Document and Entity Information
Document and Entity Information | 12 Months Ended |
Dec. 31, 2019USD ($)shares | |
Entity Information [Line Items] | |
Entity Registrant Name | Life Partners Position Holder Trust |
Entity Central Index Key | 0001692144 |
Current Fiscal Year End Date | --12-31 |
Entity Well-known Seasoned Issuer | No |
Entity Voluntary Filers | No |
Entity Current Reporting Status | Yes |
Entity Filer Category | Non-accelerated Filer |
Entity Emerging Growth Company | false |
Entity Small Business | true |
Entity Shell Company | false |
Entity Public Float | $ | $ 0 |
Entity Common Stock, Shares Outstanding | shares | 0 |
Document Fiscal Year Focus | 2019 |
Document Fiscal Period Focus | FY |
Document Type | 10-K |
Amendment Flag | false |
Document Period End Date | Dec. 31, 2019 |
Life Partners IRA Holder Partnership, Llc | |
Entity Information [Line Items] | |
Entity Registrant Name | Life Partners IRA Holder Partnership, LLC |
Entity Central Index Key | 0001705222 |
BALANCE SHEET
BALANCE SHEET - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Assets | ||
Cash | $ 772,800 | $ 672,138 |
Maturities receivable | 29,547,497 | 24,111,204 |
Prepaids and other assets | 237,066 | 481,575 |
Restricted cash and cash equivalents | 79,989,380 | 51,221,993 |
Life insurance policies | 172,242,734 | 186,251,760 |
Total assets | 282,789,477 | 262,738,670 |
Liabilities [Abstract] | ||
Notes payable | 25,771,182 | 42,568,117 |
Assumed tax liability | 0 | 1,957,240 |
Premium liability | 33,183,289 | 33,189,624 |
Maturity liability | 8,259,865 | 14,253,643 |
Accounts payable | 216,169 | 643,472 |
Distributions payable | 341,568 | 0 |
Accrued expenses | 2,282,650 | 1,119,978 |
Commitments and Contingencies | ||
Total liabilities | 70,054,723 | 93,732,074 |
Net Assets | 212,734,754 | 169,006,596 |
Life Partners IRA Holder Partnership, Llc | ||
Assets | ||
Investment in Life Partners Position Holder Trust | 128,442,454 | 102,164,149 |
Total assets | 128,442,454 | 102,164,149 |
Liabilities [Abstract] | ||
Distributions payable | 234,292 | 0 |
Due to the Life Partners Position Holder Trust | 54,740 | 160,691 |
Total liabilities | 289,032 | 160,691 |
Net Assets | $ 128,153,422 | $ 102,003,458 |
STATEMENT OF OPERATIONS
STATEMENT OF OPERATIONS - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Income | ||
Change in fair value of life insurance policies | $ 71,207,859 | $ (62,215,770) |
Other income | 2,773,673 | 1,358,807 |
Total income (loss) | 73,981,532 | (60,856,963) |
Expenses | ||
Interest expense | 861,738 | 3,278,635 |
Legal fees | 2,207,395 | 2,037,630 |
Administrative and filing fees | 1,036,086 | 988,026 |
Insurance | 156,628 | 156,454 |
Professional fees | 5,008,744 | 2,794,667 |
Other general and administrative | 1,305,091 | 418,279 |
Total expenses | 10,575,682 | 9,673,691 |
Net increase (decrease) in net assets resulting from operations | 63,405,850 | (70,530,654) |
Life Partners IRA Holder Partnership, Llc | ||
Income | ||
Equity income (loss) from Life Partners Position Holder Trust | 38,353,720 | (48,588,366) |
Expenses | ||
Professional fees | 34,992 | 125,170 |
Income tax expense | 93,348 | 0 |
Net increase (decrease) in net assets resulting from operations | $ 38,225,380 | $ (48,713,536) |
STATEMENT OF CHANGES IN NET ASS
STATEMENT OF CHANGES IN NET ASSETS - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||
Net assets, beginning of year | $ 169,006,596 | $ 238,941,388 |
Conversion of debt to units | 322,323 | 595,862 |
Distributions to unit holders | (20,000,015) | 0 |
Net increase (decrease) in net assets resulting from operations | 63,405,850 | (70,530,654) |
Net assets, end of year | 212,734,754 | 169,006,596 |
Life Partners IRA Holder Partnership, Llc | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||
Net assets, beginning of year | 102,003,458 | 150,716,994 |
Distributions to unit holders | (12,075,416) | 0 |
Net increase (decrease) in net assets resulting from operations | 38,225,380 | (48,713,536) |
Net assets, end of year | $ 128,153,422 | $ 102,003,458 |
STATEMENT OF CASH FLOWS
STATEMENT OF CASH FLOWS - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Cash flows from operating activities: | ||
Net increase (decrease) in net assets resulting from operations | $ 63,405,850 | $ (70,530,654) |
Adjustments to reconcile net increase in net assets to net cash used in operations: | ||
Change in fair value of life insurance policies | (71,207,859) | 62,215,770 |
Change in assets and liabilities: | ||
Prepaids and other assets | 244,509 | (399,872) |
Assumed tax liability | (1,957,240) | (286,062) |
Premium liability | (6,335) | 2,963,895 |
Maturity liability | (5,993,778) | (9,390,293) |
Accounts payable | (427,303) | 608,965 |
Assumed liabilities | 0 | (18,293) |
Distributions payable | 341,568 | 0 |
Accrued expenses | 1,215,292 | 625,448 |
Net cash flows used in operating activities | (14,385,296) | (14,211,096) |
Cash flows from investing activities: | ||
Premiums paid on life settlements | (44,748,742) | (56,655,499) |
Net proceeds from maturity of life settlements | 124,529,334 | 75,656,086 |
Net cash flows provided by investing activities | 79,780,592 | 19,000,587 |
Cash flows from financing activities: | ||
Payments on notes payable | (16,527,232) | (31,000,000) |
Distributions to unit holders | (20,000,015) | 0 |
Net cash flows used in financing activities | (36,527,247) | (31,000,000) |
Net increase (decrease) in cash | 28,868,049 | (26,210,509) |
Cash and cash equivalents, beginning of year | 51,894,131 | 78,104,640 |
Cash and cash equivalents, end of year | 80,762,180 | 51,894,131 |
Supplemental cash flow information: | ||
Total cash and cash equivalents | 80,762,180 | 78,104,640 |
Cash paid for interest | 1,048,103 | 3,177,567 |
Life Partners IRA Holder Partnership, Llc | ||
Cash flows from operating activities: | ||
Net increase (decrease) in net assets resulting from operations | 38,225,380 | (48,713,536) |
Adjustments to reconcile net increase in net assets to net cash used in operations: | ||
Change in Investment in Life Partners Position Holder Trust | (38,353,720) | 48,588,366 |
Change in assets and liabilities: | ||
Distributions payable | 234,292 | 0 |
Increase (Decrease) in Due to Related Parties | (105,952) | 125,170 |
Net cash flows used in operating activities | 0 | 0 |
Cash flows from investing activities: | ||
Proceeds From Capital Distributions Received | 12,075,416 | 0 |
Net cash flows provided by investing activities | 12,075,416 | 0 |
Cash flows from financing activities: | ||
Distributions to unit holders | (12,075,416) | 0 |
Net cash flows used in financing activities | (12,075,416) | 0 |
Net increase (decrease) in cash | 0 | 0 |
Cash and cash equivalents, beginning of year | 0 | 0 |
Cash and cash equivalents, end of year | 0 | 0 |
Supplemental cash flow information: | ||
Total cash and cash equivalents | $ 0 | $ 0 |
Operations and Significant Acco
Operations and Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Operations and Significant Accounting Policies | 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. (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 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, 2019, there were 9,678 holders of the 1,235,715,080 Units outstanding. As of December 31, 2018, there were 10,442 holders of the 1,237,019,204 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, 2019, the Trust’s portion of the portfolio consists of 2,896 life insurance policies, with a fair value of $172.2 million and an aggregate face value of approximately $1.1 billion. As of December 31, 2018, the Trust’s portion of the portfolio consisted of 3,037 life insurance policies, with a fair value of $186.3 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. 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 Trust’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. On November 13, 2019, the Trust made a distribution to Unit holders for the amount of $20.0 million based on the 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 will require 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 . Any resulting changes in fair value estimates are reflected in operations in the period the change becomes apparent. Fair Value of Life Insurance Policies The Trust follows ASC 820, Fair Value Measurements and Disclosures , in estimating the fair value of its life insurance policies, which defines fair value as an exit price representing the amount that would be received if an asset were sold or that would be paid to transfer a liability in an orderly transaction between market participants at the measurement date. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. 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, 2019 and December 31, 2018, the allowance for doubtful accounts was $3.2 million and $10.0 million, respectively, and fully offset 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. Premium Liability Premium liabilities are funds in escrow on behalf of continuing fractional holders for future payment of their premium obligations. If such funds are not used for such continuing fractional holder’s premium payments, they are refunded to the respective continuing fractional holder. Maturity Liability Maturity Liabilities are maturities collected on behalf of continuing factional holders pending payment. Distributions Payable Distributions payable are distributions declared by the Trust pending payment. 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 of 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, 2019 and 2018. The Trust assumed income tax liabilities of the Debtors at its inception which totaled approximately $2.0 million as of December 31, 2018. In December 2019, the Trust made the final payment for the assumed income tax liability and the tax liability has now been completely satisfied. 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 main components of economic risk potentially impacting the Trust are market risk, concentration of credit risk, and the increasing cost of insurance 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 materially affect 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 carrier’s deteriorating financial condition 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 obligations. The increasing cost of insurance risk includes the carriers’ attempts to change a policy’s cost of insurance. While some cost of insurance increases are anticipated and taken into consideration in the Trusts forecasts, other cost of insurance increases are unilaterally imposed by the carrier. In the second quarter of 2018, one carrier increased the cost of insurance associated with its policies held by the Trust, representing about $188 million in face value, by approximately 45% over the prior cost of insurance. There is no additional impact in 2019 from this carrier. The main components of legal risk are: (i) the risk that an insurer could successfully challenge its obligation to pay policy benefits at maturity; and (ii) that an insured’s family could successfully challenge the Trust’s entitlement to an insurance policy’s benefits. In either case, there is also risk that the Trust would be unable to recover the premiums it paid towards the insurance policy. 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 in premiums and delaying its collection of death benefits. Further, increased longevity may encourage additional continuing fraction holders to default on their premium obligations, increasing the Trust’s positions and its premium payment burden. The Trust management is still evaluating any potential impact; however, such future revisions could have a material impact on the valuation. The Trust maintains the majority of its cash and cash equivalents in several accounts with a commercial bank. Balances on deposit are insured by the Federal Deposit Insurance Corporation (“FDIC”). However, from time to time the Trust's balances may exceed the FDIC insurable amounts as such in those cases the cash and cash equivalents are not insured. Recent Accounting Pronouncements |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 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. The Trust maintains insurance to mitigate its exposure to this contingency risk. |
Restricted Cash
Restricted Cash | 12 Months Ended |
Dec. 31, 2019 | |
Restricted Cash [Abstract] | |
Restricted Cash | Restricted Cash and Cash EquivalentsThe Plan imposes restrictions on the Trust to maintain certain funds in segregated accounts. As of December 31, 2019, and 2018, the Trust has $80.0 million and $51.2 million, respectively, in restricted cash and cash equivalents. The restricted cash and cash equivalents accounts are for: monies distributable to the fractional interest holders in policies that matured prior to the Plan becoming effective, maturities, premium reserves, premium obligations, and collateral deposits on debt. |
Life Insurance Policies
Life Insurance Policies | 12 Months Ended |
Dec. 31, 2019 | |
Investments, All Other Investments [Abstract] | |
Life Insurance Policies | Life Insurance Policies As of December 31, 2019, the Trust owns an interest in 2,896 policies of which 483 are life settlement policies and 2,413 are viaticals. As of December 31, 2018, the Trust owned an interest in 3,037 policies of which 548 are life settlement policies and 2,489 are viaticals (the “PHT Portfolio”). The PHT Portfolio’s aggregate face value is $1.1 billion as of December 31, 2019 of which $938.2 million is attributable to life settlements and $191.3 million is attributable to viaticals. The PHT Portfolio’s aggregate face value is $1.3 billion as of December 31, 2018 of which $1.1 billion is attributable to life settlements and $203.1 million is attributable to viaticals. The PHT Portfolio’s aggregate fair value is $172.2 million as of December 31, 2019 of which $168.7 million is attributable to life settlements and $3.5 million is attributable to viaticals. The PHT Portfolio’s aggregate fair value was $186.3 million as of December 31, 2018 of which $182.0 million was attributable to life settlements and $4.3 million was 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, 2019: Remaining Life Expectancy (Years) Number of Life Insurance Policies Face Value Fair Value 0-1 — $ — $ — 1-2 1 46,395 32,546 2-3 5 4,956,008 1,243,470 3-4 79 106,480,951 26,699,382 4-5 194 401,541,262 81,093,500 Thereafter 2,617 616,520,712 63,173,836 Total 2,896 1,129,545,328 172,242,734 December 31, 2018: Remaining Life Expectancy (Years) Number of Life Insurance Policies Face Value Fair Value 0-1 — $ — $ — 1-2 1 46,395 5,076 2-3 1 241,667 53,634 3-4 44 50,866,327 15,246,887 4-5 183 339,765,032 75,610,383 Thereafter 2,808 867,471,295 95,335,780 Total 3,037 $ 1,258,390,716 $ 186,251,760 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, 2019, are as follows: 2020 $ 63,074,892 2021 65,483,103 2022 61,597,800 2023 56,599,136 2024 49,116,216 Thereafter 186,761,906 Total $ 482,633,053 The amount of $482.6 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 differ 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, 2019 | |
Debt Disclosure [Abstract] | |
Notes Payable | Notes Payable On December 9, 2016, the Trust obtained a term loan (or the "Exit Loan Facility") from Vida Opportunity Fund, LP, an affiliate of Vida Capital, Inc., for $55.0 million. Interest accrued at 11% of outstanding balance per annum and was paid quarterly. Substantially all of the Trust’s assets collateralized the term loan. The Trust made principal payments of $31.0 million in 2018 leaving a balance outstanding on the term loan of $4.0 million at December 31, 2018. The maturity date of the term loan was December 9, 2018; however, an extension was agreed to until June 7, 2019. Effective as of January 17, 2019, the Position Holders Trust paid the remaining balance in full related to the Exit Loan Facility and terminated the $55.0 million Exit Loan Facility with Vida Opportunity Fund, LP. All liens and security interests of the lenders under the Exit Loan Facility have been terminated and released. 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 matured on December 9, 2018, at which point there was no amount outstanding. As of December 31, 2018, there were no amounts outstanding on the line of credit and the line of credit facility was terminated in January 2019. To provide for short term capital needs of the Position Holders Trust, if any, effective as of January 30, 2019, the Position Holders Trust entered into a $15.0 million revolving credit facility with Veritex Community Bank of Dallas (“Veritex Credit Facility”), Texas. The Veritex Credit Facility, is secured by a lien on the Position Holder Trust’s assets, has an initial 2 year term and, as to any amounts drawn thereunder, shall bear interest at the rate of 6% per annum. In accordance with the Plan, the Trust issued New IRA Notes of $35.9 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 New IRA 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 August 1, 2019 the Trust redeemed in full all New IRA Notes having a balance of $5,000 or less and made partial redemptions of all remaining notes equal to 2/15ths of the original balance of those notes. The total amount paid was $5.7 million and only funds set aside in a sinking fund established pursuant to the Bankruptcy Plan for that purpose were used. On December 15, 2019 the Trust redeemed in full all New IRA Notes having a balance of $7,500 or less and made partial redemptions of all remaining New IRA Notes equal to an additional 2/15 th of the outstanding balance of those notes. Accrued interest on all New IRA Notes through the redemption dates was paid as well. The total amount paid in connection with the second redemption was $5.9 million again using only funds out of the sinking fund. In 2019 there was a conversion of notes payable to IRA Partnership and Trust units of $0.3 million based on changes to elections for certain unit holders which were in dispute and resolved through settlement, mediation or court order. 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 paid in 2018. The remaining balance is in the form of a note payable in the amount of $2.8 million 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 has been discounted by $0.2 million, based on an implied interest rate of 3%. On January 11, 2019 the Trust paid the first installment and on December 27, 2019 the Trust paid the second installment. Subsequent to the end of the reporting period, on January 27, 2020 the Trust paid the final installment and the note has now been completely satisfied. Future scheduled principal payments on the long-term debt are as follows as of December 31, 2019: Year ending December 31, Note Payable 2020 $ 889,968 2021 — 2022 — 2023 — 2024 — Thereafter 24,881,214 Total $ 25,771,182 |
Fair Value Measurements
Fair Value Measurements | 12 Months Ended |
Dec. 31, 2019 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | 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, 2019 and 2018, are as follows: As of December 31, 2019 As of December 31, 2018 Assets: Investments in Life Insurance Policies Level 1 $ — $ — Level 2 $ — $ — Level 3 $ 172,242,734 $ 186,251,760 Total Fair Value $ 172,242,734 $ 186,251,760 Quantitative Information about Level 3 Fair Value Measurements Life insurance policies December 31, 2019 December 31, 2018 Fair Value $ 172,242,734 $ 186,251,760 Face Value $ 1,129,545,328 $ 1,258,390,716 Valuation Techniques Discounted cash flow Discounted cash flow Unobservable Inputs Discount rate, Mortality assumptions Discount rate, Mortality assumptions Discount rate range 24.7% - 25.7% 24.8% - 25.8% Mortality assumptions - 2015 VBT mortality multipliers: Life settlements 90% - 110% 90% - 110% Viaticals 350% 350% The life insurance policies’ fair value estimates were reduced significantly in 2018. The primary cause of the change was the use of standard mortality multipliers for all policies as opposed to using previous life expectancy estimates that were previously determined by the Debtor for certain policies. A secondary cause was the increase in the cost of insurance imposed by certain life insurance companies on a number of policies in the PHT Portfolio. In assessing and determining the PHT Portfolio’s valuation, the Position Holder Trust retained Lewis & Ellis, Inc. as its principal actuaries. The following is a summary of the methodology used to estimate the assets’ fair value measured on a recurring basis and within the above fair value hierarchy. The overall fair value methodology has been consistently applied; however, certain assumptions are revised as appropriate at each reporting period. Through the first quarter of 2018, the PHT Portfolio’s value was estimated using an actuarially based approach incorporating net cash flows and life expectancies as provided by third-party life expectancy providers when they were available. This approach applied a monthly mortality scale as generated by the specific life expectancy (“LE”) and/or a default mortality multiplier of each insured which was used to project the PHT Portfolio’s present value of net cash flows (death benefits less premium payments and servicing company compensation). The mortality scale was actuarially rolled forward from the LE underwriting date to the valuation date. The LEs that the Trust holds were issued by life expectancy providers to the Debtor during the course of the bankruptcy. The LEs were approaching, and in some cases exceeding, two years since issuance. As LEs age, they become less reliable because they are based on increasingly out of date medical information. After two years, many industry participants obtain new medical information from insureds and purchase new LEs. The Trust does not purchase new LEs because of the significant time and financial burden that would be required to obtain new medical releases from the insureds and collect their medical records from various doctors, clinics and hospitals. Because it had a number of LEs that were becoming aged and, thus, less reliable, the Trust began to incrementally phase out the LEs in favor of a mortality multiplier based on the 2015 Valuation Basic Table produced by the U.S. Society of Actuaries (“2015 VBT”) beginning in December 31, 2017. Accordingly, as the LEs aged, less weight would be applied to them and more weight would be placed with the default mortality multiplier. A 25% discount would be applied quarterly starting 21 months past the underwriting date until the aged LE date was fully discounted and replaced by the default mortality multiplier. A LE that is 24 to 26 months old would have a 50% discount, an LE that is 27 to 29 months old will have a 75% discount, and an LE greater than or equal to 30 months would only 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 was used, based on the 2015 VBT. The Trust eliminated reliance on its LEs in favor of the mortality multiplier by the second quarter of 2018. As a result of its planned comparison of actual to expected mortalities during the second quarter of 2018, the Trust noticed a growing divergence between actual and expected maturities. After further analysis, the Trust determined that the LEs in its possession were less reliable than previously understood and that the mortality multipliers were providing more accurate longevity projections across the portfolio. Accordingly, the Trust’s management decided to accelerate its migration towards the mortality multipliers and stop using the LEs. Beginning in the second quarter of 2018, the PHT Portfolio’s value has been estimated using an actuarially based approach incorporating net cash flows and life expectancies as determined by a default mortality multiplier based on the 2015 VBT. A default mortality multiplier for each insured was used to project the PHT Portfolio’s present value of net cash flows (death benefits less premium payments and servicing company compensation). The mortality multipliers used in 2019 and 2018 are 110% for males and 90% for females the life settlements, and 350% for the viaticals regardless of gender. On a quarterly basis, the Trust compares actual mortalities to expected mortalities to refine its analysis. The exclusive use of the mortality multipliers has had the effect of extending anticipated longevity of the insureds in the PHT Portfolio. As a result, the amount of premiums that the Trust anticipates paying increased as did the anticipated length of time before the receipt of the death benefit. These factors were major contributors to the 2018 reduction in the estimated fair value of the PHT Portfolio. The Trust is continually assessing and revising the estimates of future maturities and premium obligations. The Trust will continue to monitor historical deaths on a quarterly basis. We will compare actual to expected mortalities to refine our mortality multipliers; such that they reasonably “validate” based on our analysis of trends. An in-depth review of the historical death experience to the mortality tables will be conducted on our third quarter results as an annual process to ensure the Trust information is current for the most accurate estimating process of valuing the investment portfolio. The servicing company is paid 2.65% of each maturity as compensation. All 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 PHT Portfolio’s estimated value as of December 31, 2019 and 2018. Future changes in the longevity estimates and estimated cash flows could have a material effect on the PHT 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: As of December 31, 2019 Life Expectancy Months Adjustment Average Life Expectancy Fair Value Change in Fair Value -5% $ 188,372,343 $ 16,129,609 No change 4.8 years $ 172,242,734 — +5% $ 155,482,251 $ (16,760,483) As of December 31, 2018 Life Expectancy Months Adjustment Average Life Expectancy Fair Value Change in Fair Value -5% $ 202,547,381 $ 16,295,621 No change 5.2 years $ 186,251,760 — +5% $ 169,348,101 $ (16,903,659) 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: As of December 31, 2019 Rate Adjustment Fair Value Change in Fair Value +2% $ 163,300,406 $ (8,942,328) No change $ 172,242,734 — -2% $ 182,200,298 $ 9,957,564 As of December 31, 2018 Rate Adjustment Fair Value Change in Fair Value +2% $ 175,204,064 $ (11,047,696) No change $ 186,251,760 — -2% $ 198,679,523 $ 12,427,763 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 or 10% of total fair value of the Trust's life insurance policies as of December 31, 2019: Carrier Percentage of Face Value Percentage of Fair Value Carrier Rating Transamerica Financial Life Insurance Company 9.6% 12.7% A+ The Lincoln National Life Insurance Company 10.4% 12.4% A+ December 31, 2018: Carrier Percentage of Face Value Percentage of Carrier Rating The Lincoln National Life Insurance 10.4% 13.4% A+ Transamerica Financial Life Insurance 9.6% 13.1% A+ Changes in Fair Value The following table provides a roll-forward of the fair value of life insurance policies for the twelve months ended December 31, 2019 and 2018: 2019 2018 Balance at January 1, $ 186,251,760 $ 272,140,787 Realized gain on matured policies 106,836,877 64,451,763 Unrealized gain (loss) on policies held (35,629,018) (126,667,533) Change in estimated fair value 71,207,859 (62,215,770) Matured policies, net of fees (129,965,627) (80,328,756) Premiums paid 44,748,742 56,655,499 Balance at December 31, $ 172,242,734 $ 186,251,760 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
Operations | 12 Months Ended |
Dec. 31, 2019 | |
Life Partners IRA Holder Partnership, Llc | |
Entity Information [Line Items] | |
Operations | Operations The Life Partners IRA Holder Partnership, LLC ("IRA Partnership" or "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 Life Partners Position Holder Trust (the "Position Holder Trust" or "Trust"). The Partnership held 746,085,361 and 747,775,628 units as of December 31, 2019 and December 31, 2018, respectively, of the Trust’s outstanding units totaling 1,235,715,080 and 1,237,019,204 as of December 31, 2019 and December 31, 2018, 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, 2019 | |
Life Partners IRA Holder Partnership, Llc | |
Entity Information [Line Items] | |
Significant Accounting Policies | Significant Accounting Policies Equity Method Accounting The Partnership accounts for its investment in the PHT using the equity method of its share of earnings or loss less distributions received. 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. Earnings (losses) attributable to the Partnership’s interests in the Trust and recognized under the equity method represented approximately $38.4 million at December 31, 2019 and $(48.6) million at December 31, 2018. On November 13, 2019, the Trust made a distribution to Unit holders for the amount of $20.0 million. The Partnership's portion of the distribution was $12.1 million based on its Pro Rata share of the outstanding Units. Management has determined the distribution to be a return of capital. Subsequently, the Partnership distributed most of the funds received from the Trust to its Unit holders based on their Member Interests. The following table presents summarized Trust financial data: Balance Sheet Data: December 31 December 31, 2018 Life insurance policies $ 172,242,734 $ 186,251,760 All other assets 110,546,743 76,486,910 Total Assets $ 282,789,477 $ 262,738,670 Total Liabilities $ 70,054,723 $ 93,732,074 Net Assets $ 212,734,754 $ 169,006,596 Income Statement Data: December 31, 2019 December 31, 2018 Change in the fair value of life insurance policies $ 71,207,859 $ (62,215,770) Other income 2,773,673 1,358,807 Total income (loss) $ 73,981,532 $ (60,856,963) Total expenses $ 10,575,682 $ 9,673,691 Net increase (decrease) in net assets resulting from operations $ 63,405,850 $ (70,530,654) Distributions Payable Distributions payable are distributions declared by the IRA Partnership pending payment. Due to Life Partners Position Holders Trust The Partnership does not have its own cash accounts, and its operating expenses and distributions to its Unit holders are paid on behalf of the Partnership by the Trust. The Partnership settles its liabilities to the Trust through reduction of the funds it receives from distributions made by the Trust. 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 by 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, 2019 or December 31, 2018. 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. |
Operations and Significant Ac_2
Operations and Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [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 will require 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 . Any resulting changes in fair value estimates are reflected in operations in the period the change becomes apparent. |
Fair Value of Life Insurance Policies | Fair Value of Life Insurance Policies The Trust follows ASC 820, Fair Value Measurements and Disclosures , in estimating the fair value of its life insurance policies, which defines fair value as an exit price representing the amount that would be received if an asset were sold or that would be paid to transfer a liability in an orderly transaction between market participants at the measurement date. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. 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, 2019 and December 31, 2018, the allowance for doubtful accounts was $3.2 million and $10.0 million, respectively, and fully offset 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. |
Premium Liability | Premium Liability Premium liabilities are funds in escrow on behalf of continuing fractional holders for future payment of their premium obligations. If such funds are not used for such continuing fractional holder’s premium payments, they are refunded to the respective continuing fractional holder. |
Maturity Liability | Maturity Liability Maturity Liabilities are maturities collected on behalf of continuing factional holders pending payment. |
Distributions Payable | Distributions Payable Distributions payable are distributions declared by the Trust pending payment. |
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 of them. |
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 main components of economic risk potentially impacting the Trust are market risk, concentration of credit risk, and the increasing cost of insurance 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 materially affect 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 carrier’s deteriorating financial condition 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 obligations. The increasing cost of insurance risk includes the carriers’ attempts to change a policy’s cost of insurance. While some cost of insurance increases are anticipated and taken into consideration in the Trusts forecasts, other cost of insurance increases are unilaterally imposed by the carrier. In the second quarter of 2018, one carrier increased the cost of insurance associated with its policies held by the Trust, representing about $188 million in face value, by approximately 45% over the prior cost of insurance. There is no additional impact in 2019 from this carrier. The main components of legal risk are: (i) the risk that an insurer could successfully challenge its obligation to pay policy benefits at maturity; and (ii) that an insured’s family could successfully challenge the Trust’s entitlement to an insurance policy’s benefits. In either case, there is also risk that the Trust would be unable to recover the premiums it paid towards the insurance policy. 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 in premiums and delaying its collection of death benefits. Further, increased longevity may encourage additional continuing fraction holders to default on their premium obligations, increasing the Trust’s positions and its premium payment burden. The Trust management is still evaluating any potential impact; however, such future revisions could have a material impact on the valuation. |
Recently Adopted Accounting Pronouncements | Recent Accounting PronouncementsIn August 2018, the FASB issued ASU 2018-13, "Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement" which modifies the disclosure requirements on fair value measurements in Topic 820, Fair Value Measurement, based on the concepts in the Concepts Statement, including the consideration of costs and benefits. The following disclosure requirements were removed from Topic 820 among others: 1) The amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy 2) The policy for timing of transfers between levels. The following disclosure requirements were part of the modifications in Topic 820:1) For investments in certain entities that calculate net asset value, an entity is required to disclose the timing of liquidation of an investee’s assets and the date when restrictions from redemption might lapse only if the investee has communicated the timing to the entity or announced the timing publicly. The amendments also clarify that the measurement uncertainty disclosure is to communicate information about the uncertainty in measurement as of the reporting date. Lastly, the following disclosure requirements were added to Topic 820: 1) the changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period; 2) the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. For certain unobservable inputs, an entity may disclose other quantitative information (such as the median or arithmetic average) in lieu of the weighted average if the entity determines that other quantitative information would be a more reasonable and rational method to reflect the distribution of unobservable inputs used to develop Level 3 fair value measurements. The amendments in this Update are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date. We have evaluated the methods and impact of adopting this new standard on our financial statements and believe it to be immaterial. |
Significant Accounting Polici_2
Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2019 | |
Entity Information [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 of them. |
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 main components of economic risk potentially impacting the Trust are market risk, concentration of credit risk, and the increasing cost of insurance 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 materially affect 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 carrier’s deteriorating financial condition 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 obligations. The increasing cost of insurance risk includes the carriers’ attempts to change a policy’s cost of insurance. While some cost of insurance increases are anticipated and taken into consideration in the Trusts forecasts, other cost of insurance increases are unilaterally imposed by the carrier. In the second quarter of 2018, one carrier increased the cost of insurance associated with its policies held by the Trust, representing about $188 million in face value, by approximately 45% over the prior cost of insurance. There is no additional impact in 2019 from this carrier. The main components of legal risk are: (i) the risk that an insurer could successfully challenge its obligation to pay policy benefits at maturity; and (ii) that an insured’s family could successfully challenge the Trust’s entitlement to an insurance policy’s benefits. In either case, there is also risk that the Trust would be unable to recover the premiums it paid towards the insurance policy. 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 in premiums and delaying its collection of death benefits. Further, increased longevity may encourage additional continuing fraction holders to default on their premium obligations, increasing the Trust’s positions and its premium payment burden. The Trust management is still evaluating any potential impact; however, such future revisions could have a material impact on the valuation. |
Distributions Payable | Distributions Payable Distributions payable are distributions declared by the Trust pending payment. |
Life Partners IRA Holder Partnership, Llc | |
Entity Information [Line Items] | |
Equity Method Accounting | Equity Method Accounting The Partnership accounts for its investment in the PHT using the equity method of its share of earnings or loss less distributions received. 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. Earnings (losses) attributable to the Partnership’s interests in the Trust and recognized under the equity method represented approximately $38.4 million at December 31, 2019 and $(48.6) million at December 31, 2018. On November 13, 2019, the Trust made a distribution to Unit holders for the amount of $20.0 million. The Partnership's portion of the distribution was $12.1 million based on its Pro Rata share of the outstanding Units. Management has determined the distribution to be a return of capital. Subsequently, the Partnership distributed most of the funds received from the Trust to its Unit holders based on their Member Interests. The following table presents summarized Trust financial data: Balance Sheet Data: December 31 December 31, 2018 Life insurance policies $ 172,242,734 $ 186,251,760 All other assets 110,546,743 76,486,910 Total Assets $ 282,789,477 $ 262,738,670 Total Liabilities $ 70,054,723 $ 93,732,074 Net Assets $ 212,734,754 $ 169,006,596 Income Statement Data: December 31, 2019 December 31, 2018 Change in the fair value of life insurance policies $ 71,207,859 $ (62,215,770) Other income 2,773,673 1,358,807 Total income (loss) $ 73,981,532 $ (60,856,963) Total expenses $ 10,575,682 $ 9,673,691 Net increase (decrease) in net assets resulting from operations $ 63,405,850 $ (70,530,654) |
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 by 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, 2019 or December 31, 2018. |
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. |
Distributions Payable | Distributions PayableDistributions payable are distributions declared by the IRA Partnership pending payment. |
Due To Life Partners Position Holders Trust | Due to Life Partners Position Holders Trust The Partnership does not have its own cash accounts, and its operating expenses and distributions to its Unit holders are paid on behalf of the Partnership by the Trust. The Partnership settles its liabilities to the Trust through reduction of the funds it receives from distributions made by the Trust. |
Life Insurance Policies (Tables
Life Insurance Policies (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Investments, All Other Investments [Abstract] | |
Schedule of Life Settlement Contracts | The following table summarizes the Trust's life insurance policies grouped by remaining life expectancy as of: December 31, 2019: Remaining Life Expectancy (Years) Number of Life Insurance Policies Face Value Fair Value 0-1 — $ — $ — 1-2 1 46,395 32,546 2-3 5 4,956,008 1,243,470 3-4 79 106,480,951 26,699,382 4-5 194 401,541,262 81,093,500 Thereafter 2,617 616,520,712 63,173,836 Total 2,896 1,129,545,328 172,242,734 December 31, 2018: Remaining Life Expectancy (Years) Number of Life Insurance Policies Face Value Fair Value 0-1 — $ — $ — 1-2 1 46,395 5,076 2-3 1 241,667 53,634 3-4 44 50,866,327 15,246,887 4-5 183 339,765,032 75,610,383 Thereafter 2,808 867,471,295 95,335,780 Total 3,037 $ 1,258,390,716 $ 186,251,760 |
Schedule of Estimated Premiums To Be Paid | 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, 2019, are as follows: 2020 $ 63,074,892 2021 65,483,103 2022 61,597,800 2023 56,599,136 2024 49,116,216 Thereafter 186,761,906 Total $ 482,633,053 |
Notes Payable (Tables)
Notes Payable (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Debt Disclosure [Abstract] | |
Schedule of Maturities of Long-term Debt | Future scheduled principal payments on the long-term debt are as follows as of December 31, 2019: Year ending December 31, Note Payable 2020 $ 889,968 2021 — 2022 — 2023 — 2024 — Thereafter 24,881,214 Total $ 25,771,182 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Fair Value Disclosures [Abstract] | |
Schedule of Assets Measured at Fair Value | The balances of the Trust's assets measured at fair value on a recurring basis as of December 31, 2019 and 2018, are as follows: As of December 31, 2019 As of December 31, 2018 Assets: Investments in Life Insurance Policies Level 1 $ — $ — Level 2 $ — $ — Level 3 $ 172,242,734 $ 186,251,760 Total Fair Value $ 172,242,734 $ 186,251,760 |
Quantitative Information About Level 3 Fair Value Measurements | Life insurance policies December 31, 2019 December 31, 2018 Fair Value $ 172,242,734 $ 186,251,760 Face Value $ 1,129,545,328 $ 1,258,390,716 Valuation Techniques Discounted cash flow Discounted cash flow Unobservable Inputs Discount rate, Mortality assumptions Discount rate, Mortality assumptions Discount rate range 24.7% - 25.7% 24.8% - 25.8% Mortality assumptions - 2015 VBT mortality multipliers: Life settlements 90% - 110% 90% - 110% Viaticals 350% 350% |
Change in Estimated Fair Value | he 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: As of December 31, 2019 Life Expectancy Months Adjustment Average Life Expectancy Fair Value Change in Fair Value -5% $ 188,372,343 $ 16,129,609 No change 4.8 years $ 172,242,734 — +5% $ 155,482,251 $ (16,760,483) As of December 31, 2018 Life Expectancy Months Adjustment Average Life Expectancy Fair Value Change in Fair Value -5% $ 202,547,381 $ 16,295,621 No change 5.2 years $ 186,251,760 — +5% $ 169,348,101 $ (16,903,659) 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: As of December 31, 2019 Rate Adjustment Fair Value Change in Fair Value +2% $ 163,300,406 $ (8,942,328) No change $ 172,242,734 — -2% $ 182,200,298 $ 9,957,564 As of December 31, 2018 Rate Adjustment Fair Value Change in Fair Value +2% $ 175,204,064 $ (11,047,696) No change $ 186,251,760 — -2% $ 198,679,523 $ 12,427,763 |
Credit Exposure to Insurance Companies | The following table provides information about the life insurance issuer concentrations that exceed 10% of total death benefit or 10% of total fair value of the Trust's life insurance policies as of December 31, 2019: Carrier Percentage of Face Value Percentage of Fair Value Carrier Rating Transamerica Financial Life Insurance Company 9.6% 12.7% A+ The Lincoln National Life Insurance Company 10.4% 12.4% A+ December 31, 2018: Carrier Percentage of Face Value Percentage of Carrier Rating The Lincoln National Life Insurance 10.4% 13.4% A+ Transamerica Financial Life Insurance 9.6% 13.1% A+ |
Changes in Fair Value For Trust's Life Insurance Policies | The following table provides a roll-forward of the fair value of life insurance policies for the twelve months ended December 31, 2019 and 2018: 2019 2018 Balance at January 1, $ 186,251,760 $ 272,140,787 Realized gain on matured policies 106,836,877 64,451,763 Unrealized gain (loss) on policies held (35,629,018) (126,667,533) Change in estimated fair value 71,207,859 (62,215,770) Matured policies, net of fees (129,965,627) (80,328,756) Premiums paid 44,748,742 56,655,499 Balance at December 31, $ 172,242,734 $ 186,251,760 |
Significant Accounting Polici_3
Significant Accounting Policies (Tables) - Life Partners IRA Holder Partnership, Llc | 12 Months Ended |
Dec. 31, 2019 | |
Entity Information [Line Items] | |
Condensed Balance Sheet | The following table presents summarized Trust financial data: Balance Sheet Data: December 31 December 31, 2018 Life insurance policies $ 172,242,734 $ 186,251,760 All other assets 110,546,743 76,486,910 Total Assets $ 282,789,477 $ 262,738,670 Total Liabilities $ 70,054,723 $ 93,732,074 Net Assets $ 212,734,754 $ 169,006,596 |
Condensed Income Statement | December 31, 2019 December 31, 2018 Change in the fair value of life insurance policies $ 71,207,859 $ (62,215,770) Other income 2,773,673 1,358,807 Total income (loss) $ 73,981,532 $ (60,856,963) Total expenses $ 10,575,682 $ 9,673,691 Net increase (decrease) in net assets resulting from operations $ 63,405,850 $ (70,530,654) |
Operations and Significant Ac_3
Operations and Significant Accounting Policies Narrative (Details) | Dec. 09, 2016shares | Jun. 30, 2018USD ($) | Dec. 31, 2019USD ($)ShareholdersPoliciesshares | Dec. 31, 2018USD ($)ShareholdersPoliciesshares |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||
Capital units issued (in shares) | shares | 1,012,355,948 | |||
Number of unit holders | Shareholders | 9,678 | 10,442 | ||
Capital units outstanding | shares | 1,235,715,080 | 1,237,019,204 | ||
Life insurance policies | Policies | 2,896 | 3,037 | ||
Fair value of life insurance policies | $ 172,242,734 | $ 186,251,760 | ||
Face value of insurance policies | $ 188,000,000 | 1,129,545,328 | 1,258,390,716 | |
Distribution to unit holders | 20,000,015 | 0 | ||
Allowance for doubtful accounts | $ 3,200,000 | 10,000,000 | ||
Income tax liabilities | $ 2,000,000 | |||
Change in cost of insurance | 45.00% |
Restricted Cash (Details)
Restricted Cash (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Restricted Cash [Abstract] | ||
Restricted cash and cash equivalents | $ 79,989,380 | $ 51,221,993 |
Life Insurance Policies Narrati
Life Insurance Policies Narrative (Details) | Dec. 31, 2019USD ($)Policies | Dec. 31, 2018USD ($)Policies | Jun. 30, 2018USD ($) |
Product Information [Line Items] | |||
Life insurance policies | Policies | 2,896 | 3,037 | |
Face value | $ 1,129,545,328 | $ 1,258,390,716 | $ 188,000,000 |
Fair value of life insurance policies | 172,242,734 | $ 186,251,760 | |
Estimated total future premium payable | $ 482,600,000 | ||
Life Settlement Contracts | |||
Product Information [Line Items] | |||
Life insurance policies | Policies | 483 | 548 | |
Face value | $ 938,200,000 | $ 1,100,000,000 | |
Fair value of life insurance policies | $ 168,700,000 | $ 182,000,000 | |
Viatical Settlement Contract | |||
Product Information [Line Items] | |||
Life insurance policies | Policies | 2,413 | 2,489 | |
Face value | $ 191,300,000 | $ 203,100,000 | |
Fair value of life insurance policies | $ 3,500,000 | $ 4,300,000 |
Life Insurance Policies (Detail
Life Insurance Policies (Details) | Dec. 31, 2019USD ($)Policies | Dec. 31, 2018USD ($)Policies | Jun. 30, 2018USD ($) |
Number of life insurance policies | |||
0-1 | Policies | 0 | 0 | |
1-2 | Policies | 1 | 1 | |
2-3 | Policies | 5 | 1 | |
3-4 | Policies | 79 | 44 | |
4-5 | Policies | 194 | 183 | |
Thereafter | Policies | 2,617 | 2,808 | |
Total | Policies | 2,896 | 3,037 | |
Life Settlement Contracts, Fair Value Method, Face Value, Fiscal Year Maturity [Abstract] | |||
0-1 | $ 0 | $ 0 | |
1-2 | 46,395 | 46,395 | |
2-3 | 4,956,008 | 241,667 | |
3-4 | 106,480,951 | 50,866,327 | |
4-5 | 401,541,262 | 339,765,032 | |
Thereafter | 616,520,712 | 867,471,295 | |
Face value of life insurance policies | 1,129,545,328 | 1,258,390,716 | $ 188,000,000 |
Life Settlement Contracts, Fair Value, Fiscal Year Maturity [Abstract] | |||
0-1 | 0 | 0 | |
1-2 | 32,546 | 5,076 | |
2-3 | 1,243,470 | 53,634 | |
3-4 | 26,699,382 | 15,246,887 | |
4-5 | 81,093,500 | 75,610,383 | |
Thereafter | 63,173,836 | 95,335,780 | |
Fair value of life insurance policies | $ 172,242,734 | $ 186,251,760 |
Life Insurance Policies (Deta_2
Life Insurance Policies (Details 1) | Dec. 31, 2019USD ($) |
Estimated premiums to be paid | |
2020 | $ 63,074,892 |
2021 | 65,483,103 |
2022 | 61,597,800 |
2023 | 56,599,136 |
2024 | 49,116,216 |
Thereafter | 186,761,906 |
Total | $ 482,633,053 |
Notes Payable (Details)
Notes Payable (Details) - Sinking Fund Notes Payable [Member] | Dec. 31, 2019USD ($) |
Long-term Debt, Fiscal Year Maturity [Abstract] | |
2020 | $ 889,968 |
2021 | 0 |
2022 | 0 |
2023 | 0 |
2024 | 0 |
Thereafter | 24,881,214 |
Long-term debt | $ 25,771,182 |
Notes Payable - Narrative (Deta
Notes Payable - Narrative (Details) - USD ($) | Dec. 15, 2019 | Aug. 01, 2019 | Mar. 28, 2017 | Dec. 31, 2019 | Dec. 31, 2018 | Jan. 30, 2019 | Jan. 17, 2019 | Dec. 09, 2016 |
Debt Instrument [Line Items] | ||||||||
Conversion of debt to units | $ 322,323 | $ 595,862 | ||||||
Repayments of notes payable | 16,527,232 | 31,000,000 | ||||||
Notes payable | $ 25,771,182 | 42,568,117 | ||||||
Ordered trustee's fees | $ 5,500,000 | |||||||
Exit Loan Facility | Secured Debt | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt face amount | $ 55,000,000 | $ 55,000,000 | ||||||
Stated interest rate | 11.00% | |||||||
Repayments of notes payable | 31,000,000 | |||||||
Notes payable | 4,000,000 | |||||||
Exit Loan Facility | Secured Debt | Revolving Credit Facility | ||||||||
Debt Instrument [Line Items] | ||||||||
Stated interest rate | 11.00% | |||||||
Notes Payable for Chapter 11 Trustee Fees | Secured Debt | ||||||||
Debt Instrument [Line Items] | ||||||||
Repayments of notes payable | 2,800,000 | |||||||
Notes Payable for Chapter 11 Trustee Fees | Note Payable | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt face amount | $ 2,800,000 | |||||||
Stated interest rate | 3.00% | |||||||
Debt discount | $ 200,000 | |||||||
Veritex Credit Facility | Secured Debt | Revolving Credit Facility | ||||||||
Debt Instrument [Line Items] | ||||||||
Line of credit maximum borrowing | $ 15,000,000 | |||||||
Veritex Credit Facility | Secured Debt | Secured Debt | ||||||||
Debt Instrument [Line Items] | ||||||||
Stated interest rate | 6.00% | |||||||
IRA Notes | Secured Debt | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt face amount | $ 35,900,000 | |||||||
Stated interest rate | 3.00% | |||||||
Repayments of notes payable | $ 5,900,000 | $ 5,700,000 | ||||||
IRA Notes | Secured Debt | Maximum | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt face amount | $ 7,500 | $ 5,000 | ||||||
Vida Longevity Fund, L.P. | Secured Debt | Revolving Credit Facility | ||||||||
Debt Instrument [Line Items] | ||||||||
Notes payable | $ 0 | |||||||
Line of credit maximum borrowing | $ 25,000,000 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) | Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) | Jun. 30, 2018USD ($) |
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |||
Fair value of life insurance policies | $ 172,242,734 | $ 186,251,760 | |
Face value of life insurance policies | 1,129,545,328 | 1,258,390,716 | $ 188,000,000 |
Fair Value, Inputs, Level 1 | |||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |||
Fair value of life insurance policies | 0 | 0 | |
Fair Value, Inputs, Level 2 | |||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |||
Fair value of life insurance policies | 0 | 0 | |
Fair Value, Inputs, Level 3 | |||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |||
Fair value of life insurance policies | $ 172,242,734 | $ 186,251,760 | |
Fair Value, Inputs, Level 3 | Measurement Input, Discount Rate | Minimum | Fair Value, Recurring | Valuation Technique, Discounted Cash Flow | |||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |||
Measurement input | 0.247 | 0.248 | |
Fair Value, Inputs, Level 3 | Measurement Input, Discount Rate | Maximum | Fair Value, Recurring | Valuation Technique, Discounted Cash Flow | |||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |||
Measurement input | 0.257 | 0.258 | |
Fair Value, Inputs, Level 3 | Measurement Input, Mortality Rate, Life Settlements | Minimum | Fair Value, Recurring | Valuation Technique, Discounted Cash Flow | |||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |||
Measurement input | 0.90 | 0.90 | |
Fair Value, Inputs, Level 3 | Measurement Input, Mortality Rate, Life Settlements | Maximum | Fair Value, Recurring | Valuation Technique, Discounted Cash Flow | |||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |||
Measurement input | 1.10 | 1.10 | |
Fair Value, Inputs, Level 3 | Measurement Input, Mortality Rate, Viaticals | Fair Value, Recurring | Valuation Technique, Discounted Cash Flow | |||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |||
Measurement input | 350 | 350 |
Fair Value Measurements (Deta_2
Fair Value Measurements (Details 2) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Life expectancy sensitivity analysis | ||
Average life expectancy | 4 years 9 months 18 days | 5 years 2 months 12 days |
Impact of -5% in life expectancy, fair value | $ 188,372,343 | $ 202,547,381 |
No change, fair value | 172,242,734 | 186,251,760 |
Impact of +5% in life expectancy, fair value | 155,482,251 | 169,348,101 |
Impact of -5% change in life expectancy, change in fair value | 16,129,609 | 16,295,621 |
Impact of +5% change in life expectancy, change in fair value | (16,760,483) | (16,903,659) |
Discount rate | ||
Impact of +2% in discount rate, fair value | 163,300,406 | 175,204,064 |
No change, fair value | 172,242,734 | 186,251,760 |
Impact of -2% in discount rate, fair value | 182,200,298 | 198,679,523 |
Impact of +2% change in discount rate, change in fair value | (8,942,328) | (11,047,696) |
Impact of -2% change in discount rate, change in fair value | $ 9,957,564 | $ 12,427,763 |
Fair Value Measurements (Deta_3
Fair Value Measurements (Details 3) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
The Lincoln National Life Insurance | Face Value of Life Insurance Policies | ||
Fair Value, Concentration of Risk, Financial Statement Captions [Line Items] | ||
Concentration Risk, Percentage | 9.60% | 10.40% |
Carrier rating | A+ | A+ |
The Lincoln National Life Insurance | Fair Value of Life Insurance Policies | ||
Fair Value, Concentration of Risk, Financial Statement Captions [Line Items] | ||
Concentration Risk, Percentage | 12.70% | 13.40% |
Transamerica Financial Life Insurance | Face Value of Life Insurance Policies | ||
Fair Value, Concentration of Risk, Financial Statement Captions [Line Items] | ||
Concentration Risk, Percentage | 10.40% | 9.60% |
Carrier rating | A+ | A+ |
Transamerica Financial Life Insurance | Fair Value of Life Insurance Policies | ||
Fair Value, Concentration of Risk, Financial Statement Captions [Line Items] | ||
Concentration Risk, Percentage | 12.40% | 13.10% |
Fair Value Measurements (Deta_4
Fair Value Measurements (Details 4) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Beginning balance | $ 186,251,760 | |
Ending balance | $ 186,251,760 | |
Life Settlement Contracts | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Beginning balance | 186,251,760 | 272,140,787 |
Realized gain on matured policies | 106,836,877 | 64,451,763 |
Unrealized gain (loss) on policies held | (35,629,018) | (126,667,533) |
Change in estimated fair value | 71,207,859 | (62,215,770) |
Matured policies, net of fees | (129,965,627) | (80,328,756) |
Premiums paid | 44,748,742 | 56,655,499 |
Ending balance | $ 172,242,734 | $ 186,251,760 |
Fair Value Measurements - Narra
Fair Value Measurements - Narrative (Details) | Dec. 31, 2019 |
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |
Compensating percent | 2.65% |
Measurement Input, Discount Rate | 21 Months | |
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |
Measurement input | 0.25 |
Measurement Input, Discount Rate | 24 to 26 Months | |
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |
Measurement input | 0.50 |
Measurement Input, Discount Rate | 27 to 29 Months | |
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |
Measurement input | 0.75 |
Measurement Input, Mortality Rate | Male | |
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |
Measurement input | 1.10 |
Measurement Input, Mortality Rate | Female | |
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |
Measurement input | 0.90 |
Measurement Input, Mortality Rate | Regardless Of Gender | |
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |
Measurement input | 3.50 |
Operations (Details Narrative)
Operations (Details Narrative) - shares | Dec. 31, 2019 | Dec. 31, 2018 |
Entity Information [Line Items] | ||
Capital units outstanding | 1,235,715,080 | 1,237,019,204 |
Life Partners IRA Holder Partnership, Llc | ||
Entity Information [Line Items] | ||
Demutualization by Insurance Entity, Securities Issued, Quantity of Shares | 746,085,361 | 747,775,628 |
Capital units outstanding | 1,235,715,080 | 1,237,019,204 |
Significant Accounting Polici_4
Significant Accounting Policies (Details) - Life Partners IRA Holder Partnership, Llc - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Assets | ||
Investment in life insurance policies | $ 172,242,734 | $ 186,251,760 |
All other assets | 110,546,743 | 76,486,910 |
Total assets | 282,789,477 | 262,738,670 |
Equity Method Investment, Summarized Financial Information, Liabilities | 70,054,723 | 93,732,074 |
Equity Method Investment Summarized Financial Information, Equity | $ 212,734,754 | $ 169,006,596 |
Significant Accounting Polici_5
Significant Accounting Policies (Details 1) - Life Partners IRA Holder Partnership, Llc - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Equity Method Investment, Summarized Financial Information, Income Statement [Abstract] | ||
Change in fair value of life insurance policies | $ 71,207,859 | $ (62,215,770) |
Other income | 2,773,673 | 1,358,807 |
Total (loss) income | 73,981,532 | (60,856,963) |
Equity Method Investment, Summarized Financial Information, Cost of Sales | 10,575,682 | 9,673,691 |
Net (decrease) increase in net assets resulting from operations | $ 63,405,850 | $ (70,530,654) |
Significant Accounting Polici_6
Significant Accounting Policies - Narrative (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Life Partners IRA Holder Partnership, Llc | ||
Entity Information [Line Items] | ||
Equity income (loss) from Life Partners Position Holder Trust | $ 38,353,720 | $ (48,588,366) |