Emergent Capital, Inc. Announces First Quarter 2018 Results

BOCA RATON, FL / ACCESSWIRE / May 10, 2018 / Emergent Capital, Inc. (OTCQB: EMGC) (“Emergent” or the “Company”), today announced its financial results for the three month period ended March 31, 2018.

First Quarter 2018 Financial Highlights

Total income from continuing operations was $5.6 million for the three month period ended March 31, 2018 compared to $25.6 million for the same period in 2017. Income was impacted by a $17.2 million gain on the maturity of five policies during the quarter compared to a $16.3 million gain on maturity of four policies for the same period in 2017. Income for the three month period ended March 31, 2018 was lower than for the same period in 2017 due to the results of updated life expectancies procured by the Company in respect to the insureds’ lives, the results had a negative impact on the change in fair value of our life settlements. The updated life expectancy reports implied that in aggregate, the insureds’ health improved, therefore, lengthening their life expectancies relative to the prior life expectancies.

The following table provides a summary of the components of income from the Company’s life settlements.

Three Months Ended

March 31, 2018

Three Months Ended

March 31, 2017

Change in estimated probabilistic cash flows

23,343

22,600

Premiums paid during period

(22,392)

(20,582)

Change in life expectancy evaluation

(12,746)

7,298

Change in discount rates

–

(40)

Realized gain on maturities

17,239

16,264

Change in fair value of life settlements

5,444

25,540

Total expenses from continuing operations were $9.6 million for the three month period ended March 31, 2018 compared to $23.7 million for the same period in 2017. The decrease was primarily attributable to a decrease of $14.2 million on the gain in fair value of the Revolving Credit Facility, and $365,000 and $319,000 decrease in professional fees and personnel costs, respectively. These were offset mainly by an increase in legal fees of approximately $728,000.

The Company reported net loss from continuing operations of $4.0 million, or $(0.03) per diluted share for the three month period ended March 31, 2018, compared to a net income of $1.9 million, or $0.07 per diluted share for the same period in 2017.

Life Settlements Portfolio Highlights

On March 31, 2018, the estimated fair value of the Company’s 603 life insurance policies was $567.6 million compared to $567.5 million for 608 life insurance policies at December 31, 2017. The weighted average discount rate was 15.99% and 15.95% at March 31, 2018 and December 31, 2017, respectively. The aggregate face value of the Company’s portfolio of life insurance policies was approximately $2.9 billion on March 31, 2018.
During the quarter, five life insurance policies that served as collateral under our revolving credit facility matured with a face value totaling $27.7 million.

As of March 31, 2018, the Company had cash and cash equivalents and certificates of deposit of $42.2 million and a book value per share of $1.22.

About Emergent Capital, Inc.

Emergent (OTCQB: EMGC) is a specialty finance company that invests in life settlements. More information about Emergent can be found at www.emergentcapital.com.

Safe Harbor Statement

This press release may contain certain “forward-looking statements” relating to the business of Emergent Capital, Inc. and its subsidiary companies. All statements, other than statements of historical fact included herein are “forward-looking statements.” These forward-looking statements are often identified by the use of forward-looking terminology such as “believes,” “expects” or similar expressions, and involve known and unknown risks and uncertainties. Although Emergent believes that the expectations reflected in these forward-looking statements are reasonable, they do involve assumptions, risks and uncertainties, and these expectations may prove to be incorrect. Investors should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Other than as required under the securities laws, Emergent does not assume a duty to update these forward-looking statements.

Emergent Capital, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

For the Three Months Ended

March 31,

2018

2017

(in thousands, except share and per share data)

Income

Change in fair value of life settlements

5,444

25,540

Other income

147

Total income

5,591

25,590

Expenses

Interest expense

7,604

7,535

Loss on Extinguishment of Debt

–

Change in fair value of Revolving Credit Facility

(2,389)

11,831

Personnel costs

766

1,085

Legal fees

1,723

995

Professional fees

1,239

1,604

Insurance

197

192

Other selling, general and administrative expenses

445

464

Total expenses

9,585

23,706

Income (loss) from continuing operations before income taxes

(3,994)

1,884

(Benefit) provision for income taxes

–

Net income (loss) from continuing operations

(3,994)

1,884

Discontinued Operations:

Income (loss) from discontinued operations

(1)

(189)

(Benefit) provision for income taxes

–

Net income (loss) from discontinued operations

(1)

(189)

Net income (loss)

(3,995)

1,695

Basic and Diluted income (loss) per share:

Continuing operations

(0.03)

0.07

Discontinued operations

–

(0.01)

Net income (loss) – basic and diluted

(0.03)

0.06

Weighted average shares outstanding:

Basic and diluted

155,789,599

28,148,632

Emergent Capital, Inc.
CONSOLIDATED BALANCE SHEETS

March 31,

2018

December 31,

2017*

(Unaudited)

(In thousands except share data)

ASSETS

Assets

Cash and cash equivalents

$
12,917

$
18,131

Cash and cash equivalents (VIE)

28,302

13,136

Certificates of deposit

1,012

1,010

Prepaid expenses and other assets

1,100

617

Prepaid expenses and other assets (VIE)

Deposits – other

1,377

Life settlements, at estimated fair value

782

750

Life settlements, at estimated fair value (VIE)

566,846

566,742

Receivable for maturity of life settlements (VIE)

34,400

30,045

Fixed assets, net

124

145

Investment in affiliates

2,384

Total assets

$
649,268

$
634,390

LIABILITIES AND STOCKHOLDERS’ EQUITY

Liabilities

Accounts payable and accrued expenses

1,946

$
2,015

Accounts payable and accrued expenses (VIE)

971

753

Other liabilities

1,086

451

Interest payable – 8.5% Convertible Notes

8.5% Convertible Notes, net of discount and deferred debt costs

1,118

1,098

Interest payable – 5.0% Convertible Notes

485

1,432

5.0% Convertible Notes, net of discount and deferred debt costs

68,929

68,654

Interest payable – 8.5% Senior Secured Notes

132

8.5% Senior Secured Notes, net of deferred debt costs

33,990

33,927

White Eagle Revolving Credit Facility, at estimated fair value (VIE)

347,860

329,240

Total liabilities

$
456,538

$
437,748

Commitments and Contingencies

Stockholders’ Equity

Common stock (par value $0.01 per share, 415,000,000 authorized at March 31, 2018 and December 31, 2017; 158,600,399 issued and 157,992,399 outstanding as of March 31, 2018;158,495,399 issued and 157,887,399 outstanding as of December 31, 2017)

1,586

1,585

Preferred stock (par value $0.01 per share, 40,000,000 authorized; 0 issued and outstanding as of March 31, 2018 and December 31, 2017)

–

Treasury Stock, net of issuance cost (608,000 shares as of March 31, 2018 and December 31, 2017)

(2,534)

Additional paid-in-capital

333,711

333,629

Accumulated deficit

(140,033)

(136,038)

Total stockholders’ equity

192,730

196,642

Total liabilities and stockholders’ equity

$
649,268

$
634,390

* Derived from audited consolidated financial statements.

Selected Operating Data (dollars in thousands):

Three Months Ended March 31,

2018

2017

Period Acquisitions – Policies Owned

Number of policies acquired

–

Average age of insured at acquisition

–

Average life expectancy – Calculated LE (Years)

–

Average death benefit

$
–

Aggregate purchase price

$
–

End of Period – Policies Owned

Number of policies owned

603

617

Average age of insured

83.7

82.7

Average death benefit per policy

$
4,731

$
4,715

Average Life Expectancy – Calculated LE (Years)

8.1

8.9

Aggregate Death Benefit

$
2,852,803

$
2,908,876

Aggregate fair value

$
567,628

$
506,672

Monthly premium – average per policy

$
12.8

$
11.4

Period Maturities

Number of policies matured

Average age of insured at maturity

84.8

82.8

Average life expectancy – Calculated LE (Years)

6.2

3.5

Aggregate death benefit

$
27,700

$
37,850

Gains on maturity

$
17,239

$
16,264

Proceeds collected

$
23,345

$
10,000

Company Contact:

Rob Fink
Hayden IR
Phone: 646.415.8972
Email: Rob@HaydenIR.com

IR@emergentcapital.com
www.emergentcapital.com

SOURCE: Emergent Capital, Inc.

ReleaseID: 499284

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