JGWPT Holdings Inc. | 2013 | FY | 3


8. Life Settlement Contracts, at Fair Market Value

 

Information about life settlement contracts, all of which are reported at fair value at December 31, 2013 and included in other assets in the Company’s consolidated balance sheets, based on estimated remaining life expectancy for each of the next five succeeding years and in the aggregate, at December 31, 2013 was as follows:

 

Period ending

 

Number of

 

 

 

 

 

December 31,

 

Contracts

 

Carrying Value

 

Face Value

 

 

 

 

 

(Dollars in thousands)

 

Year ending 2014

 

-

 

$

-

 

$

-

 

Year ending 2015

 

1

 

-

 

500

 

Year ending 2016

 

-

 

-

 

-    

 

Year ending 2017

 

-

 

-

 

-

 

Year ending 2018

 

-

 

-

 

-    

 

Thereafter

 

26

 

-

 

8,044

 

Total

 

27

 

$

-

 

$

8,544

 

 

Key assumptions in measuring the fair value of life settlement contracts were as follows:

 

 

 

December 31, 2013

 

December 31, 2012

 

Discount Rate

 

18.50%

 

18.50%

 

Life expectancies range (months)

 

14 to 250

 

16 to 260

 

Average life expectancy (months)

 

148

 

147

 

 

The Company is required to pay certain life insurance premiums to keep the life settlement contracts in force.  Premiums are required to be paid throughout the life of the insured.  At December 31, 2013, the anticipated amount of life insurance premiums to be paid by the Company for the next 5 years was as follows:

 

Year Ended

 

Amount

 

 

 

(Dollars in thousands)

 

2014

 

$

359

 

2015

 

218

 

2016

 

191

 

2017

 

204

 

2018

 

221

 

 

 

$

1,193

 

 

The Company recorded fair market value losses in the amount of $0, $1.5 million and $1.1 million for the years ended December 31, 2013, 2012 and 2011, respectively.  There were no encumbrances on life settlement contracts as of December 31, 2013 and 2012.

 


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