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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2021
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.)
325 North St. Paul Street, Suite 2650
Dallas, TX 75201
(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:
Title of each class
Trading Symbol(s)
Name of each exchange
on which registered
Common Stock
GWGH
NASDAQ Capital Market
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 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 whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
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 November 9, 2021, GWG Holdings, Inc. had 33,098,631 shares of common stock outstanding.




GWG HOLDINGS, INC.
Index to Form 10-Q
for the Quarter Ended September 30, 2021
Page No.
i

Table Of Contents
PART I — FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
GWG HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)
September 30, 2021 (Unaudited)December 31, 2020
ASSETS
Cash and cash equivalents$42,207 $85,249 
Restricted cash
25,516 38,911 
Investment in life insurance policies, at fair value
761,560 791,911 
Life insurance policy benefits receivable, net
33,105 14,334 
Investment in alternative assets, at fair value226,138 221,894 
Equity method investments664 8,582 
Other assets
33,256 36,326 
Goodwill
2,367,750 2,367,750 
TOTAL ASSETS
$3,490,196 $3,564,957 
LIABILITIES & STOCKHOLDERS’ EQUITY
LIABILITIES
Senior credit facilities with LNV Corporation and National Founders LP$327,702 $193,730 
L Bonds
1,279,808 1,246,902 
Seller Trust L Bonds
272,104 272,104 
Debt due to related parties77,362 76,260 
Interest and dividends payable
24,440 24,080 
Accounts payable and accrued expenses
30,448 26,505 
Deferred tax liability, net
51,328 51,469 
TOTAL LIABILITIES
2,063,192 1,891,050 
Redeemable noncontrolling interests
1,226,020 1,233,093 
STOCKHOLDERS’ EQUITY
Redeemable preferred stock
(par value $0.001; shares authorized 100,000; shares outstanding 41,681 and 56,855; liquidation preference of $41,925 and $57,187 as of September 30, 2021 and December 31, 2020, respectively)
31,069 46,241 
Series 2 redeemable preferred stock
(par value $0.001; shares authorized 150,000; shares outstanding 86,707 and 129,887; liquidation preference of $87,212 and $130,645 as of September 30, 2021 and December 31, 2020, respectively)
67,410 110,592 
Common stock
(par value $0.001; shares authorized 210,000,000; shares issued and outstanding, 33,097,118 and 33,094,664 as of September 30, 2021 and December 31, 2020, respectively)
33 33 
Common stock in treasury, at cost (12,337,264 shares as of both September 30, 2021 and December 31, 2020)
(67,406)(67,406)
Additional paid-in capital
265,812 274,023 
Accumulated deficit
(412,621)(251,111)
TOTAL GWG HOLDINGS STOCKHOLDERS’ (DEFICIT) EQUITY(115,703)112,372 
Noncontrolling interests
316,687 328,442 
TOTAL STOCKHOLDERS’ EQUITY
200,984 440,814 
TOTAL LIABILITIES & STOCKHOLDERS’ EQUITY
$3,490,196 $3,564,957 
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
Page 1

GWG HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share data)
(unaudited)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2021202020212020
REVENUE
Gain on life insurance policies, net$15,484 $14,122 $17,923 $43,355 
Investment income, net17,554 56,705 21,417 41,590 
Interest income213 278 835 1,293 
Other income (loss)535 (3,093)(2,916)33,504 
TOTAL REVENUE33,786 68,012 37,259 119,742 
EXPENSES
Interest expense45,096 40,792 128,605 113,805 
Employee compensation and benefits14,871 33,777 43,977 123,321 
Legal and professional fees6,650 7,830 20,832 21,636 
Other expenses9,652 4,712 23,050 13,387 
TOTAL EXPENSES76,269 87,111 216,464 272,149 
LOSS BEFORE INCOME TAXES(42,483)(19,099)(179,205)(152,407)
INCOME TAX EXPENSE (BENEFIT)655 3,618 173 (14,545)
NET LOSS BEFORE LOSS FROM EQUITY METHOD INVESTMENT(43,138)(22,717)(179,378)(137,862)
Loss from equity method investment(4,949)(1,431)(11,898)(4,279)
NET LOSS(48,087)(24,148)(191,276)(142,141)
Net (income) loss attributable to noncontrolling interests(87)(21,181)29,766 32,901 
Less: Preferred stock dividends2,404 3,569 8,371 11,235 
NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS$(50,578)$(48,898)$(169,881)$(120,475)
NET LOSS PER COMMON SHARE
Basic$(2.44)$(1.60)$(8.18)$(3.95)
Diluted$(2.44)$(1.60)$(8.18)$(3.95)
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
Basic20,759,854 30,477,792 20,758,910 30,516,331 
Diluted20,759,854 30,477,792 20,758,910 30,516,331 
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
Page 2

GWG HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Nine Months Ended
September 30,
20212020
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss$(191,276)$(142,141)
Adjustments to reconcile net loss to net cash flows used in operating activities:
Change in fair value of life insurance policies(623)(23,476)
Investment income, net(21,417)(41,590)
Amortization of deferred financing and issuance costs19,594 13,619 
Amortization and depreciation on long-lived assets1,552 827 
Return on investments in alternative assets3,043 1,577 
Non-cash interest income(214)(215)
Non-cash interest expense3,149 1,795 
Loss from equity method investment11,898 4,279 
Loss on change in fair value of put options4,022 3,191 
Deferred income tax(141)(18,553)
Write-off of other equity investment2,037  
Equity-based compensation14,252 96,618 
Forfeiture of vested equity-based compensation (36,267)
Change in operating assets and liabilities
Life insurance policy benefits receivable(18,771)(13,387)
Other assets(1,369)(2,450)
Accounts payable and other accrued expenses(2,022)8,364 
NET CASH FLOWS USED IN OPERATING ACTIVITIES(176,286)(147,809)
CASH FLOWS FROM INVESTING ACTIVITIES
Return of investment for matured life insurance policies30,974 32,255 
Purchases of fixed assets(2,477)(2,498)
Equity method investments(3,750)(10,144)
Investments in alternative assets(4,470)(226)
Return of investments in alternative assets19,692 5,752 
Investment in put options (14,775)
NET CASH FLOWS PROVIDED BY INVESTING ACTIVITIES39,969 10,364 
CASH FLOWS FROM FINANCING ACTIVITIES
Borrowings on senior debt215,959 28,530 
Repayments of senior debt and debt due to related parties(81,105)(50,000)
Payments for deferred financing costs for senior debt and debt due to related parties(3,285)(3,307)
Purchase of noncontrolling interest (1,195)
Proceeds from issuance of L Bonds155,170 317,302 
Payments for issuance costs of L Bonds(10,007)(20,203)
Payments for redemption of L Bonds(127,961)(82,206)
Issuance of common stock 8 
Payments for redemption of preferred stock(58,354)(34,779)
Payment for equity issuance costs(778) 
Preferred stock dividends(8,371)(11,235)
Payment of employee taxes on equity based awards(1,388) 
Tax distribution to noncontrolling interest (5,592)
NET CASH FLOWS PROVIDED BY FINANCING ACTIVITIES79,880 137,323 
NET DECREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH(56,437)(122)
CASH, CASH EQUIVALENTS AND RESTRICTED CASH
BEGINNING OF PERIOD124,160 115,790 
END OF PERIOD$67,723 $115,668 
Page 3

GWG HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Nine Months Ended September 30,
20212020
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Interest paid$105,464 $97,098 
Premiums paid, including prepaid54,885 52,136 
NON-CASH INVESTING AND FINANCING ACTIVITIES
L Bonds: Conversion of accrued interest and commissions payable to principal$436 $1,296 
Liquidity Bonds, net of financing costs (see Note 9)246  
Employee payroll tax liability on restricted equity units 1,555 
Debt due to related parties: Capitalization of deferred financing costs to principal1,014  
Debt due to related parties: Deferred financing costs payable (see Note 9)2,334  
Noncash issuance of noncontrolling interest (Note 10)374  
Distribution payable to noncontrolling interest (Note 10)1,120 165 
Collateral Swap (see Note 1):
Exchange of alternative assets for GWG Holdings’ Seller Trust L Bonds 94,788 
Exchange of alternative assets for GWG Holdings’ common stock 42,856 
Deemed capital contribution from related party 46,770 
Adjustment to noncontrolling interest 3,444 
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
Page 4

GWG HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(in thousands, except share data)
(unaudited)

For the three and nine months ended September 30, 2021:
Redeemable Preferred Stock SharesRedeemable Preferred StockCommon SharesCommon Stock (par)Additional Paid-in CapitalAccumulated DeficitTreasury StockTotal GWG Holdings Stockholders’ Equity (Deficit)Noncontrolling InterestsTotal Stockholders’ EquityRedeemable noncontrolling interests
Balance, June 30, 2021 (unaudited)151,094 $121,184 20,759,854 $33 $268,190 $(364,447)$(67,406)$(42,446)$310,177 $267,731 $1,228,599 
Net loss— — — — — (48,174)— (48,174)2,666 (45,508)(2,579)
Redemption of redeemable preferred stock(22,706)(22,705)— — — — — (22,705)— (22,705)— 
Preferred stock dividends— — — — (2,404)— — (2,404)— (2,404)— 
Equity-based compensation— — — — 26 — — 26 4,091 4,117 — 
Tax withholding on employee restricted equity units— — — — — — — — (86)(86)— 
Distributions payable to noncontrolling interest— — — — — — — — (161)(161)— 
Balance, September 30, 2021 (unaudited)128,388 $98,479 20,759,854 $33 $265,812 $(412,621)$(67,406)$(115,703)$316,687 $200,984 $1,226,020 

Redeemable Preferred Stock SharesRedeemable Preferred StockCommon SharesCommon Stock (par)Additional Paid-in CapitalAccumulated DeficitTreasury StockTotal GWG Holdings Stockholders’ Equity (Deficit)Noncontrolling InterestsTotal Stockholders’ EquityRedeemable noncontrolling interests
Balance, December 31, 2020 (audited)186,742 $156,833 20,757,400 $33 $274,023 $(251,111)$(67,406)$112,372 $328,442 $440,814 $1,233,093 
Net loss— — — — — (161,510)— (161,510)(22,693)(184,203)(7,073)
Issuance of common stock— — 2,454 — — — — — — — — 
Redemption of redeemable preferred stock(58,354)(58,354)— — 27 — — (58,327)— (58,327)— 
Preferred stock dividends— — — — (8,371)— — (8,371)— (8,371)— 
Equity-based compensation— — — — 133 — — 133 13,072 13,205 — 
Tax withholding on employee restricted equity units— — — — — — — — (1,388)(1,388)— 
Distributions payable to noncontrolling interest— — — — — — — — (1,120)(1,120)— 
Noncash issuance of noncontrolling interest— — — — — — — — 374 374 — 
Balance, September 30, 2021 (unaudited)128,388 $98,479 20,759,854 $33 $265,812 $(412,621)$(67,406)$(115,703)$316,687 $200,984 $1,226,020 




The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
Page 5

GWG HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(in thousands, except share data)
(unaudited)
For the three months ended September 30, 2020:
Redeemable Preferred Stock SharesRedeemable Preferred StockCommon SharesCommon Stock (par)Additional Paid-in CapitalAccumulated DeficitTreasury StockTotal GWG Holdings Stockholders’ EquityNoncontrolling InterestsTotal Stockholders’ EquityRedeemable noncontrolling interests
Balance, June 30, 2020 (unaudited)207,311 $177,402 30,537,481 $33 $225,537 $(161,107)$(24,550)$217,315 $281,881 $499,196 $1,264,031 
Net loss— — — — — (45,329)— (45,329)32,867 (12,462)(11,686)
Issuance of common stock— — 57,183 — 524 — — 524 — 524 — 
Common stock in treasury (Note 1)— — (9,837,264)— — — (42,856)(42,856)— (42,856)— 
Redemption of redeemable preferred stock(10,289)(10,289)— — — — — (10,289)— (10,289)— 
Preferred stock dividends— — — — (3,569)— — (3,569)— (3,569)— 
Equity-based compensation— — — — 53 — — 53 23,222 23,275 — 
Tax withholding for employee restricted equity units— — — — — — — — (1,554)(1,554)— 
Tax distribution to noncontrolling interest— — — — — — — — — — (5,592)
Purchase of noncontrolling interest— — — — — — — — (935)(935)— 
Deemed capital contribution from related party (Note 1)— — — — 46,770 — — 46,770 — 46,770 — 
Adjustment to noncontrolling interest for change in ownership of Common Units (Note 1)— — — — 8,039 — — 8,039 (8,039)— — 
Reduction to noncontrolling interest for Beneficient treasury (Note 1)— — — — — — — — (3,444)(3,444)— 
Balance, September 30, 2020 (unaudited)197,022 $167,113 20,757,400 $33 $277,354 $(206,436)$(67,406)$170,658 $323,998 $494,656 $1,246,753 








The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
Page 6

GWG HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(in thousands, except share data)
(unaudited)
For the nine months ended September 30, 2020:
Redeemable Preferred Stock SharesRedeemable Preferred StockCommon SharesCommon Stock (par)Additional Paid-in CapitalAccumulated DeficitTreasury StockTotal GWG Holdings Stockholders’ EquityNoncontrolling InterestsTotal Stockholders’ EquityRedeemable noncontrolling interests
Balance, December 31, 2019 (audited)231,800 $201,891 30,533,793 $33 $233,106 $(97,196)$(24,550)$313,284 $293,910 $607,194 $1,269,654 
Net loss— — — — — (109,240)— (109,240)(15,593)(124,833)(17,309)
Issuance of common stock— — 60,871 — 534 — — 534 — 534 — 
Common stock in treasury (Note 1)— — (9,837,264)— — — (42,856)(42,856)— (42,856)— 
Redemption of redeemable preferred stock(34,778)(34,778)— — — — — (34,778)— (34,778)— 
Preferred stock dividends— — — — (11,235)— — (11,235)— (11,235)— 
Equity-based compensation— — — — 140 — — 140 96,345 96,485 — 
Forfeiture of equity-based compensation— — — — — — — — (36,267)(36,267)— 
Tax withholding for employee restricted equity units— — — — — — — — (1,554)(1,554)— 
Tax distribution to noncontrolling interest— — — — — — — — — — (5,592)
Purchase of noncontrolling interest— — — — — — — — (1,195)(1,195)— 
Distributions payable to noncontrolling interest— — — — — — — — (165)(165)— 
Deemed capital contribution from related party (Note 1)— — — — 46,770 — — 46,770 — 46,770 — 
Adjustment to noncontrolling interest for change in ownership of Common Units (Note 1)— — — — 8,039 — — 8,039 (8,039)— — 
Reduction to noncontrolling interest for Beneficient treasury (Note 1)— — — — — — — — (3,444)(3,444)— 
Balance, September 30, 2020 (unaudited)197,022 $167,113 20,757,400 $33 $277,354 $(206,436)$(67,406)$170,658 $323,998 $494,656 $1,246,753 



The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
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Table Of Contents
GWG HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

(1) Nature of Business
Organizational Structure
GWG Holdings, Inc. (“GWG Holdings”) conducts its life insurance secondary market business through a wholly-owned subsidiary, GWG Life, LLC (“GWG Life”), and GWG Life’s wholly-owned subsidiaries, GWG Life Trust, GWG DLP Funding IV, LLC (“DLP IV”), GWG DLP Funding V Holdings, LLC (“DLP V Holdings”), and GWG DLP Funding Holdings VI, LLC (“DLP VI Holdings”). DLP V Holdings is the sole member of GWG DLP Funding V, LLC (“DLP V”). DLP VI Holdings is the sole member of GWG DLP Funding VI, LLC (“DLP VI”).

In addition, GWG Holdings has exposure to indirect interests in loans collateralized by cash flows from alternative assets. Such loans are made and held by certain of the operating subsidiaries of The Beneficient Company Group, L.P. (“Ben LP,” including all of the subsidiaries it may have from time to time — “Beneficient”). These loans are made to certain of the ExAlt Trusts (as defined below), which are consolidated subsidiaries of Ben LP and thus, such loans are eliminated in consolidation for financial reporting purposes. The ExAlt Trusts are comprised of the Custody Trusts, Collective Trusts, LiquidTrusts and Funding Trusts (collectively, the “ExAlt Trusts”). Ben LP’s general partner is Beneficient Management, L.L.C. (“Beneficient Management”). Prior to December 31, 2019, GWG Holdings’ investment in Beneficient was accounted for as an equity method investment. On December 31, 2019, as more fully described below, Beneficient became a consolidated subsidiary of GWG Holdings. As also further described in Note 17, on August 13, 2021, GWG Holdings and Ben LP, and Beneficient Company Holdings, L.P. (“BCH”) entered into a non-binding term sheet (the “Term Sheet”) that outlines a series of transactions that, once completed, is expected to result in, among other things, (i) GWG Holdings receiving certain proposed enhancements to its investments in Beneficient; (ii) GWG Holdings no longer having the right to appoint directors of the Board of Directors of Beneficient Management; and (iii) Beneficient no longer being a consolidated subsidiary of GWG Holdings. The Term Sheet is part of ongoing efforts by management and the Board of Directors of GWG Holdings to maximize the value of GWG Holdings’ and GWG Life’s investment in Beneficient.
Ben LP is the general partner of BCH and owns 100% of the Class A Subclass A-1 and A-2 Units of BCH. BCH is the holding company that directly or indirectly receives all active and passive income of Beneficient and allocates that income among the partnership interests issued by BCH. As of September 30, 2021, BCH has issued general partnership Class A Units (Subclass A-1 and A-2), Class S Ordinary Units, Class S Preferred Units, FLP Units (Subclass 1 and Subclass 2), Preferred Series A Subclass 1 Unit Accounts, and Preferred Series C Unit Accounts. On July 15, 2020, BCH amended its limited partnership agreement by executing that certain 5th Amended and Restated Limited Partnership Agreement (“LPA”) of BCH to allow for the issuance of Preferred Series A Subclass 0 Unit Accounts (“Preferred A.0”), which are expected to be issued once certain conditions are met (as discussed in more detail below). Effective March 31, 2021, BCH amended its limited partnership agreement by executing that certain 6th Amended and Restated LPA of BCH to allow for the issuance of Preferred Series C Subclass 0 Unit Accounts (“Preferred C.0”), which are wholly owned by GWG Holdings.
GWG Holdings also has a financial interest in FOXO Technologies Inc. (“FOXO”, formerly FOXO BioScience LLC), which through its wholly-owned subsidiaries FOXO Labs Inc. (“FOXO Labs”, formerly, Life Epigenetics Inc.) and FOXO Life LLC (“FOXO Life”, formerly, youSurance General Agency, LLC), seeks to commercialize epigenetic technology for the longevity industry and offer life insurance directly to customers utilizing epigenetic technology. Although we have a financial interest in FOXO, we do not have a controlling financial interest because another party is the majority shareholder of the voting class of securities. Therefore, we account for GWG Holdings’ ownership interest in FOXO as an equity method investment.
All of the aforementioned entities are legally organized in the state of Delaware, other than GWG Life Trust, which was formed under the laws of the state of Utah, and certain of the ExAlt Trusts, which were formed under the laws of the state of Texas. 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 GWG Holdings together, in each case, with its subsidiaries. Our headquarters are located at 325 N. St. Paul Street, Suite 2650, Dallas, Texas 75201.
Nature of Business
GWG Holdings, through its wholly-owned subsidiary GWG Life, purchased life insurance policies in the secondary market and has built a large, actuarially diverse portfolio of life insurance policies backed by highly rated life insurance companies. These policies were purchased between April 2006 and November 2019 and were funded primarily through sales of L Bonds, as discussed in Note 9. Beginning in 2018, GWG Holdings consummated a series of transactions with Beneficient as part of a
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Table Of Contents
GWG HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

strategic decision to reorient its business and increase capital allocated toward providing liquidity products to a broader range of alternative assets through investments in Beneficient. GWG Holdings completed the transactions with Beneficient to provide the Company with a significant increase in assets and common stockholders’ equity as well as the opportunity for a diversified source of future earnings from our exposure to the alternative asset industry. We believe that GWG Holdings’ and GWG Life’s investments in Beneficient and the other strategies we are pursuing, including continuing to pursue opportunities in the life insurance industry, will transform GWG Holdings from a niche provider of liquidity to owners of life insurance policies to a diversified provider of financial products and services with exposure to a broad range of alternative assets.
We believe that Beneficient’s operations will generally produce higher risk adjusted returns than those we can achieve from life insurance policies acquired in the secondary market; however, returns on equity in life settlements, especially with the current availability of financings on favorable terms, appear to be an attractive option to diversify our exposure to alternative assets, and we have begun exploring the feasibility of acquiring such policies. Furthermore, although we believe that our portfolio of life insurance policies is a meaningful component of a growing diversified alternative asset portfolio, we continue to explore strategic alternatives for our life insurance portfolio aimed at maximizing its value, including a possible sale, refinancing, recapitalization, partnership, reinsurance guarantees, life insurance operations or other transactions involving our life insurance portfolio, as well as pursuing other alternatives to increase our exposure to alternative assets. These operations are in addition to allocating capital to provide liquidity to holders of a broader range of alternative assets, which we currently provide through GWG Holdings’ and GWG Life’s investments in Beneficient.
Beneficient is a financial services company based in Dallas, Texas that markets an array of liquidity and trust administration products to alternative asset investors primarily comprised of mid-to-high-net-worth individuals having a net worth between $5 million and $30 million (“MHNW”) and small-to-midsize institutional investors and family offices with less than $1 billion in investable assets (“STMIs”). One of Beneficient’s founders, Brad K. Heppner (“Ben Founder”), serves as Chairman and Chief Executive Officer of Beneficient and previously served from April 26, 2019 to June 14, 2021 as Chairman of GWG Holdings. Ben LP plans to offer its products and services through its five operating subsidiaries, which include (i) Ben Liquidity, (ii) Ben Custody Admin, (iii) Ben Insurance, (iv) Ben Markets and (v) Beneficient USA (each operating subsidiary is further defined below). Ben Liquidity plans to operate a trust company that is a Kansas Technology Enabled Fiduciary Financial Institutions (“TEFFI”) authorized to serve as an alternative asset custodian, trustee and lender with statutory powers granted for each of these activities and permitting Ben Liquidity to provide fiduciary financing for certain of its customer liquidity transactions. Ben Custody Admin plans to operate a Texas trust company that is being organized to provide its customers with certain administrative, custodial and trustee products and specialized services focused on alternative asset investors. Ben Insurance has been chartered as a Bermuda based insurance company that plans to offer certain customized insurance products and services covering risks relating to owning, managing and transferring alternative assets. Ben Markets is in the regulatory process for acquiring a captive registered broker-dealer that would conduct certain of its activities attendant to offering a suite of products and services from the Beneficient family of companies. Certain of Ben LP’s operating subsidiary products and services involve or are offered to certain of the ExAlt Trusts (defined below), which are consolidated subsidiaries of Ben LP for financial reporting purposes (such trusts are and may individually be referred to as Custody Trusts, Collective Trusts, LiquidTrusts, and Funding Trusts). Beneficient USA employs a substantial majority of the executives and staff for Beneficient’s operating subsidiaries to which Beneficient USA provides administrative and technical services.
Beneficient’s primary operations, which commenced on September 1, 2017, consist of offering its liquidity and trust administration services to its customers, primarily through certain of Ben LP’s operating subsidiaries, Ben Liquidity, L.L.C and its subsidiaries (collectively, “Ben Liquidity”) and Ben Custody Admin, L.L.C. and its subsidiaries (collectively, “Ben Custody Admin”), respectively. Ben Liquidity offers simple, rapid and cost-effective liquidity products to its customers through the use of customized trust vehicles, (such trusts, the ExAlt Trusts), that facilitate the exchange of a customer’s alternative assets for consideration using a unique financing structure (such structure and process, the “ExAlt PlanTM”). The ExAlt trademark was developed by Beneficient as a brand of liquidity and trust administration services designed for alternative asset investors, specifically MHNW and STMIs to “Ex”it “Alt”ernatives. A subsidiary of Ben Liquidity makes loans (each, an “ExAlt Loan”) to certain of the ExAlt Trusts, which employ the loan proceeds to acquire agreed upon consideration, upon which certain of the ExAlt Trusts deliver to customers in exchange for their alternative assets. Ben Liquidity generates interest and fee income earned in connection with the ExAlt Loans, which are collateralized by a portion of the cash flows from the exchanged alternative assets (the “Collateral”). Ben Custody Admin currently provides trust administration services to the trustees of certain of the ExAlt Trusts that own the exchanged alternative asset following liquidity transactions for fees payable quarterly. The Collateral supports the repayment of the ExAlt Loans plus any related interest and fees and trust administration service fees. Under the applicable trust and other agreements, certain charities are the ultimate beneficiaries of the ExAlt Trusts (the “Non-Controlling Interest Holders”). As ultimate beneficiaries of prior transactions, for every $0.95 paid to the lender (e.g.,
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Table Of Contents
GWG HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

subsidiaries of Ben LP) on the ExAlt Loans, $