The Deal Reports: “Abacus Reports Second Quarter Results”

The life settlements company saw net income grow to $6.8 million, a 44% increase from the same period of 2022.

Abacus Life LLC (ABL) said its net income shot up to about $6.8 million for the second quarter, a 44% increase from about $4.7 million for the same period in 2022.

The Orlando, Fla.-based life settlement provider reported its financial results on Monday, Aug. 14.

The company, which is routinely one of the busiest life settlement providers, went public at the end of June in a business combination and so now has begun reporting its quarterly results.

“Our strong second quarter results continue to validate Abacus’ differentiated business model and further contribute to our long track record of sustainable and profitable growth,” CEO Jay Jackson stated in a press release.

Abacus said its total revenue grew to $11.4 million for the second quarter compared to $8.4 million for the same period last year.

The bulk of it came from active management revenue, which increased to about $11 million for the quarter from about $8 million for the same quarter a year ago, representing a 38% increase. Abacus attributed most of the increase to policy maturities that are accounted for under the investment method.

As of June 30, the company held 167 policies, including 122 accounted for under the fair value method and 45 under the investment method, which reflects cost plus premiums paid.

Policies held at fair value had a face value of $195.2 million as of June 30 while policies accounted for using the investment method had $39.5 million in face value at the end of the quarter.

Abacus explained that policies recorded under the investment method represent policies that the company purchases with the intention of selling within the next 12 months.

Abacus also said its origination revenue increased to about $1.7 million in the last quarter compared to $743,388 for the same time a year ago.

The provider originates policies through three main channels: agents/financial advisers, direct-to-consumers and life settlement brokers.

Portfolio servicing revenue brought in $354,366 in the second quarter compared to $419,422 for the same quarter last year.

However, Abacus’ overall revenue grew to $18.3 million for the second quarter compared to $14.1 million for the year-ago quarter.

Operating expenses totaled $2 million for the second quarter, which compared to $2.4 million for the same time last year. Abacus reported that sales and marketing expenses decreased by $335,657 for the second quarter compared to the prior-year quarter because it reduced advertising costs.

Abacus explained its business model has changed over the past few years.

When it acquires a policy, it can either make a trade to a third-party institutional investor and generate a spread or hold it on its balance sheet until maturity and collect the death benefit.

“This process is predicated on driving the best economics for Abacus,” which the company describes as its “active management revenue.”

Abacus said it also provides a range of services to policy purchasers such as consulting, valuation and actuarial work as well as administrative work to keep a policy in force at the premium amount most advantageous to the owner.

The company said it generates revenue by charging a base servicing fee of about .5% of the total asset value of a portfolio or a flat rate per policy.

But in 2021, Abacus said it shifted from a service-based-only business model and began directly acquiring policies and has seen “rapid growth” in this segment of its business.

Abacus shares, which have traded on Nasdaq after its de-SPAC was completed on June 29, closed at $6.90 Monday, up 80 cents from the previous close of $6.10, or 13.11% higher. But in after-hours trading, it fell to $6.81 a share, down nine cents, or a drop of 1.30%. On July 5, its first day of trading, it closed at $9.50.