Brice Mckalip

Imperial Holdings: Life Insurance Companies Can Do Math, Life Settlements' Shareholders Can't

Executive Summary: Excitement over escaping bankruptcy earlier in the year has driven Imperial Holdings' (IFT) share price up to levels reflecting the $3B in life insurance policies the company owns but missing the 37% cut of proceeds taken by creditors and ongoing administration costs that eliminate the value.

Catalyst: Rights offering announced Friday, and expected within 90 days, forces shareholders to decide whether they'll increase their investment. The lack of shareholders' equity will lead many to pass on the rights and reconsider their entire position.

Overview of the Company and Thesis

Imperial Holdings is what's left of a life settlements business plan. Growth ended shortly after the Q1'11 IPO due to regulatory and legal issues, leaving the...

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