Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2020 | May 11, 2020 | |
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 | Mar. 31, 2020 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2020 | |
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 File Number | 001-36615 | |
Entity Interactive Data Current | Yes | |
Entity Incorporation State Country Code | DE | |
Entity Common Stock Shares Outstanding | 33,036,649 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
ASSETS | ||
Cash and cash equivalents | $ 116,432 | $ 79,073 |
Restricted cash | 26,446 | 20,258 |
Investment in life insurance policies, at fair value | 802,181 | 796,039 |
Life insurance policy benefits receivable, net | 15,330 | 23,031 |
Loans receivable, net of unearned income | 219,296 | 232,344 |
Allowance for loan losses | (700) | |
Loans receivable, net | 218,596 | 232,344 |
Fees receivable | 30,453 | 29,168 |
Financing receivables from affiliates | 68,290 | 67,153 |
Other assets | 33,906 | 30,135 |
Goodwill | 2,372,595 | 2,358,005 |
TOTAL ASSETS | 3,684,229 | 3,635,206 |
LIABILITIES | ||
Senior credit facility with LNV Corporation | 188,793 | 174,390 |
L Bonds | 1,009,781 | 926,638 |
Seller Trust L Bonds | 366,892 | 366,892 |
Other borrowings | 152,597 | 153,086 |
Interest and dividends payable | 22,403 | 16,516 |
Deferred revenue | 39,651 | 41,444 |
Accounts payable and accrued expenses | 21,139 | 27,836 |
Deferred tax liability, net | 40,206 | 57,923 |
TOTAL LIABILITIES | 1,841,462 | 1,764,725 |
Redeemable noncontrolling interests | 1,241,641 | 1,269,654 |
STOCKHOLDERS' EQUITY | ||
REDEEMABLE PREFERRED STOCK (par value $0.001; shares authorized 100,000; shares outstanding 69,756 and 84,636; liquidation preference of $70,163 and $85,130 as of March 31, 2020 and December 31, 2019, respectively) | 59,142 | 74,023 |
SERIES 2 REDEEMABLE PREFERRED STOCK (par value $0.001; shares authorized 150,000; shares outstanding 146,812 and 147,164; liquidation preference of $147,668 and $148,023 as of March 31, 2020 and December 31, 2019, respectively) | 127,516 | 127,868 |
COMMON STOCK (par value $0.001; shares authorized 210,000,000; shares issued and outstanding 30,535,249 and 30,533,793 as of March 31, 2020 and December 31, 2019, respectively) | 33 | 33 |
Common stock in treasury, at cost (2,500,000 shares as of both March 31, 2020 and December 31, 2019) | (24,550) | (24,550) |
Additional paid-in capital | 229,207 | 233,106 |
Accumulated deficit | (121,933) | (76,501) |
TOTAL GWG HOLDINGS STOCKHOLDERS' EQUITY | 269,415 | 333,979 |
Noncontrolling interests | 331,711 | 266,848 |
TOTAL STOCKHOLDERS' EQUITY | 601,126 | 600,827 |
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY | $ 3,684,229 | $ 3,635,206 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 210,000,000 | 210,000,000 |
Common stock, shares issued | 30,533,793 | |
Common stock, shares outstanding | 30,533,793 | |
Common stock, treasury shares | 2,500,000 | 2,500,000 |
Redeemable Preferred Stock | ||
Redeemable preferred stock, par value | $ 0.001 | $ 0.001 |
Redeemable preferred stock, shares authorized | 100,000 | 100,000 |
Redeemable preferred stock, shares outstanding | 69,756 | 84,636 |
Redeemable preferred stock, liquidation preference | $ 70,163 | $ 85,130 |
Series 2 Redeemable Preferred Stock | ||
Redeemable preferred stock, par value | $ 0.001 | $ 0.001 |
Redeemable preferred stock, shares authorized | 150,000 | 150,000 |
Redeemable preferred stock, shares outstanding | 146,812 | 147,164 |
Redeemable preferred stock, liquidation preference | $ 147,668 | $ 148,023 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
REVENUE | ||
Gain on life insurance policies, net | $ 14,445 | $ 21,496 |
Interest and other income | 19,112 | 3,721 |
TOTAL REVENUE | 33,557 | 25,217 |
EXPENSES | ||
Interest expense | 35,871 | 26,975 |
Employee compensation and benefits | 77,704 | 5,154 |
Legal and professional fees | 6,163 | 2,947 |
Provision for loan losses | 700 | |
Other expenses | 3,612 | 2,828 |
TOTAL EXPENSES | 124,050 | 37,904 |
LOSS BEFORE INCOME TAXES | (90,493) | (12,687) |
INCOME TAX BENEFIT | (14,507) | |
NET LOSS BEFORE LOSS FROM EQUITY METHOD INVESTMENT | (75,986) | (12,687) |
Loss from equity method investment | (1,530) | (1,927) |
NET LOSS | (77,516) | (14,614) |
Net loss attributable to noncontrolling interests | 32,084 | |
Less: Preferred stock dividends | 3,952 | 4,296 |
NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS | $ (49,384) | $ (18,910) |
NET LOSS PER COMMON SHARE | ||
Basic | $ (1.62) | $ (0.57) |
Diluted | $ (1.62) | $ (0.57) |
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING | ||
Basic | 30,534,977 | 32,984,741 |
Diluted | 30,534,977 | 32,984,741 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net loss | $ (77,516) | $ (14,614) |
Adjustments to reconcile net loss to net cash flows from operating activities: | ||
Change in fair value of life insurance policies | (12,177) | (15,571) |
Amortization of deferred financing and issuance costs | 4,211 | 3,100 |
Amortization of upfront fees | (1,793) | |
Amortization of debt premiums | (473) | |
Amortization and depreciation on long-lived assets | 172 | |
Accretion of discount on financing receivable from affiliate | (419) | |
Non-cash interest income | (13,374) | |
Non-cash interest expense | 676 | |
Loss from equity method investment | 1,530 | 1,927 |
Provision for loan losses | 700 | |
Deferred income tax | (17,717) | |
Equity-based compensation | 69,448 | 834 |
(Increase) decrease in operating assets: | ||
Life insurance policy benefits receivable | 7,701 | 7,261 |
Fees receivable | (1,285) | |
Accrued interest on financing receivable | (1,551) | |
Other assets | 368 | (3,942) |
Decrease in operating liabilities: | ||
Accounts payable and other accrued expenses | (1,103) | (3,328) |
NET CASH FLOWS USED IN OPERATING ACTIVITIES | (40,632) | (26,303) |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Investment in life insurance policies | (27,392) | |
Carrying value of matured life insurance policies | 6,035 | 8,701 |
Purchases of fixed assets | (481) | |
Equity method investments | (5,417) | |
Net change in loans receivable | 10,614 | |
NET CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES | 10,751 | (18,691) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Borrowings on senior debt | 14,074 | |
Repayments of senior debt | (2,373) | |
Proceeds from issuance of L Bonds | 109,053 | 125,985 |
Payments for issuance and redemption of L Bonds | (30,532) | (23,974) |
Issuance (repurchase) of common stock | 18 | (269) |
Payments for redemption of preferred stock | (15,233) | (819) |
Preferred stock dividends | (3,952) | (4,296) |
NET CASH FLOWS PROVIDED BY FINANCING ACTIVITIES | 73,428 | 94,254 |
NET INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH | 43,547 | 49,260 |
CASH, CASH EQUIVALENTS AND RESTRICTED CASH | ||
BEGINNING OF PERIOD | 99,331 | 125,436 |
END OF PERIOD | 142,878 | 174,696 |
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION | ||
Interest paid | 32,532 | 23,604 |
Premiums paid, including prepaid | 16,825 | 19,113 |
L Bonds: | ||
Conversion of accrued interest and commissions payable to principal | 660 | 634 |
Investment in life insurance policies included in accounts payable | 2,914 | |
Business combination measurement period adjustment: | ||
Reduction in loans receivable (see Note 4) | $ 14,590 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Changes in Stockholders' Equity (Unaudited) - USD ($) $ in Thousands | Preferred Stock | Common Stock | Additional Paid-in Capital | Accumulated Deficit | Treasury Stock | Total GWG Holdings Stockholders' Equity | Noncontrolling Interests | Total | Redeemable noncontrolling interests |
Beginning balance at Dec. 31, 2018 | $ 215,973 | $ 33 | $ 249,662 | $ (184,610) | $ 281,058 | ||||
Beginning balance, shares at Dec. 31, 2018 | 245,883 | 33,018,161 | |||||||
Net loss | (14,614) | (14,614) | |||||||
Issuance of common stock | 93 | 93 | |||||||
Issuance of common stock, shares | 17,135 | ||||||||
Repurchase of common stock | (361) | (361) | |||||||
Repurchase of common stock, shares | (42,690) | ||||||||
Redemption of redeemable preferred stock | $ (819) | (819) | |||||||
Redemption of redeemable preferred stock, shares | (819) | ||||||||
Preferred stock dividends | (4,296) | (4,296) | |||||||
Equity-based compensation | 198 | 198 | |||||||
Ending balance at Mar. 31, 2019 | $ 215,154 | $ 33 | 245,296 | (199,224) | 261,259 | ||||
Ending balance, shares at Mar. 31, 2019 | 245,064 | 32,992,606 | |||||||
Beginning balance at Dec. 31, 2019 | $ 201,891 | $ 33 | 233,106 | (76,501) | (24,550) | $ 333,979 | $ 266,848 | 600,827 | $ 1,269,654 |
Beginning balance, shares at Dec. 31, 2019 | 231,800 | 30,533,793 | |||||||
Net loss | (45,432) | (45,432) | (4,071) | (49,503) | (28,013) | ||||
Issuance of common stock | $ 18 | 18 | 18 | ||||||
Issuance of common stock, shares | 1,456 | ||||||||
Redemption of redeemable preferred stock | $ (15,233) | (15,233) | (15,233) | ||||||
Redemption of redeemable preferred stock, shares | (15,233) | ||||||||
Preferred stock dividends | (3,952) | (3,952) | (3,952) | ||||||
Equity-based compensation | 35 | 35 | 68,934 | 68,969 | |||||
Ending balance at Mar. 31, 2020 | $ 186,658 | $ 33 | $ 229,207 | $ (121,933) | $ (24,550) | $ 269,415 | $ 331,711 | $ 601,126 | $ 1,241,641 |
Ending balance, shares at Mar. 31, 2020 | 216,567 | 30,535,249 |
Nature of Business
Nature of Business | 3 Months Ended |
Mar. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Nature of Business | (1) Nature of Business Organizational Structure 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 ("DLP IV"). GWG Holdings' indirect interests in loans collateralized by cash flows from other alternative assets are held by The Beneficient Company Group, L.P. ("Ben LP," including all of the subsidiaries it may have from time to time — "Beneficient") and its general partner, Beneficient Management, L.L.C. ("Beneficient Management"). Prior to December 31, 2019, GWG Holdings' investment in Beneficient was accounted for as an equity method investment. On December 31, 2019, as more fully described below, Beneficient became a consolidated subsidiary of GWG Holdings. Ben LP is the general partner to Beneficient Company Holdings, L.P. ("BCH") and owns 100% of the Class A Subclass A-1 and A-2 Units of BCH. BCH is the holding company that directly or indirectly receives all active and passive income of Beneficient and allocates that income among the units issued by BCH. As of March 31, 2020, BCH has issued general partnership Class A Units (Subclass A-1 and A-2), Class S Ordinary Units, Class S Preferred Units, FLP Units (Subclass 1 and Subclass 2), Preferred Series A Subclass 1 Unit Accounts, and Preferred Series A Subclass 2 Units. BCH issued to Ben LP Preferred Series A Subclass 2 Units as part of the transaction with GWG Holdings discussed below. Preferred Series A Subclass 2 Units hold the same rights and privileges as the Preferred Series A Subclass 1 Unit Accounts. GWG Holdings also has a controlling financial interest in FOXO BioScience LLC ("FOXO", formerly InsurTech Holdings, LLC), which, through its wholly-owned subsidiaries Life Epigenetics Inc. ("Life Epigenetics") and youSurance General Agency, LLC ("youSurance"), seeks to commercialize epigenetic technology for the longevity industry and offer life insurance directly to customers utilizing epigenetic technology. All of the aforementioned legal entities are organized in Delaware, other than GWG Life Trust, which is governed by the laws of the state of Utah. Unless the context otherwise requires or we specifically so indicate, all references in this report to "we," "us," "our," "our Company," "GWG," or the "Company" refer to these entities collectively. Our headquarters are located in Dallas, Texas. Nature of Business GWG Holdings, through its wholly-owned subsidiary GWG Life, purchased life insurance policies in the secondary market and has built a large, actuarially diverse portfolio of life insurance policies backed by highly rated life insurance companies. These policies were purchased between April 2006 and November 2019 and were funded primarily through sales of L Bonds, as discussed in Note 10. Beginning in 2018, GWG Holdings made a strategic decision to reorient its business and increase capital allocated toward providing liquidity products to a broader range of alternative assets through investments in Beneficient. We believe that the investments in Beneficient will transform GWG Holdings from a niche provider of liquidity to owners of life insurance to a full-scale provider of trust and liquidity products and trust services to a broad range of alternative assets. As a result of such strategic decision, GWG Holdings' business today is focused on raising capital from securities offerings and using the proceeds from such offerings to grow GWG Holdings' alternative asset exposure through investments in Beneficient in the form of equity investments and/or loans to Beneficient or related entities. GWG Holdings believes funding Beneficient's operations will generally produce higher risk-adjusted returns than those we can generally achieve from life insurance policies acquired in the secondary market. Furthermore, although we believe that our portfolio of life insurance policies is a meaningful component of a diversified alternative asset portfolio, we do not anticipate purchasing additional life insurance policies in the secondary market, and we will continue to explore strategic alternatives for our life insurance portfolio aimed at maximizing its value, including a possible sale, refinancing or recapitalization of the portfolio. 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") sized institutions, which previously had few options to obtain early liquidity for their alternative assets holdings. On September 25, 2018, Beneficient's capital companies applied for trust charters from the Texas Department of Banking to merge into to-be organized limited trust associations. Beneficient submitted revised charter applications on March 6, 2020. As of May 15, 2020, the trust charters had not been issued to Beneficient. As such, Beneficient has closed a limited number of transactions to date, but intends to significantly expand its operations if and when the trust charters are issued. Beneficient was formed in 2003 but began its current operations 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) Ben Markets Management Holdings, L.P., formerly called ACE Portal, L.L.C. ("Ben Markets"), through which Beneficient plans to provide an online portal for direct access to Beneficient's financial services and products. Beneficient's primary operations pertain to its liquidity products whereby Beneficient extends loans collateralized by cash flows from illiquid alternative assets and provides services to the trustees who administer the collateral. Beneficient's core business products are its Exchange Trust, LiquidTrust and the InterChange Trust (introduced in 2020). Beneficient's clients select one of these products and place their alternative assets into the custody trust that is a constituent member of a trust structure called the "ExAlt Plan TM TM TM TM In 2018 and 2019, GWG Holdings and GWG Life consummated a series of transactions (as more fully described below) with Beneficient that has resulted in a significant reorientation of the Company's business and capital allocation strategy in addition to changes in the Company's Board of Directors and executive management team. The Exchange Transaction On August 10, 2018 (the "Initial Transfer Date"), the first of two closings was completed (the "Initial Transfer") as contemplated by a Master Exchange Agreement between GWG Holdings, GWG Life, 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 Holdings issued to the Seller Trusts Seller Trust L Bonds due 2023 (the "Seller Trust L Bonds") in an aggregate principal amount of $403.2 million, as more fully described below; ● Beneficient purchased 5,000,000 shares of GWG Holdings' 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 $50.0 million, which shares were subsequently transferred to the Seller Trusts; ● in consideration for GWG Holdings 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 $200.0 million (the "Commercial Loan"); ● Ben LP delivered to GWG Life a promissory note (the "Exchangeable Note") in the principal amount of $162.9 million; and ● the Seller Trusts delivered to GWG Holdings 4,032,349 common units of Ben LP ("Common Units") at an assumed value of $10 per unit. On December 28, 2018, the final closing of the above transaction occurred, and the following actions took place (the "Final Closing" and the date upon which the Final Closing occurred, 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 $182.0 million, (ii) the principal amount of the Exchangeable Note was reduced to $148.2 million, and (iii) the principal amount of the Seller Trust L Bonds was reduced to $366.9 million; ● the Seller Trusts refunded to GWG Holdings $0.8 million 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 $192.5 million; ● the Seller Trusts transferred to GWG Holdings an aggregate of 21,650,087 Common Units and GWG Holdings received 14,822,843 Common Units in exchange for the Exchangeable Note, upon completion of which GWG Holdings owned (including the 4,032,349 Common Units received by GWG Holdings on the Initial Transfer Date) 40,505,279 common units of Ben LP; ● Ben LP issued to GWG Holdings an option (the "Option Agreement") to acquire the number of Common Units, interests or other property that would be received by a holder of Preferred Series A Subclass 1 Unit Accounts of BCH; and ● GWG Holdings issued to the Seller Trusts 27,013,516 shares of GWG Holdings 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 Holdings to repurchase, in whole but not in part, the Seller Trust L Bonds held by such holder. The repurchase may be paid, at GWG Holdings' 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) Common Units, or a combination of cash and such property. The Seller Trust L Bonds are senior secured obligations of GWG Holdings, ranking junior only to all senior debt of GWG Holdings, pari passu in right of payment and in respect of collateral with all "L Bonds" of GWG Holdings (see Note 10), and senior in right of payment to all subordinated indebtedness of GWG Holdings. Payments under the Seller Trust L Bonds are guaranteed by GWG Life (see Note 18). Series B Convertible Preferred Stock The Series B converted into 5,000,000 shares of GWG Holdings common stock at a conversion price of $10 per share upon the Final Closing. Commercial Loan The $192.5 million principal amount under the Commercial Loan is due on August 9, 2023; however, it is extendable for two five-year terms. 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, GWG Holdings, 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. The Commercial Loan and its related interest are eliminated upon consolidation. Exchangeable Note At the Final Closing date, the principal amount of the Exchangeable Note was exchanged for 14,822,843 Common Units, 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, GWG Holdings entered into the Option Agreement with Ben LP. The Option Agreement gives GWG Holdings the option to acquire the number of Common Units that would be received by the holder of Preferred Series A Subclass 1 Unit Accounts of BCH, 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. The carrying value of the Option Agreement eliminates upon consolidation. Common Units of Ben LP In connection with the Initial Transfer and Final Closing, the Seller Trusts and Beneficient delivered to GWG Holdings 40,505,279 Common Units. These units represented an approximate 89.9% interest in the Common Units as of the Final Closing Date (although, on a fully diluted basis, GWG Holdings' ownership interest in Common Units would be reduced significantly below a majority of those issued and outstanding). These amounts eliminate upon consolidation. Purchase and Contribution Agreement On April 15, 2019, Jon R. Sabes, the former Chief Executive Officer and a former director of GWG Holdings, and Steven F. Sabes, the former Executive Vice President and a former director of GWG Holdings, entered into a Purchase and Contribution Agreement (the "Purchase and Contribution Agreement") with, among others, Ben LP. Under the Purchase and Contribution Agreement, Jon and Steven Sabes agreed to transfer all 3,952,155 of the shares of GWG Holdings' outstanding common stock held directly or indirectly by them to BCC (a subsidiary of Ben LP) and AltiVerse Capital Markets, L.L.C. ("AltiVerse"). AltiVerse is a limited liability company owned by an entity related to Beneficient's founders, including Brad K. Heppner (GWG Holdings' Chairman and Beneficient's Chief Executive Officer and Chairman) and an entity related to Thomas O. Hicks (one of Beneficient's current directors and a director of GWG Holdings). GWG Holdings 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 Holdings 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 Holdings' bylaws were amended to increase the maximum number of directors of GWG Holdings 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 nine directors. ● All seven members of GWG Holdings' Board of Directors prior to the closing resigned as directors of GWG, and 11 individuals designated by Beneficient were appointed as directors of GWG Holdings, leaving two board seats vacant after the closing. ● Jon R. Sabes resigned from all officer positions he held with GWG Holdings or any of its subsidiaries prior to the closing, other than his position as Chief Executive Officer of Life Epigenetics and youSurance. ● Steven F. Sabes resigned from all officer positions he held with GWG Holdings 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 Holdings or any of its subsidiaries in connection with such resignations or the Purchase and Contribution Transaction, and (ii) all equity awards of GWG Holdings held by either of them. ● Murray T. Holland was appointed as Chief Executive Officer of GWG Holdings. ● GWG Holdings entered into performance share unit agreements with certain of its employees 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 Holdings or one of its subsidiaries (or, if no longer employed, such employment was terminated by GWG Holdings 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 GWG Holdings, GWG Life, Messrs. Jon and Steven Sabes and the Bank of Utah, which provides that the shares of GWG Holdings' common stock acquired by BCC and AltiVerse pursuant to the Purchase and Contribution Agreement will continue to be pledged as collateral security for GWG Holdings' obligations owing in respect of the L Bonds and Seller Trust L Bonds. Indemnification Agreements On April 26, 2019, GWG Holdings 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 Holdings 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 Holdings' bylaws and generally provide that GWG Holdings 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. The Investment and Exchange Agreements On December 31, 2019, GWG Holdings, Ben LP, BCH, and Beneficient Management entered into a Preferred Series A Unit Account and Common Unit Investment Agreement (the "Investment Agreement"). Pursuant to the Investment Agreement, GWG Holdings transferred $79.0 million to Ben LP in return for 666,667 Common Units and a Preferred Series A Subclass 1 Unit Account of BCH. In connection with the Investment Agreement, GWG Holdings obtained the right to appoint a majority of the board of directors of Beneficient Management, the general partner of Ben LP. As a result, GWG Holdings obtained control of Ben LP and began reporting the results of Ben LP and its subsidiaries on a consolidated basis beginning on the transaction date of December 31, 2019. See Note 4 for more details on the accounting for the consolidation. GWG Holdings' right to appoint a majority of the board of directors of Beneficient Management will terminate in the event (i) GWG Holdings' ownership of the fully diluted equity of Ben LP (excluding equity issued upon the conversion or exchange of Preferred Series A Unit Accounts of BCH held as of December 31, 2019 by parties other than GWG Holdings) is less than 25%, (ii) the Continuing Directors of GWG Holdings cease to constitute a majority of the board of directors of GWG Holdings, or (iii) certain bankruptcy events occur with respect to GWG Holdings. The term "Continuing Directors" means, as of any date of determination, any member of the board of directors of GWG Holdings who: (1) was a member of the board of directors on December 31, 2019; or (2) was nominated for election or elected to the board of directors with the approval of a majority of the Continuing Directors who were members of the board of directors at the time of such nomination or election. Following the transaction, and as agreed upon in the Investment Agreement, GWG Holdings was issued an initial capital account balance for the Preferred Series A Subclass 1 Unit Account of $319.0 million. The other holders of the Preferred Series A Subclass 1 Unit Accounts are principally an entity related to the founders of Ben LP and an entity related to one of the directors of both GWG Holdings and Beneficient (the "Related Account Holders"), and the aggregate capital accounts of all holders of the Preferred Series A Subclass 1 Unit Accounts after giving effect to the investment by GWG Holdings was $1.6 billion. GWG Holdings' Preferred Series A Subclass 1 Unit Account is the same class of preferred security as held by the Related Account Holders. If the Related Account Holders exchange their Preferred Series A Subclass 1 Unit Accounts for securities of GWG Holdings, the Preferred Series A Subclass 1 Unit Account of GWG Holdings will also convert into Common Units (so neither GWG Holdings nor the founders would hold Preferred Series A Subclass 1 Unit Accounts). Also, on December 31, 2019, in a transaction related to the Investment Agreement, GWG Holdings transferred its interest in the Preferred Series A Subclass 1 Unit Account to its wholly-owned subsidiary, GWG Life. In addition, on December 31, 2019, GWG Holdings, Ben LP and the holders of Common Units entered into an Exchange Agreement (the "Exchange Agreement") pursuant to which the holders of Common Units from time to time have the right, on a quarterly basis, to exchange their Common Units for common stock of GWG Holdings. The exchange ratio in the Exchange Agreement is based on the ratio of the capital account associated with the Common Units to be exchanged to the market price of GWG Holdings common stock based on the volume weighted average price of GWG Holdings common stock for the five consecutive trading days prior to the quarterly exchange date. The Exchange Agreement is intended to facilitate the marketing of Ben LP's products to holders of alternative assets. The Exchange Transaction, the Purchase and Contribution Transaction, and the Investment and Exchange Agreements are referred to collectively as the "Beneficient Transactions." |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Summary of Significant Accounting Policies | (2) Summary of Significant Accounting Policies Basis of Presentation Significant accounting policies are detailed in Note 2 to the condensed consolidated financial statements included in the Company's 2019 Form 10-K. Summarized below are those new or revised significant accounting policies, including those that resulted from the consolidation of Beneficient on December 31, 2019. Use of Estimates Loans Receivable PCI loans reflect credit deterioration since origination such that it is probable as of the date of valuation that Beneficient will be unable to collect all contractually required payments. For PCI loans, expected cash flows as of the date of valuation in excess of the fair value of loans are recorded as interest income over the life of the loans using a level yield method if the timing and amount of the future cash flows is reasonably estimable. Subsequently, increases in cash flows over those expected at the acquisition date are recognized prospectively as interest income. Decreases in expected cash flows due to credit deterioration are recognized by recording an allowance for loan loss. Beneficient does not report PCI loans as nonperforming due to the accretion of interest income. For non-PCI loans, the difference between the fair value and unpaid principal balance ("UPB") of the loan as of the date of valuation is amortized or accreted to interest income over the contractual life of the loans using the effective interest method. In the event of prepayment, the remaining unamortized amount is recognized in interest income. Equity-Based Compensation Equity-based compensation expense is recorded in employee compensation and benefits in the condensed consolidated statements of operations. The determination of fair value of equity-based payment awards on the date of grant is affected by our stock price and a number of subjective variables. These variables include, but are not limited to, the expected stock price volatility over the term of the awards, the expected duration of the awards, the results of a probability-weighted discounted cash flow analysis and observable transactions. We account for the effects of forfeitures as they occur. 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. Earnings (Loss) per Common Share Net earnings, less any preferred dividends accumulated for the period (whether or not declared), is allocated to common stock. Basic earnings per common share is computed by dividing net earnings available to common stockholders by the weighted average number of common shares and the weighted average number of shares of exchangeable stock of a subsidiary ("exchangeable shares") outstanding during the period. Exchangeable shares are exchangeable for shares of GWG Holdings common stock and would participate in any dividend paid by GWG Holdings. Diluted earnings per common share is computed in a similar manner, except that first the denominator is increased to include the number of additional common shares that would have been outstanding if potentially dilutive common shares were issued using the treasury stock method in the case of restricted stock units, warrants and options, or the if-converted method in the case of RPS and RPS 2. Reclassification Newly Adopted Accounting Pronouncements Goodwill, (Topic 350) In August 2018, the Financial Accounting Standards Board ("FASB") issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework — Changes to the Disclosure Requirements for Fair Value Measurement Accounting Pronouncements Issued But Not Yet Adopted Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments ASU 2019-12, Income Taxes: Simplifying the Accounting for Income Taxes (Topic 740), ASU 2020-04, Reference Rate Reform |
Restrictions on Cash
Restrictions on Cash | 3 Months Ended |
Mar. 31, 2020 | |
Cash and Cash Equivalents [Abstract] | |
Restrictions on Cash | (3) Restrictions on Cash Under the terms of our second amended and restated senior credit facility with LNV Corporation (discussed in Note 10), 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 March 31, 2020 and December 31, 2019, there was a balance of $26.4 million and $20.3 million, respectively, in these collection and payment accounts. |
Business Combination
Business Combination | 3 Months Ended |
Mar. 31, 2020 | |
Business Combinations [Abstract] | |
Business Combination | (4) Business Combination Prior to December 31, 2019, GWG Holdings owned 41,505,279 Common Units, for a total limited partnership interest in the common units of Ben LP of approximately 90.2%. This investment was historically accounted for using the equity method (see Note 8). On December 31, 2019, GWG Holdings entered into the Investment Agreement and Exchange Agreement as described in Note 1. Pursuant to the Investment Agreement, GWG Holdings transferred $79.0 million to Ben LP in return for 666,667 additional Common Units and a Preferred Series A Subclass 1 Unit Account of BCH, which increased GWG Holdings' ownership of Common Units to approximately 95.5%. Also, on December 31, 2019, in a transaction related to the Investment Agreement, GWG Holdings transferred its interest in the Preferred Series A Subclass 1 Unit Account to its wholly-owned subsidiary, GWG Life. In connection with the Investment Agreement, GWG Holdings obtained the right to appoint a majority of the board of directors of Beneficient Management, the general partner of Ben LP. As a result, GWG Holdings obtained control of Ben LP, resulting in the consolidation of Ben LP as of December 31, 2019, in accordance with ASC 805, Business Combinations As a result of the change-of-control, GWG Holdings was required to remeasure its existing equity investment at fair value prior to consolidation. At December 31, 2019, GWG Holdings' equity investment in Common Units had a carrying value of $368.6 million, prior to the additional investment noted above. GWG Holdings estimated the fair value of its preexisting investment in Ben LP to be approximately $622.5 million, resulting in the recognition of a gain of $253.9 million during the fourth quarter of 2019. This gain was included in gain on consolidation of equity method investment in the Company's consolidated statement of operations for the year ended December 31, 2019. This gain was partially offset by the remeasurement to fair value of the Commercial Loan Agreement between GWG Life and Ben LP and the Option Agreement between GWG Holdings and Ben LP, which resulted in a net loss of $4.2 million. The net gain on consolidation of equity method investment after remeasurement of these preexisting balances was $249.7 million. GWG Holdings' proportionate share of the earnings or losses from Ben LP was recognized in earnings (loss) from equity method investment in the consolidated statement of operations from August 10, 2018 until December 31, 2019 (see Note 8 for further information) and was previously recorded on a one-quarter lag basis. In connection with the consolidation of Beneficient, the one-quarter lag was required to be discontinued. The following table summarizes the fair value measurement of the assets acquired and liabilities assumed (in thousands): Fair Value at Acquisition Date Measurement Period Adjustment (1) Adjusted Fair Value at Acquisition Date ASSETS Loans receivable (1) $ 232,344 $ (14,590 ) $ 217,754 Fees receivable 29,168 — 29,168 Investment in public equity securities 24,550 — 24,550 Other assets 14,053 — 14,053 Intangible assets (2) 3,449 — 3,449 Total identifiable assets acquired 303,564 (14,590 ) 288,974 LIABILITIES Other borrowings 153,086 — 153,086 Commercial loan agreement from parent 168,420 — 168,420 Other liabilities and deferred revenue 105,866 — 105,866 Accounts payable and accrued expenses 13,713 — 13,713 Total liabilities assumed 441,085 — 441,085 Net liabilities assumed (137,521 ) (14,590 ) (152,111 ) NONCONTROLLING INTERESTS Common Units not owned by GWG Holdings (3) 181,383 — 181,383 Class S Ordinary Units 85,448 — 85,448 Class S Preferred Units 17 — 17 Preferred Series A Subclass 1 Unit Accounts 1,269,654 — 1,269,654 Total noncontrolling interests 1,536,502 — 1,536,502 ACQUISITION CONSIDERATION Cash, less cash acquired 61,479 — 61,479 Fair value of preexisting investment in Common Units (4) 622,503 — 622,503 Fair value of noncontrolling interest 1,536,502 — 1,536,502 Total estimated consideration 2,220,484 — 2,220,484 Less: Net liabilities assumed (137,521 ) (14,590 ) (152,111 ) Resulting preliminary goodwill $ 2,358,005 $ 14,590 $ 2,372,595 (1) As a result of additional information obtained about the collateral value used in the valuation of the loan portfolio for certain collateral dependent loans, the Company recorded a measurement period adjustment during the first quarter of 2020, which resulted in a decrease to loans receivable of $14.6 million with a corresponding adjustment to goodwill. (2) Includes an insurance license valued at $3.1 million and a non-compete agreement valued at $0.3 million. (3) Calculated as 1,974,677 Common Units not owned by GWG Holdings at December 31, 2019, multiplied by the $15.00 per unit derived from the enterprise valuation of Beneficient. Also includes $151.8 million of equity-based payment awards that were granted by Beneficient prior to the change in control but were not replaced by awards of GWG Holdings upon the change in control. These awards were treated as noncontrolling interests in accordance with ASC 805, Business Combinations (4) Calculated as 41,505,279 Common Units owned by GWG Holdings prior to the change in control multiplied by the $15.00 per unit derived from the enterprise valuation of Beneficient. Methods Used to Determine Equity Value and to Fair Value Assets and Liabilities The following is a description of the valuation methodologies used to estimate the fair value of equity and the fair values of major categories of assets acquired and liabilities assumed. In many cases, determining the fair value of equity and the acquired assets and assumed liabilities required management to estimate cash flows expected from those assets and liabilities and to discount those cash flows at appropriate rates of interest. This determination required the utilization of significant estimates and management judgment in accounting for the 2019 change-of-control event. Loans receivable Cash and cash equivalents and fees receivable Investment in public equity securities Other assets Intangible assets Other borrowings and commercial loan agreement from parent Other liabilities and deferred revenue Accounts payable and accrued expenses Noncontrolling interests Goodwill The initial accounting for the estimates of equity values, which includes noncontrolling interests, the fair value of loans receivable, and any separately identifiable intangibles was based on the facts and circumstances that existed as of the acquisition date. Should management obtain new information during the measurement period, in addition to that discussed above, about facts and circumstances that existed at the acquisition date, further adjustments to the fair values assigned to these items could occur during the measurement period of one year from the acquisition date. Any such adjustment will result in corresponding adjustments to goodwill. The following unaudited pro forma financial information presents the combined results of operations of GWG Holdings for the three months ended March 31, 2019, as if the acquisition of Ben LP had occurred as of January 1, 2019 (in thousands, except per share data): Total Revenue Pro forma $ 43,935 As reported 25,217 Net Loss Attributable to Common Shareholders Pro forma $ (15,459 ) As reported (18,910 ) Net Loss per Diluted Common Share Pro forma $ (0.41 ) As reported (0.57 ) The unaudited pro forma financial information is presented for informational purposes only. It is not necessarily indicative of what our consolidated results of operations actually would have been had the acquisition occurred at the beginning of each year, nor does it attempt to project the future results of operations of the combined company. The unaudited pro forma financial information above gives effect to the following: ● Deconsolidation of certain Beneficient trusts included in the ExAlt Plan TM ● Reduction of Beneficient interest expense related to acquisition-date debt principal payments; and ● Elimination of intercompany transactions, including the Commercial Loan Agreement and Option Agreement |
Investment in Life Insurance Po
Investment in Life Insurance Policies | 3 Months Ended |
Mar. 31, 2020 | |
Investments, All Other Investments [Abstract] | |
Investment in Life Insurance Policies | (5) Investment in Life Insurance Policies The Company's investments in life insurance policies include unobservable inputs that are significant to their overall fair value. Changes in the fair value of these policies, net of premiums paid, are recorded in gain (loss) on life insurance policies, net in our consolidated statements of operations. Fair value is determined on a discounted cash flow basis that incorporates life expectancy assumptions generally derived from reports obtained from widely accepted life expectancy providers (other than insured lives covered under small face amount policies — those with $1 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 recently declined for us 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 March 31, 2020 and December 31, 2019. Portfolio Information Our portfolio of life insurance policies, owned by our subsidiaries as of March 31, 2020, is summarized below: Life Insurance Portfolio Summary Total life insurance portfolio face value of policy benefits (in thousands) $ 2,000,680 Average face value per policy (in thousands) $ 1,769 Average face value per insured life (in thousands) $ 1,900 Weighted average age of insured (years) 82.6 Weighted average life expectancy estimate (years) 7.2 Total number of policies 1,131 Number of unique lives 1,053 Demographics 74% Male; 26% Female Number of smokers 47 Largest policy as % of total portfolio face value 0.7 % Average policy as % of total portfolio face value 0.1 % Average annual premium as % of face value 3.5 % 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 March 31, 2020 As of December 31, 2019 Years Ending December 31, Number of Estimated (in thousands) Face Value Number of Estimated Face Value 2020 6 5,325 5,644 8 5,869 6,342 2021 41 49,578 61,040 55 62,061 79,879 2022 91 91,241 137,197 90 89,074 138,723 2023 123 120,539 212,493 128 123,352 222,369 2024 116 116,681 230,260 109 103,111 217,053 2025 112 77,648 179,796 113 74,223 171,961 Thereafter 642 341,169 1,174,250 648 338,349 1,184,646 Totals 1,131 $ 802,181 $ 2,000,680 1,151 $ 796,039 $ 2,020,973 We recognized life insurance benefits of $25.5 and $30.5 million during the three months ended March 31, 2020 and 2019, respectively, related to policies with a carrying value of $6.0 and $8.7 million, respectively, and as a result recorded realized gains of $19.5 and $21.8 million, respectively. A reconciliation of gain (loss) on life insurance policies is as follows (in thousands): Three Months Ended 2020 2019 Change in estimated probabilistic cash flows (1) $ 17,851 $ 17,131 Unrealized gain on acquisitions (2) — 4,459 Premiums and other annual fees (17,199 ) (15,832 ) Face value of matured policies 25,502 30,459 Fair value of matured policies (11,709 ) (14,721 ) Gain on life insurance policies, net $ 14,445 $ 21,496 (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. There were no policy acquisitions during the three months ended March 31, 2020. 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 (in thousands): Years Ending December 31, Premiums Servicing Total Nine months ending December 31, 2020 $ 49,708 $ 1,222 $ 50,930 2021 83,813 1,630 85,443 2022 96,636 1,630 98,266 2023 108,749 1,630 110,379 2024 118,269 1,630 119,899 2025 131,528 1,630 133,158 $ 588,703 $ 9,372 $ 598,075 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 second amended and restated senior credit facility with LNV Corporation 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: additional allocations to Beneficient; the purchase, policy premiums and servicing costs of additional life insurance policies; working capital; and financing expenditures including paying principal, interest and dividends. |
Loans Receivable
Loans Receivable | 3 Months Ended |
Mar. 31, 2020 | |
Receivables [Abstract] | |
Loans Receivable | (6) Loans Receivable Beneficient Loans Receivable Loans receivable held by the Company as of March 31, 2020 and December 31, 2019, were originated primarily through the initial capitalization transactions of Beneficient in 2017 and 2018. These loans are collateralized by the portfolio of alternative assets held in the custody of certain trusts of the ExAlt Plan TM Components of the carrying value of loans receivable were as follows for the periods presented below (in thousands): As of As of Loans receivable, net of unearned income $ 219,296 $ 232,344 Allowance for loan losses (700 ) — Loans receivable, net $ 218,596 $ 232,344 As described in Note 4, on December 31, 2019, a change-of-control event occurred that resulted in the application of push-down accounting, and all of Beneficient's assets and liabilities were recorded at fair value. Certain of the purchased loans were determined to be PCI loans under ASC 310-30, Loans and Debt Securities Acquired with Deteriorated Credit Quality, Nonrefundable Fees and Other Costs The following table reflects the fair value of non-PCI and PCI loans as of the date of the change-of control (in thousands): Fair value of non-PCI loans $ 86,436 Fair value of PCI loans $ 145,908 The fair value of PCI loans above does not include the downward measurement period adjustment to PCI loans of $14.6 million discussed in Note 4. The following table reflects the outstanding principal balance and carrying amounts of the non-PCI loans (in thousands): March 31, 2020 December 31, 2019 Carrying Value Unpaid Balance Carrying Value Unpaid Balance Loans receivable $ 89,135 $ 131,925 $ 86,436 $ 129,304 The following table reflects the outstanding principal balance and carrying amounts of the PCI loans (in thousands): March 31, 2020 December 31, 2019 Carrying Value Unpaid Balance Carrying Value Unpaid Balance Loans receivable $ 129,461 $ 298,127 $ 145,908 $ 296,627 Total contractually required payments receivable on PCI loans over the remaining contract period as of December 31, 2019 was $772.2 million. Cash flows expected to be collected at the acquisition date totalled $235.6 million. The difference between total cash flows expected to be collected and the fair value of the loans represents accretable yield. The following table presents a rollforward of the accretable yield for the three months ended March 31, 2020 (in thousands): Balance, beginning of period $ 89,647 Accretion (7,537 ) Decrease in accretable yield (a) (581 ) Balance, end of period $ 81,529 (a) Includes changes in the accretable yield due to both transfers from the nonaccretable difference and the impact of changes in the expected timing of cash flows. As of March 31, 2020, the allowance for loan losses related to PCI loans was $0.7 million. The loan loss provision expense related to PCI loans during the three months ended March 31, 2020 was $0.7 million. The changes in the allowance for loan losses for the three months ended March 31, 2020 are as follows (in thousands): Beginning balance $ — Provision 700 Charge-offs and other, net — Ending balance $ 700 As a result of the push-down accounting described in Note 4, the loans were recorded at fair value and there was no carryover allowance for loan losses recorded as of December 31, 2019. Beneficient recognizes charge-offs in the period in which they arise for its collateral-dependent loans. Therefore, impaired collateral-dependent loans are written down to their estimated net realizable value, based on disposition value. Promissory Note-LiquidTrusts 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 $65.0 million. Pursuant to the terms of the Promissory Note, GWG Life funded a term loan to the LiquidTrust Borrowers in an aggregate principal amount of $65.0 million (the "Loan"), which Loan was funded in two installments as described below. The Loan was made pursuant to GWG Holdings' 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 Texas Department of Banking 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 GWG Holdings owns approximately 95% of the issued and outstanding Common Units (although, on a fully diluted basis, GWG Holdings' ownership interest in Common Units 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 $50.0 million was funded on June 3, 2019 and, subsequent to satisfaction of certain customary conditions, the second advance in the principal amount of $15.0 million was funded on November 22, 2019. The Loan bears interest at 7.0% per annum, with interest payable at maturity, and matures on June 30, 2023. The loan is reported in financing receivables from affiliates in the consolidated balance sheets and included accrued interest receivable of $3.3 million and $2.2 million as of March 31, 2020 and December 31, 2019, respectively. 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 HCLP Nominees, L.L.C. ("HCLP"), as Senior Lender) and events of default. HCLP is indirectly associated with one of Beneficient's founders, who is also Chairman of the Board of Directors of GWG Holdings. Intercreditor Agreements In connection with the Promissory Note, GWG Life also entered into two intercreditor and subordination agreements: (1) an Intercreditor Agreement between GWG Life and HCLP and (2) an Intercreditor Agreement between GWG Life and Beneficient Holdings, Inc. ("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 Lender (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 Lender), 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 Lender has agreed not to extend the maturity of its loan obligations beyond June 30, 2023 or increase the outstanding principal of the loans made by the Senior Lender 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 Lender (such consent not to be unreasonably withheld) or to the Company or direct or indirect wholly-owned subsidiaries thereof. |
Fair Value Definition and Hiera
Fair Value Definition and Hierarchy | 3 Months Ended |
Mar. 31, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair Value Definition and Hierarchy | (7) Fair Value Definition and Hierarchy ASC 820, Fair Value Measurements and Disclosures ASC 820 maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring the use of observable inputs whenever available. Observable inputs are inputs that market participants would use in pricing the asset or liability developed based on market data obtained from third-party 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 fair value hierarchy prioritizes the inputs 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 as of the measurement date. Valuations are based on quoted prices that are readily and regularly available in an active market. Level 2 — Valuations based quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable market data. Level 3 — Valuations based on inputs that are unobservable, are derived from other valuation methodologies, including option pricing models, discounted cash flow models and similar techniques, and are not based on market exchange, dealer, or broker traded transactions. Level 3 valuations incorporate certain assumptions and projections in determining the fair value assigned to such instruments. A financial instrument's categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the 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. Financial instruments measured at fair value on a recurring basis The Company's financial assets and liabilities carried at fair value on a recurring basis, including the level in the fair value hierarchy, on March 31, 2020 and December 31, 2019 are presented below (in thousands). As of March 31, 2020 Level 1 Level 2 Level 3 Total Assets: Investments in life insurance policies $ — $ — $ 802,181 $ 802,181 As of December 31, 2019 Level 1 Level 2 Level 3 Total Assets: Investments in life insurance policies $ — $ — $ 796,039 $ 796,039 The following is a description of the valuation methodologies used for financial instruments measured at fair value on a recurring basis: Investments in life insurance policies 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. Under our Longest Life Expectancy portfolio valuation methodology, we: i) utilize life expectancy reports from third-party life expectancy providers for the pricing of all life insurance policies; ii) apply a stable valuation methodology driven by the experience of our life insurance portfolio, which is re-evaluated if experience deviates by a specified margin; and iii) use relevant market observations that can be validated and mapped to the discount rate used to value the life insurance portfolio. 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 (in thousands): Three Months Ended 2020 2019 Beginning balance $ 796,039 $ 747,922 Total gain in earnings (1) 12,177 15,571 Purchases — 27,393 Settlements (2) (6,035 ) (8,701 ) Transfers into Level 3 — — Transfers out of Level 3 — — Ending balance $ 802,181 $ 782,185 (1) Net change in fair value (2) Policy maturities at initial cost basis The net activity in the table above is reported in gain on life insurance policies, net, in the condensed consolidated statements of operations. There were no net unrealized gains/losses for Level 3 assets included in other comprehensive income as of March 31, 2020 and 2019. There have been no transfers between levels for any assets or liabilities recorded at fair value on a recurring basis or any changes in the valuation techniques used for measuring the fair value as of March 31, 2020 and December 31, 2019. The following table provides quantitative information about the significant unobservable inputs used in the fair value measurement of the Company's Level 3 fair value assets: As of As of Weighted-average age of insured, years* 82.6 82.4 Age of insured range, years 63-101 62-101 Weighted-average life expectancy, months* 86.6 86.2 Life expectancy range, months 0-240 0-240 Average face amount per policy (in thousands) $ 1,769 $ 1,756 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 (in thousands): Change in Life Expectancy Estimates minus minus plus plus March 31, 2020 $ 112,668 $ 57,263 $ (55,449 ) $ (110,453 ) December 31, 2019 $ 113,812 $ 57,753 $ (55,905 ) $ (111,340 ) Change in Discount Rate minus 2% minus 1% plus 1% plus 2% March 31, 2020 $ 89,558 $ 42,637 $ (38,865 ) $ (74,399 ) December 31, 2019 $ 91,890 $ 43,713 $ (39,790 ) $ (76,118 ) Financial instruments measured at fair value on a non-recurring basis There were no assets or liabilities measured at fair value on a non-recurring basis as of March 31, 2020. As of December 31, 2019, Beneficient's assets and liabilities were recorded at fair value in the consolidated balance sheet due to the application of purchase accounting in accordance with ASC 805 as described in Note 4 . Carrying amounts and estimated fair values The Company is required to disclose the estimated fair value of financial instruments, whether or not recognized in the consolidated balance sheets, for which it is practicable to estimate those values. These fair value estimates are determined based on relevant market information and information about the financial instruments. Fair value estimates are intended to represent the price at which an asset could be sold or the price at which a liability could be settled. However, given there is no active market or observable market transactions for many of the Company's financial instruments, estimates of fair values are subjective in nature, involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimated values. Nonfinancial instruments are excluded from disclosure requirements. The carrying amounts and estimated fair values of the Company's financial instruments not recorded at fair value, were as noted in the tables below (in thousands). As of March 31, 2020 Level in Fair Carrying Estimated Financial assets: Cash, cash equivalents and restricted cash 1 $ 142,878 $ 142,878 Life insurance policy benefits receivable, net 1 15,330 15,330 Fees receivable 1 30,453 30,453 Loans receivable, net of allowance for loan losses 3 218,596 206,531 Financing receivables from affiliates 2 68,290 61,042 Financial liabilities: Senior credit facility 2 $ 188,793 $ 198,661 L Bonds and Seller Trust L bonds 2 1,376,673 1,492,433 Other borrowings 2 152,597 152,597 As of December 31, 2019 Level in Fair Carrying Estimated Financial assets: Cash, cash equivalents and restricted cash 1 $ 99,331 $ 99,331 Life insurance policy benefits receivable, net 1 23,031 23,031 Fees receivable 1 29,168 29,168 Loans receivable, net of allowance for loan losses 3 232,344 232,344 Financing receivables from affiliates 2 67,153 59,608 Financial liabilities: Senior credit facility with LNV Corporation 2 $ 174,390 $ 184,587 L Bonds and Seller Trust L Bonds 2 1,293,530 1,390,288 Other borrowings 2 153,086 153,086 The following methods and assumptions were used in estimating the fair values of each of the assets and liabilities in the tables above: Cash, Cash Equivalents and Restricted Cash The carrying amounts reported in the consolidated balance sheets for cash, cash equivalents and restricted cash approximate their fair values. Life Insurance Policy Benefits Receivable The carrying value of life insurance policy benefits receivable approximate fair value due to their short-term maturities and low credit risk. Fees Receivable The carrying value of fees receivable generally approximates fair value. Loans Receivable, Net of Allowance for Loan Losses The loan portfolio was valued using current accounting guidance that defines fair value as the price that would be received to sell an asset or transfer a liability in an orderly transaction between market participants at the measurement date. Level 3 inputs were utilized to value the loan portfolio and included the use of present value techniques employing cash flow estimates and incorporated assumptions that marketplace participants would use in estimating fair values, specifically market interest rate and general credit fair value assumptions. In instances where reliable market information was not available, management used assumptions in an effort to determine reasonable fair value. As discussed in Note 4, Beneficient's assets and liabilities, including loans receivable, were recorded at fair value as a result of the change-of-control event on December 31, 2019. Accordingly, there was no carryover related allowance for loan losses. Financing Receivables from Affiliates The fair value of the Promissory Note receivable from the LiquidTrusts (see Note 6) was measured utilizing an implied yield of 10.0% based on a market yield analysis for similar instruments with similar credit profiles. Senior Credit Facility with LNV Corporation The carrying value of the LNV Credit Facility reflects interest charged at 12-month LIBOR plus an applicable margin, net of unamortized deferred financing costs. 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 outstanding principal balance of the facility approximates its fair value. L Bonds and Seller Trust L Bonds The measurement of the fair values of L Bonds and Seller Trust L Bonds, largely containing the same terms, were determined using weighted-average market interest rates of 6.21% and 6.34% as of March 31, 2020 and December 31, 2019, respectively. Other Borrowings The measurement of the fair values of these debt instruments is based on market prices that generally are observable for similar liabilities at commonly quoted intervals and are considered a Level 2 fair value measurement. The carrying value approximates fair value as of March 31, 2020. As discussed in Note 4, Beneficient's assets and liabilities, including these other borrowings, were recorded at fair value as a result of the change-of-control event on December 31, 2019. Other Fair Value Considerations 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 both March 31, 2020 and December 31, 2019, we fully reserved for the entire $2.2 million of GWG MCA's outstanding loans based on the low likelihood of collectibility on these loans. 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. |
Equity Method Investments
Equity Method Investments | 3 Months Ended |
Mar. 31, 2020 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Equity Method Investments | (8) Equity Method Investments FOXO BioScience LLC (formerly, InsurTech Holdings, LLC) On November 11, 2019, GWG contributed the common stock and membership interests of its wholly-owned subsidiaries, Life Epigenetics and youSurance, ("Insurtech Subsidiaries") to a legal entity, FOXO, in exchange for a membership interest in FOXO. Although GWG Holdings currently owns 100% of FOXO's equity, we do not have a controlling financial interest in FOXO because the managing member has substantive participating rights. Therefore, we account for our ownership interest in FOXO as an equity method investment. The transaction resulted in a loss of control of the Insurtech Subsidiaries and, as a result, we deconsolidated the subsidiaries and recorded an equity method investment balance during the fourth quarter of 2019. The loss of control required us to measure the equity investment at fair value. We determined the fair value of our investment in FOXO approximated the carrying value of $3.4 million, which was primarily comprised of cash and fixed assets contributed to the entity during the fourth quarter of 2019. We recognized a loss on equity method investment of $1.6 million during the fourth quarter of 2019, resulting in an ending balance of $1.8 million as of December 31, 2019. We made additional cash contributions of $5.4 million and recognized a loss on equity method investment of $1.5 million during the three months ended March 31, 2020, resulting in an ending balance of $5.6 million as of March 31, 2020. In accordance with the operating agreement of FOXO, GWG Holdings is committed to contribute an additional $12.5 million to the entity through October 2021. Our investment in the membership interest of FOXO is presented in other assets in our consolidated balance sheets. Our proportionate share of earnings or losses from our investee is recognized in earnings (loss) from equity method investments in our consolidated statements of operations. The Beneficient Company Group, L.P. During 2018, we acquired 40.5 million Common Units for a total limited partnership interest in the common units of Ben LP of approximately 89.9% as of December 31, 2018. On June 12, 2019, we acquired an additional 1,000,000 Common Units from a third party for a cash investment of $10.0 million. On December 31, 2019, we acquired an additional 666,667 newly-issued Common Units for a cash investment of $10.0 million. The Common Units are not publicly traded on a stock exchange. Prior to December 31, 2019, our investment in Common Units was presented in equity method investment on our consolidated balance sheets. Our proportionate share of earnings or losses from our investee was recognized in earnings (loss) from equity method investments in our consolidated statements of operations. We recorded our share of the income or loss of Beneficient through September 30, 2019, on a one-quarter lag. On December 31, 2019, we obtained control of Beneficient and consolidated Beneficient as of that date in accordance with ASC 805, Business Combinations Financial information pertaining to Beneficient is summarized in the table below (in thousands): October 1 to Total revenues $ 25,306 Net loss (41,644 ) Net loss attributable to Ben LP common unitholders (13,192 ) GWG portion of net earnings (loss) (1) (1,927 ) (1) Our portion of Beneficient's net earnings (loss) for the period noted. This amount was recognized during the three months ended March 31, 2019, in accordance with our one-quarter lag election. We eliminated the effects of any intercompany transactions in the summarized information presented above. Our historical ownership percentage of our investment in Common Units is as follows: Date Percentage of outstanding Common Units Reason August 10, 2018 13.9% Purchase of units December 28, 2018 89.9% Purchase of units March 31, 2019 88.1% Change in investee outstanding units June 12, 2019 90.2% Purchase of units December 31, 2019 95.5% Purchase of units There was no change in GWG Holdings' percentage ownership in Beneficient during the three months ended March 31, 2020. |
Variable Interest Entities
Variable Interest Entities | 3 Months Ended |
Mar. 31, 2020 | |
Variable Interest Entity [Abstract] | |
Variable Interest Entities | (9) Variable Interest Entities In accordance with ASC 810, Consolidation Prior to December 31, 2019, we determined that Beneficient was a VIE, but that we were not the primary beneficiary of the VIE. GWG Holdings did not have the power to direct any activities of Beneficient, or any of its related parties, that most significantly impacted Beneficient's economic performance. GWG Holdings had no board representation at Ben LP or at its general partner. The general partner was exclusively assigned all management powers over the business and affairs of Beneficient, and the limited partners did not have the ability to remove the general partner. Therefore, GWG Holdings did not consolidate the results of Beneficient in our condensed consolidated financial statements until the change-of-control occurred on December 31, 2019. Prior to the change-of-control, GWG Holdings' exposure to risk of loss in Beneficient was generally limited to its investment in Common Units, its financing receivable from Beneficient and its equity security investment in the Option Agreement to purchase additional common units of Ben LP. Effective December 31, 2019, GWG Holdings obtained the ability to appoint a majority of the board of directors of the general partner of Ben LP. As a result, GWG Holdings became the primary beneficiary of Ben LP on December 31, 2019, and consolidated Beneficient on that date. We determined that the LiquidTrust Borrowers are VIEs, but that we are not the primary beneficiary of these VIEs. 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 Company also determined that certain other trusts included within the ExAlt TM We determined that FOXO is a VIE, but that we are not the primary beneficiary of the VIE. We do not have the power to direct any activities of FOXO that most significantly impact its economic performance. The Company's exposure to risk of loss in FOXO is limited to its equity method investment in the membership interests of FOXO and its remaining unfunded capital commitments. The following table shows the classification, carrying value and maximum exposure to loss with respect to the Company's unconsolidated VIEs (in thousands): March 31, 2020 December 31, 2019 Carrying Maximum Carrying Maximum Loans receivable $ 218,596 $ 322,748 $ 232,344 $ 335,255 Financing receivables from affiliates 68,290 68,290 67,153 67,153 Equity method investment 5,648 18,148 1,761 19,661 Accounts payable and accrued expenses (2,538 ) — (2,515 ) — Total $ 289,996 $ 409,186 $ 298,743 $ 422,069 |
Debt
Debt | 3 Months Ended |
Mar. 31, 2020 | |
Debt Disclosure [Abstract] | |
Debt | (10) Debt Senior Credit Facility with LNV Corporation On November 1, 2019, DLP IV entered into a second amended and restated senior credit facility with LNV Corporation, as lender, and CLMG Corp., as the administrative agent on behalf of the lenders under the agreement (the "LNV Credit Facility"), which replaced the amended and restated senior credit facility dated September 27, 2017 that previously governed DLP IV's senior credit facility. The LNV Credit Facility makes available a total of up to $300.0 million 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 LNV Credit 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 LNV 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 March 31, 2020 was 9.50%. Interest payments are made on a quarterly basis. Under the LNV Credit Facility, DLP IV has granted the administrative agent, for the benefit of the lenders under the agreement, a security interest in all of DLP IV's assets. In conjunction with entering into the LNV Credit Facility, 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 (inclusive of certain fees and expenses incurred in connection with the negotiation and entry into the LNV Credit Facility). The LNV Credit Facility has certain financial and nonfinancial covenants, and we were in compliance with these covenants at March 31, 2020 and as of the date of this filing. As of March 31, 2020, approximately 77.1% of the total face value of our life insurance policies portfolio is pledged to LNV Corporation. The principal amount outstanding under this facility was $198.7 million and $184.6 million at March 31, 2020 and December 31, 2019, respectively. Obligations under the LNV 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 consolidated balance sheets is due to netting of unamortized debt issuance costs. 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 were 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, a registration statement relating to an additional public offering was declared effective permitting us to sell up to an additional $1.0 billion in principal amount of L Bonds on a continuous basis until December 2020. This offering contains the same terms and features as the previous offering. As of May 11, 2020, we had remaining capacity of approximately $70.0 million under our current registered L Bond offering. On March 30, 2020, we filed a registration statement to offer up to $2.0 billion in principal amount of L Bonds on a continuous basis until the third anniversary of the effective date of the registration statement. These bonds contain the same terms and features as our previous offerings. 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. Effective December 31, 2019, we entered into Amendment No. 2 to the indenture which primarily modified the calculation of the debt coverage ratio to allow the Company greater flexibility to finance and to anticipate the potential impacts of GWG Holdings' expanding relationship with Beneficient. We were in compliance with the covenants of the indenture at March 31, 2020, and as of the date of this filing, and no events of default (as defined in the 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 below. 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 collateral and guarantee provisions of the L Bonds and Seller Trust L Bonds are described in Note 18. 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 March 31, 2020 and December 31, 2019, the weighted-average interest rate of our L Bonds was 7.18% and 7.15%, respectively. The principal amount of L Bonds outstanding was $1.0 billion and $948.1 million at March 31, 2020 and December 31, 2019, respectively. The difference between the amount of outstanding L Bonds and the carrying amount on our 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 $3.9 million and $2.8 million for the three months ended March 31, 2020 and 2019, respectively. Future expected amortization of deferred financing costs as of March 31, 2020 is $41.2 million in total over the next seven years. Seller Trust L Bonds On August 10, 2018, in connection with the Initial Transfer of the Exchange Transaction described in Note 1, GWG Holdings issued Seller Trust L Bonds in the amount of $366.9 million to the Seller Trusts. 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. After December 28, 2020, the holders of the Seller Trust L Bonds will have the right to cause GWG Holdings to repurchase, in whole but not in part, the Seller Trust L Bonds held by such holder. The repurchase may be paid, at the option of GWG Holdings, in the form of cash, and/or a pro rata portion of (i) the outstanding principal amount and accrued and unpaid interest under the commercial loan between GWG Life and Ben LP entered into on August 10, 2018 and (ii) Common Units, or a combination of cash and such property. The principal amount of Seller Trust L Bonds outstanding was $366.9 million at both March 31, 2020 and December 31, 2019. Other Borrowings Beneficient had borrowings with an aggregate carrying value of $152.6 million and $153.1 million as of March 31, 2020 and December 31, 2019, respectively. This aggregate outstanding balance includes a senior credit agreement and a subordinate credit agreement with respective balances, including accrued interest, of $77.5 million and $72.2 million at both March 31, 2020 and December 31, 2019. These amounts exclude an aggregate unamortized premium of $0.4 million and $0.9 million as of March 31, 2020 and December 31, 2019, respectively. Both loans accrue interest at a rate of 1-month LIBOR plus 3.95%, compounded daily, with interest due by the 15 th Beneficient has additional borrowings maturing in 2023 and 2024 with an aggregate carrying value of $2.5 million as of both March 31, 2020 and December 31, 2019. |
Stockholders' Equity
Stockholders' Equity | 3 Months Ended |
Mar. 31, 2020 | |
Equity [Abstract] | |
Stockholders' Equity | (11) Stockholders' Equity Common Stock In September 2014, GWG Holdings consummated an initial public offering of its 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, the common stock of GWG Holdings was listed on the Nasdaq Capital Market under the ticker symbol "GWGH." The 2018 transactions between GWG Holdings, GWG Life, Beneficient and the Seller Trusts described in Note 1 ultimately resulted in the issuance of 27,013,516 shares of GWG Holdings common stock to the Seller Trust in exchange for 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. Also, the Purchase and Contribution Agreement described in Note 1 ultimately resulted in the sale of 2,500,000 shares of GWG Holdings common stock to BCC, and the contribution of 1,452,155 shares of GWG Holdings common stock to AltiVerse. Pursuant to the Exchange Agreement described in Note 1, on December 31, 2019, holders of Ben LP common units have the right to exchange their common units for common stock of GWG Holdings. The exchange ratio in the Exchange Agreement is based on the ratio of the capital account associated with the common units to be exchanged to the market price of the common stock of GWG Holdings based on the volume weighted average price of GWG Holdings' common stock for the five consecutive trading days prior to the quarterly exchange date. No Ben LP common units have been exchanged for common stock of GWG Holdings through March 31, 2020. On November 15, 2018, the Board of Directors of GWG Holdings 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 $1.5 million. 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 three months ended March 31, 2019 (dollar amounts in thousands, except per share data): 2019 Monthly Period Number of Average Price Total Number Maximum January 2019 42,488 $ 8.47 52,523 $ 1,072 February 2019 202 8.88 52,725 1,070 (1) No stock was repurchased after February 2019, and the stock repurchase program expired on April 30, 2019. 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 (see further details in the section below) 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 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 $99.1 million and incurred approximately $7.0 million 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 ASC 470, Debt Derivatives and Hedging 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. The terms of the RPS 2 are largely consistent with those of the RPS, other than the conversion and redemption features discussed below. 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. 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 $150.0 million and incurred approximately $10.3 million of related selling costs. The RPS 2 was determined to have the same two embedded features discussed in the RPS section above (optional redemption and optional conversion by the holder). We do not believe bifurcation of either the holder's redemption or conversion feature is appropriate. Preferred Series A Subclass 1 (Redeemable noncontrolling interest) BCH, a consolidated subsidiary of Ben LP, has non-unitized equity outstanding. The Preferred Series A Subclass 1 Unit accounts are non-participating and convertible on a dollar basis. The 4th Amended and Restated Limited Partnership Agreement ("LPA") of BCH governs the terms of BCH's equity securities. Beginning June 1, 2018, the Preferred Series A Subclass 1 Unitholders agreed to temporarily reduce the preferred return rate. On March 31, 2019, Preferred Series A Subclass 1 Unit Account holders signed an agreement to forbear the right to receive an annualized preferred return in excess of a rate determined materially consistent with the methodology below until, initially, the earlier of December 31, 2019 or three months following the issuance of the limited trust association charters by the Texas Department of Banking. The charters from the Texas Department of Banking were not issued as of December 31, 2019. In 2020, this forbearance agreement was extended through March 31, 2020. The income allocation methodology under this forbearance agreement was as follows: ● First, Ben, as the sole holder of Class A Units issued by BCH is allocated income from BCH to cover the expenses incurred solely by Ben; ● Second, the remaining income at BCH is allocated 50% to the aggregate of Class A Units and Class S Ordinary Units and 50% to Preferred Series A Subclass 1 Unit Accounts, until the Common Units issued by Ben receive a 1% annualized return on the Common Unit account balance; ● Third, after the 1% annualized return to the Common Unit issued by Ben is achieved, additional income is allocated to the Preferred Series A until the Preferred Series A is allocated the amount required under the LPA, (as amended); and ● Finally, any remaining income is allocated under the terms of the current LPA (pro-rata between the Class A Units and Class S Ordinary Units). If and when the forbearance agreement expires, account holders will be entitled to a compounded quarterly preferred return. The preferred return to be paid to Preferred Series A Unitholders is limited by a quarterly preferred return rate cap that is based on the annualized revenues of BCH. Annualized revenues are defined as four times the sum of total quarterly interest, fee and dividend income plus total noninterest revenues. This quarterly rate cap is defined as follows: ● 0.25% if annualized revenues are $80 million or less; ● 0.50% if annualized revenues are greater than $80 million but equal to or less than $105 million; ● 0.75% if annualized revenues are greater than $105 million but equal to or less than $125 million; ● 1.00% if annualized revenues are greater than $125 million but equal to or less than $135 million; ● 1.25% if annualized revenues are greater than $135 million but equal to or less than $140 million; and ● If over $140 million, the preferred return calculation is based on a fraction (i) the numerator of which is (A) the positive percentage rate change, if any, to the seasonally adjusted CPI-U covering the period from the date of the last allocation of profits to such holders, plus (B) (x) 2% prior to an Initial Public Offering (as defined in the BCH LPA) by Ben and (y) 3% thereafter, and (ii) the denominator of which is one minus the highest effective marginal combined U.S. federal, state and local income tax rate in effect as of the beginning of the fiscal quarter for which such determination is being made for an individual resident in New York City, New York, assuming (1) that the aggregate gross income allocable with respect to the quarterly preferred return for such fiscal year will consist of the same relative proportion of each type or character (e.g., long term or short term capital gain or ordinary or exempt income) of gross income item included in the aggregate gross income actually allocated in respect of the quarterly preferred return for the fiscal year reflected in the BCH's most recently filed Internal Revenue Service Form 1065 and (2) any state and local income taxes are not deductible against U.S. federal income tax. The definition of Initial Public Offering includes an event, transaction or agreement pursuant to which the Common Units are convertible or exchangeable into equity securities listed on a national securities exchange or quotation in an automated quotation system. No amounts have been paid to the Preferred Series A Subclass 1 Unit Account holders related to the preferred return from inception through March 31, 2020. In connection with the issuance of Preferred Series A Subclass 2 Units as part of the Option Agreement, the preferred return of Preferred Series A Subclass 1 Unit Account holders is reduced by the preferred return allocated to the Preferred Series A Subclass 2 Units during the period the Option Agreement remains outstanding. Upon election by a holder, the Preferred Series A Unit Accounts (other than Preferred Series A Subclass 2 Unit Accounts) are, at any time on or after January 1, 2021, convertible in an amount of Preferred Series A Unit Accounts (other than Preferred Series A Subclass 2 Unit Accounts), equal to 20% of their Sub-Capital Accounts into Class S Ordinary Units (with the right to convert any unconverted amount from previous years in any subsequent years). Upon an election, a holder of Preferred Series A Subclass 1 Unit Accounts 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) either (x) prior to an initial public offering, the appraised per Class A Unit fair market value as determined by Beneficient or (y) following an initial public offering, the average price of a Common Unit for the thirty (30) day period ended immediately prior to the applicable conversion date. The holder of such newly issued Class S Ordinary Units may immediately convert them into Common Units. Additionally, effective December 31, 2030, if the Preferred Series A Subclass 1 Unit Accounts have not been converted, they will redeem for cash in an amount equal to the then outstanding capital account balance of the accounts. If available redeeming cash (as defined in the LPA) is insufficient to satisfy any such redemption requirements, BCH, on a quarterly basis, will redeem additional Preferred Series A Units until all such Preferred Series A Units have been redeemed. The Preferred Series A Subclass 1 Unit Accounts are subject to certain other conversion and redemption provisions. The current LPA of BCH also includes certain limitations of BCH, without the consent of a majority-in-interest of the Preferred Series A Unit Account holders, to (i) issue any new equity securities and (ii) except as otherwise provided, incur indebtedness that is senior to or pari passu with any right of distribution, redemption, repayment, repurchase or other payments relating to the Preferred Series A Unit accounts. Further, BCH cannot, prior to the conversion of all the Preferred Series A Unit accounts, incur any additional long-term debt unless (i) after giving effect to the incurrence of the new long-term debt on a pro forma basis, the sum of certain preferred stock, existing debt and any new long-term indebtedness would not exceed 55% of BCH's net asset value ("NAV") plus cash on hand, and (ii) at the time of incurrence of any new long-term indebtedness, the aggregate balance of BCH's (including controlled subsidiaries) debt plus such new long-term debt does not exceed 40% of the sum of the NAV of the collateral underlying the loan portfolio of BCH and its subsidiaries plus cash on hand at Ben LP, BCH and its subsidiaries. The Preferred Series A Subclass 1 Unit Accounts are recorded in the consolidated balance sheet in the redeemable noncontrolling interest line item. Class S Ordinary Units As of both March 31, 2020 and December 31, 2019, BCH had issued and outstanding 5.8 million Class S Ordinary Units. The Class S Ordinary Units participate on an as-converted basis pro-rata in the share of the profits or losses of BCH and subsidiaries following all other allocations made by BCH and its subsidiaries. As limited partner interests, these units have limited voting rights and do not entitle participation in the management of BCH's business and affairs. The Class S Ordinary Units are exchangeable for Common Units on a one-for-one basis, subject to customary conversion rate adjustments for splits, distributions and reclassifications, as well as compliance with any applicable vesting and transfer restrictions. Each conversion also results in the issuance to Ben LP of a Class A Unit of BCH for each common unit issued. The Class S Ordinary Units are recorded in the consolidated balance sheet in the noncontrolling interests line item. Class S Preferred Units The limited partnership agreement of BCH allows it to issue Class S Preferred Units. The Class S Preferred Units are entitled to a quarterly preferred return that is limited by the quarterly preferred return rate cap described above for Preferred Series A Subclass 1 except for when annualized revenues exceed $140 million, the Class S Preferred return is based on a fraction (i) the numerator of which is (A) the positive percentage rate change, if any, to the seasonally adjusted CPI-U covering the period from the date of the last allocation of profits to such holders, plus (B) 0.75 percent, and (ii) the denominator of which is one minus the highest effective marginal combined U.S. federal, state and local income tax rate in effect as of the beginning of the fiscal quarter for which such determination is being made for an individual resident in New York City, New York, assuming (1) that the aggregate gross income allocable with respect to the quarterly preferred return for such fiscal year will consist of the same relative proportion of each type or character (e.g., long term or short term capital gain or ordinary or exempt income) of gross income item included in the aggregate gross income actually allocated in respect of the quarterly preferred return for the fiscal year reflected in the Ben Group Partnership's most recently filed IRS Form 1065 and (2) any state and local income taxes are not deductible against U.S. federal income tax. The Class S Preferred Units also participate on an as-converted basis pro-rata in the share of the profits or losses of BCH and subsidiaries following all other allocations made by BCH and its subsidiaries. As limited partner interests, these units are generally non-voting and do not entitle participation in the management of BCH's business and affairs. Generally, the Class S Preferred Units are exchangeable for Common Units in Ben LP on a 1.2-for-1 basis, subject to customary conversion rate adjustments for splits, distributions and reclassifications, as well as compliance with any applicable vesting and transfer restrictions. Each conversion also results in the issuance to Ben LP of a Class A Unit for each Common Unit issued. Holders of Class S Preferred Units may elect to convert into Class S Ordinary Units in connection with a sale or dissolution of BCH. No amounts have been paid to the Class S Preferred Unit holders related to the preferred return from inception through March 31, 2020. The Class S Preferred Units are recorded in the consolidated balance sheet in the noncontrolling interests line item. |
Equity-Based Compensation
Equity-Based Compensation | 3 Months Ended |
Mar. 31, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Equity-Based Compensation | (12) Equity-Based Compensation As of March 31, 2020, the Company has outstanding equity-based awards under the 2013 Stock Incentive Plan, the Beneficient Management Partners, L.P. ("BMP") Equity Incentive Plan, and the Ben Equity Incentive Plan, as more fully described in the sections below. 2013 Stock Incentive Plan GWG Holdings adopted the 2013 Stock Incentive Plan in March 2013, as amended on June 1, 2015, May 5, 2017 and May 8, 2018. 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 March 31, 2020, the Company has granted stock options, stock appreciation rights ("SAR"), and restricted stock units ("RSU") under this plan. During the three months ended March 31, 2020, a total of 20,751 stock options held by employees vested. Additionally, as a result of stock option exercises, 1,456 shares of common stock were issued to employees, net of shares forfeited to satisfy tax withholding obligations. 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 liability for the SARs as of March 31, 2020 and December 31, 2019 was $0.8 million and $0.6 million, respectively, and was recorded within accounts payable and accrued expenses in the condensed consolidated balance sheets. During the three months ended March 31, 2020, none of the RSUs held by employees have vested. BMP Equity Incentive Plan The Board of Directors of Beneficient Management, Ben LP's general partner, adopted the BMP Equity Incentive Plan in 2019. Under the BMP Equity Incentive Plan, certain directors and employees of Ben are eligible to receive equity units in BMP, an entity affiliated with the board of directors of Beneficient Management, in return for their services to Ben. The BMP equity units eligible to be awarded to employees are comprised of BMP's Class A Units and/or BMP's Class B Units (collectively, the "BMP Equity Units"). The BMP Equity Units awarded in 2019 and during the three months ended March 31, 2020, included some awards that were fully vested upon grant date, and some awards that are subject to service-based vesting over a four-year period from the date of hire. As BMP's equity is not publicly traded, the fair value of the BMP Equity Units is determined on each grant date using a probability-weighted discounted cash flow analysis. This fair value measurement is based on significant inputs not observable in the market and thus represents a Level 3 measurement within the fair value hierarchy. The resultant probability-weighted cash flows are then discounted using a rate that reflects the uncertainty surrounding the expected outcomes, which the Company believes is appropriate and representative of a market participant assumption. Ben Equity Incentive Plan The Board of Directors of Beneficient Management adopted the Ben Equity Incentive Plan in September 2018. Under the Ben Equity Incentive Plan, Ben is permitted to grant equity awards, in the form of restricted equity units ("REUs") representing ownership interests in Common Units. Settled awards under the Ben Equity Incentive Plan dilute Ben's Common Unitholders. The total number of Common Units that may be issued under the Ben Equity Incentive Plan is equivalent to 15% of the number of fully diluted Common Units outstanding, subject to annual adjustment. All REUs are subject to two performance conditions which were met during 2019. Additionally, if a change-of-control event occurs prior to July 1, 2021, then all units, vested and unvested, will settle within 60 days. Any transaction where GWG Holdings obtains the right to appoint a majority of the members of Beneficient Management's Board of Directors is expressly excluded from the definition of change-of-control for the REUs. Awards will generally be subject to service-based vesting over a multi-year period from the recipient's date of hire, though some awards fully vest upon grant date. While providing services to Ben, if applicable, certain of these awards are subject to minimum retained ownership rules requiring the award recipient to continuously hold Common Unit equivalents equal to at least 15% of their cumulatively granted awards that have the minimum retained ownership requirement. As Ben LP's equity is not publicly traded, the fair value of the REUs is estimated on the grant date using recent equity transactions involving third parties, which provides the Company with observable fair value information sufficient for estimating the grant date fair value. The following table summarizes the award activity, in number of units, for each plan during the three months ended March 31, 2020: Balance at December 31, Granted the period Vested Exercised the period Forfeited the period Balance at Vested Stock Options 673,341 — 20,751 (19,304 ) (55,917 ) 618,871 SAR 200,745 — — (1,284 ) (2,051 ) 197,410 RSU — — — — — — BMP Equity Units 7,980,037 3,451,017 — — — 11,431,054 REU 2,164,742 2,281,681 7,500 — — 4,453,923 Unvested Stock Options 232,040 — (20,751 ) — (44,858 ) 166,431 SAR 174,880 — — — (25,317 ) 149,563 RSU 244,083 — — — — 244,083 BMP Equity Units 180,000 2,649,200 — — (70,000 ) 2,759,200 REU 246,500 1,902,472 (7,500 ) — (77,500 ) 2,063,972 Total Stock Options 905,381 — — (19,304 ) (100,775 ) 785,302 SAR 375,625 — — (1,284 ) (27,368 ) 346,973 RSU 244,083 — — — — 244,083 BMP Equity Units 8,160,037 6,100,217 — — (70,000 ) 14,190,254 REU 2,411,242 4,184,153 — — (77,500 ) 6,517,895 The holders of certain of the units issued under the BMP Equity Incentive Plan and the Ben Equity Incentive Plan, upon vesting, have the right to convert the units to shares of GWG Holdings common stock per the Exchange Agreement discussed in Note 1. As such, units vested and issued under Beneficient's equity incentive plans may result in dilution of the common stock of GWG Holdings. The following table presents the components of equity-based compensation expense recognized in the consolidated statement of operations (in thousands): Three Months Ended 2020 2019 Stock options $ 48 $ 262 Stock appreciation rights 206 413 Restricted stock units 260 159 BMP equity units 38,024 — REU 30,910 — Total equity-based compensation $ 69,448 $ 834 Unrecognized equity-based compensation expense totaled approximately $45.2 million as of March 31, 2020. We currently expect to recognize equity-based compensation expense of $13.0 million during the remainder of 2020, and the remainder thereafter based on scheduled vesting of awards outstanding as of March 31, 2020. The following table presents the equity-based compensation expense expected to be recognized over the next five years based on scheduled vesting of awards outstanding as of March 31, 2020 (in thousands): Stock Options SAR RSU REU BMP Equity Units Total Nine months ending 2020 $ 202 $ 81 $ 226 $ 6,169 $ 6,301 $ 12,979 2021 142 132 — 8,027 8,363 16,664 2022 20 81 — 5,306 5,705 11,112 2023 — 6 — 2,148 1,904 4,058 2024 — — — 262 139 401 Total $ 364 $ 300 $ 226 $ 21,912 $ 22,412 $ 45,214 |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | (13) Income Taxes The Company applies an estimated annual effective rate to interim period pre-tax income to calculate the income tax provision for the quarter in accordance with the principal method prescribed by the accounting guidance established for computing income taxes in interim periods. Income tax benefit was $14.5 million for the three months ended March 31, 2020, compared to $0.0 million for the three months ended March 31, 2019. The Company's effective tax rate was 16.03% and 0% for the same periods. Our tax benefit for the year primarily reflects the effect of a change in state taxing jurisdictions, the reduction of a naked credit (described below) and current tax expense. In late 2019, the Company moved its headquarters from Minnesota to Texas. This move resulted in a change in the state deferred tax rate from 9.8% to 0%. The tax effects of this move has been recorded as a discrete item during the period. The Company currently records a valuation allowance against its deferred tax assets to the extent there are indefinite lived intangibles related to investments, business interest expense and net operating losses. Due to the uncertain timing of the reversal of these temporary differences, they cannot be considered as a source of future taxable income for purposes of determining a valuation allowance; therefore the deferred tax liability cannot offset deferred tax assets. This is often referred to as a "naked credit." Due to a prior deemed ownership change, net operating loss carryforwards are subject to Section 382 of the Internal Revenue Code. We continue to monitor and evaluate the rationale for recording a full valuation allowance for the net amount of the deferred tax assets which are in excess of the indefinite-lived deferred tax assets and liabilities. We intend to continue maintaining a full valuation allowance on these net deferred tax assets until there is sufficient evidence to support the reversal of all or some portion of these allowances. Release of the valuation allowance would result in the recognition of certain deferred tax assets and a decrease to income tax expense for the period the release is recorded. However, the exact timing and amount of the valuation allowance release are subject to change on the basis of the level of profitability that we are able to actually achieve. On March 27, 2020, Congress passed and the President signed into law the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act"), which included significant changes to U.S. Federal income tax law. However, the only change that is expected to affect the Company is the modification to Section 163(j), which increased the allowable business interest deduction from 30% of adjusted taxable income to 50% of adjusted taxable income. |
Loss per Common Share
Loss per Common Share | 3 Months Ended |
Mar. 31, 2020 | |
Earnings Per Share [Abstract] | |
Loss per Common Share | (14) Loss per Common Share The computations of basic and diluted income (loss) attributable to common shareholders per share for the three months ended March 31, 2020 and 2019 are as follows (in thousands, except share data and per share data): Three Months Ended 2020 2019 Numerator: Net loss attributable to common shareholders $ (49,384 ) $ (18,910 ) Denominator: Basic – weighted average common shares outstanding 30,534,977 32,984,741 Effect of dilutive securities — — Diluted – weighted average common shares outstanding 30,534,977 32,984,741 Basic loss per common share $ (1.62 ) $ (0.57 ) Diluted loss per common share $ (1.62 ) $ (0.57 ) For the three months ended March 31, 2020 and 2019, RPS, RPS 2, restricted stock units, and stock options for a potential 2,543,665 and 2,814,635 shares, respectively, were not included in the calculation of diluted earnings per share because we recorded a net loss during these periods and the effects were anti-dilutive. Potentially dilutive instruments issued by Ben LP that are ultimately exchangeable into GWG common stock were also excluded from the calculation of diluted earnings per share for the three months ended March 31, 2020 because we recorded a net loss during this period and the effects were anti-dilutive. |
Segment Reporting
Segment Reporting | 3 Months Ended |
Mar. 31, 2020 | |
Segment Reporting [Abstract] | |
Segment Reporting | (15) Segment Reporting The Company has two reportable segments consisting of Secondary Life Insurance and Beneficient. Corporate & Other includes certain activities not allocated to specific business segments. These activities include holding company financing and investing activities, and management and administrative services to support the overall operations of the Company and from November 1, 2019, include our equity method investment in FOXO. The Secondary Life Insurance segment seeks to earn non-correlated yield from our portfolio of life insurance policies. Our Beneficient segment consists of the assets and operations of Ben LP and its subsidiaries. Beneficient became a consolidated subsidiary of GWG Holdings as of December 31, 2019, as described in Note 4. Ben LP provides a variety of trust services, liquidity products and loans for alternative assets and illiquid investment funds, and other financial services to mid-to-high net worth individuals. Prior to December 31, 2019, we accounted for our investment in the common units of Beneficient under the equity method. 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 and gain on consolidation of equity method investment. Three Months Ended Revenue: 2020 2019 Secondary Life Insurance $ 15,148 $ 22,183 Beneficient 18,409 2,870 Corporate & Other — 164 Total $ 33,557 $ 25,217 Three Months Ended Interest Expense: 2020 2019 Secondary Life Insurance $ 22,693 $ 20,096 Beneficient 13,178 6,879 Corporate & Other — — Total $ 35,871 $ 26,975 Three Months Ended Interest Income: 2020 2019 Secondary Life Insurance $ 615 $ 631 Beneficient 13,374 2,825 Corporate & Other — 4 Total $ 13,989 $ 3,460 Three Months Ended Segment EBT: 2020 2019 Secondary Life Insurance $ (14,721 ) $ (1,623 ) Beneficient (70,149 ) (5,936 ) Corporate & Other (7,153 ) (7,055 ) Total (92,023 ) (14,614 ) Income tax benefit 14,507 — Net loss $ (77,516 ) $ (14,614 ) Total Assets: March 31, December 31, Secondary Life Insurance $ 952,447 $ 904,363 Beneficient 2,719,387 2,721,546 Corporate & Other 12,395 9,297 Total $ 3,684,229 $ 3,635,206 The total assets of the Beneficient segment at March 31, 2020 and December 31, 2019, includes goodwill of $2.4 billion and $2.4 billion, respectively, which represents all of the goodwill on our consolidated balance sheet as of the end of each reporting period. |
Leases
Leases | 3 Months Ended |
Mar. 31, 2020 | |
Leases [Abstract] | |
Leases | (16) Leases The Company leases certain real estate for its office premises under operating lease agreements which expire in 2021 and 2025. Under these leases, we are obligated to pay base rent plus common area maintenance and a share of building operating costs. The lease agreements contain extension options that we have not included in our liability calculations. We lease various other facilities on a short-term basis. The lease assets and liabilities are as follows (in thousands): March 31, Leases Classification 2020 Operating lease right-of-use assets Other assets $ 1,714 Operating lease liabilities Other accrued expenses $ 2,320 Total lease costs recognized for the three months ended March 31, 2020 and 2019 were $0.3 million and $0.1 million, respectively. These amounts included operating lease costs of $0.2 million and $50 thousand, variable lease costs of $53 thousand and $55 thousand, and short term lease costs of $49 thousand and $26 thousand for the three months ended March 31, 2020 and 2019, respectively. The weighted average remaining lease term at March 31, 2020 was 4.1 years and the weighted average discount rate was 6.6%. For the three months ended March 31, 2020 and 2019, cash paid for amounts included in the measurement of operating lease liabilities and included in operating cash flows totaled $0.3 million and $0.1 million, respectively. Maturities of operating lease liabilities as of March 31, 2020 are as follows (in thousands): 2020 $ 751 2021 715 2022 302 2023 311 2024 320 Thereafter 273 Total lease payments 2,672 Less: imputed interest (352 ) Present value of lease liabilities $ 2,320 |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | (17) Commitments and Contingencies Litigation — Commitments |
Guarantee and Collateral Provis
Guarantee and Collateral Provisions of L Bonds and Seller Trust L Bonds | 3 Months Ended |
Mar. 31, 2020 | |
Guarantee of L Bonds [Abstract] | |
Guarantee and Collateral Provisions of L Bonds and Seller Trust L Bonds | (18) Guarantee and Collateral Provisions 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 10. 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 and pari passu in right of payment and in respect of collateral with all L Bonds of GWG (see Note 10). Payments under the Seller Trust L Bonds are guaranteed by GWG Life. The assets exchanged in the in connection with the Beneficent transaction are available as collateral for all holders of the L Bonds and Seller Trust L Bonds. Specifically, the Common Units of Ben LP are held by GWG Holdings and the Commercial Loan is held by GWG Life. (2) The terms of our LNV Credit Facility require that we maintain a significant excess of pledged collateral value over the amount outstanding on the LNV Credit Facility at any given time. Any excess after satisfying all amounts owing under our LNV Credit Facility is available as collateral for the L Bonds (including the Seller Trust L Bonds). The following represents consolidating financial information as of March 31, 2020 and December 31, 2019, with respect to the financial position, and for the three months ended March 31, 2020 and 2019, 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 GWG Life Trust under the equity method. The non-guarantor subsidiaries column presents the financial information of all non-guarantor subsidiaries, including DLP IV, GWG Life Trust and Beneficient. Condensed Consolidating Balance Sheets (in thousands) March 31, 2020 Parent Guarantor Non- Eliminations Consolidated ASSETS Cash and cash equivalents $ 101,529 $ 1,753 $ 13,150 $ — $ 116,432 Restricted cash — 512 25,934 — 26,446 Investment in life insurance policies, at fair value — 344 801,837 — 802,181 Life insurance policy benefits receivable, net — 200 15,130 — 15,330 Loans receivable, net of unearned income — — 219,296 — 219,296 Allowance for loan losses — — (700 ) — (700 ) Loans receivable, net — — 218,596 — 218,596 Fees receivable — — 30,453 — 30,453 Financing receivable from affiliate — 239,564 — (171,274 ) 68,290 Investment in GWG stock — — 25,400 (25,400 ) — Other assets 67,792 320,460 23,471 (377,817 ) 33,906 Goodwill — — 2,372,595 — 2,372,595 Investment in subsidiaries 1,569,254 653,926 — (2,223,180 ) — TOTAL ASSETS $ 1,738,575 $ 1,216,759 $ 3,526,566 $ (2,797,671 ) $ 3,684,229 LIABILITIES & STOCKHOLDERS' EQUITY LIABILITIES Senior credit facility with LNV Corporation $ — $ — $ 188,793 $ — $ 188,793 L Bonds 1,009,781 — — — 1,009,781 Seller Trust L Bonds 366,892 — — — 366,892 Other borrowings — — 152,597 — 152,597 Intercompany debt – Commercial loan — — 171,329 (171,329 ) — Interest and dividends payable 12,162 — 10,241 — 22,403 Deferred revenue — — 39,651 — 39,651 Accounts payable and accrued expenses 8,532 2,071 69,238 (58,702 ) 21,139 Deferred tax liability, net 40,206 — — — 40,206 TOTAL LIABILITIES 1,437,573 2,071 631,849 (230,031 ) 1,841,462 Redeemable noncontrolling interests — — 1,553,554 (311,913 ) 1,241,641 STOCKHOLDERS' EQUITY Member capital — 1,214,688 655,073 (1,869,761 ) — Common units — — 603,417 (603,417 ) — Redeemable preferred stock and Series 2 redeemable preferred stock 186,658 — — — 186,658 Common stock 33 — — — 33 Common stock in treasury — — — (24,550 ) (24,550 ) Additional paid-in-capital 229,207 — — — 229,207 Accumulated deficit (114,896 ) — — (7,037 ) (121,933 ) Noncontrolling interests — — 82,673 249,038 331,711 TOTAL STOCKHOLDERS' EQUITY 301,002 1,214,688 1,341,163 (2,255,727 ) 601,126 TOTAL LIABILITIES AND EQUITY $ 1,738,575 $ 1,216,759 $ 3,526,566 $ (2,797,671 ) $ 3,684,229 December 31, 2019 Parent Guarantor Non- Eliminations Consolidated ASSETS Cash and cash equivalents $ 57,721 $ 2,644 $ 18,708 $ — $ 79,073 Restricted cash — — 20,258 — 20,258 Investment in life insurance policies, at fair value — 340 795,699 — 796,039 Life insurance policy benefits receivable, net — 200 22,831 — 23,031 Investment in GWG stock — — 24,550 (24,550 ) — Loans receivable, net of unearned income — — 232,344 — 232,344 Allowance for loan losses — — — — — Loans receivable, net — — 232,344 — 232,344 Fees receivable — — 29,168 — 29,168 Financing receivable from affiliates — 235,573 — (168,420 ) 67,153 Other assets 446,618 320,490 22,163 (759,136 ) 30,135 Goodwill — — 2,358,005 — 2,358,005 Investment in subsidiaries 1,221,227 664,723 — (1,885,950 ) — TOTAL ASSETS $ 1,725,566 $ 1,223,970 $ 3,523,726 $ (2,838,056 ) $ 3,635,206 LIABILITIES & STOCKHOLDERS' EQUITY LIABILITIES Senior credit facility with LNV Corporation $ — $ — $ 174,390 $ — $ 174,390 L Bonds 926,638 — — — 926,638 Seller Trust L Bonds 366,892 — — — 366,892 Other borrowings — — 153,086 — 153,086 Intercompany debt – commercial loan — — 168,420 (168,420 ) — Interest and dividends payable 12,491 — 4,025 — 16,516 Deferred revenue — — 41,444 — 41,444 Account payable and accrued expenses 3,093 3,891 78,455 (57,603 ) 27,836 Deferred tax liability 57,923 — — — 57,923 TOTAL LIABILITIES 1,367,037 3,891 619,820 (226,023 ) 1,764,725 Redeemable noncontrolling interests — — 1,588,604 (318,950 ) 1,269,654 STOCKHOLDERS' EQUITY Member capital — 1,220,079 665,871 (1,885,950 ) — Common units — — 563,966 (563,966 ) — Redeemable preferred stock and Series 2 redeemable preferred stock 201,891 — — — 201,891 Common stock 33 — — — 33 Treasury stock — — — (24,550 ) (24,550 ) Additional paid-in capital 233,106 — — — 233,106 Accumulated deficit (76,501 ) — — — (76,501 ) Noncontrolling interests — — 85,465 181,383 266,848 TOTAL STOCKHOLDERS' EQUITY 358,529 1,220,079 1,315,302 (2,293,083 ) 600,827 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,725,566 $ 1,223,970 $ 3,523,726 $ (2,838,056 ) $ 3,635,206 Condensed Consolidating Statements of Operations (in thousands) For the three months ended March 31, 2020 Parent Guarantor Non- Eliminations Consolidated REVENUE Gain on life insurance policies, net $ — $ 3 $ 14,442 $ — $ 14,445 Interest and other income 365 5,237 18,447 (4,937 ) 19,112 TOTAL REVENUE 365 5,240 32,889 (4,937 ) 33,557 EXPENSES Interest expense 28,737 — 11,221 (4,087 ) 35,871 Employee compensation and benefits 7,391 100 70,213 — 77,704 Legal and professional fees 1,947 134 4,082 — 6,163 Provision for loan losses — — 700 — 700 Other expenses 2,461 423 728 — 3,612 TOTAL EXPENSES 40,536 657 86,944 (4,087 ) 124,050 INCOME (LOSS) BEFORE EQUITY IN INCOME (LOSS) OF SUBSIDIARIES (40,171 ) 4,583 (54,055 ) (850 ) (90,493 ) EQUITY IN INCOME (LOSS) OF SUBSIDIARIES (11,128 ) 9,561 — 1,567 — INCOME (LOSS) BEFORE INCOME TAXES (51,299 ) 14,144 (54,055 ) 717 (90,493 ) INCOME TAX BENEFIT (14,434 ) — (73 ) — (14,507 ) NET INCOME (LOSS) BEFORE EARNINGS (LOSS) FROM EQUITY METHOD INVESTMENT (36,865 ) 14,144 (53,982 ) 717 (75,896 ) Loss from equity method investment (1,530 ) — — — (1,530 ) NET INCOME (LOSS) (38,395 ) 14,144 (53,982 ) 717 (77,516 ) Net loss attributable to noncontrolling interests — — 37,842 (5,758 ) 32,084 Less: Preferred stock dividends 3,952 — — — 3,952 NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS $ (42,347 ) $ 14,144 $ (16,140 ) $ (5,041 ) $ (49,384 ) For the three months ended March 31, 2019 Parent Guarantor Non- Eliminations Consolidated REVENUE Gain (loss) on life insurance policies, net $ — $ 2,067 $ 19,429 $ — $ 21,496 Interest and other income 614 2,833 274 — 3,721 TOTAL REVENUE 614 4,900 19,703 — 25,217 EXPENSES Interest expense 22,607 — 4,368 — 26,975 Employee compensation and benefits 3,224 1,855 75 — 5,154 Legal and professional fees 1,280 580 1,087 — 2,947 Other expenses 1,692 473 663 — 2,828 TOTAL EXPENSES 28,803 2,908 6,193 — 37,904 INCOME (LOSS) BEFORE EQUITY IN INCOME OF SUBSIDIARIES (28,189 ) 1,992 13,510 — (12,687 ) EQUITY IN INCOME OF SUBSIDIARIES 15,502 14,885 — (30,387 ) — INCOME (LOSS) BEFORE INCOME TAXES (12,687 ) 16,877 13,510 (30,387 ) (12,687 ) INCOME TAX EXPENSE (BENEFIT) — — — — — NET INCOME (LOSS) BEFORE LOSS FROM EQUITY METHOD INVESTMENT (12,687 ) 16,877 13,510 (30,387 ) (12,687 ) Loss from equity method investment (1,927 ) — — — (1,927 ) NET INCOME (LOSS) (14,614 ) 16,877 13,510 (30,387 ) (14,614 ) Preferred stock dividends 4,296 — — — 4,296 NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS $ (18,910 ) $ 16,877 $ 13,510 $ (30,387 ) $ (18,910 ) Condensed Consolidating Statements of Cash Flows (in thousands) For the three months ended March 31, 2020 Parent Guarantor Non- Eliminations Consolidated CASH FLOWS FROM OPERATING ACTIVITIES Net income (loss) $ (38,395 ) $ 14,144 $ (53,982 ) $ 717 $ (77,516 ) Adjustments to reconcile net income (loss) to net cash flows from operating activities: Equity of subsidiaries 11,128 (9,561 ) — (1,567 ) — Change in fair value of life insurance policies — (4 ) (12,173 ) — (12,177 ) Amortization of deferred financing and issuance costs 3,882 — 329 — 4,211 Amortization of upfront fees — — (1,793 ) — (1,793 ) Amortization of debt premiums — — (473 ) — (473 ) Amortization and depreciation on long-lived assets 31 1 140 — 172 Accretion of discount on financing receivable from affiliate — (1,620 ) 1,620 — — Non-cash interest income — (1,138 ) (12,236 ) — (13,374 ) Non-cash interest expense — — 676 — 676 Loss from equity method investment 1,530 — — — 1,530 Provision for loan losses — — 700 — 700 Deferred income tax (17,717 ) — — — (17,717 ) Equity-based compensation 4,303 — 65,145 — 69,448 (Increase) decrease in operating assets: Life insurance policy benefits receivable — — 7,701 — 7,701 Fees receivable — — (1,285 ) — (1,285 ) Accrued interest on financing receivable — (1,234 ) 1,234 — — Other assets 270 29 (1,880 ) 1,949 368 Increase (decrease) in operating liabilities: Accounts payable and other accrued expenses 5,372 (1,821 ) (3,555 ) (1,099 ) (1,103 ) NET CASH FLOWS USED IN OPERATING ACTIVITIES (29,596 ) (1,204 ) (9,832 ) — (40,632 ) CASH FLOWS FROM INVESTING ACTIVITIES Carrying value of matured life insurance policies — — 6,035 — 6,035 Purchases of fixed assets (60 ) — (421 ) — (481 ) Equity method investments (5,417 ) — — — (5,417 ) Net change of loans receivable — — 10,614 — 10,614 Payment of capital contributions 19,528 20,359 — (39,887 ) — NET CASH FLOWS PROVIDED BY INVESTING ACTIVITIES 14,051 20,359 16,228 (39,887 ) 10,751 CASH FLOWS FROM FINANCING ACTIVITIES Borrowings on senior debt — — 14,074 — 14,074 Proceeds from issuance of L Bonds 109,053 — — — 109,053 Payments for issuance and redemptions of L Bonds (30,532 ) — — — (30,532 ) Issuance of common stock 18 — — — 18 Payments for redemption of preferred stock (15,233 ) — — — (15,233 ) Preferred stock dividends (3,952 ) — — — (3,952 ) Issuance of member capital — (19,534 ) (20,353 ) 39,887 — NET CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES 59,354 (19,534 ) (6,279 ) 39,887 73,428 NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH 43,809 (379 ) 117 — 43,547 CASH, CASH EQUIVALENTS AND RESTRICTED CASH BEGINNING OF PERIOD 57,720 2,644 38,967 — 99,331 END OF PERIOD $ 101,529 $ 2,265 $ 39,084 $ — $ 142,878 For the three months ended March 31, 2019 Parent Guarantor Non- Eliminations Consolidated CASH FLOWS FROM OPERATING ACTIVITIES Net income (loss) $ (14,614 ) $ 16,877 $ 13,510 $ (30,387 ) $ (14,614 ) Adjustments to reconcile net income (loss) to net cash flows from operating activities: Equity of subsidiaries (15,502 ) (14,885 ) — 30,387 — Change in fair value of life insurance policies — (3,620 ) (11,951 ) — (15,571 ) Amortization of deferred financing and issuance costs 2,836 — 264 — 3,100 Accretion of discount on financing receivable from affiliate — (419 ) — — (419 ) Loss from equity method investment 1,927 — — — 1,927 Equity-based compensation 834 — — — 834 (Increase) decrease in operating assets: Life insurance policy benefits receivable — 5,000 2,261 — 7,261 Accrued interest on financing receivable — (1,551 ) — — (1,551 ) Other assets (416 ) 72 (3,598 ) — (3,942 ) Increase (decrease) in operating liabilities: Accounts payable and other accrued expenses 1,404 (481 ) (4,251 ) — (3,328 ) NET CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES (23,531 ) 993 (3,765 ) — (26,303 ) CASH FLOWS FROM INVESTING ACTIVITIES Investment in life insurance policies — (8,681 ) (18,711 ) — (27,392 ) Carrying value of matured life insurance policies — 169 8,532 — 8,701 Payment of capital contributions (33,724 ) (28,498 ) 62,222 — NET CASH FLOWS USED IN INVESTING ACTIVITIES (33,724 ) (37,010 ) (10,179 ) 62,222 (18,691 ) CASH FLOWS FROM FINANCING ACTIVITIES Repayments of senior debt — — (2,373 ) — (2,373 ) Proceeds from issuance of L Bonds 125,985 — — — 125,985 Payments for issuance and redemptions of L Bonds (23,974 ) — — — (23,974 ) Repurchase of common stock (269 ) — — — (269 ) Payments for redemption of preferred stock (819 ) — — — (819 ) Preferred stock dividends (4,296 ) — — — (4,296 ) Issuance of member capital — 31,713 30,509 (62,222 ) — NET CASH FLOWS PROVIDED BY FINANCING ACTIVITIES 96,627 31,713 28,136 (62,222 ) 94,254 NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH 39,372 (4,304 ) 14,192 — 49,260 CASH, CASH EQUIVALENTS AND RESTRICTED CASH BEGINNING OF PERIOD 113,294 7,449 4,693 — 125,436 END OF PERIOD $ 152,666 $ 3,145 $ 18,885 $ — $ 174,696 |
Concentration
Concentration | 3 Months Ended |
Mar. 31, 2020 | |
Risks and Uncertainties [Abstract] | |
Concentration | (19) Concentration Life Insurance Carriers We primarily purchase life insurance policies written by life insurance companies rated investment-grade by third-party rating agencies, including A.M. Best, Standard & Poor's and Moody's. As a result, there may be concentrations of policies with certain 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 March 31, December 31, John Hancock Life Insurance Company 14.24 % 14.23 % The Lincoln National Life Insurance Company 10.91 % 11.55 % AXA Equitable Life Insurance Company 10.83 % 10.63 % The following summarizes the number of insureds' state of residence exceeding 10% of the total face value held by us: State of Residence March 31, December 31, California 17.68 % 17.46 % Florida 14.68 % 14.86 % Beneficient's underlying portfolio companies primarily operate in the United States, with the largest percentage, based on NAV, operating in healthcare technology, bio-technology, and diversified telecommunications services industries. |
Subsequent Events and Other Mat
Subsequent Events and Other Matters | 3 Months Ended |
Mar. 31, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events and Other Matters | (20) Subsequent Events and Other Matters COVID-19 In December 2019, a novel strain of coronavirus ("COVID-19") was first reported in Wuhan, China. Less than four months later, on March 11, 2020, the World Health Organization declared COVID-19 a pandemic. The extent of COVID-19's effect on the Company's operational and financial performance will depend on future developments, including the duration, spread and intensity of the pandemic, all of which are uncertain and difficult to predict considering the rapidly evolving landscape. As a result, it is not currently possible to ascertain the overall impact of COVID-19 on the Company's business. The Company continues to raise capital, receive interest income and insurance policy benefits and meet its ongoing obligations. However, depending on the extent of the ensuing economic crisis resulting from the pandemic and its impact on the Company's business, the disease could have a material adverse effect on our results of operations, financial condition and cash flows. As discussed in our 2019 Form 10-K, management performs goodwill and intangible asset impairment testing annually, during the fourth quarter, or when events occur, or circumstances change that would more likely than not indicate impairment has occurred. The Company recorded goodwill on December 31, 2019, as a result of the transactions with Beneficient discussed in Note 4 to the condensed consolidated financial statements. Due to the significance of the COVID-19 pandemic, management performed a qualitative assessment of the goodwill of the Beneficient reporting unit. Management concluded that the potentially large and underserved market that Beneficient is seeking to address, including the estimated demand from MHNW individuals and STM size institutions seeking liquidity for their professionally managed alternative assets, has not been negatively affected by the COVID-19 pandemic such that it is more likely than not that the fair value of the Beneficient reporting unit would exceed its carrying value as of March 31, 2020. Therefore, the impact of the COVID-19 pandemic through the end of the first quarter of 2020 was not a triggering event to perform a quantitative test. We will continue to monitor the impact of COVID-19 on the economy and our business and will perform an interim quantitative goodwill impairment test if necessary. Liquidity and Capital Resources As of March 31, 2020, we had cash, cash equivalents and restricted cash of $142.9 million. We generated net losses attributable to common shareholders of $49.4 million and $18.9 million for the three months ended March 31, 2020 and 2019, respectively. As of May 13, 2020, we had cash, cash equivalents and restricted cash of approximately $140 million. Besides funding operating expenditures and having sufficient cash to fund anticipated additional investments in Beneficient primarily for its lending products and working capital needs, we are obligated to pay other items such as interest payments and debt redemptions, and preferred stock dividends and redemptions. We expect to satisfy these obligations and fund our operations through anticipated operating cash flows, receipt of proceeds from our insurance policies, sales of additional L Bonds, and, potentially, additional borrowings under existing debt facilities or new borrowings with other third-party lenders. GWG Holdings has a history of selling L Bonds dating back to January 2012. GWG Holdings may not be able sell additional L Bonds on terms as favorable to the Company as past transactions or in quantities sufficient to fund all of the Company's operating requirements. Additionally, the Company may not be able to obtain additional borrowing under existing debt facilities or new borrowings with other third-party lenders. To the extent that GWG Holdings or its subsidiaries raise additional capital through the future issuance of debt, the terms of those debt securities may include terms that adversely affect the rights of our existing debt and/or equity holders or involve negative covenants that restrict GWG Holdings' ability to take specific actions, such as incurring additional debt or making additional investments in growing the operations of the Company. If GWG Holdings is unable to fund its operations and other obligations, or defaults on its debt, then the Company will be required to either i) sell assets to provide sufficient funding or ii) to raise additional capital through the sale of equity and the ownership interest of our equity holders may be diluted. Based on projections of anticipated operating cash flows, receipt of proceeds from our insurance policies, sales of additional L-Bonds, and, potentially, additional borrowings under existing debt facilities or new borrowings with other third-party lenders, we believe that we will have sufficient cash resources to finance our operations, satisfy our other obligations, and to fund anticipated additional investments in Beneficient through May 15, 2021. Amendment of Beneficient Credit Agreements On May 15, 2020, Beneficient signed the Term Sheet with its lender to amend its senior credit agreement and subordinated credit agreement (described in Note 10). The amendment would extend the maturity date of both loans to April 10, 2021, and includes an extension fee of 2.5% of the outstanding aggregate principal balance of the loans. The amendment would also increase the interest rate on each loan to 1-month LIBOR plus 8.0%, with a maximum interest rate of 9.5%. The loans would be payable in four installments of $25.0 million on each of June 1, 2020, September 10, 2020, December 10, 2020, and March 10, 2021, with the remaining balance payable on April 10, 2021. The amendment also would provide for the assignment of the loans from Beneficient to GWG Life Trust, if permitted, or GWG Life upon issuance of Beneficient's trust company charters by the Texas Department of Banking. GWG Holdings or GWG Life will receive additional Common Units in exchange for assuming Beneficient's amended loans. Upon transfer of the loans, GWG Holdings or GWG Life will pay a fee of 2.0% of the then-remaining outstanding balance to the lender. Furthermore, upon transfer of the loans, the Commercial Loan Agreement between GWG Life and Beneficient will convert to Common Units in full satisfaction of the Commercial Loan Agreement. In connection with the transfer of the loans from Beneficient, the lender would be granted a security interest in the Preferred Series A Subclass 1 Unit Accounts of BCH held by GWG Life and the life insurance policies held by GWG Life Trust. Furthermore, the lender will be permitted to purchase up to $152.0 million of Preferred Series A Subclass 1 units from BCH for cash for two years after the amendment of the loans. The Term Sheet also provides that, in connection with the transfer of the loans, (i) BHI, which owns a majority of the Class S Ordinary Units, Preferred Series A Subclass 1 Unit Accounts, and FLP Subclass 1 Unit Accounts issued by BCH, will grant certain tax-related concessions related to the transaction as may be mutually agreed upon between the parties, and (ii) in exchange for the tax-related concessions to be agreed between the parties, (a) 5% of BHI's Preferred Series A Sub Class 1 Unit Account will become senior in allocations, distributions, redemption rights, and liquidation (potentially as a different class) (the "Senior Preferred Series A Sub Class 1 Unit Accounts") to all other Preferred Series A Sub Class 1 Unit Accounts or any other securities issued by Beneficient or a subsidiary thereof, and (b) recipients of a grant of Preferred Series A Sub Class 1 Unit Accounts from BHI will have the right to put an amount of Preferred Series A Sub Class 1 Unit Accounts to Beneficient equal to any associated tax liability stemming from any such grant; provided that the aggregated associated tax liability shall not relate to more than $30 million of grants of Preferred Series A Sub Class 1 Unit Accounts from BHI; and provided, further, that such a put cannot be exercised prior to July 1, 2021. The agreed upon amended loan terms would contain covenants that would i) prevent Beneficient from issuing any securities senior to the Preferred Series A Subclass 1 Unit Accounts or the Senior Preferred Series A Sub Class 1 Unit Accounts, and ii) prevent Beneficient from incurring additional debt or borrowings, other than trade payables, while the loans are outstanding. The amendments set forth in the Term Sheet are subject to, among other things, the negotiation and execution of definitive agreements governing the amendments and the satisfaction of closing conditions to be set forth therein, some of which may be outside of the parties' control. The parties have agreed to use their reasonable best efforts to enter into definitive agreements by June 1, 2020. Policy Benefits and L Bonds Subsequent to March 31, 2020 through May 6, 2020, policy benefits on 13 policies covering 12 individuals have been realized. The face value of insurance benefits of these policies was $14.8 million. Subsequent to March 31, 2020 through May 12, 2020, we have issued approximately $41.6 million of L Bonds. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation Significant accounting policies are detailed in Note 2 to the condensed consolidated financial statements included in the Company's 2019 Form 10-K. Summarized below are those new or revised significant accounting policies, including those that resulted from the consolidation of Beneficient on December 31, 2019. |
Use of Estimates | Use of Estimates |
Loans Receivable | Loans Receivable PCI loans reflect credit deterioration since origination such that it is probable as of the date of valuation that Beneficient will be unable to collect all contractually required payments. For PCI loans, expected cash flows as of the date of valuation in excess of the fair value of loans are recorded as interest income over the life of the loans using a level yield method if the timing and amount of the future cash flows is reasonably estimable. Subsequently, increases in cash flows over those expected at the acquisition date are recognized prospectively as interest income. Decreases in expected cash flows due to credit deterioration are recognized by recording an allowance for loan loss. Beneficient does not report PCI loans as nonperforming due to the accretion of interest income. For non-PCI loans, the difference between the fair value and unpaid principal balance ("UPB") of the loan as of the date of valuation is amortized or accreted to interest income over the contractual life of the loans using the effective interest method. In the event of prepayment, the remaining unamortized amount is recognized in interest income. |
Equity-Based Compensation | Equity-Based Compensation Equity-based compensation expense is recorded in employee compensation and benefits in the condensed consolidated statements of operations. The determination of fair value of equity-based payment awards on the date of grant is affected by our stock price and a number of subjective variables. These variables include, but are not limited to, the expected stock price volatility over the term of the awards, the expected duration of the awards, the results of a probability-weighted discounted cash flow analysis and observable transactions. We account for the effects of forfeitures as they occur. 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. |
Earnings (Loss) per Common Share | Earnings (Loss) per Common Share Net earnings, less any preferred dividends accumulated for the period (whether or not declared), is allocated to common stock. Basic earnings per common share is computed by dividing net earnings available to common stockholders by the weighted average number of common shares and the weighted average number of shares of exchangeable stock of a subsidiary ("exchangeable shares") outstanding during the period. Exchangeable shares are exchangeable for shares of GWG Holdings common stock and would participate in any dividend paid by GWG Holdings. Diluted earnings per common share is computed in a similar manner, except that first the denominator is increased to include the number of additional common shares that would have been outstanding if potentially dilutive common shares were issued using the treasury stock method in the case of restricted stock units, warrants and options, or the if-converted method in the case of RPS and RPS 2. |
Reclassification | Reclassification |
Newly Adopted Accounting Pronouncements | Newly Adopted Accounting Pronouncements Goodwill, (Topic 350) In August 2018, the Financial Accounting Standards Board ("FASB") issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework — Changes to the Disclosure Requirements for Fair Value Measurement |
Accounting Pronouncements Issued But Not Yet Adopted | Accounting Pronouncements Issued But Not Yet Adopted Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments ASU 2019-12, Income Taxes: Simplifying the Accounting for Income Taxes (Topic 740), ASU 2020-04, Reference Rate Reform |
Business Combination (Tables)
Business Combination (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Business Combinations [Abstract] | |
Schedule of preliminary fair value measurement of the assets acquired and liabilities | Fair Value at Acquisition Date Measurement Period Adjustment (1) Adjusted Fair Value at Acquisition Date ASSETS Loans receivable (1) $ 232,344 $ (14,590 ) $ 217,754 Fees receivable 29,168 — 29,168 Investment in public equity securities 24,550 — 24,550 Other assets 14,053 — 14,053 Intangible assets (2) 3,449 — 3,449 Total identifiable assets acquired 303,564 (14,590 ) 288,974 LIABILITIES Other borrowings 153,086 — 153,086 Commercial loan agreement from parent 168,420 — 168,420 Other liabilities and deferred revenue 105,866 — 105,866 Accounts payable and accrued expenses 13,713 — 13,713 Total liabilities assumed 441,085 — 441,085 Net liabilities assumed (137,521 ) (14,590 ) (152,111 ) NONCONTROLLING INTERESTS Common Units not owned by GWG Holdings (3) 181,383 — 181,383 Class S Ordinary Units 85,448 — 85,448 Class S Preferred Units 17 — 17 Preferred Series A Subclass 1 Unit Accounts 1,269,654 — 1,269,654 Total noncontrolling interests 1,536,502 — 1,536,502 ACQUISITION CONSIDERATION Cash, less cash acquired 61,479 — 61,479 Fair value of preexisting investment in Common Units (4) 622,503 — 622,503 Fair value of noncontrolling interest 1,536,502 — 1,536,502 Total estimated consideration 2,220,484 — 2,220,484 Less: Net liabilities assumed (137,521 ) (14,590 ) (152,111 ) Resulting preliminary goodwill $ 2,358,005 $ 14,590 $ 2,372,595 (1) As a result of additional information obtained about the collateral value used in the valuation of the loan portfolio for certain collateral dependent loans, the Company recorded a measurement period adjustment during the first quarter of 2020, which resulted in a decrease to loans receivable of $14.6 million with a corresponding adjustment to goodwill. (2) Includes an insurance license valued at $3.1 million and a non-compete agreement valued at $0.3 million. (3) Calculated as 1,974,677 Common Units not owned by GWG Holdings at December 31, 2019, multiplied by the $15.00 per unit derived from the enterprise valuation of Beneficient. Also includes $151.8 million of equity-based payment awards that were granted by Beneficient prior to the change in control but were not replaced by awards of GWG Holdings upon the change in control. These awards were treated as noncontrolling interests in accordance with ASC 805, Business Combinations (4) Calculated as 41,505,279 Common Units owned by GWG Holdings prior to the change in control multiplied by the $15.00 per unit derived from the enterprise valuation of Beneficient. |
Schedule of pro forma financial information | Total Revenue Pro forma $ 43,935 As reported 25,217 Net Loss Attributable to Common Shareholders Pro forma $ (15,459 ) As reported (18,910 ) Net Loss per Diluted Common Share Pro forma $ (0.41 ) As reported (0.57 ) |
Investment in Life Insurance _2
Investment in Life Insurance Policies (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Investments, All Other Investments [Abstract] | |
Schedule of life insurance portfolio | Life Insurance Portfolio Summary Total life insurance portfolio face value of policy benefits (in thousands) $ 2,000,680 Average face value per policy (in thousands) $ 1,769 Average face value per insured life (in thousands) $ 1,900 Weighted average age of insured (years) 7.2 Weighted average life expectancy estimate (years) 86.6 Total number of policies 1,131 Number of unique lives 1,053 Demographics 74% Male; 26% Female Number of smokers 47 Largest policy as % of total portfolio face value 0.7 % Average policy as % of total portfolio face value 0.1 % Average annual premium as % of face value 3.5 % |
Schedule of organized according to their estimated life expectancy dates as of the reporting date | As of March 31, 2020 As of December 31, 2019 Years Ending December 31, Number of Estimated (in thousands) Face Value Number of Estimated Face Value 2020 6 5,325 5,644 8 5,869 6,342 2021 41 49,578 61,040 55 62,061 79,879 2022 91 91,241 137,197 90 89,074 138,723 2023 123 120,539 212,493 128 123,352 222,369 2024 116 116,681 230,260 109 103,111 217,053 2025 112 77,648 179,796 113 74,223 171,961 Thereafter 642 341,169 1,174,250 648 338,349 1,184,646 Totals 1,131 $ 802,181 $ 2,000,680 1,151 $ 796,039 $ 2,020,973 |
Schedule of reconciliation of gain (loss) on life insurance policies | Three Months Ended 2020 2019 Change in estimated probabilistic cash flows (1) $ 17,851 $ 17,131 Unrealized gain on acquisitions (2) — 4,459 Premiums and other annual fees (17,199 ) (15,832 ) Face value of matured policies 25,502 30,459 Fair value of matured policies (11,709 ) (14,721 ) Gain on life insurance policies, net $ 14,445 $ 21,496 (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. There were no policy acquisitions during the three months ended March 31, 2020. |
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 Nine months ending December 31, 2020 $ 49,708 $ 1,222 $ 50,930 2021 83,813 1,630 85,443 2022 96,636 1,630 98,266 2023 108,749 1,630 110,379 2024 118,269 1,630 119,899 2025 131,528 1,630 133,158 $ 588,703 $ 9,372 $ 598,075 |
Loans Receivable (Tables)
Loans Receivable (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Schedule of carrying value of loans receivable | As of As of Loans receivable, net of unearned income $ 219,296 $ 232,344 Allowance for loan losses (700 ) — Loans receivable, net $ 218,596 $ 232,344 |
Schedule of cash flows expected to be collected and the fair value of the loans | The following table reflects the fair value of non-PCI and PCI loans as of the date of the change-of control (in thousands): Fair value of non-PCI loans $ 86,436 Fair value of PCI loans $ 145,908 |
Schedule of rollforward of the accretable yield | Balance, beginning of period $ 89,647 Accretion (7,537 ) Decrease in accretable yield (a) (581 ) Balance, end of period $ 81,529 (a) Includes changes in the accretable yield due to both transfers from the nonaccretable difference and the impact of changes in the expected timing of cash flows. |
Schedule of changes in the allowance for loan losses | Beginning balance $ — Provision 700 Charge-offs and other, net — Ending balance $ 700 |
PCI and non-PCI Loans [Member] | |
Schedule of carrying value of loans receivable | The following table reflects the outstanding principal balance and carrying amounts of the non-PCI loans (in thousands): March 31, 2020 December 31, 2019 Carrying Value Unpaid Balance Carrying Value Unpaid Balance Loans receivable $ 89,135 $ 131,925 $ 86,436 $ 129,304 The following table reflects the outstanding principal balance and carrying amounts of the PCI loans (in thousands): March 31, 2020 December 31, 2019 Carrying Value Unpaid Balance Carrying Value Unpaid Balance Loans receivable $ 129,461 $ 298,127 $ 145,908 $ 296,627 |
Fair Value Definition and Hie_2
Fair Value Definition and Hierarchy (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Fair Value Disclosures [Abstract] | |
Schedule of financial assets and liabilities carried at fair value on a recurring basis | As of March 31, 2020 Level 1 Level 2 Level 3 Total Assets: Investments in life insurance policies $ — $ — $ 802,181 $ 802,181 As of December 31, 2019 Level 1 Level 2 Level 3 Total Assets: Investments in life insurance policies $ — $ — $ 796,039 $ 796,039 |
Schedule of reconciliation of investments in life insurance policies | Three Months Ended 2020 2019 Beginning balance $ 796,039 $ 747,922 Total gain in earnings (1) 12,177 15,571 Purchases — 27,393 Settlements (2) (6,035 ) (8,701 ) Transfers into Level 3 — — Transfers out of Level 3 — — Ending balance $ 802,181 $ 782,185 (1) Net change in fair value (2) Policy maturities at initial cost basis |
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* 82.6 82.4 Age of insured range, years 63-101 62-101 Weighted-average life expectancy, months* 86.6 86.2 Life expectancy range, months 0-240 0-240 Average face amount per policy (in thousands) $ 1,769 $ 1,756 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 March 31, 2020 $ 112,668 $ 57,263 $ (55,449 ) $ (110,453 ) December 31, 2019 $ 113,812 $ 57,753 $ (55,905 ) $ (111,340 ) Change in Discount Rate minus 2% minus 1% plus 1% plus 2% March 31, 2020 $ 89,558 $ 42,637 $ (38,865 ) $ (74,399 ) December 31, 2019 $ 91,890 $ 43,713 $ (39,790 ) $ (76,118 ) |
Schedule of carrying amounts and estimated fair values of the Company's financial instruments | As of March 31, 2020 Level in Fair Carrying Estimated Financial assets: Cash, cash equivalents and restricted cash 1 $ 142,878 $ 142,878 Life insurance policy benefits receivable, net 1 15,330 15,330 Fees receivable 1 30,453 30,453 Loans receivable, net of allowance for loan losses 3 218,596 206,531 Financing receivables from affiliates 2 68,290 61,042 Financial liabilities: Senior credit facility 2 $ 188,793 $ 198,661 L Bonds and Seller Trust L bonds 2 1,376,673 1,492,433 Other borrowings 2 152,597 152,597 As of December 31, 2019 Level in Fair Carrying Estimated Financial assets: Cash, cash equivalents and restricted cash 1 $ 99,331 $ 99,331 Life insurance policy benefits receivable, net 1 23,031 23,031 Fees receivable 1 29,168 29,168 Loans receivable, net of allowance for loan losses 3 232,344 232,344 Financing receivables from affiliates 2 67,153 59,608 Financial liabilities: Senior credit facility with LNV Corporation 2 $ 174,390 $ 184,587 L Bonds and Seller Trust L Bonds 2 1,293,530 1,390,288 Other borrowings 2 153,086 153,086 |
Equity Method Investments (Tabl
Equity Method Investments (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Schedule of financial information pertaining to beneficient | October 1 to Total revenues $ 25,306 Net loss (41,644 ) Net loss attributable to Ben LP common unitholders (13,192 ) GWG portion of net earnings (loss) (1) (1,927 ) (1) Our portion of Beneficient’s net earnings (loss) for the period noted. This amount was recognized during the three months ended March 31, 2019, in accordance with our one-quarter lag election. |
Schedule of outstanding ownership percentage of common units | Date Percentage of outstanding Common Units Reason August 10, 2018 13.9% Purchase of units December 28, 2018 89.9% Purchase of units March 31, 2019 88.1% Change in investee outstanding units June 12, 2019 90.2% Purchase of units December 31, 2019 95.5% Purchase of units |
Variable Interest Entities (Tab
Variable Interest Entities (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Variable Interest Entity [Abstract] | |
Schedule of carrying value and maximum exposure to loss with respect to the Company's unconsolidated VIEs | March 31, 2020 December 31, 2019 Carrying Maximum Carrying Maximum Loans receivable $ 218,596 $ 322,748 $ 232,344 $ 335,255 Financing receivables from affiliates 68,290 68,290 67,153 67,153 Equity method investment 5,648 18,148 1,761 19,661 Accounts payable and accrued expenses (2,538 ) — (2,515 ) — Total $ 289,996 $ 409,186 $ 298,743 $ 422,069 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Equity [Abstract] | |
Schedule of stock repurchase program | 2019 Monthly Period Number of Average Price Total Number Maximum January 2019 42,488 $ 8.47 52,523 $ 1,072 February 2019 202 8.88 52,725 1,070 |
Equity-Based Compensation (Tabl
Equity-Based Compensation (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Schedule of award activity for each plan | Balance at December 31, Granted the period Vested Exercised the period Forfeited the period Balance at Vested Stock Options 673,341 — 20,751 (19,304 ) (55,917 ) 618,871 SAR 200,745 — — (1,284 ) (2,051 ) 197,410 RSU — — — — — — BMP Equity Units 7,980,037 3,451,017 — — — 11,431,054 REU 2,164,742 2,281,681 7,500 — — 4,453,923 Unvested Stock Options 232,040 — (20,751 ) — (44,858 ) 166,431 SAR 174,880 — — — (25,317 ) 149,563 RSU 244,083 — — — — 244,083 BMP Equity Units 180,000 2,649,200 — — (70,000 ) 2,759,200 REU 246,500 1,902,472 (7,500 ) — (77,500 ) 2,063,972 Total Stock Options 905,381 — — (19,304 ) (100,775 ) 785,302 SAR 375,625 — — (1,284 ) (27,368 ) 346,973 RSU 244,083 — — — — 244,083 BMP Equity Units 8,160,037 6,100,217 — — (70,000 ) 14,190,254 REU 2,411,242 4,184,153 — — (77,500 ) 6,517,895 |
Schedule of equity-based compensation expense | Three Months Ended 2020 2019 Stock options $ 48 $ 262 Stock appreciation rights 206 413 Restricted stock units 260 159 BMP equity units 38,024 — REU 30,910 — Total equity-based compensation $ 69,448 $ 834 |
Schedule of equity-based compensation expense vesting of award outstanding | Stock Options SAR RSU REU BMP Equity Units Total Nine months ending 2020 $ 202 $ 81 $ 226 $ 6,169 $ 6,301 $ 12,979 2021 142 132 — 8,027 8,363 16,664 2022 20 81 — 5,306 5,705 11,112 2023 — 6 — 2,148 1,904 4,058 2024 — — — 262 139 401 Total $ 364 $ 300 $ 226 $ 21,912 $ 22,412 $ 45,214 |
Loss per Common Share (Tables)
Loss per Common Share (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Earnings Per Share [Abstract] | |
Schedule of computations of basic and diluted income (loss) attributable to common shareholders per share | Three Months Ended 2020 2019 Numerator: Net loss attributable to common shareholders $ (49,384 ) $ (18,910 ) Denominator: Basic – weighted average common shares outstanding 30,534,977 32,984,741 Effect of dilutive securities — — Diluted – weighted average common shares outstanding 30,534,977 32,984,741 Basic loss per common share $ (1.62 ) $ (0.57 ) Diluted loss per common share $ (1.62 ) $ (0.57 ) |
Segment Reporting (Tables)
Segment Reporting (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Segment Reporting [Abstract] | |
Schedule of financial information of reportable segments | Three Months Ended Revenue: 2020 2019 Secondary Life Insurance $ 15,148 $ 22,183 Beneficient 18,409 2,870 Corporate & Other — 164 Total $ 33,557 $ 25,217 Three Months Ended Interest Expense: 2020 2019 Secondary Life Insurance $ 22,693 $ 20,096 Beneficient 13,178 6,879 Corporate & Other — — Total $ 35,871 $ 26,975 Three Months Ended Interest Income: 2020 2019 Secondary Life Insurance $ 615 $ 631 Beneficient 13,374 2,825 Corporate & Other — 4 Total $ 13,989 $ 3,460 Three Months Ended Segment EBT: 2020 2019 Secondary Life Insurance $ (14,721 ) $ (1,623 ) Beneficient (70,149 ) (5,936 ) Corporate & Other (7,153 ) (7,055 ) Total (92,023 ) (14,614 ) Income tax benefit 14,507 — Net loss $ (77,516 ) $ (14,614 ) Total Assets: March 31, December 31, Secondary Life Insurance $ 952,447 $ 904,363 Beneficient 2,719,387 2,721,546 Corporate & Other 12,395 9,297 Total $ 3,684,229 $ 3,635,206 |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Leases [Abstract] | |
Schedule of lease assets and liabilities | March 31, Leases Classification 2020 Operating lease right-of-use assets Other assets $ 1,714 Operating lease liabilities Other accrued expenses $ 2,320 |
Schedule of maturities of operating lease liabilities | 2020 $ 751 2021 715 2022 302 2023 311 2024 320 Thereafter 273 Total lease payments 2,672 Less: imputed interest (352 ) Present value of lease liabilities $ 2,320 |
Guarantee and Collateral Prov_2
Guarantee and Collateral Provisions of L Bonds and Seller Trust L Bonds (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Guarantee of L Bonds [Abstract] | |
Schedule of condensed consolidating balance sheets | Condensed Consolidating Balance Sheets (in thousands) March 31, 2020 Parent Guarantor Non- Eliminations Consolidated ASSETS Cash and cash equivalents $ 101,529 $ 1,753 $ 13,150 $ — $ 116,432 Restricted cash — 512 25,934 — 26,446 Investment in life insurance policies, at fair value — 344 801,837 — 802,181 Life insurance policy benefits receivable, net — 200 15,130 — 15,330 Loans receivable, net of unearned income — — 219,296 — 219,296 Allowance for loan losses — — (700 ) — (700 ) Loans receivable, net — — 218,596 — 218,596 Fees receivable — — 30,453 — 30,453 Financing receivable from affiliate — 239,564 — (171,274 ) 68,290 Investment in GWG stock — — 25,400 (25,400 ) — Other assets 67,792 320,460 23,471 (377,817 ) 33,906 Goodwill — — 2,372,595 — 2,372,595 Investment in subsidiaries 1,569,254 653,926 — (2,223,180 ) — TOTAL ASSETS $ 1,738,575 $ 1,216,759 $ 3,526,566 $ (2,797,671 ) $ 3,684,229 LIABILITIES & STOCKHOLDERS' EQUITY LIABILITIES Senior credit facility with LNV Corporation $ — $ — $ 188,793 $ — $ 188,793 L Bonds 1,009,781 — — — 1,009,781 Seller Trust L Bonds 366,892 — — — 366,892 Other borrowings — — 152,597 — 152,597 Intercompany debt – Commercial loan — — 171,329 (171,329 ) — Interest and dividends payable 12,162 — 10,241 — 22,403 Deferred revenue — — 39,651 — 39,651 Accounts payable and accrued expenses 8,532 2,071 69,238 (58,702 ) 21,139 Deferred tax liability, net 40,206 — — — 40,206 TOTAL LIABILITIES 1,437,573 2,071 631,849 (230,031 ) 1,841,462 Redeemable noncontrolling interests — — 1,553,554 (311,913 ) 1,241,641 STOCKHOLDERS' EQUITY Member capital — 1,214,688 655,073 (1,869,761 ) — Common units — — 603,417 (603,417 ) — Redeemable preferred stock and Series 2 redeemable preferred stock 186,658 — — — 186,658 Common stock 33 — — — 33 Common stock in treasury — — — (24,550 ) (24,550 ) Additional paid-in-capital 229,207 — — — 229,207 Accumulated deficit (114,896 ) — — (7,037 ) (121,933 ) Noncontrolling interests — — 82,673 249,038 331,711 TOTAL STOCKHOLDERS' EQUITY 301,002 1,214,688 1,341,163 (2,255,727 ) 601,126 TOTAL LIABILITIES AND EQUITY $ 1,738,575 $ 1,216,759 $ 3,526,566 $ (2,797,671 ) $ 3,684,229 December 31, 2019 Parent Guarantor Non- Eliminations Consolidated ASSETS Cash and cash equivalents $ 57,721 $ 2,644 $ 18,708 $ — $ 79,073 Restricted cash — — 20,258 — 20,258 Investment in life insurance policies, at fair value — 340 795,699 — 796,039 Life insurance policy benefits receivable, net — 200 22,831 — 23,031 Investment in GWG stock — — 24,550 (24,550 ) — Loans receivable, net of unearned income — — 232,344 — 232,344 Allowance for loan losses — — — — — Loans receivable, net — — 232,344 — 232,344 Fees receivable — — 29,168 — 29,168 Financing receivable from affiliates — 235,573 — (168,420 ) 67,153 Other assets 446,618 320,490 22,163 (759,136 ) 30,135 Goodwill — — 2,358,005 — 2,358,005 Investment in subsidiaries 1,221,227 664,723 — (1,885,950 ) — TOTAL ASSETS $ 1,725,566 $ 1,223,970 $ 3,523,726 $ (2,838,056 ) $ 3,635,206 LIABILITIES & STOCKHOLDERS' EQUITY LIABILITIES Senior credit facility with LNV Corporation $ — $ — $ 174,390 $ — $ 174,390 L Bonds 926,638 — — — 926,638 Seller Trust L Bonds 366,892 — — — 366,892 Other borrowings — — 153,086 — 153,086 Intercompany debt – commercial loan — — 168,420 (168,420 ) — Interest and dividends payable 12,491 — 4,025 — 16,516 Deferred revenue — — 41,444 — 41,444 Account payable and accrued expenses 3,093 3,891 78,455 (57,603 ) 27,836 Deferred tax liability 57,923 — — — 57,923 TOTAL LIABILITIES 1,367,037 3,891 619,820 (226,023 ) 1,764,725 Redeemable noncontrolling interests — — 1,588,604 (318,950 ) 1,269,654 STOCKHOLDERS' EQUITY Member capital — 1,220,079 665,871 (1,885,950 ) — Common units — — 563,966 (563,966 ) — Redeemable preferred stock and Series 2 redeemable preferred stock 201,891 — — — 201,891 Common stock 33 — — — 33 Treasury stock — — — (24,550 ) (24,550 ) Additional paid-in capital 233,106 — — — 233,106 Accumulated deficit (76,501 ) — — — (76,501 ) Noncontrolling interests — — 85,465 181,383 266,848 TOTAL STOCKHOLDERS' EQUITY 358,529 1,220,079 1,315,302 (2,293,083 ) 600,827 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,725,566 $ 1,223,970 $ 3,523,726 $ (2,838,056 ) $ 3,635,206 |
Schedule of condensed consolidating statements of operations | Condensed Consolidating Statements of Operations (in thousands) For the three months ended March 31, 2020 Parent Guarantor Non- Eliminations Consolidated REVENUE Gain on life insurance policies, net $ — $ 3 $ 14,442 $ — $ 14,445 Interest and other income 365 5,237 18,447 (4,937 ) 19,112 TOTAL REVENUE 365 5,240 32,889 (4,937 ) 33,557 EXPENSES Interest expense 28,737 — 11,221 (4,087 ) 35,871 Employee compensation and benefits 7,391 100 70,213 — 77,704 Legal and professional fees 1,947 134 4,082 — 6,163 Provision for loan losses — — 700 — 700 Other expenses 2,461 423 728 — 3,612 TOTAL EXPENSES 40,536 657 86,944 (4,087 ) 124,050 INCOME (LOSS) BEFORE EQUITY IN INCOME (LOSS) OF SUBSIDIARIES (40,171 ) 4,583 (54,055 ) (850 ) (90,493 ) EQUITY IN INCOME (LOSS) OF SUBSIDIARIES (11,128 ) 9,561 — 1,567 — INCOME (LOSS) BEFORE INCOME TAXES (51,299 ) 14,144 (54,055 ) 717 (90,493 ) INCOME TAX BENEFIT (14,434 ) — (73 ) — (14,507 ) NET INCOME (LOSS) BEFORE EARNINGS (LOSS) FROM EQUITY METHOD INVESTMENT (36,865 ) 14,144 (53,982 ) 717 (75,896 ) Loss from equity method investment (1,530 ) — — — (1,530 ) NET INCOME (LOSS) (38,395 ) 14,144 (53,982 ) 717 (77,516 ) Net loss attributable to noncontrolling interests — — 37,842 (5,758 ) 32,084 Less: Preferred stock dividends 3,952 — — — 3,952 NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS $ (42,347 ) $ 14,144 $ (16,140 ) $ (5,041 ) $ (49,384 ) For the three months ended March 31, 2019 Parent Guarantor Non- Eliminations Consolidated REVENUE Gain (loss) on life insurance policies, net $ — $ 2,067 $ 19,429 $ — $ 21,496 Interest and other income 614 2,833 274 — 3,721 TOTAL REVENUE 614 4,900 19,703 — 25,217 EXPENSES Interest expense 22,607 — 4,368 — 26,975 Employee compensation and benefits 3,224 1,855 75 — 5,154 Legal and professional fees 1,280 580 1,087 — 2,947 Other expenses 1,692 473 663 — 2,828 TOTAL EXPENSES 28,803 2,908 6,193 — 37,904 INCOME (LOSS) BEFORE EQUITY IN INCOME OF SUBSIDIARIES (28,189 ) 1,992 13,510 — (12,687 ) EQUITY IN INCOME OF SUBSIDIARIES 15,502 14,885 — (30,387 ) — INCOME (LOSS) BEFORE INCOME TAXES (12,687 ) 16,877 13,510 (30,387 ) (12,687 ) INCOME TAX EXPENSE (BENEFIT) — — — — — NET INCOME (LOSS) BEFORE LOSS FROM EQUITY METHOD INVESTMENT (12,687 ) 16,877 13,510 (30,387 ) (12,687 ) Loss from equity method investment (1,927 ) — — — (1,927 ) NET INCOME (LOSS) (14,614 ) 16,877 13,510 (30,387 ) (14,614 ) Preferred stock dividends 4,296 — — — 4,296 NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS $ (18,910 ) $ 16,877 $ 13,510 $ (30,387 ) $ (18,910 ) |
Schedule of condensed consolidating statements of cash flows | Condensed Consolidating Statements of Cash Flows (in thousands) For the three months ended March 31, 2020 Parent Guarantor Non- Eliminations Consolidated CASH FLOWS FROM OPERATING ACTIVITIES Net income (loss) $ (38,395 ) $ 14,144 $ (53,982 ) $ 717 $ (77,516 ) Adjustments to reconcile net income (loss) to net cash flows from operating activities: Equity of subsidiaries 11,128 (9,561 ) — (1,567 ) — Change in fair value of life insurance policies — (4 ) (12,173 ) — (12,177 ) Amortization of deferred financing and issuance costs 3,882 — 329 — 4,211 Amortization of upfront fees — — (1,793 ) — (1,793 ) Amortization of debt premiums — — (473 ) — (473 ) Amortization and depreciation on long-lived assets 31 1 140 — 172 Accretion of discount on financing receivable from affiliate — (1,620 ) 1,620 — — Non-cash interest income — (1,138 ) (12,236 ) — (13,374 ) Non-cash interest expense — — 676 — 676 Loss from equity method investment 1,530 — — — 1,530 Provision for loan losses — — 700 — 700 Deferred income tax (17,717 ) — — — (17,717 ) Equity-based compensation 4,303 — 65,145 — 69,448 (Increase) decrease in operating assets: Life insurance policy benefits receivable — — 7,701 — 7,701 Fees receivable — — (1,285 ) — (1,285 ) Accrued interest on financing receivable — (1,234 ) 1,234 — — Other assets 270 29 (1,880 ) 1,949 368 Increase (decrease) in operating liabilities: Accounts payable and other accrued expenses 5,372 (1,821 ) (3,555 ) (1,099 ) (1,103 ) NET CASH FLOWS USED IN OPERATING ACTIVITIES (29,596 ) (1,204 ) (9,832 ) — (40,632 ) CASH FLOWS FROM INVESTING ACTIVITIES Carrying value of matured life insurance policies — — 6,035 — 6,035 Purchases of fixed assets (60 ) — (421 ) — (481 ) Equity method investments (5,417 ) — — — (5,417 ) Net change of loans receivable — — 10,614 — 10,614 Payment of capital contributions 19,528 20,359 — (39,887 ) — NET CASH FLOWS PROVIDED BY INVESTING ACTIVITIES 14,051 20,359 16,228 (39,887 ) 10,751 CASH FLOWS FROM FINANCING ACTIVITIES Borrowings on senior debt — — 14,074 — 14,074 Proceeds from issuance of L Bonds 109,053 — — — 109,053 Payments for issuance and redemptions of L Bonds (30,532 ) — — — (30,532 ) Issuance of common stock 18 — — — 18 Payments for redemption of preferred stock (15,233 ) — — — (15,233 ) Preferred stock dividends (3,952 ) — — — (3,952 ) Issuance of member capital — (19,534 ) (20,353 ) 39,887 — NET CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES 59,354 (19,534 ) (6,279 ) 39,887 73,428 NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH 43,809 (379 ) 117 — 43,547 CASH, CASH EQUIVALENTS AND RESTRICTED CASH BEGINNING OF PERIOD 57,720 2,644 38,967 — 99,331 END OF PERIOD $ 101,529 $ 2,265 $ 39,084 $ — $ 142,878 For the three months ended March 31, 2019 Parent Guarantor Non- Eliminations Consolidated CASH FLOWS FROM OPERATING ACTIVITIES Net income (loss) $ (14,614 ) $ 16,877 $ 13,510 $ (30,387 ) $ (14,614 ) Adjustments to reconcile net income (loss) to net cash flows from operating activities: Equity of subsidiaries (15,502 ) (14,885 ) — 30,387 — Change in fair value of life insurance policies — (3,620 ) (11,951 ) — (15,571 ) Amortization of deferred financing and issuance costs 2,836 — 264 — 3,100 Accretion of discount on financing receivable from affiliate — (419 ) — — (419 ) Loss from equity method investment 1,927 — — — 1,927 Equity-based compensation 834 — — — 834 (Increase) decrease in operating assets: Life insurance policy benefits receivable — 5,000 2,261 — 7,261 Accrued interest on financing receivable — (1,551 ) — — (1,551 ) Other assets (416 ) 72 (3,598 ) — (3,942 ) Increase (decrease) in operating liabilities: Accounts payable and other accrued expenses 1,404 (481 ) (4,251 ) — (3,328 ) NET CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES (23,531 ) 993 (3,765 ) — (26,303 ) CASH FLOWS FROM INVESTING ACTIVITIES Investment in life insurance policies — (8,681 ) (18,711 ) — (27,392 ) Carrying value of matured life insurance policies — 169 8,532 — 8,701 Payment of capital contributions (33,724 ) (28,498 ) 62,222 — NET CASH FLOWS USED IN INVESTING ACTIVITIES (33,724 ) (37,010 ) (10,179 ) 62,222 (18,691 ) CASH FLOWS FROM FINANCING ACTIVITIES Repayments of senior debt — — (2,373 ) — (2,373 ) Proceeds from issuance of L Bonds 125,985 — — — 125,985 Payments for issuance and redemptions of L Bonds (23,974 ) — — — (23,974 ) Repurchase of common stock (269 ) — — — (269 ) Payments for redemption of preferred stock (819 ) — — — (819 ) Preferred stock dividends (4,296 ) — — — (4,296 ) Issuance of member capital — 31,713 30,509 (62,222 ) — NET CASH FLOWS PROVIDED BY FINANCING ACTIVITIES 96,627 31,713 28,136 (62,222 ) 94,254 NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH 39,372 (4,304 ) 14,192 — 49,260 CASH, CASH EQUIVALENTS AND RESTRICTED CASH BEGINNING OF PERIOD 113,294 7,449 4,693 — 125,436 END OF PERIOD $ 152,666 $ 3,145 $ 18,885 $ — $ 174, 696 |
Concentration (Tables)
Concentration (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Risks and Uncertainties [Abstract] | |
Schedule of the face value of insurance policies | Life Insurance Company March 31, December 31, John Hancock Life Insurance Company 14.24 % 14.23 % The Lincoln National Life Insurance Company 10.91 % 11.55 % AXA Equitable Life Insurance Company 10.83 % 10.63 % |
Schedule of the number of insurance contracts | State of Residence March 31, December 31, California 17.68 % 17.46 % Florida 14.68 % 14.86 % |
Nature of Business (Details)
Nature of Business (Details) - $ / shares | Aug. 10, 2018 | Apr. 15, 2019 | Dec. 28, 2018 | Mar. 31, 2020 | Dec. 31, 2019 | Nov. 11, 2019 |
Nature of Business (Textual) | ||||||
Initial transfer of beneficient transaction, description | ● GWG Holdings issued to the Seller Trusts Seller Trust L Bonds due 2023 (the "Seller Trust L Bonds") in an aggregate principal amount of $403.2 million, as more fully described below; ● Beneficient purchased 5,000,000 shares of GWG Holdings' 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 $50.0 million, which shares were subsequently transferred to the Seller Trusts; ● in consideration for GWG Holdings 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 $200.0 million (the "Commercial Loan"); ● Ben LP delivered to GWG Life a promissory note (the "Exchangeable Note") in the principal amount of $162.9 million; and ● the Seller Trusts delivered to GWG Holdings 4,032,349 common units of Ben LP ("Common Units") at an assumed value of $10 per unit. | |||||
Final closing of beneficient transaction, description | ● 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 $182.0 million, (ii) the principal amount of the Exchangeable Note was reduced to $148.2 million, and (iii) the principal amount of the Seller Trust L Bonds was reduced to $366.9 million; ● the Seller Trusts refunded to GWG Holdings $0.8 million 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 $192.5 million; ● the Seller Trusts transferred to GWG Holdings an aggregate of 21,650,087 Common Units and GWG Holdings received 14,822,843 Common Units in exchange for the Exchangeable Note, upon completion of which GWG Holdings owned (including the 4,032,349 Common Units received by GWG Holdings on the Initial Transfer Date) 40,505,279 common units of Ben LP; ● Ben LP issued to GWG Holdings an option (the "Option Agreement") to acquire the number of Common Units, interests or other property that would be received by a holder of Preferred Series A Subclass 1 Unit Accounts of BCH; and ● GWG Holdings issued to the Seller Trusts 27,013,516 shares of GWG Holdings common stock (including 5,000,000 shares issued upon conversion of the Series B). | |||||
Common units of beneficient | 666,667 | |||||
Percentage acquired investment | 95.50% | 90.20% | ||||
Purchase and contribution agreement, description | ● GWG Holdings' bylaws were amended to increase the maximum number of directors of GWG Holdings 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 nine directors. ● All seven members of GWG Holdings' Board of Directors prior to the closing resigned as directors of GWG, and 11 individuals designated by Beneficient were appointed as directors of GWG Holdings, leaving two board seats vacant after the closing. ● Jon R. Sabes resigned from all officer positions he held with GWG Holdings or any of its subsidiaries prior to the closing, other than his position as Chief Executive Officer of Life Epigenetics and youSurance. ● Steven F. Sabes resigned from all officer positions he held with GWG Holdings 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 Holdings or any of its subsidiaries in connection with such resignations or the Purchase and Contribution Transaction, and (ii) all equity awards of GWG Holdings held by either of them. ● Murray T. Holland was appointed as Chief Executive Officer of GWG Holdings. ● GWG Holdings entered into performance share unit agreements with certain of its employees 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 Holdings or one of its subsidiaries (or, if no longer employed, such employment was terminated by GWG Holdings 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 GWG Holdings, GWG Life, Messrs. Jon and Steven Sabes and the Bank of Utah, which provides that the shares of GWG Holdings' common stock acquired by BCC and AltiVerse pursuant to the Purchase and Contribution Agreement will continue to be pledged as collateral security for GWG Holdings' obligations owing in respect of the L Bonds and Seller Trust L Bonds. | |||||
GWG common shares transferred | 3,952,155 | |||||
Investment Agreement [Member] | ||||||
Nature of Business (Textual) | ||||||
Additional equity investment, description | Pursuant to the Investment Agreement, GWG Holdings transferred $79.0 million to Ben LP in return for 666,667 Common Units and a Preferred Series A Subclass 1 Unit Account of BCH. | |||||
Investment agreement, description | In connection with the Investment Agreement, GWG Holdings obtained the right to appoint a majority of the board of directors of Beneficient Management, the general partner of Ben LP. As a result, GWG Holdings obtained control of Ben LP and began reporting the results of Ben LP and its subsidiaries on a consolidated basis beginning on the transaction date of December 31, 2019. See Note 4 for more details on the accounting for the consolidation. GWG Holdings' right to appoint a majority of the board of directors of Beneficient Management will terminate in the event (i) GWG Holdings' ownership of the fully diluted equity of Ben LP (excluding equity issued upon the conversion or exchange of Preferred Series A Unit Accounts of BCH held as of December 31, 2019 by parties other than GWG Holdings) is less than 25%, (ii) the Continuing Directors of GWG Holdings cease to constitute a majority of the board of directors of GWG Holdings, or (iii) certain bankruptcy events occur with respect to GWG Holdings. The term "Continuing Directors" means, as of any date of determination, any member of the board of directors of GWG Holdings who: (1) was a member of the board of directors on December 31, 2019; or (2) was nominated for election or elected to the board of directors with the approval of a majority of the Continuing Directors who were members of the board of directors at the time of such nomination or election. Following the transaction, and as agreed upon in the Investment Agreement, GWG Holdings was issued an initial capital account balance for the Preferred Series A Subclass 1 Unit Account of $319.0 million. The other holders of the Preferred Series A Subclass 1 Unit Accounts are principally an entity related to the founders of Ben LP and an entity related to one of the directors of both GWG Holdings and Beneficient (the "Related Account Holders"), and the aggregate capital accounts of all holders of the Preferred Series A Subclass 1 Unit Accounts after giving effect to the investment by GWG Holdings was $1.6 billion. GWG Holdings' Preferred Series A Subclass 1 Unit Account is the same class of preferred security as held by the Related Account Holders. If the Related Account Holders exchange their Preferred Series A Subclass 1 Unit Accounts for securities of GWG Holdings, the Preferred Series A Subclass 1 Unit Account of GWG Holdings will also convert into Common Units (so neither GWG Holdings nor the founders would hold Preferred Series A Subclass 1 Unit Accounts). | |||||
Series B Convertible Preferred Stock [Member] | ||||||
Nature of Business (Textual) | ||||||
Converted shares of preferred stock | 5,000,000 | |||||
Exchangeable note common units price per shares | $ 10 | |||||
Exchangeable Debt [Member] | ||||||
Nature of Business (Textual) | ||||||
Interest payable rate | 12.40% | |||||
Common unit of beneficient for exchangeable note | 14,822,843 | |||||
Seller Trusts and Beneficient [Member] | ||||||
Nature of Business (Textual) | ||||||
Common units of beneficient | 40,505,279 | |||||
Percentage acquired investment | 89.90% | |||||
InsurTech Holdings, LLC [Member] | ||||||
Nature of Business (Textual) | ||||||
Percentage acquired investment | 100.00% | |||||
L Bonds and Seller Trust L Bonds [Member] | ||||||
Nature of Business (Textual) | ||||||
Interest rate | 6.21% | 6.34% | ||||
L Bonds [Member] | ||||||
Nature of Business (Textual) | ||||||
Interest rate | 7.50% | |||||
Commercial Loan [Member] | ||||||
Nature of Business (Textual) | ||||||
Description of 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. | The $192.5 million principal amount under the Commercial Loan is due on August 9, 2023; however, it is extendable for two five-year terms. Ben LP's obligations under the Commercial Loan are unsecured. | ||||
Interest payable rate | 5.00% |
Restrictions on Cash (Details)
Restrictions on Cash (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Restrictions on Cash (Textual) | ||
Restricted cash collection and payment accounts | $ 26,400 | $ 20,300 |
Business Combination (Details)
Business Combination (Details) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020USD ($) | ||
Measurement Period Adjustment [Member] | ||
ASSETS | ||
Loans receivable | $ (14,590) | [1] |
Fees receivable | [1] | |
Investment in public equity securities | [1] | |
Other assets | [1] | |
Intangible assets | [1],[2] | |
Total identifiable assets acquired | (14,590) | [1] |
LIABILITIES | ||
Other borrowings | [1] | |
Commercial loan agreement from parent | [1] | |
Other liabilities and deferred revenue | [1] | |
Accounts payable and accrued expenses | [1] | |
Total liabilities assumed | [1] | |
Net liabilities assumed | (14,590) | [1] |
NONCONTROLLING INTERESTS | ||
Common Units not owned by GWG Holdings | [1],[3] | |
Class S Ordinary Units | [1] | |
Class S Preferred Units | [1] | |
Preferred Series A Subclass 1 Unit Accounts | [1] | |
Total noncontrolling interests | [1] | |
ACQUISITION CONSIDERATION | ||
Cash, less cash acquired | [1] | |
Fair value of preexisting investment in Common Units | [1],[4] | |
Fair value of noncontrolling interest | [1] | |
Total estimated consideration | [1] | |
Less: Net liabilities assumed | (14,590) | [1] |
Resulting preliminary goodwill | 14,590 | [1] |
Adjusted Fair Value at Acquisition Date [Member] | ||
ASSETS | ||
Loans receivable | 217,754 | [1] |
Fees receivable | 29,168 | |
Investment in public equity securities | 24,550 | |
Other assets | 14,053 | |
Intangible assets | 3,449 | [2] |
Total identifiable assets acquired | 288,974 | |
LIABILITIES | ||
Other borrowings | 153,086 | |
Commercial loan agreement from parent | 168,420 | |
Other liabilities and deferred revenue | 105,866 | |
Accounts payable and accrued expenses | 13,713 | |
Total liabilities assumed | 441,085 | |
Net liabilities assumed | (152,111) | |
NONCONTROLLING INTERESTS | ||
Common Units not owned by GWG Holdings | 181,383 | [3] |
Class S Ordinary Units | 85,448 | |
Class S Preferred Units | 17 | |
Preferred Series A Subclass 1 Unit Accounts | 1,269,654 | |
Total noncontrolling interests | 1,536,502 | |
ACQUISITION CONSIDERATION | ||
Cash, less cash acquired | 61,479 | |
Fair value of preexisting investment in Common Units | 622,503 | [4] |
Fair value of noncontrolling interest | 1,536,502 | |
Total estimated consideration | 2,220,484 | |
Less: Net liabilities assumed | (152,111) | |
Resulting preliminary goodwill | 2,372,595 | |
Fair Value at Acquisition Date [Member] | ||
ASSETS | ||
Loans receivable | 232,344 | [1] |
Fees receivable | 29,168 | |
Investment in public equity securities | 24,550 | |
Other assets | 14,053 | |
Intangible assets | 3,449 | [2] |
Total identifiable assets acquired | 303,564 | |
LIABILITIES | ||
Other borrowings | 153,086 | |
Commercial loan agreement from parent | 168,420 | |
Other liabilities and deferred revenue | 105,866 | |
Accounts payable and accrued expenses | 13,713 | |
Total liabilities assumed | 441,085 | |
Net liabilities assumed | (137,521) | |
NONCONTROLLING INTERESTS | ||
Common Units not owned by GWG Holdings | 181,383 | [3] |
Class S Ordinary Units | 85,448 | |
Class S Preferred Units | 17 | |
Preferred Series A Subclass 1 Unit Accounts | 1,269,654 | |
Total noncontrolling interests | 1,536,502 | |
ACQUISITION CONSIDERATION | ||
Cash, less cash acquired | 61,479 | |
Fair value of preexisting investment in Common Units | 622,503 | [4] |
Fair value of noncontrolling interest | 1,536,502 | |
Total estimated consideration | 2,220,484 | |
Less: Net liabilities assumed | (137,521) | |
Resulting preliminary goodwill | $ 2,358,005 | |
[1] | As a result of additional information obtained about the collateral value used in the valuation of the loan portfolio for certain collateral dependent loans, the Company recorded a measurement period adjustment during the first quarter of 2020, which resulted in a decrease to loans receivable of $14.6 million with a corresponding adjustment to goodwill. | |
[2] | Includes an insurance license valued at $3.1 million and a non-compete agreement valued at $0.3 million. | |
[3] | Calculated as 1,974,677 Common Units not owned by GWG Holdings at December 31, 2019, multiplied by the $15.00 per unit derived from the enterprise valuation of Beneficient. Also includes $151.8 million of equity-based payment awards that were granted by Beneficient prior to the change in control but were not replaced by awards of GWG Holdings upon the change in control. These awards were treated as noncontrolling interests in accordance with ASC 805, Business Combinations. | |
[4] | Calculated as 41,505,279 Common Units owned by GWG Holdings prior to the change in control multiplied by the $15.00 per unit derived from the enterprise valuation of Beneficient. |
Business Combination (Details 1
Business Combination (Details 1) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Total Revenue | ||
Pro forma | $ 43,935 | |
As reported | $ 33,557 | 25,217 |
Net Loss Attributable to Common Shareholders | ||
Pro forma | (15,459) | |
As reported | $ (49,384) | $ (18,910) |
Net Loss per Diluted Common Share | ||
Pro forma | $ (0.41) | |
As reported | $ (1.62) | $ (0.57) |
Business Combination (Details T
Business Combination (Details Textual) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Dec. 31, 2019 | |
Business Combination (Textual) | ||
Shares owned | 41,505,279 | |
Share per unit | $ 15 | |
Ownership interest rate, percentage | 95.50% | 90.20% |
Additional of common units issued | 666,667 | |
Business Combination, Consideration Transferred | $ 79,000 | |
Equity investment carrying value | 3,686,000 | |
Recognition of a gain | 253,900 | |
Net loss | 4,200 | |
Insurance license value | 3,100 | |
Non-compete agreement | 300 | |
Net gain | 249,700 | |
Share-based payment | $ 151,800 | |
Loan receivable | $ 14,600 | |
Common Stock [Member] | ||
Business Combination (Textual) | ||
Shares owned | 1,974,677 | |
Share per unit | $ 15 |
Investment in Life Insurance _3
Investment in Life Insurance Policies (Details) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020USD ($)PoliciesLivesSmokers | Dec. 31, 2019USD ($)Policies | |
Investments, All Other Investments [Abstract] | ||
Total life insurance portfolio face value of policy benefits (in thousands) | $ 2,000,680 | $ 2,020,973 |
Average face value per policy (in thousands) | 1,769 | |
Average face value per insured life (in thousands) | $ 1,900 | |
Average age of insured (years) | 82 years 7 months 6 days | |
Average life expectancy estimate (years) | 7 years 2 months 12 days | |
Total number of policies | Policies | 1,131 | 1,151 |
Number of unique lives | Lives | 1,053 | |
Demographics | 74% Male; 26% Female | |
Number of smokers | Smokers | 47 | |
Largest policy as % of total portfolio face value | 0.70% | |
Average policy as % of total portfolio face value | 0.10% | |
Average annual premium as % of face value | 3.50% |
Investment in Life Insurance _4
Investment in Life Insurance Policies (Details 1) $ in Thousands | Mar. 31, 2020USD ($)Policies | Dec. 31, 2019USD ($)Policies |
Summary of policies according to estimated life expectancy dates | ||
Number of Policies, 2020 | Policies | 6 | 8 |
Number of Policies, 2021 | Policies | 41 | 55 |
Number of Policies, 2022 | Policies | 91 | 90 |
Number of Policies, 2023 | Policies | 123 | 128 |
Number of Policies, 2024 | Policies | 116 | 109 |
Number of Policies, 2025 | Policies | 112 | 113 |
Number of Policies, Thereafter | Policies | 642 | 648 |
Number of Policies, Totals | Policies | 1,131 | 1,151 |
Estimated Fair Value, 2020 | $ 5,325 | $ 5,869 |
Estimated Fair Value, 2021 | 49,578 | 62,061 |
Estimated Fair Value, 2022 | 91,241 | 89,074 |
Estimated Fair Value, 2023 | 120,539 | 123,352 |
Estimated Fair Value, 2024 | 116,681 | 103,111 |
Estimated Fair Value, 2025 | 77,648 | 74,223 |
Estimated Fair Value, Thereafter | 341,169 | 338,349 |
Estimated Fair Value, Totals | 802,181 | 796,039 |
Face Value, 2020 | 5,644 | 6,342 |
Face Value, 2021 | 61,040 | 79,879 |
Face Value, 2022 | 137,197 | 138,723 |
Face Value, 2023 | 212,493 | 222,369 |
Face Value, 2024 | 230,260 | 217,053 |
Face Value, 2025 | 179,796 | 171,961 |
Face Value, Thereafter | 1,174,250 | 1,184,646 |
Face Value, Totals | $ 2,000,680 | $ 2,020,973 |
Investment in Life Insurance _5
Investment in Life Insurance Policies (Details 2) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | ||
Life Settlement Contracts, Fair Value Method, Gain (Loss) [Abstract] | |||
Change in estimated probabilistic cash flows | [1] | $ 17,851 | $ 17,131 |
Unrealized gain on acquisitions | [2] | 4,459 | |
Premiums and other annual fees | (17,199) | (15,832) | |
Face value of matured policies | 25,502 | 30,459 | |
Fair value of matured policies | (11,709) | (14,721) | |
Gain on life insurance policies, net | $ 14,445 | $ 21,496 | |
[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. There were no policy acquisitions during the three months ended March 31, 2020. |
Investment in Life Insurance _6
Investment in Life Insurance Policies (Details 3) $ in Thousands | Mar. 31, 2020USD ($) |
Servicing Fees [Member] | |
Life Settlement Contracts, Investment Method, Premiums to be Paid, Fiscal Year Maturity [Abstract] | |
2020 | $ 1,222 |
2021 | 1,630 |
2022 | 1,630 |
2023 | 1,630 |
2024 | 1,630 |
2025 | 1,630 |
Total | 9,372 |
Premiums And Servicing Fees [Member] | |
Life Settlement Contracts, Investment Method, Premiums to be Paid, Fiscal Year Maturity [Abstract] | |
2020 | 50,930 |
2021 | 85,443 |
2022 | 98,266 |
2023 | 110,379 |
2024 | 119,899 |
2025 | 133,158 |
Total | 598,075 |
Premiums Fees [Member] | |
Life Settlement Contracts, Investment Method, Premiums to be Paid, Fiscal Year Maturity [Abstract] | |
2020 | 49,708 |
2021 | 83,813 |
2022 | 96,636 |
2023 | 108,749 |
2024 | 118,269 |
2025 | 131,528 |
Total | $ 588,703 |
Investment in Life Insurance _7
Investment in Life Insurance Policies (Details Textual) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Investment in Life Insurance Policies (Textual) | |||
Benefits recognized from insurance policies | $ 25,500 | $ 30,500 | |
Carrying value of life insurance policies | 6,000 | 8,700 | |
Realized gains from life insurance policies | $ 19,500 | $ 21,800 | |
Discount rate applied to portfolio | 8.25% | 8.25% | 8.25% |
Life Insurance Policies face amount | $ 1,000 |
Loans Receivable (Details)
Loans Receivable (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Loans and Leases Receivable Disclosure [Line Items] | ||
Loans receivable, net of unearned income | $ 219,296 | $ 232,344 |
Allowance for loan losses | (700) | |
Loans receivable, net | 218,596 | 232,344 |
Beneficient Loans Receivable [Member] | ||
Loans and Leases Receivable Disclosure [Line Items] | ||
Loans receivable, net of unearned income | 219,296 | 232,344 |
Allowance for loan losses | (700) | |
Loans receivable, net | $ 218,596 | $ 232,344 |
Loans Receivable (Details 1)
Loans Receivable (Details 1) $ in Thousands | Dec. 31, 2019USD ($) |
PCI Loans [Member] | |
Fair value of loans | $ 145,908 |
Non PCI Loans [Member] | |
Fair value of loans | $ 86,436 |
Loans Receivable (Details 2)
Loans Receivable (Details 2) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Loans receivable, Unpaid Balance | $ 430,100 | $ 425,900 |
Non PCI Loans [Member] | ||
Loans receivable, Carrying Value | 89,135 | 86,436 |
Loans receivable, Unpaid Balance | 131,925 | 129,304 |
PCI Loans [Member] | ||
Loans receivable, Carrying Value | 129,461 | 145,908 |
Loans receivable, Unpaid Balance | $ 298,127 | $ 296,627 |
Loans Receivable (Details 3)
Loans Receivable (Details 3) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020USD ($) | ||
Receivables [Abstract] | ||
Balance, beginning of period | $ 89,647 | |
Accretion | (7,537) | |
Decrease in accretable yield | (581) | [1] |
Balance, end of period | $ 81,529 | |
[1] | Includes changes in the accretable yield due to both transfers from the nonaccretable difference and the impact of changes in the expected timing of cash flows. |
Loans Receivable (Details 4)
Loans Receivable (Details 4) $ in Thousands | 3 Months Ended |
Mar. 31, 2020USD ($) | |
Receivables [Abstract] | |
Beginning balance | |
Provision | 700 |
Charge-offs and other, net | |
Ending balance | $ 700 |
Loans Receivable (Details Textu
Loans Receivable (Details Textual) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 12 Months Ended |
May 31, 2019 | Mar. 31, 2020 | Dec. 31, 2019 | |
Loans Receivable (Textual) | |||
Loans receivable outstanding principal balance | $ 430,100 | $ 425,900 | |
Interest income paid-in-kind | 169,500 | 154,700 | |
Allowance for loan losses | 700 | ||
Provision expense | 700 | ||
Charge-offs and other, net | |||
Downward measurement period adjustment to PCI loans | 14,600 | ||
Cash flows expected to be collected at the acquisition date totalled | 235,600 | ||
Total contractually required payments receivable on PCI loans | $ 772,200 | ||
LiquidTrust Borrowers [Member] | |||
Loans Receivable (Textual) | |||
Aggregate principal amount | $ 65,000 | ||
Principal amount | $ 65,000 | ||
Aggregate outstanding principal percentage | 16.70% | ||
Description of promissory note commitment | An initial advance in the principal amount of $50.0 million was funded on June 3, 2019 and, subsequent to satisfaction of certain customary conditions, the second advance in the principal amount of $15.0 million was funded on November 22, 2019. The Loan bears interest at 7.0% per annum, with interest payable at maturity, and matures on June 30, 2023. The loan is reported in financing receivables from affiliates in the consolidated balance sheets and included accrued interest receivable of $3.3 million and $2.2 million as of March 31, 2020 and December 31, 2019, respectively. Subject to the Intercreditor Agreements (as defined below), the Loan can be prepaid at the LiquidTrust Borrowers' election without premium or penalty. |
Fair Value Definition and Hie_3
Fair Value Definition and Hierarchy (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Assets: | ||
Investments in life insurance policies | $ 802,181 | $ 796,039 |
Level 3 [Member] | ||
Assets: | ||
Investments in life insurance policies | 802,181 | 796,039 |
Level 1 [Member] | ||
Assets: | ||
Investments in life insurance policies | ||
Level 2 [Member] | ||
Assets: | ||
Investments in life insurance policies |
Fair Value Definition and Hie_4
Fair Value Definition and Hierarchy (Details 1) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | ||
Schedule of reconciliation of investments in life insurance policies | |||
Beginning balance | $ 796,039 | $ 747,922 | |
Total gain in earnings | [1] | 12,177 | 15,571 |
Purchases | 27,393 | ||
Settlements | [2] | (6,035) | (8,701) |
Transfers into Level 3 | |||
Transfers out of Level 3 | |||
Ending balance | $ 802,181 | $ 782,185 | |
[1] | Net change in fair value | ||
[2] | Policy maturities at initial cost basis |
Fair Value Definition and Hie_5
Fair Value Definition and Hierarchy (Details 2) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Fair value of our portfolio of life insurance policies | |||
Discount rate | 8.25% | 8.25% | 8.25% |
Life Insurance Policies [Member] | |||
Fair value of our portfolio of life insurance policies | |||
Weighted-average age of insured, years | 82 years 7 months 6 days | 82 years 4 months 24 days | |
Weighted-average life expectancy, months | 86 years 7 months 6 days | 86 years 2 months 12 days | |
Average face amount per policy | $ 1,769 | $ 1,756 | |
Discount rate | 8.25% | 8.25% | |
Minimum [Member] | Life Insurance Policies [Member] | |||
Fair value of our portfolio of life insurance policies | |||
Age of insured range, years | 63 years | 62 years | |
Life expectancy range, months | 0 years | 0 years | |
Maximum [Member] | Life Insurance Policies [Member] | |||
Fair value of our portfolio of life insurance policies | |||
Age of insured range, years | 101 years | 101 years | |
Life expectancy range, months | 240 years | 240 years |
Fair Value Definition and Hie_6
Fair Value Definition and Hierarchy (Details 3) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Change in Discount Rate [Member] | Plus One Percent [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 | $ (38,865) | $ (39,790) |
Change in Discount Rate [Member] | Minus One Percent [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 | 42,637 | 43,713 |
Change in Discount Rate [Member] | Plus Two Percent [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 | (74,399) | (76,118) |
Change in Discount Rate [Member] | Minus Two Percent [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 | 89,558 | 91,890 |
Minus Four 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 | 57,263 | 57,753 |
Plus Eight 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 | (110,453) | (111,340) |
Minus Eight 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 | 112,668 | 113,812 |
Plus Four 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 | $ (55,449) | $ (55,905) |
Fair Value Definition and Hie_7
Fair Value Definition and Hierarchy (Details 4) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Level 3 [Member] | Carrying Amount [Member] | ||
Financial assets: | ||
Loans receivable, net of allowance for loan losses | $ 218,596 | $ 232,344 |
Level 3 [Member] | Estimated Fair Value [Member] | ||
Financial assets: | ||
Loans receivable, net of allowance for loan losses | 206,531 | 232,344 |
Level 2 [Member] | Carrying Amount [Member] | ||
Financial assets: | ||
Financing receivables from affiliates | 68,290 | 67,153 |
Financial liabilities: | ||
Senior credit facility | 188,793 | 174,390 |
L Bonds and Seller Trust L Bonds | 1,376,673 | 1,293,530 |
Other borrowings | 152,597 | 153,086 |
Level 2 [Member] | Estimated Fair Value [Member] | ||
Financial assets: | ||
Financing receivables from affiliates | 61,042 | 59,608 |
Financial liabilities: | ||
Senior credit facility | 198,661 | 184,587 |
L Bonds and Seller Trust L Bonds | 1,492,433 | 1,390,288 |
Other borrowings | 152,597 | 153,086 |
Level 1 [Member] | Carrying Amount [Member] | ||
Financial assets: | ||
Cash, cash equivalents and restricted cash | 142,878 | 99,331 |
Life insurance policy benefits receivable, net | 15,330 | 23,031 |
Fees receivable | 30,453 | 29,168 |
Level 1 [Member] | Estimated Fair Value [Member] | ||
Financial assets: | ||
Cash, cash equivalents and restricted cash | 142,878 | 99,331 |
Life insurance policy benefits receivable, net | 15,330 | 23,031 |
Fees receivable | $ 30,453 | $ 29,168 |
Fair Value Definition and Hie_8
Fair Value Definition and Hierarchy (Details Textual) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2020 | Dec. 31, 2019 | Aug. 10, 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. | ||
Carrying value of the senior credit facility interest margin, description | 12-Month LIBOR. | ||
Reserve for outstanding loan | $ 2,200 | $ 2,200 | |
Implied yield percentage | 10.00% | ||
L Bonds and Seller Trust L Bonds [Member] | |||
Fair Value Definition and Hierarchy (Textual) | |||
Weighted average market interest rate | 6.21% | 6.34% | |
L Bonds [Member] | |||
Fair Value Definition and Hierarchy (Textual) | |||
Weighted average market interest rate | 7.50% |
Equity Method Investments (Deta
Equity Method Investments (Details) - USD ($) $ in Thousands | 3 Months Ended | |||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2018 | ||
GWG portion of net earnings (loss) | $ (1,530) | $ (1,927) | ||
Beneficient [Member] | ||||
Total revenues | $ 25,306 | |||
Net loss | (41,644) | |||
Net loss attributable to Ben LP common unitholders | (13,192) | |||
GWG portion of net earnings (loss) | [1] | $ (1,927) | ||
[1] | Our portion of Beneficient's net earnings (loss) for the period noted. This amount was recognized during the three months ended March 31, 2019, in accordance with our one-quarter lag election. |
Equity Method Investments (De_2
Equity Method Investments (Details 1) | 3 Months Ended | |
Mar. 31, 2020 | Dec. 31, 2019 | |
Percentage of outstanding common units | 95.50% | 90.20% |
August 10, 2018 [Member] | Beneficient [Member] | ||
Percentage of outstanding common units | 13.90% | |
Reason | Purchase of units | |
December 28, 2018 [Member] | Beneficient [Member] | ||
Percentage of outstanding common units | 89.90% | |
Reason | Purchase of units | |
March 31, 2019 [Member] | Beneficient [Member] | ||
Percentage of outstanding common units | 88.10% | |
Reason | Change in investee outstanding units | |
June 12, 2019 [Member] | Beneficient [Member] | ||
Percentage of outstanding common units | 90.20% | |
Reason | Purchase of units | |
December 31, 2019 [Member] | Beneficient [Member] | ||
Percentage of outstanding common units | 95.50% | |
Reason | Purchase of units |
Equity Method Investments (De_3
Equity Method Investments (Details Textual) - USD ($) $ in Thousands | Nov. 11, 2019 | Jun. 12, 2019 | Mar. 31, 2020 | Dec. 31, 2019 | Mar. 31, 2019 | Dec. 31, 2019 | Dec. 31, 2018 |
Equity Method Investment (Textual) | |||||||
Beneficient transaction, shares acquired | 666,667 | ||||||
Partnership interest of beneficient | 95.50% | 90.20% | 90.20% | ||||
Cash investment | $ 5,417 | ||||||
Loss on equity method investment | (1,530) | $ (1,927) | |||||
InsurTech Holdings, LLC [Member] | |||||||
Equity Method Investment (Textual) | |||||||
Partnership interest of beneficient | 100.00% | ||||||
Ownership percentage | 100.00% | ||||||
Carrying value of cash and fixed assets | $ 3,400 | 5,400 | |||||
Loss on equity method investment | 1,500 | $ 1,600 | |||||
Equity Method Investment balance | $ 5,600 | $ 1,800 | $ 1,800 | ||||
Additional information, description | In accordance with the operating agreement of FOXO, GWG Holdings is committed to contribute an additional $12.5 million to the entity through October 2021. | ||||||
Seller Trusts and Beneficient [Member] | |||||||
Equity Method Investment (Textual) | |||||||
Beneficient transaction, shares acquired | 40,505,279 | ||||||
Partnership interest of beneficient | 89.90% | ||||||
Beneficient [Member] | |||||||
Equity Method Investment (Textual) | |||||||
Beneficient transaction, shares acquired | 1,000,000 | 666,667 | 40,500,000 | ||||
Partnership interest of beneficient | 89.90% | ||||||
Cash investment | $ 10,000 | $ 10,000 |
Variable Interest Entities (Det
Variable Interest Entities (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Loan receivables | $ (218,596) | $ (232,344) |
Accounts payable and accrued expenses | (21,139) | (27,836) |
Carrying Value [Member] | VIEs [Member] | ||
Loan receivables | 218,596 | 232,344 |
Financing receivables from affiliates | 68,290 | 67,153 |
Equity method investments | 5,648 | 1,761 |
Accounts payable and accrued expenses | (2,538) | (2,515) |
Total | 289,996 | 298,743 |
Maximum Exposure to Loss [Member] | VIEs [Member] | ||
Loan receivables | 322,748 | 335,255 |
Financing receivables from affiliates | 68,290 | 67,153 |
Equity method investments | 18,148 | 19,661 |
Accounts payable and accrued expenses | ||
Total | $ 409,186 | $ 422,069 |
Debt (Details)
Debt (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 12 Months Ended | ||||||
Nov. 01, 2019 | Aug. 10, 2018 | Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | May 11, 2020 | Mar. 30, 2020 | Jan. 31, 2018 | Dec. 01, 2017 | |
Debt (Textual) | |||||||||
Seller Trust L Bonds | $ 366,892 | $ 366,892 | |||||||
Carrying value of credit agreements | $ 152,597 | 153,086 | |||||||
Other Borrowings [Member] | |||||||||
Debt (Textual) | |||||||||
Interest rate, description | 1-month LIBOR plus 3.95%. | ||||||||
Carrying value of credit agreements | $ 152,600 | 153,100 | |||||||
Credit agreement maturity date | Jun. 30, 2020 | ||||||||
Unamortized premium | $ 400 | 900 | |||||||
Other Borrowings [Member] | Senior Credit Facility [Member] | |||||||||
Debt (Textual) | |||||||||
Outstanding amount of credit facility | 77,500 | 77,500 | |||||||
Other Borrowings [Member] | Subordinated Credit Facility [Member] | |||||||||
Debt (Textual) | |||||||||
Outstanding amount of credit facility | 72,200 | 72,200 | |||||||
Other Borrowings [Member] | Misc Borrowings [Member] | |||||||||
Debt (Textual) | |||||||||
Outstanding amount of credit facility | $ 2,500 | $ 2,500 | |||||||
L Bonds [Member] | |||||||||
Debt (Textual) | |||||||||
Debentures offer for sale | $ 2,000,000 | $ 1,000,000 | $ 1,000,000 | ||||||
Description of interest payment | Interest is payable monthly or annually depending on the election of the investor. | ||||||||
Interest rate | 7.18% | 7.12% | |||||||
Principal amount outstanding | $ 1,000,000 | $ 948,100 | |||||||
Amortization of deferred issuance costs | 3,900 | $ 2,800 | |||||||
Future expected amortization of deferred financing costs | $ 41,200 | ||||||||
Amortization period of deferred financing cost | 7 years | ||||||||
L Bonds [Member] | Subsequent Event [Member] | |||||||||
Debt (Textual) | |||||||||
Principal amount outstanding | $ 70,000 | ||||||||
LNV Corporation [Member] | |||||||||
Debt (Textual) | |||||||||
Senior credit facility | $ 300,000 | ||||||||
Maturity date | Sep. 27, 2029 | ||||||||
Interest rate, description | Interest will accrue on amounts borrowed under the LNV 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 March 31, 2020 was 9.50%. | ||||||||
Outstanding amount of credit facility | $ 198,700 | 184,600 | |||||||
Additional collateral pledged | $ 298,300 | ||||||||
Advance received | $ 37,100 | ||||||||
Portfolio pledged, percentage | 77.10% | ||||||||
L Bonds [Member] | |||||||||
Debt (Textual) | |||||||||
Maturity date | Aug. 9, 2023 | ||||||||
Description of interest payment | Interest is payable monthly in cash. | ||||||||
Interest rate | 7.50% | ||||||||
Principal amount outstanding | $ 366,900 | $ 366,900 | |||||||
Seller Trust L Bonds | $ 366,900 | ||||||||
L Bonds and Seller Trust L Bonds [Member] | |||||||||
Debt (Textual) | |||||||||
Interest rate | 6.21% | 6.34% |
Stockholders' Equity (Details)
Stockholders' Equity (Details) - Stock Repurchase Program [Member] $ / shares in Units, $ in Thousands | 3 Months Ended |
Mar. 31, 2020USD ($)$ / sharesshares | |
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 Remained Under the Program | $ | $ 1,072 |
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 Remained Under the Program | $ | $ 1,070 |
Stockholders' Equity (Details T
Stockholders' Equity (Details Textual) $ / shares in Units, $ in Thousands | Feb. 14, 2017Tradingdays$ / sharesshares | Apr. 15, 2019shares | Dec. 31, 2018shares | Apr. 30, 2018USD ($)shares | Mar. 31, 2017USD ($)shares | Nov. 30, 2015Tradingdays$ / sharesshares | Sep. 30, 2014USD ($)$ / sharesshares | Mar. 31, 2020$ / sharesshares | Mar. 31, 2019shares | Dec. 31, 2019$ / sharesshares | Nov. 15, 2018USD ($) |
Stockholders' Equity (Textual) | |||||||||||
Aggregate authorized purchase of common stock | $ | $ 1,500 | ||||||||||
Preferred Stock, Per share Stated value | $ / shares | $ 15 | ||||||||||
Common stock at a conversion price | $ / shares | $ 0.001 | 0.001 | |||||||||
Sub-capital accounts, percentage | 20.00% | ||||||||||
Long-term debt, percentage | 40.00% | ||||||||||
Preferred units issued | 30,535,249 | ||||||||||
Preferred units outstanding | 30,535,249 | ||||||||||
Common stock transactions between shareholders | 3,952,155 | ||||||||||
Common Stock [Member] | |||||||||||
Stockholders' Equity (Textual) | |||||||||||
Issuance of common stock, shares | 800,000 | 1,456 | 17,135 | ||||||||
Common stock, par value | $ / shares | $ 12.50 | ||||||||||
Net proceeds | $ | $ 8,600 | ||||||||||
Preferred Stock, Per share Stated value | $ / shares | $ 15 | ||||||||||
Common Stock [Member] | |||||||||||
Stockholders' Equity (Textual) | |||||||||||
Issuance of common stock, shares | 27,013,516 | ||||||||||
Common Stock [Member] | AltiVerse [Member] | |||||||||||
Stockholders' Equity (Textual) | |||||||||||
Common stock transactions between shareholders | 1,452,155 | ||||||||||
Common Stock [Member] | BCC [Member] | |||||||||||
Stockholders' Equity (Textual) | |||||||||||
Common stock transactions between shareholders | 2,500,000 | ||||||||||
Redeemable Preferred Stock [Member] | |||||||||||
Stockholders' Equity (Textual) | |||||||||||
Company offering shares of redeemable preferred stock | 100,000 | 100,000 | 100,000 | ||||||||
Par value per share | $ / shares | $ 1,000 | $ 0.001 | $ 0.001 | ||||||||
Dividend rate | 7.00% | ||||||||||
Liquidation preference value, per share | $ / shares | $ 1,000 | ||||||||||
Number of trading days | Tradingdays | 20 | ||||||||||
Minimum conversion price | $ / shares | $ 15 | ||||||||||
Preferred stock redemption, percentage | 15.00% | ||||||||||
Number of shares issued | 99,127 | ||||||||||
Aggregate gross consideration | $ | $ 99,100 | ||||||||||
Selling costs related to shares | $ | $ 7,000 | ||||||||||
Series 2 Redeemable Preferred Stock [Member] | |||||||||||
Stockholders' Equity (Textual) | |||||||||||
Company offering shares of redeemable preferred stock | 150,000 | ||||||||||
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% | ||||||||||
Number of shares issued | 149,979 | ||||||||||
Selling costs related to shares | $ | $ 10,300 | ||||||||||
Preferred Unit Description | The event of redemptions occurring less than one year after issuance, of 107% of the stated value. | ||||||||||
Aggregate gross consideration | $ | $ 150,000 | ||||||||||
Class S Preferred Units [Member] | BCH [Member] | |||||||||||
Stockholders' Equity (Textual) | |||||||||||
Preferred Unit Description | The Class S Preferred Units are entitled to a quarterly preferred return that is limited by the quarterly preferred return rate cap described above for Preferred Series A Subclass 1 except for when annualized revenues exceed $140 million, the Class S Preferred return is based on a fraction (i) the numerator of which is (A) the positive percentage rate change, if any, to the seasonally adjusted CPI-U covering the period from the date of the last allocation of profits to such holders, plus (B) 0.75 percent, and (ii) the denominator of which is one minus the highest effective marginal combined U.S. federal, state and local income tax rate in effect as of the beginning of the fiscal quarter for which such determination is being made for an individual resident in New York City, New York, assuming (1) that the aggregate gross income allocable with respect to the quarterly preferred return for such fiscal year will consist of the same relative proportion of each type or character (e.g., long term or short term capital gain or ordinary or exempt income) of gross income item included in the aggregate gross income actually allocated in respect of the quarterly preferred return for the fiscal year reflected in the Ben Group Partnership's most recently filed IRS Form 1065 and (2) any state and local income taxes are not deductible against U.S. federal income tax. The Class S Preferred Units also participate on an as-converted basis pro-rata in the share of the profits or losses of BCH and subsidiaries following all other allocations made by BCH and its subsidiaries. As limited partner interests, these units are generally non-voting and do not entitle participation in the management of BCH's business and affairs. Generally, the Class S Preferred Units are exchangeable for Common Units in Ben LP on a 1.2-for-1 basis, subject to customary conversion rate adjustments for splits, distributions and reclassifications, as well as compliance with any applicable vesting and transfer restrictions. Each conversion also results in the issuance to Ben LP of a Class A Unit for each Common Unit issued. Holders of Class S Preferred Units may elect to convert into Class S Ordinary Units in connection with a sale or dissolution of BCH. | ||||||||||
Class S Ordinary [Member] | BCH [Member] | |||||||||||
Stockholders' Equity (Textual) | |||||||||||
Preferred units issued | 5,800,000 | 5,800,000 | |||||||||
Preferred units outstanding | 5,800,000 | 5,800,000 | |||||||||
Preferred Series A Subclass 1 [Member] | BCH [Member] | |||||||||||
Stockholders' Equity (Textual) | |||||||||||
Preferred Unit Description | ● First, Ben, as the sole holder of Class A Units issued by BCH is allocated income from BCH to cover the expenses incurred solely by Ben; ● Second, the remaining income at BCH is allocated 50% to the aggregate of Class A Units and Class S Ordinary Units and 50% to Preferred Series A Subclass 1 Unit Accounts, until the Common Units issued by Ben receive a 1% annualized return on the Common Unit account balance; ● Third, after the 1% annualized return to the Common Unit issued by Ben is achieved, additional income is allocated to the Preferred Series A until the Preferred Series A is allocated the amount required under the LPA, (as amended); and ● Finally, any remaining income is allocated under the terms of the current LPA (pro-rata between the Class A Units and Class S Ordinary Units). | ||||||||||
Quarterly return limitation, description | ● 0.25% if annualized revenues are $80 million or less; ● 0.50% if annualized revenues are greater than $80 million but equal to or less than $105 million; ● 0.75% if annualized revenues are greater than $105 million but equal to or less than $125 million; ● 1.00% if annualized revenues are greater than $125 million but equal to or less than $135 million; ● 1.25% if annualized revenues are greater than $135 million but equal to or less than $140 million; and ● If over $140 million, the preferred return calculation is based on a fraction (i) the numerator of which is (A) the positive percentage rate change, if any, to the seasonally adjusted CPI-U covering the period from the date of the last allocation of profits to such holders, plus (B) (x) 2% prior to an Initial Public Offering (as defined in the BCH LPA) by Ben and (y) 3% thereafter, and (ii) the denominator of which is one minus the highest effective marginal combined U.S. federal, state and local income tax rate in effect as of the beginning of the fiscal quarter for which such determination is being made for an individual resident in New York City, New York, assuming (1) that the aggregate gross income allocable with respect to the quarterly preferred return for such fiscal year will consist of the same relative proportion of each type or character (e.g., long term or short term capital gain or ordinary or exempt income) of gross income item included in the aggregate gross income actually allocated in respect of the quarterly preferred return for the fiscal year reflected in the BCH's most recently filed Internal Revenue Service Form 1065 and (2) any state and local income taxes are not deductible against U.S. federal income tax. | ||||||||||
Preferred stock conversion and redemption terms, description | Upon election by a holder, the Preferred Series A Unit Accounts (other than Preferred Series A Subclass 2 Unit Accounts) are, at any time on or after January 1, 2021, convertible in an amount of Preferred Series A Unit Accounts (other than Preferred Series A Subclass 2 Unit Accounts), equal to 20% of their Sub-Capital Accounts into Class S Ordinary Units (with the right to convert any unconverted amount from previous years in any subsequent years). Upon an election, a holder of Preferred Series A Subclass 1 Unit Accounts 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) either (x) prior to an initial public offering, the appraised per Class A Unit fair market value as determined by Beneficient or (y) following an initial public offering, the average price of a Common Unit for the thirty (30) day period ended immediately prior to the applicable conversion date. The holder of such newly issued Class S Ordinary Units may immediately convert them into Common Units. Additionally, effective December 31, 2030, if the Preferred Series A Subclass 1 Unit Accounts have not been converted, they will redeem for cash in an amount equal to the then outstanding capital account balance of the accounts. If available redeeming cash (as defined in the LPA) is insufficient to satisfy any such redemption requirements, BCH, on a quarterly basis, will redeem additional Preferred Series A Units until all such Preferred Series A Units have been redeemed. The Preferred Series A Subclass 1 Unit Accounts are subject to certain other conversion and redemption provisions. The current LPA of BCH also includes certain limitations of BCH, without the consent of a majority-in-interest of the Preferred Series A Unit Account holders, to (i) issue any new equity securities and (ii) except as otherwise provided, incur indebtedness that is senior to or pari passu with any right of distribution, redemption, repayment, repurchase or other payments relating to the Preferred Series A Unit accounts. Further, BCH cannot, prior to the conversion of all the Preferred Series A Unit accounts, incur any additional long-term debt unless (i) after giving effect to the incurrence of the new long-term debt on a pro forma basis, the sum of certain preferred stock, existing debt and any new long-term indebtedness would not exceed 55% of BCH's net asset value ("NAV") plus cash on hand, and (ii) at the time of incurrence of any new long-term indebtedness, the aggregate balance of BCH's (including controlled subsidiaries) debt plus such new long-term debt does not exceed 40% of the sum of the NAV of the collateral underlying the loan portfolio of BCH and its subsidiaries plus cash on hand at Ben LP, BCH and its subsidiaries. |
Equity-Based Compensation (Deta
Equity-Based Compensation (Details) | 3 Months Ended |
Mar. 31, 2020shares | |
SAR [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Beginning Balance | 375,625 |
Granted during the year | |
Vested during the year | |
Exercised during the year | (1,284) |
Forfeited during the year | (27,368) |
Ending Balance | 346,973 |
SAR [Member] | Vested [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Beginning Balance | 200,745 |
Granted during the year | |
Vested during the year | |
Exercised during the year | (1,284) |
Forfeited during the year | (2,051) |
Ending Balance | 197,410 |
SAR [Member] | Unvested [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Beginning Balance | 174,880 |
Granted during the year | |
Vested during the year | |
Exercised during the year | |
Forfeited during the year | (25,317) |
Ending Balance | 149,563 |
Stock Options [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Beginning Balance | 905,381 |
Granted during the year | |
Vested during the year | |
Exercised during the year | (19,304) |
Forfeited during the year | (100,775) |
Ending Balance | 785,302 |
Stock Options [Member] | Vested [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Beginning Balance | 673,341 |
Granted during the year | |
Vested during the year | 20,751 |
Exercised during the year | (19,304) |
Forfeited during the year | (55,917) |
Ending Balance | 618,871 |
Stock Options [Member] | Unvested [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Beginning Balance | 232,040 |
Granted during the year | |
Vested during the year | (20,751) |
Exercised during the year | |
Forfeited during the year | (44,858) |
Ending Balance | 166,431 |
RSU [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Beginning Balance | 244,083 |
Granted during the year | |
Vested during the year | |
Exercised during the year | |
Forfeited during the year | |
Ending Balance | 244,083 |
RSU [Member] | Vested [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Beginning Balance | |
Granted during the year | |
Vested during the year | |
Exercised during the year | |
Forfeited during the year | |
Ending Balance | |
RSU [Member] | Unvested [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Beginning Balance | 244,083 |
Granted during the year | |
Vested during the year | |
Exercised during the year | |
Forfeited during the year | |
Ending Balance | 244,083 |
BMP Equity Units [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Beginning Balance | 8,160,037 |
Granted during the year | 6,100,217 |
Vested during the year | |
Exercised during the year | |
Forfeited during the year | (70,000) |
Ending Balance | 14,190,254 |
BMP Equity Units [Member] | Vested [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Beginning Balance | 7,980,037 |
Granted during the year | 3,451,017 |
Vested during the year | |
Exercised during the year | |
Forfeited during the year | |
Ending Balance | 11,431,054 |
BMP Equity Units [Member] | Unvested [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Beginning Balance | 180,000 |
Granted during the year | 2,649,200 |
Vested during the year | |
Exercised during the year | |
Forfeited during the year | (70,000) |
Ending Balance | 2,759,200 |
REU [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Beginning Balance | 2,411,242 |
Granted during the year | 4,184,153 |
Vested during the year | |
Exercised during the year | |
Forfeited during the year | (77,500) |
Ending Balance | 6,517,895 |
REU [Member] | Vested [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Beginning Balance | 2,164,742 |
Granted during the year | 2,281,681 |
Vested during the year | 7,500 |
Exercised during the year | |
Forfeited during the year | |
Ending Balance | 4,453,923 |
REU [Member] | Unvested [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Beginning Balance | 246,500 |
Granted during the year | 1,902,472 |
Vested during the year | (7,500) |
Exercised during the year | |
Forfeited during the year | (77,500) |
Ending Balance | 2,063,972 |
Equity-Based Compensation (De_2
Equity-Based Compensation (Details 1) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Share-based Payment Arrangement [Abstract] | ||
Stock options | $ 48 | $ 262 |
Stock appreciation rights | 206 | 413 |
Restricted stock units | 260 | 159 |
BMP equity units | 38,024 | |
REU | 30,910 | |
Total equity-based compensation | $ 69,448 | $ 834 |
Equity-Based Compensation (De_3
Equity-Based Compensation (Details 2) $ in Thousands | Mar. 31, 2020USD ($) |
Nine months ending 2020 | $ 12,979 |
2021 | 16,664 |
2022 | 11,112 |
2023 | 4,058 |
2024 | 401 |
Total | 45,214 |
Stock Options [Member] | |
Nine months ending 2020 | 202 |
2021 | 142 |
2022 | 20 |
2023 | |
2024 | |
Total | 364 |
SAR [Member] | |
Nine months ending 2020 | 81 |
2021 | 132 |
2022 | 81 |
2023 | 6 |
2024 | |
Total | 300 |
RSU [Member] | |
Nine months ending 2020 | 226 |
2021 | |
2022 | |
2023 | |
2024 | |
Total | 226 |
REU [Member] | |
Nine months ending 2020 | 6,169 |
2021 | 8,027 |
2022 | 5,306 |
2023 | 2,148 |
2024 | 262 |
Total | 21,912 |
BMP Equity Units [Member] | |
Nine months ending 2020 | 6,301 |
2021 | 8,363 |
2022 | 5,705 |
2023 | 1,904 |
2024 | 139 |
Total | $ 22,412 |
Equity-Based Compensation (De_4
Equity-Based Compensation (Details Textual) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Equity-Based Compensation (Textual) | |||
Unrecognized compensation expense related to un-vested options | $ 45,214 | ||
Expense related to stock options | $ 48 | $ 262 | |
Loss on equity method investment | $ 1,500 | ||
Percentage of common units | 15.00% | ||
Equity Option [Member] | |||
Equity-Based Compensation (Textual) | |||
Awards vested during period | 20,751 | ||
Unrecognized compensation expense related to un-vested options | $ 45,200 | ||
Compensation expense remaining vesting in 2020 | $ 13,000 | ||
BMP Equity Units [Member] | |||
Equity-Based Compensation (Textual) | |||
Awards vested during period | |||
Cumulative options exercised | |||
Unrecognized compensation expense related to un-vested options | $ 22,412 | ||
REU's [Member] | |||
Equity-Based Compensation (Textual) | |||
Awards vested during period | |||
Cumulative options exercised | |||
Unrecognized compensation expense related to un-vested options | $ 21,912 | ||
Ben Equity Incentive Plan [Member] | |||
Equity-Based Compensation (Textual) | |||
Equity Incentive Plan, description | Under the Ben Equity Incentive Plan, Ben is permitted to grant equity awards, in the form of restricted equity units ("REUs") representing ownership interests in Common Units. Settled awards under the Ben Equity Incentive Plan dilute Ben’s Common Unitholders. The total number of Common Units that may be issued under the Ben Equity Incentive Plan is equivalent to 15% of the number of fully diluted Common Units outstanding, subject to annual adjustment. | ||
Stock Options [Member] | |||
Equity-Based Compensation (Textual) | |||
Awards vested during period | |||
Cumulative options exercised | 19,304 | ||
Unrecognized compensation expense related to un-vested options | $ 364 | ||
Stock Appreciation Rights (SARs) [Member] | |||
Equity-Based Compensation (Textual) | |||
Awards vested during period | |||
Cumulative options exercised | 1,284 | ||
Stock Appreciation Rights [Member] | |||
Equity-Based Compensation (Textual) | |||
Other accrued expenses | $ 800 | $ 600 | |
Restricted Stock Units (RSUs) [Member] | |||
Equity-Based Compensation (Textual) | |||
Awards vested during period | |||
Cumulative options exercised | |||
Unrecognized compensation expense related to un-vested options | $ 226 | ||
2013 Stock Incentive Plan [Member] | |||
Equity-Based Compensation (Textual) | |||
Expiry award grant term | 10 years | ||
Employees [Member] | |||
Equity-Based Compensation (Textual) | |||
Common stock issued | 1,456 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Income Taxes (Textual) | ||
Benefit for income taxes | $ (14,507) | |
Effective tax rate | 16.03% | 0.00% |
Change in state deferred tax rate, description | Change in the state deferred tax rate from 9.8% to 0%. | |
CARES Act effects | Increased the allowable business interest deduction from 30% of adjusted taxable income to 50% of adjusted taxable income. |
Loss per Common Share (Details)
Loss per Common Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Numerator: | ||
Net loss attributable to common shareholders | $ (49,384) | $ (18,910) |
Denominator: | ||
Basic - weighted average common shares outstanding | 30,534,977 | 32,984,741 |
Effect of dilutive securities | ||
Diluted - weighted average common shares outstanding | 30,534,977 | 32,984,741 |
Basic loss per common share | $ (1.62) | $ (0.57) |
Diluted loss per common share | $ (1.62) | $ (0.57) |
Loss per Common Share (Details
Loss per Common Share (Details Textual) - shares | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Loss per Common Share (Textual) | ||
Anti-dilutive potential shares excluded in calculation of diluted earnings per share | 2,543,665 | 2,814,635 |
Segment Reporting (Details)
Segment Reporting (Details) - Revenue [Member] - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Total | $ 33,557 | $ 25,217 |
Corporate & Other [Member] | ||
Total | 164 | |
Beneficient [Member] | ||
Total | 18,409 | 2,870 |
Secondary Life Insurance [Member] | ||
Total | $ 15,148 | $ 22,183 |
Segment Reporting (Details 1)
Segment Reporting (Details 1) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Interest Expense [Member] | ||
Total | $ 35,871 | $ 26,975 |
Interest Expense [Member] | Corporate & Other [Member] | ||
Total | ||
Interest Income [Member] | ||
Total | 13,989 | 3,460 |
Interest Income [Member] | Corporate & Other [Member] | ||
Total | 4 | |
Beneficient [Member] | Interest Expense [Member] | ||
Total | 13,178 | 6,879 |
Beneficient [Member] | Interest Income [Member] | ||
Total | 13,374 | 2,825 |
Secondary Life Insurance [Member] | Interest Expense [Member] | ||
Total | 22,693 | 20,096 |
Secondary Life Insurance [Member] | Interest Income [Member] | ||
Total | $ 615 | $ 631 |
Segment Reporting (Details 2)
Segment Reporting (Details 2) - Segment EBT [Member] - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Total | $ (92,023) | $ (14,614) |
Income tax expense | 14,507 | |
Net loss | (77,516) | (14,614) |
Beneficient [Member] | ||
Total | (70,149) | (5,936) |
Corporate & Other [Member] | ||
Total | (7,153) | (7,055) |
Secondary Life Insurance [Member] | ||
Total | $ (14,721) | $ (1,623) |
Segment Reporting (Details 3)
Segment Reporting (Details 3) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Total | $ 3,684,229 | $ 3,635,206 |
Corporate & Other [Member] | ||
Total | 12,395 | |
Beneficient [Member] | ||
Total | 2,719,387 | |
Secondary Life Insurance [Member] | ||
Total | $ 952,447 | 904,363 |
Beneficient [Member] | ||
Total | 2,721,546 | |
Corporate & Other [Member] | ||
Total | $ 9,297 |
Segment Reporting (Details Text
Segment Reporting (Details Textual) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020USD ($)Segment | Dec. 31, 2019USD ($) | |
Segment Reporting (Textual) | ||
Number of reportable segments | Segment | 2 | |
Goodwill | $ | $ 2,372,595 | $ 2,358,005 |
Leases (Details)
Leases (Details) $ in Thousands | Mar. 31, 2020USD ($) |
Operating lease liabilities | $ 2,320 |
Other accrued expenses [Member] | |
Operating lease liabilities | 2,320 |
Other Assets [Member] | |
Operating lease right-of-use assets | $ 1,714 |
Leases (Details 1)
Leases (Details 1) $ in Thousands | Mar. 31, 2020USD ($) |
Summary of minimum lease payments under amendment lease | |
2020 | $ 751 |
2021 | 715 |
2022 | 302 |
2023 | 311 |
2024 | 320 |
Thereafter | 273 |
Total lease payments | 2,672 |
Less: imputed interest | (352) |
Present value of lease liabilities | $ 2,320 |
Leases (Details Textual)
Leases (Details Textual) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Leases (Textual) | ||
Description of operating lease agreements | The Company leases certain real estate for its office premises under operating lease agreements which expire in 2021 and 2025. | |
Operating lease costs | $ 200 | $ 50 |
Short term lease costs | $ 49 | 26 |
Weighted average remaining lease term | 4 years 1 month 6 days | |
Weighted average discount rate | 6.60% | |
Operating lease payments | $ 300 | 100 |
Variable lease costs | 53 | 55 |
Total lease costs | $ 300 | $ 100 |
Commitments and Contingencies (
Commitments and Contingencies (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2020 | Dec. 31, 2019 | |
Commitments and Contingencies (Textual) | ||
Commitments, description | GWG Holdings is committed to contribute an additional $12.5 million to FOXO through 2021, with an additional $8.4 million in the nine months ending December 31, 2020 and $4.1 million in 2021. | |
Gross potential capital commitments | $ 73,700 | $ 73,800 |
Guarantee and Collateral Prov_3
Guarantee and Collateral Provisions of L Bonds and Seller Trust L Bonds (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 | Mar. 31, 2019 | Dec. 31, 2018 |
ASSETS | ||||
Cash and cash equivalents | $ 116,432 | $ 79,073 | ||
Restricted cash | 26,446 | 20,258 | ||
Investment in life insurance policies, at fair value | 802,181 | 796,039 | ||
Life insurance policy benefits receivable, net | 15,330 | 23,031 | ||
Loans receivable, net of unearned income | 219,296 | 232,344 | ||
Allowance for loan losses | (700) | |||
Loans receivable, net | 218,596 | 232,344 | ||
Fees receivable | 30,453 | 29,168 | ||
Financing receivables from affiliates | 68,290 | 67,153 | ||
Investment in GWG stock | ||||
Other assets | 33,906 | 30,135 | ||
Goodwill | 2,372,595 | 2,358,005 | ||
Investment in subsidiaries | ||||
TOTAL ASSETS | 3,684,229 | 3,635,206 | ||
LIABILITIES | ||||
Senior credit facility with LNV Corporation | 188,793 | 174,390 | ||
L Bonds | 1,009,781 | 926,638 | ||
Seller Trust L Bonds | 366,892 | 366,892 | ||
Other borrowings | 152,597 | 153,086 | ||
Intercompany debt - commercial loan | ||||
Interest and dividends payable | 22,403 | 16,516 | ||
Deferred revenue | 39,651 | 41,444 | ||
Account payable and accrued expenses | 21,139 | 27,836 | ||
Deferred tax liability, net | 40,206 | 57,923 | ||
TOTAL LIABILITIES | 1,841,462 | 1,764,725 | ||
Redeemable noncontrolling interests | 1,241,641 | 1,269,654 | ||
STOCKHOLDERS' EQUITY | ||||
Member capital | ||||
Common units | ||||
Redeemable preferred stock and Series 2 redeemable preferred stock | 186,658 | 201,891 | ||
Common stock | 33 | 33 | ||
Common stock in treasury | (24,550) | (24,550) | ||
Additional paid-in capital | 229,207 | 233,106 | ||
Accumulated deficit | (121,933) | (76,501) | ||
Noncontrolling interests | 331,711 | 266,848 | ||
TOTAL STOCKHOLDERS' EQUITY | 601,126 | 600,827 | $ 261,259 | $ 281,058 |
TOTAL LIABILITIES AND EQUITY | 3,684,229 | 3,635,206 | ||
Eliminations [Member] | ||||
ASSETS | ||||
Cash and cash equivalents | ||||
Restricted cash | ||||
Investment in life insurance policies, at fair value | ||||
Life insurance policy benefits receivable, net | ||||
Loans receivable, net of unearned income | ||||
Allowance for loan losses | ||||
Loans receivable, net | ||||
Fees receivable | ||||
Financing receivables from affiliates | (171,274) | (168,420) | ||
Investment in GWG stock | (25,400) | (24,550) | ||
Other assets | (377,817) | (759,136) | ||
Goodwill | ||||
Investment in subsidiaries | (2,223,180) | (1,885,950) | ||
TOTAL ASSETS | (2,797,671) | (2,838,056) | ||
LIABILITIES | ||||
Senior credit facility with LNV Corporation | ||||
L Bonds | ||||
Seller Trust L Bonds | ||||
Other borrowings | ||||
Intercompany debt - commercial loan | (171,329) | (168,420) | ||
Interest and dividends payable | ||||
Deferred revenue | ||||
Account payable and accrued expenses | (58,702) | (57,603) | ||
Deferred tax liability, net | ||||
TOTAL LIABILITIES | (230,031) | (226,023) | ||
Redeemable noncontrolling interests | (311,913) | (318,950) | ||
STOCKHOLDERS' EQUITY | ||||
Member capital | (1,869,761) | (1,885,950) | ||
Common units | (603,417) | (563,966) | ||
Redeemable preferred stock and Series 2 redeemable preferred stock | ||||
Common stock | ||||
Common stock in treasury | (24,550) | (24,550) | ||
Additional paid-in capital | ||||
Accumulated deficit | (7,037) | |||
Noncontrolling interests | 249,038 | 181,383 | ||
TOTAL STOCKHOLDERS' EQUITY | (2,255,727) | (2,293,083) | ||
TOTAL LIABILITIES AND EQUITY | (2,797,671) | (2,838,056) | ||
Parent [Member] | ||||
ASSETS | ||||
Cash and cash equivalents | 101,529 | 57,721 | ||
Restricted cash | ||||
Investment in life insurance policies, at fair value | ||||
Life insurance policy benefits receivable, net | ||||
Loans receivable, net of unearned income | ||||
Allowance for loan losses | ||||
Loans receivable, net | ||||
Fees receivable | ||||
Financing receivables from affiliates | ||||
Investment in GWG stock | ||||
Other assets | 67,792 | 446,618 | ||
Goodwill | ||||
Investment in subsidiaries | 1,569,254 | 1,221,227 | ||
TOTAL ASSETS | 1,738,575 | 1,725,566 | ||
LIABILITIES | ||||
Senior credit facility with LNV Corporation | ||||
L Bonds | 1,009,781 | 926,638 | ||
Seller Trust L Bonds | 366,892 | 366,892 | ||
Other borrowings | ||||
Intercompany debt - commercial loan | ||||
Interest and dividends payable | 12,162 | 12,491 | ||
Deferred revenue | ||||
Account payable and accrued expenses | 8,532 | 3,093 | ||
Deferred tax liability, net | 40,206 | 57,923 | ||
TOTAL LIABILITIES | 1,437,573 | 1,367,037 | ||
Redeemable noncontrolling interests | ||||
STOCKHOLDERS' EQUITY | ||||
Member capital | ||||
Common units | ||||
Redeemable preferred stock and Series 2 redeemable preferred stock | 186,658 | 201,891 | ||
Common stock | 33 | 33 | ||
Common stock in treasury | ||||
Additional paid-in capital | 229,207 | 233,106 | ||
Accumulated deficit | (114,896) | (76,501) | ||
Noncontrolling interests | ||||
TOTAL STOCKHOLDERS' EQUITY | 301,002 | 358,529 | ||
TOTAL LIABILITIES AND EQUITY | 1,738,575 | 1,725,566 | ||
Guarantor Subsidiary [Member] | ||||
ASSETS | ||||
Cash and cash equivalents | 1,753 | 2,644 | ||
Restricted cash | 512 | |||
Investment in life insurance policies, at fair value | 344 | 340 | ||
Life insurance policy benefits receivable, net | 200 | 200 | ||
Loans receivable, net of unearned income | ||||
Allowance for loan losses | ||||
Loans receivable, net | ||||
Fees receivable | ||||
Financing receivables from affiliates | 239,564 | 235,573 | ||
Investment in GWG stock | ||||
Other assets | 320,460 | 320,490 | ||
Goodwill | ||||
Investment in subsidiaries | 653,926 | 664,723 | ||
TOTAL ASSETS | 1,216,759 | 1,223,970 | ||
LIABILITIES | ||||
Senior credit facility with LNV Corporation | ||||
L Bonds | ||||
Seller Trust L Bonds | ||||
Other borrowings | ||||
Intercompany debt - commercial loan | ||||
Interest and dividends payable | ||||
Deferred revenue | ||||
Account payable and accrued expenses | 2,071 | 3,891 | ||
Deferred tax liability, net | ||||
TOTAL LIABILITIES | 2,071 | 3,891 | ||
Redeemable noncontrolling interests | ||||
STOCKHOLDERS' EQUITY | ||||
Member capital | 1,214,688 | 1,220,079 | ||
Common units | ||||
Redeemable preferred stock and Series 2 redeemable preferred stock | ||||
Common stock | ||||
Common stock in treasury | ||||
Additional paid-in capital | ||||
Accumulated deficit | ||||
Noncontrolling interests | ||||
TOTAL STOCKHOLDERS' EQUITY | 1,214,688 | 1,220,079 | ||
TOTAL LIABILITIES AND EQUITY | 1,216,759 | 1,223,970 | ||
Non-Guarantor Subsidiaries [Member] | ||||
ASSETS | ||||
Cash and cash equivalents | 13,150 | 18,708 | ||
Restricted cash | 25,934 | 20,258 | ||
Investment in life insurance policies, at fair value | 801,837 | 795,699 | ||
Life insurance policy benefits receivable, net | 15,130 | 22,831 | ||
Loans receivable, net of unearned income | 219,296 | 232,344 | ||
Allowance for loan losses | (700) | |||
Loans receivable, net | 218,596 | 232,344 | ||
Fees receivable | 30,453 | 29,168 | ||
Financing receivables from affiliates | ||||
Investment in GWG stock | 25,400 | 24,550 | ||
Other assets | 23,471 | 22,163 | ||
Goodwill | 2,372,595 | 2,358,005 | ||
Investment in subsidiaries | ||||
TOTAL ASSETS | 3,526,566 | 3,523,726 | ||
LIABILITIES | ||||
Senior credit facility with LNV Corporation | 188,793 | 174,390 | ||
L Bonds | ||||
Seller Trust L Bonds | ||||
Other borrowings | 152,597 | 153,086 | ||
Intercompany debt - commercial loan | 171,329 | 168,420 | ||
Interest and dividends payable | 10,241 | 4,025 | ||
Deferred revenue | 39,651 | 41,444 | ||
Account payable and accrued expenses | 69,238 | 78,455 | ||
Deferred tax liability, net | ||||
TOTAL LIABILITIES | 631,849 | 619,820 | ||
Redeemable noncontrolling interests | 1,553,554 | 1,588,604 | ||
STOCKHOLDERS' EQUITY | ||||
Member capital | 655,073 | 665,871 | ||
Common units | 603,417 | 563,966 | ||
Redeemable preferred stock and Series 2 redeemable preferred stock | ||||
Common stock | ||||
Common stock in treasury | ||||
Additional paid-in capital | ||||
Accumulated deficit | ||||
Noncontrolling interests | 82,673 | 85,465 | ||
TOTAL STOCKHOLDERS' EQUITY | 1,341,163 | 1,315,302 | ||
TOTAL LIABILITIES AND EQUITY | $ 3,526,566 | $ 3,523,726 |
Guarantee and Collateral Prov_4
Guarantee and Collateral Provisions of L Bonds and Seller Trust L Bonds (Details 1) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
REVENUE | ||
Gain (loss) on life insurance policies, net | $ 14,445 | $ 21,496 |
Interest and other income | 19,112 | 3,721 |
TOTAL REVENUE | 33,557 | 25,217 |
EXPENSES | ||
Interest expense | 35,871 | 26,975 |
Employee compensation and benefits | 77,704 | 5,154 |
Legal and professional fees | 6,163 | 2,947 |
Provision for loan losses | 700 | |
Other expenses | 3,612 | 2,828 |
TOTAL EXPENSES | 124,050 | 37,904 |
INCOME (LOSS) BEFORE EQUITY IN INCOME (LOSS) OF SUBSIDIARIES | (90,493) | (12,687) |
EQUITY IN INCOME OF SUBSIDIARIES | ||
INCOME (LOSS) BEFORE INCOME TAXES | (90,493) | (12,687) |
INCOME TAX EXPENSE (BENEFIT) | (14,507) | |
NET INCOME (LOSS) BEFORE EARNINGS (LOSS) FROM EQUITY METHOD INVESTMENT | (75,986) | (12,687) |
Loss from equity method investment | (1,530) | (1,927) |
NET INCOME (LOSS) | (77,516) | (14,614) |
Net loss attributable to noncontrolling interests | 32,084 | |
Preferred stock dividends | 3,952 | 4,296 |
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS | (49,384) | (18,910) |
Eliminations [Member] | ||
REVENUE | ||
Gain (loss) on life insurance policies, net | ||
Interest and other income | (4,937) | |
TOTAL REVENUE | (4,937) | |
EXPENSES | ||
Interest expense | (4,087) | |
Employee compensation and benefits | ||
Legal and professional fees | ||
Provision for loan losses | ||
Other expenses | ||
TOTAL EXPENSES | (4,087) | |
INCOME (LOSS) BEFORE EQUITY IN INCOME (LOSS) OF SUBSIDIARIES | (850) | |
EQUITY IN INCOME OF SUBSIDIARIES | 1,567 | (30,387) |
INCOME (LOSS) BEFORE INCOME TAXES | 717 | (30,387) |
INCOME TAX EXPENSE (BENEFIT) | ||
NET INCOME (LOSS) BEFORE EARNINGS (LOSS) FROM EQUITY METHOD INVESTMENT | 717 | (30,387) |
Loss from equity method investment | ||
NET INCOME (LOSS) | 717 | (30,387) |
Net loss attributable to noncontrolling interests | (5,758) | |
Preferred stock dividends | ||
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS | (5,041) | (30,387) |
Parent [Member] | ||
REVENUE | ||
Gain (loss) on life insurance policies, net | ||
Interest and other income | 365 | 614 |
TOTAL REVENUE | 365 | 614 |
EXPENSES | ||
Interest expense | 28,737 | 22,607 |
Employee compensation and benefits | 7,391 | 3,224 |
Legal and professional fees | 1,947 | 1,280 |
Provision for loan losses | ||
Other expenses | 2,461 | 1,692 |
TOTAL EXPENSES | 40,536 | 28,803 |
INCOME (LOSS) BEFORE EQUITY IN INCOME (LOSS) OF SUBSIDIARIES | (40,171) | (28,189) |
EQUITY IN INCOME OF SUBSIDIARIES | (11,128) | 15,502 |
INCOME (LOSS) BEFORE INCOME TAXES | (51,299) | (12,687) |
INCOME TAX EXPENSE (BENEFIT) | (14,434) | |
NET INCOME (LOSS) BEFORE EARNINGS (LOSS) FROM EQUITY METHOD INVESTMENT | (36,865) | (12,687) |
Loss from equity method investment | (1,530) | (1,927) |
NET INCOME (LOSS) | (38,395) | (14,614) |
Net loss attributable to noncontrolling interests | ||
Preferred stock dividends | 3,952 | 4,296 |
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS | (42,347) | (18,910) |
Gurantor Subsidiairies [Member] | ||
REVENUE | ||
Gain (loss) on life insurance policies, net | 3 | 2,067 |
Interest and other income | 5,237 | 2,833 |
TOTAL REVENUE | 5,240 | 4,900 |
EXPENSES | ||
Interest expense | ||
Employee compensation and benefits | 100 | 1,855 |
Legal and professional fees | 134 | 580 |
Provision for loan losses | ||
Other expenses | 423 | 473 |
TOTAL EXPENSES | 657 | 2,908 |
INCOME (LOSS) BEFORE EQUITY IN INCOME (LOSS) OF SUBSIDIARIES | 4,583 | 1,992 |
EQUITY IN INCOME OF SUBSIDIARIES | 9,561 | 14,885 |
INCOME (LOSS) BEFORE INCOME TAXES | 14,144 | 16,877 |
INCOME TAX EXPENSE (BENEFIT) | ||
NET INCOME (LOSS) BEFORE EARNINGS (LOSS) FROM EQUITY METHOD INVESTMENT | 14,144 | 16,877 |
Loss from equity method investment | ||
NET INCOME (LOSS) | 14,144 | 16,877 |
Net loss attributable to noncontrolling interests | ||
Preferred stock dividends | ||
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS | 14,144 | 16,877 |
Non-Guarantor Subsidiaries [Member] | ||
REVENUE | ||
Gain (loss) on life insurance policies, net | 14,442 | 19,429 |
Interest and other income | 18,447 | 274 |
TOTAL REVENUE | 32,889 | 19,703 |
EXPENSES | ||
Interest expense | 11,221 | 4,368 |
Employee compensation and benefits | 70,213 | 75 |
Legal and professional fees | 4,082 | 1,087 |
Provision for loan losses | 700 | |
Other expenses | 728 | 663 |
TOTAL EXPENSES | 86,944 | 6,193 |
INCOME (LOSS) BEFORE EQUITY IN INCOME (LOSS) OF SUBSIDIARIES | (54,055) | 13,510 |
EQUITY IN INCOME OF SUBSIDIARIES | ||
INCOME (LOSS) BEFORE INCOME TAXES | (54,055) | 13,510 |
INCOME TAX EXPENSE (BENEFIT) | (73) | |
NET INCOME (LOSS) BEFORE EARNINGS (LOSS) FROM EQUITY METHOD INVESTMENT | (53,982) | 13,510 |
Loss from equity method investment | ||
NET INCOME (LOSS) | (53,982) | 13,510 |
Net loss attributable to noncontrolling interests | 37,842 | |
Preferred stock dividends | ||
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS | $ (16,140) | $ 13,510 |
Guarantee and Collateral Prov_5
Guarantee and Collateral Provisions of L Bonds and Seller Trust L Bonds (Details 2) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
CASH FLOWS FROM OPERATING ACTIVITIES | |||
Net income (loss) | $ (77,516) | $ (14,614) | |
Adjustments to reconcile net income (loss) to net cash flows from operating activities: | |||
Equity of subsidiaries | |||
Change in fair value of life insurance policies | (12,177) | (15,571) | |
Amortization of deferred financing and issuance costs | 4,211 | 3,100 | |
Amortization of upfront fees | (1,793) | ||
Amortization of debt premiums | (473) | ||
Amortization and depreciation on long-lived assets | 172 | ||
Accretion of discount on financing receivable from affiliate | (419) | ||
Non-cash interest income | (13,374) | ||
Non-cash interest expense | 676 | ||
Loss from equity method investment | 1,530 | 1,927 | |
Provision for loan losses | 700 | ||
Deferred income tax | (17,717) | ||
Equity-based compensation | 69,448 | 834 | |
(Increase) decrease in operating assets: | |||
Life insurance policy benefits receivable | 7,701 | 7,261 | |
Fees receivable | (1,285) | ||
Accrued interest on financing receivable | (1,551) | ||
Other assets | 368 | (3,942) | |
Increase (decrease) in operating liabilities: | |||
Accounts payable and other accrued expenses | (1,103) | (3,328) | |
NET CASHFLOWS USED USED IN OPERATING ACTIVITIES | (40,632) | (26,303) | |
CASH FLOWS FROM INVESTING ACTIVITIES | |||
Investment in life insurance policies | (27,392) | ||
Carrying value of matured life insurance policies | 6,035 | 8,701 | |
Purchases of fixed assets | (481) | ||
Equity method investments | (5,417) | ||
Net change in loans receivable | 10,614 | ||
Payment of capital contributions | |||
NET CASH FLOWS PROVIDED BY INVESTING ACTIVITIES | 10,751 | (18,691) | |
CASH FLOWS FROM FINANCING ACTIVITIES | |||
Borrowings on senior debt | 14,074 | ||
Repayments of senior debt | (2,373) | ||
Proceeds from issuance of L Bonds | 109,053 | 125,985 | |
Payments for issuance and redemptions of L Bonds | (30,532) | (23,974) | |
Issuance (repurchase) of common stock | 18 | (269) | |
Payments for redemption of preferred stock | (15,233) | (819) | |
Preferred stock dividends | (3,952) | (4,296) | |
Issuance of member capital | |||
NET CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES | 73,428 | 94,254 | |
NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH | 43,547 | 49,260 | |
CASH, CASH EQUIVALENTS AND RESTRICTED CASH | |||
BEGINNING OF PERIOD | 99,331 | 125,436 | $ 125,436 |
END OF PERIOD | 142,878 | 174,696 | 99,331 |
Eliminations [Member] | |||
CASH FLOWS FROM OPERATING ACTIVITIES | |||
Net income (loss) | 717 | (30,387) | |
Adjustments to reconcile net income (loss) to net cash flows from operating activities: | |||
Equity of subsidiaries | (1,567) | 30,387 | |
Change in fair value of life insurance policies | |||
Amortization of deferred financing and issuance costs | |||
Amortization of upfront fees | |||
Amortization of debt premiums | |||
Amortization and depreciation on long-lived assets | |||
Accretion of discount on financing receivable from affiliate | |||
Non-cash interest income | |||
Non-cash interest expense | |||
Loss from equity method investment | |||
Provision for loan losses | |||
Deferred income tax | |||
Equity-based compensation | |||
(Increase) decrease in operating assets: | |||
Life insurance policy benefits receivable | |||
Fees receivable | |||
Accrued interest on financing receivable | |||
Other assets | 1,949 | ||
Increase (decrease) in operating liabilities: | |||
Accounts payable and other accrued expenses | (1,099) | ||
NET CASHFLOWS USED USED IN OPERATING ACTIVITIES | |||
CASH FLOWS FROM INVESTING ACTIVITIES | |||
Investment in life insurance policies | |||
Carrying value of matured life insurance policies | |||
Equity method investments | |||
Net change in loans receivable | |||
Payment of capital contributions | (39,887) | 62,222 | |
NET CASH FLOWS PROVIDED BY INVESTING ACTIVITIES | (39,887) | 62,222 | |
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 | |||
Payments for redemption of preferred stock | |||
Preferred stock dividends | |||
Issuance of member capital | 39,887 | (62,222) | |
NET CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES | 39,887 | (62,222) | |
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) | (38,395) | (14,614) | |
Adjustments to reconcile net income (loss) to net cash flows from operating activities: | |||
Equity of subsidiaries | 11,128 | (15,502) | |
Change in fair value of life insurance policies | |||
Amortization of deferred financing and issuance costs | 3,882 | 2,836 | |
Amortization of upfront fees | |||
Amortization of debt premiums | |||
Amortization and depreciation on long-lived assets | 31 | ||
Accretion of discount on financing receivable from affiliate | |||
Non-cash interest income | |||
Non-cash interest expense | |||
Loss from equity method investment | 1,530 | 1,927 | |
Provision for loan losses | |||
Deferred income tax | (17,717) | ||
Equity-based compensation | 4,303 | 834 | |
(Increase) decrease in operating assets: | |||
Life insurance policy benefits receivable | |||
Fees receivable | |||
Accrued interest on financing receivable | |||
Other assets | 270 | (416) | |
Increase (decrease) in operating liabilities: | |||
Accounts payable and other accrued expenses | 5,372 | 1,404 | |
NET CASHFLOWS USED USED IN OPERATING ACTIVITIES | (29,596) | (23,531) | |
CASH FLOWS FROM INVESTING ACTIVITIES | |||
Investment in life insurance policies | |||
Carrying value of matured life insurance policies | |||
Purchases of fixed assets | (60) | ||
Equity method investments | (5,417) | ||
Net change in loans receivable | |||
Payment of capital contributions | 19,528 | (33,724) | |
NET CASH FLOWS PROVIDED BY INVESTING ACTIVITIES | 14,051 | (33,724) | |
CASH FLOWS FROM FINANCING ACTIVITIES | |||
Borrowings on senior debt | |||
Repayments of senior debt | |||
Proceeds from issuance of L Bonds | 109,053 | 125,985 | |
Payments for issuance and redemptions of L Bonds | (30,532) | (23,974) | |
Issuance (repurchase) of common stock | 18 | (269) | |
Payments for redemption of preferred stock | (15,233) | (819) | |
Preferred stock dividends | (3,952) | (4,296) | |
Issuance of member capital | |||
NET CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES | 59,354 | 96,627 | |
NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH | 43,809 | 39,372 | |
CASH, CASH EQUIVALENTS AND RESTRICTED CASH | |||
BEGINNING OF PERIOD | 57,720 | 113,294 | 113,294 |
END OF PERIOD | 101,529 | 152,666 | 57,720 |
Guarantor Subsidiary [Member] | |||
CASH FLOWS FROM OPERATING ACTIVITIES | |||
Net income (loss) | 14,144 | 16,877 | |
Adjustments to reconcile net income (loss) to net cash flows from operating activities: | |||
Equity of subsidiaries | (9,561) | (14,885) | |
Change in fair value of life insurance policies | (4) | (3,620) | |
Amortization of deferred financing and issuance costs | |||
Amortization of upfront fees | |||
Amortization of debt premiums | |||
Amortization and depreciation on long-lived assets | 1 | ||
Accretion of discount on financing receivable from affiliate | (1,620) | (419) | |
Non-cash interest income | (1,138) | ||
Non-cash interest expense | |||
Loss from equity method investment | |||
Provision for loan losses | |||
Deferred income tax | |||
Equity-based compensation | |||
(Increase) decrease in operating assets: | |||
Life insurance policy benefits receivable | 5,000 | ||
Fees receivable | |||
Accrued interest on financing receivable | (1,234) | (1,551) | |
Other assets | 29 | 72 | |
Increase (decrease) in operating liabilities: | |||
Accounts payable and other accrued expenses | (1,821) | (481) | |
NET CASHFLOWS USED USED IN OPERATING ACTIVITIES | (1,204) | 993 | |
CASH FLOWS FROM INVESTING ACTIVITIES | |||
Investment in life insurance policies | (8,681) | ||
Carrying value of matured life insurance policies | 169 | ||
Purchases of fixed assets | |||
Equity method investments | |||
Net change in loans receivable | |||
Payment of capital contributions | 20,359 | (28,498) | |
NET CASH FLOWS PROVIDED BY INVESTING ACTIVITIES | 20,359 | (37,010) | |
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 | |||
Payments for redemption of preferred stock | |||
Preferred stock dividends | |||
Issuance of member capital | (19,534) | 31,713 | |
NET CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES | (19,534) | 31,713 | |
NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH | (379) | (4,304) | |
CASH, CASH EQUIVALENTS AND RESTRICTED CASH | |||
BEGINNING OF PERIOD | 2,644 | 7,449 | 7,449 |
END OF PERIOD | 2,265 | 3,145 | 2,644 |
Non-Guarantor Subsidiaries [Member] | |||
CASH FLOWS FROM OPERATING ACTIVITIES | |||
Net income (loss) | (53,982) | 13,510 | |
Adjustments to reconcile net income (loss) to net cash flows from operating activities: | |||
Equity of subsidiaries | |||
Change in fair value of life insurance policies | (12,173) | (11,951) | |
Amortization of deferred financing and issuance costs | 329 | 264 | |
Amortization of upfront fees | (1,793) | ||
Amortization of debt premiums | (473) | ||
Amortization and depreciation on long-lived assets | 140 | ||
Accretion of discount on financing receivable from affiliate | 1,620 | ||
Non-cash interest income | (12,236) | ||
Non-cash interest expense | 676 | ||
Loss from equity method investment | |||
Provision for loan losses | 700 | ||
Deferred income tax | |||
Equity-based compensation | 65,145 | ||
(Increase) decrease in operating assets: | |||
Life insurance policy benefits receivable | 7,701 | 2,261 | |
Fees receivable | (1,285) | ||
Accrued interest on financing receivable | 1,234 | ||
Other assets | (1,880) | (3,598) | |
Increase (decrease) in operating liabilities: | |||
Accounts payable and other accrued expenses | (3,555) | (4,251) | |
NET CASHFLOWS USED USED IN OPERATING ACTIVITIES | (9,832) | (3,765) | |
CASH FLOWS FROM INVESTING ACTIVITIES | |||
Investment in life insurance policies | (18,711) | ||
Carrying value of matured life insurance policies | 6,035 | 8,532 | |
Purchases of fixed assets | (421) | ||
Equity method investments | |||
Net change in loans receivable | 10,614 | ||
Payment of capital contributions | |||
NET CASH FLOWS PROVIDED BY INVESTING ACTIVITIES | 16,228 | (10,179) | |
CASH FLOWS FROM FINANCING ACTIVITIES | |||
Borrowings on senior debt | 14,074 | ||
Repayments of senior debt | (2,373) | ||
Proceeds from issuance of L Bonds | |||
Payments for issuance and redemptions of L Bonds | |||
Issuance (repurchase) of common stock | |||
Payments for redemption of preferred stock | |||
Preferred stock dividends | |||
Issuance of member capital | (20,353) | 30,509 | |
NET CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES | (6,279) | 28,136 | |
NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH | 117 | 14,192 | |
CASH, CASH EQUIVALENTS AND RESTRICTED CASH | |||
BEGINNING OF PERIOD | 38,967 | 4,693 | 4,693 |
END OF PERIOD | $ 39,084 | $ 18,885 | $ 38,967 |
Concentration (Details)
Concentration (Details) | Mar. 31, 2020 | Dec. 31, 2019 |
John Hancock Life Insurance Company [Member] | ||
Concentration Risk [Line Items] | ||
Face value percentage of insurance policies with specific life insurance companies | 14.24% | 14.23% |
The Lincoln National Life Insurance Company [Member] | ||
Concentration Risk [Line Items] | ||
Face value percentage of insurance policies with specific life insurance companies | 10.91% | 11.55% |
AXA Equitable Life Insurance Company [Member] | ||
Concentration Risk [Line Items] | ||
Face value percentage of insurance policies with specific life insurance companies | 10.83% | 10.63% |
Concentration (Details 1)
Concentration (Details 1) | Mar. 31, 2020 | Dec. 31, 2019 |
California [Member] | ||
Concentration Risk [Line Items] | ||
Percentage of insurance policies held in specific states | 17.68% | 17.46% |
Florida [Member] | ||
Concentration Risk [Line Items] | ||
Percentage of insurance policies held in specific states | 14.68% | 14.86% |
Concentration (Details Textual)
Concentration (Details Textual) | 3 Months Ended |
Mar. 31, 2020 | |
Life Insurance Portfolio [Member] | |
Concentration (Textual) | |
Percentage of portfolio | 10.00% |
Subsequent Events and Other M_2
Subsequent Events and Other Matters (Details) - USD ($) $ in Thousands | May 15, 2020 | May 12, 2020 | May 06, 2020 | Mar. 31, 2020 | Mar. 31, 2019 | May 13, 2020 | Dec. 31, 2019 | Dec. 31, 2018 |
Subsequent events and other matters (Textual) | ||||||||
Cash, cash equivalents and restricted cash | $ 142,878 | $ 174,696 | $ 99,331 | $ 125,436 | ||||
Net losses attributable to common shareholders | $ (49,384) | $ (18,910) | ||||||
Subsequent Event [Member] | ||||||||
Subsequent events and other matters (Textual) | ||||||||
Cash, cash equivalents and restricted cash | $ 140,000 | |||||||
Face value of insurance benefits | $ 14,800 | |||||||
Amendment of Beneficient Credit Agreements, Description | The amendment would extend the maturity date of both loans to April 10, 2021, and includes an extension fee of 2.5% of the outstanding aggregate principal balance of the loans. The amendment would also increase the interest rate on each loan to 1-month LIBOR plus 8.0%, with a maximum interest rate of 9.5%. The loans would be payable in four installments of $25.0 million on each of June 1, 2020, September 10, 2020, December 10, 2020, and March 10, 2021, with the remaining balance payable on April 10, 2021. | |||||||
Credit agreement amendment fee percentage | 2.00% | |||||||
Preferred Series A Subclass 1 units reserved for lender | $ 152,000 | |||||||
Preferred Unit Description | In connection with the transfer of the loans from Beneficient, the lender would be granted a security interest in the Preferred Series A Subclass 1 Unit Accounts of BCH held by GWG Life and the life insurance policies held by GWG Life Trust. Furthermore, the lender will be permitted to purchase up to $152.0 million of Preferred Series A Subclass 1 units from BCH for cash for two years after the amendment of the loans. The Term Sheet also provides that, in connection with the transfer of the loans, (i) BHI, which owns a majority of the Class S Ordinary Units, Preferred Series A Subclass 1 Unit Accounts, and FLP Subclass 1 Unit Accounts issued by BCH, will grant certain tax-related concessions related to the transaction as may be mutually agreed upon between the parties, and (ii) in exchange for the tax-related concessions to be agreed between the parties, (a) 5% of BHI's Preferred Series A Sub Class 1 Unit Account will become senior in allocations, distributions, redemption rights, and liquidation (potentially as a different class) (the "Senior Preferred Series A Sub Class 1 Unit Accounts") to all other Preferred Series A Sub Class 1 Unit Accounts or any other securities issued by Beneficient or a subsidiary thereof, and (b) recipients of a grant of Preferred Series A Sub Class 1 Unit Accounts from BHI will have the right to put an amount of Preferred Series A Sub Class 1 Unit Accounts to Beneficient equal to any associated tax liability stemming from any such grant; provided that the aggregated associated tax liability shall not relate to more than $30 million of grants of Preferred Series A Sub Class 1 Unit Accounts from BHI; and provided, further, that such a put cannot be exercised prior to July 1, 2021. The agreed upon amended loan terms would contain covenants that would i) prevent Beneficient from issuing any securities senior to the Preferred Series A Subclass 1 Unit Accounts or the Senior Preferred Series A Sub Class 1 Unit Accounts, and ii) prevent Beneficient from incurring additional debt or borrowings, other than trade payables, while the loans are outstanding. | |||||||
L Bonds [Member] | Subsequent Event [Member] | ||||||||
Subsequent events and other matters (Textual) | ||||||||
L Bonds Issued | $ 41,600 |