GWGH GWG Holdings Inc

GWG Holdings, Inc. (Nasdaq: GWGH), a financial services holding company committed to transforming the alternative asset industry through innovative liquidity products and related services for the owners of illiquid alternative investments, today announced its financial and operating results for the first quarter ended March 31, 2019.

First Quarter 2019 Financial and Operating Highlights

• Realized a record $30.5 million of face amount of policy benefits from 20 life insurance policies;
• Reported additional policy realizations of $30.7 million from 25 policies through July 31, 2019, bringing the 2019 total to $61.2 million from 45 policies.  This compares to total policy realizations of $71.1 million from 62 policies for the full year of 2018;
• Acquired $80.2 million of face amount of policy benefits;
• Ended the quarter with a life insurance portfolio of $2.098 billion in face amount of policy benefits consisting of 1,194 policies; and
• Reported total assets of $1.6 billion.

1. Financial & Operating Highlights

($ Thousands except per share information)		Q1 2019				Q1 2018
Revenue		$	25,217,000			$	14,542,000
Expenses			37,904,000				23,720,000
Per Share Data1:
Net Income (Loss)2			(0.57	)			(2.22	)
Capital Raised			125,985,000				87,526,000
Liquidity3,4			183,896,000				141,897,000
Life Insurance Portfolio5			2,098,428,000				1,758,066,000
Life Insurance Acquired5			80,211,000				94,352,000
Face Value of Matured Policies			30,459,000				14,504,000
TTM Benefits / Premiums6			154.8	%			113.3	%

(1) Attributable to common shareholders(2) Per basic and fully diluted share outstanding(3) Includes cash, restricted cash and policy benefits receivable(4) Cash, restricted cash and policy benefits receivable totaled $51.5 million on July 31, 2019(5) Face amount of policy benefits(6) The ratio of policy benefits recognized to premiums paid on a trailing twelve month (TTM) basis

2. Revenue and Expense Discussion

First Quarter 2019 vs. First Quarter 2018:

• Total revenue was $25.2 million in the current period, compared to $14.5 million in the prior period primarily due to:
  • Higher gain from policy benefits due to increased realization of policy benefits – $30.5 million of life insurance policy benefits realized in the current period compared to $14.5 million in the prior period.
• Total expenses were $37.9 million in the current period, compared to $23.7 million in the prior period primarily due to:
  • Increased interest expense of $10.9 million; and
  • Costs of $1.4 million relating to the YouSurance and Life Epigenetics wholly owned insurtech subsidiaries.

3. Life Insurance Portfolio Statistics

Portfolio Summary:

Total life insurance portfolio face value of policy benefits		$	2,098,428,000
Average face value per policy		$	1,757,000
Average face value per insured life		$	1,885,000
Average age of insured (years)			81.7
Average life expectancy estimate (years)			7.6
Total number of policies			1,194
Number of unique lives			1,113
Demographics			78% Male; 22% Female
Number of smokers			53
Largest policy as % of total portfolio face value			0.6	%
Average policy as % of total portfolio			0.1	%
Average annual premium as % of face value			3.0	%

Distribution of Policies and Benefits by Current Age of Insured:

												Percentage of Total
Min Age		Max Age		Number of Policies				Policy Benefits				Number of Policies				Policy Benefits				Wtd. Avg. LE (yrs.)
95		100			18			$	29,153,000				1.5	%			1.4	%			2.3
90		94			131				254,273,000				11.0	%			12.1	%			3.5
85		89			252				579,409,000				21.1	%			27.6	%			5.3
80		84			245				430,373,000				20.5	%			20.5	%			7.5
75		79			234				409,470,000				19.6	%			19.5	%			10.4
70		74			227				314,465,000				19.0	%			15.0	%			11.3
60		69			87				81,285,000				7.3	%			3.9	%			11.6
Total					1,194			$	2,098,428,000				100.0	%			100.0	%			7.6

4. Life Insurance Policy Origination

Life Insurance Portfolio Activity:

			Three Months Ended
			March 31, 2019			March 31, 2018
Total policy benefits purchased		$	80,211,000		$	94,352,000
Total life insurance policies purchased			60			59
Average policy benefit purchased		$	1,337,000		$	1,599,000
Direct policy benefits purchased		$	12,337,000		$	5,000,000
Direct insurance policies purchased			16			11

5. Additional Information     

Gain (Loss) on Life Insurance Policies:

		Three Months Ended March 31,
		2019				2018
Change in estimated probabilistic cash flows(1)		$	17,131,000			$	19,005,000
Unrealized gain on acquisitions(2)			4,459,000				6,974,000
Premiums and other annual fees			(15,832,000	)			(12,197,000	)
Change in discount rates(3)			-				-
Change in life expectancy evaluation(4)			-				(4,868,000	)
Face value of matured policies			30,459,000				14,504,000
Fair value of matured policies			(14,721,000	)			(9,549,000	)
Gain (loss) on life insurance policies, net		$	21,496,000			$	13,869,000

(1) Change in fair value of expected future cash flows from our life insurance policies not specifically attributable to other factors.(2) Gain resulting from fair value in excess of the purchase price for life insurance policies acquired during the reporting period.(3) The discount rate applied to estimate the fair value of the portfolio of life insurance policies we own was 8.25% at both March 31, 2019 and December 31, 2018, and 10.45% at both March 31, 2018 and December 31, 2017. See our Form 10-K filed with the Securities and Exchange Commission (SEC) on July 9, 2019 for important changes to how we estimate the discount rate for fair value purposes.(4) The change in fair value due to updating life expectancy estimates on certain life insurance policies in our portfolio. See our Form 10-K filed with the SEC on July 9, 2019 for important changes to how we use updated life expectancy reports.

Policy Benefits Recognized and Premiums Paid (TTM):  

Quarter End Date		PortfolioFace Amount ($)		12-MonthTrailingBenefits Realized ($)		12-MonthTrailing Premiums Paid ($)		12-MonthTrailingBenefits/PremiumCoverage Ratio
June 30, 2015		806,274,000		47,125,000		24,348,000		193.5	%
September 30, 2015		878,882,000		44,482,000		25,313,000		175.7	%
December 31, 2015		944,844,000		31,232,000		26,650,000		117.2	%
March 31, 2016		1,027,821,000		21,845,000		28,771,000		75.9	%
June 30, 2016		1,154,798,000		30,924,000		31,891,000		97.0	%
September 30, 2016		1,272,078,000		35,867,000		37,055,000		96.8	%
December 31, 2016		1,361,675,000		48,452,000		40,239,000		120.4	%
March 31, 2017		1,447,558,000		48,189,000		42,753,000		112.7	%
June 30, 2017		1,525,363,000		49,295,000		45,414,000		108.5	%
September 30, 2017		1,622,627,000		53,742,000		46,559,000		115.4	%
December 31, 2017		1,676,148,000		64,719,000		52,263,000		123.8	%
March 31, 2018		1,758,066,000		60,248,000		53,169,000		113.3	%
June 30, 2018		1,849,079,000		76,936,000		53,886,000		142.8	%
September 30, 2018		1,961,598,000		75,161,000		55,365,000		135.8	%
December 31, 2018		2,047,992,000		71,090,000		52,675,000		135.0	%
March 31, 2019		2,098,428,000		87,045,000		56,227,000		154.8	%

Earnings Webcast Details

Information will be forthcoming about an earnings webcast to discuss GWGH’s financial results.

About GWG Holdings, Inc. 

GWG Holdings, Inc. (Nasdaq: GWGH), the parent company of GWG Life, Life Epigenetics and YouSurance, is a leading provider of liquidity to consumers owning life insurance policies, an owner of a portfolio of alternative assets, and the developer of epigenetic technology for the life insurance and related industries. GWG Life provides value to consumers owning illiquid life insurance products across America, delivering $565 million more for their policies since 2006 than the cash surrender value on those policies. GWG Life owns a life insurance policy portfolio of $2.1 billion in face value of policy benefits as of March 31, 2019. Life Epigenetics is working to commercialize epigenetic technology for the life insurance and related industries. YouSurance, a digital life insurance agency, is working to embed epigenetic testing into life insurance purchasing to provide consumers a value-added ecosystem that supports their health and wellness while reducing the cost of their insurance. GWGH also has a strategic investment in The Beneficient Company Group, L.P., a financial services company providing proprietary liquidity solutions to owners of alternative assets.

For more information about GWG Holdings, email info@gwgh.com or visit www.gwgh.com.

Cautionary Statement Regarding Forward-Looking Statements

This 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 that 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.

Media Contact:Dan CallahanDirector of CommunicationGWG Holdings, Inc.(612) 746-1935dcallahan@gwgh.com

GWG HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
		March 31, 2019 (unaudited)				December 31, 2018
ASSETS
Cash and cash equivalents		$	154,384,426			$	114,587,084
Restricted cash			20,311,646				10,849,126
Investment in life insurance policies, at fair value			782,184,731				747,922,465
Life insurance policy benefits receivable, net			9,200,000				16,460,687
Financing receivable from affiliate			186,738,243				184,768,874
Equity method investment			359,096,434				360,841,651
Other assets			50,116,768				45,437,164
TOTAL ASSETS		$	1,562,032,248			$	1,480,867,051
LIABILITIES & STOCKHOLDERS’ EQUITY
LIABILITIES
Senior credit facility with LNV Corporation		$	146,868,215			$	148,977,596
L Bonds			756,397,420				651,402,663
Seller Trust L Bonds			366,891,940				366,891,940
Accounts payable			6,079,306				9,276,507
Interest and dividends payable			18,506,588				18,555,293
Other accrued expenses			6,030,841				4,705,170
TOTAL LIABILITIES			1,300,774,310				1,199,809,169
STOCKHOLDERS’ EQUITY
REDEEMABLE PREFERRED STOCK
(par value $0.001; shares authorized 100,000; shares outstanding 96,954 and 97,524; liquidation preference of $97,520,000 and $98,093,000 as of March 31, 2019 and December 31, 2018, respectively)			86,340,335				86,910,335
SERIES 2 REDEEMABLE PREFERRED STOCK
(par value $0.001; shares authorized 150,000; shares outstanding 148,110 and 148,359; liquidation preference of $148,974,000 and $149,225,000 as of March 31, 2019 and December 31, 2018, respectively)			128,813,787				129,062,704
COMMON STOCK
(par value $0.001; shares authorized 210,000,000; shares issued and outstanding 32,992,606 as of March 31, 2019 and 33,018,161 as of December 31, 2018)			32,993				33,018
Additional paid-in capital			245,294,858				249,662,168
Accumulated deficit			(199,224,035	)			(184,610,343	)
TOTAL STOCKHOLDERS’ EQUITY			261,257,938				281,057,882
TOTAL LIABILITIES & EQUITY		$	1,562,032,248			$	1,480,867,051

GWG HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
		Three Months Ended
		March 31, 2019				March 31, 2018
REVENUE
Gain (loss) on life insurance policies, net		$	21,496,390			$	13,868,745
Interest and other income			3,720,550				672,927
TOTAL REVENUE			25,216,940				14,541,672
EXPENSES
Interest expense			26,974,988				16,063,337
Employee compensation and benefits			5,153,984				3,742,669
Legal and professional fees			2,947,196				1,173,629
Other expenses			2,827,721				2,740,577
TOTAL EXPENSES			37,903,889				23,720,212
INCOME (LOSS) BEFORE INCOME TAXES			(12,686,949	)			(9,178,540	)
INCOME TAX EXPENSE (BENEFIT)			-				-
NET INCOME (LOSS) BEFORE EARNINGS FROM EQUITY METHOD INVESTMENT			(12,686,949	)			(9,178,540	)
Earnings (loss) from equity method investment			(1,926,743	)			-
NET INCOME (LOSS)			(14,613,692	)			(9,178,540	)
Preferred stock dividends			4,296,314				3,704,484
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS		$	(18,910,006	)		$	(12,883,024	)
NET INCOME (LOSS) PER COMMON SHARE
Basic		$	(0.57	)		$	(2.22	)
Diluted		$	(0.57	)		$	(2.22	)
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
Basic			32,984,741				5,813,555
Diluted			32,984,741				5,813,555