Imperial Holdings, Inc. Announces First Quarter 2014 Results

Company Reports Book Value of $9.23 per Share

Business Wire

BOCA RATON, Fla.--(BUSINESS WIRE)--

Imperial Holdings, Inc. (IFT) ("Imperial" or the "Company"), a specialty finance company with a focus on providing liquidity solutions to owners of illiquid financial assets, announced today its financial results for the three months ended March 31, 2014.

Three Months Ended March 31, 2014

Total income from continuing operations was $13.6 million for the three months ended March 31, 2014 compared to a total income from continuing operations of $3.3 million for the same period in 2013. The increase in income was primarily a result of a $12.1 million increase in the change in fair value of the Company's investment in life settlements as compared to the prior period. Total expenses were $12.9 million for the three months ended March 31, 2014 compared to $8.6 million for the same period in 2013. The increase in expenses was primarily due to a $2.7 million increase in interest expense relating to the Company’s recent convertible notes issuance and increased borrowing of revolving credit facility debt. Additionally, the fair value of the revolving credit facility debt increased by $1.1 million during the quarter and the Company incurred a $2.1 million increase in conversion derivative liability, which is embedded in the convertible notes between inception date and the quarter end. These increases were partially offset by a decrease of $2.0 million in legal fees.

The Company reported a net loss from continuing operations of $3.3 million, or ($.16) per fully diluted share, for the three months ended March 31, 2014, compared to a net loss of $5.3 million, or ($0.25) per fully diluted share, for the same period in 2013. The net loss was impacted by a one-time provision for income taxes of $3.7 million as a result of a recent accounting pronouncement that was adopted by the Company as of January 1, 2014.

As of March 31, 2014, the Company had cash and cash equivalents of approximately $81.9 million. As of May 8, 2014, the Company had 21,362,794 shares outstanding and a book value of $9.23 per share.

Life Settlements Portfolio Highlights

At March 31, 2014, the estimated fair value of the Company’s 601 life insurance policies was $315.5 million compared to $303.0 million for 614 life insurance policies at December 31, 2013. The weighted average discount rate was 19.05% at March 31, 2014 compared to 19.14% at December 31, 2013. The aggregate face value of the Company's portfolio of life insurance policies was approximately $2.9 billion at March 31, 2014.

Antony Mitchell, Chief Executive Officer of Imperial, commented: “With the recent capital raise behind us, we are focused on sourcing accretive lending and investment opportunities within the life finance space. Our current pipeline looks encouraging and we expect to deploy capital later this year.”

Conference Call

The Company will host a conference call today at 5:00 P.M. ET. To join the call please dial US Toll Free (877) 312-5529 or from Outside of the US (253) 237-1147 and provide Conference ID 32093012 when prompted.

The conference call will also be broadcast live through a link on the Investor Relations section of the Company’s website at www.imperial.com. Please visit the website at least 10 minutes prior to the call to register, download and install any necessary audio software.

About Imperial Holdings, Inc.

Imperial is a leading specialty finance company that provides customized liquidity solutions to owners of illiquid financial assets. More information about Imperial can be found at www.imperial.com.

Safe Harbor Statement

This press release may contain certain "forward-looking statements" relating to the business of Imperial Holdings, 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 Imperial 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, Imperial does not assume a duty to update these forward-looking statements.

Imperial Holdings, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
        March 31,   December 31,
2014   2013*
(Unaudited)
(In thousands except share data)
ASSETS
Assets
Cash and cash equivalents $ 79,061 $ 14,722
Cash and cash equivalents (VIE Note 4) 2,869 7,977
Restricted cash - 13,506
Prepaid expenses and other assets 2,492 1,331
Deposits - other 1,347 1,597
Structured settlement receivables, at estimated fair value 388 660
Structured settlement receivables at cost, net 545 797
Investment in life settlements, at estimated fair value 46,887 48,442
Investment in life settlements, at estimated fair value (VIE Note 4) 268,577 254,519
Receivable for maturity of life settlements (VIE Note 4) 13,641 2,100
Fixed assets, net 53 74
Investment in affiliates 2,384 2,378
Deferred debt costs, net   3,251     -  
Total assets $ 421,495   $ 348,103  
 
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Accounts payable and accrued expenses $ 5,415 $ 2,977
Accounts payable and accrued expenses (VIE Note 4) 267 341
Other liabilities 6,912 21,221
Interest payable - senior unsecured convertible notes 668 -
Revolving Credit Facility debt, at estimated fair value (VIE Note 4) 133,952 123,847
Senior unsecured convertible notes, net of discount (Note 10) 54,092 -
Conversion derivative liability, at estimated fair value (Note 10) 18,963 -
Income taxes payable - 6,295
Deferred tax liability   3,976     -  
Total liabilities 224,245 154,681
Commitments and Contingencies (Note 13)
Stockholders' Equity
Common stock (par value $0.01 per share, 80,000,000 authorized; 21,362,794 and
21,237,166 issued and outstanding as of March 31, 2014 and December 31, 2013, respectively) 213 212
Additional paid-in-capital 246,670 239,506
Accumulated deficit   (49,633 )   (46,296 )
Total stockholders' equity   197,250     193,422  
Total liabilities and stockholders' equity $ 421,495   $ 348,103  
 
* Derived from audited consolidated financial statements.
Imperial Holdings, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
     
For the Three Months Ended
March 31,
2014   2013  
Income (in thousands, except share and per share data)
Interest income $ 2 $ 20
Interest and dividends on investment securities available for sale - 14
Loss on life settlements, net (360 ) -
Change in fair value of life settlements (Notes 8 & 11) 13,956 1,840
Servicing fee income - 234
Other income 4 1,153
   
Total income (loss)   13,602     3,261  
 
Expenses
Interest expense 2,801 103
Change in fair value of Revolving Credit Facility debt (Notes 9 & 11) 1,129 -
Change in fair value of conversion derivative liability (Notes 10 & 11) 2,062 -
Amortization of deferred costs - 7
Personnel costs 2,168 1,863
Legal fees 2,844 4,843
Professional fees 1,171 802
Insurance 423 519
Other selling, general and administrative expenses   346     420  
Total expenses   12,944     8,557  
Income (loss) from continuing operations before income taxes 658 (5,296 )
Provision for income taxes   3,976     40  
Net income (loss) from continuing operations $ (3,318 ) $ (5,336 )
Discontinued Operations:
Income (loss) from discontinued operations, net of income taxes $ (19 ) $ 1,005  
Net income (loss) $ (3,337 ) $ (4,331 )
 
Earnings per share:
Basic and diluted earnings per common share
Continuing operations $ (0.16 ) $ (0.25 )
Discontinued operations $ -   $ 0.05  
Net income (loss) $ (0.16 ) $ (0.20 )
Weighted average shares outstanding:    
Basic and diluted   21,344,112     21,206,121  
Life Finance Business Segment    
For the Three Months Ended
March 31,
2014 2013  
 
Period Acquisitions — Policies Owned
Number of policies acquired - 8
Average age of insured at acquisition - 76.8
Average life expectancy - Calculated LE (Years) - 12.3
Average death benefit $ - $ 4,094
Aggregate purchase price $ - $ 1,524
 
End of Period — Policies Owned
Number of policies owned 601 220
Average Life Expectancy - Calculated LE (Years) 11.4 10.8
Aggregate Death Benefit $ 2,920,399 $ 1,099,906
Aggregate fair value $ 315,464 $ 117,732
Monthly premium — average per policy $ 7.5 $ 10.4
 
End of Period Loan Portfolio
Loans receivable, net $ - $ 1,769
Number of policies underlying loans receivable - 14
Aggregate death benefit of policies underlying loans receivable $ - $ 56,900
Number of loans with insurance protection - 5
Loans receivable, net (insured loans only) $ - $ 93
Average Per Loan:
Age of insured in loans receivable - 75.8
Life expectancy of insured (years) - 15.6
Monthly premium $ - $ 5
Loan receivable, net $ - $ 126
Interest rate - 12.5 %

Contact:
Imperial Holdings, Inc.
David Sasso, 561-672-6114
Director - Investor Relations
IR@imperial.com
www.imperial.com

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