GWG Holdings, Inc

Thank you. Good afternoon, everybody. My name is Dan Callahan, Director of Communication for GWG Holdings. Welcome to our third quarter 2020 earnings webcast. On the webcast with me today are Murray Holland, our President and Chief Executive Officer, Brad Heppner, Chairman of the Board of GWG Holdings, and Tim Evans, our Chief Financial Officer. Following our remarks today, we'll be taking submitted questions that came in through the registration process. We've gotten a few questions. We think we'll give you more information. But if we don't get to one of yours, or if you have questions as a result of anything we present today, there'll be a contact slide at the end of the presentation. You can email us, call us, and we'll get you an answer. Some statements on the webcast today, along with any projected financial results, include forward-looking statements that are subject to certain risks and uncertainties. Any forward-looking statements made on this webcast are made based on assumptions as of today, and we make no obligation to update them as a result of new information or future events. Our sample list of factors and risks that could cause actual results to be materially different from forward-looking statements can be found in our earnings release and in our most recent 10Q and 10K reports. The webcast is being recorded and will be available on our website at gwgh.com through the Investor Relations tab. So with that, we'll turn it over to our President and Chief Executive Officer, Murray Holland. Murray.

Dan, thank you very much. Today, we'd like to review a number of agenda items on GWG and Beneficent's third quarter 2020. The first is an update on corporate events during the third quarter. Then we will cover the COVID-19 update. Beneficent update by Brad Hepner will be about Beneficent operations. Then we will talk about BIN risk management underwriting tools that have been developed, and then review the third quarter 2020 financial metrics and results, and finish with a Q&A session. First, we have reported strong performance in our life insurance portfolio with just under $40 million in maturities. This compares very favorably with prior quarters. Continued success in raising capital through our $2 billion L bond offering, This quarter, we raised right at $115 million in L bond sales, including a $43 million month in September. Beneficent closed $8.1 million in originations in October 2020, just after the quarter closed, and has built a pipeline of approximately $300 million of originations sourced from RIAs, family offices, general partners, foundations, and various other sources. The third quarter was our first full quarter with Grant Thornton as our new independent public auditing firm. We're very pleased to have Grant Thornton here, and they've done a very good job for the firm. GWG Holdings and Beneficent have taken steps to assist management in oversight of our combined company's controls. This includes engaging internationally recognized accounting firms to prepare quarterly valuations and an opinion on Beneficent's loan portfolio. We engaged internationally recognized accounting firms to consult with GWG and Beneficent on internal audit department developments. We've hired another internationally recognized accounting firm to review the cost basis of Beneficent financings and related loan balances. During the third quarter, we purchased a multi-year hedge to protect Beneficent's loan portfolio against potential market corrections. And we began automating our middle and back office functions, which will allow both Ben and GWG to scale the business, minimize costs, and increase accuracy. During the pandemic, we have experienced no material impact on the life insurance portfolio from COVID-19-based maturities. The performance of our portfolio is not affected by market movements and is consequently non-correlated to the markets. We have spent a lot of energy on focusing on the health and safety of our employees, and we are committed to our business partners and investors to continue to raise capital, pay and receive income and dividends, receive insurance policies, benefits, and otherwise meet all of our ongoing operating obligations. The majority of our employees have worked from home since mid-March, and during this time period, we had relatively strong L-bond sales in facing this pandemic. Next, I'd like to hand it over to Brad Hettner, the Chairman of the Board of GWG Holdings. Brad?

Thank you, Murray. Good afternoon, everyone. GWG and Ben further advanced our strategic partnership in December 2019, nearly a year ago, and that created a joint workforce of over 150 employees. It also expanded our strategy of providing early liquidity on professionally managed alternative assets to a vast and underserved market of mid to high net worth individuals and to small to mid-sized institutions. During 2020, we have focused our efforts to build the foundation of our companies by introducing unique products, services, and systems. Some of these systems we intend to file patents to protect. We believe all of these efforts poise our companies for 2021 to scale at a time when there is a great need for our products and services that we have created. We believe the liquidity challenges faced by individuals and families, by small institutions and their advisors provide an opportunity for our liquidity line of products. This need for liquidity has grown substantially in the past few years, driven basically by U.S.-based investors who now hold over $3 trillion in institutionally managed net asset value of alternative assets. Now, that $3 trillion excludes hedge funds that have interval liquidity, BDCs, and real estate investments that are exchange traded. It's quite a large market for people needing liquidity. Today, only 50% of these assets are held by large institutions, which have greater than a billion-dollar balance sheet. And that number of 50% continues to decrease. The reason for this is that the other half, for the $1.5 trillion of NAV held by U.S. investors, are today held by small institutions with under a billion dollars in assets and by individuals and families having a net worth of over $5 million. That's half the marketplace. And that segment of alternative asset holders is growing. There are now 2,700 small US institutions that fit our category. We all know them as small endowments, foundations, hospitals, and unions. But in addition, there's $750 billion that are now held by individuals and families in our communities. This growth in our alternative asset industry and how those that hold the assets evolved over the past 15 years has required us to take a much closer look at how to deliver liquidity to different types of investors having these liquidity needs. For example, individuals, families, and small institutions, they do not have the ability to access the U.S. intermediary markets for liquidity. That market for secondary liquidity was built for the big institutions. And in fact, the big institutions are the ones who built the markets. It is a mergers and acquisition transactional type of market built by bankers, where each party often has their own advisors. They have their own accounting firms and their own law firms. Typically, there are several pricey intermediaries, consultants, and auctioneers in the middle of each transaction. So it's very expensive. It's a complicated process, and it can often take anywhere from six to 18 months. There's a reason that individuals and small institutions cannot get liquidity out of alternatives from that market. It's simple. They just can't afford it. It's too expensive. They need it to be simpler. They need it to be much more rapid. They need the liquidity now for their life changes. Individuals have health needs. They have family needs, business needs, and estate planning requirements. All the big institutions, they don't have those needs. So we went to work a few years ago to create a line of business products and services that simplifies the entire transaction for gaining liquidity, simplifies the process into a rapid and cost-effective manner to provide individuals in small institutions with access to liquidity when they need it, much easier than the big institutions that built their market for providing them liquidity. Our strategy is very simple. We're a financial services company. We provide private trust solutions, including a unique suite of trust and liquidity solutions. I always like to highlight the Beneficent is not an investment fund, and we're not an investment advisor. Our business model is to operate as a permanent financial institution and to deploy our balance sheets with capital that's off our balance sheet to fund the liquidity needs of alternative asset investors. We operate with a lower cost to capital than our competition. They provide liquidity to large institutions and typically have to cover their own expensive promoted profits, interest, and advisory fees that they pay to their asset managers, along with seven-figure transaction costs paid to Wall Street attorneys, consultants, and intermediaries on every liquidity transaction that they do. They typically raise money from private equity institutional investors who have a very high rate of return expectations. Our companies, on the other hand, do not have all these costs for managers, lawyers, outside investors. Reason is we do all of these functions ourselves inside our companies. This means that our costs are substantially lower than our competition, often more than 50% lower than the secondary liquidity provider's costs of capital. Our asset-based lending arm operates similar to how a bank operates. And we found other ways to cut costs associated with delivering liquidity to our underserved market of individuals and institutions. All of these cost cuts allow us to operate at a spread and to be transparent to our investors on what that spread is and what we intend to earn by providing liquidity to the investors. The benefit of our lower cost of capital, of our lower execution costs, and of our lower holding costs opens us up to a market that needs our products and services and allows us to be among the first to this market with a compelling and valuable liquidity solutions and services built specifically for them. To engage with our targeted clients, Beneficent built during 2020 the AltAccess proprietary online secure platform portal. We developed it to do business directly with our clients all online. our clients can simply and rapidly complete all of their transactions online over our AltAccess platform. It's our very own main street for connecting beneficent to our target market worldwide without a brick and mortar presence, without the expensive legacy information technology needs, or without having the burden of branch bank technology operations. Through AltAccess, clients can learn about our liquidity products and solutions, those solutions that provide cash, securities or a mix of cash and securities, and then they can transact on those solutions from beginning to end all online. Everything can be done simply from their own system online. In the summer of 2020, Beneficent officially launched its suite of liquidity solutions for our target markets, and we launched it under GWG. Central to our launch was the introduction of the liquidity bond. It's a 506C offering, which allows our companies to advertise and promote our products to accredited investors who need liquidity from their professionally managed alternative investments. Very few liquidity providers can directly advertise and promote in the manner that we can to our target market. Since June of 2020, We have over $100 million of private assets that are currently pricing or being actively under consideration, with an additional $200 million of potential transactions that are waiting on actions from our potential clients. That's a large pipeline. This pipeline of potential new transactions has all been sourced from registered investment advisors, family offices, alternative asset sponsors, foundations, and other types of investors. Very happy to see the development of the inflow for a demand from Beneficent to provide liquidity. We should see more closings begin to evolve over the next few months. With that, I'm going to hand it back to Murray, the CEO of GWG. He's going to talk about some of our key proprietary tools that we've developed to operate and further enhance our business. And then he's going to introduce Tim Evans, our CFO, to discuss our financial results for the third quarter. Appreciate your time today. Thank you. Murray.