GWG Holdings Announces New Life Expectancy Methodology
April 16 2019 - 9:00AM
Results from Life Expectancy Providers
Announced Updates and Changes
GWG Holdings, Inc. (Nasdaq: GWGH) today announced that it has
adopted a new life expectancy methodology going forward based upon
using the longest life expectancy report received from the life
expectancy providers used for pricing at the time a life insurance
policy is purchased.
The change results from updates announced by two of the
Company’s and the industry’s primary life expectancy providers -
ITM TwentyFirst, LLC and AVS, LLC. The Company, along with
other major secondary market participants, has noted the frequent
changes in methodologies made by the life expectancy providers over
the years that, short of purchasing revised life expectancy reports
at a substantial cost, have lacked detailed information about the
impact of these changes on individual policy values.
As a result, the Company undertook a comprehensive study to
determine a more accurate, transparent and cost-effective method of
pricing, valuing, and modeling the performance of its portfolio of
life insurance. The Company’s goal was to incorporate life
expectancy estimates from life expectancy providers, the historical
experience of the portfolio, the diversification and mortality
factors of the portfolio, and relevant market-based observations
and inputs.
The Company believes it has succeeded in creating and validating
such an approach which is referred to as the “Longest Life
Expectancy” method.
After extensive research and modelling, the Company found that
the Longest Life Expectancy methodology was highly predictive of
the actual experience of its portfolio of life insurance policies
as compared to its historical methodology that has in the past been
typically based upon the average of two life expectancy reports
received from Life Expectancy Providers (Average Life
Expectancy).
The tables to the right compare the actual-to-expected mortality
cash flow experience of our life insurance portfolio using Average
Life Expectancy and Longest Life Expectancy.
A photo accompanying this announcement is available at
http://www.globenewswire.com/NewsRoom/AttachmentNg/f1ca77a1-dc14-4c88-8bd4-e1182669cf2b
While implementation of the Longest Life Expectancy methodology
will require the Company to take a non-cash, non-recurring charge
of $84 million, reflecting a decrease in the fair market value of
the portfolio at December 31, 2018 (or approximately 10 percent of
the fair market value of the portfolio prior to adjustment), the
Company believes that a Longest Life Expectancy should minimize
future fluctuations of valuation, decrease its reliance on Life
Expectancy Providers for updated life expectancy reports, and
improve its ability to finance and forecast future revenues and
earnings.
Additional details regarding the information about this change
will be filed on a Form 8-K with the Securities and Exchange
Commission.
About GWG Holdings, Inc.GWG
Holdings, Inc. (Nasdaq: GWGH), is the parent company of GWG
Life, Life Epigenetics and YouSurance. GWG Life is a leading
provider of liquidity to owners of life insurance in the secondary
market. GWGH owns a portfolio of alternative life insurance assets
equaling $1.96 billion in face value of policy benefits as of
September 30, 2018. Life Epigenetics is commercializing epigenetic
technology for the longevity life insurance industry and other
industries. YouSurance is a digital life insurance agency working
to embed epigenetic testing into life insurance products to provide
consumers a value-added ecosystem that supports their health and
wellness. For more information about GWG,
visit www.gwgh.com.
Cautionary Statement Regarding Forward-Looking
StatementsThis press release contains forward-looking
statements that involve substantial risks and uncertainties. All
statements, other than statements of historical facts, included in
this press release regarding our strategy, future operations,
future financial position, future revenue, projected costs,
prospects, plans and objectives of management are forward-looking
statements. The words "anticipate," "believe," "estimate,"
"expect," "intend," "may," "plan," "would," "target" and similar
expressions are intended to identify forward-looking statements,
although not all forward-looking statements contain these
identifying words. These forward-looking statements include, among
other things, statements about our estimates regarding future
revenue and financial performance. We may not actually achieve the
expectations disclosed in our forward-looking statements, and you
should not place undue reliance on our forward-looking statements.
Actual results or events could differ materially from the
expectations disclosed in the forward-looking statements we make.
More information about potential factors that could affect our
business and financial results is contained in our filings with the
Securities and Exchange Commission. Additional information will
also be set forth in our future quarterly reports on Form 10-Q,
annual reports on Form 10-K and other filings that we make with the
Securities and Exchange Commission. We do not intend, and undertake
no duty, to release publicly any updates or revisions to any
forward-looking statements contained herein.
Contact:
For GWG Holdings Dan
Callahandcallahan@gwgh.com(612) 746-1935
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