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Investment in Life Settlements | 9 Months Ended
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Sep. 30, 2012
Investments, All Other Investments [Abstract] |
Investment in Life Settlements | Investment in Life Settlements A life settlement contract is a contract between the owner of a life insurance policy and a third-party who obtains the ownership and beneficiary rights of the underlying life insurance policy. During 2010, the Company formed Tiger Capital LLC (“Tiger”) with a subsidiary of ACAC for the purposes of acquiring certain life settlement contracts. In 2011, the Company formed AMT Capital Alpha, LLC (“AMT Alpha”) with a subsidiary of ACAC and AMT Capital Holdings, S.A. (“AMTCH”) with ACP Re, Ltd., an entity controlled by the Michael Karfunkel Grantor Retained Annuity Trust, for the purposes of acquiring additional life settlement contracts. The Company has a fifty percent ownership interest in each of Tiger, AMT Alpha and AMTCH (collectively, the “LSC entities”). The LSC entities may also acquire premium finance loans made in connection with the borrowers’ purchase of life insurance policies that are secured by the policies, which are in default at the time of purchase. The LSC entities acquire the underlying policies through the borrowers’ voluntary surrender of the policy in satisfaction of the loan or foreclosure. A third party serves as the administrator of the Tiger life settlement contract portfolio, for which it receives an annual fee. Under the terms of an agreement for Tiger, the third party administrator is eligible to receive a percentage of profits after certain time and performance thresholds have been met. The Company provides for certain actuarial and finance functions related to the LSC entities. Additionally, in conjunction with the Company’s 21.25% ownership percentage of ACAC, the Company ultimately receives 60.625% of the profits and losses of Tiger and AMT Alpha. As such, in accordance with ASC 810-10, Consolidation, we have been deemed the primary beneficiary and, therefore, consolidate the LSC entities. The Company accounts for investments in life settlements in accordance with ASC 325-30, Investments in Insurance Contracts, which states that an investor shall elect to account for its investments in life settlement contracts by using either the investment method or the fair value method. The election is made on an instrument-by-instrument basis and is irrevocable. The Company has elected to account for these policies using the fair value method. The Company determines fair value on a discounted cash flow basis of anticipated death benefits, incorporating current life expectancy assumptions, premium payments, the credit exposure to the insurance company that issued the life settlement contracts and the rate of return that a buyer would require on the contracts as no comparable market pricing is available. Total capital contributions of approximately $28,042 and $39,930 were made to the LSC entities during the nine months ended September 30, 2012 and 2011, respectively, for which the Company contributed approximately $14,021 and $19,965 in those same periods. The Company’s investments in life settlements and cash value loans were approximately $173,298 and $136,800 as of September 30, 2012 and December 31, 2011, respectively and are included in Prepaid expenses and other assets on the Consolidated Balance Sheet. The Company recorded other income for the three months ended September 30, 2012 and 2011 of approximately $3,251 and $6,882, and approximately $5,302 and $48,346 for the nine months ended September 30, 2012 and 2011, respectively, related to the life settlement contracts. In addition to the 256 policies disclosed in the table below as of September 30, 2012, Tiger owned 14 premium finance loans as of the nine months ended September 30, 2012, which were secured by life insurance policies and were carried at a value of $1,822. As of September 30, 2012, the face value amount of the related 256 life insurance policies and 14 premium finance loans were approximately $1,671,013 and $68,250 respectively. All of the premium finance loans are in default and Tiger is enforcing its rights in the collateral. Upon the voluntary surrender of the underlying life insurance policy in satisfaction of the loan or foreclosure, Tiger will become the owner of and beneficiary under the underlying life insurance policy and will have the option to continue to make premium payments on the policies or allow the policies to lapse. If a policyholder wishes to cure his or her default and repay the loan, Tiger will be repaid the total amount due under the premium finance loans, including all premium payments made by Tiger to maintain the policy in force since its acquisition of the loan. The following table describes the Company’s investment in life settlements as of September 30, 2012:
(Amounts in Thousands, except number of Life Settlement Contracts) Expected Maturity Term in Years | Number of Life Settlement Contracts |  | Fair Value (1) |  | Face Value
0-1 | — |  |  | $ | — |  |  | $ | — |
1-2 | — |  |  | — |  |  | — |
2-3 | 3 |  |  | 12,266 |  |  | 20,000 |
3-4 | 1 |  |  | 2,932 |  |  | 5,000 |
4-5 | 3 |  |  | 13,133 |  |  | 30,000 |
Thereafter | 249 |  |  | 143,145 |  |  | 1,616,013 |
Total | 256 |  |  | $ | 171,476 |  |  | $ | 1,671,013 |
(1) | The Company determined this fair value based on 166 policies out of the 256 policies as of September 30, 2012, as the Company assigned no value to 90 of the policies as of September 30, 2012.
Premiums to be paid for each of the five succeeding fiscal years to keep the life insurance policies in force as of September 30, 2012, are as follows:
(Amounts in Thousands) | Premiums Due on Life Settlement Contracts |  | Premiums Due on Premium Finance Loans |  | Total
2012 | $ | 26,967 |  |  | $ | 502 |  |  | $ | 27,469 |
2013 | 28,316 |  |  | 478 |  |  | 28,794 |
2014 | 30,156 |  |  | 613 |  |  | 30,769 |
2015 | 33,015 |  |  | 1,131 |  |  | 34,146 |
2016 | 44,570 |  |  | 1,022 |  |  | 45,592 |
Thereafter | 473,533 |  |  | 15,905 |  |  | 489,438 |
Total | $ | 636,557 |  |  | $ | 19,651 |  |  | $ | 656,208 |

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- Definition The entire disclosure for life settlement contracts including the accounting policy for life settlement contracts and the classification of cash receipts and cash disbursements in the statement of cash flows and, as applicable, for (1) life settlement contracts accounted for under the investment method based on the remaining life expectancy for each of the first five succeeding years from the date of the statement of financial position and thereafter, as well as in the aggregate: (a) the number of life settlement contracts, (b) the carrying value of the life settlement contracts, and (c) the face value (death benefits) of the life insurance policies underlying the contracts, (d) the life insurance premiums anticipated to be paid for each of the five succeeding fiscal years to keep the life settlement contracts in force as of the date of the most recent statement of financial position presented, (e) the nature of the information that causes the Entity to change its expectations on the timing of the realization of proceeds from the investments in life settlement contracts and the related effect on the timing of the realization of proceeds from the life settlement contracts and for (2) life settlement contracts accounted for under the fair value method, disclosure would include, based on remaining life expectancy for each of the first five succeeding years from the date of the statement of financial position and thereafter, as well as in the aggregate: (a) the number of life settlement contracts, (b) the carrying value of the life settlement contracts, (c) the face value (death benefits) of the life insurance policies underlying the contracts, (d) the reasons for changes in the Entity's expectation of the timing of the realization of the investments in life settlement contracts, and (e) (i) the gains or losses recognized during the period on investments sold during the period and (ii) the unrealized gains or losses recognized during the period on investments that are still held at the date of the statement of financial position. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 325 -SubTopic 30 -Section 50 -Paragraph 10 -URI http://asc.fasb.org/extlink&oid=6385267&loc=d3e42754-111610 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 325 -SubTopic 30 -Section 50 -Paragraph 5 -URI http://asc.fasb.org/extlink&oid=6385267&loc=d3e42708-111610 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 325 -SubTopic 30 -Section 50 -Paragraph 7 -URI http://asc.fasb.org/extlink&oid=6385267&loc=d3e42728-111610 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name FASB Staff Position (FSP) -Number FTB85-4-1 -Paragraph 12-19 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Glossary Life Settlement Contract -URI http://asc.fasb.org/extlink&oid=6516907 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 325 -SubTopic 30 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=6385267&loc=d3e42674-111610 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 325 -SubTopic 30 -Section 50 -Paragraph 8 -URI http://asc.fasb.org/extlink&oid=6385267&loc=d3e42732-111610 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 325 -SubTopic 30 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=6385267&loc=d3e42748-111610 Reference 9: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 325 -SubTopic 30 -Section 50 -Paragraph 6 -URI http://asc.fasb.org/extlink&oid=6385267&loc=d3e42712-111610 + Details
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