Attached files

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EX-21 - LIST OF SUBSIDIARIES - GWG Holdings, Inc.f10k2015ex21_gwghold.htm
EX-32.1 - CERTIFICATION - GWG Holdings, Inc.f10k2015ex32i_gwghold.htm
EX-31.1 - CERTIFICATION - GWG Holdings, Inc.f10k2015ex31i_gwghold.htm
EX-31.2 - CERTIFICATION - GWG Holdings, Inc.f10k2015ex31ii_gwghold.htm
EX-3.7 - CERTIFICATE OF DESIGNATION FOR REDEEMABLE PREFERRED STOCK (FILED HEREWITH) - GWG Holdings, Inc.f10k2015ex3vii_gwgholdings.htm
EX-3.8 - CERTIFICATE OF AMENDMENT TO CERTIFICATE OF DESIGNATION FOR REDEEMABLE PREFERRED STOCK (FILED HEREWITH) - GWG Holdings, Inc.f10k2015ex3viii_gwgholdings.htm
EX-99.1 - LETTER FROM MODEL ACTUARIAL PRICING SYSTEMS, DATED FEBRUARY 1, 2016 - GWG Holdings, Inc.f10k2015ex99i_gwghold.htm

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

FORM 10-K

☒   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2015

or

☐    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES ACT OF 1934

For the transition period from ________ to ________

Commission File Number: 001-36615

 

GWG HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

Delaware   26-2222607

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

220 South Sixth Street, Suite 1200

Minneapolis, MN 55402

(Address of principal executive offices, including zip code) 

(612) 746-1944

(Registrant’s telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act:

Common Stock

Securities registered pursuant to Section 12(g) of the Act

None

 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes ☐ No ☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒  No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 Accelerated filer

  Non-accelerated filer Smaller reporting company

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

As of  March 22, 2016, GWG Holdings, Inc. had 5,941,790 shares of common stock outstanding. 

 

 

 

 

 

DOCUMENTS INCORPORATED BY REFERENCE:

 

Portions of the definitive Proxy Statement for our 2016 Annual Meeting of Stockholders which is to be filed within 120 days after the end of the fiscal year ended December 31, 2015, are incorporated by reference into Part III of this Form 10-K, to the extent described in Part III.

 

 

 

 

GWG HOLDINGS, INC.

 

Index to Form 10-K

for the Fiscal Year Ended December 31, 2015

 

PART I 3
ITEM 1.    Business. 3
ITEM 1A. Risk factors. 18
ITEM 1B. Unresolved staff comments. 26
ITEM 2.    Properties. 26
ITEM 3.    Legal proceedings. 26
ITEM 4.    Mine safety disclosures. 26
PART II 27
ITEM 5.    Market for the registrant’s common equity, related shareholder matters and issuer purchases of equity securities. 27
ITEM 6.    Selected Financial Data. 27
ITEM 7.    Management’s discussion and analysis of financial condition and results of operations. 28
ITEM 7A. Quantitative and qualitative disclosures about market risk. 41
ITEM 8.    Consolidated financial statements and supplementary data F-1
ITEM 9.    Changes in and disagreements with accountants on accounting and financial disclosure. 42
ITEM 9A. Controls and procedures. 42
ITEM 9B.  Other information. 42
PART III 43
ITEM 10.  Directors, executive officers and corporate governance. 43
ITEM 11.  Executive compensation and related-party transaction disclosures. 43
ITEM 12.  Security ownership of certain beneficial owners and management and related shareholder matters. 43
ITEM 13.  Certain relationships and related transactions, and director independence. 43
ITEM 14.  Principal accounting fees and services. 43
PART IV 44
ITEM 15.   Exhibits, financial statement schedules. 44
SIGNATURES 46

 

 2 
 

 

PART I

 

ITEM 1. BUSINESS.

 

Overview

 

GWG Holdings, Inc. is a specialty finance company and a leading financial purchaser of life insurance assets in the secondary market. We create opportunities for consumers owning life insurance to obtain significant value for their policies as compared to the traditional options offered by insurance companies. We also create opportunities for investors to participate in alternative asset classes, such as life insurance, not correlated to traditional financial markets. In so doing, we enable investors to take advantage of financial opportunities dominated by banks prior to the 2008 credit crisis.

 

The life insurance secondary market provides consumers with the opportunity to sell their life insurance policies to financial buyers for a market value, rather than the surrender value offered by insurance carriers. When a life insurance policy is sold, the purchase price will exceed the surrender value, but will be at a discount to the face value of the policy benefit. Since inception, we have purchased approximately $1.85 billion in face value of policy benefits from consumers for over $315.5 million, an amount that exceeded their surrender value by over $294.7 million. Why do consumers choose to sell their life insurance in the secondary market? There are a number of reasons, such as no longer needing or wanting the coverage, no longer being able to afford the premiums, or just wanting to maximize their life insurance investment. We believe that, for consumers 65 years or older and owning life insurance, we provide a unique financial opportunity that is far more valuable than surrendering a policy for a fraction of its market value or allowing it to lapse as worthless.

 

Market researchers believe that the market opportunity in the life insurance secondary market is significant, with the annual net market potential of $138 billion in face value of policy benefits in 2015. To seize this opportunity, we have built a robust operational platform to offer consumers options based on the market value of their life insurance that include: (i) selling the entire policy benefit for cash, or (ii) selling a portion of the policy benefit and retaining a portion of the benefit with no future premium obligation. When we purchase a life insurance policy, we expect to continue paying the premiums for that policy until the policy benefit is paid upon the mortality of the insured. We believe we are well positioned to capitalize on the market opportunity to serve consumers in the life insurance secondary market.

 

The life insurance secondary market provides buyers of life insurance policies with the opportunity to purchase an alternative asset that potentially generates attractive investment returns not correlated to traditional financial markets. When a buyer acquires a life insurance asset in the secondary market, that buyer acquires a financial obligation of an insurance carrier to pay the face value of the insurance policy benefit. The potential yield generated from a portfolio of life insurance assets equals the difference between the purchase price of the life insurance assets, plus the premiums and financing costs to maintain those assets, and the face value of the policy benefits received. As of December 31, 2015, our total investment in our portfolio of life insurance assets, including the purchase price and attendant premiums and financing costs was $353 million, and the total face value of life insurance policy benefits of our portfolio was $945 million.

 

We seek to build a profitable and large portfolio of life insurance assets that are well diversified in terms of insurance companies and insureds. We believe that diversification is a key risk mitigation strategy to provide consistent cash flows and reliable investment returns from our portfolio of life insurance assets. To grow our portfolio and achieve the diversification we seek, we offer investors the opportunity to participate in the yield potentially generated by our portfolio of life insurance assets through a variety of financings and securities offerings. We chose to finance our business in this manner after the 2008 credit crisis, during which banks largely ceased financing alternative asset classes as a result of the regulatory response to the financial crisis. We believe we are well positioned to continue providing investors with yield participation opportunities from alternative asset classes once dominated by the banking sector.

 

Our business was originally organized in February 2006, and we added our current parent holding company, GWG Holdings Inc., in March 2008. In September 2014, we consummated an initial public offering of our common stock on The Nasdaq Capital Market, where our stock trades under the ticker symbol “GWGH.”

 

 3 
 

 

In February 2016, we launched a new operating division in the merchant cash industry through a subsidiary entity, GWG MCA Capital, Inc. (“GWG MCA”). GWG MCA provides secured loans to merchant cash advance funders, and also provides merchant cash advances directly to small businesses across the United States. To begin this operating division, we acquired a $4.3 million portfolio of loans and advances from a subsidiary of Walker Preston Capital. As part of the transaction, we retained the services of Patrick F. Preece as the President and Chief Executive Officer of GWG MCA. Mr. Preece had been the Chief Executive Officer of Walker Preston Capital prior to our acquisition of its loan portfolio and, prior to his work with Walker Preston Capital, Mr. Preece was head of asset securitization for Autobahn Funding, a $6 billion commercial paper conduit for DZ Bank that specialized in financing alternative classes. To finance our GWG MCA portfolio, we intend to offer investors the opportunity to participate in the yield potentially generated by these alternative assets through a variety of securities offerings.

 

GWG Holdings, Inc. (GWG Holdings) conducts its life insurance related business through a wholly-owned subsidiary, GWG Life, LLC (GWG Life), and GWG Life’s wholly-owned subsidiaries, GWG Trust (Trust), GWG DLP Funding II, LLC (DLP II) and GWG DLP Funding III, LLC (DLP III). As indicated above, GWG Holdings conducts its merchant cash advance activities through GWG MCA. All of these entities are legally organized in Delaware. 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 based in Minneapolis, Minnesota. 

 

Markets

 

Consumers Owning Life Insurance

 

The potential secondary market for life insurance is large. According to the American Council of Life Insurers Fact Book 2015 (ACLI), individuals owned over $11.0 trillion in face value of life insurance policy benefits in the United States in 2014. This figure includes all types of policies, including term and permanent insurance known as whole life and universal life. The ACLI reports that the lapse and surrender rate of 5.3% for individual life insurance policies, amounting to over $602 billion in face value of policy benefits lapsed and surrendered in 2014 alone. These figures do not include group-owned life insurance, such as employer-provided life insurance, the market for which totaled over $8.2 trillion of face value of life insurance policy benefits in the United States in 2014. Group-owned life insurance exhibits similar lapse and surrender rates to consumer owned life insurance according to the ACLI. Owners of life insurance lapse or surrender their policies for a variety of reasons, including: (i) the insurance coverage is no longer needed; (ii) the internal cash value of the policy is substantially less than was projected due to unrealistic assumptions made about the insurance policy’s earnings when the policy was originally purchased; (iii) the insurance premiums are no longer affordable for the policy owner for a variety of reasons; or (iv) there is a desire to maximize the insurance policy’s investment value in the secondary market.

 

The life insurance secondary market has developed in response to the large volume of policy lapses and surrenders and inadequate value offered to consumers by the insurance carriers. According to research conducted by a leading actuarial firm, it is estimated that 88% of all universal life insurance policies do not result in the payment of a benefit claim. Rather than allowing a policy to lapse as worthless, or surrendering a life insurance policy at a fraction of its market value, the secondary market can be a source of significant value to consumers. Without the secondary market, insurance carriers maintain monopsony power over consumers who no longer desire to pay the premiums for their life insurance coverage. To illustrate the significance of this value, since our inception we have paid consumers $315.5 million for their life insurance policies as compared to the $20.8 million of cash surrender value offered by insurance carriers for these same policies. The development of a vibrant life insurance secondary market provides consumers with greater flexibility and options for the life insurance assets they own and maintain.

 

The life insurance secondary market is geared towards consumers, 65 years and older, who own life insurance and are addressing their post-retirement financial options. These consumers represent the fastest growing demographic segment in the United States according to the U.S. Census Bureau. And as these consumers age, they and their families will be faced with a variety of financial needs that can benefit from the value-added options our market offers.

 

Research by Conning Research & Consulting (Conning) reports that the annual net market potential for life insurance policy benefits sold in the secondary market exceeds $138 billion in 2015. Of that market potential, Conning estimates that investors purchased approximately $1.7 billion in face value of life insurance assets in 2014, indicating that the market is dramatically underserved. And with an aging demographic in the United States, Conning expects the net market potential to grow to an annual $166 billion in face value of life insurance benefits by 2024. We share the belief that the life insurance secondary market represents a both a dramatically underserved market and significant long-term growth opportunity. We further believe that GWG is well organized and positioned to address the market need.

 

 4 
 

 

Investors Seeking Alternative Assets

 

Since the credit crisis of 2008, the flow of capital to a variety of alternative asset classes has undergone a structural shift. Alternative assets, broadly defined, are any non-traditional asset with potential economic value that would not be found in a standard investment portfolio. An asset is generally considered “alternative” if it has some or all of the following characteristics: a limited investment history, not commonly found in portfolios, an illiquid market, different performance characteristics, and requires specialized skill to originate and service the asset. Definitions of traditional assets today extend well beyond stocks and bonds, and can include a variety of assets which may have been better classified as “alternative” a decade ago, i.e., real estate, commodities or natural resources. Thus what is an alternative asset today may largely be considered tomorrow’s mainstream investment asset.

 

Once dominated by banks, alternative asset markets are in many cases no longer viable for banks to finance due to vast new regulation effected since the crisis, regulation that has in effect reshaped the way in which banks participate in many parts of the economy. At the same time, an increasing number of investors are now turning to alternative asset classes as a means to diversify their investment portfolio to manage risk and volatility, and to obtain greater returns in the low interest rate environment that has persisted since 2008. In fact, according to research published by Goldman Sachs, a significant shift by retail investors in their investments from an average of 4% allocation in alternative asset investments to the 20% allocation favored by institutional investors is expected over the next five to ten years.

 

The trend of investors seeking access and exposure to alternative investment products is expected to continue as traditional bank sources of capital for these assets continues to retreat and alternative investment product offering innovations occur within the regulated securities markets. Researchers at McKinsey report that U.S. individual investors are expected to be a primary driver of growth in alternative asset investments. McKinsey reports that high net-worth individuals and the mass affluent are increasingly looking to hedge downside risk, protect principal, manage volatility, and generate income – the same reasons institutional investors have favored larger allocations to alternative asset investment classes.

 

Our Business Model

 

Our business model is to earn a net profit between the yield generated by the alternative assets we own and the costs we incur to originate and finance the assets. We believe that we are uniquely positioned to acquire life insurance assets directly from consumers needing our services, and to finance our portfolio’s growth by providing investors with the opportunity to participate in the yield we generate from our assets. At the same time, we seek to fill the vacuum created by the widespread disappearance of bank-driven finance in a variety of other alternative asset classes.

 

To participate and compete in these growing markets, we have spent and intend to continue spending significant resources: (i) developing a robust operational platform and systems for originating and purchasing life insurance policies and other alternative assets; (ii) creating opportunities for investors to participate in the yield generated by alternative assets we own; (iii) recruiting and developing a professional management team; and (iv) establishing strategic relationships for delivering the services we provide.

 

Originating Life Insurance Assets

 

We generally purchase life insurance assets directly from policy owners who purchased their life insurance in the primary market. Historically, we have purchased life insurance policies in the secondary market through a network of specialized brokers who assist consumers and financial professionals in accessing the secondary market. We maintain membership affiliations and representation within key industry groups, such as the Life Insurance Settlement Association, where our President, Michael Freedman, serves on the board. We typically attend and sponsor trade events where we maintain contacts and visibility among professionals who submit life insurance policies for our potential purchase.

 

__________________ 

1 Goldman Sachs, Retail Liquid Alternatives: The Next Frontier (2013).

 

 5 
 

 

A key strategic initiative of ours has been to expand our origination capabilities by marketing directly to consumers and financial professionals. Most recently, we focused these marketing efforts towards financial professionals, namely financial advisors and life insurance agents, through our “Appointed Agent Program.” Our Appointed Agent Program is designed to empower financial professionals to bring the life insurance secondary market’s value proposition to their respective markets. Our Appointed Agent Program emphasizes education, training, regulatory compliance, and marketing support. In the fourth quarter of 2015, we deployed a new marketing effort focused on recruiting life insurance professionals to source life insurance policies directly to us through our Appointed Agent Program. Additionally, we continue to train financial advisors who sell our investment products to become Appointed Agents and market our services within their respective markets. While these efforts are new and still in development, the initial results and early outcomes from our Appointed Agent Program marketing efforts are encouraging and, as a result, we intend to further focus and allocate resources to grow and develop that program. 

 

Underwriting and Purchasing Life Insurance Assets

 

We focus on purchasing high quality life insurance assets through our origination practices and underwriting procedures. Our origination practices and underwriting procedures strive to meet published guidelines and methodologies for rated securitizations of life insurance portfolios. At the same time, we are looking for innovative value-added tools, services, and methodologies to improve both the accuracy and efficiency with which we acquire life insurance assets.

 

Our underwriting procedures consist of a careful review and analysis of available materials and information related to a life insurance policy and the insured. The goal of our underwriting procedures is to make an informed purchasing decision. We typically purchase life insurance policies from insureds who are 65 years or older and whose life expectancies are less than 120 months (10 years). The life expectancies we use are estimates, stated in months, which indicate the 50% probability of an individual’s mortality (meaning actuarial analysis predicts half of the individuals with similar age, sex, and medical conditions will experience mortality before that number of months, and half will experience mortality after that number of months). Life expectancies are based on actuarial tables that predict statistical probability of individual mortality. 

  

We obtain life expectancies from independent third-party medical-actuarial underwriting firms, unless the life insurance policy benefit has a face value of $1,000,000 or less (which we generally refer to as a “small face policy”). When we obtain life expectancies from independent third-party medical-actuarial firms, we receive a medical underwriter’s report summarizing the health of the insured based on a review of the insured’s historical medical records. For all life insurance policies we purchase, other than small face policies, we average two life expectancies from two independent medical-actuarial underwriting firms to form the life expectancy we use to price and value our life insurance assets. In some cases, we may obtain more than two life expectancy estimates. In those cases, we average the two life expectancy estimates that we believe are the most reliable of those we have received, based on our own analyses and conclusions. In this regard, the two life expectancy estimates we ultimately choose to average may not always be the most conservative. For small face policies, we use modified procedures to estimate a life expectancy that may, or may not, use life expectancies from independent third-party medical-actuarial underwriting firms. If in the future we believe our business model will benefit from changes in our underwriting process and if such revisions are permitted under our borrowing covenants, we may change our underwriting processes and policies.

 

We continually seek to improve the process by which we originate our life insurance assets. To this end, we have refined our underwriting procedures in order to more efficiently price small face policies. In 2015, we have reached several milestones, most notably, the time in which it takes to complete a preliminary underwriting. Historically, the preliminary underwriting process to evaluate and price a life insurance policy could take six weeks or more. This lengthy timeline, as well as additional timelines necessary for a complicated closing process, creates barriers for market development and growth. Through our efforts, however, we have been able to reduce the elapsed time to complete a preliminary underwriting from weeks to days and streamline our entire purchasing process, reducing timelines further, from months to weeks.

 

Finally, we continue to refine and improve our actuarial underwriting. We believe we can continue to improve our service offerings by adopting a multivariate analysis approach to our life expectancy underwriting—in particular for small face policies. Multivariate analysis refers to a technique used to analyze data that arises from more than one variable. The goal of our multivariate underwriting is to augment traditional life expectancy underwriting by either filling gaps, or including new information, shown to be relevant to life expectancy. An example of this approach would be to account for socio-economic factors, such as income levels, in the calculation of life expectancies, which as The Brookings Institute has recently published, has a bearing upon life expectancies. Another example of this approach would be to apply advanced medical testing technologies to our life expectancy calculations, such as genomic testing, that have shown to statistically predict mortality among individuals. These efforts are ongoing and take time to develop and implement. Nevertheless, over time, we believe they hold promise to improve the value of the services we offer.

 

 6 
 

 

Value Proposition – Life Insurance as an Alternative Asset

 

We realize profits from the life insurance assets we own by earning a spread between the investment cost of our life insurance assets and the face value of the policy benefits we receive. Accordingly, if we originate and purchase life insurance assets in the secondary market, and make all the attendant premium payments to maintain those assets in order to receive the policy benefits, the most significant risk factors (among others that we discuss in the “Risk Factors” section of this report) in the performance of those assets are: (i) the predictability of mortality, or longevity risk; and (ii) the creditworthiness of the issuing life insurance company, or credit risk. We believe the value proposition of our investments in the alternative asset of life insurance is our ability to obtain superior risk-adjusted returns.

 

Longevity Risk. We believe actuarial mortality is the single largest variable affecting the returns on our investments in life insurance assets and impacting the portfolio’s performance over time. Accurately predicting a specific individual’s mortality date is impossible, and the best an actuary can do is provide a set of probabilities of survival over time. Nevertheless, predicting mortality among a group of similarly situated individuals is less difficult—in fact, the larger the group, the more accurate actuarial prediction tends to become. The statistical mathematical concept stating that the results of random events tend to become very predictable as the number of events becomes large is the “Central Limit Theorem” (or more commonly known as the “Law of Large Numbers”). “Mean regression” is another statistical mathematical concept used to describe that, on average, observations (in this case actual mortality of insureds) tend to cluster around the mean observation (in this case our estimate of mortality of insureds as described further under “Value Proposition” below). These statistical mathematical concepts are the basis for many business models, ranging from all types of insurance to the lottery. Insurance carriers, for example, can be very certain of the number of insurance claims to expect when they have spread their risk over a large book of diversified policies. In this way, insurance carriers can price a large number of insurance policies of any type to collect premiums slightly above the level of expected claims, virtually guaranteeing a surplus or profit. Similarly, a lottery can depend on an expected amount of earnings equal to the small advantage built into the odds of the games.

 

The implications for our business model are two-fold: First, as we accumulate larger numbers of life insurance policies, we should expect our results to increasingly correlate with our expectations. Second, over the long run, we should expect that the actual cash flows will converge with the forecasted cash flows from our portfolio of life insurance assets, and the actual return on our portfolio of life insurance assets will converge with our expected return. In sum, the degree of certainty of this eventual convergence should increase as the portfolio size increases. Although medical advances and life expectancy changes may significantly impact the longevity risk we face and our understanding of that risk, these concepts nevertheless serve as guiding principles as we seek to build, manage, and forecast the performance of our portfolio of life insurance assets.

 

These expectations are affirmed in research published by A.M. Best and others, that illustrate that as the number of insured lives increase within a portfolio of life insurance policies, there is a corresponding decrease in the standard deviation of the mortality events within the portfolio—i.e., longevity risk decreases as the number of insureds increases. Standard & Poor’s indicates that 1,000 insured lives is required to reach statistical significance (where the relationship, in this context, between mortality projections and actual mortality events is not random). A.M. Best concludes that a portfolio of at least 300 insured lives is statistically significant. Our current portfolio covers 358 insured lives and we believe that both the predictability and actual performance will continue to improve with additional size and diversification. Accordingly, we continue to seek to grow the size and diversification of the portfolio in order to further mitigate risk and improve our profitability.

 

Credit Risk. We rely on the payment of policy benefit claims by life insurance companies as our most significant source of revenue collection. The life insurance assets we own represent obligations of third-party life insurance companies to pay the benefit amount under the relevant policy upon the mortality of the insured. As a result, we manage this credit risk exposure by generally purchasing policies issued by insurance companies with investment-grade ratings from Standard & Poor’s, and diversifying our portfolio among a number of insurance companies.

 

Approximately 97.3% of life insurance assets in our portfolio were issued by insurance companies with investment-grade credit ratings from Standard & Poor’s, as of December 31, 2015. Our largest life insurance company credit exposures and their respective Standard & Poor’s credit rating of their respective financial strength and claims paying ability is set forth below:

 

Rank   Policy Benefits    

Percentage

of Policy

Benefit Amount

    Insurance Company   Ins. Co. S&P Rating
1   $ 132,325,000       14.0 %   AXA Equitable Life Insurance Company   A+
2   $ 120,305,000       12.7 %   John Hancock Life Insurance Company (U.S.A.)   AA-
3   $ 86,070,000       9.1 %   Transamerica Life Insurance Company   AA-
4   $ 62,475,000       6.6 %   Voya Retirement Insurance and Annuity Company   A
5   $ 60,569,000       6.4 %   Jefferson-Pilot Life Insurance Company   AA-
6   $ 46,825,000       5.0 %   American General Life Insurance Company   A+
7   $ 44,846,000       4.7 %   Metropolitan Life Insurance Company   AA-
8   $ 43,750,000       4.6 %   Massachusetts Mutual Life Insurance Company   AA+
9   $ 42,407,000       4.5 %   Lincoln National Life Insurance Company   AA-
10   $ 36,500,000       3.9 %   West Coast Life Insurance Company   AA-
      676,072,000       71.5 %        

 

 7 
 

 

The yield to maturity on bonds issued by life insurance carriers reflects, among other things, the credit risk (risk of default) of such insurance carrier.  We follow the yields on certain publicly traded life insurance company bonds as this information is part of the data we consider when valuing our portfolio of life insurance policies for our financial statements according to GAAP.  

 

Name of Bond   Maturity   YTM     Duration (Years)    

Bond

S&P Rating

AXA 7.125%   12/15/2020     3.29 %     5.0     BBB
Manulife Finl 4.9%   9/17/2020     2.54     4.7     A
Lincoln National Corp Ind 4%   9/1/2023     3.44 %     7.7      A-
Amer Intl Grp 5%   4/26/2023     3.23 %     7.3      A-
Protective Life 7.375%   10/15/2019     2.85 %     3.8      A-
Metlife 3.048%   12/15/2022     2.94 %     7.0      A-
Prudential Finl Inc Mtns Book 4.5%   11/16/2021     2.86 %     5.9     A
Average yield on insurance bonds         3.02 %     5.9      

 

The table above indicates the current yields to maturity (YTM) for the senior bonds of selected life insurance carriers with durations, on average, that our similar to our life insurance portfolio.  The average yield to maturity of these bonds was 3.02% which, we believe, reflects in part the financial market’s judgement that credit risk is low with regard to these carriers’ financial obligations. It should be noted that the obligations of life insurance carriers to pay life insurance policy benefits is senior in rank to any other obligation.  This “super senior” priority is not reflected in the yield to maturity in the table and, if considered, would result in a lower yield to maturity all else being equal. As such, as long as the respective premium payments have been made, it is highly likely that the owner of the insurance policy will collect the insurance policy benefit upon the mortality of the insured.

 

Value Proposition. We define the value proposition presented by our portfolio of life insurance assets as our ability to earn superior risk-adjusted returns. At any given point in time, we calculate our returns from our life insurance assets based upon (i) our historical results; and (ii) the future cash flows we expect to realize from our statistical forecasts. To forecast our expected future cash flows we use the probabilistic method of analysis. The actuarial software we use produce our expected future cash flows and conduct to our probabilistic analysis was developed by the actuarial firm Milliman and is now owned by Modeling Actuarial Pricing Systems, Inc. (“MAPS”). The expected future cash flow forecasts derived from this probabilistic analysis, in relation to our investment cost basis, provides us with an expected internal rate of return on our portfolio of life insurance assets. As of December 31, 2015, the expected internal rate of return on our portfolio of life insurance assets was 11.11%.

 

We seek to further enhance our understanding of our expected future cash flow forecast by applying a stochastic analysis, sometimes referred to as a “Monte Carlo simulation,” to provide us with a greater understanding of the variability of our future cash flow projections. The stochastic analysis we perform is built within the MAPS actuarial software and provides internal rate of return calculations for different statistical confidence intervals. The results of our stochastic analysis, in which we run 10,000 random mortality scenarios, demonstrates that the scenario ranking at the 50th percentile of all 10,000 results generates an internal rate of return of 11.08% which is basically equal to our expected internal rate of return of 11.11%. The stochastic analysis results also reveal that our portfolio is expected to generate an internal rate of return of 10.33% or better in 75% of all generated scenarios; and an internal rate of return of 9.70% or better in 90% of all generated scenarios. As the portfolio continues to grow, all else equal, the percentage of observations that result in an internal rate of return at or very near 11.08% (currently our mean, or 50th percentile, internal rate of return expectation) will increase, thereby lowering future cash flow volatility and potentially justifying our use of lower discount rates to value our portfolio.

 

In sum, we believe our statistical analyses show that, if we can continue to grow and maintain our investments in life insurance assets, then, in the absence of significantly disruptive events negatively affecting our most significant risks, including but not limited to longevity and credit risk, and interest rate and financing risk, those investments will prove to be dependably profitable for our company and provide us with the means to generate attractive returns for our investors.

 

Portfolio Information

 

Our portfolio of life insurance policies, owned by our wholly-owned subsidiaries as of December 31, 2015, is summarized below: 

 

Total portfolio face value of policy benefits  $944,844,000 
Average face value per policy  $2,386,000 
Average face value per insured life  $2,639,000 
Average age of insured (yrs.)   82.6 
Average life expectancy estimate (yrs.)   6.6 
Total number of policies   396 
Number of unique lives   358 
Demographics   70%  Males; 30% Females 
Number of smokers   10 
Largest policy as % of total portfolio   1.06%
Average policy as % of total portfolio   0.25%
Average annual premium as % of face value   3.41%

 

 8 
 

 

Our portfolio of life insurance policies, owned by our wholly-owned subsidiaries as of December 31, 2015, organized by the insured’s current age and the associated policy benefits, is summarized below:

 

Distribution of Policy Benefits by Current Age of Insured

 

Min Age  Max Age  Policy Benefits  

Weighted Average

Life Expectancy (yrs.)

  Percentage of
Total
Policy Benefits
 
90  95  $72,020,000     2.7     7.6%
85  89  $251,692,000     4.9     26.6%
80  84  $352,176,000     6.7     37.3%
75  79  $179,876,000     8.8     19.0%
70  74  $57,407,000     9.5     6.1%
65  69  $31,673,000    10.5     3.4%
Total     $944,844,000     6.6     100.0%

 

Our portfolio of life insurance policies, owned by our wholly-owned subsidiaries as of December 31, 2015, organized by the insured’s current age and number of policies owned, is summarized below:

 

Distribution of Policies by Current Age of Insured

 

Min Age  Max Age  Policies  

Weighted Average

Life Expectancy (yrs.)

  Percentage of
Total Policies
 
90  95   30    2.7     7.6%
85  89   113    4.9     28.5%
80  84   127    6.7     32.1%
75  79   69    8.8     17.4%
70  74   35    9.5     8.8%
65  69   22    10.5     5.6%
Total      396    6.6     100.0%

 

Our portfolio of life insurance policies, owned by our wholly-owned subsidiaries as of December 31, 2015, organized by the insured’s estimated life expectancy estimates and associated policy benefits, is summarized below:

 

Distribution of Policies by Current Life Expectancies of Insured

 

Min LE (Months)  Max LE (Months)  Policies   Policy Benefits  Percentage of
Total
Policy Benefits
 
5  47   93   $180,813,000   19.1%
48  71   108    258,697,000   27.4%
72  95   84    223,506,000   23.7%
96  119   68    166,295,000   17.6%
120  143   27    66,015,000   7.0%
144  197   16    49,518,000   5.2%
Total      396   $944,844,000   100.0%

 

We track concentrations of pre-existing medical conditions among insured individuals within our portfolio based on information contained in life expectancy reports. We track these medical conditions within the following ten primary disease categories: (1) cancer, (2) cardiovascular, (3) cerebrovascular, (4) dementia, (5) diabetes, (6) multiple, (7) neurological disorders, (8) no disease, (9) other, and (10) respiratory diseases. Our primary disease categories are summary generalizations based on the ICD-9 codes we track on each insured individuals within our portfolio. ICD- 9 codes, published by the World Health Organization, are used worldwide for medical diagnoses and treatment systems, as well as morbidity and mortality statistics. Currently, the only primary disease category within our portfolio that represents a concentration of over 10% is cardiovascular, which constitutes 20.8% of the value of our portfolio.

 

 9 
 

 

The complete detail of our portfolio of life insurance policies, owned by our wholly owned subsidiaries as of December 31, 2015, organized by the current age of the insured and the associated policy benefits, sex, estimated life expectancy, issuing insurance carrier, and the credit rating of the issuing insurance carrier, is set forth below.

 

Life Insurance Portfolio Detail

(as of December 31, 2015)

 

      Face Amount     Gender   Age (ALB)   LE (mo.)   Insurance Company   S&P Rating
1   $            4,000,000     Male   95   34   MetLife Investors USA Insurance Company   AA-
2   $            1,100,000     Male   95   29   Voya Retirement Insurance and Annuity Company   A
3   $            1,500,000     Female   95   32   Aviva Life Insurance Company   A-
4   $            3,200,000     Male   94   27   West Coast Life Insurance Company   AA-
5   $            1,000,000     Female   93   38   Transamerica Life Insurance Company   AA-
6   $                264,000     Female   93   25   Lincoln Benefit Life Company   BBB+
7   $            3,500,000     Male   92   40   Voya Retirement Insurance and Annuity Company   A
8   $            3,000,000     Male   92   40   West Coast Life Insurance Company   AA-
9   $                500,000     Male   92   12   John Hancock Life Insurance Company (U.S.A)   AA-
10   $                625,000     Female   92   22   Prudential Life Insurance Company   AA-
11   $            2,000,000     Female   92   10   Pruco Life Insurance Company   AA-
12   $                250,000     Male   92   22   Transamerica Life Insurance Company   AA-
13   $            1,682,773     Female   91   49   Hartford Life and Annuity Insurance Company   BBB+
14   $            5,000,000     Female   91   51   American General Life Insurance Company   A+
15   $            5,000,000     Female   91   29   John Hancock Life Insurance Company (U.S.A)   AA-
16   $                300,000     Female   91   30   West Coast Life Insurance Company   AA-
17   $            3,845,000     Female   91   45   Pacific Life Insurance Company   A+
18   $            5,000,000     Male   90   31   John Hancock Life Insurance Company (U.S.A)   AA-
19   $            3,500,000     Female   90   54   John Hancock Life Insurance Company (U.S.A)   AA-
20   $            3,100,000     Female   90   32   Lincoln Benefit Life Company   BBB+
21   $            1,500,000     Female   90   67   Jefferson-Pilot Life Insurance Company   AA-
22   $            2,500,000     Female   90   5   AXA Equitable Life Insurance Company   A+
23   $            2,500,000     Female   90   5   AXA Equitable Life Insurance Company   A+
24   $            3,000,000     Female   90   32   Jefferson-Pilot Life Insurance Company   AA-
25   $            5,000,000     Female   90   38   Voya Retirement Insurance and Annuity Company   A
26   $            5,000,000     Female   90   16   Lincoln National Life Insurance Company   AA-
27   $            1,000,000     Male   90   8   Voya Retirement Insurance and Annuity Company   A
28   $            1,203,520     Male   90   42   Columbus Life Insurance Company   AA
29   $            1,350,000     Female   90   34   Jefferson-Pilot Life Insurance Company   AA-
30   $                600,000     Female   90   20   Columbus Life Insurance Company   AA
31   $            5,000,000     Female   89   48   Massachusetts Mutual Life Insurance Company   AA+
32   $            2,500,000     Female   89   46   American General Life Insurance Company   A+
33   $            2,500,000     Male   89   53   Pacific Life Insurance Company   A+
34   $            1,000,000     Female   89   49   United of Omaha Life Insurance Company   AA-
35   $            5,000,000     Male   89   50   AXA Equitable Life Insurance Company   A+
36   $                375,000     Male   89   40   Lincoln National Life Insurance Company   AA-
37   $            1,103,922     Female   89   57   Sun Life Assurance Company of Canada (U.S.)   AA-
38   $            1,500,000     Male   89   41   John Hancock Life Insurance Company (U.S.A)   AA-
39   $            1,500,000     Male   89   41   John Hancock Life Insurance Company (U.S.A)   AA-
40   $            1,000,000     Female   89   62   Transamerica Life Insurance Company   AA-
41   $                250,000     Female   89   62   Transamerica Life Insurance Company   AA-
42   $                500,000     Male   89   59   Lincoln National Life Insurance Company   AA-
43   $                800,000     Male   89   66   Lincoln National Life Insurance Company   AA-
44   $                715,000     Female   89   58   Jefferson-Pilot Life Insurance Company   AA-
45   $            2,225,000     Female   89   81   Transamerica Life Insurance Company   AA-
46   $            3,000,000     Female   89   79   Massachusetts Mutual Life Insurance Company   AA+
47   $            1,500,000     Male   89   44   Union Central Life Insurance Company   A+
48   $            3,500,000     Female   89   38   Lincoln National Life Insurance Company   AA-
49   $            1,500,000     Male   89   103   Transamerica Life Insurance Company   AA-
50   $            3,000,000     Male   89   29   American General Life Insurance Company   A+
51   $                500,000     Female   88   64   Sun Life Assurance Company of Canada (U.S.)   AA-
52   $            3,000,000     Male   88   45   Transamerica Life Insurance Company   AA-
53   $                250,000     Male   88   69   Metropolitan Life Insurance Company   AA-
54   $            4,000,000     Female   88   69   Transamerica Life Insurance Company   AA-
55   $            1,050,000     Male   88   42   John Hancock Life Insurance Company (U.S.A)   AA-
56   $            3,000,000     Male   88   97   Transamerica Life Insurance Company   AA-

 

 10 
 

 

      Face Amount     Gender   Age (ALB)   LE (mo.)   Insurance Company   S&P Rating
57   $            1,000,000     Male   88   52   AXA Equitable Life Insurance Company   A+
58   $            1,250,000     Male   88   34   Columbus Life Insurance Company   AA
59   $                300,000     Male   88   34   Columbus Life Insurance Company   AA
60   $            4,785,380     Female   88   43   John Hancock Life Insurance Company (U.S.A)   AA-
61   $            2,500,000     Male   88   45   Transamerica Life Insurance Company   AA-
62   $            1,000,000     Female   88   47   West Coast Life Insurance Company   AA-
63   $            2,000,000     Female   88   47   West Coast Life Insurance Company   AA-
64   $            1,803,455     Female   88   47   Metropolitan Life Insurance Company   AA-
65   $            1,529,270     Female   88   47   Metropolitan Life Insurance Company   AA-
66   $            5,000,000     Male   88   49   John Hancock Life Insurance Company (U.S.A)   AA-
67   $                800,000     Male   88   52   National Western Life Insurance Company   A
68   $                200,000     Male   88   46   Lincoln Benefit Life Company   BBB+
69   $            4,445,467     Male   88   56   Penn Mutual Life Insurance Company   A+
70   $            7,500,000     Male   88   46   Jefferson-Pilot Life Insurance Company   AA-
71   $            3,600,000     Female   88   55   AXA Equitable Life Insurance Company   A+
72   $            1,000,000     Female   88   33   John Hancock Life Insurance Company (U.S.A)   AA-
73   $            3,000,000     Male   88   40   Jefferson-Pilot Life Insurance Company   AA-
74   $            2,000,000     Male   88   44   John Hancock Life Insurance Company (U.S.A)   AA-
75   $                100,000     Female   88   52   American General Life Insurance Company   A+
76   $                100,000     Female   88   52   American General Life Insurance Company   A+
77   $            2,000,000     Female   88   73   U.S. Financial Life Insurance Company   A+
78   $                396,791     Male   88   33   Lincoln National Life Insurance Company   AA-
79   $            1,000,000     Male   87   58   John Hancock Life Insurance Company (U.S.A)   AA-
80   $            2,000,000     Male   87   58   John Hancock Life Insurance Company (U.S.A)   AA-
81   $            5,000,000     Male   87   49   Jefferson-Pilot Life Insurance Company   AA-
82   $            5,000,000     Female   87   32   Transamerica Life Insurance Company   AA-
83   $            1,200,000     Male   87   70   Transamerica Life Insurance Company   AA-
84   $            6,000,000     Female   87   53   Sun Life Assurance Company of Canada (U.S.)   AA-
85   $            1,000,000     Female   87   83   Voya Retirement Insurance and Annuity Company   A
86   $            3,000,000     Male   87   76   AXA Equitable Life Insurance Company   A+
87   $            1,000,000     Female   87   21   State Farm Life Insurance Company   AA-
88   $            1,000,000     Female   87   37   New York Life Insurance Company   AA+
89   $          10,000,000     Female   87   68   West Coast Life Insurance Company   AA-
90   $            8,500,000     Male   87   77   Massachusetts Mutual Life Insurance Company   AA+
91   $                500,000     Male   87   78   Metropolitan Life Insurance Company   AA-
92   $                347,211     Male   87   38   Prudential Life Insurance Company   AA-
93   $                500,000     Female   87   51   Beneficial Life Insurance Company   N/A
94   $            5,000,000     Male   87   77   Lincoln National Life Insurance Company   AA-
95   $            4,513,823     Female   87   22   Aviva Life Insurance Company   A-
96   $            2,000,000     Male   87   91   Voya Retirement Insurance and Annuity Company   A
97   $            2,000,000     Male   87   91   Voya Retirement Insurance and Annuity Company   A
98   $            2,000,000     Male   87   91   Voya Retirement Insurance and Annuity Company   A
99   $            1,365,000     Female   86   90   Transamerica Life Insurance Company   AA-
100   $                200,000     Female   86   82   Lincoln National Life Insurance Company   AA-
101   $            1,000,000     Male   86   37   Massachusetts Mutual Life Insurance Company   AA+
102   $            2,000,000     Male   86   93   Transamerica Life Insurance Company   AA-
103   $            1,000,000     Male   86   36   John Hancock Life Insurance Company (U.S.A)   AA-
104   $            1,000,000     Male   86   52   AXA Equitable Life Insurance Company   A+
105   $            2,328,547     Male   86   41   Metropolitan Life Insurance Company   AA-
106   $            2,000,000     Male   86   41   Metropolitan Life Insurance Company   AA-
107   $            1,000,000     Male   86   23   Transamerica Life Insurance Company   AA-
108   $            2,000,000     Male   86   58   Jefferson-Pilot Life Insurance Company   AA-
109   $            3,000,000     Female   86   67   Transamerica Life Insurance Company   AA-
110   $            5,000,000     Male   86   69   Voya Retirement Insurance and Annuity Company   A
111   $            1,800,000     Male   86   50   John Hancock Variable Life Insurance Company   AA-
112   $            2,000,000     Male   86   60   AXA Equitable Life Insurance Company   A+
113   $            1,750,000     Male   86   60   AXA Equitable Life Insurance Company   A+
114   $            4,000,000     Male   86   48   Metropolitan Life Insurance Company   AA-
115   $            2,000,000     Male   86   32   Transamerica Life Insurance Company   AA-
116   $            1,425,000     Male   86   75   John Hancock Life Insurance Company (U.S.A)   AA-

 

 11 
 

 

      Face Amount     Gender   Age (ALB)   LE (mo.)   Insurance Company   S&P Rating
117   $            1,000,000     Female   85   78   John Hancock Life Insurance Company (U.S.A)   AA-
118   $            1,500,000     Male   85   35   Transamerica Life Insurance Company   AA-
119   $            1,500,000     Female   85   104   Lincoln Benefit Life Company   BBB+
120   $            1,000,000     Female   85   40   Metropolitan Life Insurance Company   AA-
121   $            3,750,000     Male   85   72   AXA Equitable Life Insurance Company   A+
122   $            2,000,000     Male   85   51   Metropolitan Life Insurance Company   AA-
123   $            3,000,000     Male   85   51   Metropolitan Life Insurance Company   AA-
124   $            4,000,000     Male   85   33   John Hancock Life Insurance Company (U.S.A)   AA-
125   $            1,000,000     Male   85   73   John Hancock Life Insurance Company (U.S.A)   AA-
126   $            2,000,000     Female   85   80   AXA Equitable Life Insurance Company   A+
127   $            2,000,000     Female   85   93   Lincoln Benefit Life Company   BBB+
128   $            1,000,000     Male   85   50   Voya Retirement Insurance and Annuity Company   A
129   $            3,000,000     Female   85   79   Sun Life Assurance Company of Canada (U.S.)   AA-
130   $            2,400,000     Male   85   34   Genworth Life Insurance Company   BBB-
131   $                829,022     Female   85   22   Hartford Life and Annuity Insurance Company   BBB+
132   $            1,500,000     Male   85   75   AXA Equitable Life Insurance Company   A+
133   $            5,000,000     Male   85   84   Voya Retirement Insurance and Annuity Company   A
134   $            1,500,000     Male   85   46   Voya Retirement Insurance and Annuity Company   A
135   $            1,500,000     Male   85   46   Voya Retirement Insurance and Annuity Company   A
136   $            2,500,000     Female   85   61   American General Life Insurance Company   A+
137   $                500,000     Male   85   38   Genworth Life Insurance Company   BBB-
138   $            1,000,000     Male   85   43   John Hancock Life Insurance Company (U.S.A)   AA-
139   $            4,000,000     Female   85   47   Voya Retirement Insurance and Annuity Company   A
140   $            5,000,000     Female   85   88   American General Life Insurance Company   A+
141   $            1,703,959     Male   85   63   Jefferson-Pilot Life Insurance Company   AA-
142   $            1,000,000     Male   85   54   Hartford Life and Annuity Insurance Company   BBB+
143   $            3,500,000     Female   85   102   Lincoln Benefit Life Company   BBB+
144   $            5,000,000     Female   84   95   AXA Equitable Life Insurance Company   A+
145   $            6,000,000     Female   84   105   American General Life Insurance Company   A+
146   $            5,000,000     Male   84   61   AXA Equitable Life Insurance Company   A+
147   $            1,433,572     Male   84   51   Security Mutual Life Insurance Company of NY   N/A
148   $            1,000,000     Male   84   59   Texas Life Insurance Company   N/A
149   $                500,000     Male   84   101   Metropolitan Life Insurance Company   AA-
150   $            2,000,000     Male   84   37   National Life Insurance Company   A
151   $            2,147,816     Female   84   115   John Hancock Life Insurance Company (U.S.A)   AA-
152   $            4,200,000     Female   84   113   Transamerica Life Insurance Company   AA-
153   $                750,000     Male   84   83   West Coast Life Insurance Company   AA-
154   $            5,000,000     Male   84   69   AXA Equitable Life Insurance Company   A+
155   $            2,000,000     Female   84   69   New York Life Insurance Company   AA+
156   $            5,000,000     Male   84   70   Jefferson-Pilot Life Insurance Company   AA-
157   $            2,700,000     Male   84   57   John Hancock Life Insurance Company (U.S.A)   AA-
158   $            1,500,000     Male   84   72   Jefferson-Pilot Life Insurance Company   AA-
159   $            3,500,000     Female   84   84   AXA Equitable Life Insurance Company   A+
160   $            1,000,000     Female   84   97   West Coast Life Insurance Company   AA-
161   $            3,000,000     Female   84   89   MetLife Investors USA Insurance Company   AA-
162   $            7,600,000     Female   84   95   Transamerica Life Insurance Company   AA-
163   $                250,000     Male   84   48   Transamerica Life Insurance Company   AA-
164   $            2,275,000     Male   84   89   Voya Retirement Insurance and Annuity Company   A
165   $            2,500,000     Male   84   55   AXA Equitable Life Insurance Company   A+
166   $            3,000,000     Male   84   55   Lincoln National Life Insurance Company   AA-
167   $                340,000     Female   84   82   Jackson National Life Insurance Company   AA
168   $            2,000,000     Male   84   81   Pacific Life Insurance Company   A+
169   $            3,000,000     Female   84   40   AXA Equitable Life Insurance Company   A+
170   $            1,800,000     Female   84   57   Jefferson-Pilot Life Insurance Company   AA-
171   $            3,000,000     Male   84   57   Metropolitan Life Insurance Company   AA-
172   $                500,000     Male   84   16   Great Southern Life Insurance Company   N/A
173   $            2,247,450     Female   84   56   Transamerica Life Insurance Company   AA-
174   $                400,000     Male   84   46   Transamerica Life Insurance Company   AA-
175   $          10,000,000     Female   84   56   American National Insurance Company   A
176   $                500,000     Male   84   23   West Coast Life Insurance Company   AA-

 

 12 
 

 

      Face Amount     Gender   Age (ALB)   LE (mo.)   Insurance Company   S&P Rating
177   $            3,500,000     Female   83   86   Jefferson-Pilot Life Insurance Company   AA-
178   $            1,000,000     Male   83   65   Lincoln National Life Insurance Company   AA-
179   $            3,000,000     Male   83   38   U.S. Financial Life Insurance Company   A+
180   $            5,000,000     Male   83   106   American General Life Insurance Company   A+
181   $            1,900,000     Male   83   62   American National Insurance Company   A
182   $                500,000     Male   83   43   New York Life Insurance Company   AA+
183   $                500,000     Male   83   43   New York Life Insurance Company   AA+
184   $                385,000     Male   83   70   Metropolitan Life Insurance Company   AA-
185   $                500,000     Male   83   70   Metropolitan Life Insurance Company   AA-
186   $                  75,000     Male   83   44   Fidelity and Guaranty Insurance Company   AA
187   $          10,000,000     Male   83   71   Lincoln National Life Insurance Company   AA-
188   $                250,000     Male   83   30   Jackson National Life Insurance Company   AA
189   $            5,000,000     Female   83   72   Sun Life Assurance Company of Canada (U.S.)   AA-
190   $                750,000     Male   83   78   John Hancock Life Insurance Company (U.S.A)   AA-
191   $            4,500,000     Male   83   70   AXA Equitable Life Insurance Company   A+
192   $            1,995,000     Female   83   76   Transamerica Life Insurance Company   AA-
193   $            4,000,000     Male   83   54   Jefferson-Pilot Life Insurance Company   AA-
194   $            1,250,000     Female   83   57   Columbus Life Insurance Company   AA
195   $          10,000,000     Male   83   80   AXA Equitable Life Insurance Company   A+
196   $            1,000,000     Male   83   67   Hartford Life and Annuity Insurance Company   BBB+
197   $            1,000,000     Male   83   67   Jackson National Life Insurance Company   AA
198   $            2,300,000     Male   83   20   American General Life Insurance Company   A+
199   $            3,500,000     Male   83   69   AXA Equitable Life Insurance Company   A+
200   $            6,217,200     Female   83   101   Phoenix Life Insurance Company   B+
201   $            2,500,000     Female   83   68   Voya Retirement Insurance and Annuity Company   A
202   $            5,000,000     Female   83   53   Massachusetts Mutual Life Insurance Company   AA+
203   $            5,000,000     Male   83   72   Transamerica Life Insurance Company   AA-
204   $            2,000,000     Female   83   93   Jefferson-Pilot Life Insurance Company   AA-
205   $            1,000,000     Male   83   49   American General Life Insurance Company   A+
206   $                350,000     Male   83   34   Reassure America Life Insurance Company   AA
207   $            5,000,000     Male   83   80   Jefferson-Pilot Life Insurance Company   AA-
208   $            3,000,000     Male   82   65   Protective Life Insurance Company   AA-
209   $            1,500,000     Male   82   65   American General Life Insurance Company   A+
210   $            2,000,000     Female   82   102   Transamerica Life Insurance Company   AA-
211   $                550,000     Male   82   101   Genworth Life Insurance Company   BBB-
212   $                500,000     Male   82   62   West Coast Life Insurance Company   AA-
213   $            1,500,000     Male   82   55   Pacific Life Insurance Company   A+
214   $            1,000,000     Female   82   94   Jefferson-Pilot Life Insurance Company   AA-
215   $            2,000,000     Male   82   83   New York Life Insurance Company   AA+
216   $                250,000     Male   82   144   Voya Retirement Insurance and Annuity Company   A
217   $          10,000,000     Male   82   78   New York Life Insurance Company   AA+
218   $                417,300     Male   82   98   Jackson National Life Insurance Company   AA
219   $            5,000,000     Male   82   71   AXA Equitable Life Insurance Company   A+
220   $                300,000     Female   82   71   Hartford Life and Annuity Insurance Company   BBB+
221   $          10,000,000     Male   82   112   John Hancock Life Insurance Company (U.S.A)   AA-
222   $            2,000,000     Male   82   68   Ohio National Life Assurance Corporation   AA-
223   $            1,000,000     Male   82   68   Ohio National Life Assurance Corporation   AA-
224   $            7,000,000     Male   82   85   Genworth Life Insurance Company   BBB-
225   $            5,000,000     Male   81   90   AXA Equitable Life Insurance Company   A+
226   $            8,000,000     Male   81   83   AXA Equitable Life Insurance Company   A+
227   $            1,680,000     Female   81   67   AXA Equitable Life Insurance Company   A+
228   $            2,000,000     Male   81   28   Metropolitan Life Insurance Company   AA-
229   $            1,250,000     Male   81   99   Metropolitan Life Insurance Company   AA-
230   $            1,000,000     Male   81   64   AXA Equitable Life Insurance Company   A+
231   $            1,250,000     Female   81   73   Principal Life Insurance Company   A+
232   $                320,987     Female   81   104   John Hancock Life Insurance Company (U.S.A)   AA-
233   $            1,000,000     Male   81   55   AXA Equitable Life Insurance Company   A+
234   $                700,000     Male   81   100   Banner Life Insurance Company   AA-
235   $            2,000,000     Female   81   88   Pacific Life Insurance Company   A+
236   $            3,000,000     Male   81   97   John Hancock Life Insurance Company (U.S.A)   AA-

 

 13 
 

 

      Face Amount     Gender   Age (ALB)   LE (mo.)   Insurance Company   S&P Rating
237   $            2,000,000     Male   81   40   Jefferson-Pilot Life Insurance Company   AA-
238   $          10,000,000     Male   81   68   Hartford Life and Annuity Insurance Company   BBB+
239   $            1,750,000     Male   81   81   AXA Equitable Life Insurance Company   A+
240   $                250,000     Male   81   79   American General Life Insurance Company   A+
241   $            3,500,000     Male   81   100   Metropolitan Life Insurance Company   AA-
242   $            2,502,000     Male   81   149   Transamerica Life Insurance Company   AA-
243   $            3,000,000     Male   81   111   Principal Life Insurance Company   A+
244   $            1,210,000     Male   81   65   Lincoln National Life Insurance Company   AA-
245   $            3,000,000     Female   81   104   West Coast Life Insurance Company   AA-
246   $            3,000,000     Male   80   43   Pacific Life Insurance Company   A+
247   $            3,000,000     Male   80   43   Minnesota Life Insurance Company   A+
248   $            3,000,000     Male   80   43   Prudential Life Insurance Company   AA-
249   $            3,000,000     Male   80   90   Voya Retirement Insurance and Annuity Company   A
250   $            5,000,000     Male   80   98   Pacific Life Insurance Company   A+
251   $            5,000,000     Male   80   98   Pacific Life Insurance Company   A+
252   $            4,000,000     Male   80   81   Jefferson-Pilot Life Insurance Company   AA-
253   $            3,000,000     Male   80   148   Metropolitan Life Insurance Company   AA-
254   $                300,000     Female   80   98   Metropolitan Life Insurance Company   AA-
255   $            5,000,000     Male   80   129   Principal Life Insurance Company   A+
256   $            5,000,000     Male   80   90   John Hancock Life Insurance Company (U.S.A)   AA-
257   $                800,000     Male   80   78   North American Company for Life And Health Insurance   A+
258   $            7,000,000     Male   80   86   Lincoln Benefit Life Company   BBB+
259   $            1,000,000     Female   80   87   Lincoln Benefit Life Company   BBB+
260   $            6,000,000     Male   80   122   AXA Equitable Life Insurance Company   A+
261   $                130,000     Male   80   51   Genworth Life Insurance Company   BBB-
262   $            1,000,000     Male   80   123   Empire General Life Assurance Corporation   AA-
263   $            4,300,000     Female   80   109   American National Insurance Company   A
264   $                200,000     Male   80   67   Kansas City Life Insurance Company   N/A
265   $                200,000     Male   80   57   Lincoln National Life Insurance Company   AA-
266   $            6,000,000     Male   80   107   AXA Equitable Life Insurance Company   A+
267   $            2,000,000     Female   80   87   Transamerica Life Insurance Company   AA-
268   $            1,000,000     Male   80   56   Pacific Life Insurance Company   A+
269   $                200,000     Male   80   46   Prudential Life Insurance Company   AA-
270   $                500,000     Male   80   48   Transamerica Life Insurance Company   AA-
271   $            5,000,000     Male   79   79   John Hancock Life Insurance Company (U.S.A)   AA-
272   $            3,601,500     Male   79   94   Transamerica Life Insurance Company   AA-
273   $            1,000,000     Male   79   96   Sun Life Assurance Company of Canada (U.S.)   AA-
274   $            5,000,000     Male   79   89   John Hancock Life Insurance Company (U.S.A)   AA-
275   $            1,009,467     Male   79   59   John Hancock Life Insurance Company (U.S.A)   AA-
276   $            4,000,000     Male   79   51   MetLife Investors USA Insurance Company   AA-
277   $                100,000     Male   79   64   North American Company for Life And Health Insurance   A+
278   $            5,000,000     Male   79   57   John Hancock Life Insurance Company (U.S.A)   AA-
279   $                476,574     Male   79   72   Transamerica Life Insurance Company   AA-
280   $            2,250,000     Male   79   94   Massachusetts Mutual Life Insurance Company   AA+
281   $                775,000     Male   79   124   Lincoln National Life Insurance Company   AA-
282   $            1,000,000     Female   79   123   John Hancock Life Insurance Company (U.S.A)   AA-
283   $            1,445,000     Female   79   104   AXA Equitable Life Insurance Company   A+
284   $            1,500,000     Female   79   104   AXA Equitable Life Insurance Company   A+
285   $            1,000,000     Male   79   87   Lincoln National Life Insurance Company   AA-
286   $                325,000     Male   79   43   American General Life Insurance Company   A+
287   $            3,750,000     Male   79   60   AXA Equitable Life Insurance Company   A+
288   $            1,000,000     Male   79   111   Metropolitan Life Insurance Company   AA-
289   $            5,000,000     Female   79   117   Voya Retirement Insurance and Annuity Company   A
290   $                750,000     Male   79   70   Lincoln National Life Insurance Company   AA-
291   $            5,000,000     Male   79   182   West Coast Life Insurance Company   AA-
292   $            3,000,000     Male   79   96   Principal Life Insurance Company   A+
293   $            5,000,000     Male   78   119   Jefferson-Pilot Life Insurance Company   AA-
294   $            3,000,000     Male   78   86   American General Life Insurance Company   A+
295   $                500,000     Male   78   68   John Hancock Life Insurance Company (U.S.A)   AA-
296   $            1,000,000     Male   78   115   Metropolitan Life Insurance Company   AA-

 

 14 
 

 

      Face Amount     Gender   Age (ALB)   LE (mo.)   Insurance Company   S&P Rating
297   $            3,000,000     Female   78   88   New York Life Insurance Company   AA+
298   $            2,500,000     Male   78   88   Massachusetts Mutual Life Insurance Company   AA+
299   $            2,500,000     Male   78   88   Massachusetts Mutual Life Insurance Company   AA+
300   $                500,000     Female   78   116   Columbus Life Insurance Company   AA
301   $            1,750,000     Male   78   64   John Hancock Life Insurance Company (U.S.A)   AA-
302   $            5,000,000     Male   78   104   Transamerica Life Insurance Company   AA-
303   $            6,250,000     Male   78   197   John Hancock Life Insurance Company (U.S.A)   AA-
304   $            2,000,000     Female   78   57   Transamerica Life Insurance Company   AA-
305   $            2,840,000     Male   77   99   Transamerica Life Insurance Company   AA-
306   $            4,000,000     Male   77   69   Massachusetts Mutual Life Insurance Company   AA+
307   $            1,000,000     Female   77   76   John Hancock Life Insurance Company (U.S.A)   AA-
308   $            7,000,000     Female   77   124   Pacific Life Insurance Company   A+
309   $            2,000,000     Male   77   108   Genworth Life Insurance Company   BBB-
310   $            2,000,000     Male   77   121   Transamerica Life Insurance Company   AA-
311   $                490,620     Male   77   88   Ameritas Life Insurance Corporation   A+
312   $                600,000     Male   77   86   Protective Life Insurance Company   AA-
313   $            5,000,000     Male   76   151   Prudential Life Insurance Company   AA-
314   $                250,000     Male   76   106   Midland National Life Insurance Company   A+
315   $            3,000,000     Male   76   57   Aviva Life Insurance Company   A-
316   $            3,000,000     Male   76   99   Prudential Life Insurance Company   AA-
317   $                500,000     Male   76   105   AXA Equitable Life Insurance Company   A+
318   $            5,000,000     Male   76   144   Massachusetts Mutual Life Insurance Company   AA+
319   $            5,000,000     Male   76   144   Massachusetts Mutual Life Insurance Company   AA+
320   $            3,000,000     Male   76   106   Protective Life Insurance Company   AA-
321   $            2,000,000     Female   76   122   Aviva Life Insurance Company   A-
322   $            1,000,000     Male   76   106   Athene Life Insurance Company of New York   A-
323   $            5,000,000     Male   76   35   Lincoln Benefit Life Company   BBB+
324   $                850,000     Male   76   71   New York Life Insurance Company   AA+
325   $            1,000,000     Male   76   85   Pacific Life Insurance Company   A+
326   $                150,000     Male   76   108   Genworth Life Insurance Company   BBB-
327   $            5,000,000     Male   76   61   West Coast Life Insurance Company   AA-
328   $                200,000     Male   75   73   Voya Retirement Insurance and Annuity Company   A
329   $            3,000,000     Male   75   116   John Hancock Life Insurance Company (U.S.A)   AA-
330   $            5,000,000     Male   75   116   John Hancock Life Insurance Company (U.S.A)   AA-
331   $            8,000,000     Male   75   106   Metropolitan Life Insurance Company   AA-
332   $                500,000     Male   75   97   AXA Equitable Life Insurance Company   A+
333   $            4,000,000     Female   75   146   American General Life Insurance Company   A+
334   $                300,000     Male   75   19   Lincoln National Life Insurance Company   AA-
335   $          10,000,000     Female   75   142   Voya Retirement Insurance and Annuity Company   A
336   $                500,000     Male   75   79   American General Life Insurance Company   A+
337   $            3,000,000     Female   75   119   General American Life Insurance Company   AA-
338   $                412,839     Male   75   73   Pacific Life Insurance Company   A+
339   $                300,000     Female   75   141   Minnesota Life Insurance Company   A+
340   $                500,000     Male   74   40   Midland National Life Insurance Company   A+
341   $            1,000,000     Male   74   104   Transamerica Life Insurance Company   AA-
342   $            3,000,000     Male   74   78   AXA Equitable Life Insurance Company   A+
343   $                500,000     Male   74   111   United of Omaha Life Insurance Company   AA-
344   $            2,000,000     Male   74   127   Prudential Life Insurance Company   AA-
345   $            2,000,000     Male   74   102   American General Life Insurance Company   A+
346   $                400,000     Male   74   88   Protective Life Insurance Company   AA-
347   $            1,000,000     Female   73   128   United of Omaha Life Insurance Company   AA-
348   $            2,500,000     Male   73   111   John Hancock Life Insurance Company (U.S.A)   AA-
349   $                500,000     Male   73   143   Prudential Life Insurance Company   AA-