Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2019 | Oct. 31, 2019 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | GWG Holdings, Inc. | |
Entity Central Index Key | 0001522690 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2019 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2019 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Shell Company | false | |
Entity Emerging Growth Company | false | |
Entity Ex Transition Period | false | |
Entity File Number | 001-36615 | |
Entity Interactive Data Current | Yes | |
Entity Incorporation State Country Code | DE | |
Entity Common Stock Shares Outstanding | 30,033,503 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
ASSETS | ||
Cash and cash equivalents | $ 65,680,464 | $ 114,587,084 |
Restricted cash | 8,204,705 | 10,849,126 |
Investment in life insurance policies, at fair value | 807,518,088 | 747,922,465 |
Life insurance policy benefits receivable, net | 17,369,176 | 16,460,687 |
Financing receivables from affiliates | 241,185,081 | 184,768,874 |
Equity method investment | 370,652,128 | 360,841,651 |
Other assets | 50,391,311 | 45,437,164 |
TOTAL ASSETS | 1,561,000,953 | 1,480,867,051 |
LIABILITIES | ||
Senior credit facility with LNV Corporation | 131,717,520 | 148,977,596 |
L Bonds | 830,341,949 | 651,402,663 |
Seller Trust L Bonds | 366,891,940 | 366,891,940 |
Accounts payable | 2,570,842 | 9,276,507 |
Interest and dividends payable | 16,726,344 | 18,555,293 |
Other accrued expenses | 6,700,336 | 4,705,170 |
TOTAL LIABILITIES | 1,354,948,931 | 1,199,809,169 |
STOCKHOLDERS' EQUITY | ||
REDEEMABLE PREFERRED STOCK (par value $0.001; shares authorized 100,000; shares outstanding 92,124 and 97,524; liquidation preference of $92,661,000 and $98,093,000 as of September 30, 2019 and December 31, 2018, respectively) | 81,509,765 | 86,910,335 |
SERIES 2 REDEEMABLE PREFERRED STOCK (par value $0.001; shares authorized 150,000; shares outstanding 147,604 and 148,359; liquidation preference of $148,465,000 and $149,225,000 as of September 30, 2019 and December 31, 2018, respectively) | 128,307,735 | 129,062,704 |
COMMON STOCK (par value $0.001; shares authorized 210,000,000; shares issued and outstanding 33,033,420 as of September 30, 2019 and 33,018,161 as of December 31, 2018) | 33,033 | 33,018 |
Additional paid-in capital | 237,159,909 | 249,662,168 |
Accumulated deficit | (240,958,420) | (184,610,343) |
TOTAL STOCKHOLDERS' EQUITY | 206,052,022 | 281,057,882 |
TOTAL LIABILITIES & EQUITY | $ 1,561,000,953 | $ 1,480,867,051 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 210,000,000 | 210,000,000 |
Common stock, shares issued | 33,033,420 | 33,018,161 |
Common stock, shares outstanding | 33,033,420 | 33,018,161 |
Redeemable Preferred Stock [Member] | ||
Redeemable preferred stock, par value | $ 0.001 | $ 0.001 |
Redeemable preferred stock, shares authorized | 100,000 | 100,000 |
Redeemable preferred stock, shares outstanding | 92,124 | 97,524 |
Redeemable preferred stock, liquidation preference | $ 92,661,000 | $ 98,093,000 |
Series 2 Redeemable Preferred Stock [Member] | ||
Redeemable preferred stock, par value | $ 0.001 | $ 0.001 |
Redeemable preferred stock, shares authorized | 150,000 | 150,000 |
Redeemable preferred stock, shares outstanding | 147,604 | 148,359 |
Redeemable preferred stock, liquidation preference | $ 148,465,000 | $ 149,225,000 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
REVENUE | ||||
Gain (loss) on life insurance policies, net | $ 17,792,324 | $ 15,721,513 | $ 59,218,532 | $ 52,930,008 |
Interest and other income | 4,418,655 | 5,215,515 | 12,219,762 | 6,863,640 |
TOTAL REVENUE | 22,210,979 | 20,937,028 | 71,438,294 | 59,793,648 |
EXPENSES | ||||
Interest expense | 28,289,670 | 21,799,332 | 83,751,611 | 55,010,519 |
Employee compensation and benefits | 9,136,824 | 5,548,771 | 21,084,815 | 12,527,139 |
Legal and professional fees | 2,594,467 | 1,421,964 | 10,263,230 | 3,751,321 |
Other expenses | 3,549,265 | 2,688,970 | 12,315,434 | 8,262,324 |
TOTAL EXPENSES | 43,570,226 | 31,459,037 | 127,415,090 | 79,551,303 |
INCOME (LOSS) BEFORE INCOME TAXES | (21,359,247) | (10,522,009) | (55,976,796) | (19,757,655) |
INCOME TAX EXPENSE (BENEFIT) | ||||
NET INCOME (LOSS) BEFORE EARNINGS (LOSS) FROM EQUITY METHOD INVESTMENT | (21,359,247) | (10,522,009) | (55,976,796) | (19,757,655) |
Earnings (loss) from equity method investment | 955,751 | (371,281) | ||
NET INCOME (LOSS) | (20,403,496) | (10,522,009) | (56,348,077) | (19,757,655) |
Preferred stock dividends | 4,231,641 | 4,313,542 | 12,806,173 | 12,356,513 |
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS | $ (24,635,137) | $ (14,835,551) | $ (69,154,250) | $ (32,114,168) |
NET INCOME (LOSS) PER COMMON SHARE | ||||
Basic | $ (0.75) | $ (2.52) | $ (2.09) | $ (5.50) |
Diluted | $ (0.75) | $ (2.52) | $ (2.09) | $ (5.50) |
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING | ||||
Basic | 33,033,420 | 5,894,639 | 33,010,100 | 5,840,880 |
Diluted | 33,033,420 | 5,894,639 | 33,010,100 | 5,840,880 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | ||
CASH FLOWS FROM OPERATING ACTIVITIES | |||||
Net income (loss) | $ (20,403,496) | $ (10,522,009) | $ (56,348,077) | $ (19,757,655) | |
Adjustments to reconcile net income (loss) to net cash flows from operating activities: | |||||
Change in fair value of life insurance policies | (14,180,970) | (24,839,567) | (48,031,195) | (56,058,336) | |
Amortization of deferred financing and issuance costs | 3,460,607 | 2,575,322 | 9,982,375 | 7,241,283 | |
Accretion of discount (amortization of premium) on financing receivables | (427,914) | (1,292,434) | |||
Provision for uncollectible policy benefits receivable | 200,897 | 200,897 | |||
(Earnings) loss from equity method investment | (955,751) | 371,281 | |||
Stock-based compensation | 700,688 | 528,461 | 1,365,219 | 788,865 | |
(Increase) decrease in operating assets: | |||||
Life insurance policy benefits receivable | (11,993,676) | 16,562,304 | (1,109,386) | 6,186,065 | |
Accrued interest on financing receivables | (2,078,175) | (4,284,370) | (5,123,774) | (4,284,370) | |
Other assets | 390,183 | 321,968 | (4,556,454) | (1,487,238) | |
Increase (decrease) in operating liabilities: | |||||
Accounts payable and other accrued expenses | (3,679,319) | 1,390,241 | (8,432,166) | 126,719 | |
NET CASH FLOWS USED IN OPERATING ACTIVITIES | (48,966,926) | (18,267,650) | (112,973,714) | (67,244,667) | |
CASH FLOWS FROM INVESTING ACTIVITIES | |||||
Investment in life insurance policies | (710,863) | (42,891,764) | (32,249,397) | (98,440,528) | |
Carrying value of matured life insurance policies | 6,639,919 | 2,325,989 | 20,684,967 | 13,557,632 | |
Financing receivables from affiliates issued | (50,000,000) | ||||
Equity method investment acquired | (1,421,059) | (10,000,000) | (1,421,059) | ||
NET CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES | 5,929,056 | (41,986,834) | (71,564,430) | (86,303,955) | |
CASH FLOWS FROM FINANCING ACTIVITIES | |||||
Borrowings on senior debt | [1] | 3,937,020 | 3,937,020 | 12,903,166 | |
Repayments of senior debt | [1] | (2,079,600) | (18,425,136) | (21,648,615) | (63,463,452) |
Proceeds from issuance of L Bonds | 107,012,114 | 68,884,369 | 278,238,656 | 166,081,914 | |
Payments for issuance and redemption of L Bonds | (61,679,235) | (20,195,657) | (108,656,765) | (46,151,926) | |
Issuance (repurchase) of common stock | 682,954 | 57,518 | 682,954 | ||
Common stock dividends | (25,709,412) | (25,709,412) | |||
Proceeds from issuance of convertible preferred stock | 50,000,000 | 50,000,000 | |||
Proceeds from issuance of redeemable preferred stock | 56,238,128 | ||||
Payments for issuance of preferred stock | (4,142,294) | ||||
Payments for redemption of preferred stock | (2,920,292) | (821,778) | (6,134,538) | (2,361,692) | |
Preferred stock dividends | (4,231,641) | (4,313,542) | (12,806,173) | (12,356,513) | |
NET CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES | 40,038,366 | 50,101,798 | 132,987,103 | 131,720,873 | |
NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH | (2,999,504) | (10,152,686) | (51,551,041) | (21,827,749) | |
CASH, CASH EQUIVALENTS AND RESTRICTED CASH | |||||
BEGINNING OF PERIOD | 76,884,673 | 131,096,113 | 125,436,210 | 142,771,176 | |
END OF PERIOD | 73,885,169 | 120,943,427 | 73,885,169 | 120,943,427 | |
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION | |||||
Interest paid | 25,719,000 | 17,340,000 | 75,153,000 | 44,591,000 | |
Premiums paid, including prepaid | 16,684,000 | 14,672,000 | 51,586,000 | 38,898,000 | |
NON-CASH INVESTING AND FINANCING ACTIVITIES | |||||
Commercial Loan receivable | 190,670,000 | 190,670,000 | |||
Exchangeable Note receivable | 171,917,000 | 171,917,000 | |||
Equity method investment acquired | 40,648,000 | 40,648,000 | |||
Seller Trust L Bonds issued | 403,235,000 | 403,235,000 | |||
L Bonds: | |||||
Conversion of accrued interest and commissions payable to principal | 214,000 | 410,000 | 1,086,000 | 972,000 | |
Conversion of L Bonds to redeemable preferred stock | 4,546,000 | ||||
Options and stock appreciation rights issued | 290,000 | 458,000 | |||
Investment in life insurance policies included in accounts payable | $ 4,000 | $ 508,000 | $ 4,000 | $ 508,000 | |
[1] | The line items Borrowings on senior debt and Repayments of senior debt for the three and nine months ended September 30, 2018 have been revised to present gross activity that was previously reported net as discussed in Note 2 Correction of an Immaterial Error. |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Changes in Stockholders' Equity (Unaudited) - USD ($) | Preferred Stock | Common Stock | Additional Paid-in Capital | Accumulated Deficit | Total |
Beginning balance at Dec. 31, 2017 | $ 173,115,447 | $ 5,813 | $ (39,449,517) | $ 133,671,743 | |
Beginning balance, shares at Dec. 31, 2017 | 187,319 | 5,813,555 | |||
Net income (loss) | (19,757,655) | (19,757,655) | |||
Issuance of common stock | $ 167 | 1,181,435 | 1,181,602 | ||
Issuance of common stock, shares | 166,569 | ||||
Issuance of redeemable preferred stock | $ 56,878,238 | 56,878,238 | |||
Issuance of redeemable preferred stock, shares | 61,021 | ||||
Redemption of redeemable preferred stock | $ (2,362,914) | (2,362,914) | |||
Redemption of redeemable preferred stock, shares | (2,362) | ||||
Issuance of Series B convertible preferred stock | $ 50,000,000 | 50,000,000 | |||
Issuance of Series B convertible preferred stock, shares | 5,000,000 | ||||
Common stock dividends | (25,709,412) | (25,709,412) | |||
Preferred stock dividends | (11,562,732) | (793,781) | (12,356,513) | ||
Stock-based compensation | (387,654) | (387,654) | |||
Ending balance at Sep. 30, 2018 | $ 266,068,039 | $ 5,980 | (84,916,584) | 181,157,435 | |
Ending balance, shares at Sep. 30, 2018 | 5,245,978 | 5,980,124 | |||
Beginning balance at Jun. 30, 2018 | $ 220,701,701 | $ 5,813 | (48,685,163) | 172,022,351 | |
Beginning balance, shares at Jun. 30, 2018 | 246,800 | 5,813,555 | |||
Net income (loss) | (10,522,009) | (10,522,009) | |||
Issuance of common stock | $ 167 | 1,181,435 | 1,181,602 | ||
Issuance of common stock, shares | 166,569 | ||||
Redemption of redeemable preferred stock | $ (823,000) | (823,000) | |||
Redemption of redeemable preferred stock, shares | (822) | ||||
Issuance of Series B convertible preferred stock | $ 50,000,000 | 50,000,000 | |||
Issuance of Series B convertible preferred stock, shares | 5,000,000 | ||||
Common stock dividends | (25,709,412) | (25,709,412) | |||
Preferred stock dividends | (3,519,761) | (793,781) | (4,313,542) | ||
Stock-based compensation | (290,901) | (387,654) | (678,555) | ||
Ending balance at Sep. 30, 2018 | $ 266,068,039 | $ 5,980 | (84,916,584) | 181,157,435 | |
Ending balance, shares at Sep. 30, 2018 | 5,245,978 | 5,980,124 | |||
Beginning balance at Dec. 31, 2018 | $ 215,973,039 | $ 33,018 | 249,662,168 | (184,610,343) | 281,057,882 |
Beginning balance, shares at Dec. 31, 2018 | 245,883 | 33,018,161 | |||
Net income (loss) | (56,348,077) | (56,348,077) | |||
Issuance of common stock | $ 58 | 418,954 | 419,012 | ||
Issuance of common stock, shares | 58,009 | ||||
Repurchase of common stock | $ (43) | (361,451) | (361,494) | ||
Repurchase of common stock, shares | (42,750) | ||||
Redemption of redeemable preferred stock | $ (6,155,539) | (6,155,539) | |||
Redemption of redeemable preferred stock, shares | (6,155) | ||||
Preferred stock dividends | (12,806,173) | (12,806,173) | |||
Stock-based compensation | 246,411 | 246,411 | |||
Ending balance at Sep. 30, 2019 | $ 209,817,500 | $ 33,033 | 237,159,909 | (240,958,420) | 206,052,022 |
Ending balance, shares at Sep. 30, 2019 | 239,728 | 33,033,420 | |||
Beginning balance at Jun. 30, 2019 | $ 212,737,793 | $ 33,033 | 241,317,803 | (220,554,924) | 233,533,705 |
Beginning balance, shares at Jun. 30, 2019 | 242,648 | 33,033,420 | |||
Net income (loss) | (20,403,496) | (20,403,496) | |||
Issuance of common stock | |||||
Issuance of common stock, shares | |||||
Repurchase of common stock | |||||
Repurchase of common stock, shares | |||||
Redemption of redeemable preferred stock | $ (2,920,293) | (2,920,293) | |||
Redemption of redeemable preferred stock, shares | (2,920) | ||||
Preferred stock dividends | (4,231,641) | (4,231,641) | |||
Stock-based compensation | 73,747 | 73,747 | |||
Ending balance at Sep. 30, 2019 | $ 209,817,500 | $ 33,033 | $ 237,159,909 | $ (240,958,420) | $ 206,052,022 |
Ending balance, shares at Sep. 30, 2019 | 239,728 | 33,033,420 |
Nature of Business and Summary
Nature of Business and Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Nature of Business and Summary of Significant Accounting Policies | (1) Nature of Business and Summary of Significant Accounting Policies Nature of Business — GWG Holdings, Inc. ("GWG Holdings") conducts its life insurance secondary market business through a wholly owned subsidiary, GWG Life, LLC ("GWG Life"), and GWG Life's wholly owned subsidiaries, GWG Life Trust and GWG DLP Funding IV, LLC. GWG Holdings owns a significant equity interest in The Beneficient Company Group, L.P. ("BEN LP," including all of the subsidiaries it may have from time to time — "Beneficient"). Beneficient is a financial services firm based in Dallas, Texas that provides liquidity solutions for mid-to-high net worth ("MHNW") individuals and small-to-mid ("STM") size institutions, which previously had few options to obtain early liquidity for their alternative assets holdings. Beneficient has closed a limited number of these transactions to date, and intends to significantly expand its operations. All of the GWG Holdings' entities are legally organized in Delaware, other than GWG Life Trust, which is governed by the laws of the state of Utah. GWG Holdings' wholly owned subsidiary, Life Epigenetics Inc. (formerly named Actüa Life & Annuity Ltd.) ("Life Epigenetics") was formed to engage in various life insurance related businesses and activities related to its development of epigenetic technology. Through its wholly owned subsidiary, youSurance General Agency, LLC ("youSurance"), GWG Holdings offers life insurance directly to customers from a variety of life insurance carriers. On November 11, 2019, GWG contributed the common stock of Life Epigenetics and membership interests in youSurance to a legal entity, InsurTech Holdings, LLC in exchange for a membership interest in the entity (see Note 25). Unless the context otherwise requires or we specifically so indicate, all references in this report to "we," "us," "our," "our Company," "GWG," or the "Company" refer to these entities collectively. Our headquarters are currently in Minneapolis, Minnesota. Beneficient was formed in 2003 but began its alternative asset business in September 2017. Beneficient operates primarily through its subsidiaries, which provide Beneficient's products and services. These subsidiaries include: (i) Beneficient Capital Company, L.L.C. ("BCC"), through which Beneficient offers loans and liquidity products; (ii) Beneficient Administrative and Clearing Company, L.L.C. ("BACC"), through which Beneficient provides services for fund and trust administration and plans to provide custody services; (iii) PEN Indemnity Insurance Company, LTD ("PEN"), through which Beneficient plans to offer insurance services; and (iv) ACE Portal, L.L.C. ("ACE"), through which Beneficient plans to provide an online portal for direct access to Beneficient's financial services and products. In 2018 and early 2019, we consummated a series of transactions (as more fully described below) with Beneficient that has resulted in a significant reorientation of our business and capital allocation strategy in addition to a change in our Board of Directors and executive management team. The Exchange Transaction On August 10, 2018 (the "Initial Transfer Date"), we completed the first of two closings (the "Initial Transfer") contemplated by a Master Exchange Agreement with BEN LP and certain other parties (the "Seller Trusts"), which governs the strategic exchange of assets among the parties (the "Exchange Transaction"). On the Initial Transfer Date: ● GWG issued to the Seller Trusts Seller Trust L Bonds due 2023 (the "Seller Trust L Bonds") in an aggregate principal amount of $403,234,866, as more fully described below; ● Beneficient purchased 5,000,000 shares of GWG's Series B Convertible Preferred Stock, par value $0.001 per share and having a stated value of $10 per share ("Series B"), for cash consideration of $50,000,000, which shares were subsequently transferred to the Seller Trusts; ● in consideration for GWG and GWG Life entering into the Master Exchange Agreement and consummating the transactions contemplated thereby, BEN LP, as borrower, entered into a commercial loan agreement (the "Commercial Loan Agreement") with GWG Life, as lender, providing for a loan in a principal amount of $200,000,000 (the "Commercial Loan"); ● BEN LP delivered to GWG a promissory note (the "Exchangeable Note") in the principal amount of $162,911,379; and ● the Seller Trusts delivered to GWG 4,032,349 common units of BEN LP at an assumed value of $10 per common unit. On December 28, 2018, the final closing of the transaction occurred and the following actions took place (the "Final Closing" and the date upon which the Final Closing occurs, the "Final Closing Date"): ● in accordance with the Master Exchange Agreement, and based on the net asset value of alternative asset financings as of the Final Closing Date, effective as of the Initial Transfer Date, (i) the principal amount of the Commercial Loan was reduced to $181,974,314, (ii) the principal amount of the Exchangeable Note was reduced to $148,228,432, and (iii) the principal amount of the Seller Trust L Bonds was reduced to $366,892,000; ● the Seller Trusts refunded to GWG $840,430 in interest paid on the Seller Trust L Bonds related to the Seller Trust L Bonds that were issued as of the Initial Transfer Date but cancelled, effective as of the Initial Transfer Date, on the Final Closing Date; ● the accrued interest on the Commercial Loan and the Exchangeable Note was added to the principal amount of the Commercial Loan, as a result of which the principal amount of the Commercial Loan as of the Final Closing Date was $192,507,946; ● the Seller Trusts transferred to GWG an aggregate of 21,650,087 common units of BEN LP and GWG received 14,822,843 common units of BEN LP in exchange for the Exchangeable Note, upon completion of which GWG owned (including the 4,032,349 common units received by GWG on the Initial Transfer Date) 40,505,279 common units of BEN LP; ● BEN LP issued to GWG an option (the "Option Agreement") to acquire the number of common units of BEN LP, interests or other property that would be received by a holder of the NPC-A Prime limited partnership interests of Beneficient Company Holdings, L.P., an affiliate of BEN LP ("Beneficient Holdings"); and ● GWG issued to the Seller Trusts 27,013,516 shares of GWG common stock (including 5,000,000 shares issued upon conversion of the Series B). Description of the Assets Exchanged Seller Trust L Bonds On August 10, 2018, in connection with the Initial Transfer, GWG Holdings, GWG Life and Bank of Utah, as trustee, entered into a Supplemental Indenture (the "Supplemental Indenture") to the Amended and Restated Indenture dated as of October 23, 2017 (the "Amended and Restated Indenture"). GWG Holdings entered into the Supplemental Indenture to add and modify certain provisions of the Amended and Restated Indenture necessary to provide for the issuance of the Seller Trust L Bonds. The maturity date of the Seller Trust L Bonds is August 9, 2023. The Seller Trust L Bonds bear interest at 7.5% per year. Interest is payable monthly in cash. After the second anniversary of the Final Closing Date, the holders of the Seller Trust L Bonds will have the right to cause GWG to repurchase, in whole but not in part, the Seller Trust L Bonds held by such holder. The repurchase may be paid, at GWG's option, in the form of cash, a pro rata portion of (i) the outstanding principal amount and accrued and unpaid interest under the Commercial Loan and (ii) BEN LP common units, or a combination of cash and such property. The Seller Trust L Bonds (see Note 11) are senior secured obligations of GWG, ranking junior only to all senior debt of GWG (see Note 9), pari passu in right of payment and in respect of collateral with all "L Bonds" of GWG (see Note 10), and senior in right of payment to all subordinated indebtedness of GWG. Payments under the Seller Trust L Bonds are guaranteed by GWG Life (see Note 23). Series B Convertible Preferred Stock The Series B converted into 5,000,000 shares of our common stock at a conversion price of $10 per share upon the Final Closing. Commercial Loan The $192,508,000 principal amount under the Commercial Loan is due on August 9, 2023; however, is extendable for two five-year terms. See Note 6 for a full description of the terms of the Commercial Loan. BEN LP's obligations under the Commercial Loan are unsecured. The principal amount of the Commercial Loan bears interest at 5.0% per year. From and after the Final Closing Date, one-half of the interest, or 2.5% per year, is due and payable monthly in cash, and one-half of the interest, or 2.5% per year, accrues and compounds annually on each anniversary date of the Final Closing Date and becomes due and payable in full in cash on the maturity date. In accordance with the Supplemental Indenture governing the issuance of the Seller Trust L Bonds, upon a redemption event or at the maturity date of the Seller Trust L Bonds, the Company, at its option, may use the outstanding principal amount of the Commercial Loan, and accrued and unpaid interest thereon, as repayment consideration of the Seller Trust L Bonds. Exchangeable Note The Exchangeable Note accrued interest at a rate of 12.4% per year, compounded annually. Interest was payable in cash on the earlier to occur of the maturity date or the Final Closing Date; provided that Beneficient had the option to add to the outstanding principal balance under the Commercial Loan the accrued interest in lieu of payment in cash of such accrued interest thereon at the Final Closing Date. At the Final Closing date, the principal amount of the Exchangeable Note was exchanged for 14,822,843 common units of BEN LP, and the accrued interest on the Exchangeable Note was added to the principal balance of the Commercial Loan. Option Agreement In connection with the Final Closing, the Company entered into the Option Agreement with BEN LP. The Option Agreement gives us the option to acquire the number of common units in BEN LP that would be received by the holder of NPC-A Prime limited partnership interests of Beneficient Holdings, if such holder were converting on that date. There is no exercise price and the Company may exercise the option at any time until December 27, 2028, at which time the option will automatically settle. Common Units of BEN LP In connection with the Initial Transfer and Final Closing, the Seller Trusts and Beneficient delivered to us 40,505,279 common units of BEN LP. This represented an approximate 89.9% interest in the common units of BEN LP as of the Final Closing Date (although, on a fully diluted basis, our ownership interest in common units of BEN LP would be reduced significantly below a majority of those issued and outstanding). Purchase and Contribution Agreement On April 15, 2019, Jon R. Sabes, GWG's former Chief Executive Officer and a former director, and Steven F. Sabes, GWG's former Executive Vice President and a former director, entered into a Purchase and Contribution Agreement (the "Purchase and Contribution Agreement") with, among others, Beneficient. Under the Purchase and Contribution Agreement, Jon and Steven Sabes agreed to transfer all 3,952,155 of the shares of GWG's outstanding common stock held directly or indirectly by them to BCC (a subsidiary of BEN LP) and AltiVerse Capital Markets, L.L.C. ("AltiVerse"). GWG was not a party to the Purchase Agreement; however, the closing of the transactions contemplated by the Purchase and Contribution Agreement (the "Purchase and Contribution Transaction") were subject to certain conditions that were dependent upon GWG taking, or refraining from taking, certain actions. The closing of the Purchase and Contribution Transaction occurred on April 26, 2019. Prior to or in connection with such closing: ● GWG's bylaws were amended to increase the maximum number of directors of GWG from nine to 13, and the actual number of directors comprising the Board of Director was increased from seven to 11. The size of the Board has since been reduced and currently consists of ten directors. ● All seven members of GWG's Board of Directors prior to the closing resigned as directors of GWG, and 11 individuals designated by Beneficient were appointed as directors of GWG, leaving two board seats vacant after the closing. ● Jon R. Sabes resigned from all officer positions he held with GWG or any of its subsidiaries prior to the closing, other than his position as Chief Executive Officer of GWG's technology focused wholly owned subsidiaries, Life Epigenetics and youSurance. ● Steven F. Sabes resigned from all officer positions he held with GWG or any of its subsidiaries prior to the closing, except as Chief Operating Officer of Life Epigenetics. ● The resignations of Messrs. Jon and Steven Sabes included a full waiver and forfeit of (i) any severance that may be payable by GWG or any of its subsidiaries in connection with such resignations or the Purchase and Contribution Transaction and (ii) all equity awards of GWG held by either of them. ● Murray T. Holland was appointed as Chief Executive Officer of GWG. ● GWG entered into performance share unit agreements with certain employees of GWG pursuant to which such employees will collectively receive up to $4.5 million in cash compensation under certain terms and conditions, including, among others, that such employees remain employed by GWG or one of its subsidiaries (or, if no longer employed, such employment was terminated by GWG other than for cause, as such term is defined in the performance share unit agreement) for a period of 120 days following the closing. ● The stockholders agreement that was entered into on the Final Closing Date was terminated by mutual consent of the parties thereto. ● BCC and AltiVerse executed and delivered a Consent and Joinder to the Amended and Restated Pledge and Security Agreement dated October 23, 2017 by and among the Company, GWG Life, LLC, Messrs. Jon and Steven Sabes and the Bank of Utah, which provides that the shares of GWG's common stock acquired by BCC and AltiVerse pursuant to the Purchase and Contribution Agreement will continue to be pledged as collateral security for GWG's obligations owing in respect of the L Bonds and Seller Trust L Bonds. Indemnification Agreements On April 26, 2019, GWG entered into Indemnification Agreements (the "Indemnification Agreements") with each of its executive officers and the directors appointed to the Board of Directors on such date. On May 13, 2019, GWG entered into Indemnification Agreement with the three additional directors appointed to the Board of Directors on such date (collectively with the executive officers and directors appointed on April 26, 2019, the "Indemnitees"). The Indemnification Agreements clarify and supplement indemnification provisions already contained in GWG's bylaws and generally provide that GWG shall indemnify the Indemnitees to the fullest extent permitted by applicable law, subject to certain exceptions, against expenses, judgments, fines and other amounts actually and reasonably incurred in connection with their service as a director or officer and also provide for rights to advancement of expenses and contribution. Basis of Presentation — Principles of Consolidation — The Company has interests in various entities including corporations and limited partnerships. For each such entity, the Company evaluates its ownership interest to determine whether the entity is a variable interest entity ("VIE") and, if so, whether it is the primary beneficiary of the VIE. The Company would consolidate any entity for which it was the primary beneficiary, regardless of its ownership or voting interests. Upon inception of a variable interest or the occurrence of a reconsideration event, the Company makes judgments in determining whether entities in which it invests are VIEs. If so, the Company makes judgments to determine whether it is the primary beneficiary and is thus required to consolidate the entity. If it is concluded that an entity is not a VIE, then the Company considers its proportional voting interests in the entity. The Company consolidates majority-owned subsidiaries in which a controlling financial interest is maintained. A controlling financial interest is determined by majority ownership and the absence of significant third-party participating rights. Ownership interests in entities for which the Company has significant influence that are not consolidated under the Company's consolidation policy are accounted for as equity method investments. SEC Staff Announcement: Accounting for Limited Partnership Investments (codified in Accounting Standards Codification ("ASC") 323-30-S99-1) guidance requires the use of the equity method unless the investor's interest "is so minor that the limited partner may have virtually no influence over partnership operating and financial policies." The SEC staff's position is that investments in limited partnerships of greater than 3% to 5% are considered more than minor and, therefore, should be accounted for using the equity method. Related party transactions between the Company and its equity method investee have not been eliminated. Use of Estimates — Cash and Cash Equivalents — Cash, cash equivalents and restricted cash on our condensed consolidated statements of cash flows include cash and cash equivalents of $65.7 million and restricted cash of $8.2 million as of September 30, 2019, and $117.9 million and $3.1 million, respectively, as of September 30, 2018. Life Insurance Policies — In a case where our acquisition of a policy is not complete as of a reporting date, but we have nonetheless advanced direct costs and deposits for the acquisition, those costs and deposits are recorded as other assets on our condensed consolidated balance sheets until the acquisition is complete and we have secured title to the policy. On both September 30, 2019 and December 31, 2018, none of our other assets comprised direct costs and deposits that we had advanced for life insurance policy acquisitions. We also recognize realized gain (or loss) from a life insurance policy upon one of the two following events: (1) our receipt of notice or verified mortality of the insured; or (2) our sale of the policy (upon filing of change-of-ownership forms and receipt of payment). In the case of mortality, the gain (or loss) we recognize is the difference between the policy benefits and the carrying value of the policy once we determine that collection of the policy benefits is reasonably assured. In the case of a policy sale, the gain (or loss) we recognize is the difference between the sale price and the carrying value of the policy on the date we receive sale proceeds. Life Insurance Policy Benefits Receivable, Net We reserve for policy benefits when it becomes probable that we will not collect the full amount of the policy benefit. The reserve requirements are based on the best facts available to us and are re-evaluated and adjusted as additional information becomes available. Uncollectible policy benefits are written off against the reserves when it is deemed that a policy amount is uncollectible. As of September 30, 2019, the balance of the allowance for uncollectible receivables was $4.5 million, relating to a single life insurance policy claim where collection is doubtful. Other Assets In December 2018, in connection with the Final Closing of the Exchange Transaction, the Company entered into an Option Agreement with Beneficient. The agreement gives GWG the option to acquire the number of common units in BEN LP that would be received by the holder of NPC-A Prime limited partnership interests of Beneficient Holdings. There is no exercise price and the Company may exercise the option at any time until December 27, 2028, at which time the option will automatically exercise and settle. The Option Agreement is recorded in other assets at a value of $38.6 million at both September 30, 2019 and December 31, 2018. The Option Agreement is considered an equity security investment and the Company has elected the measurement alternative for equity securities without a readily determinable fair value. Under this measurement alternative, we record the Option Agreement at its cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions for the identical or similar investments of Beneficient. As at September 30, 2019, there were no indications of impairment. The instrument earns a preferred return that we accrue to the investment balance and record in interest and other income in the condensed consolidated statement of operations. Financing Receivables Losses on financing receivables are recognized when they are incurred, which requires us to make our best estimate of probable losses. Specific allowances are recorded for individually impaired loans to the extent we determine it is probable we will be unable to collect all amounts due according to original contractual terms of the loan agreement. Certain loans classified as impaired may not require an allowance for loan loss because we believe we will ultimately collect the unpaid balance (through collection or collateral repossession). The method for calculating the best estimate of losses depends on the type and risk characteristics of the related financing receivables. Such an estimate requires consideration of historical loss experience, adjusted for current conditions, and judgments about the probable effects of relevant observable data, including present economic conditions such as delinquency rates, financial health of market sectors, and the present and expected future levels of interest rates. The underlying assumptions, estimates and assessments we use to provide for losses are updated periodically to reflect our view of current conditions. Changes in such estimates can significantly affect the allowance and provision for losses. It is possible we will experience credit losses that are different from our current estimates. We have no allowance for losses at September 30, 2019 or December 31, 2018. Write-offs are deducted from the allowance for losses when we judge the principal to be uncollectible and subsequent recoveries are added to the allowance at the time cash is received on a written-off account. Equity Method Investment Our equity method investment is reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of the investment might not be recoverable. These circumstances can include, but are not limited to evidence that we do not have the ability to recover the carrying amount, the inability of the investee to sustain earnings, a current fair value of the investment that is less than the carrying amount, and other investors ceasing to provide support or reducing their financial commitment to the investee. If the fair value of the investment is less than the carrying amount, and the investment will not recover in the near term, then an other-than-temporary impairment may exist. We recognize a loss in value of an investment deemed other-than-temporary in the period the conclusion is made. The Company reports its share of the income or loss of the equity method partner companies on a one-quarter lag where we do not expect financial information to be consistently available on a timely basis. For more information on equity method investment, see Note 7. Leases – Stock-Based Compensation The risk-free interest rate is based on the U.S. Treasury rates at the date of grant with maturity dates approximately equal to the expected life at grant date. Volatility is based on the standard deviation of the average continuously compounded rate of return of five selected companies. Deferred Financing and Issuance Costs Earnings (Loss) per Share — Reclassification — Newly Adopted Accounting Pronouncements — Recently Issued Accounting Pronouncements In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework — Changes to the Disclosure Requirements for Fair Value Measurement, which eliminates, adds and modifies certain disclosure requirements for fair value measurements. The guidance is effective for fiscal years and interim periods beginning after December 15, 2019. Certain of the amendments require prospective application, while the remainder require retrospective application. Early adoption is allowed either for the entire standard or only the provisions that eliminate or modify the requirements. The Company believes that we are currently compliant with this pronouncement but continues to evaluate potential impact of this guidance on our condensed consolidated financial statements. |
Correction of an Immaterial Err
Correction of an Immaterial Error | 9 Months Ended |
Sep. 30, 2019 | |
Accounting Changes and Error Corrections [Abstract] | |
Correction of an Immaterial Error | 2) Correction of an Immaterial Error In the condensed consolidated statement of cash flows for the three and nine months ended September 30, 2018, we have separated the gross borrowings and repayments on our senior credit facility with LNV Corporation that were previously erroneously reported on a net basis in cash flows from financing activities. For the three and nine months ended September 30, 2018, we previously reported net repayments of senior debt of $18.4 million and $50.6 million, respectively. We have revised the comparative information for the three and nine months ended September 30, 2018 to report gross borrowings on senior debt of $0 million and $12.9 million, respectively, and gross repayments of senior debt of $18.4 million and $63.5 million, respectively, in the condensed consolidated statements of cash flows. This revision had no effect on the total cash flows from financing activities. |
Restrictions on Cash
Restrictions on Cash | 9 Months Ended |
Sep. 30, 2019 | |
Cash and Cash Equivalents [Abstract] | |
Restrictions on Cash | (3) Restrictions on Cash Under the terms of our amended and restated senior credit facility with LNV Corporation (discussed in Note 9), we are required to maintain collection and payment accounts that are used to collect policy benefits from pledged policies, pay annual policy premiums, interest and other charges under the facility, distribute funds to pay down the facility, and distribute excess funds to the borrower (GWG DLP Funding IV, LLC). . The agents for the lender authorize the disbursements from these accounts. At September 30, 2019 and December 31, 2018, there was a balance of $8,112,000 and $4,164,000, respectively, in these collection and payment accounts. To fund the Company's acquisition of life insurance policies, we are required to maintain escrow accounts. Distributions from these accounts are made according to life insurance policy purchase contracts. At September 30, 2019 and December 31, 2018, there was a balance of $93,000 and $6,685,000, respectively, in the Company's escrow accounts. |
Investment in Life Insurance Po
Investment in Life Insurance Policies | 9 Months Ended |
Sep. 30, 2019 | |
Investments, All Other Investments [Abstract] | |
Investment in Life Insurance Policies | (4) Investment in Life Insurance Policies Our investments in life insurance policies are valued based on unobservable inputs that are significant to their overall fair value. Changes in the fair value of these policies, net of premiums paid, are recorded in gain (loss) on life insurance policies, net in our condensed consolidated statements of operations. Fair value is determined on a discounted cash flow basis that incorporates life expectancy assumptions generally derived from reports obtained from widely accepted life expectancy providers (other than insured lives covered under small face amount policies — those with $1 million in face value benefits or less — which utilize either a single fully underwritten, or simplified report based on self-reported medical interview), assumptions relating to cost-of-insurance (premium) rates and other assumptions. The discount rate we apply incorporates current information about the discount rates observed in the life insurance secondary market through competitive bidding observations (which have declined recently as a result of our decreased purchase activity) and other means, fixed income market interest rates, the estimated credit exposure to the insurance companies that issued the life insurance policies and management's estimate of the operational risk yield premium a purchaser would require to receive the future cash flows derived from our portfolio as a whole. Management has significant discretion regarding the combination of these and other factors when determining the discount rate. As a result of management's analysis, a discount rate of 8.25% was applied to our portfolio as of both September 30, 2019 and December 31, 2018. Portfolio Information Our portfolio of life insurance policies, owned by our subsidiaries as of September 30, 2019 is summarized below: Life Insurance Portfolio Summary Total life insurance portfolio face value of policy benefits $ 2,064,156,000 Average face value per policy $ 1,758,000 Average face value per insured life $ 1,887,000 Average age of insured (years)* 82.3 Average life expectancy estimate (years)* 7.3 Total number of policies 1,174 Number of unique lives 1,094 Demographics 74% Male; 26% Female Number of smokers 45 Largest policy as % of total portfolio face value 0.64 % Average policy as % of total portfolio face value 0.09 % Average annual premium as % of face value 3.2 % * Averages presented in the table are weighted averages by face amount of policy benefits. A summary of our policies, organized according to their estimated life expectancy dates, grouped by year, as of the reporting date, is as follows: As of September 30, 2019 As of December 31, 2018 Years Ending December 31, Number of Estimated Face Value Number of Estimated Face Value 2019 3 $ 3,232,000 $ 3,375,000 9 $ 6,380,000 $ 7,305,000 2020 19 12,533,000 14,917,000 41 46,338,000 59,939,000 2021 62 75,255,000 100,575,000 81 68,836,000 108,191,000 2022 109 109,003,000 180,986,000 104 97,231,000 177,980,000 2023 121 114,084,000 213,293,000 109 93,196,000 185,575,000 2024 111 98,450,000 217,355,000 107 84,150,000 211,241,000 Thereafter 749 394,961,000 1,333,655,000 703 351,791,000 1,297,761,000 Totals 1,174 $ 807,518,000 $ 2,064,156,000 1,154 $ 747,922,000 $ 2,047,992,000 We recognized life insurance benefits of $27,470,000 and $7,973,000 during the three months ended September 30, 2019 and 2018, respectively, related to policies with a carrying value of $6,640,000 and $2,326,000, respectively, and as a result recorded realized gains of $20,830,000 and $5,647,000. We recognized life insurance benefits of $80,927,000 and $50,100,000 during the nine months ended September 30, 2019 and 2018, respectively, related to policies with a carrying value of $20,685,000 and $13,558,000, respectively, and as a result recorded realized gains of $60,242,000 and $36,542,000. A reconciliation of gain (loss) on life insurance policies is as follows: Three Months Ended Nine Months Ended 2019 2018 2019 2018 Change in estimated probabilistic cash flows (1) $ 17,908,000 $ 19,069,000 $ 52,161,000 $ 55,483,000 Unrealized gain on acquisitions (2) 472,000 9,021,000 6,775,000 21,790,000 Premiums and other annual fees (17,219,000 ) (14,765,000 ) (49,055,000 ) (39,670,000 ) Change in discount rates (3)(4) — — — — Change in life expectancy evaluation (5) — 73,000 — (4,890,000 ) Face value of matured policies 27,470,000 7,973,000 80,927,000 50,100,000 Fair value of matured policies (10,839,000 ) (5,650,000 ) (31,590,000 ) (29,883,000 ) Gain (loss) on life insurance policies, net $ 17,792,000 $ 15,721,000 $ 59,218,000 $ 52,930,000 (1) Change in fair value of expected future cash flows relating to our investment in life insurance policies that are not specifically attributable to changes in life expectancy, discount rate changes or policy maturity events. (2) Gain resulting from fair value in excess of the purchase price for life insurance policies acquired during the reporting period. (3) The discount rate applied to estimate the fair value of the portfolio of life insurance policies we own was 8.25% at September 30 and June 30, 2019 and December 31, 2018, and was 10.45% at September 30 and June 30, 2018 and December 31, 2017. (4) The discount rate of 8.25% is based on our "longest life expectancy" methodology (among other factors) which was adopted at December 31, 2018, whereas the discount rate of 10.45% is based on our historical "average life expectancy methodology" (among other factors). (5) The change in fair value due to updating life expectancy estimates on certain life insurance policies in our portfolio. Estimated premium payments and servicing fees required to maintain our current portfolio of life insurance policies in force for the next five years, assuming no mortalities, are as follows: Years Ending December 31, Premiums Servicing Total Three months ending December 31, 2019 $ 16,553,000 $ 430,000 $ 16,983,000 2020 76,305,000 1,719,000 78,024,000 2021 88,684,000 1,719,000 90,403,000 2022 101,706,000 1,719,000 103,425,000 2023 113,838,000 1,719,000 115,557,000 2024 123,793,000 1,719,000 125,512,000 $ 520,879,000 $ 9,025,000 $ 529,904,000 Management anticipates funding the majority of the premium payments and servicing fees estimated above from cash flows realized from life insurance policy benefits, and to the extent necessary, with additional borrowing capacity created as the premiums and servicing costs of pledged life insurance policies become due, under the amended and restated senior credit facility with LNV Corporation as described in Note 9, and the net proceeds from our offering of L Bonds as described in Note 10. Management anticipates funding premiums and servicing costs of non-pledged life insurance policies with cash flows realized from life insurance policy benefits from our portfolio of life insurance policies and net proceeds from our offering of L Bonds. The proceeds of these capital sources may also be used for the purchase, policy premiums and servicing costs of additional life insurance policies, working capital and financing expenditures including paying principal, interest and dividends. |
Fair Value Definition and Hiera
Fair Value Definition and Hierarchy | 9 Months Ended |
Sep. 30, 2019 | |
Fair Value Disclosures [Abstract] | |
Fair Value Definition and Hierarchy | (5) Fair Value Definition and Hierarchy ASC 820, Fair Value Measurements and Disclosures, establishes a hierarchical disclosure framework that prioritizes and ranks the level of market price observability used in measuring assets and liabilities at fair value. Market price observability is affected by a number of factors, including the type of investment, the characteristics specific to the investment and the state of the marketplace, including the existence and transparency of transactions between market participants. Assets and liabilities with readily available and actively quoted prices, or for which fair value can be measured from actively quoted prices in an orderly market, generally will have a higher degree of market price observability and a lesser degree of judgment used in measuring fair value. ASC 820 maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring the use of observable inputs whenever available. Observable inputs are inputs that market participants would use in pricing the asset or liability developed based on market data obtained from independent sources. Unobservable inputs are inputs that reflect assumptions about how market participants price an asset or liability based on the best available information. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., the "exit price") in an orderly transaction between market participants at the measurement date (a non-distressed transaction in which neither seller nor buyer is compelled to engage in the transaction). A sale of the portfolio or a portion of the portfolio in an other than orderly transaction would likely occur at less than the fair value of the respective life insurance policies. The hierarchy is broken down into three levels based on the observability of inputs as follows: Level 1 — Valuations based on quoted prices in active markets for identical assets or liabilities that the Company has the ability to access. Valuations are based on quoted prices that are readily and regularly available in an active market. Level 2 — Valuations based on one or more quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly. Level 3 — Valuations based on inputs that are unobservable and significant to the overall fair value measurement. The availability of observable inputs can vary by types of assets and liabilities and is affected by a wide variety of factors, including, for example, whether an instrument is established in the marketplace, the liquidity of markets and other characteristics particular to the transaction. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by management in determining fair value is greatest for assets and liabilities categorized in Level 3. Level 3 Valuation Process The estimated fair value of our portfolio of life insurance policies is determined on a quarterly basis by management taking into consideration a number of factors, including changes in discount rate assumptions, estimated premium payments and life expectancy estimate assumptions, as well as any changes in economic and other relevant conditions. The discount rate incorporates current information about discount rates observed in the life insurance secondary market through competitive bidding observations (which have declined recently as a result of our decreased purchase activity) and other means, fixed income market interest rates, the estimated credit exposure to the insurance company that issued the life insurance policy and management's estimate of the operational risk yield premium a purchaser would require to receive the future cash flows derived from our portfolio as a whole. Management has significant discretion regarding the combination of these and other factors when determining the discount rate. These inputs are then used to estimate the discounted cash flows from the portfolio using the ClariNet LS probabilistic and stochastic portfolio pricing model from ClearLife Limited, which estimates the expected cash flows using various mortality probabilities and scenarios. The valuation process includes a review by senior management as of each quarterly valuation date. We also engage ClearLife Limited to prepare a net present value calculation of our life insurance portfolio using the inputs we provide on a quarterly basis. The following table reconciles the beginning and ending fair value of our Level 3 investments in our portfolio of life insurance policies for the periods ended September 30, as follows: Three Months Ended Nine Months Ended 2019 2018 2019 2018 Beginning balance $ 799,266,000 $ 726,063,000 $ 747,922,000 $ 650,527,000 Purchases 711,000 42,892,000 32,250,000 98,442,000 Maturities (initial cost basis) (6,640,000 ) (2,326,000 ) (20,685,000 ) (13,558,000 ) Net change in fair value 14,181,000 24,840,000 48,031,000 56,058,000 Ending balance $ 807,518,000 $ 791,469,000 $ 807,518,000 $ 791,469,000 Historically, for life insurance policies with face amounts greater than $1 million and that are not pledged as collateral under our amended and restated senior credit facility with LNV Corporation (approximately 25.3% of our portfolio by face amount of policy benefits), we attempted to obtain updated life expectancy reports on a continuous rotating three year cycle. For life insurance policies that are pledged under our amended and restated senior credit facility with LNV Corporation (approximately 62.5% of our portfolio by face amount of policy benefits as of September 30, 2019), prior to entering into the second amended and restated senior credit facility with LNV Corporation on November 1, 2019, we were required to update the life expectancy estimates every two years beginning from the closing date of the amended and restated senior credit facility with LNV Corporation. Under the second amended and restated senior credit facility with LNV Corporation, we are required to update the life expectancy estimates no later than December 18, 2020 and obtain updated life expectancy updates no less frequently than once every five years. For the remaining small face insurance policies (i.e., a policy with $1 million in face value benefits or less), we historically employed other methods and timeframes to update life expectancy estimates. With the adoption of the Longest Life Expectancy method in the fourth quarter of 2018 (as described under "Fair Value Components — Life Expectancies" within the Management Discussion and Analysis section), we discontinued the practice of obtaining updated life expectancy reports (or updating specific life expectancies in any manner) except as required by lenders to comply with existing and future covenants within credit facilities. This change was accounted for as a change in accounting estimate and affects current and future periods. To the extent such updated life expectancy reports are available, we do not expect to incorporate these life expectancy reports into our revised valuation methodology; however, we will monitor this data to determine over time if there exists any additive predictive value in relation to the basis of its mortality projections. The following table summarizes the inputs utilized in estimating the fair value of our portfolio of life insurance policies: As of As of Weighted-average age of insured, years* 82.3 82.1 Age of insured range, years 62-101 61-100 Weighted-average life expectancy, months* 87.6 93.2 Life expectancy range, months 1-243 1-251 Average face amount per policy $ 1,758,000 $ 1,775,000 Discount rate 8.25 % 8.25 % (*) Weighted-average by face amount of policy benefits Life expectancy estimates and market discount rates for a portfolio of life insurance policies are inherently uncertain and the effect of changes in estimates may be significant. For example, if the life expectancy estimates were increased or decreased by four and eight months on each outstanding policy, and the discount rates were increased or decreased by 1% and 2%, with all other variables held constant, the fair value of our investment in life insurance policies would increase or decrease as summarized below: Change in Fair Value of the Investment in Life Insurance Policies Change in Life Expectancy Estimates minus minus plus plus September 30, 2019 $ 116,229,000 $ 59,050,000 $ (57,071,000 ) $ (113,742,000 ) December 31, 2018 $ 113,410,000 $ 57,611,000 $ (55,470,000 ) $ (110,473,000 ) Change in Discount Rate minus 2% minus 1% plus 1% plus 2% September 30, 2019 $ 94,576,000 $ 44,978,000 $ (40,918,000 ) $ (78,257,000 ) December 31, 2018 $ 95,747,000 $ 45,440,000 $ (41,179,000 ) $ (78,615,000 ) Other Fair Value Considerations The carrying value of policy benefit receivables, prepaid expenses, accounts payable and accrued expenses approximate fair value due to their short-term maturities and low credit risk. Using the income-based valuation approach, the estimated fair value of our L Bonds and Seller Trust L Bonds, largely containing the same terms, having an aggregate face value of $1,209,840,000 as of September 30, 2019, is approximately $1,283,460,000 based on a weighted-average market interest rate of 6.28%. The Commercial Loan receivable from BEN LP (see Note 6) has a below-market interest rate of 5.0% per year; provided that the accrued interest from the date of the Initial Transfer to the Final Closing Date of the Exchange Transaction was added to the principal balance of the Commercial Loan. From and after the Final Closing Date, one-half of the interest, or 2.5% per year, is due and payable monthly in cash, and one-half of the interest, or 2.5% per year, accrues and compounds annually on each anniversary date of the Final Closing Date and becomes due and payable in full in cash on the maturity date. Utilizing an implied yield of 6.75%, we estimate the fair value of the Commercial Loan to be approximately $188,936,000 as of September 30, 2019 based on a market yield analysis for similar instruments with similar credit profiles. The Commercial Loan had a carrying value of $190,018,000 as of September 30, 2019. The Promissory Note receivable from the LiquidTrusts (see Note 6) earns interest at 7.0% per year, payable upon maturity in 2023. Utilizing an implied yield of 7.0%, we estimate the fair value of the Promissory Note to be approximately $49,924,000 as of September 30, 2019 based on a market yield analysis for similar instruments with similar credit profiles. The Promissory Note had a carrying value of $51,167,000 as of September 30, 2019. The carrying value of the amended and restated senior credit facility with LNV Corporation reflects interest charged at 12-month LIBOR plus an applicable margin. The margin represents our credit risk, and the strength of the portfolio of life insurance policies collateralizing the debt. The overall rate reflects the current interest rate market, and the carrying value of the facility approximates fair value. GWG MCA Capital, Inc. ("GWG MCA") participated in the merchant cash advance industry by directly advancing sums to merchants and lending money, on a secured basis, to companies that advance sums to merchants. Each quarter, we review the carrying value of these cash advances, determine if an impairment exists and establish or adjust an allowance for loan loss as necessary. At September 30, 2019, one of our secured cash advances was impaired. Specifically, the secured loan to Nulook Capital LLC had an outstanding balance of $1,879,000 and an allowance for loan loss of $1,879,000 at September 30, 2019. We deem fair value to be the estimated collectible value on each loan or advance made from GWG MCA. Secured merchant cash advances, net of allowance for loan loss, of none and $547,000 are included within other assets on our condensed consolidated balance sheets as of September 30, 2019 and December 31, 2018, respectively. Where we estimate the collectible amount to be less than the outstanding balance, we record an allowance for the difference. Provision for merchant cash advances are recorded within other expenses on our condensed consolidated statements of operations (see Note 18). GWG MCA no longer participates in the merchant cash advance industry. Certain assets are subject to periodic impairment testing by comparing the respective carrying value of the asset to its estimated fair value. In the event we determine these assets to be impaired, we would recognize an impairment loss equal to the amount by which the carrying value of the impaired asset exceeds its estimated fair value. These periodic impairment tests utilize company-specific assumptions involving significant unobservable inputs, or Level 3, in the fair value hierarchy. GWG Holdings previously had outstanding common stock warrants; however, the warrants expired in the quarter ended September 30, 2019. |
Financing Receivables from Affi
Financing Receivables from Affiliates | 9 Months Ended |
Sep. 30, 2019 | |
Financing Receivable from Affiliate [Abstract] | |
Financing Receivables from Affiliates | (6) Financing Receivables from Affiliates Commercial Loan On August 10, 2018, in connection with the Initial Transfer of the Exchange Transaction, GWG Life, as lender, and BEN LP, as borrower, entered into the Commercial Loan Agreement. On December 28, 2018, the Final Closing Date of the Exchange Transaction, the agreement was amended to adjust the principal to $192,508,000. The principal amount under the Commercial Loan is due on August 9, 2023, but is extendable for two five-year terms under certain circumstances. The extensions are available to the borrower provided that (a) in the event BEN LP completes at least one public offering of its common units raising at least $50,000,000, which on its own or together with any other public offering of BEN LP's common units results in Beneficient raising at least $100,000,000, then the maturity date will be extended to August 9, 2028; and (b) in the event that BEN LP (i) completes at least one public offering of its common units raising at least $50,000,000, which on its own or together with any other public offering of BEN LP's common units results in Beneficient raising at least $100,000,000 and (ii) at least 75% of Beneficient Holding's total outstanding NPC-B limited partnership interests, if any, have been converted to shares of BEN LP's common units, then the maturity date will be extended to August 9, 2033. Repayment of the Commercial Loan is subordinated in right of payment to other Beneficient obligations, including (i) Beneficient's exiting senior debt obligations, (ii) any of Beneficient's commercial bank debt and (iii) any Beneficient obligations that may arise in connection with the issuance of Preferred Series B Unit Accounts of Beneficient Holdings. BEN LP's obligations under the Commercial Loan Agreement are unsecured. The Commercial Loan Agreement contains negative covenants that limit or restrict, subject to certain exceptions, the incurrence of liens and indebtedness by Beneficient, fundamental changes to its business and transactions with affiliates. The Commercial Loan Agreement also contains customary affirmative covenants, including, but not limited to, preservation of corporate existence, compliance with applicable law, payment of taxes, notice of material events, financial reporting and keeping of proper books of record and account. The Commercial Loan Agreement includes customary events of default, including, but not limited to, non-payment of principal or interest, failure to comply with covenants, failure to pay other indebtedness when due, cross-acceleration to other debt, material adverse effects, events of bankruptcy and insolvency, and unsatisfied judgments. The borrower was in compliance with its financial reporting covenants in the Commercial Loan Agreement as of September 30, 2019. The principal amount of the Commercial Loan bears interest at 5.00% per year from the Final Closing Date. One-half of the interest, or 2.50% per year, is due and payable monthly in cash, and one-half of the interest, or 2.50% per year, accrues and compounds annually on each anniversary date of the Final Closing Date and becomes due and payable in full in cash on the maturity date. The accrued interest from the Initial Transfer to the Final Closing Date was added to the principal amount of the Commercial Loan. The Commercial Loan was recorded at a discount as a result of the relative fair value allocations for the assets received in the Initial Transfer of the Exchange Transaction. Under ASC 805, Business Combinations In accordance with the Supplemental Indenture governing the issuance of the Seller Trust L Bonds, upon a redemption event or at the maturity date of the Seller Trust L Bonds, the Company, at its option, may use the outstanding principal amount of the Commercial Loan, and accrued and unpaid interest thereon, as repayment consideration of the Seller Trust L Bonds (see Note 11). Promissory Note On May 31, 2019, GWG Life entered into a Promissory Note (the "Promissory Note"), made by Jeffrey S. Hinkle and Dr. John A. Stahl, not in their individual capacity but solely as trustees of The LT-1 LiquidTrust, The LT-2 LiquidTrust, The LT-5 LiquidTrust, The LT-7 LiquidTrust, The LT-8 LiquidTrust and The LT-9 LiquidTrust (collectively, the "LiquidTrust Borrowers") in the principal amount of $65,000,000. Pursuant to the terms of the Promissory Note, GWG Life will fund a term loan to the LiquidTrust Borrowers in an aggregate principal amount of $65,000,000 (the "Loan"), which Loan is to be funded in two installments as described below. The Loan was made pursuant to GWG's strategy to further diversify into alternative assets (beyond life insurance) and ancillary businesses and was intended to better position Beneficient's balance sheet, working capital and liquidity profile to satisfy anticipated state of Texas regulatory requirements. The LiquidTrust Borrowers are common law trusts established as part of alternative asset financings extended by a subsidiary of BEN LP, of which the Company owns approximately 90% of the issued and outstanding common units of BEN LP (although, on a fully diluted basis, our ownership interest in common units of BEN LP would be reduced significantly below a majority of those issued and outstanding). Although each Borrower is allocated a portion of the Loan equal to approximately 16.7% of the aggregate outstanding principal of the Loan, the Loan constitutes the joint and several obligations of the LiquidTrust Borrowers. An initial advance in the principal amount of $50,000,000 was funded on June 3, 2019 and, subject to satisfaction of certain customary conditions, it is anticipated that the second advance, in the principal amount of $15,000,000, will be funded no later than December 31, 2019. The Loan bears interest at 7.0% per annum, with interest payable at maturity, and matures on June 30, 2023. Subject to the Intercreditor Agreements (as defined below), the Loan can be prepaid at the LiquidTrust Borrowers' election without premium or penalty. The Loan is unsecured and is subject to certain covenants (including a restriction on the incurrence of any indebtedness senior to the Loan other than existing senior loan obligations to each of HCLP Nominees, L.L.C. ("HCLP") and Beneficient Holdings, Inc. ("BHI", and together with HCLP, the "Senior Lenders"), as lenders) and events of default. The Senior Lenders are directly or indirectly associated with one of Beneficient's founders, who is also Chairman of the Company's Board of Directors. Intercreditor Agreements In connection with the Promissory Note, the Company also entered into two intercreditor and subordination agreements: (1) an Intercreditor Agreement between the GWG Life and HCLP and (2) an Intercreditor Agreement between the GWG Life and BHI (the "Intercreditor Agreements"). Under the Intercreditor Agreements, GWG Life agrees to subordinate the Loan to the secured obligations of Beneficient and its affiliates outstanding to the Senior Lenders (the "Senior Loan Obligations"), agrees to not take any liens to secure the Loan (and to subordinate such liens, if any, to the liens of the Senior Lenders), and agrees not to take enforcement actions under the Promissory Note until such Senior Loan Obligations are paid in full. The Intercreditor Agreements establish various other inter-lender and subordination terms, including, without limitation, with respect to permitted actions by each party, permitted payments, waivers, voting arrangements in bankruptcy, application of certain proceeds and limitations on amendments of the respective loan obligations of the parties. The Senior Lenders have agreed not to extend the maturity of their respective loan obligations beyond June 30, 2023 or increase the outstanding principal of the loans made by the Senior Lenders without the written consent of GWG Life. GWG Life has agreed not to transfer, assign, pledge, grant a security interest in or otherwise dispose of (including, without limitation, pursuant to a foreclosure) the Promissory Note except with the written consent of the Senior Lenders (such consent not to be unreasonably withheld) or to the Company or direct or indirect wholly owned subsidiaries thereof. The following table summarizes outstanding principal, discount and accrued interest balances of the financing receivables: September 30, December 31, Commercial Loan Commercial Loan receivable – principal $ 192,508,000 $ 192,508,000 Discount on Commercial Loan receivable (6,554,000 ) (7,846,000 ) Accrued interest receivable on Commercial Loan 4,064,000 107,000 Balance outstanding on Commercial Loan 190,018,000 184,769,000 Promissory Note Promissory Note receivable – principal 50,000,000 - Accrued interest receivable on Promissory Note 1,167,000 - Balance outstanding on Promissory Note 51,167,000 - Total financing receivables from affiliates $ 241,185,000 $ 184,769,000 |
Equity Method Investment
Equity Method Investment | 9 Months Ended |
Sep. 30, 2019 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Equity Method Investment | (7) Equity Method Investment During 2018, in connection with the Initial Transfer and Final Closing of the Exchange Transaction, we acquired 40.5 million common units of BEN LP for a total limited partnership interest in the common units of BEN LP of approximately 89.9% as of December 31, 2018 (although, on a fully diluted basis, our ownership interest in common units of BEN LP would be reduced significantly below a majority of those issued and outstanding). On June 12, 2019, we acquired an additional 1 million common units of BEN LP from a third party for a cash investment of $10 million. The common units of BEN LP are not publicly traded on a stock exchange. Our investment in the common units of BEN LP is presented in equity method investment on our condensed consolidated balance sheets. Our proportionate share of earnings or losses from our investee is recognized in earnings (loss) from equity method investment in our condensed consolidated statements of operations. We record our share of the income or loss of Beneficient on a one-quarter lag. Financial information pertaining to Beneficient is summarized in the table below: Three Months Ended Nine Months Ended Total revenues $ 28,151,000 $ 69,262,000 Net income (loss) 9,696,000 (36,345,000 ) Net earnings (loss) attributable to BEN LP common unitholders 1,080,000 (11,439,000 ) GWG portion of net earnings (loss) 956,000 (1) (371,000 ) (2) (1) Our portion of Beneficient's net earnings (loss) from April 1, 2019 to June 30, 2019. (2) Our portion of Beneficient's net earnings (loss) from October 1, 2018 to June 30, 2019. Due to our accounting election to record the equity earnings of Beneficient on a one quarter-lag, for the three months ended September 30, 2019, we recorded earnings of $956,000 for our share of the net earnings of Beneficient for the period from April 1 to June 30, 2019, and for the nine months ended September 30, 2019, we recorded a loss of $371,000 for the period from October 1, 2018 to June 30, 2019. We eliminated the effects of any intercompany transactions in the summarized information presented above. For the period from October 1 to December 28, 2018, we owned 13.9% of the common units of BEN LP. Effective December 28, 2018, as a result of the Final Closing of the Exchange Transaction, our ownership of BEN LP common units increased to approximately 89.9%. As a result of common unit issuances by BEN LP in the first quarter of 2019, our ownership dropped to 88.1% as of March 31, 2019. Effective June 12, 2019, we acquired an additional 1 million common units of BEN LP, which increased our ownership to 90.2% (although, on a fully diluted basis, our ownership interest in common units of BEN LP would be reduced significantly below a majority of those issued and outstanding). A substantial majority of the net assets of Beneficient are currently represented by intangible assets and goodwill. As such, we believe substantially all of our equity method investment is characterized as equity method goodwill as of September 30, 2019. We do not believe conditions exist indicating an other-than-temporary loss in the value of our investment and no impairment has been recorded to our equity method investment as of September 30, 2019. Beneficient has certain share classes outstanding other than and senior to the BEN LP common units, namely Class S Ordinary units, FLP units and Non-Participating Convertible Series A units issued by a subsidiary of BEN LP. The Class S Ordinary units and FLP units are classified as noncontrolling interest and the Non-Participating Convertible Series A units are classified as redeemable noncontrolling interest on the consolidated statements of financial position of Beneficient and their share of the net income of Beneficient is classified as net income attributable to noncontrolling interests on the consolidated statements of operations of Beneficient. These units are exchangeable or convertible into common units of BEN LP. Beneficient Adoption of Equity Incentive Plan The board of directors of Beneficient Management, L.L.C., Beneficient's general partner, adopted an equity incentive plan ("Beneficient's Equity Incentive Plan") in September 2018. Under the Beneficient Equity Incentive Plan, Beneficient is permitted to grant equity awards representing ownership interests in BEN LP common units. Vested awards under the Beneficient Equity Incentive Plan dilute BEN LP's common unitholders, including GWG. The total number of common units that may be issued under the Beneficient Equity Incentive Plan is equivalent to 15% of the number of fully diluted common units outstanding, subject to annual adjustment. In April 2019, initial equity awards in the form of Beneficient restricted equity units ("Beneficient REUs") were granted under Beneficient's Equity Incentive Plan. These awards are generally subject to service-based vesting of a three year period from the date of grant, though some of the awards are fully vested upon grant date. All awards are subject to performance conditions pertaining to entry into certain transactions with GWG Holdings or a change of control event prior to July 1, 2021. While providing services to Beneficient, if applicable, certain of these awards are subject to minimum retained ownership rules requiring the award recipient to continuously hold BEN LP common unit equivalents equal to at least 15% of their cumulatively vested awards that have the minimum retained ownership requirement. For the Beneficient REUs awarded under the Beneficient Equity Incentive Plan, Beneficient will recognize expense associated with the vesting of these awards based on the fair value of the BEN LP common units on the date of grant, discounted for the lack of participation rights in the expected distributions on unvested units and discounted for the lack of marketability associated with the post-vesting transfer restrictions. Beneficient will recognize expense when it is probable that the performance condition will be met, which will be upon entering into certain transactions with GWG Holdings or upon a change of control. A cumulative catch up of expense will be recognized by Beneficient at the time of entering into certain transactions with GWG Holdings or a change of control for the portion of awards that are vested at the time the performance condition is met. The remaining unrecognized compensation cost for these awards would be recognized prospectively over the remaining requisite service period. The remaining unrecognized compensation expense will be recognized on a straight-line basis using the graded vesting method over the life of the award and forfeitures will be accounted for at the time that such forfeitures occur. A total of 3.4 million Beneficient REUs have been approved for granting in 2019 that will vest upon the grant date, subject to the performance condition vesting described above. A total of 6.1 million Beneficient REUs have been approved for granting in 2019 that will vest over the completion of a 3-year service period beginning on the grant date, subject to the performance condition described above. All awards are anticipated to be classified in equity. Based on the grant date fair value, the estimated total Beneficient compensation expense attributable to these awards, assuming all vest, is approximately $90 to $100 million. The expense, when recognized by Beneficient, will impact the earnings at BEN LP and GWG's equity earnings from our equity method investment in Beneficient. The Beneficient REUs, when settled – commencing July 1, 2021 over a three-year period, will convert to BEN LP common units and will be dilutive to the existing BEN LP common unitholders, including GWG. Amendment of Beneficient Holdings Limited Partner Agreement Governing Beneficient Noncontrolling Interests BEN LP is a holding company of capital and financial services companies, the general partner of Beneficient Holdings, and owns 100% of the Class A Subclass 1 and Subclass 2 Units of Beneficient Holdings. Beneficient Holdings is a Delaware limited partnership formed on July 1, 2010. Beneficient Holdings is the holding company that directly or indirectly receives all active and passive income from its subsidiaries and allocates that income among its issued units. Beneficient Holdings has issued general partnership Class A Units (Subclass 1 and Subclass 2) — the class of units owned by BEN LP — and Class S Ordinary Units, FLP Unit accounts (Subclass 1 and Subclass 2) and Preferred Series A Subclass 1 Unit accounts (formerly referred to as Non-Participating Convertible Series A Units), which are owned by entities associated with BEN LP's management and founders, including our Chairman, and certain of our directors, along with our Chief Executive Officer. At June 30, 2019, there was $1,012,873,516 of Preferred Series A Subclass 1 Unit accounts (the "Preferred Series A") and $58,879,383 of Class S Ordinary Units issued. The rights of all partners of Beneficient Holdings are governed by a Limited Partnership Agreement ("BCH LPA"). On April 26, 2019, the BCH LPA was amended. Under the amendment, the preferred return to be paid to Preferred Series A holders is limited through December 31, 2019 by a quarterly rate cap that is based on the annualized revenues of Beneficient Holdings. Further, under the amendment, the Preferred Series A holders can convert up to 20% of the sub-capital balance in any calendar year into Class S Ordinary Units on or after January 1, 2021. Upon such an election, a holder of Preferred Series A will be issued Class S Ordinary Units necessary to provide the holder with a number of Class S Ordinary Units that, in the aggregate, equal (a) the balance of the holder's capital account associated with the Preferred Series A Subclass 1 Unit accounts being converted divided by (b) $8.50. The amendment affects several areas that could impact the value of our ownership in BEN LP such as allocations or distributions of income to the various classes of units issued by Beneficient Holdings, including the Class A Units (Subclass 1 and Subclass 2) owned by BEN LP, preferred returns paid to the holders of Class S Preferred Units, FLP Units and Preferred Series A Units (collectively, "BCH Preferred Units"), distribution of proceeds from the sale of assets, and future issuance of dilutive securities and future debt issuances, among other changes. The impact of the BCH LPA amendment on our investment in BEN LP may vary depending on multiple factors, including, among other things, (1) the economic performance of BEN LP, (2) the value of BEN LP's common units, and (3) the timing, price and amount of any conversions of BCH Preferred Units or Class S Ordinary Units. BEN LP has notified us that, subject to receiving approval from the board of directors of its general partner, BEN LP intends to further amend, effective April 26, 2019, the BCH LPA to adjust the conversion price for the Preferred Series A Subclass 1 Units to the fair market value of the BEN LP common units at conversion. This conversion price would be consistent with the previous BCH LPA prior to the most recent amendment described above. BEN LP has determined that the accounting for this further proposed amendment will be a modification as opposed to an extinguishment and will not have a significant impact on the relative value of the Beneficient securities. GWG has therefore concluded the collective impacts of the amended BCH LPA, inclusive of the proposed further amendment, will not significantly impact GWG's portion of net earnings related to its investment in BEN LP. |
Variable Interest Entities
Variable Interest Entities | 9 Months Ended |
Sep. 30, 2019 | |
Variable Interest Entity [Abstract] | |
Variable Interest Entities | (8) Variable Interest Entities In accordance with ASC 810, Consolidation, the Company assesses whether it has a variable interest in legal entities in which it has a financial relationship and, if so, whether or not those entities are variable interest entities ("VIEs"). For those entities that qualify as VIEs, ASC 810 requires the Company to determine if the Company is the primary beneficiary of the VIE, and if so, to consolidate the VIE. We have determined that Beneficient is a VIE, but that we are not the primary beneficiary of the investment. GWG does not have the power to direct any activities of Beneficient, or any of its related parties, that most significantly impact Beneficient's economic performance. GWG has no board representation at BEN LP or at its general partner. The general partner is exclusively assigned all management powers over the business and affairs of Beneficient, and the limited partners do not have the ability to remove the general partner. BEN LP's limited partnership agreement specifies that any person or group that acquires beneficial ownership of 20% or more of BEN LP's common limited partnership units (including us) forfeits all voting rights associated with all of its common units and such common units may not be voted on any matter. Therefore, we do not consolidate the results of Beneficient in our consolidated financial statements. The Company's exposure to risk of loss in Beneficient is generally limited to its investment in the common units of BEN LP, its financing receivable from Beneficient and its equity security investment in the Option Agreement to purchase additional common units of BEN LP. We have determined that the LiquidTrust Borrowers are VIEs, but that we are not the primary beneficiary of the variable interests. We do not have the power to direct any activities of the LiquidTrust Borrowers that most significantly impact the Borrower's economic performance. The Company's exposure to risk of loss in the LiquidTrust Borrowers is limited to its financing receivable from the LiquidTrust Borrowers. The following table shows the classification, carrying value and maximum exposure to loss with respect to the Company's unconsolidated VIEs at September 30, 2019 and December 31, 2018: September 30, 2019 December 31, 2018 Carrying Maximum Carrying Maximum Financing receivables from affiliates $ 241,185,000 $ 241,185,000 $ 184,769,000 $ 184,769,000 Equity method investment 370,652,000 370,652,000 360,842,000 360,842,000 Other asset 38,607,000 38,607,000 38,562,000 38,562,000 Total assets $ 650,444,000 $ 650,444,000 $ 584,173,000 $ 584,173,000 |
Credit Facility - LNV Corporati
Credit Facility - LNV Corporation | 9 Months Ended |
Sep. 30, 2019 | |
Line of Credit Facility [Abstract] | |
Credit Facility - LNV Corporation | (9) Credit Facility — LNV Corporation On September 27, 2017, we entered into an amended and restated senior credit facility with LNV Corporation as lender through our subsidiary GWG DLP Funding IV, LLC ("DLP IV"). The amended and restated senior credit facility makes available a total of up to $300,000,000 in credit with a maturity date of September 27, 2029. Additional advances are available under the amended and restated senior credit facility at the LIBOR rate as herein defined. Advances are available as the result of additional borrowing base capacity, created as the premiums and servicing costs of pledged life insurance policies become due. Interest will accrue on amounts borrowed under the amended and restated senior credit facility at an annual interest rate, determined as of each date of borrowing or quarterly if there is no borrowing, equal to (a) 12-month LIBOR plus (b) 7.50% per annum. The effective rate at September 30, 2019 was 9.68%. Interest payments are made on a quarterly basis. As of September 30, 2019, approximately 62.5% of the total face value of our life insurance policies portfolio is pledged to LNV Corporation. The amount outstanding under this facility was $140,497,000 and $158,209,000 at September 30, 2019 and December 31, 2018, respectively. Obligations under the amended and restated senior credit facility are secured by a security interest in DLP IV's assets, for the benefit of the lenders, through an arrangement under which Wells Fargo Bank, N.A. serves as securities intermediary. The life insurance policies owned by DLP IV do not serve as direct collateral for the obligations of GWG Holdings under the L Bonds and Seller Trust L Bonds. The difference between the amount outstanding and the carrying amount on our condensed consolidated balance sheets is due to netting of unamortized debt issuance costs. The amended and restated senior credit facility has certain financial and nonfinancial covenants, and we were in compliance with these covenants at September 30, 2019 and as of the date of this filing. On November 1, 2019, we entered into the second amended and restated senior credit facility with LNV Corporation (see Note 25). |
L Bonds
L Bonds | 9 Months Ended |
Sep. 30, 2019 | |
L Bonds [Abstract] | |
L Bonds | (10) L Bonds We began publicly offering and selling L Bonds in January 2012 under the name "Renewable Secured Debentures". These debt securities were re-named "L Bonds" in January 2015. L Bonds are publicly offered and sold on a continuous basis under a registration statement permitting us to sell up to $1.0 billion in principal amount of L Bonds through January 2018. On December 1, 2017, an additional public offering was declared effective permitting us to sell up to $1.0 billion in principal amount of L Bonds on a continuous basis until December 2020. The new offering is a follow-on to the previous L Bond offering and contains the same terms and features. We are party to an indenture governing the L Bonds dated October 19, 2011, as amended ("Indenture"), under which GWG Holdings is obligor, GWG Life is guarantor, and Bank of Utah serves as indenture trustee. On October 23, 2017, the parties entered into the Amended and Restated Indenture in connection with the new offering. On March 27, 2018, GWG L Bond holders approved Amendment No.1 to the Amended and Restated Indenture. This amendment expands the definition of Total Coverage to include, without duplication, the value of all of our other assets as reflected on our most recently available balance sheet prepared in accordance with GAAP. The Amended and Restated Indenture contains certain financial and nonfinancial covenants, and we were in compliance with all material covenants at September 30, 2019 and as of the date of this filing and no Events of Default (as defined in the Amended and Restated Indenture) existed as of such dates. We publicly offer and sell L Bonds under a registration statement declared effective by the SEC and have issued Seller Trust L Bonds under a Supplemental Indenture, as described in Note 11. We temporarily suspended the offering of our L Bonds on May 1, 2019 as a result of our delay in filing certain periodic reports with the SEC. We recommenced our L Bond offering on August 8, 2019. The L Bonds and Seller Trust L Bonds are secured by substantially all the assets of GWG Holdings, a pledge of all our common stock held by BCC, an indirect subsidiary of BEN LP and AltiVerse (which together represent approximately 12% of our outstanding common stock), and by a guarantee and corresponding grant of a security interest in substantially all the assets of GWG Life (1) (2) (1) The Seller Trust L Bonds (see Note 11) are senior secured obligations of GWG, ranking junior to all senior debt of GWG (see Note 9) and pari passu in right of payment and in respect of collateral with all L Bonds of GWG. Payments under the Seller Trust L Bonds are guaranteed by GWG Life. The assets exchanged in the Exchange Transaction are available as collateral for all holders of the L Bonds and Seller Trust L Bonds. Specifically, the common units of BEN LP and the Option Agreement are held by GWG Holdings and the Commercial Loan is held by GWG Life. (2) The terms of our amended and restated senior credit facility with LNV Corporation require that we maintain a significant excess of pledged collateral value over the amount outstanding on the amended and restated senior credit facility at any given time. Any excess equity value in DLP IV after satisfying all amounts owing under our amended and restated senior credit facility is available as collateral for the L Bonds (including the Seller Trust L Bonds). The bonds have renewal features under which we may elect to permit their renewal, subject to the right of bondholders to elect to receive payment at maturity. Interest is payable monthly or annually depending on the election of the investor. At September 30, 2019 and December 31, 2018, the weighted-average interest rate of our L Bonds was 7.14% and 7.10%, respectively. The principal amount of L Bonds outstanding was $842,948,000 and $662,152,000 at September 30, 2019 and December 31, 2018, respectively. The difference between the amount of outstanding L Bonds and the carrying amount on our condensed consolidated balance sheets is due to netting of unamortized deferred issuance costs, cash receipts for new issuances and payments of redemptions in process. Amortization of deferred issuance costs was $3,197,000 and $2,312,000 for the three months ended September 30, 2019 and 2018, respectively, and $9,191,000 and $6,450,000 for the nine months ended September 30, 2019 and 2018, respectively. Future expected amortization of deferred financing costs as of September 30, 2019 is $32,507,000 in total over the next seven years. Future contractual maturities of L Bonds, and future amortization of their deferred financing costs, at September 30, 2019 are as follows: Years Ending December 31, Contractual Unamortized Three months ending December 31, 2019 $ 29,267,000 $ 91,000 2020 158,475,000 2,399,000 2021 174,469,000 5,461,000 2022 125,086,000 5,335,000 2023 72,640,000 3,320,000 2024 92,488,000 4,967,000 Thereafter 190,523,000 10,934,000 $ 842,948,000 $ 32,507,000 |
Seller Trust L Bonds
Seller Trust L Bonds | 9 Months Ended |
Sep. 30, 2019 | |
Seller Trust L Bonds [Abstract] | |
Seller Trust L Bonds | (11) Seller Trust L Bonds On August 10, 2018, in connection with the Initial Transfer of the Exchange Transaction, GWG Holdings, GWG Life and Bank of Utah, as trustee, entered into a Supplemental Indenture (the "Supplemental Indenture") to the Amended and Restated Indenture. GWG Holdings entered into the Supplemental Indenture to add and modify certain provisions of the Amended and Restated Indenture necessary to provide for the issuance of a new class of securities titled "Seller Trust L Bonds". The maturity date of the Seller Trust L Bonds is August 9, 2023. The Seller Trust L Bonds bear interest at 7.50% per year. Interest is payable monthly in cash. GWG issued Seller Trust L Bonds in the amount of $366,892,000 to the various related trusts (the "Seller Trusts") in connection with the Exchange Transaction on August 10, 2018. After the second anniversary of the Final Closing, the holders of the Seller Trust L Bonds will have the right to cause GWG to repurchase, in whole but not in part, the Seller Trust L Bonds held by such holder. The repurchase may be paid, at GWG's option, in the form of cash, a pro rata portion of (i) the outstanding principal amount and accrued and unpaid interest under the Commercial Loan Agreement and (ii) BEN LP common units, or a combination of cash and such property. Our L Bonds are offered and sold under a registration statement declared effective by the SEC, as described in Note 10, and we have issued Seller Trust L Bonds under a Supplemental Indenture. We temporarily suspended the offering of our L Bonds on May 1, 2019 as a result of our delay in filing certain periodic reports with the SEC. We recommenced our L Bond offering on August 8, 2019. The L Bonds and Seller Trust L Bonds are secured by substantially all the assets of GWG Holdings, a pledge of all our common stock held by BCC and AltiVerse (which together represent approximately 12% of our outstanding common stock), and by a guarantee and corresponding grant of a security interest in substantially all the assets of GWG Life (1) (2) (1) The Seller Trust L Bonds are senior secured obligations of GWG, ranking junior to all senior debt of GWG (see Note 9) and pari passu in right of payment and in respect of collateral with all L Bonds of GWG (see Note 10). Payments under the Seller Trust L Bonds are guaranteed by GWG Life. The assets exchanged in the Exchange Transaction are available as collateral for all holders of the L Bonds and Seller Trust L Bonds. Specifically, the common units of BEN LP and the Option Agreement are held by GWG Holdings and the Commercial Loan is held by GWG Life. (2) The terms of our amended and restated senior credit facility with LNV Corporation require that we maintain a significant excess of pledged collateral value over the amount outstanding on the amended and restated senior credit facility at any given time. Any excess equity value of DLP IV after satisfying all amounts owing under our amended and restated senior credit facility is available as collateral for the L Bonds (including the Seller Trust L Bonds). The principal amount of Seller Trust L Bonds outstanding was $366,892,000 at both September 30, 2019 and December 31, 2018. |
Redeemable Preferred Stock
Redeemable Preferred Stock | 9 Months Ended |
Sep. 30, 2019 | |
Redeemable Preferred Stock [Abstract] | |
Redeemable Preferred Stock | (12) Redeemable Preferred Stock On November 30, 2015, our public offering of up to 100,000 shares of RPS at $1,000 per share was declared effective. Holders of RPS are entitled to cumulative dividends at the rate of 7% per annum, paid monthly. Dividends on the RPS are recorded as a reduction to additional paid-in capital, if any, then to the outstanding balance of the preferred stock if additional paid-in capital has been exhausted. Under certain circumstances described in the Certificate of Designation for the RPS, additional shares of RPS may be issued in lieu of cash dividends. The RPS ranks senior to our common stock and pari passu with our RPS 2 and entitles its holders to a liquidation preference equal to the stated value per share (i.e., $1,000) plus accrued but unpaid dividends. Holders of RPS may presently convert their RPS into our common stock at a conversion price equal to the volume-weighted average price of our common stock for the 20 trading days immediately prior to the date of conversion, subject to a minimum conversion price of $15.00 and in an aggregate amount limited to 15% of the stated value of RPS originally purchased from us and still held by such purchaser. Holders of RPS may request that we redeem their RPS at a price equal to their stated value plus accrued but unpaid dividends, less an applicable redemption fee, if any, as specified in the Certificate of Designation. Nevertheless, the Certificate of Designation for RPS permits us in our sole discretion to grant or decline redemption requests. Subject to certain restrictions and conditions, we may also redeem shares of RPS without a redemption fee upon a holder’s death, total disability or bankruptcy. In addition, after one year from the date of original issuance, we may, at our option, call and redeem shares of RPS at a price equal to their liquidation preference. In March 2017, we closed the RPS offering to additional investors having sold 99,127 shares of RPS for an aggregate gross consideration of $99,127,000 and incurred approximately $7,019,000 of related selling costs. At the time of its issuance, we determined that the RPS contained two embedded features: (1) optional redemption by the holder, and (2) optional conversion by the holder. We determined that each of the embedded features met the definition of a derivative; however, based on our assessment under Accounting Standards Codification 470, Debt, (“ASC 470”) and ASC 815, Derivatives and Hedging, (“ASC 815”), we do not believe bifurcation of either the holder’s redemption or conversion feature is appropriate. |
Series 2 Redeemable Preferred S
Series 2 Redeemable Preferred Stock | 9 Months Ended |
Sep. 30, 2019 | |
Series 2 Redeemable Preferred Stock [Abstract] | |
Series 2 Redeemable Preferred Stock | (13) Series 2 Redeemable Preferred Stock On February 14, 2017, our public offering of up to 150,000 shares of RPS 2 at $1,000 per share was declared effective. Holders of RPS 2 are entitled to cumulative dividends at the rate of 7% per annum, paid monthly. Dividends on the RPS 2 are recorded as a reduction to additional paid-in capital, if any, then to the outstanding balance of the preferred stock if additional paid-in capital has been exhausted. Under certain circumstances described in the Certificate of Designation for the RPS 2, additional shares of RPS 2 may be issued in lieu of cash dividends. The RPS 2 ranks senior to our common stock and pari passu with our RPS and entitles its holders to a liquidation preference equal to the stated value per share (i.e., $1,000) plus accrued but unpaid dividends. Holders of RPS 2 may, less an applicable conversion discount, if any, convert their RPS 2 into our common stock at a conversion price equal to the volume-weighted average price of our common stock for the 20 trading days immediately prior to the date of conversion, subject to a minimum conversion price of $12.75 and in an aggregate amount limited to 10% of the stated value of RPS 2 originally purchased from us and still held by such purchaser. Holders of RPS 2 may request that we redeem their RPS 2 shares at a price equal to their liquidation preference, less an applicable redemption fee, if any, as specified in the Certificate of Designation. Nevertheless, the Certificate of Designation for RPS 2 permits us in our sole discretion to grant or decline requests for redemption. Subject to certain restrictions and conditions, we may also redeem shares of RPS 2 without a redemption fee upon a holder's death, total disability or bankruptcy. In addition, we may, at our option, call and redeem shares of RPS 2 at a price equal to their liquidation preference (subject to a minimum redemption price, in the event of redemptions occurring less than one year after issuance, of 107% of the stated value of the shares being redeemed). In April 2018, we closed the RPS 2 offering to additional investors having sold 149,979 shares of RPS 2 for an aggregate gross consideration of $149,979,000 and incurred approximately $10,284,000 of related selling costs. At the time of its issuance, we determined that the RPS 2 contained two embedded features: (1) optional redemption by the holder, and (2) optional conversion by the holder. We determined that each of the embedded features met the definition of a derivative; however, based on our assessment under ASC 470 and ASC 815, we do not believe bifurcation of either the holder's redemption or conversion feature is appropriate. |
Series B Convertible Preferred
Series B Convertible Preferred Stock | 9 Months Ended |
Sep. 30, 2019 | |
Equity [Abstract] | |
Series B Convertible Preferred Stock | (14) Series B Convertible Preferred Stock On August 10, 2018, GWG Holdings issued 5,000,000 shares of Series B, par value $0.001 per share and having a stated value of $10.00 per share, to BEN LP for cash consideration of $50,000,000 as part of the Initial Transfer. On December 28, 2018, the Series B converted into 5,000,000 shares of our common stock at a conversion price of $10.00 per share immediately following the Final Closing of the Exchange Transaction. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | (15) Income Taxes We had no current income tax liability as of September 30, 2019 and December 31, 2018. The components of our income tax expense (benefit) and the reconciliation at the statutory federal tax rate to our actual income tax expense (benefit) for the three and nine months ended September 30, 2019 and 2018 consisted of the following: Three Months Ended Nine Months Ended September 30, September 30, September 30, September 30, 2019 2018 2019 2018 Statutory federal income tax (benefit) $ (4,485,000 ) $ (2,234,000 ) $ (11,755,000 ) $ (4,173,000 ) State income taxes (benefit), net of federal benefit (1,322,000 ) (866,000 ) (4,103,000 ) (1,558,000 ) Change in valuation allowance 4,697,000 3,215,000 15,025,000 5,783,000 Other permanent differences 1,110,000 (115,000 ) 833,000 (52,000 ) Total income tax expense (benefit) $ - $ - $ - $ - The tax effects of temporary differences that give rise to deferred income taxes were as follows: September 30, December 31, Deferred tax assets: Net operating loss carryforwards $ 9,994,000 $ 10,491,000 Investment in life insurance policies 34,186,000 23,132,000 Other assets 11,429,000 6,864,000 Subtotal 55,609,000 40,487,000 Valuation allowance (55,410,000 ) (40,385,000 ) Deferred tax assets 199,000 102,000 Deferred tax liabilities: Other liabilities (199,000 ) (102,000 ) Net deferred tax asset (liability) $ — $ — At September 30, 2019 and December 31, 2018, we had federal net operating loss ("NOL") carryforwards of $34,773,000 and $36,501,000, respectively, and aggregate state NOL carryforwards of approximately $34,747,000 and $36,475,000, respectively. The NOL carryforwards will begin to expire in 2031. Future utilization of NOL carryforwards is subject to limitations under Section 382 of the Internal Revenue Code. This section generally relates to a more than 50 percent change in ownership over a three-year period. As a result of the Exchange Transaction, it is believed that a change in ownership for income tax purposes only has occurred as of December 28, 2018. As such, the annual utilization of our net operating losses generated prior to the ownership change is limited. Based on the estimated value of the Company prior to the Exchange Transaction, utilization of pre-ownership change net operating losses are subject to an annual limitation of approximately $7,564,000. We provide for a valuation allowance when it is not considered "more likely than not" that our deferred tax assets will be realized. As of September 30, 2019, based on all available evidence, we have provided a valuation allowance against our total net deferred tax asset of $55,410,000 due to uncertainty as to the realization of our deferred tax assets during the carryforward periods. ASC 740, Income Taxes, requires the reporting of certain tax positions that do not meet a threshold of "more-likely-than-not" to be recorded as uncertain tax benefits. It is management's responsibility to determine whether it is "more-likely-than-not" that a tax position will be sustained upon examination, including resolution of any related appeals or litigation, based upon the technical merits of the position. Management has reviewed all income tax positions taken or expected to be taken and has determined that the income tax positions are appropriately stated and supported. We do not anticipate that the total unrecognized tax benefits will significantly change prior to December 31, 2019. Under our accounting policies, interest and penalties on unrecognized tax benefits, as well as interest received from favorable tax settlements are recognized as components of income tax expense. At September 30, 2019 and December 31, 2018, we recorded no accrued interest or penalties related to uncertain tax positions. Our income tax returns for tax years ended December 31, 2016 through 2018 remain open to examination by the Internal Revenue Service and various state taxing jurisdictions. Our income tax return for tax year ended December 31, 2015 also remains open to examination by various state taxing jurisdictions. |
Common Stock
Common Stock | 9 Months Ended |
Sep. 30, 2019 | |
Equity [Abstract] | |
Common Stock | (16) Common Stock In September 2014, we consummated an initial public offering of our common stock resulting in the sale of 800,000 shares of common stock at $12.50 per share, and net proceeds of approximately $8.6 million after the payment of underwriting commissions, discounts and expense reimbursements. In connection with this offering, we listed our common stock on the Nasdaq Capital Market under the ticker symbol "GWGH." In conjunction with the initial public offering, we issued warrants to purchase 16,000 shares of common stock at an exercise price of $15.63 per share. As of September 30, 2019, all of these warrants have expired and none of them had been exercised. On August 10, 2018, the Company declared a special dividend of $4.30 per share of common stock payable to shareholders of record on August 27, 2018. On December 28, 2018, the Series B converted into 5,000,000 shares of our common stock at a conversion price of $10.00 per share immediately following the Final Closing of the Exchange Transaction. On December 28, 2018, in connection with the Exchange Transaction, we issued 22,013,516 shares of common stock to the Seller Trusts at a market value of approximately $203.4 million in exchange for BEN LP common units. The shares were offered and sold in reliance upon the exemption from registration provided by Section 4(a)(2) under the Securities Act of 1933, as amended. The common shares issued to the Seller Trusts were initially subject to a Stockholders Agreement between GWG and the Seller Trusts, under which the Seller Trusts, as long as they own at least 10% of the voting shares of GWG, agree to vote their shares in proportion to the votes cast by all other voting securities of GWG. In addition, the Seller Trusts agree, for the period of one year after the Final Closing, not to seek or propose to influence or control the management, Board or policies of GWG. The Stockholders Agreement was terminated in connection with the closing of the Purchase and Contribution Transaction on April 26, 2019. In addition, GWG and the Seller Trusts entered into a registration rights agreement and an orderly marketing agreement. Under these agreements, GWG and the Seller Trusts agreed to take steps to allow for the orderly marketing and resale of the common shares issued to Seller Trusts as part of the Exchange Transaction, and Seller Trusts agreed to sell their common shares of GWG only as permitted under these agreements. On November 15, 2018, the Company's Board of Directors approved a stock repurchase program pursuant to which the Company was permitted, from time to time, to purchase shares of its common stock for an aggregate purchase price not to exceed $1,500,000. Stock repurchases were able to be executed through various means, including, without limitation, open market transactions, privately negotiated transactions or otherwise. The stock repurchase program did not obligate the Company to purchase any shares, and expired on April 30, 2019. The following table includes information about the stock repurchase program for the nine months ended September 30, 2019: Monthly Period Number of Average Price Total Number Maximum January 2019 42,488 $ 8.47 52,523 $ 1,072,000 February 2019 202 8.88 52,725 1,070,000 March 2019 — — — — April 2019 — — — — May 2019 — — — — June 2019 — — — — July 2019 — — — — August 2019 — — — — September 2019 — — — — Total 42,690 $ 8.47 52,725 $ 1,070,000 (1) (1) The stock repurchase program expired on April 30, 2019. |
Stock Incentive Plan
Stock Incentive Plan | 9 Months Ended |
Sep. 30, 2019 | |
Share-based Payment Arrangement [Abstract] | |
Stock Incentive Plan | (17) Stock Incentive Plan We adopted our 2013 Stock Incentive Plan in March 2013, as amended on June 1, 2015, May 5, 2017 and May 8, 2018. The Stock Option Sub-Committee of our Compensation Committee of our Board of Directors is responsible for the administration of the plan. Participants under the plan may be granted incentive stock options and non-statutory stock options; stock appreciation rights; stock awards; restricted stock; restricted stock units; and performance shares. Eligible participants include officers and employees of GWG Holdings and its subsidiaries, members of our Board of Directors, and consultants. Option awards generally expire 10 years from the date of grant. As of September 30, 2019, 6,000,000 of our common stock options are authorized under the plan, of which 2,482,452 shares were reserved for issuance under outstanding incentive awards and 3,517,548 shares remain available for future grants. Stock Options As of September 30, 2019, we had outstanding stock options for 888,000 shares of common stock to employees, officers, and directors under the plan. Options for 665,000 shares have vested and the remaining options are scheduled to vest over three years. The options were issued with an exercise price between $4.83 and $11.56, which is equal to the market price of the shares on the date of grant. As of September 30, 2019, stock options for 1,164,000 shares had been forfeited and stock options for 775,000 shares had been exercised. The total intrinsic value of stock options exercised during the three months ended September 30, 2019 was $36,000. The aggregate intrinsic value of stock options outstanding and exercisable at September 30, 2019 was $1,145,000 and $891,000, respectively. Outstanding stock options: Vested Unvested Total Balance as of December 31, 2017 857,192 779,756 1,636,948 Granted during the year 63,950 314,000 377,950 Vested during the year 503,503 (503,503 ) — Exercised during the year (569,864 ) — (569,864 ) Forfeited during the year (21,582 ) (25,501 ) (47,083 ) Balance as of December 31, 2018 833,199 564,752 1,397,951 Granted during the period — — — Vested during the period 182,053 (182,053 ) — Exercised during the period (50,685 ) — (50,685 ) Forfeited during the period (299,883 ) (158,936 ) (458,819 ) Balance as of September 30, 2019 664,684 223,763 888,447 As of September 30, 2019, unrecognized compensation expense related to unvested options is $515,000. We expect to recognize this compensation expense over the next three years: $85,000 in 2019, $302,000 in 2020, and $128,000 in 2021. Stock Appreciation Rights (SARs) As of September 30, 2019, we had outstanding SARs for 288,000 shares of common stock to employees. The strike price of the SARs was between $6.75 and $11.55, which was equal to the market price of the common stock at the date of issuance. SARs vest over varying terms of up to three years. As of September 30, 2019, 178,000 of the SARs were vested and 169,000 have been exercised. On September 30, 2019, the market price of GWG's common stock was $9.98. Outstanding SARs: Vested Unvested Total Balance as of December 31, 2017 189,053 153,919 342,972 Granted during the year 2,625 111,025 113,650 Vested during the year 71,785 (71,785 ) -- Exercised during the year (145,622 ) — (145,622 ) Forfeited during the year — (39,235 ) (39,235 ) Balance as of December 31, 2018 117,841 153,924 271,765 Granted during the period 4,250 43,150 47,400 Vested during the period 79,150 (79,150 ) — Exercised during the period (23,448 ) — (23,448 ) Forfeited during the period — (7,592 ) (7,592 ) Balance as of September 30, 2019 177,793 110,332 288,125 The liability for the SARs as of September 30, 2019 and December 31, 2018 was $557,000 and $349,000, respectively, and was recorded within other accrued expenses on the condensed consolidated balance sheets. Remaining compensation expense is expected to be recognized over the next three years. Employee compensation and benefits expense for SARs of $327,000 and $25,000 was recorded for the three months ending September 30, 2019 and 2018, respectively, and $323,000 and $15,000 was recorded for the nine months ended September 30, 2019 and 2018, respectively. Upon the exercise of SARs, the Company is obligated to make cash payment equal to the positive difference between the market value of the Company's common stock on the date of exercise less the market value of the common stock on the date of grant. The following summarizes information concerning outstanding shares issuable under the 2013 Stock Incentive Plan: September 30, 2019 Outstanding Weighted- Weighted- Fair Value at Vested Stock Options 664,684 $ 8.88 7.05 $ 2.21 SARs 177,793 $ 8.78 4.68 $ 2.07 Total Vested 842,477 $ 8.86 6.55 $ 2.18 Unvested Stock Options 223,763 $ 9.47 8.47 $ 2.56 SARs 110,332 $ 9.57 5.79 $ 2.48 Total Unvested 334,095 $ 9.50 7.58 $ 2.53 December 31, 2018 Outstanding Weighted- Weighted- Fair Value at Vested Stock Options 833,199 $ 8.88 5.95 $ 2.02 SARs 117,841 $ 8.88 5.02 $ 2.02 Total Vested 951,040 $ 8.88 5.83 $ 2.02 Unvested Stock Options 564,752 $ 9.15 7.88 $ 2.35 SARs 153,924 $ 8.37 5.98 $ 2.09 Total Unvested 718,676 $ 8.98 7.47 $ 2.30 Restricted Stock Units A restricted stock unit ("RSU") entitles the holder thereof to receive one share of our common stock (or, in some circumstances, the cash value thereof) upon vesting. RSUs are subject to forfeiture until they vest. As of September 30, 2019, we had outstanding RSUs for 244,083 shares of common stock (based on target grant amounts) held by employees and directors under the plan, of which none were vested. On June 18, 2019, we granted an aggregate of 114,366 RSUs to our directors, which RSUs are subject to time-based vesting and are scheduled to vest in their entirety on the one year anniversary of the grant date subject to the holder continuously remaining a director or employee of, or a consultant to, GWG or one of its subsidiaries through such date. On May 31, 2019, we granted RSUs to our Chief Executive Officer that are subject to performance-based vesting pursuant to a performance share unit agreement ("PSU Agreement"). The PSU Agreement provides for a target award grant of 129,717 RSUs, and up to a maximum of 259,434 RSUs, with each representing the right to receive one share of our common stock (or, following a Change-in-Control Transaction (as defined in the PSU Agreement), the cash value thereof) upon vesting, which is generally subject to the satisfaction of performance goals over a performance period commencing on April 26, 2019 and ending on December 31, 2021. In the three months ended September 30, 2019, a total of 375,000 RSUs held by employees vested entitling the holders thereof, collectively, to cash payments totaling $4.5 million. Additionally, during the nine months ended September 30, 2019, 53,403 RSUs vested and 26,701 shares of common stock were issued to employees, net of shares forfeited to satisfy tax withholding obligations. |
Other Expenses
Other Expenses | 9 Months Ended |
Sep. 30, 2019 | |
Other Expenses [Abstract] | |
Other Expenses | (18) Other Expenses The components of other expenses in our condensed consolidated statements of operations for the three and nine months ended September 30, 2019 and 2018 are as follows: Three Months Ended Nine Months Ended 2019 2018 2019 2018 Contract Labor $ 533,000 $ 359,000 $ 1,345,000 $ 964,000 Marketing 408,000 413,000 1,229,000 1,343,000 Information Technology 529,000 432,000 1,513,000 1,208,000 Servicing and Facility Fees 450,000 382,000 1,313,000 1,244,000 Travel and Entertainment 321,000 204,000 823,000 650,000 Insurance and Regulatory 586,000 401,000 4,426,000 1,120,000 General and Administrative 722,000 498,000 1,666,000 1,733,000 Total Other Expenses $ 3,549,000 $ 2,689,000 $ 12,315,000 $ 8,262,000 (19) Net Loss Attributable to Common Shareholders We have outstanding RPS and RPS 2, as described in Notes 12 and 13. RPS and RPS 2 are anti-dilutive to our net loss attributable to common shareholders calculation for both the three and nine months ended September 30, 2019 and 2018. Our warrants, vested and unvested stock options and restricted stock units are also anti-dilutive for both the three and nine months ended September 30, 2019 and 2018. |
Net Loss Attributable to Common
Net Loss Attributable to Common Shareholders | 9 Months Ended |
Sep. 30, 2019 | |
Earnings Per Share [Abstract] | |
Net Loss Attributable to Common Shareholders | (19) Net Loss Attributable to Common Shareholders We have outstanding RPS and RPS 2, as described in Notes 12 and 13. RPS and RPS 2 are anti-dilutive to our net loss attributable to common shareholders calculation for both the three and nine months ended September 30, 2019 and 2018. Our warrants, vested and unvested stock options and restricted stock units are also anti-dilutive for both the three and nine months ended September 30, 2019 and 2018. |
Segment Reporting
Segment Reporting | 9 Months Ended |
Sep. 30, 2019 | |
Segment Reporting [Abstract] | |
Segment Reporting | (20) Segment Reporting GWG has two reportable segments consisting of Secondary Life Insurance and Investment in Beneficient. In addition, the Company reports certain of its results of operations in Corporate & Other. The Secondary Life Insurance segment seeks to earn non-correlated yield from our portfolio of life insurance policies. Our Investment in Beneficient segment consists of our investment in the common units of BEN LP, which we account for using the equity method, and related assets and liabilities. Beneficient provides a variety of trust services, liquidity products and loans for alternative assets and illiquid investment funds, and other financial services to mid-to-high net worth individuals. The Corporate & Other category consists of unallocated corporate overhead and administrative costs and the operations of operating segments that do not meet the quantitative criteria to be separately reported. These segments are differentiated by the products and services they offer as well as by the information used by the Company's chief operating decision maker to determine allocation of resources and assess performance. Earnings before taxes ("EBT") is the measure of profitability used by management to assess performance of its segments and allocate resources. Segment EBT represents net income (loss) excluding income taxes and includes earnings (loss) from equity method investments. Equity method investments and related earnings are allocated to the Investment in Beneficient segment. Summarized financial information for the Company's reportable segments is presented for the periods indicated: Three Months Ended Nine Months Ended Revenue: 2019 2018 2019 2018 Secondary Life Insurance $ 18,238,000 $ 16,388,000 $ 61,199,000 $ 55,054,000 Investment in Beneficient 3,709,000 4,284,000 9,723,000 4,284,000 Corporate & Other 264,000 265,000 516,000 456,000 Total $ 22,211,000 $ 20,937,000 $ 71,438,000 $ 59,794,000 Three Months Ended Nine Months Ended Segment EBT: 2019 2018 2019 2018 Secondary Life Insurance $ (9,169,000 ) $ (4,932,000 ) $ (19,792,000 ) $ (4,256,000 ) Investment in Beneficient (2,214,000 ) - (11,286,000 ) - Corporate & Other (9,020,000 ) (5,590,000 ) (25,270,000 ) (15,502,000 ) Total (20,403,000 ) (10,522,000 ) (56,348,000 ) (19,758,000 ) Income tax benefit - - - - Net Loss $ (20,403,000 ) $ (10,522,000 ) $ (56,348,000 ) $ (19,758,000 ) Three Months Ended Nine Months Ended Interest Expense: 2019 2018 2019 2018 Secondary Life Insurance $ 21,410,000 $ 17,514,000 $ 63,114,000 $ 50,725,000 Investment in Beneficient 6,880,000 4,284,000 20,638,000 4,284,000 Corporate & Other - 1,000 - 2,000 Total $ 28,290,000 $ 21,799,000 $ 83,752,000 $ 55,011,000 Three Months Ended Nine Months Ended Interest Income: 2019 2018 2019 2018 Secondary Life Insurance $ 226,000 $ 553,000 $ 1,594,000 $ 1,663,000 Investment in Beneficient 3,709,000 4,284,000 9,678,000 4,284,000 Corporate & Other - 39,000 4,000 173,000 Total $ 3,935,000 $ 4,876,000 $ 11,276,000 $ 6,120,000 September 30, December 31, Total Assets: 2019 2018 Secondary Life Insurance $ 903,726,000 $ 889,665,000 Investment in Beneficient 650,444,000 584,173,000 Corporate & Other 6,831,000 7,029,000 Total $ 1,561,001,000 $ 1,480,867,000 |
Leases
Leases | 9 Months Ended |
Sep. 30, 2019 | |
Leases [Abstract] | |
Leases | (21) Leases We are party to an office lease with U.S. Bank National Association as the landlord. On September 1, 2015, we entered into an amendment to our original lease that expanded the leased space to 17,687 square feet and extended the term through October 2025. Under the amended lease, we are obligated to pay base rent plus common area maintenance and a share of building operating costs. This lease is accounted for as an operating lease. We lease various other facilities on a short-term basis. The lease assets and liabilities are as follows: September 30, Leases Classification 2019 Operating lease right-of-use assets Other assets $ 852,000 Operating lease liabilities Other accrued expenses $ 1,498,000 Total lease costs recognized for the three and nine months ended September 30, 2019 were $108,000 and $355,000, respectively, and $119,000 and $334,000 for the three and nine months ended September 30, 2018, respectively. These amounts included operating lease costs of $50,000 and $149,000, variable lease costs of $49,000 and $159,000, and short term lease costs of $9,000 and $47,000 for the three months and nine months ended September 30, 2019, respectively. The remaining lease term at September 30, 2019 was 6.0 years and the discount rate was 6.96%. For the three and nine months ended September 30, 2019, cash paid for amounts included in the measurement of operating lease liabilities and included in operating cash flows totaled $68,000 and $205,000, respectively. Maturities of operating lease liabilities as of September 30, 2019 are as follows: Remaining 2019 $ 70,000 2020 284,000 2021 293,000 2022 302,000 2023 311,000 Thereafter 593,000 Total lease payments 1,853,000 Less: imputed interest (355,000 ) Present value of lease liabilities $ 1,498,000 The minimum aggregate operating lease commitments as of December 31, 2018 as reported under previous lease accounting standards were as follows: 2019 $ 275,000 2020 284,000 2021 293,000 2022 302,000 2023 311,000 Thereafter 593,000 $ 2,058,000 |
Contingencies
Contingencies | 9 Months Ended |
Sep. 30, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Contingencies | (22) Contingencies Litigation — |
Guarantee of L Bonds and Seller
Guarantee of L Bonds and Seller Trust L Bonds | 9 Months Ended |
Sep. 30, 2019 | |
Guarantee of L Bonds [Abstract] | |
Guarantee of L Bonds and Seller Trust L Bonds | (23) Guarantee of L Bonds and Seller Trust L Bonds Our L Bonds are offered and sold under a registration statement declared effective by the SEC, as described in Note 10, and we have issued Seller Trust L Bonds under a Supplemental Indenture, as described in Note 11. The L Bonds and Seller Trust L Bonds are secured by substantially all the assets of GWG Holdings, a pledge of all our common stock held by BCC and AltiVerse (which together represent approximately 12% of our outstanding common stock), and by a guarantee and corresponding grant of a security interest in substantially all the assets of GWG Life (1) (2) (1) The Seller Trust L Bonds (see Note 11) are senior secured obligations of GWG, ranking junior to all senior debt of GWG (see Note 9), and pari passu in right of payment and in respect of collateral with all L Bonds of GWG (see Note 10). Payments under the Seller Trust L Bonds are guaranteed by GWG Life. The assets exchanged in the Exchange Transaction are available as collateral for all holders of the L Bonds and Seller Trust L Bonds. Specifically, the common units of BEN LP and the Option Agreement are held by GWG Holdings and the Commercial Loan is held by GWG Life. (2) The terms of our amended and restated senior credit facility with LNV Corporation require that we maintain a significant excess of pledged collateral value over the amount outstanding on the amended and restated senior credit facility at any given time. Any excess equity value of DLP IV after satisfying all amounts owing under our amended and restated senior credit facility is available as collateral for the L Bonds (including the Seller Trust L Bonds). The following represents consolidating financial information as of September 30, 2019 and December 31, 2018, with respect to the financial position, and as of September 30, 2019 and 2018, with respect to results of operations and cash flows of GWG Holdings and its subsidiaries. The parent column presents the financial information of GWG Holdings, the primary obligor for the L Bonds and Seller Trust L Bonds. The guarantor subsidiary column presents the financial information of GWG Life, the guarantor subsidiary of the L Bonds and Seller Trust L Bonds, presenting its investment in DLP IV and the Trust under the equity method. The non-guarantor subsidiaries column presents the financial information of all non-guarantor subsidiaries, including DLP IV and Life Trust. For the three and nine months ended September 30, 2018, we reclassified certain intercompany funding outflows from operating cash flows to investing cash flows in the condensed consolidating statement of cash flows in this guarantor footnote. This had the effect of increasing cash flows from operations for the parent for the three and nine months ended September 30, 2018 by $59.6 million and $136.6 million, respectively, and for the guarantor for the three and nine months ended September 30, 2018 by $47.3 million and $112.8 million, respectively, and decreasing cash flow from investing activities by these amounts, compared to previous presentation. Presentation of consolidated results in the condensed consolidated financial statements were not affected by these reclassifications. Presentation of the condensed consolidating balance sheets and condensed consolidating statements of operations in this guarantor footnote were not affected by these reclassifications. Condensed Consolidating Balance Sheets September 30, 2019 Parent Guarantor Non-Guarantor Eliminations Consolidated ASSETS Cash and cash equivalents $ 61,701,804 $ 2,605,365 $ 1,373,295 $ — $ 65,680,464 Restricted cash — 1,177,630 7,027,075 — 8,204,705 Investment in life insurance policies, at fair value — 106,329,394 701,188,694 — 807,518,088 Life insurance policy benefits receivable, net — 961,200 16,407,976 — 17,369,176 Financing receivables from affiliates — 241,185,081 — — 241,185,081 Equity method investment 370,652,128 — — — 370,652,128 Other assets 43,810,955 2,433,192 4,147,164 — 50,391,311 Investment in subsidiaries 944,560,782 592,688,454 — (1,537,249,236 ) — TOTAL ASSETS $ 1,420,725,669 $ 947,380,316 $ 730,144,204 $ (1,537,249,236 ) $ 1,561,000,953 LIABILITIES & STOCKHOLDERS' EQUITY LIABILITIES Senior credit facility with LNV Corporation $ — $ (329,050 ) $ 132,046,570 $ — $ 131,717,520 L Bonds 830,341,949 — — — 830,341,949 Seller Trust L Bonds 366,891,940 — — — 366,891,940 Accounts payable 1,353,654 927,306 289,882 — 2,570,842 Interest and dividends payable 13,273,621 — 3,452,723 — 16,726,344 Other accrued expenses 2,812,483 3,006,986 880,867 — 6,700,336 TOTAL LIABILITIES 1,214,673,647 3,605,242 136,670,042 — 1,354,948,931 STOCKHOLDERS' EQUITY Member capital — 943,775,074 593,474,162 (1,537,249,236 ) — Redeemable preferred stock and Series 2 redeemable preferred stock 209,817,500 — — — 209,817,500 Common stock 33,033 — — — 33,033 Additional paid-in capital 237,159,909 — — — 237,159,909 Accumulated deficit (240,958,420 ) — — — (240,958,420 ) TOTAL STOCKHOLDERS' EQUITY 206,052,022 943,775,074 593,474,162 (1,537,249,236 ) 206,052,022 TOTAL LIABILITIES AND EQUITY $ 1,420,725,669 $ 947,380,316 $ 730,144,204 $ (1,537,249,236 ) $ 1,561,000,953 December 31, 2018 Parent Guarantor Non-Guarantor Eliminations Consolidated ASSETS Cash and cash equivalents $ 113,293,682 $ 232,387 $ 1,061,015 $ — $ 114,587,084 Restricted cash — 7,217,194 3,631,932 — 10,849,126 Investment in life insurance policies, at fair value — 92,336,494 655,585,971 — 747,922,465 Life insurance policy benefits receivable, net — 5,000,000 11,460,687 — 16,460,687 Financing receivables from affiliates — 184,768,874 — — 184,768,874 Equity method investment 360,841,651 — — — 360,841,651 Other assets 42,944,402 1,730,581 762,181 — 45,437,164 Investment in subsidiaries 799,182,251 510,865,003 — (1,310,047,254 ) — TOTAL ASSETS $ 1,316,261,986 $ 802,150,533 $ 672,501,786 $ (1,310,047,254 ) $ 1,480,867,051 LIABILITIES & STOCKHOLDERS' EQUITY LIABILITIES Senior credit facility with LNV Corporation $ — $ — $ 148,977,596 $ — $ 148,977,596 L Bonds 651,402,663 — — — 651,402,663 Seller Trust L Bonds 366,891,940 — — — 366,891,940 Accounts payable 1,126,327 1,674,494 6,475,686 — 9,276,507 Interest and dividends payable 14,047,248 — 4,508,045 — 18,555,293 Other accrued expenses 1,735,926 1,593,108 1,376,136 — 4,705,170 TOTAL LIABILITIES 1,035,204,104 3,267,602 161,337,463 — 1,199,809,169 STOCKHOLDERS' EQUITY Member capital — 798,882,931 511,164,323 (1,310,047,254 ) — Redeemable preferred stock and Series 2 redeemable preferred stock 215,973,039 — — — 215,973,039 Common stock 33,018 — — — 33,018 Additional paid-in capital 249,662,168 — — — 249,662,168 Accumulated deficit (184,610,343 ) — — — (184,610,343 ) TOTAL STOCKHOLDERS' EQUITY 281,057,882 798,882,931 511,164,323 (1,310,047,254 ) 281,057,882 TOTAL LIABILITIES AND EQUITY $ 1,316,261,986 $ 802,150,533 $ 672,501,786 $ (1,310,047,254 ) $ 1,480,867,051 Condensed Consolidating Statements of Operations For the three months ended September 30, 2019 Parent Guarantor Non-Guarantor Eliminations Consolidated REVENUE Gain (loss) on life insurance policies, net $ — $ 2,231,897 $ 15,560,427 $ — $ 17,792,324 Interest and other income 257,050 3,825,547 336,058 — 4,418,655 TOTAL REVENUE 257,050 6,057,444 15,896,485 — 22,210,979 EXPENSES Interest expense 24,573,192 — 3,716,478 — 28,289,670 Employee compensation and benefits 6,374,457 2,080,646 681,721 — 9,136,824 Legal and professional fees 1,816,531 297,254 480,682 — 2,594,467 Other expenses 2,094,036 586,601 868,628 — 3,549,265 TOTAL EXPENSES 34,858,216 2,964,501 5,747,509 — 43,570,226 INCOME (LOSS) BEFORE EQUITY IN INCOME OF SUBSIDIARIES (34,601,166 ) 3,092,943 10,148,976 — (21,359,247 ) EQUITY IN INCOME OF SUBSIDIARIES 13,241,919 11,448,079 — (24,689,998 ) — INCOME (LOSS) BEFORE INCOME TAXES (21,359,247 ) 14,541,022 10,148,976 (24,689,998 ) (21,359,247 ) INCOME TAX EXPENSE (BENEFIT) — — — — — NET INCOME (LOSS) BEFORE EARNINGS (LOSS) FROM EQUITY METHOD INVESTMENT (21,359,247 ) 14,541,022 10,148,976 (24,689,998 ) (21,359,247 ) Earnings (loss) from equity method investment 955,751 — — — 955,751 NET INCOME (LOSS) (20,403,496 ) 14,541,022 10,148,976 (24,689,998 ) (20,403,496 ) Preferred stock dividends 4,231,641 — — — 4,231,641 NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS $ (24,635,137 ) $ 14,541,022 $ 10,148,976 $ (24,689,998 ) $ (24,635,137 ) For the three months ended September 30, 2018 Parent Guarantor Non-Guarantor Eliminations Consolidated REVENUE Gain on life insurance policies, net $ — $ 4,122,153 $ 11,599,360 $ — $ 15,721,513 Interest and other income 3,333,424 1,700,414 181,677 — 5,215,515 TOTAL REVENUE 3,333,424 5,822,567 11,781,037 — 20,937,028 EXPENSES Interest expense 16,739,120 — 5,060,212 — 21,799,332 Employee compensation and benefits 2,292,251 3,086,682 169,838 — 5,548,771 Legal and professional fees 483,512 221,613 716,839 — 1,421,964 Other expenses 1,590,823 455,800 642,347 — 2,688,970 TOTAL EXPENSES 21,105,706 3,764,095 6,589,236 — 31,459,037 INCOME (LOSS) BEFORE EQUITY IN INCOME OF SUBSIDIARIES (17,772,282 ) 2,058,472 5,191,801 — (10,522,009 ) EQUITY IN INCOME OF SUBSIDIARIES 7,250,273 6,266,481 — (13,516,754 ) — INCOME (LOSS) BEFORE INCOME TAXES (10,522,009 ) 8,324,953 5,191,801 (13,516,754 ) (10,522,009 ) INCOME TAX EXPENSE (BENEFIT) — — — — — NET INCOME (LOSS) (10,522,009 ) 8,324,953 5,191,801 (13,516,754 ) (10,522,009 ) Preferred stock dividends 4,313,542 — — — 4,313,542 NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS $ (14,835,551 ) $ 8,324,953 $ 5,191,801 $ (13,516,754 ) $ (14,835,551 ) For the nine months ended September 30, 2019 Parent Guarantor Non-Guarantor Eliminations Consolidated REVENUE Gain (loss) on life insurance policies, net $ — $ 6,783,129 $ 52,435,403 $ — $ 59,218,532 Interest and other income 1,438,068 9,852,224 929,470 — 12,219,762 TOTAL REVENUE 1,438,068 16,635,353 53,364,873 — 71,438,294 EXPENSES Interest expense 71,753,380 — 11,998,231 — 83,751,611 Employee compensation and benefits 13,991,440 5,791,512 1,301,863 — 21,084,815 Legal and professional fees 6,146,443 1,212,791 2,903,996 — 10,263,230 Other expenses 8,548,645 1,549,259 2,217,530 — 12,315,434 TOTAL EXPENSES 100,439,908 8,553,562 18,421,620 — 127,415,090 INCOME (LOSS) BEFORE EQUITY IN INCOME OF SUBSIDIARIES (99,001,840 ) 8,081,791 34,943,253 — (55,976,796 ) EQUITY IN INCOME OF SUBSIDIARIES 43,025,044 39,802,437 — (82,827,481 ) — INCOME (LOSS) BEFORE INCOME TAXES (55,976,796 ) 47,884,228 34,943,253 (82,827,481 ) (55,976,796 ) INCOME TAX EXPENSE (BENEFIT) — — — — — NET INCOME (LOSS) BEFORE EARNINGS (LOSS) FROM EQUITY METHOD INVESTMENT (55,976,796 ) 47,884,228 34,943,253 (82,827,481 ) (55,976,796 ) Earnings (loss) from equity method investment (371,281 ) — — — (371,281 ) NET INCOME (LOSS) (56,348,077 ) 47,884,228 34,943,253 (82,827,481 ) (56,348,077 ) Preferred stock dividends 12,806,173 — — — 12,806,173 NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS $ (69,154,250 ) $ 47,884,228 $ 34,943,253 $ (82,827,481 ) $ (69,154,250 ) For the nine months ended September 30, 2018 Parent Guarantor Non-Guarantor Eliminations Consolidated REVENUE Gain (loss) on life insurance policies, net $ — $ 12,135,832 $ 40,794,176 $ — $ 52,930,008 Interest and other income 4,447,322 1,726,938 689,380 — 6,863,640 TOTAL REVENUE 4,447,322 13,862,770 41,483,556 — 59,793,648 EXPENSES Interest expense 38,758,326 — 16,252,193 — 55,010,519 Employee compensation and benefits 5,629,344 5,881,219 1,016,576 — 12,527,139 Legal and professional fees 1,290,614 688,003 1,772,704 — 3,751,321 Other expenses 5,082,525 1,397,314 1,782,485 — 8,262,324 TOTAL EXPENSES 50,760,809 7,966,536 20,823,958 — 79,551,303 INCOME (LOSS) BEFORE EQUITY IN INCOME OF SUBSIDIARIES (46,313,487 ) 5,896,234 20,659,598 — (19,757,655 ) EQUITY IN INCOME OF SUBSIDIARIES 26,555,832 23,824,330 — (50,380,162 ) — INCOME (LOSS) BEFORE INCOME TAXES (19,757,655 ) 29,720,564 20,659,598 (50,380,162 ) (19,757,655 ) INCOME TAX EXPENSE (BENEFIT) — — — — — NET INCOME (LOSS) (19,757,655 ) 29,720,564 20,659,598 (50,380,162 ) (19,757,655 ) Preferred stock dividends 12,356,513 — — — 12,356,513 NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS $ (32,114,168 ) $ 29,720,564 $ 20,659,598 $ (50,380,162 ) $ (32,114,168 ) Condensed Consolidating Statements of Cash Flows For the three months ended September 30, 2019 Parent Guarantor Non-Guarantor Eliminations Consolidated CASH FLOWS FROM OPERATING ACTIVITIES Net income (loss) $ (20,403,496 ) $ 14,541,022 $ 10,148,976 $ (24,689,998 ) $ (20,403,496 ) Adjustments to reconcile net income (loss) to net cash flows from operating activities: Equity of subsidiaries (13,241,919 ) (11,448,079 ) — 24,689,998 — Change in fair value of life insurance policies — (2,251,068 ) (11,929,902 ) — (14,180,970 ) Amortization of deferred financing and issuance costs 3,196,852 — 263,755 — 3,460,607 Accretion of discount on financing receivables from affiliates — (427,914 ) — — (427,914 ) Provision for uncollectible policy benefits receivable — — 200,897 — 200,897 (Earnings) Loss from equity method investment (955,751 ) — — — (955,751 ) Stock-based compensation 700,688 — — — 700,688 (Increase) decrease in operating assets: Life insurance policy benefits receivable — 570,197 (12,563,873 ) — (11,993,676 ) Accrued interest on financing receivables — (2,078,175 ) — — (2,078,175 ) Other assets 517,880 (201,431 ) 73,734 — 390,183 Increase (decrease) in operating liabilities: Accounts payable and other accrued expenses (3,366,349 ) 649,937 (962,907 ) — (3,679,319 ) NET CASH FLOWS USED IN OPERATING ACTIVITIES (33,552,095 ) (645,511 ) (14,769,320 ) — (48,966,926 ) CASH FLOWS FROM INVESTING ACTIVITIES Investment in life insurance policies — — (710,863 ) — (710,863 ) Carrying value of matured life insurance policies — 1,347,089 5,292,830 — 6,639,919 Financing receivables from affiliates issued — — — — — Equity method investment acquired — — — — — Payment of capital contributions (497,879 ) (9,715,465 ) — 10,213,344 — NET CASH FLOWS USED IN INVESTING ACTIVITIES (497,879 ) (8,368,376 ) 4,581,967 10,213,344 5,929,056 CASH FLOWS FROM FINANCING ACTIVITIES Borrowings on senior debt — — 3,937,020 — 3,937,020 Repayments of senior debt — — (2,079,600 ) — (2,079,600 ) Proceeds from issuance of L Bonds 107,012,114 — — — 107,012,114 Payments for issuance and redemptions of L Bonds (61,679,235 ) — — — (61,679,235 ) Issuance (repurchase) of common stock — — — — — Payments for redemption of preferred stock (2,920,292 ) — — — (2,920,292 ) Preferred stock dividends (4,231,641 ) — — — (4,231,641 ) Issuance of member capital — (1,010,542 ) 11,223,886 (10,213,344 ) — NET CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES 38,180,946 (1,010,542 ) 13,081,306 (10,213,344 ) 40,038,366 NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH 4,130,972 (10,024,429 ) 2,893,953 — (2,999,504 ) CASH, CASH EQUIVALENTS AND RESTRICTED CASH BEGINNING OF PERIOD 57,570,832 13,807,424 5,506,417 — 76,884,673 END OF PERIOD $ 61,701,804 $ 3,782,995 $ 8,400,370 $ — $ 73,885,169 For the three months ended September 30, 2018 Parent Guarantor Non-Guarantor Eliminations Consolidated CASH FLOWS FROM OPERATING ACTIVITIES Net income (loss) $ (10,522,009 ) $ 8,324,953 $ 5,191,801 $ (13,516,754 ) $ (10,522,009 ) Adjustments to reconcile net income (loss) to net cash flows from operating activities: Equity of subsidiaries (7,250,273 ) (6,266,481 ) — 13,516,754 — Change in fair value of life insurance policies — (3,485,452 ) (21,354,115 ) — (24,839,567 ) Amortization of deferred financing and issuance costs 2,311,567 — 263,755 — 2,575,322 Amortization of discount or premium on financing receivables 251,672 (251,672 ) — — — Stock-based compensation 528,461 — — — 528,461 (Increase) decrease in operating assets: Accrued interest on financing receivables (2,839,926 ) (1,444,444 ) — — (4,284,370 ) Life insurance policy benefits receivable — (2,000,000 ) 18,562,304 — 16,562,304 Other assets (82,158 ) 98,900 305,226 — 321,968 Increase (decrease) in operating liabilities: Account payable and other accrued expenses 2,931,894 (384,380 ) (1,157,273 ) — 1,390,241 NET CASH FLOWS USED IN OPERATING ACTIVITIES (14,670,772 ) (5,408,576 ) 1,811,698 — (18,267,650 ) CASH FLOWS FROM INVESTING ACTIVITIES Investment in life insurance policies — (11,368,457 ) (31,523,307 ) — (42,891,764 ) Carrying value of matured life insurance policies — 669,349 1,656,640 — 2,325,989 Equity method investment acquired (1,421,059 ) — — — (1,421,059 ) Payment of capital contributions (59,567,886 ) (47,346,065 ) — 106,913,951 — NET CASH FLOWS USED IN INVESTING ACTIVITIES (60,988,945 ) (58,045,173 ) (29,866,667 ) 106,913,951 (41,986,834 ) CASH FLOWS FROM FINANCING ACTIVITIES Borrowings on senior debt — — — — — Repayments of senior debt — — (18,425,136 ) — (18,425,136 ) Proceeds from issuance of L Bonds 68,884,369 — — — 68,884,369 Payments for issuance and redemptions of L Bonds (20,195,657 ) — — — (20,195,657 ) Issuance (redemption) of common stock 682,954 — — — 682,954 Common stock dividends (25,709,412 ) — — — (25,709,412 ) Proceeds from issuance of convertible preferred stock 50,000,000 — — — 50,000,000 Payments for redemption of preferred stock (821,778 ) — — — (821,778 ) Preferred stock dividends (4,313,542 ) — — — (4,313,542 ) Issuance of member capital — 58,589,352 48,324,599 (106,913,951 ) — NET CASH FLOWS PROVIDED BY FINANCING ACTIVITIES 68,526,934 58,589,352 29,899,463 (106,913,951 ) 50,101,798 NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH (7,132,783 ) (4,864,397 ) 1,844,494 — (10,152,686 ) CASH, CASH EQUIVALENTS AND RESTRICTED CASH BEGINNING OF PERIOD 123,017,408 6,195,102 1,883,603 — 131,096,113 END OF PERIOD $ 115,884,625 $ 1,330,705 $ 3,728,097 $ — $ 120,943,427 For the nine months ended September 30, 2019 Parent Guarantor Non-Guarantor Eliminations Consolidated CASH FLOWS FROM OPERATING ACTIVITIES Net income (loss) $ (56,348,077 ) $ 47,884,228 $ 34,943,253 $ (82,827,481 ) $ (56,348,077 ) Adjustments to reconcile net income (loss) to net cash flows from operating activities: Equity of subsidiaries (43,025,044 ) (39,802,437 ) — 82,827,481 — Change in fair value of life insurance policies — (8,713,865 ) (39,317,330 ) — (48,031,195 ) Amortization of deferred financing and issuance costs 9,191,110 — 791,265 — 9,982,375 Accretion of discount on financing receivables from affiliates — (1,292,434 ) — — (1,292,434 ) Provision for uncollectible policy benefit receivable — — 200,897 — 200,897 (Earnings) Loss from equity method investment 371,281 — — — 371,281 Stock-based compensation 1,365,219 — — — 1,365,219 (Increase) decrease in operating assets: Life insurance policy benefits receivable — 4,038,800 (5,148,186 ) — (1,109,386 ) Accrued interest on financing receivables — (5,123,774 ) — — (5,123,774 ) Other assets (1,048,310 ) (112,467 ) (3,395,677 ) — (4,556,454 ) Increase (decrease) in operating liabilities: Accounts payable and other accrued expenses (443,269 ) (252,502 ) (7,736,395 ) — (8,432,166 ) NET CASH FLOWS USED IN OPERATING ACTIVITIES (89,937,090 ) (3,374,451 ) (19,662,173 ) — (112,973,714 ) CASH FLOWS FROM INVESTING ACTIVITIES Investment in life insurance policies — (8,682,044 ) (23,567,353 ) — (32,249,397 ) Carrying value of matured life insurance policies — 3,403,008 17,281,959 — 20,684,967 Financing receivables from affiliates issued — (50,000,000 ) — — (50,000,000 ) Equity method investment acquired (10,000,000 ) — — — (10,000,000 ) Payment of capital contributions (102,353,486 ) (42,021,014 ) — 144,374,500 — NET CASH FLOWS USED IN INVESTING ACTIVITIES (112,353,486 ) (97,300,050 ) (6,285,394 ) 144,374,500 (71,564,430 ) CASH FLOWS FROM FINANCING ACTIVITIES Borrowings on senior debt — — 3,937,020 — 3,937,020 Repayments of senior debt — — (21,648,615 ) — (21,648,615 ) Proceeds from issuance of L Bonds 278,238,656 — — — 278,238,656 Payments for issuance and redemptions of L Bonds (108,656,765 ) — — — (108,656,765 ) Issuance (repurchase) of common stock 57,518 — — — 57,518 Payments for redemption of preferred stock (6,134,538 ) — — — (6,134,538 ) Preferred stock dividends (12,806,173 ) — — — (12,806,173 ) Issuance of member capital — 97,007,915 47,366,585 (144,374,500 ) — NET CASH FLOWS PROVIDED BY FINANCING ACTIVITIES 150,698,698 97,007,915 29,654,990 (144,374,500 ) 132,987,103 NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH (51,591,878 ) (3,666,586 ) 3,707,423 — (51,551,041 ) CASH, CASH EQUIVALENTS AND RESTRICTED CASH BEGINNING OF PERIOD 113,293,682 7,449,581 4,692,947 — 125,436,210 END OF PERIOD $ 61,701,804 $ 3,782,995 $ 8,400,370 $ — $ 73,885,169 For the nine months ended September 30, 2018 Parent Guarantor Non-Guarantor Eliminations Consolidated CASH FLOWS FROM OPERATING ACTIVITIES Net income (loss) $ (19,757,655 ) $ 29,720,564 $ 20,659,598 $ (50,380,162 ) $ (19,757,655 ) Adjustments to reconcile net income (loss) to net cash flows from operating activities: Equity of subsidiaries (26,555,832 ) (23,824,330 ) — 50,380,162 — Change in fair value of life insurance policies — (9,691,293 ) (46,367,043 ) — (56,058,336 ) Amortization of deferred financing and issuance costs 6,450,018 — 791,265 — 7,241,283 Amortization of discount or premium on financing receivables 251,672 (251,672 ) — — — Stock-based compensation 788,865 — — — 788,865 (Increase) decrease in operating assets: Accrued interest on financing receivable (2,839,926 ) (1,444,444 ) — — (4,284,370 ) Life insurance policy benefits receivable — (1,300,000 ) 7,486,065 — 6,186,065 Other assets (2,477,789 ) 164,028 826,523 — (1,487,238 ) Increase (decrease) in operating liabilities: Account payable and other accrued expenses 3,832,942 (365,125 ) (3,341,098 ) — 126,719 NET CASH FLOWS USED IN OPERATING ACTIVITIES (40,307,705 ) (6,992,272 ) (19,944,690 ) — (67,244,667 ) CASH FLOWS FROM INVESTING ACTIVITIES Investment in life insurance policies — (26,916,457 ) (71,524,071 ) — (98,440,528 ) Carrying value of matured life insurance policies — 2,623,779 10,933,853 — 13,557,632 Equity method investment acquired (1,421,059 ) — — — (1,421,059 ) Payment of capital contributions (136,620,599 ) (112,777,113 ) — 249,397,712 — NET CASH FLOWS USED IN INVESTING ACTIVITIES (138,041,658 ) (137,069,791 ) (60,590,218 ) 249,397,712 (86,303,955 ) CASH FLOWS FROM FINANCING ACTIVITIES Borrowings on senior debt — — 12,903,166 — 12,903,166 Repayments of senior debt — — (63,463,452 ) — (63,463,452 ) Proceeds from issuance of L Bonds 166,081,914 — — — 166,081,914 Payments for issuance and redemptions of L Bonds (46,151,926 ) — — — (46,151,926 ) Issuance (redemption) of common stock 682,954 — — — 682,954 Common stock dividends (25,709,412 ) — — — (25,709,412 ) Proceeds from issuance of convertible preferred stock 50,000,000 50,000,000 Proceeds from issuance of redeemable preferred stock 56 ,238,128 — — — 56 ,238,128 Payments for issuance of preferred stock (4,142,294 ) — — — (4,142,294 ) Payments for redemption of preferred stock (2,361,692 ) — — — (2,361,692 ) Preferred stock dividends (12,356,513 ) — — — (12,356,513 ) Issuance of member capital — 134,538,735 114,858,977 (249,397,712 ) — NET CASH FLOWS PROVIDED BY FINANCING ACTIVITIES 182,281,159 134,538,735 64,298,691 (249,397,712 ) 131,720,873 NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH 3,931,796 (9,523,328 ) (16,236,217 ) — (21,827,749 ) CASH, CASH EQUIVALENTS AND RESTRICTED CASH BEGINNING OF PERIOD 111,952,829 10,854,033 19,964,314 — 142,771,176 END OF PERIOD $ 115,884,625 $ 1,330,705 $ 3,728,097 $ — $ 120,943,427 |
Concentration
Concentration | 9 Months Ended |
Sep. 30, 2019 | |
Risks and Uncertainties [Abstract] | |
Concentration | (24) Concentration Life Insurance Carriers We mostly purchase life insurance policies written by life insurance companies rated investment-grade by certain third-party rating agencies. As a result, there may be certain concentrations of policies with life insurance companies. The following summarizes the face value of insurance policies with specific life insurance companies exceeding 10% of the total face value held by our portfolio. Life Insurance Company September 30, December 31, John Hancock 14.02 % 13.71 % Lincoln National 11.22 % 11.33 % AXA Equitable 10.65 % 10.83 % The following summarizes the number of insureds' state of residence exceeding 10% of the total face value held by us: State of Residence September 30, December 31, California 17.38 % 18.02 % Florida 14.91 % 15.34 % Investment in Beneficient During 2018, in connection with the Exchange Transaction, the Company (i) acquired a limited partnership investment in the common units of BEN LP, (ii) entered into a Commercial Loan with BEN LP as borrower, and (iii) received an Option Agreement to acquire additional common units of BEN LP. The total carrying value of these investments at September 30, 2019 and December 31, 2018 was 650,444,000 and $584,173,000, respectively, representing 41.7% and 39.4%, respectively, of the Company's consolidated assets. Currently there is no liquid market for the common units of BEN LP and it is possible none will develop. Although we intend to hold the Commercial Loan to maturity, there is currently no liquid market for this loan and it is possible none will develop. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2019 | |
Subsequent Events [Abstract] | |
Subsequent Events | (25) Subsequent Events Subsequent to September 30, 2019, policy benefits on 12 policies covering 11 individuals have been realized. The face value of insurance benefits of these policies was $14,544,000. Subsequent to September 30, 2019, we issued approximately $73,160,000 of L Bonds. Second Amended and Restated Senior Credit Facility with LNV Corporation On November 1, 2019, DLP IV entered into a Second Amended and Restated Loan and Security Agreement with LNV Corporation, as lender, and CLMG Corp., as the administrative agent on behalf of the lenders under the agreement (the "Second Amended and Restated Agreement"), which replaced an amended and restated agreement dated September 27, 2017 that previously governed the DLP IV's senior credit facility (the "Second Amended Facility"). The Second Amended Facility makes available a total of up to $300,000,000 in credit to DLP IV with a maturity date of September 27, 2029. Subject to available borrowing base capacity, additional advances are available under the Second Amended Facility at the LIBOR rate described below. Such advances are available to pay the premiums and servicing costs of pledged life insurance policies as such amounts become due. Interest will accrue on amounts borrowed under the Second Amended Facility at an annual interest rate, determined as of each date of borrowing or quarterly if there is no borrowing, equal to (a) 12-month LIBOR, plus (b) 7.50% per annum. Under the Second Amended and Restated Agreement, DLP IV has granted the administrative agent, for the benefit of the lenders under the Second Amended Facility, a security interest in all of DLP IV's assets. The Company is subject to various financial and non-financial covenants under the Second Amended and Restated Agreement, including, but not limited to, compliance with laws, preservation of existence, financial reporting, keeping of proper books of record and account, payment of taxes, and ensuring that neither DLP IV nor GWG Life, LLC become an investment company. In conjunction with entering into the Second Amended and Restated Agreement, DLP IV pledged life insurance policies having an aggregate face value of approximately $298.3 million as additional collateral and received an advance of approximately $37.1 million under the Second Amended Facility (inclusive of certain fees and expenses incurred in connection with the negotiation and entry into the Second Amended and Restated Agreement). After giving effect to such advance, the amount outstanding under the Second Amended Facility on November 1, 2019 was approximately $175.5 million. Insurtech On November 11, 2019, GWG contributed the common stock and membership interests of its wholly owned Life Epigenetics and youSurance subsidiaries ("Insurtech Subsidiaries") to a legal entity, InsurTech Holdings, LLC ("InsurTech Holdings") in exchange for a membership interest in InsurTech Holdings. Although we currently own 100% of InsurTech Holding's equity, we do not have a controlling financial interest in InsurTech Holdings because the managing member has substantive participating rights. Therefore, we will account for our ownership interest in InsurTech Holdings as an equity method investment. The transaction resulted in a loss of control of the Insurtech Subsidiaries and as a result we will deconsolidate the subsidiaries and record an investment in equity method investee during the fourth quarter of 2019. The loss of control requires us to measure the equity investment at fair value. The valuation of our equity investment is not complete, and we expect to record the resulting gain or loss in earnings during the fourth quarter of 2019. In connection with the transaction, GWG contributed $1.25 million in cash to InsurTech Holdings and is committed to contribute an additional $18.75 million to the entity over the next two years. |
Nature of Business and Summar_2
Nature of Business and Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation — |
Principles of Consolidation | Principles of Consolidation — The Company has interests in various entities including corporations and limited partnerships. For each such entity, the Company evaluates its ownership interest to determine whether the entity is a variable interest entity (“VIE”) and, if so, whether it is the primary beneficiary of the VIE. The Company would consolidate any entity for which it was the primary beneficiary, regardless of its ownership or voting interests. Upon inception of a variable interest or the occurrence of a reconsideration event, the Company makes judgments in determining whether entities in which it invests are VIEs. If so, the Company makes judgments to determine whether it is the primary beneficiary and is thus required to consolidate the entity. If it is concluded that an entity is not a VIE, then the Company considers its proportional voting interests in the entity. The Company consolidates majority-owned subsidiaries in which a controlling financial interest is maintained. A controlling financial interest is determined by majority ownership and the absence of significant third-party participating rights. Ownership interests in entities for which the Company has significant influence that are not consolidated under the Company’s consolidation policy are accounted for as equity method investments. SEC Staff Announcement: Accounting for Limited Partnership Investments (codified in Accounting Standards Codification (“ASC”) 323-30-S99-1) guidance requires the use of the equity method unless the investor’s interest “is so minor that the limited partner may have virtually no influence over partnership operating and financial policies.” The SEC staff’s position is that investments in limited partnerships of greater than 3% to 5% are considered more than minor and, therefore, should be accounted for using the equity method. Related party transactions between the Company and its equity method investee have not been eliminated. |
Use of Estimates | Use of Estimates — Business Combinations |
Cash and Cash Equivalents | Cash and Cash Equivalents — Cash, cash equivalents and restricted cash on our condensed consolidated statements of cash flows include cash and cash equivalents of $65.7 million and restricted cash of $8.2 million as of September 30, 2019, and $117.9 million and $3.1 million, respectively, as of September 30, 2018. |
Life Insurance Policies | Life Insurance Policies — In a case where our acquisition of a policy is not complete as of a reporting date, but we have nonetheless advanced direct costs and deposits for the acquisition, those costs and deposits are recorded as other assets on our condensed consolidated balance sheets until the acquisition is complete and we have secured title to the policy. On both September 30, 2019 and December 31, 2018, none of our other assets comprised direct costs and deposits that we had advanced for life insurance policy acquisitions. We also recognize realized gain (or loss) from a life insurance policy upon one of the two following events: (1) our receipt of notice or verified mortality of the insured; or (2) our sale of the policy (upon filing of change-of-ownership forms and receipt of payment). In the case of mortality, the gain (or loss) we recognize is the difference between the policy benefits and the carrying value of the policy once we determine that collection of the policy benefits is reasonably assured. In the case of a policy sale, the gain (or loss) we recognize is the difference between the sale price and the carrying value of the policy on the date we receive sale proceeds. |
Life Insurance Policy Benefits Receivable, Net | Life Insurance Policy Benefits Receivable, Net We reserve for policy benefits when it becomes probable that we will not collect the full amount of the policy benefit. The reserve requirements are based on the best facts available to us and are re-evaluated and adjusted as additional information becomes available. Uncollectible policy benefits are written off against the reserves when it is deemed that a policy amount is uncollectible. As of September 30, 2019, the balance of the allowance for uncollectible receivables was $4.5 million, relating to a single life insurance policy claim where collection is doubtful. |
Other Assets | Other Assets In December 2018, in connection with the Final Closing of the Exchange Transaction, the Company entered into an Option Agreement with Beneficient. The agreement gives GWG the option to acquire the number of common units in BEN LP that would be received by the holder of NPC-A Prime limited partnership interests of Beneficient Holdings. There is no exercise price and the Company may exercise the option at any time until December 27, 2028, at which time the option will automatically exercise and settle. The Option Agreement is recorded in other assets at a value of $38.6 million at both September 30, 2019 and December 31, 2018. The Option Agreement is considered an equity security investment and the Company has elected the measurement alternative for equity securities without a readily determinable fair value. Under this measurement alternative, we record the Option Agreement at its cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions for the identical or similar investments of Beneficient. As at September 30, 2019, there were no indications of impairment. The instrument earns a preferred return that we accrue to the investment balance and record in interest and other income in the condensed consolidated statement of operations. |
Financing Receivables | Financing Receivables Losses on financing receivables are recognized when they are incurred, which requires us to make our best estimate of probable losses. Specific allowances are recorded for individually impaired loans to the extent we determine it is probable we will be unable to collect all amounts due according to original contractual terms of the loan agreement. Certain loans classified as impaired may not require an allowance for loan loss because we believe we will ultimately collect the unpaid balance (through collection or collateral repossession). The method for calculating the best estimate of losses depends on the type and risk characteristics of the related financing receivables. Such an estimate requires consideration of historical loss experience, adjusted for current conditions, and judgments about the probable effects of relevant observable data, including present economic conditions such as delinquency rates, financial health of market sectors, and the present and expected future levels of interest rates. The underlying assumptions, estimates and assessments we use to provide for losses are updated periodically to reflect our view of current conditions. Changes in such estimates can significantly affect the allowance and provision for losses. It is possible we will experience credit losses that are different from our current estimates. We have no allowance for losses at September 30, 2019 or December 31, 2018. Write-offs are deducted from the allowance for losses when we judge the principal to be uncollectible and subsequent recoveries are added to the allowance at the time cash is received on a written-off account. |
Equity Method Investment | Equity Method Investment Our equity method investment is reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of the investment might not be recoverable. These circumstances can include, but are not limited to evidence that we do not have the ability to recover the carrying amount, the inability of the investee to sustain earnings, a current fair value of the investment that is less than the carrying amount, and other investors ceasing to provide support or reducing their financial commitment to the investee. If the fair value of the investment is less than the carrying amount, and the investment will not recover in the near term, then an other-than-temporary impairment may exist. We recognize a loss in value of an investment deemed other-than-temporary in the period the conclusion is made. The Company reports its share of the income or loss of the equity method partner companies on a one-quarter lag where we do not expect financial information to be consistently available on a timely basis. For more information on equity method investment, see Note 7. |
Leases | Leases – |
Stock-Based Compensation | Stock-Based Compensation The risk-free interest rate is based on the U.S. Treasury rates at the date of grant with maturity dates approximately equal to the expected life at grant date. Volatility is based on the standard deviation of the average continuously compounded rate of return of five selected companies. |
Deferred Financing and Issuance Costs | Deferred Financing and Issuance Costs |
Earnings (Loss) per Share | Earnings (Loss) per Share — |
Reclassification | Reclassification — |
Newly Adopted Accounting Pronouncements | Newly Adopted Accounting Pronouncements — |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework — Changes to the Disclosure Requirements for Fair Value Measurement |
Investment in Life Insurance _2
Investment in Life Insurance Policies (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Investments, All Other Investments [Abstract] | |
Schedule of life insurance portfolio | Total life insurance portfolio face value of policy benefits $ 2,064,156,000 Average face value per policy $ 1,758,000 Average face value per insured life $ 1,887,000 Average age of insured (years)* 82.3 Average life expectancy estimate (years)* 7.3 Total number of policies 1,174 Number of unique lives 1,094 Demographics 74% Male; 26% Female Number of smokers 45 Largest policy as % of total portfolio face value 0.64 % Average policy as % of total portfolio face value 0.09 % Average annual premium as % of face value 3.2 % * Averages presented in the table are weighted averages by face amount of policy benefits. |
Schedule of organized according to their estimated life expectancy dates as of the reporting date | As of September 30, 2019 As of December 31, 2018 Years Ending December 31, Number of Estimated Face Value Number of Estimated Face Value 2019 3 $ 3,232,000 $ 3,375,000 9 $ 6,380,000 $ 7,305,000 2020 19 12,533,000 14,917,000 41 46,338,000 59,939,000 2021 62 75,255,000 100,575,000 81 68,836,000 108,191,000 2022 109 109,003,000 180,986,000 104 97,231,000 177,980,000 2023 121 114,084,000 213,293,000 109 93,196,000 185,575,000 2024 111 98,450,000 217,355,000 107 84,150,000 211,241,000 Thereafter 749 394,961,000 1,333,655,000 703 351,791,000 1,297,761,000 Totals 1,174 $ 807,518,000 $ 2,064,156,000 1,154 $ 747,922,000 $ 2,047,992,000 |
Schedule of reconciliation of gain (loss) on life insurance policies | Three Months Ended Nine Months Ended 2019 2018 2019 2018 Change in estimated probabilistic cash flows (1) $ 17,908,000 $ 19,069,000 $ 52,161,000 $ 55,483,000 Unrealized gain on acquisitions (2) 472,000 9,021,000 6,775,000 21,790,000 Premiums and other annual fees (17,219,000 ) (14,765,000 ) (49,055,000 ) (39,670,000 ) Change in discount rates (3)(4) — — — — Change in life expectancy evaluation (5) — 73,000 — (4,890,000 ) Face value of matured policies 27,470,000 7,973,000 80,927,000 50,100,000 Fair value of matured policies (10,839,000 ) (5,650,000 ) (31,590,000 ) (29,883,000 ) Gain (loss) on life insurance policies, net $ 17,792,000 $ 15,721,000 $ 59,218,000 $ 52,930,000 (1) Change in fair value of expected future cash flows relating to our investment in life insurance policies that are not specifically attributable to changes in life expectancy, discount rate changes or policy maturity events. (2) Gain resulting from fair value in excess of the purchase price for life insurance policies acquired during the reporting period. (3) The discount rate applied to estimate the fair value of the portfolio of life insurance policies we own was 8.25% at September 30 and June 30, 2019 and December 31, 2018, and was 10.45% at September 30 and June 30, 2018 and December 31, 2017. (4) The discount rate of 8.25% is based on our "longest life expectancy" methodology (among other factors) which was adopted at December 31, 2018, whereas the discount rate of 10.45% is based on our historical "average life expectancy methodology" (among other factors). (5) The change in fair value due to updating life expectancy estimates on certain life insurance policies in our portfolio. |
Schedule of estimate that premium payments and servicing fees required to maintain our current portfolio of life insurance policies | Years Ending December 31, Premiums Servicing Total Three months ending December 31, 2019 $ 16,553,000 $ 430,000 $ 16,983,000 2020 76,305,000 1,719,000 78,024,000 2021 88,684,000 1,719,000 90,403,000 2022 101,706,000 1,719,000 103,425,000 2023 113,838,000 1,719,000 115,557,000 2024 123,793,000 1,719,000 125,512,000 $ 520,879,000 $ 9,025,000 $ 529,904,000 |
Fair Value Definition and Hie_2
Fair Value Definition and Hierarchy (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Fair Value Disclosures [Abstract] | |
Schedule of reconciliation of investments in life insurance policies | Three Months Ended Nine months Ended 2019 2018 2019 2018 Beginning balance $ 799,266,000 $ 726,063,000 $ 747,922,000 $ 650,527,000 Purchases 711,000 42,892,000 32,250,000 98,442,000 Maturities (initial cost basis) (6,640,000 ) (2,326,000 ) (20,685,000 ) (13,558,000 ) Net change in fair value 14,181,000 24,840,000 48,031,000 56,058,000 Ending balance $ 807,518,000 $ 791,469,000 $ 807,518,000 $ 791,469,000 |
Schedule of inputs utilized in estimating the fair value of our portfolio of life insurance policies | As of As of Weighted-average age of insured, years* 82.3 82.1 Age of insured range, years 62-101 61-100 Weighted-average life expectancy, months* 87.6 93.2 Life expectancy range, months 1-243 1-251 Average face amount per policy $ 1,758,000 $ 1,775,000 Discount rate 8.25 % 8.25 % (*) Weighted-average by face amount of policy benefits |
Schedule of change in fair value of the investment in life insurance policies | Change in Life Expectancy Estimates minus minus plus plus September 30, 2019 $ 116,229,000 $ 59,050,000 $ (57,071,000 ) $ (113,742,000 ) December 31, 2018 $ 113,410,000 $ 57,611,000 $ (55,470,000 ) $ (110,473,000 ) Change in Discount Rate minus 2% minus 1% plus 1% plus 2% September 30, 2019 $ 94,576,000 $ 44,978,000 $ (40,918,000 ) $ (78,257,000 ) December 31, 2018 $ 95,747,000 $ 45,440,000 $ (41,179,000 ) $ (78,615,000 ) |
Financing Receivables from Af_2
Financing Receivables from Affiliates (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Financing Receivable from Affiliate [Abstract] | |
Schedule of outstanding principal, discount and accrued interest balances of the financing receivables | September 30, December 31, Commercial Loan Commercial Loan receivable – principal $ 192,508,000 $ 192,508,000 Discount on Commercial Loan receivable (6,554,000 ) (7,846,000 ) Accrued interest receivable on Commercial Loan 4,064,000 107,000 Balance outstanding on Commercial Loan 190,018,000 184,769,000 Promissory Note Promissory Note receivable – principal 50,000,000 - Accrued interest receivable on Promissory Note 1,167,000 - Balance outstanding on Promissory Note 51,167,000 - Total financing receivables from affiliates $ 241,185,000 $ 184,769,000 |
Equity Method Investment (Table
Equity Method Investment (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Schedule of financial information pertaining to beneficient | Three Months Ended Nine Months Ended Total revenues $ 28,151,000 $ 69,262,000 Net income (loss) 9,696,000 (36,345,000 ) Net earnings (loss) attributable to BEN LP common unitholders 1,080,000 (11,439,000 ) GWG portion of net earnings (loss) 956,000 (1) (371,000 ) (2) (1) Our portion of Beneficient's net earnings (loss) from April 1, 2019 to June 30, 2019. (2) Our portion of Beneficient's net earnings (loss) from October 1, 2018 to June 30, 2019. |
Variable Interest Entities (Tab
Variable Interest Entities (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Variable Interest Entity [Abstract] | |
Schedule of carrying value and maximum exposure to loss with respect to the Company's unconsolidated VIEs | September 30, 2019 December 31, 2018 Carrying Maximum Carrying Maximum Financing receivables from affiliates $ 241,185,000 $ 241,185,000 $ 184,769,000 $ 184,769,000 Equity method investment 370,652,000 370,652,000 360,842,000 360,842,000 Other asset 38,607,000 38,607,000 38,562,000 38,562,000 Total assets $ 650,444,000 $ 650,444,000 $ 584,173,000 $ 584,173,000 |
L Bonds (Tables)
L Bonds (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
L Bonds [Abstract] | |
Schedule of future contractual maturities of L Bonds, and future amortization of deferred financing costs | Years Ending December 31, Contractual Unamortized Three months ending December 31, 2019 $ 29,267,000 $ 91,000 2020 158,475,000 2,399,000 2021 174,469,000 5,461,000 2022 125,086,000 5,335,000 2023 72,640,000 3,320,000 2024 92,488,000 4,967,000 Thereafter 190,523,000 10,934,000 $ 842,948,000 $ 32,507,000 |
Income Taxes (Tables)
Income Taxes (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Income Tax Disclosure [Abstract] | |
Schedule of income tax expense (benefit) and reconciliation of statutory federal tax rate | Three Months Ended Nine Months Ended September 30, September 30, September 30, September 30, 2019 2018 2019 2018 Statutory federal income tax (benefit) $ (4,485,000 ) $ (2,234,000 ) $ (11,755,000 ) $ (4,173,000 ) State income taxes (benefit), net of federal benefit (1,322,000 ) (866,000 ) (4,103,000 ) (1,558,000 ) Change in valuation allowance 4,697,000 3,215,000 15,025,000 5,783,000 Other permanent differences 1,110,000 (115,000 ) 833,000 (52,000 ) Total income tax expense (benefit) $ - $ - $ - $ - |
Schedule of deferred tax assets and liabilities | September 30, December 31, Deferred tax assets: Net operating loss carryforwards $ 9,994,000 $ 10,491,000 Investment in life insurance policies 34,186,000 23,132,000 Other assets 11,429,000 6,864,000 Subtotal 55,609,000 40,487,000 Valuation allowance (55,410,000 ) (40,385,000 ) Deferred tax assets 199,000 102,000 Deferred tax liabilities: Other liabilities (199,000 ) (102,000 ) Net deferred tax asset (liability) $ — $ — |
Common Stock (Tables)
Common Stock (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Equity [Abstract] | |
Schedule of information about the stock repurchase program | Monthly Period Number of Average Price Total Number Maximum January 2019 42,488 $ 8.47 52,523 $ 1,072,000 February 2019 202 8.88 52,725 1,070,000 March 2019 — — — — April 2019 — — — — May 2019 — — — — June 2019 — — — — July 2019 — — — — August 2019 — — — — September 2019 — — — — Total 42,690 $ 8.47 52,725 $ 1,070,000 (1) (1) The stock repurchase program expired on April 30, 2019. |
Stock Incentive Plan (Tables)
Stock Incentive Plan (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Share-based Payment Arrangement [Abstract] | |
Schedule of outstanding stock options | Vested Unvested Total Balance as of December 31, 2017 857,192 779,756 1,636,948 Granted during the year 63,950 314,000 377,950 Vested during the year 503,503 (503,503 ) — Exercised during the year (569,864 ) — (569,864 ) Forfeited during the year (21,582 ) (25,501 ) (47,083 ) Balance as of December 31, 2018 833,199 564,752 1,397,951 Granted during the period — — — Vested during the period 182,053 (182,053 ) — Exercised during the period (50,685 ) — (50,685 ) Forfeited during the period (299,883 ) (158,936 ) (458,819 ) Balance as of September 30, 2019 664,684 223,763 888,447 |
Schedule of outstanding stock appreciation rights (SARs) | Vested Unvested Total Balance as of December 31, 2017 189,053 153,919 342,972 Granted during the year 2,625 111,025 113,650 Vested during the year 71,785 (71,785 ) -- Exercised during the year (145,622 ) — (145,622 ) Forfeited during the year — (39,235 ) (39,235 ) Balance as of December 31, 2018 117,841 153,924 271,765 Granted during the period 4,250 43,150 47,400 Vested during the period 79,150 (79,150 ) — Exercised during the period (23,448 ) — (23,448 ) Forfeited during the period — (7,592 ) (7,592 ) Balance as of September 30, 2019 177,793 110,332 288,125 |
Schedule of outstanding shares options and SARs issued | September 30, 2019 Outstanding Weighted- Weighted- Fair Value at Vested Stock Options 664,684 $ 8.88 7.05 $ 2.21 SARs 177,793 $ 8.78 4.68 $ 2.07 Total Vested 842,477 $ 8.86 6.55 $ 2.18 Unvested Stock Options 223,763 $ 9.47 8.47 $ 2.56 SARs 110,332 $ 9.57 5.79 $ 2.48 Total Unvested 334,095 $ 9.50 7.58 $ 2.53 December 31, 2018 Outstanding Weighted- Weighted- Fair Value at Vested Stock Options 833,199 $ 8.88 5.95 $ 2.02 SARs 117,841 $ 8.88 5.02 $ 2.02 Total Vested 951,040 $ 8.88 5.83 $ 2.02 Unvested Stock Options 564,752 $ 9.15 7.88 $ 2.35 SARs 153,924 $ 8.37 5.98 $ 2.09 Total Unvested 718,676 $ 8.98 7.47 $ 2.30 |
Other Expenses (Tables)
Other Expenses (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Other Expenses [Abstract] | |
Schedule of other expenses in consolidated statements of operations | Three Months Ended Nine Months Ended 2019 2018 2019 2018 Contract Labor $ 533,000 $ 359,000 $ 1,345,000 $ 964,000 Marketing 408,000 413,000 1,229,000 1,343,000 Information Technology 529,000 432,000 1,513,000 1,208,000 Servicing and Facility Fees 450,000 382,000 1,313,000 1,244,000 Travel and Entertainment 321,000 204,000 823,000 650,000 Insurance and Regulatory 586,000 401,000 4,426,000 1,120,000 General and Administrative 722,000 498,000 1,666,000 1,733,000 Total Other Expenses $ 3,549,000 $ 2,689,000 $ 12,315,000 $ 8,262,000 |
Segment Reporting (Tables)
Segment Reporting (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Segment Reporting [Abstract] | |
Schedule of financial information of reportable segments | Three Months Ended Nine Months Ended Revenue: 2019 2018 2019 2018 Secondary Life Insurance $ 18,238,000 $ 16,388,000 $ 61,199,000 $ 55,054,000 Investment in Beneficient 3,709,000 4,284,000 9,723,000 4,284,000 Corporate & Other 264,000 265,000 516,000 456,000 Total $ 22,211,000 $ 20,937,000 $ 71,438,000 $ 59,794,000 Three Months Ended Nine Months Ended Segment EBT: 2019 2018 2019 2018 Secondary Life Insurance $ (9,169,000 ) $ (4,932,000 ) $ (19,792,000 ) $ (4,256,000 ) Investment in Beneficient (2,214,000 ) - (11,286,000 ) - Corporate & Other (9,020,000 ) (5,590,000 ) (25,270,000 ) (15,502,000 ) Total (20,403,000 ) (10,522,000 ) (56,348,000 ) (19,758,000 ) Income tax benefit - - - - Net Loss $ (20,403,000 ) $ (10,522,000 ) $ (56,348,000 ) $ (19,758,000 ) Three Months Ended Nine Months Ended Interest Expense: 2019 2018 2019 2018 Secondary Life Insurance $ 21,410,000 $ 17,514,000 $ 63,114,000 $ 50,725,000 Investment in Beneficient 6,880,000 4,284,000 20,638,000 4,284,000 Corporate & Other - 1,000 - 2,000 Total $ 28,290,000 $ 21,799,000 $ 83,752,000 $ 55,011,000 Three Months Ended Nine Months Ended Interest Income: 2019 2018 2019 2018 Secondary Life Insurance $ 226,000 $ 553,000 $ 1,594,000 $ 1,663,000 Investment in Beneficient 3,709,000 4,284,000 9,678,000 4,284,000 Corporate & Other - 39,000 4,000 173,000 Total $ 3,935,000 $ 4,876,000 $ 11,276,000 $ 6,120,000 September 30, December 31, Total Assets: 2019 2018 Secondary Life Insurance $ 903,726,000 $ 889,665,000 Investment in Beneficient 650,444,000 584,173,000 Corporate & Other 6,831,000 7,029,000 Total $ 1,561,001,000 $ 1,480,867,000 |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Leases Tables [Abstract] | |
Schedule of lease assets and liabilities | September 30, Leases Classification 2019 Operating lease right-of-use assets Other assets $ 852,000 Operating lease liabilities Other accrued expenses $ 1,498,000 |
Schedule of maturities of operating lease liabilities | Remaining 2019 $ 70,000 2020 284,000 2021 293,000 2022 302,000 2023 311,000 Thereafter 593,000 Total lease payments 1,853,000 Less: imputed interest (355,000 ) Present value of lease liabilities $ 1,498,000 |
Schedule of minimum aggregate operating lease commitments | 2019 $ 275,000 2020 284,000 2021 293,000 2022 302,000 2023 311,000 Thereafter 593,000 $ 2,058,000 |
Guarantee of L Bonds and Sell_2
Guarantee of L Bonds and Seller Trust L Bonds (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Guarantee of L Bonds [Abstract] | |
Schedule of condensed consolidating balance sheets | September 30, 2019 Parent Guarantor Non-Guarantor Eliminations Consolidated ASSETS Cash and cash equivalents $ 61,701,804 $ 2,605,365 $ 1,373,295 $ — $ 65,680,464 Restricted cash — 1,177,630 7,027,075 — 8,204,705 Investment in life insurance policies, at fair value — 106,329,394 701,188,694 — 807,518,088 Life insurance policy benefits receivable, net — 961,200 16,407,976 — 17,369,176 Financing receivables from affiliates — 241,185,081 — — 241,185,081 Equity method investment 370,652,128 — — — 370,652,128 Other assets 43,810,955 2,433,192 4,147,164 — 50,391,311 Investment in subsidiaries 944,560,782 592,688,454 — (1,537,249,236 ) — TOTAL ASSETS $ 1,420,725,669 $ 947,380,316 $ 730,144,204 $ (1,537,249,236 ) $ 1,561,000,953 LIABILITIES & STOCKHOLDERS' EQUITY LIABILITIES Senior credit facility with LNV Corporation $ — $ (329,050 ) $ 132,046,570 $ — $ 131,717,520 L Bonds 830,341,949 — — — 830,341,949 Seller Trust L Bonds 366,891,940 — — — 366,891,940 Accounts payable 1,353,654 927,306 289,882 — 2,570,842 Interest and dividends payable 13,273,621 — 3,452,723 — 16,726,344 Other accrued expenses 2,812,483 3,006,986 880,867 — 6,700,336 TOTAL LIABILITIES 1,214,673,647 3,605,242 136,670,042 — 1,354,948,931 STOCKHOLDERS' EQUITY Member capital — 943,775,074 593,474,162 (1,537,249,236 ) — Redeemable preferred stock and Series 2 redeemable preferred stock 209,817,500 — — — 209,817,500 Common stock 33,033 — — — 33,033 Additional paid-in capital 237,159,909 — — — 237,159,909 Accumulated deficit (240,958,420 ) — — — (240,958,420 ) TOTAL STOCKHOLDERS' EQUITY 206,052,022 943,775,074 593,474,162 (1,537,249,236 ) 206,052,022 TOTAL LIABILITIES AND EQUITY $ 1,420,725,669 $ 947,380,316 $ 730,144,204 $ (1,537,249,236 ) $ 1,561,000,953 December 31, 2018 Parent Guarantor Non-Guarantor Eliminations Consolidated ASSETS Cash and cash equivalents $ 113,293,682 $ 232,387 $ 1,061,015 $ — $ 114,587,084 Restricted cash — 7,217,194 3,631,932 — 10,849,126 Investment in life insurance policies, at fair value — 92,336,494 655,585,971 — 747,922,465 Life insurance policy benefits receivable, net — 5,000,000 11,460,687 — 16,460,687 Financing receivables from affiliates — 184,768,874 — — 184,768,874 Equity method investment 360,841,651 — — — 360,841,651 Other assets 42,944,402 1,730,581 762,181 — 45,437,164 Investment in subsidiaries 799,182,251 510,865,003 — (1,310,047,254 ) — TOTAL ASSETS $ 1,316,261,986 $ 802,150,533 $ 672,501,786 $ (1,310,047,254 ) $ 1,480,867,051 LIABILITIES & STOCKHOLDERS' EQUITY LIABILITIES Senior credit facility with LNV Corporation $ — $ — $ 148,977,596 $ — $ 148,977,596 L Bonds 651,402,663 — — — 651,402,663 Seller Trust L Bonds 366,891,940 — — — 366,891,940 Accounts payable 1,126,327 1,674,494 6,475,686 — 9,276,507 Interest and dividends payable 14,047,248 — 4,508,045 — 18,555,293 Other accrued expenses 1,735,926 1,593,108 1,376,136 — 4,705,170 TOTAL LIABILITIES 1,035,204,104 3,267,602 161,337,463 — 1,199,809,169 STOCKHOLDERS' EQUITY Member capital — 798,882,931 511,164,323 (1,310,047,254 ) — Redeemable preferred stock and Series 2 redeemable preferred stock 215,973,039 — — — 215,973,039 Common stock 33,018 — — — 33,018 Additional paid-in capital 249,662,168 — — — 249,662,168 Accumulated deficit (184,610,343 ) — — — (184,610,343 ) TOTAL STOCKHOLDERS' EQUITY 281,057,882 798,882,931 511,164,323 (1,310,047,254 ) 281,057,882 TOTAL LIABILITIES AND EQUITY $ 1,316,261,986 $ 802,150,533 $ 672,501,786 $ (1,310,047,254 ) $ 1,480,867,051 |
Schedule of condensed consolidating statements of operations | For the three months ended September 30, 2019 Parent Guarantor Non-Guarantor Eliminations Consolidated REVENUE Gain (loss) on life insurance policies, net $ — $ 2,231,897 $ 15,560,427 $ — $ 17,792,324 Interest and other income 257,050 3,825,547 336,058 — 4,418,655 TOTAL REVENUE 257,050 6,057,444 15,896,485 — 22,210,979 EXPENSES Interest expense 24,573,192 — 3,716,478 — 28,289,670 Employee compensation and benefits 6,374,457 2,080,646 681,721 — 9,136,824 Legal and professional fees 1,816,531 297,254 480,682 — 2,594,467 Other expenses 2,094,036 586,601 868,628 — 3,549,265 TOTAL EXPENSES 34,858,216 2,964,501 5,747,509 — 43,570,226 INCOME (LOSS) BEFORE EQUITY IN INCOME OF SUBSIDIARIES (34,601,166 ) 3,092,943 10,148,976 — (21,359,247 ) EQUITY IN INCOME OF SUBSIDIARIES 13,241,919 11,448,079 — (24,689,998 ) — INCOME (LOSS) BEFORE INCOME TAXES (21,359,247 ) 14,541,022 10,148,976 (24,689,998 ) (21,359,247 ) INCOME TAX EXPENSE (BENEFIT) — — — — — NET INCOME (LOSS) BEFORE EARNINGS (LOSS) FROM EQUITY METHOD INVESTMENT (21,359,247 ) 14,541,022 10,148,976 (24,689,998 ) (21,359,247 ) Earnings (loss) from equity method investment 955,751 — — — 955,751 NET INCOME (LOSS) (20,403,496 ) 14,541,022 10,148,976 (24,689,998 ) (20,403,496 ) Preferred stock dividends 4,231,641 — — — 4,231,641 NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS $ (24,635,137 ) $ 14,541,022 $ 10,148,976 $ (24,689,998 ) $ (24,635,137 ) For the three months ended September 30, 2018 Parent Guarantor Non-Guarantor Eliminations Consolidated REVENUE Gain on life insurance policies, net $ — $ 4,122,153 $ 11,599,360 $ — $ 15,721,513 Interest and other income 3,333,424 1,700,414 181,677 — 5,215,515 TOTAL REVENUE 3,333,424 5,822,567 11,781,037 — 20,937,028 EXPENSES Interest expense 16,739,120 — 5,060,212 — 21,799,332 Employee compensation and benefits 2,292,251 3,086,682 169,838 — 5,548,771 Legal and professional fees 483,512 221,613 716,839 — 1,421,964 Other expenses 1,590,823 455,800 642,347 — 2,688,970 TOTAL EXPENSES 21,105,706 3,764,095 6,589,236 — 31,459,037 INCOME (LOSS) BEFORE EQUITY IN INCOME OF SUBSIDIARIES (17,772,282 ) 2,058,472 5,191,801 — (10,522,009 ) EQUITY IN INCOME OF SUBSIDIARIES 7,250,273 6,266,481 — (13,516,754 ) — INCOME (LOSS) BEFORE INCOME TAXES (10,522,009 ) 8,324,953 5,191,801 (13,516,754 ) (10,522,009 ) INCOME TAX EXPENSE (BENEFIT) — — — — — NET INCOME (LOSS) (10,522,009 ) 8,324,953 5,191,801 (13,516,754 ) (10,522,009 ) Preferred stock dividends 4,313,542 — — — 4,313,542 NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS $ (14,835,551 ) $ 8,324,953 $ 5,191,801 $ (13,516,754 ) $ (14,835,551 ) For the nine months ended September 30, 2019 Parent Guarantor Non-Guarantor Eliminations Consolidated REVENUE Gain (loss) on life insurance policies, net $ — $ 6,783,129 $ 52,435,403 $ — $ 59,218,532 Interest and other income 1,438,068 9,852,224 929,470 — 12,219,762 TOTAL REVENUE 1,438,068 16,635,353 53,364,873 — 71,438,294 EXPENSES Interest expense 71,753,380 — 11,998,231 — 83,751,611 Employee compensation and benefits 13,991,440 5,791,512 1,301,863 — 21,084,815 Legal and professional fees 6,146,443 1,212,791 2,903,996 — 10,263,230 Other expenses 8,548,645 1,549,259 2,217,530 — 12,315,434 TOTAL EXPENSES 100,439,908 8,553,562 18,421,620 — 127,415,090 INCOME (LOSS) BEFORE EQUITY IN INCOME OF SUBSIDIARIES (99,001,840 ) 8,081,791 34,943,253 — (55,976,796 ) EQUITY IN INCOME OF SUBSIDIARIES 43,025,044 39,802,437 — (82,827,481 ) — INCOME (LOSS) BEFORE INCOME TAXES (55,976,796 ) 47,884,228 34,943,253 (82,827,481 ) (55,976,796 ) INCOME TAX EXPENSE (BENEFIT) — — — — — NET INCOME (LOSS) BEFORE EARNINGS (LOSS) FROM EQUITY METHOD INVESTMENT (55,976,796 ) 47,884,228 34,943,253 (82,827,481 ) (55,976,796 ) Earnings (loss) from equity method investment (371,281 ) — — — (371,281 ) NET INCOME (LOSS) (56,348,077 ) 47,884,228 34,943,253 (82,827,481 ) (56,348,077 ) Preferred stock dividends 12,806,173 — — — 12,806,173 NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS $ (69,154,250 ) $ 47,884,228 $ 34,943,253 $ (82,827,481 ) $ (69,154,250 ) For the nine months ended September 30, 2018 Parent Guarantor Non-Guarantor Eliminations Consolidated REVENUE Gain (loss) on life insurance policies, net $ — $ 12,135,832 $ 40,794,176 $ — $ 52,930,008 Interest and other income 4,447,322 1,726,938 689,380 — 6,863,640 TOTAL REVENUE 4,447,322 13,862,770 41,483,556 — 59,793,648 EXPENSES Interest expense 38,758,326 — 16,252,193 — 55,010,519 Employee compensation and benefits 5,629,344 5,881,219 1,016,576 — 12,527,139 Legal and professional fees 1,290,614 688,003 1,772,704 — 3,751,321 Other expenses 5,082,525 1,397,314 1,782,485 — 8,262,324 TOTAL EXPENSES 50,760,809 7,966,536 20,823,958 — 79,551,303 INCOME (LOSS) BEFORE EQUITY IN INCOME OF SUBSIDIARIES (46,313,487 ) 5,896,234 20,659,598 — (19,757,655 ) EQUITY IN INCOME OF SUBSIDIARIES 26,555,832 23,824,330 — (50,380,162 ) — INCOME (LOSS) BEFORE INCOME TAXES (19,757,655 ) 29,720,564 20,659,598 (50,380,162 ) (19,757,655 ) INCOME TAX EXPENSE (BENEFIT) — — — — — NET INCOME (LOSS) (19,757,655 ) 29,720,564 20,659,598 (50,380,162 ) (19,757,655 ) Preferred stock dividends 12,356,513 — — — 12,356,513 NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS $ (32,114,168 ) $ 29,720,564 $ 20,659,598 $ (50,380,162 ) $ (32,114,168) |
Schedule of condensed consolidating statements of cash flows | For the three months ended September 30, 2019 Parent Guarantor Non-Guarantor Eliminations Consolidated CASH FLOWS FROM OPERATING ACTIVITIES Net income (loss) $ (20,403,496 ) $ 14,541,022 $ 10,148,976 $ (24,689,998 ) $ (20,403,496 ) Adjustments to reconcile net income (loss) to net cash flows from operating activities: Equity of subsidiaries (13,241,919 ) (11,448,079 ) — 24,689,998 — Change in fair value of life insurance policies — (2,251,068 ) (11,929,902 ) — (14,180,970 ) Amortization of deferred financing and issuance costs 3,196,852 — 263,755 — 3,460,607 Accretion of discount on financing receivables from affiliates — (427,914 ) — — (427,914 ) Provision for uncollectible policy benefits receivable — — 200,897 — 200,897 (Earnings) Loss from equity method investment (955,751 ) — — — (955,751 ) Stock-based compensation 700,688 — — — 700,688 (Increase) decrease in operating assets: Life insurance policy benefits receivable — 570,197 (12,563,873 ) — (11,993,676 ) Accrued interest on financing receivables — (2,078,175 ) — — (2,078,175 ) Other assets 517,880 (201,431 ) 73,734 — 390,183 Increase (decrease) in operating liabilities: Accounts payable and other accrued expenses (3,366,349 ) 649,937 (962,907 ) — (3,679,319 ) NET CASH FLOWS USED IN OPERATING ACTIVITIES (33,552,095 ) (645,511 ) (14,769,320 ) — (48,966,926 ) CASH FLOWS FROM INVESTING ACTIVITIES Investment in life insurance policies — — (710,863 ) — (710,863 ) Carrying value of matured life insurance policies — 1,347,089 5,292,830 — 6,639,919 Financing receivables from affiliates issued — — — — — Equity method investment acquired — — — — — Payment of capital contributions (497,879 ) (9,715,465 ) — 10,213,344 — NET CASH FLOWS USED IN INVESTING ACTIVITIES (497,879 ) (8,368,376 ) 4,581,967 10,213,344 5,929,056 CASH FLOWS FROM FINANCING ACTIVITIES Borrowings on senior debt — — 3,937,020 — 3,937,020 Repayments of senior debt — — (2,079,600 ) — (2,079,600 ) Proceeds from issuance of L Bonds 107,012,114 — — — 107,012,114 Payments for issuance and redemptions of L Bonds (61,679,235 ) — — — (61,679,235 ) Issuance (repurchase) of common stock — — — — — Payments for redemption of preferred stock (2,920,292 ) — — — (2,920,292 ) Preferred stock dividends (4,231,641 ) — — — (4,231,641 ) Issuance of member capital — (1,010,542 ) 11,223,886 (10,213,344 ) — NET CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES 38,180,946 (1,010,542 ) 13,081,306 (10,213,344 ) 40,038,366 NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH 4,130,972 (10,024,429 ) 2,893,953 — (2,999,504 ) CASH, CASH EQUIVALENTS AND RESTRICTED CASH BEGINNING OF PERIOD 57,570,832 13,807,424 5,506,417 — 76,884,673 END OF PERIOD $ 61,701,804 $ 3,782,995 $ 8,400,370 $ — $ 73,885,169 For the three months ended September 30, 2018 Parent Guarantor Non-Guarantor Eliminations Consolidated CASH FLOWS FROM OPERATING ACTIVITIES Net income (loss) $ (10,522,009 ) $ 8,324,953 $ 5,191,801 $ (13,516,754 ) $ (10,522,009 ) Adjustments to reconcile net income (loss) to net cash flows from operating activities: Equity of subsidiaries (7,250,273 ) (6,266,481 ) — 13,516,754 — Change in fair value of life insurance policies — (3,485,452 ) (21,354,115 ) — (24,839,567 ) Amortization of deferred financing and issuance costs 2,311,567 — 263,755 — 2,575,322 Amortization of discount or premium on financing receivables 251,672 (251,672 ) — — — Stock-based compensation 528,461 — — — 528,461 (Increase) decrease in operating assets: Accrued interest on financing receivables (2,839,926 ) (1,444,444 ) — — (4,284,370 ) Life insurance policy benefits receivable — (2,000,000 ) 18,562,304 — 16,562,304 Other assets (82,158 ) 98,900 305,226 — 321,968 Increase (decrease) in operating liabilities: Account payable and other accrued expenses 2,931,894 (384,380 ) (1,157,273 ) — 1,390,241 NET CASH FLOWS USED IN OPERATING ACTIVITIES (14,670,772 ) (5,408,576 ) 1,811,698 — (18,267,650 ) CASH FLOWS FROM INVESTING ACTIVITIES Investment in life insurance policies — (11,368,457 ) (31,523,307 ) — (42,891,764 ) Carrying value of matured life insurance policies — 669,349 1,656,640 — 2,325,989 Equity method investment acquired (1,421,059 ) — — — (1,421,059 ) Payment of capital contributions (59,567,886 ) (47,346,065 ) — 106,913,951 — NET CASH FLOWS USED IN INVESTING ACTIVITIES (60,988,945 ) (58,045,173 ) (29,866,667 ) 106,913,951 (41,986,834 ) CASH FLOWS FROM FINANCING ACTIVITIES Borrowings on senior debt — — — — — Repayments of senior debt — — (18,425,136 ) — (18,425,136 ) Proceeds from issuance of L Bonds 68,884,369 — — — 68,884,369 Payments for issuance and redemptions of L Bonds (20,195,657 ) — — — (20,195,657 ) Issuance (redemption) of common stock 682,954 — — — 682,954 Common stock dividends (25,709,412 ) — — — (25,709,412 ) Proceeds from issuance of convertible preferred stock 50,000,000 — — — 50,000,000 Payments for redemption of preferred stock (821,778 ) — — — (821,778 ) Preferred stock dividends (4,313,542 ) — — — (4,313,542 ) Issuance of member capital — 58,589,352 48,324,599 (106,913,951 ) — NET CASH FLOWS PROVIDED BY FINANCING ACTIVITIES 68,526,934 58,589,352 29,899,463 (106,913,951 ) 50,101,798 NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH (7,132,783 ) (4,864,397 ) 1,844,494 — (10,152,686 ) CASH, CASH EQUIVALENTS AND RESTRICTED CASH BEGINNING OF PERIOD 123,017,408 6,195,102 1,883,603 — 131,096,113 END OF PERIOD $ 115,884,625 $ 1,330,705 $ 3,728,097 $ — $ 120,943,427 For the nine months ended September 30, 2019 Parent Guarantor Non-Guarantor Eliminations Consolidated CASH FLOWS FROM OPERATING ACTIVITIES Net income (loss) $ (56,348,077 ) $ 47,884,228 $ 34,943,253 $ (82,827,481 ) $ (56,348,077 ) Adjustments to reconcile net income (loss) to net cash flows from operating activities: Equity of subsidiaries (43,025,044 ) (39,802,437 ) — 82,827,481 — Change in fair value of life insurance policies — (8,713,865 ) (39,317,330 ) — (48,031,195 ) Amortization of deferred financing and issuance costs 9,191,110 — 791,265 — 9,982,375 Accretion of discount on financing receivables from affiliates — (1,292,434 ) — — (1,292,434 ) Provision for uncollectible policy benefit receivable — — 200,897 — 200,897 (Earnings) Loss from equity method investment 371,281 — — — 371,281 Stock-based compensation 1,365,219 — — — 1,365,219 (Increase) decrease in operating assets: Life insurance policy benefits receivable — 4,038,800 (5,148,186 ) — (1,109,386 ) Accrued interest on financing receivables — (5,123,774 ) — — (5,123,774 ) Other assets (1,048,310 ) (112,467 ) (3,395,677 ) — (4,556,454 ) Increase (decrease) in operating liabilities: Accounts payable and other accrued expenses (443,269 ) (252,502 ) (7,736,395 ) — (8,432,166 ) NET CASH FLOWS USED IN OPERATING ACTIVITIES (89,937,090 ) (3,374,451 ) (19,662,173 ) — (112,973,714 ) CASH FLOWS FROM INVESTING ACTIVITIES Investment in life insurance policies — (8,682,044 ) (23,567,353 ) — (32,249,397 ) Carrying value of matured life insurance policies — 3,403,008 17,281,959 — 20,684,967 Financing receivables from affiliates issued — (50,000,000 ) — — (50,000,000 ) Equity method investment acquired (10,000,000 ) — — — (10,000,000 ) Payment of capital contributions (102,353,486 ) (42,021,014 ) — 144,374,500 — NET CASH FLOWS USED IN INVESTING ACTIVITIES (112,353,486 ) (97,300,050 ) (6,285,394 ) 144,374,500 (71,564,430 ) CASH FLOWS FROM FINANCING ACTIVITIES Borrowings on senior debt — — 3,937,020 — 3,937,020 Repayments of senior debt — — (21,648,615 ) — (21,648,615 ) Proceeds from issuance of L Bonds 278,238,656 — — — 278,238,656 Payments for issuance and redemptions of L Bonds (108,656,765 ) — — — (108,656,765 ) Issuance (repurchase) of common stock 57,518 — — — 57,518 Payments for redemption of preferred stock (6,134,538 ) — — — (6,134,538 ) Preferred stock dividends (12,806,173 ) — — — (12,806,173 ) Issuance of member capital — 97,007,915 47,366,585 (144,374,500 ) — NET CASH FLOWS PROVIDED BY FINANCING ACTIVITIES 150,698,698 97,007,915 29,654,990 (144,374,500 ) 132,987,103 NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH (51,591,878 ) (3,666,586 ) 3,707,423 — (51,551,041 ) CASH, CASH EQUIVALENTS AND RESTRICTED CASH BEGINNING OF PERIOD 113,293,682 7,449,581 4,692,947 — 125,436,210 END OF PERIOD $ 61,701,804 $ 3,782,995 $ 8,400,370 $ — $ 73,885,169 For the nine months ended September 30, 2018 Parent Guarantor Non-Guarantor Eliminations Consolidated CASH FLOWS FROM OPERATING ACTIVITIES Net income (loss) $ (19,757,655 ) $ 29,720,564 $ 20,659,598 $ (50,380,162 ) $ (19,757,655 ) Adjustments to reconcile net income (loss) to net cash flows from operating activities: Equity of subsidiaries (26,555,832 ) (23,824,330 ) — 50,380,162 — Change in fair value of life insurance policies — (9,691,293 ) (46,367,043 ) — (56,058,336 ) Amortization of deferred financing and issuance costs 6,450,018 — 791,265 — 7,241,283 Amortization of discount or premium on financing receivables 251,672 (251,672 ) — — — Stock-based compensation 788,865 — — — 788,865 (Increase) decrease in operating assets: Accrued interest on financing receivable (2,839,926 ) (1,444,444 ) — — (4,284,370 ) Life insurance policy benefits receivable — (1,300,000 ) 7,486,065 — 6,186,065 Other assets (2,477,789 ) 164,028 826,523 — (1,487,238 ) Increase (decrease) in operating liabilities: Account payable and other accrued expenses 3,832,942 (365,125 ) (3,341,098 ) — 126,719 NET CASH FLOWS USED IN OPERATING ACTIVITIES (40,307,705 ) (6,992,272 ) (19,944,690 ) — (67,244,667 ) CASH FLOWS FROM INVESTING ACTIVITIES Investment in life insurance policies — (26,916,457 ) (71,524,071 ) — (98,440,528 ) Carrying value of matured life insurance policies — 2,623,779 10,933,853 — 13,557,632 Equity method investment acquired (1,421,059 ) — — — (1,421,059 ) Payment of capital contributions (136,620,599 ) (112,777,113 ) — 249,397,712 — NET CASH FLOWS USED IN INVESTING ACTIVITIES (138,041,658 ) (137,069,791 ) (60,590,218 ) 249,397,712 (86,303,955 ) CASH FLOWS FROM FINANCING ACTIVITIES Borrowings on senior debt — — 12,903,166 — 12,903,166 Repayments of senior debt — — (63,463,452 ) — (63,463,452 ) Proceeds from issuance of L Bonds 166,081,914 — — — 166,081,914 Payments for issuance and redemptions of L Bonds (46,151,926 ) — — — (46,151,926 ) Issuance (redemption) of common stock 682,954 — — — 682,954 Common stock dividends (25,709,412 ) — — — (25,709,412 ) Proceeds from issuance of convertible preferred stock 50,000,000 50,000,000 Proceeds from issuance of redeemable preferred stock 56 ,238,128 — — — 56 ,238,128 Payments for issuance of preferred stock (4,142,294 ) — — — (4,142,294 ) Payments for redemption of preferred stock (2,361,692 ) — — — (2,361,692 ) Preferred stock dividends (12,356,513 ) — — — (12,356,513 ) Issuance of member capital — 134,538,735 114,858,977 (249,397,712 ) — NET CASH FLOWS PROVIDED BY FINANCING ACTIVITIES 182,281,159 134,538,735 64,298,691 (249,397,712 ) 131,720,873 NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH 3,931,796 (9,523,328 ) (16,236,217 ) — (21,827,749 ) CASH, CASH EQUIVALENTS AND RESTRICTED CASH BEGINNING OF PERIOD 111,952,829 10,854,033 19,964,314 — 142,771,176 END OF PERIOD $ 115,884,625 $ 1,330,705 $ 3,728,097 $ — $ 120,943,427 |
Concentration (Tables)
Concentration (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Risks and Uncertainties [Abstract] | |
Schedule of the face value of insurance policies | Life Insurance Company September 30, December 31, John Hancock 14.02 % 13.71 % Lincoln National 11.22 % 11.33 % AXA Equitable 10.65 % 10.83 % |
Schedule of the number of insurance contracts | State of Residence September 30, December 31, California 17.38 % 18.02 % Florida 14.91 % 15.34 % |
Nature of Business and Summar_3
Nature of Business and Summary of Significant Accounting Policies (Details) - USD ($) | Apr. 15, 2019 | Aug. 10, 2018 | Dec. 28, 2018 | Aug. 10, 2018 | Sep. 30, 2019 | Jan. 02, 2019 | Dec. 31, 2018 | Sep. 30, 2018 |
Nature of Business and Summary of Significant Accounting Policies (Textual) | ||||||||
Percentage acquired investment | 89.90% | |||||||
Security acquired | $ 38,600,000 | $ 38,600,000 | ||||||
Prepaid expenses | 6,000,000 | 1,200,000 | ||||||
Net fixed assets | 1,300,000 | 1,500,000 | ||||||
Security deposits | 600,000 | 600,000 | ||||||
Cash advances | 500,000 | |||||||
Other miscellaneous assets | 3,900,000 | 3,100,000 | ||||||
Initial transfer of beneficient transaction, description | ● GWG issued to the Seller Trust L Bonds due 2023 (the "Seller Trust L Bonds") in an aggregate principal amount of $403,234,866, as more fully described below; ● Beneficient purchased 5,000,000 shares of GWG's Series B Convertible Preferred Stock, par value $0.001 per share and having a stated value of $10 per share ("Series B"), for cash consideration of $50,000,000, which shares were subsequently transferred to the Seller Trusts; ● in consideration for GWG and GWG Life entering into the Master Exchange Agreement and consummating the transactions contemplated thereby, BEN LP, as borrower, entered into a commercial loan agreement (the "Commercial Loan Agreement") with GWG Life, as lender, providing for a loan in a principal amount of $200,000,000 (the "Commercial Loan"); ● BEN LP delivered to GWG a promissory note (the "Exchangeable Note") in the principal amount of $162,911,379; and ● the Seller Trusts delivered to GWG 4,032,349 common units of BEN LP at an assumed value of $10 per common unit. | |||||||
Final closing of beneficient transaction, description | The final closing of the transaction occurred and the following actions took place (the "Final Closing" and the date upon which the Final Closing occurs, the "Final Closing Date"): ● in accordance with the Master Exchange Agreement, and based on the net asset value of alternative asset financings as of the Final Closing Date, effective as of the Initial Transfer Date, (i) the principal amount of the Commercial Loan was reduced to $181,974,314, (ii) the principal amount of the Exchangeable Note was reduced to $148,228,432, and (iii) the principal amount of the Seller Trust L Bonds was reduced to $366,892,000; ● the Seller Trusts refunded to GWG $840,430 in interest paid on the Seller Trust L Bonds related to the Seller Trust L Bonds that were issued as of the Initial Transfer Date but cancelled, effective as of the Initial Transfer Date; ● the accrued interest on the Commercial Loan and the Exchangeable Note was added to the principal amount of the Commercial Loan, as a result of which the principal amount of the Commercial Loan as of the Final Closing Date was $192,507,946; ● the Seller Trusts transferred to GWG an aggregate of 21,650,087 common units of BEN LP and GWG received 14,822,843 common units of BEN LP in exchange for the Exchangeable Note, upon completion of which GWG owned (including the 4,032,349 common units received by GWG on the Initial Transfer Date) 40,505,279 common units of BEN LP; ● BEN LP issued to GWG an option (the "Option Agreement") to acquire the number of common units of BEN LP, interests or other property that would be received by a holder of the NPC-A Prime limited partnership interests of Beneficient Company Holdings, L.P., an affiliate of BEN LP ("Beneficient Holdings"); and ● GWG issued to the Seller Trusts 27,013,516 shares of GWG common stock (including 5,000,000 shares issued upon conversion of the Series B). | |||||||
Purchase and contribution agreement, description | The closing of the Purchase and Contribution Transaction occurred on April 26, 2019. Prior to or in connection with such closing: ● GWG's bylaws were amended to increase the maximum number of directors of GWG from nine to 13, and the actual number of directors comprising the Board of Director was increased from seven to 11. ● All seven members of GWG's Board of Directors prior to the closing resigned as directors of GWG, and 11 individuals designated by Beneficient were appointed as directors of GWG, leaving two board seats vacant after the closing. ● Jon R. Sabes resigned from all officer positions he held with GWG or any of its subsidiaries prior to the closing, other than his position as Chief Executive Officer of GWG's technology focused wholly owned subsidiaries, Life Epigenetics and youSurance. ● Steven F. Sabes resigned from all officer positions he held with GWG or any of its subsidiaries prior to the closing, except as Chief Operating Officer of Life Epigenetics. ● The resignations of Messrs. Jon and Steven Sabes included a full waiver and forfeit of (i) any severance that may be payable by GWG or any of its subsidiaries in connection with such resignations or the Purchase and Contribution Transaction and (ii) all equity awards of GWG held by either of them. ● Murray T. Holland was appointed as Chief Executive Officer of GWG. ● GWG entered into performance share unit agreements with certain employees of GWG pursuant to which such employees will collectively receive up to $4.5 million in bonuses under certain terms and conditions, including, among others, that such employees remain employed by GWG or one of its subsidiaries (or, if no longer employed, such employment was terminated by GWG other than for cause, as such term is defined in the performance share unit agreement) for a period of 120 days following the closing. ● The stockholders agreement that was entered into on the Final Closing Date was terminated by mutual consent of the parties thereto. ● BCC and AltiVerse executed and delivered a Consent and Joinder to the Amended and Restated Pledge and Security Agreement dated October 23, 2017 by and among the Company, GWG Life, LLC, Messrs. Jon and Steven Sabes and the Bank of Utah, which provides that the shares of GWG's common stock acquired by BCC and AltiVerse pursuant to the Purchase and Contribution Agreement will continue to be pledged as collateral security for GWG's obligations owing in respect of the L Bonds and Seller Trust L Bonds. | |||||||
GWG common shares transferred | 3,952,155 | |||||||
Cash and cash equivalents | 65,680,464 | 114,587,084 | $ 117,900,000 | |||||
Restricted cash | $ 8,204,705 | 10,849,126 | $ 3,100,000 | |||||
Equity method investment, description | The SEC staff's position is that investments in limited partnerships of greater than 3% to 5% are considered more than minor and, therefore, should be accounted for using the equity method. | |||||||
Right-of-use assets | $ 900,000 | |||||||
Deferred rent | 700,000 | |||||||
Lease liabilities | $ 1,498,000 | $ 1,600,000 | ||||||
Allowance for uncollectible receivables | 4,500,000 | |||||||
Option Agreement [Member] | ||||||||
Nature of Business and Summary of Significant Accounting Policies (Textual) | ||||||||
Other assets | $ 38,600,000 | $ 38,600,000 | ||||||
Series B Convertible Preferred Stock [Member] | ||||||||
Nature of Business and Summary of Significant Accounting Policies (Textual) | ||||||||
Exchangeable note common units price per shares | $ 10 | |||||||
Converted shares of preferred stock | 5,000,000 | |||||||
Exchangeable Note [Member] | ||||||||
Nature of Business and Summary of Significant Accounting Policies (Textual) | ||||||||
Interest payable rate | 12.40% | |||||||
Common unit of beneficient for exchangeable note | 14,822,843 | |||||||
Commercial Loan [Member] | ||||||||
Nature of Business and Summary of Significant Accounting Policies (Textual) | ||||||||
Description of commercial loan | The $192,508,000 principal amount under the Commercial Loan is due on August 9, 2023; however, is extendable for two five-year terms. See Note 6 for a full description of the terms of the Commercial Loan. BEN LP's obligations under the Commercial Loan are unsecured. The principal amount of the Commercial Loan bears interest at 5.0% per year. From and after the Final Closing Date, one-half of the interest, or 2.5% per year, is due and payable monthly in cash, and one-half of the interest, or 2.5% per year, accrues and compounds annually on each anniversary date of the Final Closing Date and becomes due and payable in full in cash on the maturity date. | |||||||
Interest payable rate | 5.00% | |||||||
Seller Trusts and Beneficient [Member] | ||||||||
Nature of Business and Summary of Significant Accounting Policies (Textual) | ||||||||
Percentage acquired investment | 89.90% | |||||||
Common units of beneficient | 40,505,279 | |||||||
Seller Trust L Bonds [Member] | ||||||||
Nature of Business and Summary of Significant Accounting Policies (Textual) | ||||||||
Maturity date | Aug. 9, 2023 | Aug. 9, 2023 | ||||||
Interest rate | 7.50% | 7.50% |
Correction of an Immaterial E_2
Correction of an Immaterial Error (Details) - Senior Debt [Member] - USD ($) | 3 Months Ended | 9 Months Ended |
Sep. 30, 2018 | Sep. 30, 2018 | |
Correction of an Immaterial Error (Textual) | ||
Net repayments of senior debt | $ 18,400,000 | $ 50,600,000 |
Gross borrowings on senior debt | 0 | 12,900,000 |
Repayments of senior debt | $ 18,400,000 | $ 63,500,000 |
Restrictions on Cash (Details)
Restrictions on Cash (Details) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
Restrictions on Cash (Textual) | ||
Restricted cash collection and payment accounts | $ 8,112,000 | $ 4,164,000 |
Escrow account, balance | $ 93,000 | $ 6,685,000 |
Investment in Life Insurance _3
Investment in Life Insurance Policies (Details) | 9 Months Ended | ||
Sep. 30, 2019USD ($)PoliciesLivesSmokers | Dec. 31, 2018USD ($)Policies | ||
Investments, All Other Investments [Abstract] | |||
Total life insurance portfolio face value of policy benefits | $ 2,064,156,000 | $ 2,047,992,000 | |
Average face value per policy | 1,758,000 | ||
Average face value per insured life | $ 1,887,000 | ||
Average age of insured (years) | [1] | 82 years 3 months 19 days | |
Average life expectancy estimate (years) | [1] | 7 years 3 months 19 days | |
Total number of policies | Policies | 1,174 | 1,154 | |
Number of unique lives | Lives | 1,094 | ||
Demographics | 74% Male; 26% Female | ||
Number of smokers | Smokers | 45 | ||
Largest policy as % of total portfolio face value | 0.64% | ||
Average policy as % of total portfolio face value | 0.09% | ||
Average annual premium as % of face value | 3.20% | ||
[1] | Averages presented in the table are weighted averages by face amount of policy benefits. |
Investment in Life Insurance _4
Investment in Life Insurance Policies (Details 1) | Sep. 30, 2019USD ($)Policies | Dec. 31, 2018USD ($)Policies |
Summary of policies according to estimated life expectancy dates | ||
Number of Policies, 2019 | Policies | 3 | 9 |
Number of Policies, 2020 | Policies | 19 | 41 |
Number of Policies, 2021 | Policies | 62 | 81 |
Number of Policies, 2022 | Policies | 109 | 104 |
Number of Policies, 2023 | Policies | 121 | 109 |
Number of Policies, 2024 | Policies | 111 | 107 |
Number of Policies, Thereafter | Policies | 749 | 703 |
Number of Policies, Totals | Policies | 1,174 | 1,154 |
Estimated Fair Value, 2019 | $ 3,232,000 | $ 6,380,000 |
Estimated Fair Value, 2020 | 12,533,000 | 46,338,000 |
Estimated Fair Value, 2021 | 75,255,000 | 68,836,000 |
Estimated Fair Value, 2022 | 109,003,000 | 97,231,000 |
Estimated Fair Value, 2023 | 114,084,000 | 93,196,000 |
Estimated Fair Value, 2024 | 98,450,000 | 84,150,000 |
Estimated Fair Value, Thereafter | 394,961,000 | 351,791,000 |
Estimated Fair Value, Totals | 807,518,000 | 747,922,000 |
Face Value, 2019 | 3,375,000 | 7,305,000 |
Face Value, 2020 | 14,917,000 | 59,939,000 |
Face Value, 2021 | 100,575,000 | 108,191,000 |
Face Value, 2022 | 180,986,000 | 177,980,000 |
Face Value, 2023 | 213,293,000 | 185,575,000 |
Face Value, 2024 | 217,355,000 | 211,241,000 |
Face Value, Thereafter | 1,333,655,000 | 1,297,761,000 |
Face Value, Totals | $ 2,064,156,000 | $ 2,047,992,000 |
Investment in Life Insurance _5
Investment in Life Insurance Policies (Details 2) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | ||
Schedule of reconciliation of gain on life insurance policies | |||||
Change in estimated probabilistic cash flows | [1] | $ 17,908,000 | $ 19,069,000 | $ 52,161,000 | $ 55,483,000 |
Unrealized gain on acquisitions | [2] | 472,000 | 9,021,000 | 6,775,000 | 21,790,000 |
Premiums and other annual fees | (17,219,000) | (14,765,000) | (49,055,000) | (39,670,000) | |
Change in discount rates | [3],[4] | ||||
Change in life expectancy evaluation | [5] | 73,000 | (4,890,000) | ||
Face value of matured policies | 27,470,000 | 7,973,000 | 80,927,000 | 50,100,000 | |
Fair value of matured policies | (10,839,000) | (5,650,000) | (31,590,000) | (29,883,000) | |
Gain (loss) on life insurance policies, net | $ 17,792,000 | $ 15,721,000 | $ 59,218,000 | $ 52,930,000 | |
[1] | Change in fair value of expected future cash flows relating to our investment in life insurance policies that are not specifically attributable to changes in life expectancy, discount rate changes or policy maturity events. | ||||
[2] | Gain resulting from fair value in excess of the purchase price for life insurance policies acquired during the reporting period. | ||||
[3] | The discount rate applied to estimate the fair value of the portfolio of life insurance policies we own was 8.25% at September 30 and June 30, 2019 and December 31, 2018, and was 10.45% at September 30 and June 30, 2018 and December 31, 2017. | ||||
[4] | The discount rate of 8.25% is based on our "longest life expectancy" methodology (among other factors) which was adopted at December 31, 2018, whereas the discount rate of 10.45% is based on our historical "average life expectancy methodology" (among other factors). | ||||
[5] | The change in fair value due to updating life expectancy estimates on certain life insurance policies in our portfolio. |
Investment in Life Insurance _6
Investment in Life Insurance Policies (Details 3) | Sep. 30, 2019USD ($) |
Premiums [Member] | |
Schedule of estimated premium payments and servicing fees | |
Three months ending December 31, 2019 | $ 16,553,000 |
2020 | 76,305,000 |
2021 | 88,684,000 |
2022 | 101,706,000 |
2023 | 113,838,000 |
2024 | 123,793,000 |
Total | 520,879,000 |
Servicing [Member] | |
Schedule of estimated premium payments and servicing fees | |
Three months ending December 31, 2019 | 430,000 |
2020 | 1,719,000 |
2021 | 1,719,000 |
2022 | 1,719,000 |
2023 | 1,719,000 |
2024 | 1,719,000 |
Total | 9,025,000 |
Total [Member] | |
Schedule of estimated premium payments and servicing fees | |
Three months ending December 31, 2019 | 16,983,000 |
2020 | 78,024,000 |
2021 | 90,403,000 |
2022 | 103,425,000 |
2023 | 115,557,000 |
2024 | 125,512,000 |
Total | $ 529,904,000 |
Investment in Life Insurance _7
Investment in Life Insurance Policies (Details Textual) - USD ($) | 3 Months Ended | 6 Months Ended | 9 Months Ended | 12 Months Ended | ||||
Sep. 30, 2019 | Sep. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | |
Investment in Life Insurance Policies (Textual) | ||||||||
Life insurance policies face value | $ 1,000,000 | |||||||
Benefits recognized from insurance policies | $ 27,470,000 | $ 7,973,000 | 80,927,000 | $ 50,100,000 | ||||
Carrying value of life insurance policies | 6,640,000 | 2,326,000 | 20,685,000 | 13,558,000 | ||||
Realized gains from life insurance policies | $ 20,830,000 | $ 5,647,000 | $ 60,242,000 | $ 36,542,000 | ||||
Discount rate applied to portfolio | 8.25% | 10.45% | 8.25% | 10.45% | 8.25% | 10.45% | 8.25% | 10.45% |
Fair Value Definition and Hie_3
Fair Value Definition and Hierarchy (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Schedule of reconciliation of investments in life insurance policies | ||||
Beginning balance | $ 799,266,000 | $ 726,063,000 | $ 747,922,000 | $ 650,527,000 |
Purchases | 711,000 | 42,892,000 | 32,250,000 | 98,442,000 |
Maturities (initial cost basis) | (6,640,000) | (2,326,000) | (20,685,000) | (13,558,000) |
Net change in fair value | 14,181,000 | 24,840,000 | 48,031,000 | 56,058,000 |
Ending balance | $ 807,518,000 | $ 791,469,000 | $ 807,518,000 | $ 791,469,000 |
Fair Value Definition and Hie_4
Fair Value Definition and Hierarchy (Details 1) - USD ($) | 3 Months Ended | 6 Months Ended | 9 Months Ended | 12 Months Ended | |||||
Sep. 30, 2019 | Sep. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | ||
Fair value of our portfolio of life insurance policies | |||||||||
Discount rate | 8.25% | 10.45% | 8.25% | 10.45% | 8.25% | 10.45% | 8.25% | 10.45% | |
Life Insurance Policies [Member] | |||||||||
Fair value of our portfolio of life insurance policies | |||||||||
Weighted-average age of insured, years | [1] | 82 years 3 months 19 days | 82 years 1 month 6 days | ||||||
Weighted-average life expectancy, months | [1] | 87 years 7 months 6 days | 93 years 2 months 12 days | ||||||
Average face amount per policy | $ 1,758,000 | $ 1,758,000 | $ 1,775,000 | ||||||
Discount rate | 8.25% | 8.25% | |||||||
Life Insurance Policies [Member] | Minimum [Member] | |||||||||
Fair value of our portfolio of life insurance policies | |||||||||
Age of insured range, years | 62 years | 61 years | |||||||
Life expectancy range, months | 1 month | 1 month | |||||||
Life Insurance Policies [Member] | Maximum [Member] | |||||||||
Fair value of our portfolio of life insurance policies | |||||||||
Age of insured range, years | 101 years | 100 years | |||||||
Life expectancy range, months | 243 months | 251 months | |||||||
[1] | Weighted-average by face amount of policy benefits |
Fair Value Definition and Hie_5
Fair Value Definition and Hierarchy (Details 2) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
Change in Discount Rate [Member] | minus 2% [Member] | ||
Summary of change in fair value of the investment in life insurance policies | ||
Change in fair value of the investment in life insurance policies | $ 94,576,000 | $ 95,747,000 |
Change in Discount Rate [Member] | minus 1 % [Member] | ||
Summary of change in fair value of the investment in life insurance policies | ||
Change in fair value of the investment in life insurance policies | 44,978,000 | 45,440,000 |
Change in Discount Rate [Member] | plus 1 % [Member] | ||
Summary of change in fair value of the investment in life insurance policies | ||
Change in fair value of the investment in life insurance policies | (40,918,000) | (41,179,000) |
Change in Discount Rate [Member] | plus 2 % [Member] | ||
Summary of change in fair value of the investment in life insurance policies | ||
Change in fair value of the investment in life insurance policies | (78,257,000) | (78,615,000) |
minus 8 months [Member] | Change in Life Expectancy Estimates [Member] | ||
Summary of change in fair value of the investment in life insurance policies | ||
Change in fair value of the investment in life insurance policies | 116,229,000 | 113,410,000 |
minus 4 months [Member] | Change in Life Expectancy Estimates [Member] | ||
Summary of change in fair value of the investment in life insurance policies | ||
Change in fair value of the investment in life insurance policies | 59,050,000 | 57,611,000 |
plus 4 months [Member] | Change in Life Expectancy Estimates [Member] | ||
Summary of change in fair value of the investment in life insurance policies | ||
Change in fair value of the investment in life insurance policies | (57,071,000) | (55,470,000) |
plus 8 months [Member] | Change in Life Expectancy Estimates [Member] | ||
Summary of change in fair value of the investment in life insurance policies | ||
Change in fair value of the investment in life insurance policies | $ (113,742,000) | $ (110,473,000) |
Fair Value Definition and Hie_6
Fair Value Definition and Hierarchy (Details Textual) - USD ($) | 9 Months Ended | |
Sep. 30, 2019 | Dec. 31, 2018 | |
Fair Value Definition and Hierarchy (Textual) | ||
Description for change in discount factor | If the life expectancy estimates were increased or decreased by four and eight months on each outstanding policy, and the discount rates were increased or decreased by 1% and 2%, with all other variables held constant. | |
Secured loan outstanding balance | $ 1,879,000 | |
Allowance for loan loss | $ 1,879,000 | |
Carrying value of the senior credit facility interest margin, description | 12-Month LIBOR. | |
Secured merchant cash advances, net of allowance for loan loss | $ 547,000 | |
Life insurance policies, description | For life insurance policies with face amounts greater than $1 million and that are not pledged as collateral under our amended and restated senior credit facility with LNV Corporation (approximately 25.3% of our portfolio by face amount of policy benefits), we attempted to obtain updated life expectancy reports on a continuous rotating three year cycle. For life insurance policies that are pledged under our amended and restated senior credit facility with LNV Corporation (approximately 62.5% of our portfolio by face amount of policy benefits as of September 30, 2019), prior to entering into the second amended and restated senior credit facility with LNV Corporation on November 1, 2019, we were required to update the life expectancy estimates every two years beginning from the closing date of the amended and restated senior credit facility with LNV Corporation. Under the second amended and restated senior credit facility with LNV Corporation, we are required to update the life expectancy estimates no later than December 18, 2020 and obtain updated life expectancy updates no less frequently than once every five years. For the remaining small face insurance policies (i.e., a policy with $1 million in face value benefits or less), we historically employed other methods and timeframes to update life expectancy estimates. | |
Promissory Note [Member] | ||
Fair Value Definition and Hierarchy (Textual) | ||
Promissory note, description | The Promissory Note receivable from the LiquidTrusts (see Note 6) earns interest at 7.0% per year, payable upon maturity in 2023. Utilizing an implied yield of 7.0%, we estimate the fair value of the Promissory Note to be approximately $49,924,000 as of September 30, 2019 based on a market yield analysis for similar instruments with similar credit profiles. The Promissory Note had a carrying value of $51,167,000 as of September 30, 2019. | |
Principal amount outstanding on commercial loan | $ 50,000,000 | |
L Bonds and Seller Trust L Bonds [Member] | ||
Fair Value Definition and Hierarchy (Textual) | ||
Aggregate face value | 1,209,840,000 | |
Estimated fair value of L Bonds | $ 1,283,460,000 | |
Weighted average market interest rate | 6.28% | |
Commercial Loan [Member] | ||
Fair Value Definition and Hierarchy (Textual) | ||
Estimated fair value of L Bonds | $ 188,936,000 | |
Coupon interest rate | 5.00% | |
Description of loan receivable | From and after the Final Closing Date, one-half of the interest, or 2.5% per year, is due and payable monthly in cash, and one-half of the interest, or 2.5% per year, accrues and compounds annually on each anniversary date of the Final Closing Date and becomes due and payable in full in cash on the maturity date. Utilizing an implied yield of 6.75%. | |
Principal amount outstanding on commercial loan | $ 190,018,000 |
Financing Receivables from Af_3
Financing Receivables from Affiliates (Details) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
Total financing receivables from affiliates | $ 241,185,000 | $ 184,769,000 |
Commercial Loan [Member] | ||
Commercial Loan receivable - principal | 192,508,000 | 192,508,000 |
Discount on Commercial Loan receivable | (6,554,000) | (7,846,000) |
Accrued interest receivable on Commercial Loan | 4,064,000 | 107,000 |
Balance outstanding on Commercial Loan | 190,018,000 | 184,769,000 |
Promissory Note [Member] | ||
Commercial Loan receivable - principal | 50,000,000 | |
Accrued interest receivable on Commercial Loan | 1,167,000 | |
Balance outstanding on Commercial Loan | $ 51,167,000 |
Financing Receivables from Af_4
Financing Receivables from Affiliates (Details Textual) - USD ($) | Aug. 10, 2018 | May 31, 2019 | Sep. 30, 2019 |
Note Receivable from Affiliate (Textual) | |||
Ownership percentage | 89.90% | ||
Beneficient Company Group, L.P. [Member] | Commercial Loan [Member] | |||
Note Receivable from Affiliate (Textual) | |||
Initial transfer of beneficient transaction, description | The Initial Transfer of the Exchange Transaction, GWG Life, as lender, and BEN LP, as borrower, entered into the Commercial Loan Agreement. On December 28, 2018, the Final Closing Date of the Exchange Transaction, the agreement was amended to adjust the principal to $192,508,000. The principal amount under the Commercial Loan is due on August 9, 2023, but is extendable for two five-year terms under certain circumstances. The extensions are available to the borrower provided that (a) in the event BEN LP completes at least one public offering of its common units raising at least $50,000,000, which on its own or together with any other public offering of BEN LP's common units results in Beneficient raising at least $100,000,000, then the maturity date will be extended to August 9, 2028; and (b) in the event that BEN LP (i) completes at least one public offering of its common units raising at least $50,000,000, which on its own or together with any other public offering of BEN LP's common units results in Beneficient raising at least $100,000,000 and (ii) at least 75% of Beneficient Holding's total outstanding NPC-B limited partnership interests, if any, have been converted to shares of BEN LP's common units, then the maturity date will be extended to August 9, 2033. | ||
Description of commercial loan bears interest | The principal amount of the Commercial Loan bears interest at 5.00% per year from the Final Closing Date. One-half of the interest, or 2.50% per year, is due and payable monthly in cash, and one-half of the interest, or 2.50% per year, accrues and compounds annually on each anniversary date of the Final Closing Date and becomes due and payable in full in cash on the maturity date. | ||
LiquidTrust Borrowers [Member] | |||
Note Receivable from Affiliate (Textual) | |||
Description of promissory note commitment | An initial advance in the principal amount of $50,000,000 was funded on June 3, 2019 and, subject to satisfaction of certain customary conditions, it is anticipated that the second advance, in the principal amount of $15,000,000, will be funded no later than December 31, 2019. The Loan bears interest at 7.0% per annum, with interest payable at maturity, and matures on June 30, 2023. | ||
Aggregate principal amount | $ 65,000,000 | ||
Principal amount | $ 65,000,000 | ||
Aggregate outstanding principal percentage | 16.70% | ||
BEN LP [Member] | |||
Note Receivable from Affiliate (Textual) | |||
Ownership percentage | 90.00% |
Equity Method Investment (Detai
Equity Method Investment (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2019 | Jun. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Jun. 30, 2019 | Sep. 30, 2018 | |||
Equity Method Investments and Joint Ventures [Abstract] | ||||||||
Total revenues | $ 28,151,000 | $ 69,262,000 | ||||||
Net loss | 9,696,000 | (36,345,000) | ||||||
Net earnings (loss) attributable to BEN LP common unitholders | 1,080,000 | (11,439,000) | ||||||
GWG portion of net earnings (loss) | $ 955,751 | [1] | $ (371,281) | [2] | ||||
[1] | Our portion of Beneficient's net earnings (loss) from April 1, 2019 to June 30, 2019. | |||||||
[2] | Our portion of Beneficient's net earnings (loss) from October 1, 2018 to June 30, 2019. |
Equity Method Investment (Det_2
Equity Method Investment (Details Textual) - USD ($) | Jun. 12, 2019 | Apr. 26, 2019 | Jul. 01, 2010 | Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | Apr. 30, 2019 | Mar. 31, 2019 | Dec. 28, 2018 |
Equity Method Investment (Textual) | |||||||||||
Partnership interest of beneficient | 89.90% | 89.90% | |||||||||
Cash investment | $ 1,421,059 | $ 10,000,000 | $ 1,421,059 | ||||||||
BENLP [Member] | |||||||||||
Equity Method Investment (Textual) | |||||||||||
Partnership interest of beneficient | 13.90% | ||||||||||
Beneficient [Member] | |||||||||||
Equity Method Investment (Textual) | |||||||||||
Beneficient transaction, shares acquired | 1,000,000 | 40,500,000 | |||||||||
Partnership interest of beneficient | 90.20% | 88.10% | 89.90% | ||||||||
Equity earnings of beneficient, description | We recorded earnings of $956,000 for our share of the net earnings of Beneficient for the period from April 1 to June 30, 2019, and for the nine months ended September 30, 2019, we recorded a loss of $371,000 for the period from October 1, 2018 to June 30, 2019. | ||||||||||
Cash investment | $ 10,000,000 | ||||||||||
Minimum retained ownership percentage | 15.00% | ||||||||||
Maximum ownership percentage | 15.00% | ||||||||||
Beneficient REUs (Restricted equity units) description | A total of 3.4 million Beneficient REUs have been approved for granting in 2019 that will vest upon the grant date, subject to the performance condition vesting described above. A total of 6.1 million Beneficient REUs have been approved for granting in 2019 that will vest over the completion of a 3-year service period beginning on the grant date, subject to the performance condition described above. All awards are anticipated to be classified in equity. Based on the grant date fair value, the estimated total Beneficient compensation expense attributable to these awards, assuming all vest, is approximately $90 to $100 million. | ||||||||||
Beneficient Company Holdings [Member] | |||||||||||
Equity Method Investment (Textual) | |||||||||||
Description of dilutive securities at equity method investee | The Preferred Series A holders can convert up to 20% of the sub-capital balance in any calendar year into Class S Ordinary Units on or after January 1, 2021. Upon such an election, a holder of Preferred Series A will be issued Class S Ordinary Units necessary to provide the holder with a number of Class S Ordinary Units that, in the aggregate, equal (a) the balance of the holder's capital account associated with the Preferred Series A Subclass 1 Unit accounts being converted divided by (b) $8.50. | At June 30, 2019, there was $1,012,873,516 of Preferred Series A Subclass 1 Unit accounts (the "Preferred Series A") and $58,879,383 of Class S Ordinary Units issued. | |||||||||
Ownership percentage | 100.00% |
Variable Interest Entities (Det
Variable Interest Entities (Details) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
Financing receivables from affiliates | $ 241,185,081 | $ 184,768,874 |
Equity method investment | 370,652,128 | 360,841,651 |
Other asset | 38,600,000 | 38,600,000 |
VIEs [Member] | Carrying Value [Member] | ||
Financing receivables from affiliates | 241,185,000 | 184,769,000 |
Equity method investment | 370,652,000 | 360,842,000 |
Other asset | 38,607,000 | 38,562,000 |
Total assets | 650,444,000 | 584,173,000 |
VIEs [Member] | Maximum Exposure to Loss [Member] | ||
Financing receivables from affiliates | 241,185,000 | 184,769,000 |
Equity method investment | 370,652,000 | 360,842,000 |
Other asset | 38,607,000 | 38,562,000 |
Total assets | $ 650,444,000 | $ 584,173,000 |
Variable Interest Entities (D_2
Variable Interest Entities (Details Textual) | Dec. 28, 2018 |
Beneficient [Member] | |
Variable Interest Entities (Textual) | |
Maximum acquires beneficial ownership percentage | 20.00% |
Credit Facility - LNV Corpora_2
Credit Facility - LNV Corporation (Details) - LNV Corporation [Member] - USD ($) | 1 Months Ended | 9 Months Ended | 12 Months Ended |
Sep. 27, 2017 | Sep. 30, 2019 | Dec. 31, 2018 | |
Credit Facility - LNV Corporation (Textual) | |||
Effective interest rate | 9.68% | ||
Outstanding amount of credit facility | $ 140,497,000 | $ 158,209,000 | |
Portfolio pledged, percentage | 62.50% | ||
GWG DLP Funding IV, LLC [Member] | |||
Credit Facility - LNV Corporation (Textual) | |||
Maturity date | Sep. 27, 2029 | ||
Interest rate, description | Interest will accrue on amounts borrowed under the amended and restated senior credit facility at an annual interest rate, determined as of each date of borrowing or quarterly if there is no borrowing, equal to (a) 12-month LIBOR plus (b) 7.50% per annum. |
L Bonds (Details)
L Bonds (Details) - Renewable Secured Debentures [Member] | Sep. 30, 2019USD ($) |
Contractual Maturities | |
Three months ending December 31, 2019 | $ 29,267,000 |
2020 | 158,475,000 |
2021 | 174,469,000 |
2022 | 125,086,000 |
2023 | 72,640,000 |
2024 | 92,488,000 |
Thereafter | 190,523,000 |
Total | 842,948,000 |
Unamortized Deferred Financing Costs | |
Three months ending December 31, 2019 | 91,000 |
2020 | 2,399,000 |
2021 | 5,461,000 |
2022 | 5,335,000 |
2023 | 3,320,000 |
2024 | 4,967,000 |
Thereafter | 10,934,000 |
Total | $ 32,507,000 |
L Bonds (Details Textual)
L Bonds (Details Textual) - USD ($) | 3 Months Ended | 9 Months Ended | |||||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | Jan. 31, 2018 | Dec. 01, 2017 | |
L Bonds (Textual) | |||||||
Common stock pledged as collateral, percentage | 12.00% | ||||||
Renewable Secured Debentures [Member] | |||||||
L Bonds (Textual) | |||||||
Debentures offer for sale | $ 1,000,000,000 | $ 1,000,000,000 | |||||
Description of interest payment | Interest is payable monthly or annually depending on the election of the investor. | ||||||
Weighted-average market interest rate | 7.14% | 7.14% | 7.10% | ||||
Principal amount outstanding under L bonds | $ 842,948,000 | $ 842,948,000 | $ 662,152,000 | ||||
Amortization of deferred issuance costs | 3,197,000 | $ 2,312,000 | 9,191,000 | $ 6,450,000 | |||
Future expected amortization of deferred financing costs | $ 32,507,000 | $ 32,507,000 | |||||
Amortization period of deferred financing cost | 7 years | ||||||
Common stock pledged as collateral, percentage | 12.00% |
Seller Trust L Bonds (Details)
Seller Trust L Bonds (Details) - USD ($) | Aug. 10, 2018 | Aug. 10, 2018 | Sep. 30, 2019 | Dec. 31, 2018 |
Seller Trust L Bonds (Textual) | ||||
Seller Trust L Bonds | $ 366,891,940 | $ 366,891,940 | ||
Common stock pledged as collateral, percentage | 12.00% | |||
GWG [Member] | ||||
Seller Trust L Bonds (Textual) | ||||
Seller Trust L Bonds | $ 366,892,000 | $ 366,892,000 | ||
Seller Trust L Bonds [Member] | ||||
Seller Trust L Bonds (Textual) | ||||
Maturity date | Aug. 9, 2023 | Aug. 9, 2023 | ||
Interest rate | 7.50% | 7.50% | ||
Description of interest payment | Interest is payable monthly in cash. | |||
Principle amount outstanding | $ 366,892,000 | $ 366,892,000 | ||
Common stock pledged as collateral, percentage | 12.00% |
Redeemable Preferred Stock (Det
Redeemable Preferred Stock (Details) | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||||
Mar. 31, 2017USD ($)shares | Nov. 30, 2015Tradingdays$ / sharesshares | Sep. 30, 2019USD ($)$ / sharesshares | Sep. 30, 2018USD ($) | Sep. 30, 2019USD ($)$ / sharesshares | Sep. 30, 2018USD ($) | Dec. 31, 2018$ / sharesshares | |
Redeemable Preferred Stock (Textual) | |||||||
Selling costs related to shares | $ | $ 4,142,294 | ||||||
Redeemable Preferred Stock [Member] | |||||||
Redeemable Preferred Stock (Textual) | |||||||
Company offering shares of redeemable preferred stock | shares | 100,000 | 100,000 | 100,000 | 100,000 | |||
Par value per share | $ / shares | $ 1,000 | $ 0.001 | $ 0.001 | $ 0.001 | |||
Dividend rate on redeemable preferred stock | 7.00% | ||||||
Redeemable preferred stock liquidation value per share | $ / shares | $ 1,000 | ||||||
Number of trading days | Tradingdays | 20 | ||||||
Minimum conversion price | $ / shares | $ 15 | ||||||
Preferred stock redemption, percentage | 15.00% | ||||||
Redeemable preferred stock, shares issued | shares | 99,127 | ||||||
Aggregate gross consideration | $ | $ 99,127,000 | ||||||
Selling costs related to shares | $ | $ 7,019,000 |
Series 2 Redeemable Preferred_2
Series 2 Redeemable Preferred Stock (Details) | Feb. 14, 2017Tradingdays$ / sharesshares | Apr. 30, 2018USD ($)shares | Sep. 30, 2019USD ($) | Sep. 30, 2018USD ($) | Sep. 30, 2019USD ($) | Sep. 30, 2018USD ($) |
Series 2 Redeemable Preferred Stock (Textual) | ||||||
Aggregate gross consideration | $ 56,238,128 | |||||
Selling costs related to shares | $ 4,142,294 | |||||
Series 2 Redeemable Preferred Stock [Member] | ||||||
Series 2 Redeemable Preferred Stock (Textual) | ||||||
Public offering, shares | shares | 150,000 | |||||
Market price for share | $ / shares | $ 1,000 | |||||
Dividend rate, per annum | 7.00% | |||||
Liquidation preference value, per share | $ / shares | $ 1,000 | |||||
Number of trading days | Tradingdays | 20 | |||||
Minimum conversion price | $ / shares | $ 12.75 | |||||
Preferred stock redemption, percentage | 10.00% | |||||
Preferred stock redemption, description | The event of redemptions occurring less than one year after issuance, of 107% of the stated value. | |||||
Number of shares offering to investors | shares | 149,979 | |||||
Aggregate gross consideration | $ 149,979,000 | |||||
Selling costs related to shares | $ 10,284,000 |
Series B Convertible Preferre_2
Series B Convertible Preferred Stock (Details) - USD ($) | Aug. 10, 2018 | Dec. 28, 2018 | Sep. 30, 2018 | Sep. 30, 2018 | Sep. 30, 2019 | Dec. 31, 2018 |
Series B Convertible Preferred Stock (Textual) | ||||||
Series B Convertible Preferred Stock, Values issued | $ 50,000,000 | $ 50,000,000 | ||||
Common stock at a conversion price | $ 0.001 | $ 0.001 | ||||
Series B Convertible Preferred Stock [Member] | ||||||
Series B Convertible Preferred Stock (Textual) | ||||||
Series B Convertible Preferred Stock, Values issued | $ 50,000,000 | |||||
Series B Convertible Preferred Stock, Shares Issued | 5,000,000 | 5,000,000 | ||||
Series B Convertible Preferred stock, Par value | $ 0.001 | |||||
Preferred Stock, Per share Stated value | $ 10 | |||||
Common stock at a conversion price | $ 10 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Income Tax Disclosure [Abstract] | ||||
Statutory federal income tax (benefit) | $ (4,485,000) | $ (2,234,000) | $ (11,755,000) | $ (4,173,000) |
State income taxes (benefit), net of federal benefit | (1,322,000) | (866,000) | (4,103,000) | (1,558,000) |
Change in valuation allowance | 4,697,000 | 3,215,000 | 15,025,000 | 5,783,000 |
Other permanent differences | 1,110,000 | (115,000) | 833,000 | (52,000) |
Total income tax expense (benefit) |
Income Taxes (Details 1)
Income Taxes (Details 1) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
Deferred tax assets: | ||
Net operating loss carryforwards | $ 9,994,000 | $ 10,491,000 |
Investment in life insurance policies | 34,186,000 | 23,132,000 |
Other assets | 11,429,000 | 6,864,000 |
Subtotal | 55,609,000 | 40,487,000 |
Valuation allowance | (55,410,000) | (40,385,000) |
Deferred tax assets | 199,000 | 102,000 |
Deferred tax liabilities: | ||
Other liabilities | (199,000) | (102,000) |
Net deferred tax asset (liability) |
Income Taxes (Details Textual)
Income Taxes (Details Textual) - USD ($) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Income Taxes (Textual) | ||
Current income tax liability | ||
Valuation allowance against our total net deferred tax asset | 55,410,000 | |
Federal net operating loss carryforwards | $ 34,773,000 | 36,501,000 |
Net operating loss carryforwards expiration date | Dec. 31, 2031 | |
Future utilization of net operating loss carryforwards, description | The NOL carryforwards will begin to expire in 2031. Future utilization of NOL carryforwards is subject to limitations under Section 382 of the Internal Revenue Code. This section generally relates to a more than 50 percent change in ownership over a three-year period. | |
State NOL carryforwards | $ 34,747,000 | $ 36,475,000 |
Annual Limitation on operating loss carryforward utilization | $ 7,564,000 |
Common Stock (Details)
Common Stock (Details) - Stock Repurchase Program [Member] | 9 Months Ended | |
Sep. 30, 2019USD ($)$ / sharesshares | ||
Number of Shares Purchased | 42,690 | |
Average Price Paid per Share | $ / shares | $ 8.47 | |
Total Number of Shares Purchased as Part of the Program | 52,725 | |
Maximum Dollar Value of Shares that May Yet Be Purchased Under the Program | $ | $ 1,070,000 | [1] |
Monthly Period January 2019 [Member] | ||
Number of Shares Purchased | 42,488 | |
Average Price Paid per Share | $ / shares | $ 8.47 | |
Total Number of Shares Purchased as Part of the Program | 52,523 | |
Maximum Dollar Value of Shares that May Yet Be Purchased Under the Program | $ | $ 1,072,000 | |
Monthly Period February 2019 [Member] | ||
Number of Shares Purchased | 202 | |
Average Price Paid per Share | $ / shares | $ 8.88 | |
Total Number of Shares Purchased as Part of the Program | 52,725 | |
Maximum Dollar Value of Shares that May Yet Be Purchased Under the Program | $ | $ 1,070,000 | |
Monthly Period March 2019 [Member] | ||
Number of Shares Purchased | ||
Average Price Paid per Share | $ / shares | ||
Total Number of Shares Purchased as Part of the Program | ||
Maximum Dollar Value of Shares that May Yet Be Purchased Under the Program | $ | ||
Monthly Period April 2019 [Member] | ||
Number of Shares Purchased | ||
Average Price Paid per Share | $ / shares | ||
Total Number of Shares Purchased as Part of the Program | ||
Maximum Dollar Value of Shares that May Yet Be Purchased Under the Program | $ | ||
Monthly Period May 2019 [Member] | ||
Number of Shares Purchased | ||
Average Price Paid per Share | $ / shares | ||
Total Number of Shares Purchased as Part of the Program | ||
Maximum Dollar Value of Shares that May Yet Be Purchased Under the Program | $ | ||
Monthly Period June 2019 [Member] | ||
Number of Shares Purchased | ||
Average Price Paid per Share | $ / shares | ||
Total Number of Shares Purchased as Part of the Program | ||
Maximum Dollar Value of Shares that May Yet Be Purchased Under the Program | $ | ||
Monthly Period July 2019 [Member] | ||
Number of Shares Purchased | ||
Average Price Paid per Share | $ / shares | ||
Total Number of Shares Purchased as Part of the Program | ||
Maximum Dollar Value of Shares that May Yet Be Purchased Under the Program | $ | ||
Monthly Period August 2019 [Member] | ||
Number of Shares Purchased | ||
Average Price Paid per Share | $ / shares | ||
Total Number of Shares Purchased as Part of the Program | ||
Maximum Dollar Value of Shares that May Yet Be Purchased Under the Program | $ | ||
Monthly Period September 2019 [Member] | ||
Number of Shares Purchased | ||
Average Price Paid per Share | $ / shares | ||
Total Number of Shares Purchased as Part of the Program | ||
Maximum Dollar Value of Shares that May Yet Be Purchased Under the Program | $ | ||
[1] | The stock repurchase program expired on April 30, 2019. |
Common Stock (Details Textual)
Common Stock (Details Textual) - USD ($) | 1 Months Ended | 9 Months Ended | |||
Dec. 28, 2018 | Aug. 10, 2018 | Sep. 30, 2014 | Sep. 30, 2019 | Nov. 15, 2018 | |
Common Stock (Textual) | |||||
Aggregate purchase of common stock | $ 1,500,000 | ||||
Series B Converted [Member] | |||||
Common Stock (Textual) | |||||
Conversion of common stock shares | 5,000,000 | ||||
Conversion price per share | $ 10 | ||||
Exchange transaction, description | The Exchange Transaction, we issued 22,013,516 shares of common stock to the Seller Trusts at a market value of approximately $203.4 million in exchange for BEN LP common units. | ||||
IPO [Member] | |||||
Common Stock (Textual) | |||||
Issuance of common stock, shares | 800,000 | ||||
Common stock, par value | $ 12.50 | ||||
Net proceeds | $ 8,600,000 | ||||
Exercise price | $ 15.63 | ||||
Warrants issued | 16,000 | ||||
Voting shares, description | The common shares issued to the Seller Trusts were initially subject to a Stockholders Agreement between GWG and the Seller Trusts, under which the Seller Trusts, as long as they own at least 10% of the voting shares of GWG, agree to vote their shares in proportion to the votes cast by all other voting securities of GWG. In addition, the Seller Trusts agree, for the period of one year after the Final Closing, not to seek or propose to influence or control the management, Board or policies of GWG. The Stockholders Agreement was terminated in connection with the closing of the Purchase and Contribution Transaction on April 26, 2019. | ||||
Shareholders [Member] | |||||
Common Stock (Textual) | |||||
Dividend per share of common stock | $ 4.30 |
Stock Incentive Plan (Details)
Stock Incentive Plan (Details) - shares | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Stock Options [Member] | ||
Outstanding stock options: | ||
Beginning Balance | 1,397,951 | 1,636,948 |
Granted during the year | 377,950 | |
Vested during the year | ||
Exercised during the year | (50,685) | (569,864) |
Forfeited during the year | (458,819) | (47,083) |
Ending Balance | 888,447 | 1,397,951 |
Vested [Member] | ||
Outstanding stock options: | ||
Beginning Balance | 833,199 | 857,192 |
Granted during the year | 63,950 | |
Vested during the year | 182,053 | 503,503 |
Exercised during the year | (50,685) | (569,864) |
Forfeited during the year | (299,883) | (21,582) |
Ending Balance | 664,684 | 833,199 |
Unvested [Member] | ||
Outstanding stock options: | ||
Beginning Balance | 564,752 | 779,756 |
Granted during the year | 314,000 | |
Vested during the year | (182,053) | (503,503) |
Exercised during the year | ||
Forfeited during the year | (158,936) | (25,501) |
Ending Balance | 223,763 | 564,752 |
Stock Incentive Plan (Details 1
Stock Incentive Plan (Details 1) - Stock Appreciation Rights [Member] - shares | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Outstanding Stock Appreciation Rights: | ||
Beginning Balance | 271,765 | 342,972 |
Granted during the year | 47,400 | 113,650 |
Vested during the year | ||
Exercised during the year | (23,448) | (145,622) |
Forfeited during the year | (7,592) | (39,235) |
Ending Balance | 288,125 | 271,765 |
Vested [Member] | ||
Outstanding Stock Appreciation Rights: | ||
Beginning Balance | 117,841 | 189,053 |
Granted during the year | 4,250 | 2,625 |
Vested during the year | 79,150 | 71,785 |
Exercised during the year | (23,448) | (145,622) |
Forfeited during the year | ||
Ending Balance | 177,793 | 117,841 |
Unvested [Member] | ||
Outstanding Stock Appreciation Rights: | ||
Beginning Balance | 153,924 | 153,919 |
Granted during the year | 43,150 | 111,025 |
Vested during the year | (79,150) | (71,785) |
Exercised during the year | ||
Forfeited during the year | (7,592) | (39,235) |
Ending Balance | 110,332 | 153,924 |
Stock Incentive Plan (Details 2
Stock Incentive Plan (Details 2) - $ / shares | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Vested [Member] | SARs [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Outstanding | 177,793 | 117,841 |
Weighted-Average Exercise Price | $ 8.78 | $ 8.88 |
Weighted-Average Remaining Life (years) | 4 years 8 months 5 days | 5 years 7 days |
Fair Value at Grant Date | $ 2.07 | $ 2.02 |
Vested [Member] | Total Vested [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Outstanding | 842,477 | 951,040 |
Weighted-Average Exercise Price | $ 8.86 | $ 8.88 |
Weighted-Average Remaining Life (years) | 6 years 6 months 18 days | 5 years 9 months 29 days |
Fair Value at Grant Date | $ 2.18 | $ 2.02 |
Vested [Member] | Stock Options [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Outstanding | 664,684 | 833,199 |
Weighted-Average Exercise Price | $ 8.88 | $ 8.88 |
Weighted-Average Remaining Life (years) | 7 years 18 days | 5 years 11 months 12 days |
Fair Value at Grant Date | $ 2.21 | $ 2.02 |
Unvested [Member] | SARs Unvested [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Outstanding | 110,332 | 153,924 |
Weighted-Average Exercise Price | $ 9.57 | $ 8.37 |
Weighted-Average Remaining Life (years) | 5 years 9 months 14 days | 5 years 11 months 23 days |
Fair Value at Grant Date | $ 2.48 | $ 2.09 |
Unvested [Member] | Total Unvested [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Outstanding | 334,095 | 718,676 |
Weighted-Average Exercise Price | $ 9.50 | $ 8.98 |
Weighted-Average Remaining Life (years) | 7 years 6 months 29 days | 7 years 5 months 20 days |
Fair Value at Grant Date | $ 2.53 | $ 2.30 |
Unvested [Member] | Stock Options Unvested [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Outstanding | 223,763 | 564,752 |
Weighted-Average Exercise Price | $ 9.47 | $ 9.15 |
Weighted-Average Remaining Life (years) | 8 years 5 months 20 days | 7 years 10 months 17 days |
Fair Value at Grant Date | $ 2.56 | $ 2.35 |
Stock Incentive Plan (Details T
Stock Incentive Plan (Details Textual) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||||
Jun. 18, 2019 | May 31, 2019 | Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Stock Incentive Plan (Textual) | |||||||
Aggregate intrinsic value of stock options outstanding | $ 1,145,000 | $ 1,145,000 | |||||
Aggregate intrinsic value of stock options exercisable | $ 891,000 | $ 891,000 | |||||
Stock Appreciation Rights [Member] | |||||||
Stock Incentive Plan (Textual) | |||||||
Stock awards outstanding | 288,000 | 288,000 | |||||
Stock awards vested during period | 178,000 | ||||||
Number of awards exercised | 169,000 | ||||||
Options exercise price, description | The strike price of the SARs was between $6.75 and $11.55, which was equal to the market price of the common stock at the date of issuance. | ||||||
Market price for share | $ 9.98 | $ 9.98 | |||||
Options vesting period | 3 years | ||||||
Other accrued expenses | $ 557,000 | $ 557,000 | $ 349,000 | ||||
Employee compensation and benefits expense | $ 327,000 | $ 25,000 | $ 323,000 | $ 15,000 | |||
Restricted Stock Units (RSUs) [Member] | |||||||
Stock Incentive Plan (Textual) | |||||||
Stock awards outstanding | 244,083 | 244,083 | |||||
Restricted shares of common stock issued | 375,000 | 26,701 | |||||
Restricted shares of common stock exercising | 53,403 | ||||||
Cash payments | $ 4,500,000 | ||||||
Restricted Stock Units (RSUs) [Member] | Director [Member] | |||||||
Stock Incentive Plan (Textual) | |||||||
Restricted stock units granted during period | 114,366 | ||||||
Restricted Stock Units (RSUs) [Member] | Chief Executive Officer [Member] | |||||||
Stock Incentive Plan (Textual) | |||||||
Options exercise price, description | We granted RSUs to our Chief Executive Officer that are subject to performance-based vesting pursuant to a performance share unit agreement ("PSU Agreement"). The PSU Agreement provides for a target award grant of 129,717 RSUs, and up to a maximum of 259,434 RSUs, with each representing the right to receive one share of our common stock (or, following a Change-in-Control Transaction (as defined in the PSU Agreement), the cash value thereof) upon vesting, which is generally subject to the satisfaction of performance goals over a performance period commencing on April 26, 2019 and ending on December 31, 2021. | ||||||
2013 Stock Incentive Plan [Member] | |||||||
Stock Incentive Plan (Textual) | |||||||
Common stock options authorized | 6,000,000 | 6,000,000 | |||||
Common stock options available for issuance | 3,517,548 | 3,517,548 | |||||
Expiry award grant term | 10 years | ||||||
Reserved for issuance under outstanding incentive awards | 2,482,452 | 2,482,452 | |||||
Stock Options [Member] | |||||||
Stock Incentive Plan (Textual) | |||||||
Outstanding stock options | 888,000 | 888,000 | |||||
Awards vested during period | 665,000 | ||||||
Options exercise price maximum range | $ 11.56 | ||||||
Options exercise price minimum range | $ 4.83 | ||||||
Forfeited | 1,164,000 | ||||||
Exercised during the year | 775,000 | ||||||
Unrecognized compensation expense related to un-vested options | $ 515,000 | $ 515,000 | |||||
Unrecognized compensation expense related to un-vested options, period of recognition | 3 years | ||||||
Compensation expense remaining vesting in 2019 | $ 85,000 | ||||||
Compensation expense remaining vesting in 2020 | 302,000 | ||||||
Compensation expense remaining vesting in 2021 | 128,000 | ||||||
Total intrinsic value of stock options exercised | $ 36,000 |
Other Expenses (Details)
Other Expenses (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Other Expenses [Abstract] | ||||
Contract Labor | $ 533,000 | $ 359,000 | $ 1,345,000 | $ 964,000 |
Marketing | 408,000 | 413,000 | 1,229,000 | 1,343,000 |
Information Technology | 529,000 | 432,000 | 1,513,000 | 1,208,000 |
Servicing and Facility Fees | 450,000 | 382,000 | 1,313,000 | 1,244,000 |
Travel and Entertainment | 321,000 | 204,000 | 823,000 | 650,000 |
Insurance and Regulatory | 586,000 | 401,000 | 4,426,000 | 1,120,000 |
General and Administrative | 722,000 | 498,000 | 1,666,000 | 1,733,000 |
Total Other Expenses | $ 3,549,265 | $ 2,688,970 | $ 12,315,434 | $ 8,262,324 |
Segment Reporting (Details)
Segment Reporting (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Segment EBT [Member] | ||||
Total | $ (20,403,000) | $ (10,522,000) | $ (56,348,000) | $ (19,758,000) |
Income tax benefit | ||||
Net Loss | (20,403,000) | (10,522,000) | (56,348,000) | (19,758,000) |
Investment in Beneficient [Member] | Segment EBT [Member] | ||||
Total | (2,214,000) | (11,286,000) | ||
Revenue [Member] | ||||
Total | 22,211,000 | 20,937,000 | 71,438,000 | 59,794,000 |
Revenue [Member] | Corporate & Other [Member] | ||||
Total | 264,000 | 265,000 | 516,000 | 456,000 |
Revenue [Member] | Investment in Beneficient [Member] | ||||
Total | 3,709,000 | 4,284,000 | 9,723,000 | 4,284,000 |
Secondary Life Insurance [Member] | Segment EBT [Member] | ||||
Total | (9,169,000) | (4,932,000) | (19,792,000) | (4,256,000) |
Secondary Life Insurance [Member] | Revenue [Member] | ||||
Total | 18,238,000 | 16,388,000 | 61,199,000 | 55,054,000 |
Corporate & Other [Member] | Segment EBT [Member] | ||||
Total | $ (9,020,000) | $ (5,590,000) | $ (25,270,000) | $ (15,502,000) |
Segment Reporting (Details 1)
Segment Reporting (Details 1) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Interest Expense [Member] | ||||
Total | $ 28,290,000 | $ 21,799,000 | $ 83,752,000 | $ 55,011,000 |
Interest Expense [Member] | Corporate & Other [Member] | ||||
Total | 1,000 | 2,000 | ||
Interest Expense [Member] | Investment in Beneficient [Member] | ||||
Total | 6,880,000 | 4,284,000 | 20,638,000 | 4,284,000 |
Interest Income [Member] | ||||
Total | 3,935,000 | 4,876,000 | 11,276,000 | 6,120,000 |
Interest Income [Member] | Corporate & Other [Member] | ||||
Total | 39,000 | 4,000 | 173,000 | |
Interest Income [Member] | Investment in Beneficient [Member] | ||||
Total | 3,709,000 | 4,284,000 | 9,678,000 | 4,284,000 |
Secondary Life Insurance [Member] | Interest Expense [Member] | ||||
Total | 21,410,000 | 17,514,000 | 63,114,000 | 50,725,000 |
Secondary Life Insurance [Member] | Interest Income [Member] | ||||
Total | $ 226,000 | $ 553,000 | $ 1,594,000 | $ 1,663,000 |
Segment Reporting (Details 2)
Segment Reporting (Details 2) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
Total | $ 1,561,001,000 | $ 1,480,867,000 |
Investment in Beneficient [Member] | ||
Total | 650,444,000 | 584,173,000 |
Secondary Life Insurance [Member] | ||
Total | 903,726,000 | 889,665,000 |
Corporate & Other [Member] | ||
Total | $ 6,831,000 | $ 7,029,000 |
Segment Reporting (Details Text
Segment Reporting (Details Textual) | 9 Months Ended |
Sep. 30, 2019Segment | |
Segment Reporting (Textual) | |
Number of reportable segments | 2 |
Leases (Details)
Leases (Details) - USD ($) | 9 Months Ended | |
Sep. 30, 2019 | Jan. 02, 2019 | |
Leases | Operating lease right-of-use assets | |
Classification | Operating lease liabilities | |
Lease assets and liabilities | $ 900,000 | |
Lease assets and liabilities | $ 1,498,000 | $ 1,600,000 |
Other accrued expenses [Member] | ||
Lease assets and liabilities | 1,498,000 | |
Other Assets [Member] | ||
Lease assets and liabilities | $ 852,000 |
Leases (Details 1)
Leases (Details 1) - USD ($) | Sep. 30, 2019 | Jan. 02, 2019 |
Summary of minimum lease payments under amendment lease | ||
Remaining 2019 | $ 70,000 | |
2020 | 284,000 | |
2021 | 293,000 | |
2022 | 302,000 | |
2023 | 311,000 | |
Thereafter | 593,000 | |
Total lease payments | 1,853,000 | |
Less: imputed interest | (355,000) | |
Present value of lease liabilities | $ 1,498,000 | $ 1,600,000 |
Leases (Details 2)
Leases (Details 2) | Dec. 31, 2018USD ($) |
Summary of minimum aggregate operating lease commitments | |
2019 | $ 275,000 |
2020 | 284,000 |
2021 | 293,000 |
2022 | 302,000 |
2023 | 311,000 |
Thereafter | 593,000 |
Total | $ 2,058,000 |
Leases (Details Textual)
Leases (Details Textual) | Sep. 01, 2015ft² | Sep. 30, 2019USD ($) | Sep. 30, 2018USD ($) | Sep. 30, 2019USD ($) | Sep. 30, 2018USD ($) |
Leases (Textual) | |||||
Description of lessor leasing arrangements | We entered into an amendment to our original lease that expanded the leased space to 17,687 square feet and extended the term through October 2025. | ||||
Office space in square feet | ft² | 17,687 | ||||
Lease term date | Oct. 31, 2025 | ||||
Operating lease costs | $ 50,000 | $ 149,000 | |||
Short term lease costs | $ 9,000 | $ 47,000 | |||
Weighted average remaining lease term | 6 years | 6 years | |||
Weighted average discount rate | 6.96% | 6.96% | |||
Operating lease payments | $ 68,000 | $ 205,000 | |||
Variable lease costs | 49,000 | 159,000 | |||
Total lease costs | $ 108,000 | $ 119,000 | $ 355,000 | $ 334,000 |
Guarantee of L Bonds and Sell_3
Guarantee of L Bonds and Seller Trust L Bonds (Details) - USD ($) | Sep. 30, 2019 | Jun. 30, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Dec. 31, 2017 |
ASSETS | ||||||
Cash and cash equivalents | $ 65,680,464 | $ 114,587,084 | $ 117,900,000 | |||
Restricted cash | 8,204,705 | 10,849,126 | 3,100,000 | |||
Investment in life insurance policies, at fair value | 807,518,088 | 747,922,465 | ||||
Life insurance policy benefits receivable, net | 17,369,176 | 16,460,687 | ||||
Financing receivables from affiliates | 241,185,081 | 184,768,874 | ||||
Equity method investment | 370,652,128 | 360,841,651 | ||||
Other assets | 50,391,311 | 45,437,164 | ||||
Investment in subsidiaries | ||||||
TOTAL ASSETS | 1,561,000,953 | 1,480,867,051 | ||||
LIABILITIES | ||||||
Senior credit facility with LNV Corporation | 131,717,520 | 148,977,596 | ||||
L Bonds | 830,341,949 | 651,402,663 | ||||
Seller Trust L Bonds | 366,891,940 | 366,891,940 | ||||
Accounts payable | 2,570,842 | 9,276,507 | ||||
Interest and dividends payable | 16,726,344 | 18,555,293 | ||||
Other accrued expenses | 6,700,336 | 4,705,170 | ||||
TOTAL LIABILITIES | 1,354,948,931 | 1,199,809,169 | ||||
STOCKHOLDERS' EQUITY | ||||||
Member capital | ||||||
Redeemable preferred stock and Series 2 redeemable preferred stock | 209,817,500 | 215,973,039 | ||||
Common stock | 33,033 | 33,018 | ||||
Additional paid-in-capital | 237,159,909 | 249,662,168 | ||||
Accumulated deficit | (240,958,420) | (184,610,343) | ||||
TOTAL STOCKHOLDERS' EQUITY | 206,052,022 | $ 233,533,705 | 281,057,882 | $ 181,157,435 | $ 172,022,351 | $ 133,671,743 |
TOTAL LIABILITIES AND EQUITY | 1,561,000,953 | 1,480,867,051 | ||||
Parent [Member] | ||||||
ASSETS | ||||||
Cash and cash equivalents | 61,701,804 | 113,293,682 | ||||
Restricted cash | ||||||
Investment in life insurance policies, at fair value | ||||||
Life insurance policy benefits receivable, net | ||||||
Financing receivables from affiliates | ||||||
Equity method investment | 370,652,128 | 360,841,651 | ||||
Other assets | 43,810,955 | 42,944,402 | ||||
Investment in subsidiaries | 944,560,782 | 799,182,251 | ||||
TOTAL ASSETS | 1,420,725,669 | 1,316,261,986 | ||||
LIABILITIES | ||||||
Senior credit facility with LNV Corporation | ||||||
L Bonds | 830,341,949 | 651,402,663 | ||||
Seller Trust L Bonds | 366,891,940 | 366,891,940 | ||||
Accounts payable | 1,353,654 | 1,126,327 | ||||
Interest and dividends payable | 13,273,621 | 14,047,248 | ||||
Other accrued expenses | 2,812,483 | 1,735,926 | ||||
TOTAL LIABILITIES | 1,214,673,647 | 1,035,204,104 | ||||
STOCKHOLDERS' EQUITY | ||||||
Member capital | ||||||
Redeemable preferred stock and Series 2 redeemable preferred stock | 209,817,500 | 215,973,039 | ||||
Common stock | 33,033 | 33,018 | ||||
Additional paid-in-capital | 237,159,909 | 249,662,168 | ||||
Accumulated deficit | (240,958,420) | (184,610,343) | ||||
TOTAL STOCKHOLDERS' EQUITY | 206,052,022 | 281,057,882 | ||||
TOTAL LIABILITIES AND EQUITY | 1,420,725,669 | 1,316,261,986 | ||||
Guarantor Subsidiary [Member] | ||||||
ASSETS | ||||||
Cash and cash equivalents | 2,605,365 | 232,387 | ||||
Restricted cash | 1,177,630 | 7,217,194 | ||||
Investment in life insurance policies, at fair value | 106,329,394 | 92,336,494 | ||||
Life insurance policy benefits receivable, net | 961,200 | 5,000,000 | ||||
Financing receivables from affiliates | 241,185,081 | 184,768,874 | ||||
Equity method investment | ||||||
Other assets | 2,433,192 | 1,730,581 | ||||
Investment in subsidiaries | 592,688,454 | 510,865,003 | ||||
TOTAL ASSETS | 947,380,316 | 802,150,533 | ||||
LIABILITIES | ||||||
Senior credit facility with LNV Corporation | (329,050) | |||||
L Bonds | ||||||
Seller Trust L Bonds | ||||||
Accounts payable | 927,306 | 1,674,494 | ||||
Interest and dividends payable | ||||||
Other accrued expenses | 3,006,986 | 1,593,108 | ||||
TOTAL LIABILITIES | 3,605,242 | 3,267,602 | ||||
STOCKHOLDERS' EQUITY | ||||||
Member capital | 943,775,074 | 798,882,931 | ||||
Redeemable preferred stock and Series 2 redeemable preferred stock | ||||||
Common stock | ||||||
Additional paid-in-capital | ||||||
Accumulated deficit | ||||||
TOTAL STOCKHOLDERS' EQUITY | 943,775,074 | 798,882,931 | ||||
TOTAL LIABILITIES AND EQUITY | 947,380,316 | 802,150,533 | ||||
Non-Guarantor Subsidiaries [Member] | ||||||
ASSETS | ||||||
Cash and cash equivalents | 1,373,295 | 1,061,015 | ||||
Restricted cash | 7,027,075 | 3,631,932 | ||||
Investment in life insurance policies, at fair value | 701,188,694 | 655,585,971 | ||||
Life insurance policy benefits receivable, net | 16,407,976 | 11,460,687 | ||||
Financing receivables from affiliates | ||||||
Equity method investment | ||||||
Other assets | 4,147,164 | 762,181 | ||||
Investment in subsidiaries | ||||||
TOTAL ASSETS | 730,144,204 | 672,501,786 | ||||
LIABILITIES | ||||||
Senior credit facility with LNV Corporation | 132,046,570 | 148,977,596 | ||||
L Bonds | ||||||
Seller Trust L Bonds | ||||||
Accounts payable | 289,882 | 6,475,686 | ||||
Interest and dividends payable | 3,452,723 | 4,508,045 | ||||
Other accrued expenses | 880,867 | 1,376,136 | ||||
TOTAL LIABILITIES | 136,670,042 | 161,337,463 | ||||
STOCKHOLDERS' EQUITY | ||||||
Member capital | 593,474,162 | 511,164,323 | ||||
Redeemable preferred stock and Series 2 redeemable preferred stock | ||||||
Common stock | ||||||
Additional paid-in-capital | ||||||
Accumulated deficit | ||||||
TOTAL STOCKHOLDERS' EQUITY | 593,474,162 | 511,164,323 | ||||
TOTAL LIABILITIES AND EQUITY | 730,144,204 | 672,501,786 | ||||
Eliminations [Member] | ||||||
ASSETS | ||||||
Cash and cash equivalents | ||||||
Restricted cash | ||||||
Investment in life insurance policies, at fair value | ||||||
Life insurance policy benefits receivable, net | ||||||
Financing receivables from affiliates | ||||||
Equity method investment | ||||||
Other assets | ||||||
Investment in subsidiaries | (1,537,249,236) | (1,310,047,254) | ||||
TOTAL ASSETS | (1,537,249,236) | (1,310,047,254) | ||||
LIABILITIES | ||||||
Senior credit facility with LNV Corporation | ||||||
L Bonds | ||||||
Seller Trust L Bonds | ||||||
Accounts payable | ||||||
Interest and dividends payable | ||||||
Other accrued expenses | ||||||
TOTAL LIABILITIES | ||||||
STOCKHOLDERS' EQUITY | ||||||
Member capital | (1,537,249,236) | (1,310,047,254) | ||||
Redeemable preferred stock and Series 2 redeemable preferred stock | ||||||
Common stock | ||||||
Additional paid-in-capital | ||||||
Accumulated deficit | ||||||
TOTAL STOCKHOLDERS' EQUITY | (1,537,249,236) | (1,310,047,254) | ||||
TOTAL LIABILITIES AND EQUITY | $ (1,537,249,236) | $ (1,310,047,254) |
Guarantee of L Bonds and Sell_4
Guarantee of L Bonds and Seller Trust L Bonds (Details 1) - USD ($) | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2019 | Jun. 30, 2019 | [1] | Sep. 30, 2018 | Sep. 30, 2019 | Jun. 30, 2019 | [2] | Sep. 30, 2018 | |
REVENUE | ||||||||
Gain (loss) on life insurance policies, net | $ 17,792,324 | $ 15,721,513 | $ 59,218,532 | $ 52,930,008 | ||||
Interest and other income | 4,418,655 | 5,215,515 | 12,219,762 | 6,863,640 | ||||
TOTAL REVENUE | 22,210,979 | 20,937,028 | 71,438,294 | 59,793,648 | ||||
EXPENSES | ||||||||
Interest expense | 28,289,670 | 21,799,332 | 83,751,611 | 55,010,519 | ||||
Employee compensation and benefits | 9,136,824 | 5,548,771 | 21,084,815 | 12,527,139 | ||||
Legal and professional fees | 2,594,467 | 1,421,964 | 10,263,230 | 3,751,321 | ||||
Other expenses | 3,549,265 | 2,688,970 | 12,315,434 | 8,262,324 | ||||
TOTAL EXPENSES | 43,570,226 | 31,459,037 | 127,415,090 | 79,551,303 | ||||
INCOME (LOSS) BEFORE EQUITY IN INCOME OF SUBSIDIARIES | (21,359,247) | (10,522,009) | (55,976,796) | (19,757,655) | ||||
EQUITY IN INCOME OF SUBSIDIARIES | ||||||||
INCOME (LOSS) BEFORE INCOME TAXES | (21,359,247) | (10,522,009) | (55,976,796) | (19,757,655) | ||||
INCOME TAX EXPENSE (BENEFIT) | ||||||||
NET INCOME (LOSS) BEFORE EARNINGS (LOSS) FROM EQUITY METHOD INVESTMENT | (21,359,247) | (10,522,009) | (55,976,796) | (19,757,655) | ||||
Earnings (loss) from equity method investment | 955,751 | (371,281) | ||||||
NET INCOME (LOSS) | (20,403,496) | (10,522,009) | (56,348,077) | (19,757,655) | ||||
Preferred stock dividends | 4,231,641 | 4,313,542 | 12,806,173 | 12,356,513 | ||||
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS | (24,635,137) | (14,835,551) | (69,154,250) | (32,114,168) | ||||
Parent [Member] | ||||||||
REVENUE | ||||||||
Gain (loss) on life insurance policies, net | ||||||||
Interest and other income | 257,050 | 3,333,424 | 1,438,068 | 4,447,322 | ||||
TOTAL REVENUE | 257,050 | 3,333,424 | 1,438,068 | 4,447,322 | ||||
EXPENSES | ||||||||
Interest expense | 24,573,192 | 16,739,120 | 71,753,380 | 38,758,326 | ||||
Employee compensation and benefits | 6,374,457 | 2,292,251 | 13,991,440 | 5,629,344 | ||||
Legal and professional fees | 1,816,531 | 483,512 | 6,146,443 | 1,290,614 | ||||
Other expenses | 2,094,036 | 1,590,823 | 8,548,645 | 5,082,525 | ||||
TOTAL EXPENSES | 34,858,216 | 21,105,706 | 100,439,908 | 50,760,809 | ||||
INCOME (LOSS) BEFORE EQUITY IN INCOME OF SUBSIDIARIES | (34,601,166) | (17,772,282) | (99,001,840) | (46,313,487) | ||||
EQUITY IN INCOME OF SUBSIDIARIES | 13,241,919 | 7,250,273 | 43,025,044 | 26,555,832 | ||||
INCOME (LOSS) BEFORE INCOME TAXES | (21,359,247) | (10,522,009) | (55,976,796) | (19,757,655) | ||||
INCOME TAX EXPENSE (BENEFIT) | ||||||||
NET INCOME (LOSS) BEFORE EARNINGS (LOSS) FROM EQUITY METHOD INVESTMENT | (21,359,247) | (55,976,796) | ||||||
Earnings (loss) from equity method investment | 955,751 | (371,281) | ||||||
NET INCOME (LOSS) | (20,403,496) | (10,522,009) | (56,348,077) | (19,757,655) | ||||
Preferred stock dividends | 4,231,641 | 4,313,542 | 12,806,173 | 12,356,513 | ||||
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS | (24,635,137) | (14,835,551) | (69,154,250) | (32,114,168) | ||||
Guarantor Subsidiary [Member] | ||||||||
REVENUE | ||||||||
Gain (loss) on life insurance policies, net | 2,231,897 | 4,122,153 | 6,783,129 | 12,135,832 | ||||
Interest and other income | 3,825,547 | 1,700,414 | 9,852,224 | 1,726,938 | ||||
TOTAL REVENUE | 6,057,444 | 5,822,567 | 16,635,353 | 13,862,770 | ||||
EXPENSES | ||||||||
Interest expense | ||||||||
Employee compensation and benefits | 2,080,646 | 3,086,682 | 5,791,512 | 5,881,219 | ||||
Legal and professional fees | 297,254 | 221,613 | 1,212,791 | 688,003 | ||||
Other expenses | 586,601 | 455,800 | 1,549,259 | 1,397,314 | ||||
TOTAL EXPENSES | 2,964,501 | 3,764,095 | 8,553,562 | 7,966,536 | ||||
INCOME (LOSS) BEFORE EQUITY IN INCOME OF SUBSIDIARIES | 3,092,943 | 2,058,472 | 8,081,791 | 5,896,234 | ||||
EQUITY IN INCOME OF SUBSIDIARIES | 11,448,079 | 6,266,481 | 39,802,437 | 23,824,330 | ||||
INCOME (LOSS) BEFORE INCOME TAXES | 14,541,022 | 8,324,953 | 47,884,228 | 29,720,564 | ||||
INCOME TAX EXPENSE (BENEFIT) | ||||||||
NET INCOME (LOSS) BEFORE EARNINGS (LOSS) FROM EQUITY METHOD INVESTMENT | 14,541,022 | 47,884,228 | ||||||
Earnings (loss) from equity method investment | ||||||||
NET INCOME (LOSS) | 14,541,022 | 8,324,953 | 47,884,228 | 29,720,564 | ||||
Preferred stock dividends | ||||||||
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS | 14,541,022 | 8,324,953 | 47,884,228 | 29,720,564 | ||||
Non-Guarantor Subsidiaries [Member] | ||||||||
REVENUE | ||||||||
Gain (loss) on life insurance policies, net | 15,560,427 | 11,599,360 | 52,435,403 | 40,794,176 | ||||
Interest and other income | 336,058 | 181,677 | 929,470 | 689,380 | ||||
TOTAL REVENUE | 15,896,485 | 11,781,037 | 53,364,873 | 41,483,556 | ||||
EXPENSES | ||||||||
Interest expense | 3,716,478 | 5,060,212 | 11,998,231 | 16,252,193 | ||||
Employee compensation and benefits | 681,721 | 169,838 | 1,301,863 | 1,016,576 | ||||
Legal and professional fees | 480,682 | 716,839 | 2,903,996 | 1,772,704 | ||||
Other expenses | 868,628 | 642,347 | 2,217,530 | 1,782,485 | ||||
TOTAL EXPENSES | 5,747,509 | 6,589,236 | 18,421,620 | 20,823,958 | ||||
INCOME (LOSS) BEFORE EQUITY IN INCOME OF SUBSIDIARIES | 10,148,976 | 5,191,801 | 34,943,253 | 20,659,598 | ||||
EQUITY IN INCOME OF SUBSIDIARIES | ||||||||
INCOME (LOSS) BEFORE INCOME TAXES | 10,148,976 | 5,191,801 | 34,943,253 | 20,659,598 | ||||
INCOME TAX EXPENSE (BENEFIT) | ||||||||
NET INCOME (LOSS) BEFORE EARNINGS (LOSS) FROM EQUITY METHOD INVESTMENT | 10,148,976 | 34,943,253 | ||||||
Earnings (loss) from equity method investment | ||||||||
NET INCOME (LOSS) | 10,148,976 | 5,191,801 | 34,943,253 | 20,659,598 | ||||
Preferred stock dividends | ||||||||
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS | 10,148,976 | 5,191,801 | 34,943,253 | 20,659,598 | ||||
Eliminations [Member] | ||||||||
REVENUE | ||||||||
Gain (loss) on life insurance policies, net | ||||||||
Interest and other income | ||||||||
TOTAL REVENUE | ||||||||
EXPENSES | ||||||||
Interest expense | ||||||||
Employee compensation and benefits | ||||||||
Legal and professional fees | ||||||||
Other expenses | ||||||||
TOTAL EXPENSES | ||||||||
INCOME (LOSS) BEFORE EQUITY IN INCOME OF SUBSIDIARIES | ||||||||
EQUITY IN INCOME OF SUBSIDIARIES | (24,689,998) | (13,516,754) | (82,827,481) | (50,380,162) | ||||
INCOME (LOSS) BEFORE INCOME TAXES | (24,689,998) | (13,516,754) | (82,827,481) | (50,380,162) | ||||
INCOME TAX EXPENSE (BENEFIT) | ||||||||
NET INCOME (LOSS) BEFORE EARNINGS (LOSS) FROM EQUITY METHOD INVESTMENT | (24,689,998) | (82,827,481) | ||||||
Earnings (loss) from equity method investment | ||||||||
NET INCOME (LOSS) | (24,689,998) | (13,516,754) | (82,827,481) | (50,380,162) | ||||
Preferred stock dividends | ||||||||
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS | $ (24,689,998) | $ (13,516,754) | $ (82,827,481) | $ (50,380,162) | ||||
[1] | Our portion of Beneficient's net earnings (loss) from April 1, 2019 to June 30, 2019. | |||||||
[2] | Our portion of Beneficient's net earnings (loss) from October 1, 2018 to June 30, 2019. |
Guarantee of L Bonds and Sell_5
Guarantee of L Bonds and Seller Trust L Bonds (Details 2) - USD ($) | 3 Months Ended | 9 Months Ended | |||||||
Sep. 30, 2019 | Jun. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Jun. 30, 2019 | Sep. 30, 2018 | ||||
CASH FLOWS FROM OPERATING ACTIVITIES | |||||||||
Net income (loss) | $ (20,403,496) | $ (10,522,009) | $ (56,348,077) | $ (19,757,655) | |||||
Adjustments to reconcile net income (loss) to net cash flows from operating activities: | |||||||||
Equity of subsidiaries | |||||||||
Change in fair value of life insurance policies | (14,180,970) | (24,839,567) | (48,031,195) | (56,058,336) | |||||
Amortization of deferred financing and issuance costs | 3,460,607 | 2,575,322 | 9,982,375 | 7,241,283 | |||||
Amortization of discount or premium on financing receivables | |||||||||
Accretion of discount on financing receivables from affiliates | (427,914) | (1,292,434) | |||||||
Provision for uncollectible policy benefits receivable | 200,897 | 200,897 | |||||||
(Earnings) Loss from equity method investment | (955,751) | [1] | 371,281 | [2] | |||||
Stock-based compensation | 700,688 | 528,461 | 1,365,219 | 788,865 | |||||
(Increase) decrease in operating assets: | |||||||||
Life insurance policy benefits receivable | (11,993,676) | 16,562,304 | (1,109,386) | 6,186,065 | |||||
Accrued interest on financing receivables | (2,078,175) | (4,284,370) | (5,123,774) | (4,284,370) | |||||
Other assets | 390,183 | 321,968 | (4,556,454) | (1,487,238) | |||||
Increase (decrease) in operating liabilities: | |||||||||
Accounts payable and other accrued expenses | (3,679,319) | 1,390,241 | (8,432,166) | 126,719 | |||||
NET CASH FLOWS USED IN OPERATING ACTIVITIES | (48,966,926) | (18,267,650) | (112,973,714) | (67,244,667) | |||||
CASH FLOWS FROM INVESTING ACTIVITIES | |||||||||
Investment in life insurance policies | (710,863) | (42,891,764) | (32,249,397) | (98,440,528) | |||||
Carrying value of matured life insurance policies | 6,639,919 | 2,325,989 | 20,684,967 | 13,557,632 | |||||
Financing receivables from affiliates issued | (50,000,000) | ||||||||
Equity method investment acquired | (1,421,059) | (10,000,000) | (1,421,059) | ||||||
Payment of capital contributions | |||||||||
NET CASH FLOWS USED IN INVESTING ACTIVITIES | 5,929,056 | (41,986,834) | (71,564,430) | (86,303,955) | |||||
CASH FLOWS FROM FINANCING ACTIVITIES | |||||||||
Borrowings on senior debt | [3] | 3,937,020 | 3,937,020 | 12,903,166 | |||||
Repayments of senior debt | [3] | (2,079,600) | (18,425,136) | (21,648,615) | (63,463,452) | ||||
Proceeds from issuance of L Bonds | 107,012,114 | 68,884,369 | 278,238,656 | 166,081,914 | |||||
Payments for issuance and redemptions of L Bonds | (61,679,235) | (20,195,657) | (108,656,765) | (46,151,926) | |||||
Issuance (repurchase) of common stock | 682,954 | 57,518 | 682,954 | ||||||
Common stock dividends | (25,709,412) | (25,709,412) | |||||||
Proceeds from Issuance of redeemable preferred stock | 56,238,128 | ||||||||
Proceeds from issuance of convertible preferred stock | 50,000,000 | 50,000,000 | |||||||
Payments for issuance of preferred stock | (4,142,294) | ||||||||
Payments for redemption of preferred stock | (2,920,292) | (821,778) | (6,134,538) | (2,361,692) | |||||
Preferred stock dividends | (4,231,641) | (4,313,542) | (12,806,173) | (12,356,513) | |||||
Issuance of member capital | |||||||||
NET CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES | 40,038,366 | 50,101,798 | 132,987,103 | 131,720,873 | |||||
NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH | (2,999,504) | (10,152,686) | (51,551,041) | (21,827,749) | |||||
CASH, CASH EQUIVALENTS AND RESTRICTED CASH | |||||||||
BEGINNING OF PERIOD | 76,884,673 | 131,096,113 | 125,436,210 | 120,943,427 | 142,771,176 | ||||
END OF PERIOD | 73,885,169 | 76,884,673 | 120,943,427 | 73,885,169 | 76,884,673 | 120,943,427 | |||
Eliminations [Member] | |||||||||
CASH FLOWS FROM OPERATING ACTIVITIES | |||||||||
Net income (loss) | (24,689,998) | (13,516,754) | (82,827,481) | (50,380,162) | |||||
Adjustments to reconcile net income (loss) to net cash flows from operating activities: | |||||||||
Equity of subsidiaries | 24,689,998 | 13,516,754 | 82,827,481 | 50,380,162 | |||||
Change in fair value of life insurance policies | |||||||||
Amortization of deferred financing and issuance costs | |||||||||
Amortization of discount or premium on financing receivables | |||||||||
Accretion of discount on financing receivables from affiliates | |||||||||
Provision for uncollectible policy benefits receivable | |||||||||
(Earnings) Loss from equity method investment | |||||||||
Stock-based compensation | |||||||||
(Increase) decrease in operating assets: | |||||||||
Life insurance policy benefits receivable | |||||||||
Accrued interest on financing receivables | |||||||||
Other assets | |||||||||
Increase (decrease) in operating liabilities: | |||||||||
Accounts payable and other accrued expenses | |||||||||
NET CASH FLOWS USED IN OPERATING ACTIVITIES | |||||||||
CASH FLOWS FROM INVESTING ACTIVITIES | |||||||||
Investment in life insurance policies | |||||||||
Carrying value of matured life insurance policies | |||||||||
Financing receivables from affiliates issued | |||||||||
Equity method investment acquired | |||||||||
Payment of capital contributions | 10,213,344 | 106,913,951 | 144,374,500 | 249,397,712 | |||||
NET CASH FLOWS USED IN INVESTING ACTIVITIES | 10,213,344 | 106,913,951 | 144,374,500 | 249,397,712 | |||||
CASH FLOWS FROM FINANCING ACTIVITIES | |||||||||
Borrowings on senior debt | |||||||||
Repayments of senior debt | |||||||||
Proceeds from issuance of L Bonds | |||||||||
Payments for issuance and redemptions of L Bonds | |||||||||
Issuance (repurchase) of common stock | |||||||||
Common stock dividends | |||||||||
Proceeds from Issuance of redeemable preferred stock | |||||||||
Proceeds from issuance of convertible preferred stock | |||||||||
Payments for issuance of preferred stock | |||||||||
Payments for redemption of preferred stock | |||||||||
Preferred stock dividends | |||||||||
Issuance of member capital | (10,213,344) | (106,913,951) | (144,374,500) | (249,397,712) | |||||
NET CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES | (10,213,344) | (106,913,951) | (144,374,500) | (249,397,712) | |||||
NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH | |||||||||
CASH, CASH EQUIVALENTS AND RESTRICTED CASH | |||||||||
BEGINNING OF PERIOD | |||||||||
END OF PERIOD | |||||||||
Parent [Member] | |||||||||
CASH FLOWS FROM OPERATING ACTIVITIES | |||||||||
Net income (loss) | (20,403,496) | (10,522,009) | (56,348,077) | (19,757,655) | |||||
Adjustments to reconcile net income (loss) to net cash flows from operating activities: | |||||||||
Equity of subsidiaries | (13,241,919) | (7,250,273) | (43,025,044) | (26,555,832) | |||||
Change in fair value of life insurance policies | |||||||||
Amortization of deferred financing and issuance costs | 3,196,852 | 2,311,567 | 9,191,110 | 6,450,018 | |||||
Amortization of discount or premium on financing receivables | 251,672 | 251,672 | |||||||
Accretion of discount on financing receivables from affiliates | |||||||||
Provision for uncollectible policy benefits receivable | |||||||||
(Earnings) Loss from equity method investment | (955,751) | 371,281 | |||||||
Stock-based compensation | 700,688 | 528,461 | 1,365,219 | 788,865 | |||||
(Increase) decrease in operating assets: | |||||||||
Life insurance policy benefits receivable | |||||||||
Accrued interest on financing receivables | (2,839,926) | (2,839,926) | |||||||
Other assets | 517,880 | (82,158) | (1,048,310) | (2,477,789) | |||||
Increase (decrease) in operating liabilities: | |||||||||
Accounts payable and other accrued expenses | (3,366,349) | 2,931,894 | (443,269) | 3,832,942 | |||||
NET CASH FLOWS USED IN OPERATING ACTIVITIES | (33,552,095) | (14,670,772) | (89,937,090) | (40,307,705) | |||||
CASH FLOWS FROM INVESTING ACTIVITIES | |||||||||
Investment in life insurance policies | |||||||||
Carrying value of matured life insurance policies | |||||||||
Financing receivables from affiliates issued | |||||||||
Equity method investment acquired | (1,421,059) | (10,000,000) | (1,421,059) | ||||||
Payment of capital contributions | (497,879) | (59,567,886) | (102,353,486) | (136,620,599) | |||||
NET CASH FLOWS USED IN INVESTING ACTIVITIES | (497,879) | (60,988,945) | (112,353,486) | (138,041,658) | |||||
CASH FLOWS FROM FINANCING ACTIVITIES | |||||||||
Borrowings on senior debt | |||||||||
Repayments of senior debt | |||||||||
Proceeds from issuance of L Bonds | 107,012,114 | 68,884,369 | 278,238,656 | 166,081,914 | |||||
Payments for issuance and redemptions of L Bonds | (61,679,235) | (20,195,657) | (108,656,765) | (46,151,926) | |||||
Issuance (repurchase) of common stock | 682,954 | 57,518 | 682,954 | ||||||
Common stock dividends | (25,709,412) | (25,709,412) | |||||||
Proceeds from Issuance of redeemable preferred stock | 56,238,128 | ||||||||
Proceeds from issuance of convertible preferred stock | 50,000,000 | 50,000,000 | |||||||
Payments for issuance of preferred stock | (4,142,294) | ||||||||
Payments for redemption of preferred stock | (2,920,292) | (821,778) | (6,134,538) | (2,361,692) | |||||
Preferred stock dividends | (4,231,641) | (4,313,542) | (12,806,173) | (12,356,513) | |||||
Issuance of member capital | |||||||||
NET CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES | 38,180,946 | 68,526,934 | 150,698,698 | 182,281,159 | |||||
NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH | 4,130,972 | (7,132,783) | (51,591,878) | 3,931,796 | |||||
CASH, CASH EQUIVALENTS AND RESTRICTED CASH | |||||||||
BEGINNING OF PERIOD | 57,570,832 | 123,017,408 | 113,293,682 | 115,884,625 | 111,952,829 | ||||
END OF PERIOD | 61,701,804 | 57,570,832 | 115,884,625 | 61,701,804 | 57,570,832 | 115,884,625 | |||
Guarantor Subsidiaries [Member] | |||||||||
CASH FLOWS FROM OPERATING ACTIVITIES | |||||||||
Net income (loss) | 14,541,022 | 8,324,953 | 47,884,228 | 29,720,564 | |||||
Adjustments to reconcile net income (loss) to net cash flows from operating activities: | |||||||||
Equity of subsidiaries | (11,448,079) | (6,266,481) | (39,802,437) | (23,824,330) | |||||
Change in fair value of life insurance policies | (2,251,068) | (3,485,452) | (8,713,865) | (9,691,293) | |||||
Amortization of deferred financing and issuance costs | |||||||||
Amortization of discount or premium on financing receivables | (251,672) | (251,672) | |||||||
Accretion of discount on financing receivables from affiliates | (427,914) | (1,292,434) | |||||||
Provision for uncollectible policy benefits receivable | |||||||||
(Earnings) Loss from equity method investment | |||||||||
Stock-based compensation | |||||||||
(Increase) decrease in operating assets: | |||||||||
Life insurance policy benefits receivable | 570,197 | (2,000,000) | 4,038,800 | (1,300,000) | |||||
Accrued interest on financing receivables | (2,078,175) | (1,444,444) | (5,123,774) | (1,444,444) | |||||
Other assets | (201,431) | 98,900 | (112,467) | 164,028 | |||||
Increase (decrease) in operating liabilities: | |||||||||
Accounts payable and other accrued expenses | 649,937 | (384,380) | (252,502) | (365,125) | |||||
NET CASH FLOWS USED IN OPERATING ACTIVITIES | (645,511) | (5,408,576) | (3,374,451) | (6,992,272) | |||||
CASH FLOWS FROM INVESTING ACTIVITIES | |||||||||
Investment in life insurance policies | (11,368,457) | (8,682,044) | (26,916,457) | ||||||
Carrying value of matured life insurance policies | 1,347,089 | 669,349 | 3,403,008 | 2,623,779 | |||||
Financing receivables from affiliates issued | (50,000,000) | ||||||||
Equity method investment acquired | |||||||||
Payment of capital contributions | (9,715,465) | (47,346,065) | (42,021,014) | (112,777,113) | |||||
NET CASH FLOWS USED IN INVESTING ACTIVITIES | (8,368,376) | (58,045,173) | (97,300,050) | (137,069,791) | |||||
CASH FLOWS FROM FINANCING ACTIVITIES | |||||||||
Borrowings on senior debt | |||||||||
Repayments of senior debt | |||||||||
Proceeds from issuance of L Bonds | |||||||||
Payments for issuance and redemptions of L Bonds | |||||||||
Issuance (repurchase) of common stock | |||||||||
Common stock dividends | |||||||||
Proceeds from Issuance of redeemable preferred stock | |||||||||
Proceeds from issuance of convertible preferred stock | |||||||||
Payments for issuance of preferred stock | |||||||||
Payments for redemption of preferred stock | |||||||||
Preferred stock dividends | |||||||||
Issuance of member capital | (1,010,542) | 58,589,352 | 97,007,915 | 134,538,735 | |||||
NET CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES | (1,010,542) | 58,589,352 | 97,007,915 | 134,538,735 | |||||
NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH | (10,024,429) | (4,864,397) | (3,666,586) | (9,523,328) | |||||
CASH, CASH EQUIVALENTS AND RESTRICTED CASH | |||||||||
BEGINNING OF PERIOD | 13,807,424 | 6,195,102 | 7,449,581 | 1,330,705 | 10,854,033 | ||||
END OF PERIOD | 3,782,995 | 13,807,424 | 1,330,705 | 3,782,995 | 13,807,424 | 1,330,705 | |||
Non-Guarantor Subsidiaries [Member] | |||||||||
CASH FLOWS FROM OPERATING ACTIVITIES | |||||||||
Net income (loss) | 10,148,976 | 5,191,801 | 34,943,253 | 20,659,598 | |||||
Adjustments to reconcile net income (loss) to net cash flows from operating activities: | |||||||||
Equity of subsidiaries | |||||||||
Change in fair value of life insurance policies | (11,929,902) | (21,354,115) | (39,317,330) | (46,367,043) | |||||
Amortization of deferred financing and issuance costs | 263,755 | 263,755 | 791,265 | 791,265 | |||||
Amortization of discount or premium on financing receivables | |||||||||
Accretion of discount on financing receivables from affiliates | |||||||||
Provision for uncollectible policy benefits receivable | 200,897 | 200,897 | |||||||
(Earnings) Loss from equity method investment | |||||||||
Stock-based compensation | |||||||||
(Increase) decrease in operating assets: | |||||||||
Life insurance policy benefits receivable | (12,563,873) | 18,562,304 | (5,148,186) | 7,486,065 | |||||
Accrued interest on financing receivables | |||||||||
Other assets | 73,734 | 305,226 | (3,395,677) | 826,523 | |||||
Increase (decrease) in operating liabilities: | |||||||||
Accounts payable and other accrued expenses | (962,907) | (1,157,273) | (7,736,395) | (3,341,098) | |||||
NET CASH FLOWS USED IN OPERATING ACTIVITIES | (14,769,320) | 1,811,698 | (19,662,173) | (19,944,690) | |||||
CASH FLOWS FROM INVESTING ACTIVITIES | |||||||||
Investment in life insurance policies | (710,863) | (31,523,307) | (23,567,353) | (71,524,071) | |||||
Carrying value of matured life insurance policies | 5,292,830 | 1,656,640 | 17,281,959 | 10,933,853 | |||||
Financing receivables from affiliates issued | |||||||||
Equity method investment acquired | |||||||||
Payment of capital contributions | |||||||||
NET CASH FLOWS USED IN INVESTING ACTIVITIES | 4,581,967 | (29,866,667) | (6,285,394) | (60,590,218) | |||||
CASH FLOWS FROM FINANCING ACTIVITIES | |||||||||
Borrowings on senior debt | 3,937,020 | 3,937,020 | 12,903,166 | ||||||
Repayments of senior debt | (2,079,600) | (18,425,136) | (21,648,615) | (63,463,452) | |||||
Proceeds from issuance of L Bonds | |||||||||
Payments for issuance and redemptions of L Bonds | |||||||||
Issuance (repurchase) of common stock | |||||||||
Common stock dividends | |||||||||
Proceeds from Issuance of redeemable preferred stock | |||||||||
Proceeds from issuance of convertible preferred stock | |||||||||
Payments for issuance of preferred stock | |||||||||
Payments for redemption of preferred stock | |||||||||
Preferred stock dividends | |||||||||
Issuance of member capital | 11,223,886 | 48,324,599 | 47,366,585 | 114,858,977 | |||||
NET CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES | 13,081,306 | 29,899,463 | 29,654,990 | 64,298,691 | |||||
NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH | 2,893,953 | 1,844,494 | 3,707,423 | (16,236,217) | |||||
CASH, CASH EQUIVALENTS AND RESTRICTED CASH | |||||||||
BEGINNING OF PERIOD | 5,506,417 | 1,883,603 | 4,692,947 | 3,728,097 | 19,964,314 | ||||
END OF PERIOD | $ 8,400,370 | $ 5,506,417 | $ 3,728,097 | $ 8,400,370 | $ 5,506,417 | $ 3,728,097 | |||
[1] | Our portion of Beneficient's net earnings (loss) from April 1, 2019 to June 30, 2019. | ||||||||
[2] | Our portion of Beneficient's net earnings (loss) from October 1, 2018 to June 30, 2019. | ||||||||
[3] | The line items Borrowings on senior debt and Repayments of senior debt for the three and nine months ended September 30, 2018 have been revised to present gross activity that was previously reported net as discussed in Note 2 Correction of an Immaterial Error. |
Guarantee of L Bonds and Sell_6
Guarantee of L Bonds and Seller Trust L Bonds (Details Textual) - USD ($) | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Guarantee of L Bonds and Seller Trust L Bonds (Textual) | |||
Percentage of common stock pledged as collateral | 12.00% | ||
Parent [Member] | |||
Guarantee of L Bonds and Seller Trust L Bonds (Textual) | |||
Increasing cash flows from operations | $ 59,600,000 | $ 136,600,000 | |
Guarantor [Member] | |||
Guarantee of L Bonds and Seller Trust L Bonds (Textual) | |||
Increasing cash flows from operations | $ 47,300,000 | $ 112,800,000 |
Concentration (Details)
Concentration (Details) | Sep. 30, 2019 | Dec. 31, 2018 |
John Hancock [Member] | ||
Summary of the face value of insurance contracts with specific life insurance companies | ||
Face value percentage of insurance policies with specific life insurance companies | 14.02% | 13.71% |
Lincoln National [Member] | ||
Summary of the face value of insurance contracts with specific life insurance companies | ||
Face value percentage of insurance policies with specific life insurance companies | 11.22% | 11.33% |
AXA Equitable [Member] | ||
Summary of the face value of insurance contracts with specific life insurance companies | ||
Face value percentage of insurance policies with specific life insurance companies | 10.65% | 10.83% |
Concentration (Details 1)
Concentration (Details 1) | Sep. 30, 2019 | Dec. 31, 2018 |
California [Member] | ||
Summary of the number of insurance contracts held in specific states exceeding 10% of the total face value held by the Company | ||
Percentage of insurance policies held in specific states | 17.38% | 18.02% |
Florida [Member] | ||
Summary of the number of insurance contracts held in specific states exceeding 10% of the total face value held by the Company | ||
Percentage of insurance policies held in specific states | 14.91% | 15.34% |
Concentration (Details Textual)
Concentration (Details Textual) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Beneficient [Member] | ||
Concentration (Textual) | ||
Description of credit risk arising from financial instruments | (i) acquired a limited partnership investment in the common units of BEN LP, (ii) entered into a Commercial Loan with BEN LP as borrower, and (iii) received an Option Agreement to acquire additional common units of BEN LP. The total carrying value of these investments at September 30, 2019 and December 31, 2018 was 650,444,000 and $584,173,000, respectively, representing 41.7% and 39.4%, respectively, of the Company's consolidated assets. Currently there is no liquid market for the common units of BEN LP and it is possible none will develop. Although we intend to hold the Commercial Loan to maturity, there is currently no liquid market for this loan and it is possible none will develop. | |
Life Insurance Portfolio [Member] | ||
Concentration (Textual) | ||
Percentage of portfolio | 10.00% |
Subsequent Events (Details)
Subsequent Events (Details) - Subsequent Event [Member] - USD ($) | Nov. 12, 2019 | Nov. 01, 2019 |
Subsequent Events (Textual) | ||
Issue of L bonds | $ 73,160,000 | |
Face value of insurance benefits | $ 14,544,000 | |
Insurtech Holdings [Member] | ||
Subsequent Events (Textual) | ||
Membership interest | 100.00% | |
Other commitment, description | In connection with the transaction, GWG contributed $1.25 million in cash to InsurTech Holdings and is committed to contribute an additional $18.75 million to the entity over the next two years. | |
LNV Corporation [Member] | ||
Subsequent Events (Textual) | ||
Additional collateral pledged | $ 298,300,000 | |
Senior credit facility | $ 300,000,000 | |
Maturity date | Sep. 27, 2029 | |
Interest rate, description | Interest will accrue on amounts borrowed under the Second Amended Facility at an annual interest rate, determined as of each date of borrowing or quarterly if there is no borrowing, equal to (a) 12-month LIBOR, plus (b) 7.50% per annum. | |
Subsequent events, description | As additional collateral and received an advance of approximately $37.1 million under the Second Amended Facility (inclusive of certain fees and expenses incurred in connection with the negotiation and entry into the Second Amended and Restated Agreement). After giving effect to such advance, the amount outstanding under the Second Amended Facility on November 1, 2019 was approximately $175.5 million. |