the inability to collect premiums and service fees receivable. Such estimates are based on the position holder's payment history and other indications of potential uncollectability. After all attempts to collect a receivable have failed, receivables are written off against the allowance. At December 31, 2017 and 2016, the allowance for doubtful accounts was $5.0 million, all of which was for receivables assumed from the Debtors on the effective date. Outstanding receivable balances may be recoverable pursuant to the Trustee's set-off rights under the Plan. Maturities Receivable Maturities receivable consist of the Trust's portion of life insurance policy maturities that occurred but payment was not received as of the end of the reporting period. Income Taxes No provision for state or Federal income taxes has been made as the liability for such taxes is attributable to the Unit holders rather than the Trust. The Trust is a grantor trust with taxable income or loss passing through to the Unit holders. In certain instances, however, the Trust may be required under applicable state laws to remit directly to state tax authorities amounts otherwise due to Unit holders. Such payments on behalf of the Unit holders are deemed distributions to them. The FASB has provided guidance for how uncertain tax positions should be recognized, measured, disclosed, and presented in the financial statements. This requires the evaluation of tax positions taken or expected to be taken in the course of preparing the Trust's tax returns to determine whether the tax positions are more-likely-than-not of being sustained when challenged or when examined by the applicable taxing authority. The Trust has no material uncertain income tax positions as of December 31, 2017 and 2016. The Trust also assumed income tax liabilities of the Debtors at its inception which total approximately $2.0 and $2.9 million as of December 31, 2017 and 2016, respectively, related to taxes, penalties, and interest from the Debtors' 2008, 2009 and 2010 income tax returns. These obligations bear interest at 4% annually and are due in full by January 2020. Use of Estimates The preparation of these financial statements, in conformity with generally accepted accounting principles in the United States of America ("GAAP"), requires the Trust to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting periods. Actual results could differ from these estimates and such differences could be material. The estimates related to the valuation of the life insurance policies represent significant estimates made by the Trust. Risks and Uncertainties The Trust encounters economic, legal, and longevity risk. The two main components of economic risk potentially impacting the Trust are market risk and concentration of credit risk. The Trust's market risks include interest rate risk and the risk of declines in valuation of the Trust's life insurance policies, including declines caused by the selection of increased discount rates associated with the Trust's fair value model. It is reasonably possible that future changes to estimates involved in valuing life insurance policies could change and result in material effects to the future financial statements. Concentration of credit risk is the risk that an insurance carrier who has issued life insurance policies held by the Trust, does not remit the amount due under those policies due to the deteriorating financial condition of the carrier or otherwise. Another credit risk potentially impacting the Trust is the risk continuing fractional holders may default on their future premium obligations, increasing the Trust's premium liability. There exists a legal risk that courts would allow insurance carriers to retain premiums paid by the Trust in respect of insurance policies that are successfully rescinded or contested. In addition, the Trust's title or right to benefit from an insurance policy may be challenged by the insurer or the insured’s family. Longevity risk refers to the reasonable possibility that actual mortalities of insureds in the Trust's portfolio extend over longer periods than are anticipated, resulting in the Trust paying more for premiums. The Trust maintains the majority of its cash in several accounts with a commercial bank. Balances on deposit are insured by the FDIC. However, from time to time the Trust's balances may exceed the FDIC insurable amount at its banks. Creditors’ Trust Funding Liability Pursuant to the Plan, in December 2016 the Trust contributed $2 million to the Creditor’s Trust that was also established contemporaneously under the Plan. As of December 31, 2016, the Trust was obligated to fund an additional $10 million. The Trust paid $5 million to the Creditor’s Trust in January and another $5 million in December 2017. Premium Liability As of December 31, 2017 and 2016, the Trust holds $30.2 million and $25.8 million, respectively in escrow for future payment of the continuing fractional holders’ premium obligations. To the extent that these funds are not used for premium payments, they are refundable to the respective continuing fractional holder. Maturity Liabilities As of December 31, 2017, and 2016, the Trust holds $23.6 million and $38.0 million, respectively, of maturities collected on behalf of continuing factional holders pending payment. On December 9, 2016, the Trust received funds related to maturities that occurred prior to the formation of the Trust. These funds are recognized as a liability on the accompanying balance sheet as pre-effective maturity liabilities owed to the fractional interest holders. Additionally, the Trust has recorded a receivable for maturities that occurred prior to December 9, 2016 where proceeds were not received as of that date. This receivable is $9.0 million as of December 31, 2016 and is included in maturity liabilities on the accompanying balance sheet. Reclassifications Certain reclassifications have been made to the 2016 financial statement presentation to correspond to the current year’s format. Total assets, net assets, and changes in net assets resulting from operations are unchanged due to these reclassifications. Recently Issued Accounting Pronouncements In May 2014, the FASB issued Accounting Standards Update (“ASU”) No. 2014-09, “Revenue from Contracts with Customers,” which converges the FASB and the International Accounting Standards Board (“IASB”) standard on revenue recognition. Areas of revenue recognition that will be affected include, but are not limited to, transfer of control, variable consideration, allocation of transfer pricing, licenses, time value of money, contract costs and disclosures. The provisions of this ASU are effective for interim and annual periods beginning after December 15, 2017. The Trust does not expect that this guidance will have a material impact on its financial position, results of operations or cash flows. |
Operations
Operations | 12 Months Ended |
Dec. 31, 2017 | |
Life Partners IRA Holder Partnership, LLC [Member] | |
Operations [Line Items] | |
Operations | Note 1 - Operations The Partnership was created on December 9, 2016, pursuant to the Revised Third Amended Joint Plan of Reorganization of Life Partners Holdings, Inc., et al. (the “Debtors”), dated as of October 27, 2016, which we call the “Plan,” that was confirmed by order of the United States Bankruptcy Court for the Northern District of Texas, Fort Worth Division on November 1, 2016. Life Partners Holdings, Inc. was the parent company of Life Partners, Inc., a Texas corporation, and its wholly-owned subsidiary LPI Financial Services, Inc., a Texas corporation. From 1991 until 2014, Life Partners, Inc. was a specialty financial services company engaged in the business of purchasing individual life insurance policies from third parties by raising money from the offer and sale to investors of “fractional interests” in such policies. LPI Financial Services, Inc. was organized to bill and collect certain fees charged to investors in connection with the business. Life Partners and LPI Financial Services also filed for protection under Chapter 11 of the Bankruptcy Code. In connection with its formation and the inception of its activities on December 9, 2016, the Partnership issued limited liability company interests (“Member Interests”) in satisfaction of claims against the Debtors. The only assets of the Partnership are beneficial interest units of the Trust. The Partnership held 733,164,743 and 692,883,523 units as of December 31, 2017 and December 31, 2016, respectively, of the Trust’s outstanding units totaling 1,162,059,511 and 1,012,355,948 as of December 31, 2017 and December 31, 2016, respectively. The sole purpose of the Partnership is to hold Trust interests to permit holders of Partnership Interests to participate in distributions of the proceeds of the liquidation of the Trust. The Partnership was created to allow IRA Holders to hold an interest in an entity classified as a partnership for federal tax purposes, rather than the assets of a grantor trust, such as the Position Holder Trust. The Partnership’s sole asset is its investment in the Trust and it engages in no other business activity. |
Significant Accounting Policies
Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2017 | |
Life Partners IRA Holder Partnership, Llc [Member] | |
Significant Accounting Policies [Line Items] | |
Significant Accounting Policies | Note 2 - Significant Accounting Policies Equity Method Accounting The Partnership accounts for its investment in the PHT using the equity method of accounting in accordance with Accounting Standards Codification (ASC) 323, Investments – Equity Method and Joint Ventures. The Partnership and the Trust are closely connected, with a common trustee and common management. As a result of this common oversight and control, as well as the Partnership’s position as the majority holder of the Trust’s beneficial interest units, the Partnership is considered to have significant influence under the provisions of ASC 323, resulting in the application by the Partnership of the equity method of accounting. Undistributed earnings attributable to the Partnership’s interests in the Trust and recognized under the equity method represented approximately $11.3 million at December 31, 2017 and $615 thousand at December 31, 2016. The following table presents summarized Trust financial data: Balance Sheet data December 31, 2017 December 31, 2016 Life insurance policies $ 272,140,787 $ 263,579,040 All other assets 97,624,877 118,545,086 Total assets $ 369,765,664 $ 382,124,126 Total liabilities $ 130,824,276 $ 178,374,572 Net assets $ 238,941,388 $ 203,749,554 Income Statement Data December 31, 2017 December 31, 2016 Change in the fair value of life insurance policies $ 49,930,097 $ 2,559,020 Other income 672,712 - Total income $ 50,602,809 $ 2,559,020 Total expenses $ 15,410,975 $ 1,660,445 Net increase in net assets resulting from operations $ 35,191,834 $ 898,575 Income Taxes No provision for state or Federal income taxes has been made as the liability for such taxes is attributable to the members rather than the Partnership. The Partnership is a limited liability company with taxable income or loss passing through to the members. In certain instances, however, the Partnership may be required under applicable state laws to remit directly to state tax authorities amounts otherwise due to members. Such payments on behalf of the members are deemed distributions to them. The Financial Accounting Standards Board (the “FASB”) has provided guidance for how uncertain tax positions should be recognized, measured, disclosed, and presented in the financial statements. This requires the evaluation of tax positions taken or expected to be taken in the course of preparing the Partnership’s tax returns to determine whether the tax positions are more-likely-than-not of being sustained when challenged or when examined by the applicable taxing authority. The Partnership has no material uncertain income tax positions as of December 31, 2017 or December 31, 2016. Use of Estimates The preparation of these financial statements, in conformity with generally accepted accounting principles in the United States of America (“GAAP”), requires the Partnership to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting periods. Actual results could differ from these estimates and such differences could be material. Risks and Uncertainties The Partnership, due to the nature of its assets and operations, is subject to significant risks and uncertainties affecting the Trust which encounters economic risk. The two main components of economic risk potentially impacting the Partnership's interest in the Trust are market risk and concentration of credit risk. Market risks include interest rate risk and the risk of declines in valuation of the Trust’s life insurance policies, including declines caused by the selection of increased discount rates associated with the Trust’s fair value model. Concentration of credit risk is the risk that an insurance carrier who has issued life insurance policies held by the Trust, does not remit the amount due under those policies due to the deteriorating financial condition of the carrier or otherwise. It is reasonably possible that future changes to estimates involved in valuing the Trust's life insurance policies could change and result in material effects on the Partnership's financial position and results of operation. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2017 | |
Commitments and Contingencies [Abstract] | |
Commitments and Contingencies | Note 2 - Commitments and Contingencies Litigation In accordance with applicable accounting guidance, the Trust establishes an accrued liability for litigation and regulatory matters when those matters present loss contingencies that are both probable and estimable. In such cases, there may be an exposure to loss in excess of any amounts accrued. When a loss contingency is not both probable and estimable, the Trust does not establish an accrued liability. As a litigation or regulatory matter develops, the Trust, in conjunction with any outside counsel handling the matter, evaluates on an ongoing basis whether such matter presents a loss contingency that is probable and estimable. Such matters will continue to be monitored for further developments. Indemnification of Certain Persons Under certain circumstances, the Trust may be required to indemnify certain persons performing services on behalf of the Trust for liability they may incur arising out of the indemnified persons' activities conducted on behalf of the Trust. There is no limitation on the maximum potential payments under these indemnification obligations, and, due to the number and variety of events and circumstances under which these indemnification obligations could arise, the Trust is not able to estimate such maximum potential payments. The Trust has not made any payments under such indemnification obligations, and no amount has been accrued in the accompanying financial statements for these indemnification obligations of the Trust. |
Restricted Cash
Restricted Cash | 12 Months Ended |
Dec. 31, 2017 | |
Restricted Cash [Abstract] | |
Restricted Cash | Note 3 - Restricted Cash The Plan imposes restrictions on the Trust to maintain certain funds in segregated accounts. As of December 31, 2017, and 2016, the Trust has approximately $23.6 million and $33.1 million, respectively in the pre and post effective maturity escrow account which are distributable to the fractional interest holders in those policies. The Plan further requires the Trust to maintain certain premium reserves in a segregated account. As of December 31, 2017 and 2016 those reserves for Policy premiums are approximately $5.7 million and $27.5 million, respectively. The Trust also maintains escrow accounts on behalf of the continuing fractional interest holders from which to fulfill their premium obligations, as of December 31, 2017 and 2016, the Trust holds approximately $30.2 million and $25.8 million, respectively, on their behalf. At December 31, 2017, the Trust also held $16.6 million as collateral deposits on debt. |
Life Insurance Policies
Life Insurance Policies | 12 Months Ended |
Dec. 31, 2017 | |
Life Insurance Policies [Abstract] | |
Life Insurance Policies | Note 4 - Life Insurance Policies As of December 31, 2017, the Trust owns an interest in 3,140 policies of which 600 are life settlement policies and 2,540 are viaticals (the "PHT Portfolio"). As of December 31, 2016, the Trust owns an interest in 3,252 policies of which 654 are life settlement policies and 2,598 are viaticals. The PHT Portfolio's aggregate face value is $1.3 billion as of December 31, 2017 of which $1.1 billion is attributable to life settlements and $179.1 million is attributable to viaticals. The PHT Portfolio's aggregate face value is $1.3 billion as of December 31, 2016 of which $1.12 billion is attributable to life settlements and $191.2 million is attributable to viaticals. The PHT Portfolio's aggregate fair value is $272.1 million as of December 31, 2017 of which $270.6 million is attributable to life settlements and $1.5 million is attributable to viaticals. The PHT Portfolio's aggregate fair value is $263.6 million as of December 31, 2016 of which $261.6 million is attributable to life settlements and $2.0 million is attributable to viaticals. Life expectancy reflects the probable number of years remaining in the life of a class of persons determined statistically, affected by such factors as heredity, physical condition, nutrition, and occupation. It is not an estimate or an indication of the actual expected maturity date or indication of the timing of expected cash flows from death benefits. See "Life Insurance policies," in Note 6, "Fair Value Measurements". The following table summarizes the Trust's life insurance policies grouped by remaining life expectancy as of: December 31, 2017: Remaining Life Expectancy (Years) Number of Life Insurance Policies Face Value Fair Value 0-1 21 $ 45,189,634 $ 36,855,871 1-2 33 61,077,238 36,814,730 2-3 60 65,934,777 30,372,137 3-4 57 94,187,235 31,657,796 4-5 130 211,916,460 50,004,422 Thereafter 2,839 784,622,390 86,435,831 Total 3,140 $ 1,262,927,734 $ 272,140,787 December 31, 2016: Remaining Life Expectancy (Years) Number of Life Insurance Policies Face Value Fair Value 0-1 19 $ 26,906,072 $ 22,344,600 1-2 29 59,109,822 38,672,708 2-3 60 53,027,573 26,251,734 3-4 59 95,930,412 35,577,890 4-5 86 112,725,236 29,193,315 Thereafter 2,999 942,298,899 111,538,793 Total 3,252 $ 1,289,998,014 $ 263,579,040 Estimated premiums to be paid by the Trust for its portfolio during each of the five succeeding fiscal years and thereafter as of December 31, 2017, are as follows: 2018 $ 44,153,752 2019 50,945,512 2020 52,032,825 2021 47,956,157 2022 42,096,660 Thereafter 171,254,328 Total $ 408,439,234 The amount of $408.4 million represents the estimated total future premiums payable by the Trust. The Trust is required to pay its portion to keep the life insurance policies in force during the life expectancies of all the underlying insured lives. The estimated total future premium payments could increase or decrease significantly to the extent that insurance carriers increase the cost of insurance on their issued policies or that actual mortalities of insureds differs from the estimated life expectancies. If the continuing fractional holders default on their future premium obligations, the Trust's premium liability may increase. The Trust anticipates funding the estimated premium payments from maturities of life insurance policies. It also maintains premium reserves and access to lines of credit. |
Notes Payable
Notes Payable | 12 Months Ended |
Dec. 31, 2017 | |
Notes Payable [Abstract] | |
Notes Payable | Note 5 - Notes Payable On December 9, 2016, the Trust obtained a term loan from Vida Opportunity Fund, LP, an affiliate of Vida Capital, Inc., for $55.0 million. Interest accrues at 11% of outstanding balance per annum and is paid quarterly. Principal is due in full on December 9, 2018 but is not subject to a prepayment penalty. Substantially all of the Trust's assets collateralize the loan. The Trust made principal payments of $20 million in 2017 leaving a balance outstanding on the term loan of $35 million at December 31, 2017. On December 9, 2016, the Trust entered into a revolving line of credit with Vida Longevity Fund, LP, an affiliate of Vida Capital, Inc., for $25.0 million. Interest accrues at 11% of outstanding balance and is paid quarterly. The line of credit matures on December 9, 2018, at which point any amount outstanding is due in full. As of December 31, 2017, and 2016, no amounts have been drawn on the line of credit. In accordance with the Plan, the Trust issued New IRA notes of $36.5 million in exchange for claims against the Debtor's estate and the incidental interests in life insurance policies. Those policies collateralize the Trust's obligations under the notes. Interest accrues at 3% of outstanding balance and is paid annually in December. Principal is due in full on December 9, 2031. In accordance with the notes, beginning in December 2017, the Trust is required to make annual payments to a sinking fund for the principal payment due at maturity. Such fund is included in restricted cash on the accompanying balance sheet. On March 28, 2017, the Trust, was ordered to pay the Chapter 11 trustee’s fees totaling $5.5 million. The first payment of $2.8 million was due and paid promptly after the Court order on March 28, 2017 and is included in assumed liabilities on the accompanying balance sheet at December 31, 2016. The remaining balance is in the form of a note payable and is due in three equal annual payments on January 1 beginning in 2019. The note does not bear interest as ordered by the Court, thus the note was been discounted by $0.2 million, based on an implied interest rate of 3%. Future scheduled principal payments on the above notes payable and required sinking fund contributions are as follows as of December 31, 2017: Year ending December 31: Sinking Fund Notes Payable 2018 $ 2,432,886 $ 35,000,000 2019 2,432,886 916,667 2020 2,432,886 916,667 2021 2,432,886 916,666 2022 2,432,886 - Thereafter 21,887,452 36,493,298 $ 34,051,882 $ 74,243,298 |
Fair Value Measurements
Fair Value Measurements | 12 Months Ended |
Dec. 31, 2017 | |
Fair Value Measurements [Abstract] | |
Fair Value Measurements | Note 6 - Fair Value Measurements The Trust carries its life insurance policies at fair value. Fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurements are classified based on the following fair value hierarchy: Level 1 — Valuation is based on unadjusted quoted prices in active markets for identical assets and liabilities that are accessible at the reporting date. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these products does not entail a significant degree of judgment. Level 2 — Valuation is determined from pricing inputs that are other than quoted prices in active markets that are either directly or indirectly observable as of the reporting date. Observable inputs include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, and interest rates and yield curves that are observable at commonly quoted intervals. Level 3 — Valuation is based on inputs that are both significant to the fair value measurement and unobservable. Level 3 inputs include situations where there is little, if any, market activity for the financial instrument. The inputs into the determination of fair value generally require significant management judgment or estimation. The balances of the Trust's assets measured at fair value on a recurring basis as of December 31, 2017, are as follows: Level 1 Level 2 Level 3 Total Fair Value Assets: Investment in life insurance policies $ — $ — $ 272,140,787 $ 272,140,787 $ — $ — $ 272,140,787 $ 272,140,787 The balances of the Trust's assets measured at fair value on a recurring basis as of December 31, 2016, are as follows: Level 1 Level 2 Level 3 Total Fair Value Assets: Investment in life insurance policies $ — $ — $ 263,579,040 $ 263,579,040 $ — $ — $ 263,579,040 $ 263,579,040 Quantitative Information about Level 3 Fair Value Measurements Fair Value at Face value at Valuation Unobservable Range Life insurance policies $ 272,140,787 $ 1,262,927,734 Discounted cash flow Discount rate 24.45%-31.82 % Fair Value at Face value at Valuation Unobservable Range Life insurance policies $ 263,579,040 $ 1,289,998,014 Discounted cash flow Discount rate 24.74%-31.74 % Following is a description of the methodologies used to estimate the assets' fair value measured on a recurring basis and within the above fair value hierarchy. In assessing and determining the Portfolio's valuation, the Position Holder Trust retained Lewis & Ellis, Inc. as its principal actuaries. The Portfolio's value was estimated using an actuarially based approach incorporating net cash flows and life expectancies. This approach applies a monthly mortality scale as generated by the specific life expectancy (LE) and/or a default mortality multiplier of each insured which is used to project the Portfolio's present value of net cash flows (death benefits less premium payments and Servicing Company compensation). The mortality scale is actuarially rolled forward from the LE underwriting date to the valuation date. The Trust will not obtain current medical information for each insured which would be necessary to update the LE's due to the significant time and financial burden that would be required. Accordingly, as LE's become aged, less weight will be applied to them and more weight will be placed with the default mortality multiplier. A discount will be applied quarterly starting months past the underwriting date unit the aged LE date is fully discounted and replaced by the default mortality multiplier. An LE that is to months old will have a discount, an LE that is to months old will have a discount, and an LE greater than or equal to months will solely use the default mortality multiplier, as described below. If a policy did not have a LE, or the LE became aged, a default mortality multiplier, based on the mortality tables developed by the U.S. Society of Actuaries was applied. Currently, the mortality multipliers used are: for the life settlements and for the viaticals, regardless of gender. On a quarterly basis, we will compare actual mortalities to expected mortalities and refine the mortality multipliers as appropriate. The Servicing Company is paid of each maturity as compensation. The estimated cash flows of the Policies are net of such compensation. The monthly net cash flows with interest and survivorship were discounted to arrive at the Portfolio's estimated value as of December and Future changes in the life expectancies and estimated cash flows could have a material effect on the Portfolio's fair value, and the Trust's financial condition and results of operations. Life expectancy sensitivity analysis Life expectancy estimates are a significant input in the fair value determination. Future changes in the life expectancy estimates could have a material effect on the Portfolio’s fair value, which could have a material effect on its financial condition and results of operations. The tables below reflect the effect on the PHT Portfolio's fair value if the actual life expectancy experienced is 5% less or 5% more than is currently estimated. If the life expectancy estimates increase by 5% or decrease by 5%, the change in estimated fair value of the life insurance policies would be as follows: December 31, 2017: Life Expectancy Months Adjustment Average life expectancy Value Change in Value - 5 % $ 286,717,730 $ 14,576,943 No change 3.6 years $ 272,140,787 $ — + 5 % $ 257,057,325 $ (15,083,462 ) December 31, 2016: Life Expectancy Months Adjustment Average life expectancy Value Change in Value - 5 % $ 277,276,497 $ 13,697,457 No change 4.0 years $ 263,579,040 $ — + 5 % $ 249,069,410 $ (14,509,630 ) Discount rate The discount rate is another significant input in the fair value determination. The Trust's estimate incorporates market factors, the size of the portfolio, and various policy specific quantitative and qualitative factors including known information about the underlying insurance policy, its economics, the insured and the insurer. The effect of changes in the weighted average discount rate on the death benefit and premiums used to estimate the PHT Portfolio's fair value has been analyzed. If the weighted average discount rate increased or decreased by 2 percent and the other assumptions used to estimate fair value remained the same, the change in estimated fair value would be as follows: December 31, 2017 Rate Adjustment Value Change in Value +2 % $ 259,806,309 $ (12,334,478 ) No change $ 272,140,787 $ — -2 % $ 285,785,223 $ 13,644,436 December 31, 2016 Rate Adjustment Value Change in Value +2 % $ 250,218,915 $ (13,360,125 ) No change $ 263,579,040 $ — -2 % $ 278,442,322 $ 14,863,282 Future changes in the discount rates used by the Trust to value life insurance policies could have a material effect on the Trust's yield on life settlement transactions, which could have a material adverse effect on the Trust's financial condition and results of operations. The Trust re-evaluates its discount rates at the end of every reporting period in order to estimate the discount rates that could reasonably be used by market participants in a transaction involving the Trust's life insurance policies. In doing so, the Trust engages third party consultants to corroborate its assessment, engages in discussions with other market participants and extrapolates the discount rate underlying actual sales of insurance policies. Credit Exposure to Insurance Companies The following table provides information about the life insurance issuer concentrations that exceed 10% of total death benefit and 10% of total fair value of the Trust's life insurance policies as of December 31, 2017: Carrier Percentage of Face Value Percentage of Fair Value Carrier Rating The Lincoln National Life Insurance 11.5 % 13.6 % A+ Transamerica Financial Life Insurance 9.4 % 11.5 % A+ John Hancock Life Insurance (USA) 7.9 % 12.4 % A+ December 31, 2016: Carrier Percentage of Face Value Percentage of Fair Value Carrier Rating The Lincoln National Life Insurance 11.4 % 14.6 % A+ Transamerica Financial Life Insurance 9.4 % 10.72 % A+ John Hancock Life Insurance (USA) 7.3 % 10.6 % A+ Changes in Fair Value The following table provides a roll-forward in the changes in fair value for the Trust’s life insurance policies: Balance at December 31, 2016 $ 263,579,040 Realized gain on matured policies 60,812,229 Unrealized gain on assets held (10,882,132 ) Change in fair value 49,930,087 Matured policies, net of fees (78,913,426 ) Premiums paid 37,545,076 Balance at December 31, 2017 $ 272,140,787 Contributed balance at December 9, 2016 $ 267,769,937 Realized gain on matured policies 5,569,231 Unrealized gain on assets held (3,010,211 ) Change in fair value 2,559,020 Matured policies, net of fees (6,749,917 ) Balance at December 31, 2016 $ 263,579,040 Other Fair Value Considerations— All assets and liabilities except for the life insurance policies, which includes cash, maturities and premium receivable, notes payable and premium and maturity liability, are accounted for at their carrying value which approximates fair value. |
Operations and Significant Ac14
Operations and Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2017 | |
Operations and Significant Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The Trust's primary purpose is the liquidation of the Trust's assets and the distribution of proceeds to its beneficial interest holders. The Trust expects that fulfilling its purpose requires a significant amount of time, and that the Trust will have significant ongoing operations during that period due to the nature of its assets and its plan to maximize the proceeds to its beneficiaries by maintaining the majority of its life insurance policies until maturity. As a result, the Trust has concluded that its liquidation is not imminent, in accordance with the definitions under accounting principles generally accepted in the United States of America, and has not applied the liquidation basis of accounting in presenting its financial statements. The Trust will continue to evaluate its operations to determine when its liquidation becomes imminent and the liquidation basis of accounting is required. |
Investments in Life Insurance Policies | Investments in Life Insurance Policies The Trust accounts for its interests in life insurance policies at fair value in accordance with ASC 325-30, Investments in Insurance Contracts |
Fair Value of Life Insurance Policies | Fair Value of Life Insurance Policies The Trust follows ASC 820, Fair Value Measurements and Disclosures As a basis for considering such assumptions, the guidance establishes a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. Level 1 relates to quoted prices in active markets for identical assets or liabilities. Level 2 relates to observable inputs other than quoted prices included in Level 1. Level 3 relates to unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. The Trust's investments in life insurance policies are considered to be Level 3 as there is currently no active market where the Trust is able to observe quoted prices for identical assets and the Trust's valuation model incorporates significant inputs that are not observable. The Trust's valuation of life insurance policies is a critical estimate within the financial statements. The Trust currently uses a probabilistic method of valuing life insurance policies, which the Trust believes to be the preferred valuation method in its industry. The Trust calculates the assets' fair value using a present value technique to estimate the fair value of the projected future cash flows. The most significant assumptions in estimating the fair value are the Trust's estimate of the insureds' life expectancy and the discount rate. See Note 6, "Fair Value Measurements". |
Income Recognition | Income Recognition The Trust's investments in life insurance policies are its primary source of income. Gain or loss is recognized from ongoing changes in the portfolio's estimated fair value, including any gains or losses at maturity. Gains or losses from maturities are recognized at receipt of a death notice or verified obituary for an insured party, and determined based on the difference between the death benefit and the estimated fair value of the policy at maturity. |
Premiums Receivable | Premiums Receivable The Trust assumed the Debtors' receivables related to life insurance policy premiums and service fees that were paid by the Debtors on behalf of fractional interest holders prior to the Trust's effective date. After December 9, 2016, the policy premiums allocable to continuing fractional interest holders are those persons' obligations and not the Trust. If a continuing fractional interest holder defaults on future premium obligations, such position is deemed contributed to the Trust in exchange for the number of Units provided by the Plan, as recently modified by the Bankruptcy Court. The Trust maintains an allowance for doubtful accounts for estimated losses resulting from the inability to collect premiums and service fees receivable. Such estimates are based on the position holder's payment history and other indications of potential uncollectability. After all attempts to collect a receivable have failed, receivables are written off against the allowance. At December 31, 2017 and 2016, the allowance for doubtful accounts was $5.0 million, all of which was for receivables assumed from the Debtors on the effective date. Outstanding receivable balances may be recoverable pursuant to the Trustee's set-off rights under the Plan. |
Maturities Receivable | Maturities Receivable Maturities receivable consist of the Trust's portion of life insurance policy maturities that occurred but payment was not received as of the end of the reporting period. |
Income Taxes | Income Taxes No provision for state or Federal income taxes has been made as the liability for such taxes is attributable to the Unit holders rather than the Trust. The Trust is a grantor trust with taxable income or loss passing through to the Unit holders. In certain instances, however, the Trust may be required under applicable state laws to remit directly to state tax authorities amounts otherwise due to Unit holders. Such payments on behalf of the Unit holders are deemed distributions to them. The FASB has provided guidance for how uncertain tax positions should be recognized, measured, disclosed, and presented in the financial statements. This requires the evaluation of tax positions taken or expected to be taken in the course of preparing the Trust's tax returns to determine whether the tax positions are more-likely-than-not of being sustained when challenged or when examined by the applicable taxing authority. The Trust has no material uncertain income tax positions as of December 31, 2017 and 2016. The Trust also assumed income tax liabilities of the Debtors at its inception which total approximately $2.0 and $2.9 million as of December 31, 2017 and 2016, respectively, related to taxes, penalties, and interest from the Debtors' 2008, 2009 and 2010 income tax returns. These obligations bear interest at 4% annually and are due in full by January 2020. |
Use of Estimates | Use of Estimates The preparation of these financial statements, in conformity with generally accepted accounting principles in the United States of America ("GAAP"), requires the Trust to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting periods. Actual results could differ from these estimates and such differences could be material. The estimates related to the valuation of the life insurance policies represent significant estimates made by the Trust. |
Risks and Uncertainties | Risks and Uncertainties The Trust encounters economic, legal, and longevity risk. The two main components of economic risk potentially impacting the Trust are market risk and concentration of credit risk. The Trust's market risks include interest rate risk and the risk of declines in valuation of the Trust's life insurance policies, including declines caused by the selection of increased discount rates associated with the Trust's fair value model. It is reasonably possible that future changes to estimates involved in valuing life insurance policies could change and result in material effects to the future financial statements. Concentration of credit risk is the risk that an insurance carrier who has issued life insurance policies held by the Trust, does not remit the amount due under those policies due to the deteriorating financial condition of the carrier or otherwise. Another credit risk potentially impacting the Trust is the risk continuing fractional holders may default on their future premium obligations, increasing the Trust's premium liability. There exists a legal risk that courts would allow insurance carriers to retain premiums paid by the Trust in respect of insurance policies that are successfully rescinded or contested. In addition, the Trust's title or right to benefit from an insurance policy may be challenged by the insurer or the insured’s family. Longevity risk refers to the reasonable possibility that actual mortalities of insureds in the Trust's portfolio extend over longer periods than are anticipated, resulting in the Trust paying more for premiums. The Trust maintains the majority of its cash in several accounts with a commercial bank. Balances on deposit are insured by the FDIC. However, from time to time the Trust's balances may exceed the FDIC insurable amount at its banks. |
Creditors' Trust Funding Liability | Creditors’ Trust Funding Liability Pursuant to the Plan, in December 2016 the Trust contributed $2 million to the Creditor’s Trust that was also established contemporaneously under the Plan. As of December 31, 2016, the Trust was obligated to fund an additional $10 million. The Trust paid $5 million to the Creditor’s Trust in January and another $5 million in December 2017. |
Premium Liability | Premium Liability As of December 31, 2017 and 2016, the Trust holds $30.2 million and $25.8 million, respectively in escrow for future payment of the continuing fractional holders’ premium obligations. To the extent that these funds are not used for premium payments, they are refundable to the respective continuing fractional holder. |
Maturity Liabilities | Maturity Liabilities As of December 31, 2017, and 2016, the Trust holds $23.6 million and $38.0 million, respectively, of maturities collected on behalf of continuing factional holders pending payment. On December 9, 2016, the Trust received funds related to maturities that occurred prior to the formation of the Trust. These funds are recognized as a liability on the accompanying balance sheet as pre-effective maturity liabilities owed to the fractional interest holders. Additionally, the Trust has recorded a receivable for maturities that occurred prior to December 9, 2016 where proceeds were not received as of that date. This receivable is $9.0 million as of December 31, 2016 and is included in maturity liabilities on the accompanying balance sheet. |
Reclassifications | Reclassifications Certain reclassifications have been made to the 2016 financial statement presentation to correspond to the current year’s format. Total assets, net assets, and changes in net assets resulting from operations are unchanged due to these reclassifications. |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements In May 2014, the FASB issued Accounting Standards Update (“ASU”) No. 2014-09, “Revenue from Contracts with Customers,” which converges the FASB and the International Accounting Standards Board (“IASB”) standard on revenue recognition. Areas of revenue recognition that will be affected include, but are not limited to, transfer of control, variable consideration, allocation of transfer pricing, licenses, time value of money, contract costs and disclosures. The provisions of this ASU are effective for interim and annual periods beginning after December 15, 2017. The Trust does not expect that this guidance will have a material impact on its financial position, results of operations or cash flows. |
Significant Accounting Polici15
Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2017 | |
Significant Accounting Policies [Line Items] | |
Income Taxes | Income Taxes No provision for state or Federal income taxes has been made as the liability for such taxes is attributable to the Unit holders rather than the Trust. The Trust is a grantor trust with taxable income or loss passing through to the Unit holders. In certain instances, however, the Trust may be required under applicable state laws to remit directly to state tax authorities amounts otherwise due to Unit holders. Such payments on behalf of the Unit holders are deemed distributions to them. The FASB has provided guidance for how uncertain tax positions should be recognized, measured, disclosed, and presented in the financial statements. This requires the evaluation of tax positions taken or expected to be taken in the course of preparing the Trust's tax returns to determine whether the tax positions are more-likely-than-not of being sustained when challenged or when examined by the applicable taxing authority. The Trust has no material uncertain income tax positions as of December 31, 2017 and 2016. The Trust also assumed income tax liabilities of the Debtors at its inception which total approximately $2.0 and $2.9 million as of December 31, 2017 and 2016, respectively, related to taxes, penalties, and interest from the Debtors' 2008, 2009 and 2010 income tax returns. These obligations bear interest at 4% annually and are due in full by January 2020. |
Use of Estimates | Use of Estimates The preparation of these financial statements, in conformity with generally accepted accounting principles in the United States of America ("GAAP"), requires the Trust to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting periods. Actual results could differ from these estimates and such differences could be material. The estimates related to the valuation of the life insurance policies represent significant estimates made by the Trust. |
Risks and Uncertainties | Risks and Uncertainties The Trust encounters economic, legal, and longevity risk. The two main components of economic risk potentially impacting the Trust are market risk and concentration of credit risk. The Trust's market risks include interest rate risk and the risk of declines in valuation of the Trust's life insurance policies, including declines caused by the selection of increased discount rates associated with the Trust's fair value model. It is reasonably possible that future changes to estimates involved in valuing life insurance policies could change and result in material effects to the future financial statements. Concentration of credit risk is the risk that an insurance carrier who has issued life insurance policies held by the Trust, does not remit the amount due under those policies due to the deteriorating financial condition of the carrier or otherwise. Another credit risk potentially impacting the Trust is the risk continuing fractional holders may default on their future premium obligations, increasing the Trust's premium liability. There exists a legal risk that courts would allow insurance carriers to retain premiums paid by the Trust in respect of insurance policies that are successfully rescinded or contested. In addition, the Trust's title or right to benefit from an insurance policy may be challenged by the insurer or the insured’s family. Longevity risk refers to the reasonable possibility that actual mortalities of insureds in the Trust's portfolio extend over longer periods than are anticipated, resulting in the Trust paying more for premiums. The Trust maintains the majority of its cash in several accounts with a commercial bank. Balances on deposit are insured by the FDIC. However, from time to time the Trust's balances may exceed the FDIC insurable amount at its banks. |
Life Partners IRA Holder Partnership, Llc [Member] | |
Significant Accounting Policies [Line Items] | |
Equity Method Accounting | Equity Method Accounting The Partnership accounts for its investment in the PHT using the equity method of accounting in accordance with Accounting Standards Codification (ASC) 323, Investments – Equity Method and Joint Ventures. The Partnership and the Trust are closely connected, with a common trustee and common management. As a result of this common oversight and control, as well as the Partnership’s position as the majority holder of the Trust’s beneficial interest units, the Partnership is considered to have significant influence under the provisions of ASC 323, resulting in the application by the Partnership of the equity method of accounting. Undistributed earnings attributable to the Partnership’s interests in the Trust and recognized under the equity method represented approximately $11.3 million at December 31, 2017 and $615 thousand at December 31, 2016. The following table presents summarized Trust financial data: Balance Sheet data December 31, 2017 December 31, 2016 Life insurance policies $ 272,140,787 $ 263,579,040 All other assets 97,624,877 118,545,086 Total assets $ 369,765,664 $ 382,124,126 Total liabilities $ 130,824,276 $ 178,374,572 Net assets $ 238,941,388 $ 203,749,554 Income Statement Data December 31, 2017 December 31, 2016 Change in the fair value of life insurance policies $ 49,930,097 $ 2,559,020 Other income 672,712 - Total income $ 50,602,809 $ 2,559,020 Total expenses $ 15,410,975 $ 1,660,445 Net increase in net assets resulting from operations $ 35,191,834 $ 898,575 |
Income Taxes | Income Taxes No provision for state or Federal income taxes has been made as the liability for such taxes is attributable to the members rather than the Partnership. The Partnership is a limited liability company with taxable income or loss passing through to the members. In certain instances, however, the Partnership may be required under applicable state laws to remit directly to state tax authorities amounts otherwise due to members. Such payments on behalf of the members are deemed distributions to them. The Financial Accounting Standards Board (the “FASB”) has provided guidance for how uncertain tax positions should be recognized, measured, disclosed, and presented in the financial statements. This requires the evaluation of tax positions taken or expected to be taken in the course of preparing the Partnership’s tax returns to determine whether the tax positions are more-likely-than-not of being sustained when challenged or when examined by the applicable taxing authority. The Partnership has no material uncertain income tax positions as of December 31, 2017 or December 31, 2016. |
Use of Estimates | Use of Estimates The preparation of these financial statements, in conformity with generally accepted accounting principles in the United States of America (“GAAP”), requires the Partnership to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting periods. Actual results could differ from these estimates and such differences could be material. |
Risks and Uncertainties | Risks and Uncertainties The Partnership, due to the nature of its assets and operations, is subject to significant risks and uncertainties affecting the Trust which encounters economic risk. The two main components of economic risk potentially impacting the Partnership's interest in the Trust are market risk and concentration of credit risk. Market risks include interest rate risk and the risk of declines in valuation of the Trust’s life insurance policies, including declines caused by the selection of increased discount rates associated with the Trust’s fair value model. Concentration of credit risk is the risk that an insurance carrier who has issued life insurance policies held by the Trust, does not remit the amount due under those policies due to the deteriorating financial condition of the carrier or otherwise. It is reasonably possible that future changes to estimates involved in valuing the Trust's life insurance policies could change and result in material effects on the Partnership's financial position and results of operation. |
Operations and Significant Ac16
Operations and Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Operations and Significant Accounting Policies [Abstract] | |
Summary of Contributed Assets and Liabilities Assumed | A summary of contributed assets and liabilities assumed by the Trust on December 9, 2016 were as follows: Contributed assets Cash $ 207,083,599 Life insurance policies 267,769,937 Premiums receivable 3,044,358 Prepaids and other assets 607,039 $ 478,504,933 Assumed liabilities Maturity funds facility $ 27,176,462 Maturity liability 136,124,755 Premium escrow liability 25,776,263 Assumed tax liability 4,102,099 Notes payable 39,010,671 Creditor's trust funding 10,000,000 Assumed liabilities 33,462,382 Other 1,322 $ 275,653,954 |
Significant Accounting Polici17
Significant Accounting Policies (Tables) - Life Partners Position Holder Trust [Member] | 12 Months Ended |
Dec. 31, 2017 | |
Significant Accounting Policies [Line Items] | |
Summarized Balance Sheet Data | Balance Sheet data December 31, 2017 December 31, 2016 Life insurance policies $ 272,140,787 $ 263,579,040 All other assets 97,624,877 118,545,086 Total assets $ 369,765,664 $ 382,124,126 Total liabilities $ 130,824,276 $ 178,374,572 Net assets $ 238,941,388 $ 203,749,554 |
Summarized Income Statement Data | Income Statement Data December 31, 2017 December 31, 2016 Change in the fair value of life insurance policies $ 49,930,097 $ 2,559,020 Other income 672,712 - Total income $ 50,602,809 $ 2,559,020 Total expenses $ 15,410,975 $ 1,660,445 Net increase in net assets resulting from operations $ 35,191,834 $ 898,575 |
Life Insurance Policies (Tables
Life Insurance Policies (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Life Insurance Policies [Abstract] | |
Trust's Life Insurance Policies Grouped by Remaining Life Expectancy | The following table summarizes the Trust's life insurance policies grouped by remaining life expectancy as of: December 31, 2017: Remaining Life Expectancy (Years) Number of Life Insurance Policies Face Value Fair Value 0-1 21 $ 45,189,634 $ 36,855,871 1-2 33 61,077,238 36,814,730 2-3 60 65,934,777 30,372,137 3-4 57 94,187,235 31,657,796 4-5 130 211,916,460 50,004,422 Thereafter 2,839 784,622,390 86,435,831 Total 3,140 $ 1,262,927,734 $ 272,140,787 December 31, 2016: Remaining Life Expectancy (Years) Number of Life Insurance Policies Face Value Fair Value 0-1 19 $ 26,906,072 $ 22,344,600 1-2 29 59,109,822 38,672,708 2-3 60 53,027,573 26,251,734 3-4 59 95,930,412 35,577,890 4-5 86 112,725,236 29,193,315 Thereafter 2,999 942,298,899 111,538,793 Total 3,252 $ 1,289,998,014 $ 263,579,040 |
Estimated Premiums to be Paid by the Trust for its Portfolio | Estimated premiums to be paid by the Trust for its portfolio during each of the five succeeding fiscal years and thereafter as of December 31, 2017, are as follows: 2018 $ 44,153,752 2019 50,945,512 2020 52,032,825 2021 47,956,157 2022 42,096,660 Thereafter 171,254,328 Total $ 408,439,234 |
Notes Payable (Tables)
Notes Payable (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Notes Payable [Abstract] | |
Future Scheduled Principal Payments of Notes Payable and Sinking Fund Contributions | Future scheduled principal payments on the above notes payable and required sinking fund contributions are as follows as of December 31, 2017: Year ending December 31: Sinking Fund Notes Payable 2018 $ 2,432,886 $ 35,000,000 2019 2,432,886 916,667 2020 2,432,886 916,667 2021 2,432,886 916,666 2022 2,432,886 - Thereafter 21,887,452 36,493,298 $ 34,051,882 $ 74,243,298 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Fair Value Measurements [Abstract] | |
Assets Measured at Fair Value on Recurring Basis | The balances of the Trust's assets measured at fair value on a recurring basis as of December 31, 2017, are as follows: Level 1 Level 2 Level 3 Total Fair Value Assets: Investment in life insurance policies $ — $ — $ 272,140,787 $ 272,140,787 $ — $ — $ 272,140,787 $ 272,140,787 The balances of the Trust's assets measured at fair value on a recurring basis as of December 31, 2016, are as follows: Level 1 Level 2 Level 3 Total Fair Value Assets: Investment in life insurance policies $ — $ — $ 263,579,040 $ 263,579,040 $ — $ — $ 263,579,040 $ 263,579,040 |
Quantitative Information about Level 3 Fair Value Measurements | Quantitative Information about Level 3 Fair Value Measurements Fair Value at Face value at Valuation Unobservable Range Life insurance policies $ 272,140,787 $ 1,262,927,734 Discounted cash flow Discount rate 24.45%-31.82 % Fair Value at Face value at Valuation Unobservable Range Life insurance policies $ 263,579,040 $ 1,289,998,014 Discounted cash flow Discount rate 24.74%-31.74 % |
Change in Estimated Fair Value | If the life expectancy estimates increase by 5% or decrease by 5%, the change in estimated fair value of the life insurance policies would be as follows: December 31, 2017: Life Expectancy Months Adjustment Average life expectancy Value Change in Value - 5 % $ 286,717,730 $ 14,576,943 No change 3.6 years $ 272,140,787 $ — + 5 % $ 257,057,325 $ (15,083,462 ) December 31, 2016: Life Expectancy Months Adjustment Average life expectancy Value Change in Value - 5 % $ 277,276,497 $ 13,697,457 No change 4.0 years $ 263,579,040 $ — + 5 % $ 249,069,410 $ (14,509,630 ) The effect of changes in the weighted average discount rate on the death benefit and premiums used to estimate the PHT Portfolio's fair value has been analyzed. If the weighted average discount rate increased or decreased by 2 percent and the other assumptions used to estimate fair value remained the same, the change in estimated fair value would be as follows: December 31, 2017 Rate Adjustment Value Change in Value +2 % $ 259,806,309 $ (12,334,478 ) No change $ 272,140,787 $ — -2 % $ 285,785,223 $ 13,644,436 December 31, 2016 Rate Adjustment Value Change in Value +2 % $ 250,218,915 $ (13,360,125 ) No change $ 263,579,040 $ — -2 % $ 278,442,322 $ 14,863,282 |
Credit Exposure to Insurance Companies | The following table provides information about the life insurance issuer concentrations that exceed 10% of total death benefit and 10% of total fair value of the Trust's life insurance policies as of December 31, 2017: Carrier Percentage of Face Value Percentage of Fair Value Carrier Rating The Lincoln National Life Insurance 11.5 % 13.6 % A+ Transamerica Financial Life Insurance 9.4 % 11.5 % A+ John Hancock Life Insurance (USA) 7.9 % 12.4 % A+ December 31, 2016: Carrier Percentage of Face Value Percentage of Fair Value Carrier Rating The Lincoln National Life Insurance 11.4 % 14.6 % A+ Transamerica Financial Life Insurance 9.4 % 10.72 % A+ John Hancock Life Insurance (USA) 7.3 % 10.6 % A+ |
Changes in Fair Value for Trusts Life Insurance Policies | The following table provides a roll-forward in the changes in fair value for the Trust’s life insurance policies: Balance at December 31, 2016 $ 263,579,040 Realized gain on matured policies 60,812,229 Unrealized gain on assets held (10,882,132 ) Change in fair value 49,930,087 Matured policies, net of fees (78,913,426 ) Premiums paid 37,545,076 Balance at December 31, 2017 $ 272,140,787 Contributed balance at December 9, 2016 $ 267,769,937 Realized gain on matured policies 5,569,231 Unrealized gain on assets held (3,010,211 ) Change in fair value 2,559,020 Matured policies, net of fees (6,749,917 ) Balance at December 31, 2016 $ 263,579,040 |
Operations and Significant Ac21
Operations and Significant Accounting Policies, Operations (Details) | Dec. 31, 2017USD ($)ShareholdersPolicyshares | Dec. 31, 2016USD ($)ShareholdersPolicyshares | Dec. 09, 2016USD ($)shares |
Operations and Significant Accounting Policies [Abstract] | |||
Number of units of beneficial interest issued to fractional interest holders (in shares) | shares | 1,012,355,948 | ||
Number of unit holders | Shareholders | 10,187 | 12,243 | |
Number of units outstanding (in shares) | shares | 1,162,059,511 | 1,012,364,792 | |
Number of life insurance policies | Policy | 3,140 | 3,252 | |
Fair value of life insurance policies | $ 272,140,787 | $ 263,579,040 | $ 267,769,937 |
Aggregate face value of life insurance policies | 1,300,000,000 | 1,300,000,000 | |
Contributed assets [Abstract] | |||
Cash | 1,800,047 | 23,927,247 | 207,083,599 |
Life insurance policies | 272,140,787 | 263,579,040 | 267,769,937 |
Premiums receivable | 0 | 661,878 | 3,044,358 |
Prepaids and other assets | 81,703 | 164,867 | 607,039 |
Total contributed assets | 478,504,933 | ||
Assumed liabilities [Abstract] | |||
Maturity funds facility | 27,176,462 | ||
Maturity liability | 23,643,936 | 38,026,076 | 136,124,755 |
Premium escrow liability | 25,776,263 | ||
Assumed tax liability | 2,243,302 | 4,102,099 | 4,102,099 |
Notes payable | 74,086,192 | 94,010,671 | 39,010,671 |
Creditors trust funding | 0 | 10,000,000 | 10,000,000 |
Assumed liabilities | $ 18,293 | $ 5,741,922 | 33,462,382 |
Other | 1,322 | ||
Total assumed liabilities | $ 275,653,954 |
Operations and Significant Ac22
Operations and Significant Accounting Policies, Summary of Significant Accounting Policies (Details) | 1 Months Ended | 12 Months Ended | |||
Dec. 31, 2017USD ($) | Jan. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Dec. 31, 2017USD ($)Component | Dec. 09, 2016USD ($) | |
Premiums Receivable [Abstract] | |||||
Allowance for doubtful accounts | $ 5,000,000 | $ 5,000,000 | $ 5,000,000 | ||
Income Taxes [Abstract] | |||||
Income tax liabilities of Debtors assumed | $ 2,000,000 | 2,900,000 | $ 2,000,000 | ||
Interest on income tax obligations | 4.00% | 4.00% | |||
Risks and Uncertainties [Abstract] | |||||
Number of main components of economic risk | Component | 2 | ||||
Creditors' Trust Funding Liability [Abstract] | |||||
Contribution to creditor trust | $ 5,000,000 | $ 5,000,000 | 2,000,000 | ||
Outstanding funding obligation | 0 | 10,000,000 | $ 0 | $ 10,000,000 | |
Premium Liability [Abstract] | |||||
Escrow for future payment of premium obligations | 30,225,729 | 25,776,263 | 30,225,729 | ||
Maturity Liabilities [Abstract] | |||||
Maturity liabilities | 23,643,936 | 38,026,076 | 23,643,936 | $ 136,124,755 | |
Receivables for maturities included in pre-effective maturity liabilities | $ 0 | $ 9,000,000 | $ 0 |
Operations (Details)
Operations (Details) - shares | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 09, 2016 |
Operations [Line Items] | |||
Number of units of beneficial interest issued to fractional interest holders (in shares) | 1,012,355,948 | ||
Number of units outstanding (in shares) | 1,162,059,511 | 1,012,364,792 | |
Life Partners IRA Holder Partnership, LLC [Member] | |||
Operations [Line Items] | |||
Number of units of beneficial interest issued to fractional interest holders (in shares) | 733,164,743 | 692,883,523 | |
Number of units outstanding (in shares) | 1,162,059,511 | 1,012,355,948 |
Significant Accounting Polici24
Significant Accounting Policies (Details) | 12 Months Ended | |
Dec. 31, 2017USD ($)Component | Dec. 31, 2016USD ($) | |
Risks and Uncertainties [Abstract] | ||
Number of main components of economic risk | Component | 2 | |
Life Partners IRA Holder Partnership, Llc [Member] | ||
Equity Method Accounting [Abstract] | ||
Undistributed earnings | $ 11,300,000 | $ 615,000 |
Risks and Uncertainties [Abstract] | ||
Number of main components of economic risk | Component | 2 | |
Life Partners Position Holder Trust [Member] | ||
Assets | ||
Life insurance policies | $ 272,140,787 | 263,579,040 |
All other assets | 97,624,877 | 118,545,086 |
Total assets | 369,765,664 | 382,124,126 |
Total liabilities | 130,824,276 | 178,374,572 |
Net assets | 238,941,388 | 203,749,554 |
Income Statement Data [Abstract] | ||
Change in the fair value of life insurance policies | 49,930,097 | 2,559,020 |
Other income | 672,712 | 0 |
Total income | 50,602,809 | 2,559,020 |
Total expenses | 15,410,975 | 1,660,445 |
Net increase in net assets resulting from operations | $ 35,191,834 | $ 898,575 |
Restricted Cash (Details)
Restricted Cash (Details) - USD ($) $ in Millions | Dec. 31, 2017 | Dec. 31, 2016 |
Restricted Cash [Abstract] | ||
Pre and post effective maturity escrow | $ 23.6 | $ 33.1 |
Cash reserve | 5.7 | 27.5 |
Escrow to fulfill premium obligations of continuing fractional interest holders | 30.2 | $ 25.8 |
Collateral deposits on debt | $ 16.6 |
Life Insurance Policies (Detail
Life Insurance Policies (Details) | Dec. 31, 2017USD ($)Policy | Dec. 31, 2016USD ($)Policy | Dec. 09, 2016USD ($) |
Number of life insurance policies [Abstract] | |||
0-1 | Policy | 21 | 19 | |
1-2 | Policy | 33 | 29 | |
2-3 | Policy | 60 | 60 | |
3-4 | Policy | 57 | 59 | |
4-5 | Policy | 130 | 86 | |
Thereafter | Policy | 2,839 | 2,999 | |
Total | Policy | 3,140 | 3,252 | |
Face value [Abstract] | |||
0-1 | $ 45,189,634 | $ 26,906,072 | |
1-2 | 61,077,238 | 59,109,822 | |
2-3 | 65,934,777 | 53,027,573 | |
3-4 | 94,187,235 | 95,930,412 | |
4-5 | 211,916,460 | 112,725,236 | |
Thereafter | 784,622,390 | 942,298,899 | |
Total | 1,262,927,734 | 1,289,998,014 | |
Fair value [Abstract] | |||
0-1 | 36,855,871 | 22,344,600 | |
1-2 | 36,814,730 | 38,672,708 | |
2-3 | 30,372,137 | 26,251,734 | |
3-4 | 31,657,796 | 35,577,890 | |
4-5 | 50,004,422 | 29,193,315 | |
Thereafter | 86,435,831 | 111,538,793 | |
Total | 272,140,787 | $ 263,579,040 | $ 267,769,937 |
Estimated premiums to be paid [Abstract] | |||
2,018 | 44,153,752 | ||
2,019 | 50,945,512 | ||
2,020 | 52,032,825 | ||
2,021 | 47,956,157 | ||
2,022 | 42,096,660 | ||
Thereafter | 171,254,328 | ||
Total | $ 408,439,234 | ||
Life Settlement Policies [Member] | |||
Number of life insurance policies [Abstract] | |||
Total | Policy | 600 | 654 | |
Face value [Abstract] | |||
Total | $ 1,100,000,000 | $ 1,120,000,000 | |
Fair value [Abstract] | |||
Total | $ 270,600,000 | $ 261,600,000 | |
Viaticals [Member] | |||
Number of life insurance policies [Abstract] | |||
Total | Policy | 2,540 | 2,598 | |
Face value [Abstract] | |||
Total | $ 179,100,000 | $ 191,200,000 | |
Fair value [Abstract] | |||
Total | $ 1,500,000 | $ 2,000,000 |
Notes Payable (Details)
Notes Payable (Details) | Mar. 28, 2017USD ($) | Dec. 31, 2017USD ($)Payment | Dec. 31, 2016USD ($) | Dec. 09, 2016USD ($) |
Debt Instrument [Line Items] | ||||
Line of credit, outstanding amount | $ 27,176,462 | |||
Revolving Line of Credit [Member] | ||||
Debt Instrument [Line Items] | ||||
Debt instrument, interest rate | 11.00% | |||
Line of credit, maximum borrowing capacity | $ 25,000,000 | |||
Line of credit, maturity date | Dec. 9, 2018 | |||
Line of credit, outstanding amount | $ 0 | $ 0 | ||
IRA Notes Payable [Member] | ||||
Debt Instrument [Line Items] | ||||
Debt instrument face amount | $ 36,500,000 | |||
Debt instrument, interest rate | 3.00% | |||
Debt instrument, maturity date | Dec. 9, 2031 | |||
Notes Payable [Member] | Term Loan [Member] | ||||
Debt Instrument [Line Items] | ||||
Debt instrument face amount | $ 55,000,000 | |||
Debt instrument, interest rate | 11.00% | |||
Repayment of debt | $ 20,000,000 | |||
Debt instrument, outstanding | $ 35,000,000 | |||
Debt instrument, maturity date | Dec. 9, 2018 | |||
Notes Payable [Member] | Notes Payable for Chapter 11 Trustee's Fees [Member] | ||||
Debt Instrument [Line Items] | ||||
Trustee fees | $ 5,500,000 | |||
Payments for fees | $ 2,800,000 | |||
Number of annual payments | Payment | 3 | |||
Note payable discount amount | $ 200,000 | |||
Implied interest rate | 3.00% |
Notes Payable, Future Scheduled
Notes Payable, Future Scheduled Principal Payments of Notes Payable and Sinking Fund Contributions (Details) | Dec. 31, 2017USD ($) |
Sinking Fund [Member] | |
Future scheduled principal payments [Abstract] | |
2,018 | $ 2,432,886 |
2,019 | 2,432,886 |
2,020 | 2,432,886 |
2,021 | 2,432,886 |
2,022 | 2,432,886 |
Thereafter | 21,887,452 |
Long-term debt | 34,051,882 |
Notes Payable [Member] | |
Future scheduled principal payments [Abstract] | |
2,018 | 35,000,000 |
2,019 | 916,667 |
2,020 | 916,667 |
2,021 | 916,666 |
2,022 | 0 |
Thereafter | 36,493,298 |
Long-term debt | $ 74,243,298 |
Fair Value Measurements, Assets
Fair Value Measurements, Assets Measured at Fair Value on Recurring Basis (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 09, 2016 |
Assets [Abstract] | |||
Fair value of life insurance policies | $ 272,140,787 | $ 263,579,040 | $ 267,769,937 |
Recurring [Member] | |||
Assets [Abstract] | |||
Fair value of life insurance policies | 272,140,787 | 263,579,040 | |
Recurring [Member] | Level 1 [Member] | |||
Assets [Abstract] | |||
Fair value of life insurance policies | 0 | 0 | |
Recurring [Member] | Level 2 [Member] | |||
Assets [Abstract] | |||
Fair value of life insurance policies | 0 | 0 | |
Recurring [Member] | Level 3 [Member] | |||
Assets [Abstract] | |||
Fair value of life insurance policies | $ 272,140,787 | $ 263,579,040 |
Fair Value Measurements, Quanti
Fair Value Measurements, Quantitative Information about Level 3 Fair Value Measurements (Details) - USD ($) | 1 Months Ended | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2017 | Dec. 09, 2016 | |
Fair Value Inputs, Assets, Quantitative Information [Line Items] | |||
Fair value of life insurance policies | $ 263,579,040 | $ 272,140,787 | $ 267,769,937 |
Face value | 1,289,998,014 | $ 1,262,927,734 | |
Discount rate for life expectancy starting 21 months past the underwritting date | 25.00% | ||
Discount rate for life expectancy between 24 to 26 months | 50.00% | ||
Discount rate for life expectancy between 27 to 29 months | 75.00% | ||
Mortality multipliers rate for life settlement | 100.00% | ||
Mortality multipliers rate for viaticals regardless of gender | 350.00% | ||
Servicing fee payable percentage | 2.65% | ||
Discounted Cash Flow [Member] | Level 3 [Member] | Life Settlement Policies [Member] | |||
Fair Value Inputs, Assets, Quantitative Information [Line Items] | |||
Fair value of life insurance policies | 263,579,040 | $ 272,140,787 | |
Face value | $ 1,289,998,014 | $ 1,262,927,734 | |
Unobservable inputs | Discount rate | Discount rate | |
Discounted Cash Flow [Member] | Level 3 [Member] | Life Settlement Policies [Member] | Minimum [Member] | |||
Fair Value Inputs, Assets, Quantitative Information [Line Items] | |||
Discount rate | 24.74% | 24.45% | |
Discounted Cash Flow [Member] | Level 3 [Member] | Life Settlement Policies [Member] | Maximum [Member] | |||
Fair Value Inputs, Assets, Quantitative Information [Line Items] | |||
Discount rate | 31.74% | 31.82% |
Fair Value Measurements, Change
Fair Value Measurements, Change in Estimated Fair Value (Details) - USD ($) | 1 Months Ended | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2017 | Dec. 09, 2016 | |
Life expectancy sensitivity analysis [Abstract] | |||
Average life expectancy | 4 years | 3 years 7 months 6 days | |
Impact of -5% in life expectancy, value | $ 277,276,497 | $ 286,717,730 | |
Impact of -5% change in life expectancy, change in value | 13,697,457 | 14,576,943 | |
No change, value | 263,579,040 | 272,140,787 | $ 267,769,937 |
Impact of +5% in life expectancy, value | 249,069,410 | 257,057,325 | |
Impact of +5% change in life expectancy, change in value | (14,509,630) | (15,083,462) | |
Discount rate [Abstract] | |||
Impact of +2% in discount rate, value | 250,218,915 | 259,806,309 | |
Impact of +2% change in discount rate, change in value | (13,360,125) | (12,334,478) | |
No change, value | 263,579,040 | 272,140,787 | $ 267,769,937 |
Impact of -2% in discount rate, value | 278,442,322 | 285,785,223 | |
Impact of -2% change in discount rate, change in value | $ 14,863,282 | $ 13,644,436 |
Fair Value Measurements, Life I
Fair Value Measurements, Life Insurance Issuer Concentrations (Details) - Credit Concentration Risk [Member] - Carrier A+ Rating [Member] | 1 Months Ended | 12 Months Ended |
Dec. 31, 2016 | Dec. 31, 2017 | |
Face Value of Life Insurance Policies [Member] | The Lincoln National Life Insurance [Member] | ||
Concentration Risk [Line Items] | ||
Concentrations risk percentage | 11.40% | 11.50% |
Face Value of Life Insurance Policies [Member] | Transamerica Financial Life Insurance [Member] | ||
Concentration Risk [Line Items] | ||
Concentrations risk percentage | 9.40% | 9.40% |
Face Value of Life Insurance Policies [Member] | John Hancock Life Insurance (USA) [Member] | ||
Concentration Risk [Line Items] | ||
Concentrations risk percentage | 7.30% | 7.90% |
Fair Value of Life Insurance Policies [Member] | The Lincoln National Life Insurance [Member] | ||
Concentration Risk [Line Items] | ||
Concentrations risk percentage | 14.60% | 13.60% |
Fair Value of Life Insurance Policies [Member] | Transamerica Financial Life Insurance [Member] | ||
Concentration Risk [Line Items] | ||
Concentrations risk percentage | 10.72% | 11.50% |
Fair Value of Life Insurance Policies [Member] | John Hancock Life Insurance (USA) [Member] | ||
Concentration Risk [Line Items] | ||
Concentrations risk percentage | 10.60% | 12.40% |
Fair Value Measurements, Chan33
Fair Value Measurements, Changes in Fair Value (Details) - Life Insurance Policies [Member] - USD ($) | 1 Months Ended | 12 Months Ended |
Dec. 31, 2016 | Dec. 31, 2017 | |
Changes in Fair Value [Roll Forward] | ||
Beginning balance | $ 267,769,937 | $ 263,579,040 |
Realized gain on matured policies | 5,569,231 | 60,812,229 |
Unrealized gain on assets held | (3,010,211) | (10,882,132) |
Change in fair value | 2,559,020 | 49,930,097 |
Matured policies, net of fees | (6,749,917) | (78,913,426) |
Premiums paid | 37,545,076 | |
Ending balance | $ 263,579,040 | $ 272,140,787 |