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Life Partners Holdings Inc Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: January 6, 2012 02:44PM

Life Partners Holdings Inc (LPHI) filed Quarterly Report for the period ended 2011-11-30. Life Partners Holdings Inc has a market cap of $92.5 million; its shares were traded at around $4.96 with a P/E ratio of 2.8 and P/S ratio of 0.9. The dividend yield of Life Partners Holdings Inc stocks is 16.2%. Life Partners Holdings Inc had an annual average earning growth of 52.2% over the past 10 years.



Highlight of Business Operations:

We follow the guidance contained in ASC 325-30, Investments in Insurance Contracts, to account for our investments in life settlement contracts. ASC 325-30 states that a purchaser may elect to account for its investments in life settlement contracts using either the investment method or the fair value method. The election is made on an instrument-by instrument basis and is irrevocable. Under the investment method, a purchaser recognizes the initial investment at the purchase price plus all initial direct costs. Continuing costs (e.g., policy premiums and direct external costs, if any) to keep the policy in force are capitalized. Under the fair value method, a purchaser recognizes the initial investment at the purchase price. In subsequent periods, the purchaser re-measures the investment at fair value in its entirety at each reporting period and recognizes changes in fair value earnings (or other performance indicators for entities that do not report earnings) in the period in which the changes occur. We elected to value our investments in life settlement contracts using the investment method. As of November 30, 2011, and February 28, 2011, our investments in life settlements held for our own account were carried at $9,043,770 and $9,506,495, respectively.

The following table shows the number of settlement contracts we have transacted, the aggregate face values of those contracts, and the revenues we derived, for the three and nine months ended November 30, 2011 and 2010:

We reported a net loss of $1,082,848 for the three months ended November 30, 2011 (the “Third Quarter of this year”), compared to net income of $3,960,688 for the three months ended November 30, 2010 (the “Third Quarter of last year”). Our lower net income resulted primarily from a 66.9% decrease in revenues, a 76.1% decrease in revenues net of brokerage fees, and a 6.0% decrease in total operating and administrative expenses. The number of life settlement transactions we brokered decreased from 37 to 10, while the average revenue per settlement increased by 22.3%, from $544,855 in the Third Quarter of last year to $666,680 in the Third Quarter of this year, furthering a trend of fewer transactions and a higher face value per settlement.

We reported a net loss of $2,280,175 for the nine months ended November 30, 2011 (the “First Nine Months of this year”), compared to net income of $20,395,930 for the nine months ended November 30, 2010 (the “First Nine Months of last year”). Our lower net income resulted primarily from a 67.7% decrease in revenues, a 78.8% decrease in revenues net of brokerage fees, and a 5.8% decrease in total operating and administrative expenses. The number of life settlement transactions we brokered decreased from 136 to 44, while the average revenue per settlement was essentially unchanged; $621,678 last year and $620,717 this year.

Read the The complete Report



Stocks Discussed: LPHI,
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