10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K

(Mark One)

þ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2012

or

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from            to             

Commission file number: 001-35064

IMPERIAL HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

Florida	30-0663473
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

701 Park of Commerce Boulevard, Suite 301

Boca Raton, Florida 33487

(Address of principal executive offices, including zip code)

(561) 995-4200

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Name of Each Exchange on Which Registered
Common Stock, par value $0.01 per share	New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:

None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes  ¨    No  þ

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act.    Yes  ¨    No  þ

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  þ    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  þ    No  ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.    ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	þ  (Do not check if a smaller reporting company)	Smaller reporting company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  þ

The aggregate market value of the voting and non-voting common stock held by non-affiliates of the registrant on June 30, 2012 was $68,690,983.

The number of shares of the registrant’s common stock outstanding as of March 22, 2013 was 21,206,121.

DOCUMENTS INCORPORATED BY REFERENCE:

Portions of the registrant’s definitive proxy statement for the 2013 annual meeting are incorporated by reference in this Annual Report on Form 10-K in response to Part III. Items 10, 11, 12, 13 and 14.

IMPERIAL HOLDINGS, INC.

2012 Form 10-K Annual Report

Table of Contents

Item		Page No.
PART I
1.	Business		1
1A.	Risk Factors		11
1B.	Unresolved Staff Comments		26
2.	Properties		26
3.	Legal Proceedings		26
4.	Mine Safety Disclosures		29
PART II
5.	Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Our Equity Securities		29
6.	Selected Financial Data		32
7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		35
7A.	Quantitative and Qualitative Disclosures about Market Risk		70
8.	Financial Statements and Supplementary Data		72
9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure		72
9A.	Controls and Procedures		72
9B.	Other Information		73
PART III
10.	Directors, Executive Officers and Corporate Governance		74
11.	Executive Compensation		74
12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		74
13.	Certain Relationships and Related Transactions, and Director Independence		74
14.	Principal Accountant Fees and Services		74
PART IV
15.	Exhibits and Financial Statement Schedules		75
	Signatures		76
	Table of Contents to Consolidated Financial Statements and Notes		F-1
	Exhibit Index		E-1

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K contains forward-looking statements that are subject to risks and uncertainties. All statements other than statements of historical fact included in this Annual Report on Form 10-K are forward-looking statements. Forward-looking statements give our current expectations and projections relating to our financial condition, results of operations, plans, objectives, future performance and business. You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. These statements may include words such as “anticipate,” “estimate,” “expect,” “project,” “plan,” “intend,” “believe,” “may,” “will,” “should,” “can have,” “likely” and other words and terms of similar meaning in connection with any discussion of the timing or nature of future operating or financial performance or other events. These forward-looking statements are not historical facts, and are based on current expectations, estimates and projections about the Company’s industry, management’s beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond the Company’s control. Accordingly, readers are cautioned that any such forward-looking statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to predict. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable as of the date made, results may prove to be materially different. Unless otherwise required by law, the Company disclaims any obligation to update its view of any such risks or uncertainties or to announce publicly the result of any revisions to the forward-looking statements made in this report.

Factors that could cause our actual results to differ materially from those indicated in our forward-looking statements include, but are not limited to, the following:

• our results of operations;

• continuing costs associated with the USAO investigation, SEC investigation, derivative actions, the class action lawsuits and similar matters;

• adverse developments, including financial ones, associated with the USAO and SEC investigations, derivative actions or class action lawsuits or similar matters;

• our inability to obtain financing on favorable terms or at all;

• our ability to continue to make premium payments on the life insurance policies that we own;

• obligations, including payments that may be undertaken by the Company to settle derivative actions or class action lawsuits;

• loss of business due to negative press from the USAO investigation, SEC investigation, Non-Prosecution Agreement, class action lawsuits or otherwise;

• failure to enter into definitive settlement agreements or settle the class action lawsuits and related litigation on the terms contemplated by the Term Sheet for Global Settlement Regarding Imperial Holdings, Inc. Matters;

• costs in excess of our directors’ & officers’ insurance coverage;

• refusal by our directors’ and officers’ insurance carriers to reimburse us for claims submitted;

• loss of revenue associated with the termination of our premium finance business;

• further adjustments to the discount rates used to value the life insurance policies that we own;

• inaccurate estimates regarding the likelihood and magnitude of death benefits related to life insurance policies that we own;

• changes in mortality rates and inaccurate assumptions about life expectancies;

• changes in life expectancy calculation methodologies by third party medical underwriters;

• changes to actuarial life expectancy tables;

• lack of mortalities of insureds of the life insurance policies that we own;

• increased carrier challenges to the validity of our life insurance policies;

• delays in the receipt of death benefits from our portfolio of life insurance policies;

• costs related to obtaining death benefits from our portfolio of life insurance policies;

• the effect on our financial condition as a result of any lapse of life insurance policies;

• deterioration of the market for life insurance policies and life settlements;

• our inability to re-sell the life insurance policies we own at favorable prices, if at all;

• adverse developments associated with uncooperative co-trustees;

• loss of the services of any of our executive officers;

• adverse court decisions interpreting insurable interest or the obligation of a life insurance carrier to return premiums upon a successful rescission or contest;

• our inability to continue to grow our businesses;

• changes in laws and regulations applicable to premium finance transactions, life settlements or structured settlements;

• increased competition for the acquisition of structured settlements;

• adverse developments in capital markets;

• disruption of our information technology systems;

• our failure to maintain the security of personally identifiable information pertaining to our customers and counterparties;

• regulation of life settlement transactions as securities;

• our limited operating experience;

• refusal by our lender protection insurer to pay claims;

• deterioration in the credit worthiness of the life insurance companies that issue the policies serving as collateral for our premium finance loans;

• increases in premiums on life insurance policies that we own or finance;

• changes in current tax law regarding the treatment of structured settlements;

• our ability to grow our database of structured settlement holders;

• the effects of United States involvement in hostilities with other countries and large-scale acts of terrorism, or the threat of hostilities or terrorist acts; and

• changes in general economic conditions, including inflation, changes in interest or tax rates and other factors.

See “Risk Factors” for more information. All written and oral forward-looking statements attributable to the Company, or persons acting on its behalf, are expressly qualified in their entirety by these cautionary statements. You should evaluate all forward-looking statements made in this Annual Report on Form 10-K in the context of these risks and uncertainties. The Company cautions you that the important factors referenced above may not contain all of the factors that are important to you.

All statements in this Annual Report on Form 10-K to “Imperial,” “Company,” “we,” “us,” or “our” refer to Imperial Holdings, Inc. and its consolidated subsidiaries unless the context suggests otherwise.

PART I

Item 1. Business

Overview

We were founded in December 2006 as a Florida limited liability company and in connection with our initial public offering, on February 3, 2011, Imperial Holdings, Inc. succeeded to the business of Imperial Holdings, LLC and its assets and liabilities.

Imperial Holdings, Inc. (the “Company” or “Imperial”) operates in two reportable business segments: life finance (formerly referred to as premium finance) and structured settlements. In the life finance business, the Company earns revenue/income from changes in the fair value of life insurance policies that the Company acquires and receipt of death benefits with respect to matured life insurance policies it owns, as well as from interest accruing on outstanding loans and loan origination fees recognized over the life of outstanding loans. In the structured settlement business, the Company purchases structured settlement receivables at a discounted rate and sells these receivables to third parties.

In February 2011, the Company completed the sale of 17,602,614 shares of common stock in its initial public offering at a price of $10.75 per share. The Company received net proceeds of approximately $174.2 million after deducting the underwriting discounts and commissions and its offering expenses.

Recent Developments

On September 27, 2011, the Company was informed that it was being investigated by the U.S. Attorney’s Office for the District of New Hampshire (the “USAO Investigation”). At that time, the Company was informed that, among other individuals, its former president and chief operating officer, former general counsel, three former life finance sales executives, two vice presidents and a funding manager were considered “targets” of the USAO Investigation. The USAO Investigation focused on the Company’s premium finance loan business

On February 17, 2012, the Company received a subpoena issued by the staff of the U.S. Securities and Exchange Commission (the “SEC”) seeking documents from 2007 through the present, generally related to the Company’s premium finance business and corresponding financial reporting. The SEC is investigating whether any violations of federal securities laws have occurred and the Company has been cooperating with the SEC regarding this matter. The Company is unable to predict what action, if any, might be taken in the future by the SEC or its staff as a result of the matters that are the subject of the subpoena or what impact, if any, the cost of responding to the subpoena might have on the Company’s financial position, results of operations, or cash flows. The Company has not established any provision for losses in respect of this matter.

On April 30, 2012, the Company entered into a Non-Prosecution Agreement (the “Non-Prosecution Agreement”) with the USAO, which agreed not to prosecute the Company for its involvement in the making of misrepresentations on life insurance applications in connection with its premium finance business or any potential securities fraud claims related to its premium finance business. In the Non-Prosecution Agreement, the USAO and the Company agreed among other things, that the following facts are true and correct: (i) at all relevant times (x) certain insurance companies required that the prospective insured applying for a life insurance policy, and sometimes the agent, disclose information relating to premium financing on applications for life insurance policies, and (y) the questions typically required the prospective insured to disclose if he or she intended to seek premium financing in connection with the policy and sometimes required the agent to disclose if he or she was aware of any such intent on the part of the applicant; (ii) in connection with a portion of the Company’s retail operation known as “retail non-seminar” that began in December 2006 and was discontinued in January 2009, Imperial had a practice of disclosing on applications that the prospective insured was seeking premium financing when the life insurance company allowed premium financing from Imperial; however, in certain circumstances, Imperial internal life agents facilitated and/or made misrepresentations on applications that the prospective insured was not seeking premium financing when the insurance carrier was likely to deny the

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policy on the basis of premium financing; and (iii) to the extent that external agents, brokers and insureds caused other misrepresentations to be made in life insurance applications in connection with the retail non-seminar business, Imperial failed to appropriately tailor controls to prevent potential fraudulent practices in that business. As of December 31, 2012, the Company had 12 policies in its portfolio that once served as collateral for premium finance loans derived through the retail non-seminar business.

In connection with the Non-Prosecution Agreement, Imperial voluntarily agreed to terminate its premium finance business, which historically accounted for the majority of the Company’s revenues and terminated certain senior sales staff associated with the premium finance business. Additionally, the Company paid the United States Government $8.0 million, and agreed to cooperate fully with the USAO’s ongoing investigation and to refrain from and self-report any criminal conduct. The Non-Prosecution Agreement has a term of three years until April 30, 2015, but after April 30, 2014 the Company may petition the USAO to forego the final year of the Non-Prosecution Agreement, if we otherwise comply with all of our obligations under the Non-Prosecution Agreement. Should the USAO conclude that Imperial has not abided by its obligations under the Non-Prosecution Agreement, the USAO could choose to terminate the Non-Prosecution Agreement, resume its investigation of the Company, or bring charges against Imperial.

On August 2, 2012, the Board of Directors of the Company appointed Andrew Dakos, Phillip Goldstein and Gerald Hellerman to serve as directors of the Company in connection with a settlement (the “Settlement”) with Opportunity Partners L.P. (“Opportunity”). The Settlement resulted in Opportunity withdrawing its demand for a special meeting of shareholders, which it had submitted to the Company on May 23, 2012 and agreeing to dismiss its lawsuit to compel an annual meeting of shareholders. In connection with the Settlement, Walter Higgins and A. Penn Wyrough resigned from the Board of Directors. On August 14, 2012, Antony Mitchell, the Company’s chief executive officer, resigned as Chairman of the Board (though he continues to serve as a director and as the Company’s chief executive officer) and Mr. Goldstein was elected Chairman. On January 14, 2013, David Buzen resigned from the Board of Directors and on March 12, 2013, Robert Rosenberg informed the Board of Directors that he would not stand for re-election at the Company’s annual meeting of shareholders.

As of December 31, 2012, the Company had approximately $20.3 million of cash, cash equivalents, and marketable securities including $1.2 million in restricted cash. This limited cash position was primarily as a result of the legal and other costs of the defense and investigation of the Company and certain employees in connection with the USAO Investigation, SEC investigation and related shareholder litigation, which required significant, unbudgeted cash outlays. As previously reported in earlier periodic reports filed with the SEC, the Company anticipated a liquidity shortfall in the second quarter of 2013. Accordingly, to avoid lapsing policies, the Company sought additional capital and, on March 27, 2013, Greenwood Asset Portfolio, LLC (“Greenwood”), a subsidiary of the Company, borrowed $45 million in aggregate principal amount under the terms of an eighteen-month bridge facility. The facility was funded by entities affiliated with certain of the Company’s shareholders and is secured by substantially all of the Company’s life insurance policies. Principal was borrowed under the facility at 92% resulting in net proceeds before transaction expenses of $41.4 million. After transaction expenses, up to 25% of the proceeds of the facility may be used by the Company for general corporate purposes, with the balance used by Greenwood to pay premiums on the life insurance policies it owns. Interest under the facility accrues at 12% per annum for nine months and thereafter increases by 600 basis points to 18% per annum for the remainder of the term of the facility. The Company intends to replace this facility, which is pre-payable at par without penalty, and refinance the bridge facility with more permanent capital once it is sourced. There can be no assurance, however, that we will be able to obtain capital on more favorable terms or at all.

Life Finance Business

Overview

Our life finance segment is comprised of our life settlements and our legacy premium finance loan businesses. The Company historically provided premium finance loans for individual life insurance policies and, commencing in 2011, began using its life settlement provider licenses to purchase life insurance policies. In a

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premium finance transaction, a life insurance policyholder obtains a loan, usually through an irrevocable life insurance trust established by the insured, to pay insurance premiums for a fixed period of time. A premium finance loan allows a policyholder to maintain coverage under the policy without having to make premium payments during the term of the loan. As described above, on April 30, 2012, the Company voluntarily terminated its premium finance business in connection with the Non-Prosecution Agreement with the USAO. We had effectively suspended originating premium finance loans, however, as of the end of the third quarter of 2011.

The Company takes title to life insurance policies through two separate channels. First, we acquire life insurance policies when a borrower defaults on a premium finance loan originated by us, and we foreclose on the policy. Second, we acquire life insurance policies through purchases directly from the original policy owners (the secondary market) or from institutional investors (the tertiary market). As of December 31, 2012, the Company had obtained the necessary licenses to purchase life insurance policies directly from original policy owners in 25 states. To conserve capital, we only purchased 2 policies in 2012 in an effort to continue to maintain the premium outlays necessary to keep our portfolio of life insurance policies in-force.

During the time period in which we were originating premium finance loans, our typical loan was approximately two years in duration and was collateralized by the underlying life insurance policy. Approximately 75.9% of loans originated were insured by lender protection insurance, which every credit facility that we entered into since December 2007 required us to obtain for each loan originated under such credit facility. This coverage provides insurance on the value of the underlying life insurance policy serving as collateral underlying the loan should our borrower default. Subject to the terms and conditions of the lender protection insurance policy, in the event of a payment default by the borrower, our lender protection insurer has the right to direct control or take beneficial ownership of the life insurance policy and we are paid an amount equal to the insured value of the life insurance policy serving as collateral underlying the loan. The life insurance policies that served as collateral for our premium finance loans were predominately universal life policies that had an average death benefit of approximately $4.8 million and insured persons over age 75. Generally, the borrower was an irrevocable life insurance trust established by the insured, which is both the legal owner and beneficiary of a life insurance policy serving as collateral for a premium finance loan. As used throughout this Annual Report on Form 10-K, references to “borrower” refer to the entity or individual executing the note in a premium finance transaction.

A borrower was not required to make any payment on the premium finance loan until maturity. At the end of the loan term, the borrower either repaid the loan in full (including all interest and fees) or defaulted under the loan. In the event of default, subject to loan terms and conditions, we generally foreclosed on the policy serving as collateral for the loan, and, correspondingly, the borrower typically relinquished control of the policy to us. If we acquired the policy upon a loan default, we either held it for investment, sought to sell the policy, or, if the loan was insured, we were paid an amount equal to the insured value of the policy, which may have been equal to or less than the contractual amount we were owed under the loan. The amounts received in respect of claims were used to repay our lenders from whom, prior to 2011, we borrowed funds to extend premium finance loans to borrowers. As of December 31, 2012, we had 22 premium finance loans outstanding, 5 of which had collateral whose value was insured.

We historically retained for investment a number of the policies that we acquired upon foreclosure and, at December 31, 2012, 171 policies in our life settlement portfolio were previously premium financed. Following our initial public offering, we used equity capital to fund premium finance loans. However, in instances where we retained policies that served as collateral for a loan that was insured, in order to retain the policy on our balance sheet, we would typically be required to pay our lender protection insurer in order for the insurer to release its subrogation rights to the policy. When we choose to retain a policy for investment, we are responsible for all future premium payments required to prevent the policy from lapsing.

Our premium finance borrowers were generally referred to us through independent insurance agents and brokers although, prior to January 2009, we originated some premium finance loans that were sold by life

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insurance agents that we employed. In certain of these instances, the life insurance agents employed by the Company worked with external brokers and agents to obtain insurance for policyholders with the Company extending a premium finance loan to a borrower. We refer to these instances as the “retail non-seminar business,” which began in December 2006 and was discontinued in January 2009. In total, the Company originated 114 premium finance loans as part of the retail non-seminar business. As of December 31, 2012, the Company had 12 policies in its portfolio that once served as collateral for premium finance loans derived through the retail non-seminar business.

As of December 31, 2012, the weighted average discount rate used in valuing the policies in our life settlement portfolio was 24.01% and the fair value of our investment in life insurance policies was approximately $113.4 million. The discount rate used in valuing the policies ranged from 14.80% to 33.80%. Our valuation of insurance policies is a critical component of our estimate for the fair value of our investments in life settlements (life insurance policies). We currently use a probabilistic method of valuing life insurance policies, meaning the individual insured’s probability of survival and probability of death are applied to the required premium and net death benefit of the policy to extrapolate the likely cash flows over the life expectancy. These likely cash flows are then discounted using a net present value formula. We believe this to be the preferred valuation method at the present time in the industry. The most significant assumptions that we must make to value a life insurance policy are the appropriate discount rate and life expectancies. Please see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies,” for a more detailed discussion of how we determine the fair value of life settlements.

Sources of Revenue/Income

For the years ended December 31, 2012, 2011 and 2010, 21.7% , 71.2% and 87.6%, respectively, of our revenue was generated from our life finance segment. We generated revenue/income from this segment in the form of unrealized change in fair value of life settlements, agency fees, interest income, origination fee income, servicing income and gain on maturities of life settlements with subrogation rights, net that we own as follows:

• Unrealized Change in Fair Value of Life Settlements—When the Company acquires certain life insurance policies we initially record these investments at the transaction price, which is the fair value of the policy for those acquired upon relinquishment or the amount paid for policies acquired for cash. The fair value of the investment in insurance policies is evaluated at the end of each reporting period. Changes in the fair value of the investment based on evaluations are recorded as unrealized changes in fair value of life settlements in our consolidated statement of operations. During the years ended December 31, 2012, 2011 and 2010, the Company recorded a loss of approximately $5.7 million, a gain of $570,000 and a gain of approximately $10.2 million, respectively on the unrealized changes in fair value of life insurance policies it acquired.

• Gain on Maturities of Life Settlements with Subrogation Rights, net. When the Company exercised its right to foreclose on collateral for loans insured by the Company’s lender protection insurer, the insurer had the right to direct control or take beneficial ownership of the life insurance policy, subject to the terms and conditions of the lender protection insurance policy, including notice and timing requirements. Under these circumstances, the insurer maintained its salvage collection and subrogation rights, which provided a remedy for the insurer to seek to recover the amount of the lender protection claim paid plus premiums paid by it, expenses and interest thereon. In those instances where the Company foreclosed on the collateral, the lender protection insurer has been covering the cost of the ongoing premiums needed to maintain certain of these life insurance policies. However, the lender protection insurer may elect at any time to discontinue the payment of premiums, which would result in the policies lapsing if the Company does not otherwise pay the premiums. Because the lender protection insurer controls whether a policy will lapse, and the amount of the lender protection insurer’s salvage collection and subrogation claim rights on any individual life insurance policy could, and in time will likely, equal or exceed the cash flow received by the Company with respect to any such policy, the Company views these policies as having uncertain value. For these reasons, the

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Company does not rely on these policies for revenue generation, and these policies are considered contingent assets and not included in the amount of life settlements on the accompanying consolidated balance sheet. The Company accounts for the maturities of life settlements with subrogation rights (net of subrogation expenses) as contingent gains in accordance with ASC 450, Contingencies and recognizes the revenue from the maturities of these policies when all contingencies are resolved. During the year ended December 31, 2012, 2011 and 2010, the Company recognized income of approximately $6.1 million, $3.2 million and $0, respectively, net of subrogation rights in receipt of death benefits with respect to matured life insurance policies.

• Servicing Income. We receive income from servicing life insurance policies controlled by a third party. These services include verifying premiums are paid and correctly applied and updating files for medical history and ongoing premiums. For the year ended December 31, 2012, 2011 and 2010, we earned approximately $1.2 million, $1.8 million and $413,000 in servicing income, respectively.

• Origination Fees. We charged a loan origination fee on each premium finance loan we funded. The origination fee accrues over the term of the loan and is due upon the date of maturity or upon repayment of the loan. During the years ended December 31, 2012, 2011 and 2010, approximately $500,000, $6.5 million and $19.9 million, respectively, of our revenue from our life finance segment was from origination fees. As a result of the voluntary termination of our premium finance business, we will cease accruing origination fee income once our outstanding premium finance loans mature.

• Agency Fees. For each premium finance loan, Imperial Life and Annuity Services, LLC (“Imperial Life and Annuity”), a licensed insurance agency and our wholly-owned subsidiary, received an agency fee from the referring insurance agent. During the years ended December 31, 2012, 2011 and 2010, approximately $0, $6.5 million and $10.1 million, respectively, of our revenue from our life finance segment was from agency fees. As a result of the voluntary termination of our premium finance business, we will not receive any revenue from agency fees and Imperial Life and Annuity has voluntarily surrendered all its insurance agency licenses during the year ended December 31, 2012.

• Interest Income. We record interest income that accrues over the life of the loan and is due upon the date of maturity or upon repayment of the loan. The interest rates are typically floating rates that are calculated at the one-month LIBOR rate plus an applicable margin. In addition, our premium finance loans have a floor interest rate and are capped at 16.0% per annum. For loans with floating rates, each month the interest rate is recalculated to equal one-month LIBOR plus the applicable margin, and then, if necessary, adjusted so as to remain at or above the stated floor rate and at or below the capped rate of 16.0% per annum. The weighted average per annum interest rate for premium finance loans outstanding as of December 31, 2012, 2011 and 2010 were 13.4% , 12.5% and 11.4%, respectively. During the years ended December 31, 2012, 2011 and 2010 approximately $2.0 million, $8.3 million and $18.7 million, respectively, of our revenue from our life finance segment was from interest income. As a result of the voluntary termination of our premium finance business, we will cease earning interest income from this type of loan once our outstanding premium finance loans mature.

Repayment of Premium Finance Loans

The following table shows the method of repayment for loans maturing during the following periods:

	Year Ended December 31,
	2012		2011		2010
Repaid by the borrower		2		—		3
Repaid from death benefit during term of loan		—		—		1
Repaid from lender protection insurance claims		85		131		419
		87		131		423

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Cost of Financing

Every credit facility we entered into since December 2007 for our legacy premium finance business required us to obtain lender protection insurance for each loan originated under such credit facility. This coverage provides insurance on the value of the underlying life insurance policy serving as collateral for the loan should our borrower default. Subject to the terms and conditions of the lender protection insurance policy, in the event of a payment default by the borrower, our lender protection insurer has the right to direct control or take beneficial ownership of the life insurance policy and we are paid an amount equal to the insured value of the life insurance policy serving as collateral for the loan. The cost for lender protection insurance ranged from 8.5% to 11% per annum of the principal balance of the loan. As of December 31, 2012, 22.7% of our outstanding premium finance loans had collateral whose value is insured. After December 31, 2010, we ceased originating premium finance loans with lender protection insurance and began funding loans with our own equity. In connection with the Non-Prosecution Agreement, we have since ceased originating premium finance loans altogether.

On December 24, 2012, we paid off all outstanding amounts under our last remaining premium finance credit facility and accordingly had no debt outstanding as of December 31, 2012 under the credit facilities used in our life finance segment to finance our legacy premium finance operations.

Underwriting Procedures

We considered and analyzed a variety of factors in evaluating each potential premium financing transaction. Our underwriting procedures required that the policyholder provide supporting documentation of the policyholder’s insurable interest in the life of the insured. Our guidelines generally required that every borrower have an existing, in-force, life insurance policy and provide proof of at least one prior premium payment from their own funds prior to our funding of a loan and applicants were generally required to sign an unconditional personal guaranty as to various matters related to the funding of the loan, including as to the accuracy of the information provided in the life insurance policy application, as further support for our underwriting procedures, including our assessment of whether the applicant was engaged in a stranger originated life insurance transaction. In the event of a default under the guaranty, the guarantor guaranteed the payment of all outstanding principal and accrued and unpaid interest under the premium finance loan, any early termination fees, costs and expenses payable (including, but not limited to, reasonable attorneys’ fees) as well as any and all costs and expenses to enforce the guaranty (including, but not limited to, reasonable attorneys’ fees). To date, we have never collected on a personal guaranty. Our premium finance legal group reviewed loan applications and assessed the validity of the applicants’ insurable interest in the life of an insured before a loan was funded.

Servicing

Our servicing department administers all premium payments, loan satisfaction and policy relinquishment processes for policies we own as well as for policies controlled by third parties. They maintain contact with insureds, trustees and referring agents or brokers to obtain current information on policy status. Our servicing department also updates the medical histories of insureds. They periodically request updated medical records from physicians and also contact each insured to obtain updated health information.

With respect to the administration of the policy relinquishment processes, our servicing department sends notices prior to the loan maturity date alerting the borrower that the loan is maturing. In the event of a default, our servicing department will send an agreement to the borrower and its beneficiaries requesting that they agree to relinquish ownership of the policy and all interests therein to us in exchange for a release of the obligation to pay amounts due. If we are unable to come to an agreement with the borrower regarding the relinquishment of the policy, we may enforce our security interests in the beneficial interests in the trust that owns the policy pursuant to which we can exercise control over the trust holding the policy in order to direct its disposition.

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Structured Settlements Business

Overview

Structured settlements refer to a contract between a plaintiff and defendant whereby the plaintiff agrees to settle a lawsuit (usually a personal injury, product liability or medical malpractice claim) in exchange for periodic payments over time. A defendant’s payment obligation with respect to a structured settlement is usually assumed by a casualty insurance company. This payment obligation is then satisfied by the casualty insurer through the purchase of an annuity from a highly rated life insurance company, which provides a high credit quality stream of payments to the plaintiff.

Recipients of structured settlements are permitted to sell their deferred payment streams to a structured settlement purchaser pursuant to state statutes that require certain disclosures, notice to the obligors and state court approval. Through such sales, we purchase a certain number of fixed (life contingent or non life-contingent), scheduled future settlement payments on a discounted basis in exchange for a single lump sum payment, thereby serving the liquidity needs of structured settlement holders.

We train our structured settlements purchasing team to work with a prospective client to review the transaction documentation and to assess a client’s needs. Our underwriting group is responsible for reviewing all proposed purchases and analyzing the associated documentation. We have also developed a nationwide network of law firms to facilitate the required court approval process for structured settlements. The average cycle time for transactions closing in the year ended December 31, 2012 starting from submission of the paper work to funding the transaction was 63 days. This cycle includes the evaluation and structuring of the transaction, an economic review, pricing and coordination of the court process.

Marketing

Brand awareness is critical to growing market share. We have a primary target market consisting of individuals 18 to 49 years of age with middle class income or lower.

We primarily market through the internet and television although, in 2012, we significantly reduced our spending on television based marketing in order to conserve capital. Our direct response television campaign consists of nationally placed 15 or 30 second commercials that air during our call center hours on several syndicated and cable networks. Typically, we experience a high volume of calls immediately after we air a television advertisement. Therefore, we attempt to space our advertisements to maintain a steady stream of inbound calls that our purchasing team is able to process. In addition to our direct response television campaign, we buy marketing on internet search engines. These advertisements produce leads with contact information that are routed to our purchasing staff for follow-up. We also send letters monthly to most of the leads in our database containing information about us and our services.

We have built a proprietary database of clients and prospective clients. From December 2006 to December 31, 2012, we have purchased a total of 869 structured settlements from existing customers in repeat transactions. When our call center staff is not answering inbound calls, they call contacts in the database to generate business. As our database and pool of customers grow, we expect to complete more transactions and our cost of marketing per transaction should decrease.

The following table shows the number of transactions we have completed and our average marketing cost per transaction (dollars in thousands):

	Year Ended December 31,
	2012		2011		2010
Number of transactions originated		965		873		565
Average marketing cost per transaction	$	5.0	$	7.0	$	9.0
Average amount paid for settlements purchased	$	25.46	$	23.26	$	23.49

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We believe this cost per transaction will continue to trend down over time. Additionally, our transactions with repeat customers are generally more profitable than with new customers due to the reduction in transaction costs. As our database grows, it provides more purchasing opportunities. The following table shows the number and percentage of our total structured settlement transactions completed with repeat customers for the three-month periods indicated:

	Three Months Ended
	Dec 31 2009			Mar 31 2010			June 30 2010			Sep 30 2010			Dec 31 2010			Mar 31 2011			June 30 2011			Sep 30 2011			Dec 31 2011			Mar 31 2012			June 30 2012			Sep 30 2012			Dec 31 2012
Number of transactions with repeat customers		20			24			25			49			56			48			92			78			89			70			99			94			70
Percentage of total transactions		17	%		22	%		18	%		34	%		31	%		30	%		38	%		37	%		35	%		29	%		38	%		37	%		35	%

Funding

We believe that we have various funding options for the purchase of structured settlements.

• Origination. We generally originate the purchase of structured settlement receivables and either finance or sell the structured settlements we acquire. In September 2010, we entered into an arrangement to provide us up to $50.0 million to finance the purchase of non-life contingent structured settlements and in December 2012, we entered into a forward purchase and sale agreement to sell up to $40.0 million of life-contingent structured settlement receivables. At December 31, 2012, only $6.8 million and $6.6 million in commitments remained under our $50.0 million and $40.0 million facility respectively. We also have other parties to whom we have sold non-life contingent structured settlement assets and to whom we believe we can sell such assets in the future.

• Balance sheet. When we purchase structured settlements, we may hold them for investment, servicing the asset and collecting the periodic payments or we may finance or sell such assets through our arrangements described above.

Sources of Revenue

During the years ended December 31, 2012, 2011 and 2010, 72.8%, 27.0% and 12.4%, respectively, of our revenue was generated from our structured settlement segment. Most of our revenue from structured settlements currently is earned from the sale of structured settlements that we originate and mark-to-market adjustments. When we sell assets, the revenue consists of the difference between the sale proceeds and our carrying value. If we retain structured settlements on our balance sheet, we earn interest income over the life of the asset based on the discount rate used to determine the purchase price. During the years ended December 31, 2012, 2011 and 2010, 95.3%, 93.2% and 95.2%, respectively, of our revenue from our structured settlement segment was generated from the sale of structured settlements and mark-to-market adjustments and 2.4%, 4.6% and 3.5%, respectively, was generated from interest income. The following table shows the number of transactions we have

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originated, the face value of undiscounted future payments purchased, the weighted average purchase discount rate, the number of transactions sold and the weighted average discount rate at which the assets were sold (dollars in thousands):

	Year Ended December 31,
	2012			2011			2010
Number of transactions originated		965			873			565
Face value of undiscounted future payments purchased	$	130,136		$	96,628		$	47,207
Weighted average purchase discount rate		18.7	%		18.2	%		19.4	%
Number of transactions sold		939			601			630
Weighted average sale discount rate		10.6	%		10.5	%		8.9	%

Underwriting Procedures, Transaction Timeline and Process

We review all proposed structured settlement transactions and analyze the transaction documentation. We identify any statutory requirements, as well as any issues that could affect the structured settlement receivables, such as liens, judgments or bankruptcy filings. We also confirm the existence and value of the structured settlement receivables, that the purchase conforms to our established internal or external counterparty credit guidelines and that all applicable statutory requirements are complied with.

Each structured settlement transaction requires a court order approving the transaction. The individual court hearings are administered by a number of outside attorneys with whom we have developed relationships.

As of December 31, 2012, our typical structured settlement transaction was completed in an average of 63 days from the date of initial contact by the client. The following events would occur during such period:

• The individual who has a structured settlement seeks a lump-sum payment based on the settlement.

• After analyzing the settlement structure, we offer to provide a lump-sum amount to the individual in exchange for a set number of payments.

• We complete our underwriting process. Upon satisfactory review, counsel secures a court date and notifies interested parties, including any beneficiaries, owners and issuers of the pending transaction.

• A court hearing is held and the judge approves or denies the motion to sell and assign to us the agreed-upon portion of the individual’s structured settlement.

• Final review of the court-approved transaction takes place and we fund the payment to the individual.

Business Strategy

While we continue to assess our business strategy in light of our exit from the premium finance business, our current liquidity position, and the obligations we have undertaken in the Non-Prosecution Agreement, our primary objective is to maintain and, ultimately, grow shareholder value. Going forward, we intend to pursue the following strategies:

• Source Long-Term Capital. Our portfolio of life insurance policies requires significant cash outlays in order to pay the premiums necessary to keep policies in force. While we believe the bridge facility provides us with sufficient liquidity to continue to fund our portfolio of life insurance policies in the short-term, we will need to source more permanent capital to repay the bridge facility and pay premiums until the portfolio begins to generate sufficient positive cash flows. We intend to continue to diligently monitor our cash position and proactively seek to manage any impending liquidity shortfall, whether by raising additional debt or equity, selling certain of the life insurance policies that we own, further reducing operating expenses, allowing certain life insurance policies that we own with a lower return profile to lapse or a combination of all of the above.

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• Maintain and selectively grow our portfolio of life insurance policies. Subject to our cash management needs, we plan to continue to maintain our portfolio of life insurance policies and selectively grow our portfolio. We believe that our ability to value life insurance policies and our licenses to purchase policies directly from insureds positions us well to buy policies at attractive prices. We intend to hold the policies to maturity, though we may occasionally sell policies on the tertiary market as our cash management needs dictate or when the need to re-balance the portfolio or the opportunity for a strategic sale arises.

• Continue to expand structured settlement market presence. We expect to continue to build and enhance our database of structured settlements through a combination of advertising campaigns and targeted marketing efforts.

Regulation

Life Settlements

The sale and solicitation of life insurance is highly regulated by the laws and regulations of individual states and other applicable jurisdictions. The purchase of a policy directly from a policy owner is referred to as a life settlement and is regulated on a state-by-state basis. At December 31, 2012, we maintained licenses to transact life settlements in 25 of the states that currently require a license and could conduct business in 35 states and the District of Columbia. Our primary regulator is the Florida Office of Insurance Regulation. A majority of the state laws and regulations concerning life settlements are based on the Model Act and Model Regulation adopted by the National Association of Insurance Commissioners (NAIC) and the Model Act adopted by the National Conference of Insurance Legislators (NCOIL). The NAIC and NCOIL models include provisions which relate to: (i) provider and broker licensing requirements; (ii) reporting requirements; (iii) required contract provisions and disclosures; (iv) privacy requirements; (v) fraud prevention measures; (vi) criminal and civil remedies; (vii) marketing requirements; (viii) the time period in which policies cannot be sold in life settlement transactions; and (viii) other rules governing the relationship between policy owners, insured persons, insurer, and others.

Premium Financing Transactions

The making, enforcement and collection of premium finance loans is subject to extensive regulation. These regulations vary widely, but often require that premium finance lenders be licensed by the applicable jurisdiction and that certain disclosures be made to insureds, regulate the amount of late fees and finance charges that may be charged if a borrower is delinquent on its payments, and allow imposition of potentially significant penalties on lenders for violations of that jurisdiction’s insurance premium finance laws. In connection with the Non-Prosecution Agreement, we terminated our premium finance business and we are no longer originating loans that are subject to these regulations.

Structured Settlements

Each structured settlement transaction requires a court order approving the transaction. These “transfer petitions,” as they are known, are brought pursuant to specific, state structured settlement protection acts (SSPAs). These SSPAs vary somewhat but generally require (i) that the seller receive detailed disclosure statements regarding all key transaction terms; (ii) a three to ten day “cooling-off period” before which the seller cannot sign an agreement to sell their structured settlement payments; and (iii) a requirement that the entire transaction be reviewed and approved by a state court judge. The parties to the transaction must satisfy the court that the proposed transfer is in the best interests of the seller, taking into consideration the welfare and support of his dependents. Generally, a seller does not sell the entire amount of his settlement in one transaction. Once an order approving the sale is issued, the payments from the annuity provider are made directly to the purchaser of the structured settlement pursuant to the terms of the order.

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The National Association of Settlement Purchasers and the National Structured Settlements Trade Association are the principal structured settlement trade organizations, which have developed and promoted model legislation regarding transfers of settlements, referred to as the Structured Settlement Model Act. While most SSPAs are similar to the Structured Settlement Model Act, any SSPA may place fewer or additional affirmative obligations (such as notice or additional disclosure requirements) on the purchaser, require more extensive or less extensive findings on the part of the court issuing the transfer order, contain additional prohibitions on the actions of the purchaser or the provisions of a settlement purchase agreement, have different effective dates, require shorter or longer notice periods and otherwise vary in substance from the Model Act.

Competition

Life Settlements

Competition in the life settlement space comes through two channels: other life settlement providers and institutional investors. To be a life settlement provider and transact with the original holder of a life insurance policy requires, in most instances, a license on a state-by-state basis. The life settlement business is highly fragmented and, therefore, competition is diverse. Often, life settlement providers are originating on behalf of institutional investors who do not maintain the necessary licenses to transact in the secondary market for life insurance. These investors may have significantly more resources than the Company and can generally also transact directly in the tertiary market.

Structured Settlements

Competition in the structured settlement market is primarily based upon marketing, referrals and quality of customer service. Based on our industry knowledge, we believe that we are one of the larger acquirers of structured settlements in the United States. Our main competitors include J.G. Wentworth & Company, Inc. and Peachtree Settlement Funding, which recently merged but continue to operate in the marketplace as distinct entities.

Employees

At December 31, 2012, we employed 119 full-time employees and no part-time employees. None of our employees is subject to any collective bargaining agreement. We believe that our employee relations are good.

Item 1A. Risk Factors

Risk Factors Relating to Our General Business

The Company may not be able to raise long-term capital in a timely manner on favorable terms or at all.

The defense and investigation of the Company and certain employees in connection with the USAO Investigation, SEC investigation and related shareholder litigation has necessitated the expenditure of significant amounts of the Company’s capital. For the year ended December 31, 2012, the Company expensed an aggregate of $22.3 million in legal costs related to these matters and expects to continue to expend significant resources through 2013. The capital expended was not originally budgeted for these purposes. As a result of legal expenses incurred, the Company did not have sufficient resources to acquire additional life insurance policies for its portfolio as originally budgeted for purchase. Further, its cash on hand for the payments of premiums necessary to maintain its portfolio was reduced.

We estimate that we will need to pay $27.7 million in premiums to keep our current portfolio of life insurance policies in force through December 31, 2013 and an additional $26.3 million to keep the portfolio in force through 2014. As of December 31, 2012, we had approximately $20.3 million of cash and cash equivalents, including cash, and marketable securities and anticipated a liquidity shortfall in the second quarter of 2013. Accordingly, to avoid lapsing policies on March 27, 2013, a subsidiary of the Company borrowed $45 million in

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aggregate principal amount under an 18-month bridge facility provided by entities affiliated with certain of the Company’s shareholders. While this facility, which is secured by substantially all of the Company’s life insurance policies, should provide the Company with adequate liquidity to pay premiums on its portfolio of life insurance through 2013, the Company will still need to source permanent capital to repay the bridge facility. There can be no assurance, however, that the Company will be able to repay or refinance the bridge facility on favorable terms or at all. If the Company cannot obtain necessary financing to repay the bridge facility, it may need to sell policies that it owns, but there can be no assurance that the Company can consummate any sales or that, if consummated, sales of policies will be at or above their carrying values.

The Company has not settled the shareholder and D&O carrier litigation and resumption of the litigation or the indemnification and advancement obligations that the Company expects to undertake to settle this litigation could have a material adverse affect on the Company’s business, financial condition and results of operations.

On December 18, 2012, attorneys for the Company signed a Term Sheet for Global Settlement Regarding Imperial Holdings, Inc. Matters (the “Term Sheet”). In addition to the Company’s attorneys, the Term Sheet was signed by attorneys representing the plaintiffs in the class action lawsuits and derivative actions instituted against the Company, as well attorneys for the Company’s director and officer liability insurance carriers (“D&O Carriers”), certain individual defendants named in the class actions and the underwriters in the Company’s initial public offering. The Term Sheet sets forth the terms upon which each of the parties represented by the signatories would be willing to settle the class action litigation and derivative actions, as well as the declaratory relief action filed by our primary D&O Carrier, respectively. The Term Sheet is non-binding and subject to certain contingencies. As of the filing of this Annual Report, such settlement agreements have not been executed. While the Company has been and expects to continue to work in good faith with the other parties to execute settlement agreements as soon as is practicable, the Company can give no assurance that the parties will enter into the settlement agreements, that executed settlement agreements will receive the requisite court approvals, or that the Company will not be required to resume the defense of these matters. Protracted litigation, regardless of its outcome, could have a material adverse effect on the Company’s business, financial condition and results of operations.

Additionally and among other things, the term sheet contemplates that the Company will agree to advance the cost of legal expenses and otherwise indemnify certain individuals who would otherwise be entitled to coverage under portions of the Company’s director and officer liability insurance policies, including individuals who have been identified as “targets” of the USAO Investigation. The costs, individually or in the aggregate, of advancing for legal expenses on behalf of these individuals is currently not quantifiable, but could be substantial especially if any such individual is indicted as part of the USAO Investigation. These obligations will likely further strain the Company’s liquidity position and could have a material adverse affect on the Company’s financial position and results of operations.

The SEC Investigation could materially and adversely affect our business, our financial condition and results of operations.

On February 17, 2012, the Company received a subpoena issued by the staff of the SEC seeking documents from 2007 through the present, generally related to the Company’s premium finance business and corresponding financial reporting. The SEC is investigating whether any violations of federal securities laws have occurred and the Company has been cooperating with the SEC regarding this matter. The Company is unable to predict what action, if any, might be taken in the future by the SEC or its staff as a result of the matters that are the subject of the subpoena or what impact, if any, the cost of responding to the subpoena might have on the Company’s financial position, results of operations, or cash flows. The Company has not established any provision for losses in respect of this matter. Additionally, no assurance can be given that the ultimate outcome of the SEC Investigation will not result in administrative, civil or other proceedings or sanctions against the Company or our employees by the SEC or any other state or federal regulatory agencies. Such proceedings may result in the imposition of fines and penalties, actions against the Company or its employees, modifications to business

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practices and compliance programs or the imposition of sanctions against the Company. Protracted investigations could also impose substantial costs and distractions, regardless of its outcome. There can be no assurance that any final resolution of this and any similar matters will not have a material and adverse effect on the Company’s financial condition and results of operations.

Negative press from the USAO Investigation, the SEC Investigation and shareholder litigation or otherwise could have a material adverse effect on our business, financial condition and results of operations.

The negative press resulting from the USAO Investigation, SEC Investigation and shareholder litigation matters have harmed the Company’s reputation and could otherwise result in a loss of future business with our counterparties and business partners. It could also adversely affect the public’s perception of us and lead to reluctance by new parties to do business with us. For example, on October 7, 2011, we were informed by a commercial bank that it had decided to end all banking relationships with us. The abrupt termination of our commercial banking relationship resulted in operational difficulties and prevented the Company from transacting with any structured settlement financing counterparty for most of the fourth quarter of 2011. Other business partners and customers have also curtailed their relationships with us. As a result of these actions, we have experienced higher costs of doing business due to less favorable terms and/or the need to find alternative partners. We cannot assure you that additional business partners and customers will not similarly attempt to end or curtail their relationships with us or that potential financing sources will be willing to extend capital to the Company.

In general, the life finance and structured settlement industries periodically receive negative press from the media and consumer advocacy groups and as a result of litigation involving industry participants. A sustained campaign of negative press resulting from media or consumer advocacy groups, industry litigation or other factors could adversely affect the public’s perception of these industries as a whole, and lead to reluctance to sell assets to us or to provide us with third party financing. We also have received negative press from competitors. Any such negative press could have a material adverse effect on our business, financial condition and results of operations.

The USAO Investigation, the SEC Investigation, the shareholder litigation and other factors may make the market price of our stock highly volatile.

The market price of our common stock could fluctuate substantially in the future. This volatility may subject our stock price to material fluctuations due to the factors discussed in this “Risk Factors” section, and other factors including market reaction to the fair market value of our portfolio; rumors or dissemination of false information; changes in coverage or earnings estimates by analysts; our ability to meet analysts’ or market expectations; and sales of common stock by existing stockholders. For example, after the announcement of the USAO Investigation, our stock price dropped significantly.

The loss of any of our key personnel could have a material adverse effect on our business, financial condition and results of operations.

Our success depends to a significant degree upon the continuing contributions of our key executive officers, including Antony Mitchell, our chief executive officer. Mr. Mitchell has significant experience operating businesses in structured settlements and life finance transactions, which are highly regulated industries. If we should lose Mr. Mitchell such loss could have a material adverse effect on our business, financial condition and results of operations. Moreover, we do not maintain key man life insurance with respect to any of our executives.

Contractions in the market for life insurance policies could make it more difficult for us to opportunistically sell policies that we own.

A potential sale of a life insurance policy owned by us depends significantly on the market for life insurance, which may contract or disappear depending on the impact of potential government regulation, future

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economic conditions and/or other market variables. The secondary and tertiary markets for life insurance policies incurred a significant slowdown in 2008, which has continued through the present. Historically, many investors who invest in life insurance policies are foreign investors who are attracted by potential investment returns from life insurance policies issued by United States life insurers with high ratings and financial strength as well as by the view that such investments are non-correlated assets—meaning changes in the equity or debt markets should not affect returns on such investments. Changes in the value of the United States dollar and corresponding exchange rates as well as changes to the ratings of United States life insurers can cause foreign investors to suffer a reduction in the value of their United States dollar denominated investments and reduce their demand for such products. Additionally, we believe increased carrier litigation as well as criminal investigations involving the life settlement market, have significantly depleted the investor base. Any of the above factors could result in a further contraction of the market, which could make it more difficult for us to opportunistically sell our life insurance policies.

We compete with a number of other finance companies and may encounter additional competition.

There are a number of finance companies that compete with us. Many are significantly larger and possess considerably greater financial, marketing, management and other resources than we do. The life finance business and structured settlement business could also prove attractive to new entrants. As a consequence, competition in these sectors may increase. In addition, existing competitors may increase their market penetration and purchasing activities in one or more of the sectors in which we participate. Increased competition could result in reduced origination volume, increased acquisition costs, changes to discount rates and/or margin compression, each of which could materially adversely affect our revenue, which would have a material adverse effect on our business, financial condition and results of operations.

Failure to maintain the security of personally identifiable and other information, non-compliance with our contractual or other legal obligations regarding such information, or a violation of the Company’s privacy and security policies with respect to such information, could adversely affect us.

In connection with our business, we collect and retain significant volumes of certain types of personally identifiable and other information pertaining to our customers, and counterparties. The legal, regulatory and contractual environment surrounding information security and privacy is constantly evolving. A significant actual or potential theft, loss, fraudulent use or misuse of customer, counterparty, employee or our data by cybercrime or otherwise, non-compliance with our contractual or other legal obligations regarding such data or a violation of our privacy and security policies with respect to such data could adversely impact our reputation and could result in significant costs, fines, litigation or regulatory action.

We have limited operating experience.

Our business operations began in December 2006 and, in connection with the Non-Prosecution Agreement, we terminated our premium finance business, which had been our primary business since our inception. Consequently, we have limited operating history in both of our business segments generally, and our original business plan may no longer be viable, which makes it difficult to evaluate our business and future prospects. We intend to shift our life finance segment towards increased investment in life settlements. However, since our inception, we have had limited experience managing and dealing in life insurance policies. Therefore, the historical performance of our operations may be of limited relevance in predicting future performance. Furthermore, if we are unable to successfully refocus our life finance segment, our results of operations and financial condition could be materially and adversely affected.

Changes to statutory, licensing and regulatory regimes governing premium financing, life settlements or structured settlements, including the means by which we conduct such business, could have a material adverse effect on our activities and revenues.

Changes to statutory, licensing and regulatory regimes could result in the enforcement of stricter compliance measures or adoption of additional measures on us or on the insurance companies or annuity providers that stand

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behind the insurance policies that collateralize our premium finance loans and the structured settlements that we purchase, either of which could have a material adverse impact on our business activities and revenues. Any change to the regulatory regime covering the resale of any of these asset classes, including any change specifically applicable to our activities or to investor eligibility, could restrict our ability to finance, acquire or sell these assets or could lead to significantly increased compliance costs.

In addition, we are subject to various federal and state regulations regarding the solicitation of customers. The Federal Communications Commission and Federal Trade Commission have issued rules that provide for a national “do not call” registry. Under these rules, companies are prohibited from contacting any individual who requests to have his or her phone number added to the registry, except in certain limited instances. In February 2009, we received a citation for violating these rules. In the event we violate these rules in the future, we could be subject to a significant fine per violation or each day of a continuing violation, which could have a material adverse effect on our business, financial condition and results of operations.

Disasters, disruptions and other impairment of our information technologies and systems could adversely affect our business.

Our businesses depend upon the use of sophisticated information technologies and systems, including third-party hosted services and data facilities that we do not control. While we have developed certain disaster recovery plans and backup systems, these plans and systems are not fully redundant. A system disruption caused by a natural disaster, cybercrime or other impairment could have a material adverse effect on our results of operations and may cause delays, loss of critical data and reputational harm, and could otherwise prevent us from servicing our portfolio of life insurance policies or managing our structured settlements business.

Regulation of life settlement transactions as securities under the federal securities laws could lead to increased compliance costs and could adversely affect our ability to acquire or sell life insurance policies.

The SEC issued a task force report in July 2010 recommending that sales of life insurance policies in life settlement transactions be regulated as securities for purposes of the federal securities laws. To date, the SEC has not made such a recommendation to Congress. However, if the statutory definitions of “security” were amended to encompass life settlements, we could become subject to additional extensive regulatory requirements under the federal securities laws, including the obligation to register sales and offerings of life settlements with the SEC as public offerings under the Securities Act of 1933 and, potentially, the obligation to register as an “investment company” pursuant to the Investment Company Act of 1940.

Any legislation implementing such regulatory change or a change in the transactions that are characterized as life settlement transactions could lead to significantly increased compliance costs, increased liability risk and adversely affect our ability to acquire or sell life insurance policies in the future, which could have a material adverse effect on our business, financial condition and results of operations.

Risk Factors Related to Life Finance Transactions

The life insurance policies that we own or that secure our premium finance loans may be subject to contest, rescission and/or non-cooperation by the issuing life insurance company, which may have a material adverse effect on our business, financial condition and results of operations.

All states require that the initial purchaser of a new life insurance policy insuring the life of an individual have an “insurable interest,” meaning a stake in the insured’s health and wellbeing, rather than the insured’s death, in such individual’s life at the time of original issuance of the policy. Whether an insurable interest exists in the context of the purchase of a life insurance policy is critical because, in the absence of a valid insurable interest, life insurance policies are unenforceable under most states’ laws. Where a life insurance policy has been issued to a policyholder without an insurable interest in the life of the individual who is insured, the life insurance company may be able to void or rescind the policy. Even if the insurance company cannot void or

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rescind the policy, however, the insurable interest laws of a number of states provide that persons with an insurable interest on the life of the insured may have the right to recover a portion or all of the death benefit payable under a policy from a person who has no insurable interest on the life of the insured. These claims can generally only be brought if the policy was originally issued to a person without an insurable interest in the life of the insured.

Many states have enacted statutes prohibiting stranger-originated life insurance, or STOLI, in which an individual purchases a life insurance policy with the intention of selling it to a third-party investor, who lacks an insurable interest in the insured’s life. Some insurance carriers have contested policies as STOLI arrangements, specifically citing the existence of certain nonrecourse premium financing arrangements as a basis to challenge the validity of the policies used to collateralize the financing. Additionally, if an insurance carrier alleges that there were misrepresentations or fraud in the application process for an insurance policy, they may sue us or others to contest or rescind that policy. If the underlying policy for a premium finance loan we have made or a policy that we own is subject to a successful contestation or rescission, the fair value of the collateral or policy could be reduced to zero and the ability to sell an affected policy could be negatively impaired. Generally, life insurance policies may only be rescinded by the issuing life insurance company within the contestability period, which, in most states is two years. Lack of insurable interest can in some instances form the basis of loss of right to payment under a life insurance policy for many years beyond the contestability period and insurance carriers have been known to challenge claims for death benefits for more than five years from issuance of the policy.

As of December 31, 2012, 18.2%, 63.6%, 90.9% and 100%, respectively, of our premium finance loans outstanding were originated within one month, three months, six months and one year, respectively, of the issuance of the underlying life insurance policy. From time to time, insurance carriers have challenged the validity of a policies owned by us or that once served as the underlying collateral for a premium finance loan made by us. Although, to date, the impact on our business from these challenges has not been significant, the USAO Investigation, the SEC Investigation and the Non-Prosecution Agreement may cause us to experience more challenges to policies by insurers attempting to use such investigations and the Non-Prosecution Agreement as grounds for rescinding or contesting a policy. Any such future challenges to the policies that we own or hold as collateral for our premium finance loans may result in a cloud over title and collectability, increased costs, delays in payment of life insurance proceeds or even the voiding of a policy, and could have a material adverse effect on our business, financial condition and results of operations.

Additionally, if an insurance company successfully rescinds or contests a policy, the insurance company may not be required to refund all or, in some cases, any of the insurance premiums paid for the policy. While defending an action to contest or rescind a policy, premium payments may have to continue to be made to the life insurance company. Additionally, in the case of a policy that serves or served as collateral for a premium finance loan, the issuing insurance company may refuse to cooperate with us by not providing information, processing notices and/or paperwork required to document the transaction. Hence, in the case of a contest or rescission, premiums paid to the carrier (including those paid during the pendency of a contest or rescission action) may not be refunded. If they are not, we may suffer a complete loss with respect to a policy, which may adversely affect our business, financial condition and results of operations.

Premium financed life insurance policies are susceptible to a higher risk of fraud and misrepresentation on life insurance applications, which increases the risk of contest, rescission or non-cooperation by issuing life insurance carriers.

While fraud and misrepresentation by applicants and potential insureds in completing life insurance applications (especially with respect to the health and medical history and condition of the potential insured as well as the applicant’s net worth) exist generally in the life insurance industry, such risk of fraud and misrepresentation is heightened in connection with life insurance policies for which the premiums are financed through premium finance loans. In particular, there is a risk that applicants and potential insureds may not answer truthfully or completely to any questions related to whether the life insurance policy premiums will be financed through a premium finance loan or otherwise, the applicants’ purpose for purchasing the policy or the applicants’

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intention regarding the future sale or transfer of the life insurance policy. Such risk may be further increased to the extent life insurance agents communicate to applicants and potential insureds regarding potential premium finance arrangements or transfer of life insurance policies through payment defaults under premium finance loans. In the ordinary course of business, our sales team received inquiries from life insurance agents and brokers regarding the availability of premium finance loans for their clients. However, any communication between the life insurance agent and the potential policyholder or insured is beyond our control and we may not know whether a life insurance agent discussed with the potential policyholder or the insured the possibility of a premium finance loan by us or the subsequent transfer of the life insurance policy. Consequently, notwithstanding the representations and certifications we obtain from the policyholders, insureds and the life insurance agents, there is a risk that we may finance premiums for policies subject to contest or rescission by the insurance carrier based on fraud or misrepresentation in any information provided to the life insurance company, including the life insurance application.

Misrepresentations, fraud, omissions or lack of insurable interest can also, in some instances, form the basis of loss of right to payment under a life insurance. Based on statements made in the Non-Prosecution Agreement, there is a risk that policies underlying our outstanding loans or that we own may increasingly be challenged by insurance carriers. Any such future challenges to the policies that we own or hold as collateral for our premium finance loans may result in increased costs, delays in payment of life insurance proceeds or even the voiding of a policy, a reduction in the fair value of a loan or policy and could have a material adverse effect on our business, financial condition and results of operations.

As of December 31, 2012, of the 214 policies in our life settlement portfolio, 171 policies were previously premium financed. The Company acquired 12 of those life settlements as a result of defaults under premium finance loans originated as part of the retail non-seminar business.

Our success in operating our life finance business is dependent on making accurate assumptions about life expectancies and maintaining adequate cash balances to pay premiums.

If we purchase a life settlement or retain a life insurance policy as a result of a borrower’s default under a premium finance loan, we will be responsible for paying all premiums necessary to keep the policy in force. We estimate that we will need to pay $27.7 million in premiums to keep our current portfolio of life insurance policies in force through 2013 and an additional $26.3 to keep the portfolio in force through 2014. As of December 31, 2012, we had approximately $20.3 million of cash, cash equivalents, and marketable securities including $1.2 million of restricted cash. By using cash reserves to pay premiums for retained life insurance policies, we will have less or no cash available for other business purposes. Therefore, our cash flows and the required amount of our cash reserves to pay premiums will become dependent on our assumptions about life expectancies being accurate.

Life expectancies are estimates of the expected longevity or mortality of an insured and are inherently uncertain. A life expectancy obtained on an insured for a life insurance policy may not be predictive of the future longevity or mortality of the insured. Inaccurate forecasting of an insured’s life expectancy could result from, among other things: (i) advances in medical treatment (e.g., new cancer treatments) resulting in deaths occurring later than forecasted; (ii) inaccurate diagnosis or prognosis; (iii) changes to life style habits or the individual’s ability to fight disease, resulting in improved health; (iv) reliance on outdated or incomplete age or health information about the insured, or on information that is inaccurate (whether or not due to fraud or misrepresentation by the insured); or (v) improper or flawed methodology or assumptions in terms of modeling or crediting of medical conditions. In forecasting estimated life expectancies, we utilize third party medical underwriters to evaluate the medical condition and life expectancy of each insured. The firms that provide health assessments and life expectancy information may depend on, among other things, actuarial tables and model inputs for insureds and third-party information from independent physicians who, in turn, may not have personally performed a physical examination of any of the insureds and may have relied solely on reports provided to them by attending physicians with whom they were authorized to communicate. The accuracy of this information has not been and will not be independently verified by us or our service providers.

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As described further in “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” the Company utilizes life expectancy reports from two life expectancy providers, 21st Services, LLC (“21st Services”) and AVS Underwriting LLC (“AVS”). On January 22, 2013, 21st Services announced significant revisions to its underwriting methodology. On February 4, 2013, 21st Services then announced that it was correcting errors discovered in its revised methodology. According to the provider, these revisions have generally been understood to lengthen the average reported life expectancy furnished by 21st Services by 19% and, accordingly, will likely negatively impact the valuation of the Company’s portfolio of life insurance policies. However, the Company has not received life expectancy reports from 21st Services that utilize its revised methodology and the fair value of the Company’s portfolio of life insurance policies at December 31, 2012 does not take into account changes to life expectancy estimates that may result from 21st Services updated methodology. While the Company is still evaluating the general impact that these revisions might have on the value of its portfolio, the Company may determine to cease utilizing, or adjust the weighting of, 21st Services reports as an input into its fair value model in future periods as market practice responds to the adjusted methodology. Additionally, the Company’s other life expectancy provider, AVS Underwriting LLC (“AVS”), filed for federal bankruptcy protection under Chapter 11 on February 12, 2013. The Company cannot, at this time, predict what impact the bankruptcy filing will have on the Company’s ability to procure life expectancy reports from AVS in the future, AVS’s ability to continue its operations or whether other market participants will continue to use AVS life expectancy reports for valuation purposes going forward. As a result of these developments, the Company may need to adjust the application of life expectancy reports in its fair value methodology or source reports from different life expectancy providers in future periods, which could have a material impact on the Company’s fair value calculations.

If life expectancy valuations underestimate the longevity of the insureds, the actual maturity date of the life insurance policies may therefore be longer than projected. Consequently, we may not have sufficient cash for payment of insurance premiums and we may allow the policies to lapse or be forced to sell policies, resulting in a loss of our investment in those policies, or if we continue to fund premium payments, the time period within which we could expect to receive a return of our investment in such life insurance policies may be extended, either of which could have a material adverse effect on our business, financial condition and results of operations.

Additionally, if widely used mortality tables are adjusted, as they were in 2008, to generally assume prolonged life expectancies, the fair value of our portfolio of life insurance policies could be adversely affected, which may have a material adverse effect on our business, operations and financial results. Further, updated life expectancy reports may indicate that an insured’s health has improved since the Company last procured a life expectancy report, which would generally result in a decrease in the fair value of the life insurance policy insuring the life of that insured.

Uncooperative co-trustees may impair the Company’s ability to service its life insurance policies.

In certain instances, change of ownership forms in respect of life insurance policies that the Company has acquired through foreclosures associated with defaulted premium finance loans have not been processed by the applicable insurance carrier and remain in their original trusts. In these instances, although the Company has, among other things, contractual rights entitling it to direct the proceeds of the policies and there is a professional co-trustee authorized to exercise all rights over the policies, it may still need the cooperation of the non-professional co-trustee to obtain information from the insurance carrier necessary to service the policy. Without this information, it is possible that a policy could lapse, as was the case with one policy in the quarter ended September 30, 2012. As a result of this lapse, the Company suffered a complete loss on its investment. While the value of this policy was immaterial, further lapses could have a material adverse affect on the Company’s financial position and results of operations.

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The timing of receipt of expected death benefits from our portfolio of life insurance policies could be volatile, which could have a material adverse effect on our cash flows and liquidity.

Timely receipt of expected cash flows from mortalities is necessary in order for us to service our portfolio of life insurance policies and manage our cash balances. Cash flow volatility generally is inversely correlated to the size of a life settlement portfolio, meaning that the more lives in the portfolio, the less cash flow volatility. We have terminated our premium finance business and also have significantly reduced our purchases of life insurance policies. As a result, our portfolio is smaller than previously anticipated and thus subject to more volatility than we had previously anticipated, which may have a material adverse effect on our business, financial condition and results of operation.

Delays in payment and non-payment of life insurance policy proceeds can occur for many reasons and any such delays may have a material adverse effect on our business, financial condition and results of operations.

A number of arguments may be made by former beneficiaries (including but not limited to spouses, ex-spouses and descendants of the insured) under a life insurance policy, by the beneficiaries of the trust holding the policy, by the estate or legal heirs of the insured or by the insurance company issuing such policy, to deny or delay payment of proceeds following the death of an insured, including arguments related to lack of mental capacity of the insured, contestability or suicide provisions in a policy. In addition, the insurable interest and life settlement laws of certain states may prevent or delay the liquidation of the life insurance policy serving as collateral for a loan. The statements in the Non-Prosecution Agreement may make such delays more likely and may increase carrier challenges to paying out death claims. Furthermore, if the death of an insured cannot be verified and no death certificate can be produced, the related insurance company may not pay the proceeds of the life insurance policy until the passage of a statutory period (usually five to seven years) for the presumption of death without proof. Such delays in payment or non-payment of policy proceeds may have a material adverse effect on our business, financial condition and results of operations.

Our Life Finance segment is highly regulated; changes in regulation, the USAO Investigation and the SEC Investigation could materially adversely affect our ability to conduct our business.

Our Life Finance segment is highly regulated. Generally, as a condition to the issuance of licenses held by the Company’s subsidiaries in the Life Finance segment, we and/or our licensed subsidiaries submit to potential state regulatory examinations. Our life settlement provider subsidiary is still undergoing an examination by the Florida Office of Insurance Regulation that was initiated after we became aware of the USAO Investigation. To the extent that other state insurance or other regulators initiate their own investigations as a result of the USAO Investigation, the SEC Investigation, or the Florida Office of Insurance Regulation or such other regulators take other action such as imposing fines or rescinding our license in response thereto, our ability to conduct the businesses comprising our life finance segment may be materially and adversely affected, which could have a material adverse effect on our business, results of operations and financial condition.

Some life insurance companies are opposed to the financing of life insurance policies.

Some life insurance companies and their trade associations have voiced concerns about the life settlement and premium finance industries generally and the transfer of life insurance policies to investors. These life insurance companies may oppose the transfer of a policy to, or honoring of a life insurance policy held by, third parties unrelated to the original insured/owner, especially when they may believe the premiums for such life insurance policies might have been financed, directly or indirectly, by investors that lacked an insurable interest in the continuing life of the insured. If the life insurance companies seek to contest or rescind life insurance policies acquired by us based on such aversion to the financing of life insurance policies, we may experience a substantial loss with respect to the related premium finance loans and the underlying life insurance policies, which could have a material adverse effect on our business, financial condition and results of operations. These life insurance companies and their trade associations may also seek additional state and federal regulation of the

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life settlement and premium finance industries. If additional life settlement regulations were adopted, we may experience material adverse effects on our business, financial condition and results of operations.

Uncertainty in valuing the life insurance policies we own or that collateralize our premium finance loans can affect the fair value of the life insurance policies. If the fair value of the life insurance policies decreases, we will incur losses with respect to the policies we own, and losses with respect to our premium finance loans if the fair value of the collateral is less than the carrying value of the loan.

We evaluate all of our premium finance loans for impairment, on a monthly basis, based on the fair value of the underlying life insurance policies, as the collectability is primarily dependent on the fair value of the policy serving as collateral. For loans without lender protection insurance, the fair value of the policy is determined using our valuation model, which is a Level 3 fair value measurement. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies—Fair Value Measurement Guidance.” For loans with lender protection insurance, the insured value is also considered when determining the fair value of the life insurance policy. The lender protection insurer limits the amount of coverage to an amount equal to or less than its determination of the value of the life insurance policy underlying our premium finance loan based on the lender protection insurer’s own models and assumptions. For all loans, the amount of impairment, if any, is calculated as the difference in the fair value of the life insurance policy and the carrying value of the loan. A loan impairment valuation is established as losses on our loans are estimated and charged to the provision for losses on loans receivable, and the provision is charged to earnings. Once established, the loan impairment valuation cannot be reversed to earnings.

A large portion of our borrowers may default by not paying off the loan and relinquish ownership of the life insurance policy to us in exchange for our release of the underlying loan. When we obtain ownership of a life insurance policy, either by purchasing the policy on the secondary or tertiary markets or when one of our premium finance borrowers defaults, we record the investment in the policy as an investment in life settlements at fair value as of the date of relinquishment. At the end of each reporting period, we re-value the life insurance policies we own. To the extent that the calculation results in an adjustment to the fair value of the policy, we record this as a unrealized change in fair value of our investment in life insurance policies. This evaluation of the fair value of life insurance policies is inherently subjective as it requires estimates and assumptions that are susceptible to significant revision as more information becomes available. Using our valuation model, we determine the fair value of life insurance policies on a discounted cash flow basis. The most significant assumptions that we estimate are the life expectancy of the insured, expected premium payments and the discount rate. The discount rate is based upon current information about market interest rates, the credit exposure to the insurance company that issued the life insurance policy and our estimate of the risk margin an investor in the policy would require. We estimate the life expectancy of an insured by analyzing medical reviews from third-party medical underwriters, who evaluate the health of the insured by examining the insured’s historical and current medical records. We then calculate a mortality impairment factor for the insured as that factor which, when applied to our mortality table, reproduces the same life expectancy for that insured. We use the resulting mortality impairment factor to generate a series of probabilistic future cash flows for the policy, which we then discount and aggregate to arrive at the fair value of the policy. If we are unable to accurately estimate any of these factors, or if the actuarial tables are revised (as they were in 2008), we may have to write down the fair value of our investments in life settlements, which could materially and adversely affect our results of operations and our financial condition.

Insurable interest concerns regarding a life insurance policy can also adversely impact its fair value. A claim or the perceived potential for a claim for rescission or a challenge to insurable interest by an insurance company or by persons with an insurable interest in the insured of a portion of or all of the policy death benefit can negatively impact the fair value of a life insurance policy. If the USAO Investigation, SEC Investigation or Non-Prosecution Agreement cause us to experience more challenges to life insurance than we otherwise would experience, those challenges could negatively impact the fair value of the life insurance policies that we own.

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If the calculation of fair value results in a decrease in value, we record this reduction as a loss. As and when loan impairment valuations are established due to the decline in the fair value of the policies collateralizing our loans, our net income will be reduced by the amount of such impairment valuations in the period in which the valuations are established. If we determine that it is appropriate to increase the discount rate further or adjust other inputs to our fair value model further, if we are otherwise unable to accurately estimate the assumptions in our valuation model, or if other factors cause the fair value of our life insurance policies to decrease, the carrying value of our assets may be materially adversely affected and may materially and adversely effect our business, financial condition and results of operations.

If a regulator or court decides that trusts that are formed to own many of the life insurance policies that serve as collateral for our premium finance loans do not have an insurable interest in the life of the insured, such determination could have a material adverse effect on our business, financial condition and results of operations.

Generally, there are two forms of insurable interests in the life of an individual, familial and financial. Additionally, an individual is deemed to have an insurable interest in his or her own life. It is also a common practice for an individual, as a grantor or settlor, to form an irrevocable trust to purchase and own a life insurance policy insuring the life of the grantor or settlor, where the beneficiaries of the trust are persons who themselves, by virtue of certain familial relationships with the grantor or settlor, also have an insurable interest in the life of the insured. In the event of a payment default on our premium finance loan, we will generally acquire life insurance policies owned by trusts (or the beneficial interests in the trust itself) that we believe had an insurable interest in the life of the related insureds. However, a state insurance regulatory authority or a court may determine that the trust or policy owner does not have an insurable interest in the life of the insured or that we, as lender, only have a limited insurable interest, which may be less than the amounts due to us. Any such determination could result in our being unable to receive the proceeds of the life insurance policy, which could lead to a total loss of all amounts loaned in the premium finance transaction or a total loss on our investment in life settlements. Any such loss or losses could have a material adverse effect on our business, financial condition and results of operations.

Bankruptcy of the insured, a beneficiary of the trust owning the life insurance policy or the trust itself could prevent a claim under our lender protection insurance policy.

In many instances, individuals establish an irrevocable trust to hold and own their life insurance policy for estate planning reasons. The majority of the premium finance borrowers are trusts owning life insurance policies. A bankruptcy of the insured, a bankruptcy of a beneficiary of a trust owning the life insurance policy or a bankruptcy of the trust itself could prevent us from acquiring the life insurance policy following an event of default under the related premium finance loan, unless consent of the applicable bankruptcy court is obtained or it is determined that the automatic stay generally arising following a bankruptcy filing is not applicable.

Our lender protection insurance policies have significant exclusions and limitations.

As of December 31, 2012, we had 5 loans outstanding that were covered by our lender protection insurance. Coverage under our lender protection insurance policies is not comprehensive and each of these policies is subject to significant exclusions, limitations and coverage gaps. In the event that any of the exclusions or limitations to coverage set forth in the lender protection insurance policies are applicable or there is a coverage gap, there will be no coverage for any losses we may suffer, which would have a material adverse effect on our business, financial condition and results of operations. The coverage exclusions include, but are not limited to:

• the lapse of the related life insurance policy due to the failure to pay sufficient premiums during the term of the applicable premium finance loan;

• certain losses relating to situations where the life insured has died and there has been a bankruptcy or insolvency of the life insurance company that issued the applicable policy;

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• any loss caused by our fraudulent, illegal, criminal, malicious or grossly negligent acts;

• a surrender of the related life insurance policy to the issuing life insurance carrier or the sale of such policy or the beneficial interest therein, in each case without the prior written consent of the lender protection insurer;

• our failure to timely obtain necessary rights, free and clear of any lien or encumbrance, with respect to the applicable life insurance policy as required under the lender protection insurance policy;

• our failure to timely submit a properly completed proof of loss certificate to the lender protection insurance policy insurer;

• our failure to timely notify the lender protection insurance policy insurer of:

• the occurrence of certain prohibited acts, as described in the lender protection insurance policy, or

• material non-compliance of the related loan with applicable laws, in each case after obtaining actual knowledge of such events;

• our making of a claim under the lender protection insurance policy knowing the same to be fraudulent; or

• the related life insurance policy being contested prior to the effective date of the related coverage certificate issued under the lender protection insurance policy and we have actual knowledge of such contest.

While we do not believe the conduct outlined in the Non-Prosecution Agreement resulted in a violation of the terms of any of our lender protection insurance policies, following the announcement of the USAO Investigation and entry into the Non-Prosecution Agreement, our lender protection insurer communicated to the Company that it was reserving its rights under our various lender protection insurance policies.

Failure to perfect a security interest in the underlying life insurance policy or the beneficial interests therein could result in our interest being subordinated to other creditors.

Payment by the related premium finance loan borrower of amounts owed pursuant to each loan is secured by the underlying life insurance policy or by the beneficial interests in a trust established to hold the insurance policy. If we fail to perfect a security interest in such policy or beneficial interests, our interest in such policy or beneficial interests may be subordinated to those of other parties, including, in the event of a bankruptcy or insolvency, a bankruptcy trustee, receiver or conservator.

We are dependent on the creditworthiness of the life insurance companies that issue the policies serving as collateral for our premium finance loans. If a life insurance company defaults on its obligation to pay death benefits on a policy we own, we would experience a loss of our investment, which could have a material adverse effect on our business, financial condition and results of operations.

We are dependent on the creditworthiness of the life insurance companies that issue the policies that we own or that serve as collateral for our premium finance loans. We assume the credit risk associated with life insurance policies issued by various life insurance companies. Furthermore, there is a concentration of life insurance companies that issue the policies that we own or that serve as collateral for our premium finance loans. Approximately 23% of the policies that we owned as of December 31, 2012 were secured by life insurance policies issued by four life insurance companies. The failure or bankruptcy of any such life insurance company or annuity company could have a material adverse impact on our financial condition and results of operation. A life insurance company’s business tends to track general economic and market conditions that are beyond its control, including extended economic recessions or interest rate changes. Changes in investor perceptions regarding the strength of insurers generally and the policies or annuities they offer can adversely affect our ability to sell or finance our assets. Adverse economic factors and volatility in the financial markets may have a material adverse effect on a life insurance company’s business and credit rating, financial condition and operating results, and an

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issuing life insurance company may default on its obligation to pay death benefits on the life insurance policies that we own or that serve as collateral for our premium finance loans. In such event, we would experience a loss of our investment in such life insurance policies, which could have a material adverse effect on our business, financial condition and results of operations.

If a life insurance company is able to increase the premiums due on life insurance policies that we own or finance, it will adversely affect our returns on such life insurance policies.

To keep the life insurance policies that we own or finance in force, insurance premiums due must be timely paid. If a life insurance company is able to increase the cost of insurance charged for any of the life insurance policies that we own or finance, the amounts required to be paid for insurance premiums due for these life insurance policies may increase, requiring us to incur additional costs for the life insurance policies, which may adversely affect returns on such life insurance policies and consequently reduce the secondary market value of such life insurance policies. Failure to pay premiums on the life insurance policies when due will result in termination or “lapse” of the life insurance policies. The insurer may in a “lapse” situation view reinstatement of a life insurance policy as tantamount to the issuance of a new life insurance policy and may require the current owner to have an insurable interest in the life of the insured as of the date of the reinstatement. In such event, we would experience a loss of our investment in such life insurance policy.

Risk Factors Related to Structured Settlements

We are dependent on third parties to purchase our structured settlements. Any inability to sell structured settlements or, in the alternative, to access additional capital to purchase structured settlements, may have a material adverse effect on our ability to grow our business, our financial condition and results of operations.

We are dependent on third parties to purchase our structured settlements. Our ability to grow our business depends upon our ability to sell our structured settlements at favorable discount rates and to establish alternative financing arrangements.

We may not be able to continue to sell our structured settlements to third parties at favorable discount rates or obtain financing through borrowings or other means on acceptable terms to satisfy our cash requirements. We were unable to obtain such financing through most of the fourth quarter of 2011. Any future inability to obtain financing or the unavailability of third party purchasers could have a material adverse effect on our future ability to grow our business.

Any change in current tax law could have a material adverse effect on our business, financial condition and results of operations.

The use of structured settlements is largely the result of the favorable federal income tax treatment of such transactions. In 1979, the Internal Revenue Service issued revenue rulings that the income tax exclusion of personal injury settlements applied to related periodic payments. Thus, claimants receiving installment payments as compensation for a personal injury were exempt from all federal income taxation, provided certain conditions were met. This ruling, and its subsequent codification into federal tax law in 1982, resulted in the proliferation of structured settlements as a means of settling personal injury lawsuits. Changes to tax policies that eliminate this exemption of structured settlements from federal taxation could have a material adverse effect on our future profitability. If the tax treatment for structured settlements were changed adversely by a statutory change or a change in interpretation, the dollar volume of structured settlements could be reduced significantly, which would also reduce the level of our structured settlement business. In addition, if there were a change in the federal tax code that would result in adverse tax consequences for the assignment or transfer of structured settlements, such change could have a material adverse effect on our business, financial condition and results of operations.

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Fluctuations in discount rates or interest rates may decrease our yield on structured settlement transactions.

Our profitability is directly affected by levels of and fluctuations in interest rates. Such profitability is largely determined by the difference between the discount rate at which we purchase the structured settlements and the discount rate at which we can resell these assets or the interest rate at which we can finance those assets. We may not be able to continue to purchase structured settlements at current or historical discount rates. Structured settlements are purchased at effective yields which are fixed, while rates at which structured settlements are sold, with the exception of forward purchase arrangements, are generally a function of the prevailing market rates for short-term borrowings. As a result, decreases in the discount rate at which we purchase structured settlements or increases in prevailing market interest rates after structured settlements are acquired could have a material adverse effect on our yield on structured settlement transactions, which could have a material adverse effect on our business, financial condition and results of operations.

The insolvency of a holder of a structured settlement could have an adverse effect on our business, financial condition and results of operations.

Our rights to scheduled payments in structured settlement transactions will be adversely affected if any holder of a structured settlement, the special purpose vehicle to which an insurance company assigns its obligations to make payments under the settlement (the “Assumption Party”) or the annuity provider becomes insolvent and/or becomes a debtor in a case under the Bankruptcy Code.

If a holder of a structured settlement were to become a debtor in a case under the Bankruptcy Code, a court could hold that the scheduled payments transferred by the holder under the applicable settlement purchase agreement would not constitute property of the estate of the claimant under the Bankruptcy Code. If, however, a trustee in bankruptcy or other receiver were to assert a contrary position, such as by requiring us (or any securitization vehicle) to establish our right to those payments under federal bankruptcy law or by persuading courts to recharacterize the transaction as secured loans, such result could have a material adverse effect on our business. If the rights to receive the scheduled payments are deemed to be property of the bankruptcy estate of the claimant, the trustee may be able to avoid assignment of the receivable to us.

Furthermore, a general creditor or representative of the creditors (such as a trustee in bankruptcy) of an Assumption Party could make the argument that the payments due from the annuity provider are the property of the estate of such Assumption Party (as the named owner thereof). To the extent that a court would accept this argument, the resulting delays or reductions in payments on our receivables could have a material adverse effect on our business, financial condition and results of operations.

If the identities of structured settlement holders become readily available, it could have an adverse effect on our structured settlement business, financial condition and results of operations.

Brand awareness is critical to growing market share. We expect to continue to build and enhance our database of structured settlements through a combination of commercial and internet advertising campaigns and targeted marketing efforts. If the identities of structured settlement holders in our database were to become readily available to our competitors or to the general public, we could face increased competition and the value of our proprietary database would be diminished, which would have a negative effect on our structured settlement business, financial condition and results of operations.

Adverse judicial developments could have an adverse effect on our business, financial condition and results of operation.

Adverse judicial developments have occasionally occurred in the structured settlement industry, especially with regard to anti-assignment concerns and issues associated with non-disclosure of material facts and associated misconduct. For example, in the 2008 case of 321 Henderson Receivables, LLC v. Tomahawk, the

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California County Superior Court (Fresno County, Case No. 08CECG00797—July 2008 Order (unreported)) ruled that (i) certain structured settlement sales were barred by anti-assignment provisions in the settlement documents, (ii) the transfers were loans, not sales, that violated California’s usury laws and (iii) for similar reasons numerous other court-approved structured settlement sales may be void. Although the Tomahawk decision was subsequently reversed by the California Court of Appeal, the Superior Court decision had a negative effect on the structured settlement industry by casting doubt on the ability of a structured settlement recipient to sell portions of the payment streams. Any similar adverse judicial developments calling into doubt such laws and regulations could materially and adversely affect our investments in structured settlements.

Risk Factors Relating to Our Common Stock

Provisions in our executive officers’ employment agreements could impede an attempt to replace or remove our directors or otherwise effect a change of control, which could diminish the price of our common stock.

We have entered into employment agreements with certain of our executive officers. The agreement for our chief executive officer provides for substantial payments upon the occurrence of certain triggering events, including a material diminution of his base salary or responsibilities. These payments are equal to three times the sum of his base salary and the average of the three years’ annual cash bonus, unless the triggering event occurs during the first three years of their respective employment agreements, in which case the payments are equal to six times base salary. These payments may deter any transaction that would result in a change in control, which could diminish the price of our common stock.

Provisions in our articles of incorporation and bylaws could impede an attempt to replace or remove our directors or otherwise effect a change of control, which could diminish the price of our common stock.

Our articles of incorporation and bylaws contain provisions that may entrench directors and make it more difficult for shareholders to replace directors even if the shareholders consider it beneficial to do so. In particular, shareholders are required to provide us with advance notice of shareholder nominations and proposals to be brought before any annual meeting of shareholders, which could discourage or deter a third party from conducting a solicitation of proxies to elect its own slate of directors or to introduce a proposal. In addition, our articles of incorporation eliminate our shareholders’ ability to act without a meeting and require the holders of not less than 50% of the voting power of our common stock to call a special meeting of shareholders.

These provisions could delay or prevent a change of control that a shareholder might consider favorable. For example, these provisions may prevent a shareholder from receiving the benefit from any premium over the market price of our common stock offered by a bidder in a potential takeover. Even in the absence of an attempt to effect a change in management or a takeover attempt, these provisions may adversely affect the prevailing market price of our common stock if they are viewed as discouraging changes in management and takeover attempts in the future. Furthermore, our articles of incorporation and our bylaws provide that the number of directors shall be fixed from time to time by our board of directors, provided that the board shall consist of at least three and no more than fifteen members.

Certain laws of the State of Florida could impede a change of control, which could diminish the price of our common stock.

As a Florida corporation, we are subject to the Florida Business Corporation Act, which provides that a person who acquires shares in an “issuing public corporation,” as defined in the statute, in excess of certain specified thresholds generally will not have any voting rights with respect to such shares unless such voting rights are approved by the holders of a majority of the votes of each class of securities entitled to vote separately, excluding shares held or controlled by the acquiring person. The Florida Business Corporation Act also contains a statute which provides that an affiliated transaction with an interested shareholder generally must be approved

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by (i) the affirmative vote of the holders of two thirds of our voting shares, other than the shares beneficially owned by the interested shareholder, or (ii) a majority of the disinterested directors.

One of our subsidiaries, Imperial Life Settlements, LLC, a Delaware limited liability company, is licensed as a viatical settlement provider and is regulated by the Florida Office of Insurance Regulation. As a Florida viatical settlement provider, Imperial Life Settlements, LLC is subject to regulation as a specialty insurer under certain provisions of the Florida Insurance Code. Under applicable Florida law, no person can finally acquire, directly or indirectly, 10% or more of the voting securities of a viatical settlement provider or its controlling company without the written approval of the Florida Office of Insurance Regulation. Accordingly, any person who acquires beneficial ownership of 10% or more of our voting securities will be required by law to notify the Florida Office of Insurance Regulation no later than five days after any form of tender offer or exchange offer is proposed, or no later than five days after the acquisition of securities or ownership interest if no tender offer or exchange offer is involved. Such person will also be required to file with the Florida Office of Insurance Regulation an application for approval of the acquisition no later than 30 days after the same date that triggers the 5-day notice requirement.

The Florida Office of Insurance Regulation may disapprove the acquisition of 10% or more of our voting securities by any person who refuses to apply for and obtain regulatory approval of such acquisition. In addition, if the Florida Office of Insurance Regulation determines that any person has acquired 10% or more of our voting securities without obtaining its regulatory approval, it may order that person to cease the acquisition and divest itself of any shares of our voting securities which may have been acquired in violation of the applicable Florida law. Due to the requirement to file an application with and obtain approval from the Florida Office of Insurance Regulation, purchasers of 10% or more of our voting securities may incur additional expenses in connection with preparing, filing and obtaining approval of the application, and the effectiveness of the acquisition will be delayed pending receipt of approval from the Florida Office of Insurance Regulation.

The Florida Office of Insurance Regulation may also take disciplinary action against Imperial Life Settlements, LLC’s license if it finds that an acquisition of our voting securities is made in violation of the applicable Florida law and would render the further transaction of business hazardous to our customers, creditors, shareholders or the public.

Item 1B. Unresolved Staff Comments

None.

Item 2. Properties

Our principal executive offices are located at 701 Park of Commerce Boulevard, Boca Raton, Florida 33487 and consist of approximately 21,000 square feet of leased office space. We consider our facilities to be adequate for our current operations.

Item 3. Legal Proceedings

Litigation

The SEC Investigation

We are subject to an investigation by the SEC. We received a subpoena issued by the staff of the SEC on February 17, 2012, seeking documents from 2007 through the present that are generally related to the Company’s premium finance business and corresponding financial reporting. The SEC is investigating whether any violations of federal securities laws have occurred and the Company is cooperating with the SEC regarding this matter. The Company is unable to predict the outcome of the SEC Investigation or estimate the amount of any

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possible sanction, which could include a fine, penalty, or court order prohibiting specific conduct, any of which could be material. No provision for losses has been recorded for this exposure.

Class Action Litigation, Derivative Demands and the Insurance Coverage Declaratory Relief Complaint

The Class Action Litigation

Initially on September 29, 2011, the Company, and certain of its officers and directors were named as defendants in a putative securities class action filed in the Circuit Court of the 15th Judicial Circuit in and for Palm Beach County, Florida, entitled Martin J. Fuller v. Imperial Holdings, Inc. et al. Also named as defendants were the underwriters of the Company’s initial public offering. That complaint asserted claims under Sections 11, 12 and 15 of the Securities Act of 1933, as amended, alleging that the Company should have but failed to disclose in the registration statement for its initial public offering purported wrongful conduct relating to its life finance business which gave rise to the USAO Investigation. On October 21, 2011, an amended complaint was filed that asserts claims under Sections 11, 12 and 15 of the Securities Act of 1933, based on similar allegations. On October 25, 2011, defendants removed the case to the United States District Court for the Southern District of Florida.

On October 31, 2011, another putative class action case was filed in the Circuit Court of the 15th Judicial Circuit in and for Palm Beach County, Florida, entitled City of Roseville Employees Retirement System v. Imperial Holdings, et al, naming the same defendants and also bringing claims under Sections 11, 12 and 15 of the Securities Act based on similar allegations. On November 28, 2011, defendants removed the case to the United States District Court for the Southern District of Florida. The plaintiffs in the Fuller and City of Roseville cases moved to remand their cases back to state court. Those motions were fully briefed and argued.

On November 18, 2011, a putative class action case was filed in the United States District Court for the Southern District of Florida, entitled Sauer v. Imperial Holdings, Inc., et al, naming the same defendants and bringing claims under Sections 11 and 15 of the Securities Act of 1933 based on similar allegations.

On December 14, 2011, another putative class action case filed in United States District Court for the Southern District of Florida, entitled Pondick v. Imperial Holdings, Inc., et al., naming the same defendants and bringing claims under Sections 11, 12, and 15 of the Securities Act of 1933 based on similar allegations.

On February 24, 2012, the four putative class actions were consolidated and designated: Fuller v. Imperial Holdings et al. in the United States District Court for the Southern District of Florida, and lead plaintiffs were appointed.

In addition, the underwriters of the Company’s initial public offering have asserted that the Company is required by its Underwriting Agreement to indemnify the underwriters’ expenses and potential liabilities in connection with the litigation.

The Insurance Coverage Declaratory Relief Complaint

On June 13, 2012, Catlin Insurance Company (UK) Ltd. (“Catlin”) filed a declaratory relief action against the Company in the United States District Court for the Southern District of Florida. The complaint seeks a determination that there is no coverage under Catlin’s primary Directors, Officers and Company Liability Policy (the “Policy”) issued to the Company for the period February 3, 2012 to February 3, 2012, based on a prior and pending litigation exclusion (the “Exclusion”). Catlin also seeks a determination that it is entitled to reimbursement of the approximately $0.8 million in defense costs and fees advanced to the Company in the first quarter of 2012 under the Policy if it is determined that the Exclusion precludes coverage. As of the filing of this Annual Report on Form 10-K, the Company has not yet been served with the complaint.

Derivative Damands

On November 16, 2011, the Company’s Board of Directors received a shareholder derivative demand from Harry Rothenberg (the “Rothenberg Demand”), which was referred to the special committee for a thorough

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investigation of the issues, occurrences and facts relating to, connected to, and arising from the USAO Investigation referenced in the Rothenberg Demand. On May 8, 2012, the Company’s Board of Directors received a derivative demand made by another shareholder, Robert Andrzejczyk (the “Andrzejczyk Demand”). The Andrzejczyk Demand, like the Rothenberg Demand was referred to the special committee, which determined that it did not contain any allegations that differed materially from those alleged in the Rothenberg Demand. On July 20, 2012, the Company (as nominal defendant) and certain of the Company’s officers, directors, and a former director were named as defendants in a shareholder derivative action filed in the Circuit Court of the 15^th Judicial Circuit in and for Palm Beach County, Florida, entitled Robert Andrzejczyk v. Imperial Holdings, Inc. et al. The complaint alleges, among other things, that the Special Committee’s refusal of the Andrzejczyk Demand was improper.

The Proposed Settlement

On December 18, 2012, attorneys for the Company signed a Term Sheet for Global Settlement Regarding Imperial Holdings, Inc. Matters (the “Term Sheet”) setting forth the terms upon which each of the parties to the matters described in “Class Action Litigation, Derivative Demands and the Insurance Coverage Declaratory Relief Complaint” would be willing to settle the class action litigation and derivative actions as well as the declaratory relief action filed by Catlin, respectively. In addition to the Company’s attorneys, the Term Sheet was signed by attorneys representing the plaintiffs in the class action lawsuits and derivative actions instituted against the Company as well attorneys for the Company’s director and officer liability insurance carriers (“D&O Carriers”), certain individual defendants named in the class actions and the underwriters in the Company’s initial public offering.

While non-binding and subject to certain contingencies, the Term Sheet provides that each of the parties will endeavor to enter into definitive settlement agreements in respect of the class action litigation, derivative action and insurance coverage declaratory relief complaint. Although definitive settlement agreements have not been executed as of the filing of this Annual Report on Form 10-K, the Company does expect to continue to work in good faith with the other parties to the Term Sheet to execute settlement agreements as soon as is practicable.

The terms of the class action settlement include a cash payment of $12.0 million, of which $11.0 million is to be contributed by the Company’s primary and excess D&O Carriers and the issuance of two million warrants for shares of the Company’s stock. In addition, the underwriters in Company’s initial public offering are to waive their rights to indemnity and contribution by the Company.

The derivative actions would be settled for implementation of certain compliance reforms. The Term Sheet also contemplates payment by the Company’s primary D&O carrier of $1.5 million for legal fees in respect of the derivative actions and the contribution of $500,000 in the Company’s stock.

In addition, the Term Sheet contemplates that the Company will contribute $500,000 to a trust to cover certain claims under its director and officer liability insurance policies.

The proposed settlement also requires the Company to advance legal fees to and indemnify certain individuals covered under the policies. The obligation to advance and indemnify on behalf of these individuals, while currently unquantifiable, may be substantial and could have a material adverse effect on the Company’s financial position and results of operations.

Other Matters

In addition to the proceedings above, we are party to various legal proceedings that arise in the ordinary course of business. From time to time, we also finance the cost of a policyholder’s defense of litigation initiated by a carrier to challenge the policyholder’s life insurance policy. While we cannot predict with certainty the

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outcome of these proceedings, we believe that the resolution of these other proceedings will not, based on information currently available to us, have a material adverse effect on our financial position or results of operations.

Item 4. Mine Safety Disclosures.

Not applicable.

PART II

Item 5. Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities

Shares of our common stock began trading on the New York Stock Exchange, or NYSE, under the symbol “IFT” on February 8, 2011.

The following table shows the high and low sales prices for our common stock for the periods indicated, as reported by the NYSE:

	2012
	High		Low
1st Quarter	$	2.80	$	1.74
2nd Quarter		4.25		2.57
3rd Quarter		4.15		3.24
4th Quarter		4.80		3.11
	2011
	High		Low
1st Quarter	$	11.30	$	10.00
2nd Quarter		10.48		9.19
3rd Quarter		10.24		1.55
4th Quarter		2.77		1.48

As of March 22, 2013, we had 9 holders of record of our common stock.

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Stock Performance Graph

The line graph below compares the cumulative total stockholder return in our common stock between February 8, 2011 (the day shares of our common stock began trading on the NYSE) and December 31, 2012, with cumulative total return on the Russell MicroCap Index and the Nasdaq Financial Index. This graph assumes a $100 investment in each of Imperial Holdings, Inc., the Russell Microcap Index and the Nasdaq Financial Index at the close of trading on February 8, 2011. The graph assumes our closing sales price on February 8, 2011 of $10.81 per share as the initial value of our common stock. We selected these indices because they include companies with similar market capitalizations to ours. We believe these are the most appropriate comparisons since we have no comparable publicly traded industry “peer” group operating in the life settlement industry.

The comparisons shown in the graph below are based upon historical data. We caution that the stock price performance shown in the graph below is not necessarily indicative of, nor is it intended to forecast, the potential future performance of our common stock.

	02/8/11		03/31/11		06/30/11		09/30/11		12/31/11		03/31/12		06/30/12		09/30/12		12/31/12
Imperial Holdings, Inc.	$	100.00	$	93.89	$	93.99	$	22.20	$	17.39	$	24.70	$	35.43	$	31.54	$	41.17
Russell Microcap Index	$	100.00	$	103.72	$	101.11	$	77.33	$	88.09	$	101.49	$	99.20	$	105.11	$	105.03
Nasdaq Financial Index	$	100.00	$	98.65	$	94.64	$	76.10	$	86.00	$	97.52	$	94.36	$	97.84	$	97.76

The performance graph above is being furnished solely to accompany this Annual Report on Form 10-K pursuant to Item 201(e) of Regulation S-K, is not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not to be incorporated by reference into any of our filings, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

Dividend Policy

We do not expect to pay any cash dividends on our common stock for the foreseeable future. We currently intend to retain any future earnings to finance our operations. Any future determination to pay cash dividends on

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our common stock will be at the discretion of our board of directors and will be dependent on our earnings, financial condition, operating results, capital requirements, any contractual, regulatory and other restrictions on the payment of dividends by us or by our subsidiaries to us, and other factors that our board of directors deems relevant.

We are a holding company and have no direct operations. Our ability to pay dividends in the future depends on the ability of our operating subsidiaries to pay dividends to us. Our existing debt facilities restrict the ability of certain of our special purpose subsidiaries to pay dividends. In addition, future debt arrangements may contain certain prohibitions or limitations on the payment of dividends.

Equity Compensation Plans

Prior to our initial public offering, in February 2011, our board of directors and shareholders approved the Imperial Holdings 2010 Omnibus Incentive Plan. The purpose of the Omnibus Plan is to attract, retain and motivate participating employees and to attract and retain well-qualified individuals to serve as members of the board of directors, consultants and advisors through the use of incentives based upon the value of our common stock. Awards under the Omnibus Plan may consist of incentive awards, stock options, stock appreciation rights, performance shares, performance units, and shares of common stock, restricted stock, restricted stock units or other stock-based awards as determined by the compensation committee. The Omnibus Plan provides that an aggregate of 1,200,000 shares of common stock are reserved for issuance under the Omnibus Plan, subject to adjustment as provided in the Omnibus Plan. Prior to our initial public offering, we had no equity compensation plan.

Recent Sales of Unregistered Securities

None.

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

None.

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Item 6. Selected Financial Data

The following table sets forth our selected historical consolidated financial and operating data as of such dates and for such periods indicated below. These selected historical consolidated results are not necessarily indicative of results to be expected in any future period. You should read the following financial information together with the other information contained in this Annual Report on Form 10-K, including “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the financial statements and related notes.

The selected historical income statement data for the years ended December 31, 2012, 2011 and 2010 and balance sheet data as of December 31, 2012 and 2011 were derived from our audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K.

	Historical
	Years Ended December 31,
	2012			2011			2010			2009			2008
	(in thousands except per share data)
Income
Agency fee income	$	—		$	6,470		$	10,149		$	26,114		$	48,004
Interest income		2,014			8,303			18,660			21,483			11,914
Interest and dividends on investment securities available for sale		391			640			—			—			—
Origination fee income		500			6,480			19,938			29,853			9,399
Realized gain on sale of structured settlements		11,509			5,817			6,595			2,684			443
Realized gain on life settlements, net		151			5			1,951			—			—
Gain on forgiveness of debt		—			5,023			7,599			16,410			—
Unrealized change in fair value of life settlements		(5,660	)		570			10,156			—			—
Unrealized change in fair value of structured settlements		1,823			5,302			2,477			—			—
Change in equity investments		—			—			(1,284	)		—			—
Servicing fee income		1,183			1,814			413			—			—
Gain on maturities of life settlements with subrogation rights, net		6,090			3,188			—			—			—
Other income		1,082			602			242			71			47
Total income		19,083			44,214			76,896			96,615			69,807
Expenses
Interest expense		1,255			8,524			28,155			33,755			12,752
Provision for losses on loans receivable		515			7,589			4,476			9,830			10,768
Loss on loan payoffs and settlements, net		125			3,837			4,981			12,058			2,738
Amortization of deferred costs		1,867			6,076			24,465			18,339			7,569
Department of Justice settlement		—			8,000			—			—			—
Selling, general and administrative expenses*		59,994			49,386			30,516			31,269			41,566
Total expenses		63,756			83,412			92,593			105,251			75,393
Loss before income taxes		(44,673	)		(39,198	)		(15,697	)		(8,636	)		(5,586	)
Benefit for income taxes		(39	)		—			—			—			—
Net loss	$	(44,634	)	$	(39,198	)	$	(15,697	)	$	(8,636	)	$	(5,586	)
Loss per share:
Basic(1)	$	(2.10	)	$	(2.03	)	$	(4.36	)	$	(2.40	)	$	(1.55	)
Diluted(1)	$	(2.10	)	$	(2.03	)	$	(4.36	)	$	(2.40	)	$	(1.55	)
Weighted average shares outstanding:
Basic(1)		21,205,747			19,352,063			3,600,000			3,600,000			3,600,000
Diluted(1)		21,205,747			19,352,063			3,600,000			3,600,000			3,600,000

(1) As of February 3, 2011, the Company had 3,600,000 shares of common stock outstanding. The impact of the Company’s corporate conversion has been applied on a retrospective basis to January 1, 2008 to determine earnings per share for the years ended December 31, 2011, 2010, 2009, and 2008. As of December 31, 2012, there were 21,206,121 issued and outstanding shares.

* See our Consolidated Statements of Operations in Part II, Item 8. Financial Statements and Supplemental Data for detail of selling general and administrative expenses.

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	Historical
	Years Ended December 31,
	2012			2011			2010			2009			2008
	(In thousands except share data)
ASSETS
Assets
Cash and cash equivalents	$	7,001		$	16,255		$	14,224		$	15,891		$	7,644
Restricted cash		1,162			691			691			—			2,221
Certificate of deposit—restricted		—			891			880			670			659
Investment securities available for sale, at estimated fair value		12,147			57,242			—			—			—
Agency fees receivable, net of allowance for doubtful accounts		—			—			561			2,165			8,871
Deferred costs, net		7			1,874			10,706			26,323			26,650
Prepaid expenses and other assets		14,165			3,277			1,868			887			4,180
Deposits—other		2,855			761			692			982			476
Interest receivable, net		822			5,758			13,140			21,034			8,604
Loans receivable, net		3,044			29,376			90,026			189,111			148,744
Structured settlement receivables at estimated fair value		1,680			12,376			1,446			—			—
Structured settlement receivables at cost, net		1,574			1,553			1,090			472			1,141
Investment in life settlements, at estimated fair value		113,441			90,917			17,138			4,306			—
Investment in life settlement fund		—			—			—			542			—
Fixed assets, net		232			585			876			—			—
Investment in affiliate		2,212			1,043			79			1,337			1,850
Total assets	$	160,342		$	222,599		$	153,417		$	263,720		$	211,040
LIABILITIES AND STOCKHOLDERS’/MEMBERS’ EQUITY
Liabilities
Accounts payable and accrued expenses		6,606			16,336			3,425			3,170			5,533
Payable for purchase of structured settlements		—			—			224			—			—
Other liabilities		20,796			4,279			7,984			—			—
Lender protection insurance claims received in advance		—			—			31,154			—			—
Interest payable		—			5,505			13,820			12,627			5,563
Notes payable and debenture payable, net of discount		—			19,277			91,609			231,064			183,462
Income taxes payable		6,295			6,295			—			—			—
Total liabilities		33,697			51,692			148,216			246,861			194,558
Stockholders’/Members’ Equity
Member units—preferred (zero authorized in the aggregate as of December 31, 2012 and 2011, respectively and 500,000 authorized in the aggregate as of December 31, 2010, 2009 and 2008, respectively):
Member units—Series A preferred (zero issued and outstanding as of December 31, 2012 and 2011, respectively and 90,796 issued and outstanding as of December 31, 2010, 2009 and 2008, respectively)		—			—			4,035			4,035			—
Member units—Series B preferred (zero issued and outstanding as of December 31, 2012 and 2011, respectively and 25,000 issued and outstanding as of December 31, 2010, 2009 and 2008, respectively)		—			—			2,500			5,000			—
Member units—Series C preferred (zero issued and outstanding as of December 31, 2012 and 2011, respectively and 70,000 issued and outstanding as of December 31, 2010, 2009 and 2008, respectively)		—			—			7,000			—			—
Member units—Series D preferred (zero issued and outstanding as of December 31, 2012 and 2011, respectively and 7,000 issued and outstanding as of December 31, 2010, 2009 and 2008, respectively)		—			—			700			—			—
Member units—Series E preferred (zero issued and outstanding as of December 31, 2012 and 2011, respectively and 73,000 issued and outstanding as of December 31, 2010, 2009 and 2008, respectively)		—			—			7,300			—			—
Member units—common (zero authorized; zero issued and outstanding as of December 31, 2012 and 2011, respectively and 500,000 authorized; 337,500 issued and outstanding as of December 31, 2010, 2009 and 2008, respectively)		—			—			11,462			19,924			19,945
Common stock (80,000,000 authorized; 21,206,121 and 21,202,614 issued and outstanding as of December 31, 2012 and 2011, respectively and zero authorized and zero issued and outstanding as of December 31, 2010, 2009 and 2008 respectively)		212			212			—			—			—
Additional paid-in-capital		238,064			237,755						—			—
Accumulated other comprehensive loss		(3	)		(66	)		—			—			—
Accumulated deficit		(111,628	)		(66,994	)		(27,796	)		(12,100	)		(3,463	)
Total stockholders’/members’ equity		126,645			170,907			5,201			16,859			16,482
Total liabilities and stockholders’/members’ equity	$	160,342		$	222,599		$	153,417		$	263,720		$	211,040

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Life Finance Segment—Selected Operating Data (dollars in thousands

	For the Twelve Months Ended December 31,
	2012			2011			2010
Period Acquisitions—Policies Owned
Number of policies acquired		31			151			33
Average age of insured at acquisition		75.5			78.0			77.5
Average life expectancy—Calculated LE (Years)		13.2			10.4			12.8
Average death benefit	$	5,354		$	4,929		$	5,176
Aggregate purchase price	$	5,708		$	56,889		$	4,010
End of Period—Policies Owned
Number of policies owned		214			190			41
Average Life Expectancy—Calculated LE (Years)		10.6			10.6			13.2
Aggregate Death Benefit	$	1,073,156		$	935,466		$	195,782
Aggregate fair value	$	113,441		$	90,917		$	17,138
Monthly premium—average per policy	$	10.9		$	10.7		$	6.4
End of Period Loan Portfolio
Loans receivable, net	$	3,044		$	29,376		$	90,026
Number of policies underlying loans receivable		22			138			325
Aggregate death benefit of policies underlying loans receivable	$	89,650		$	653,493		$	1,517,161
Number of loans with insurance protection		5			91			304
Loans receivable, net (insured loans only)	$	91		$	20,785		$	84,996
Average Per Loan:
Age of insured in loans receivable		75.5			75.0			75.3
Life expectancy of insured (years)		15.7			15.6			15.3
Monthly premium	$	5		$	6		$	7
Loan receivable, net	$	138		$	213		$	277
Interest rate		13.0	%		12.3	%		11.4	%
Period Originations:
Number of loans originated (by type):
Type 1*		—			44			93
Type 2**		—			11			4
Principal balance of loans originated	$	—		$	18,385		$	20,536
Aggregate death benefit of policies underlying loans originated	$	—		$	311,850		$	462,350
Average Per Origination During Period:
Age of insured at origination		—			75.7			74.0
Life expectancy of insured (years)		—			14.5			14.1
Monthly premium (year of origination)	$	—		$	11		$	14
Death benefit of policies underlying loans originated	$	—		$	5,377		$	4,766
Principal balance of the loan	$	—		$	334		$	212
Interest rate charged		—			14.0	%		11.5	%
Agency fee	$	—		$	110		$	103
Agency fee as % of principal balance
Type 1*		—			39.0	%		49.3	%
Type 2**		—			20.7	%		30.1	%
Origination fee	$	—		$	80		$	88
Annualized origination fee as % of principal balance		—			24.3	%		22.8	%

* We define Type 1 loans as loans that are collateralized by life insurance policies that have been in force less than two years.

** We define Type 2 loans as loans that are collateralized by life insurance policies that have been in force longer than two years.

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Structured Settlements Segment—Selected Operating Data (dollars in thousands):

	For the Twelve Months Ended December 31,
	2012			2011			2010
Period Originations:
Number of transactions		965			873			565
Number of transactions from repeat customers		333			307			154
Average purchase discount rate		18.7	%		18.2	%		19.4	%
Face value of undiscounted future payments purchased	$	130,136		$	96,628		$	47,207
Amount paid for settlements purchased	$	24,571		$	20,303		$	12,506
Marketing costs	$	5,023		$	6,087		$	5,077
Selling, general and administrative (excluding marketing costs)	$	16,524		$	15,864		$	7,888
Average Per Origination During Period:
Face value of undiscounted future payments purchased	$	135		$	111		$	84
Amount paid for settlement purchased	$	25		$	23		$	22
Time from funding to maturity (months)		132.1			152.1			133.8
Marketing cost per transaction	$	5		$	7		$	9
Segment selling, general and administrative (excluding marketing costs) per transaction	$	17		$	18		$	14
Period Sales:
Number of transactions originated and sold		939			601			630
Realized gain on sale of structured settlements	$	11,509		$	5,817		$	6,595
Average sale discount rate		10.6	%		10.5	%		8.9	%
End of Period Portfolio:
Number of transactions on balance sheet		90			356			84

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

You should read the following discussion in conjunction with the consolidated financial statements and accompanying notes and the information contained in other sections of this Annual Report on Form 10-K, particularly under the headings “Risk Factors,” “Selected Financial Data” and “Business.” This discussion and analysis is based on the beliefs of our management, as well as assumptions made by, and information currently available to, our management. The statements in this discussion and analysis concerning expectations regarding our future performance, liquidity and capital resources, as well as other non-historical statements in this discussion and analysis, are forward-looking statements. See “Cautionary Statement Regarding Forward-Looking Statements.” These forward-looking statements are subject to numerous risks and uncertainties, including those described under “Risk Factors.” Our actual results could differ materially from those suggested or implied by any forward-looking statements.

Business Overview

We were founded in December 2006 as a Florida limited liability company and in connection with our initial public offering, in February 2011, Imperial Holdings, Inc. succeeded to the business of Imperial Holdings, LLC and its assets and liabilities.

Imperial Holdings, Inc. (the “Company” or “Imperial”) operates in two reportable business segments: life finance (formerly referred to as premium finance) and structured settlements. In the life finance business, the

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Company earns revenue/income from changes in the fair value of life insurance policies that the Company acquires and receipt of death benefits with respect to matured life insurance policies it owns as well as from interest accruing on outstanding loans and loan origination fees recognized over the life of outstanding loans. In the structured settlement business, the Company purchases structured settlement receivables at a discounted rate and sells these receivables to third parties.

In February 2011, the Company sold 17,602,614 shares of common stock in its initial public offering at a price of $10.75 per share. The Company received net proceeds of approximately $174.2 million after deducting the underwriting discounts and commissions and its offering expenses.

See “Business” in this Annual Report on Form 10-K for additional information regarding our business and operations.

Recent Developments, Uncertainties & Outlook

At the time of the Company’s initial public offering, the Company intended to hold the majority of the life insurance policies it acquired to maturity while selectively trading in and out of certain policies. In light of the USAO Investigation, the SEC Investigation, the related shareholder litigation and the related unbudgeted expenses incurred by the Company, the Company is currently focused on raising long-term capital and maintaining and realizing upon its portfolio of life insurance policies. Accordingly, the Company does not currently intend to expend significant resources acquiring policies and expects that earnings in its life finance segment going forward will be driven by maturities in its portfolio of life insurance policies and through unrealized changes in the fair value of its life insurance policies. At December 31, 2012, the Company had approximately $20.3 million of cash and cash equivalents, and marketable securities, with projected premiums of $27.7 million and $26.3 million in 2013 and 2014, respectively. Based on internal projections at December 31, 2012, the Company anticipated a liquidity shortfall in the second quarter of 2013. On March 27, 2013, a subsidiary of the Company borrowed $45 million in aggregate principal amount under an 18-month senior secured bridge facility. The Company believes that the proceeds of this facility will provide the Company with the resources to continue to pay premiums on its portfolio of life insurance policies and fund its operations through December 31, 2013 while the Company continues its efforts to source more permanent capital.

Proposed Settlement of Shareholder Litigation

On December 18, 2012, attorneys for Imperial signed a Term Sheet for Global Settlement Regarding Imperial Holdings, Inc. Matters (the “Term Sheet”). Also signing the Term Sheet were attorneys representing the plaintiffs in the previously disclosed class action lawsuits and derivative actions instituted against the Company as well attorneys for Imperial’s director and officer liability insurance carriers (“D&O Carriers”), certain individual defendants named in the class actions and the underwriters in Imperial’s initial public offering. The Term Sheet provides the terms upon which each of the parties represented by the signatories would be willing to settle the class action litigation and derivative actions as well as the declaratory relief action filed by Catlin, Imperial’s primary D&O Carrier.

While non-binding and subject to certain contingencies, the terms of the class action settlement include a cash payment of $12.0 million, of which $11.0 million is to be contributed by Imperial’s primary and excess D&O Carriers, and the issuance of two million warrants for shares of the Company’s stock with an estimated value of $3.1 million at the date of the signing of the Term Sheet. The value of the warrants will be re-assessed at issuance. The warrants will have a five-year term with an exercise price of $10.75 and will be issued when the settlement proceeds are distributed to the claimants. In addition, the underwriters in Imperial’s initial public offering are to waive their rights to indemnity and contribution by Imperial. The Company established a reserve related to the proposed settlement of $15.1 million, which is included in other liabilities and a receivable for insurance recoverable from the Company’s D&O Carrier of $11.0 million, which is included in prepaid and other assets. The $4.1 million net effect of the settlement is included in legal fees in the statement of operations for the year ended December 31, 2012.

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The derivative would be settled for implementation of certain compliance reforms. The Term Sheet also contemplates payment by Imperial’s primary D&O carrier of $1.5 million for legal fees in respect of the derivative actions and the contribution of $500,000 in Imperial stock.

In addition, the Term Sheet contemplates that Imperial will contribute $500,000 to a trust to cover certain claims under its director and officer liability insurance policies.

The Company established a reserve related to the proposed derivative settlement and insurance trust of $2.5 million, which is included in other liabilities and a receivable for insurance recoverable from the Company’s D&O Carrier of $1.5 million, which is included in prepaid and other assets. The net effect of the settlement of $1.0 million is included in legal fees in the statement of operations for the year ended December 31, 2012.

The proposed settlement also requires Imperial to advance legal fees to and indemnify certain individuals covered under the policies. The obligation to advance and indemnify on behalf of these individuals, while currently unquantifiable, may be substantial and could have a material adverse effect on the Company’s financial position and results of operations.

Use of Updated Life Expectancies, Change in Mortality Table & Recent Announcements by Life Expectancy Providers

During the second half of 2012, the Company began receiving updated life expectancy reports on the insureds represented in the Company’s portfolio of life insurance policies from both its historical provider of life expectancy reports, AVS Underwriting LLC (“AVS”), and another third party life expectancy provider, 21st Services, LLC (“21st Services”). The procurement of these reports was undertaken in anticipation of a potential financing transaction as the Company believes that potential lenders in any long-term financing will likely require updated life expectancy reports and that such lenders may establish a loan-to-value ratio or borrowing base in any financing based off of a composite mortality factor or “blend” of life expectancy results furnished by these two providers. Additionally, the Company believes that many participants in the secondary and tertiary markets have utilized a blend by these life expectancy providers in pricing life insurance policies and that using a second life expectancy provider mitigates the effects of potential underwriting biases. Having taken these factors into consideration, the Company determined to input a composite mortality factor based off of AVS and 21st Services into its fair value model beginning in the third quarter. See Valuation of Insurance Policies in this Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The Company does not expect that it will ever receive updated life expectancy reports on 100% its policies as it anticipates a portion of the insureds represented by its portfolio to be unresponsive to requests for updated medical information. This information is generally required by life expectancy providers to issue new life expectancy reports. The Company believes that insureds who have deteriorated in health are generally less likely to be responsive to requests for updated medical information. As a result, the periodic updating of life expectancy reports may conservatively skew fair value estimates lower as any health deteriorations experienced by unresponsive insureds would not be reflected in the life expectancy inputs that are used to calculate the value of the Company’s investment in life settlements.

At December 31, 2012 , the Company had received updated life expectancies on 149 policies, which were blended and inputted in the Company’s fair value model at December 31, 2012. In cases where the Company did not receive updated life expectancy reports, the results of original AVS life expectancy reports together with life expectancy reports from 21st Services that were obtained when the original AVS life expectancy reports were obtained have been blended. Additionally and in consultation with third party actuarial consultants, the Company lengthened the life expectancy inputs to its fair value model on 45 policies with life expectancy reports that were more than two years old at December 31, 2012 based on the average lengthening reported on the 149 policies where update life expectancy reports were received. Had the Company not implemented such an adjustment on

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affected policies, the fair value of the Company’s portfolio would have increased from the reported amount by $5.8 million. Additionally, the Company replaced its mortality table with a modified version of the 2008 Valuation Basic Table in the third quarter of 2012 as the third party that developed the Company’s previously used table has ceased operations. The Company believes that the table utilized in the third quarter is consistent with tables used by other market participants and did not have a material impact on the valuation of the Company’s life insurance policies.

On January 22, 2013, 21st Services announced significant revisions to its underwriting methodology. On February 4, 2013, 21st Services then announced that it was correcting errors discovered in its previously announced revised methodology. According to the provider, these revisions have generally been understood to lengthen the average reported life expectancy furnished by 21st Services by 19% and, accordingly, will likely negatively impact the valuation of the Company’s portfolio of life insurance policies. However, the Company has not received life expectancy reports from 21st Services that utilize its revised methodology and the fair value of the Company’s portfolio of life insurance policies at December 31, 2012 does not take into account changes to life expectancy estimates that may result from 21st Services updated methodology. While the Company is still evaluating the general impact that these revisions might have on the value of its portfolio, the Company may determine to cease utilizing, or adjust the weighting of, 21st Services reports as an input into its fair value model in future periods as market practice responds to the adjusted methodology. Additionally, the Company’s other life expectancy provider, AVS Underwriting LLC (“AVS”), filed for federal bankruptcy protection under Chapter 11 on February 12, 2013. The Company cannot, at this time, predict what impact the bankruptcy filing will have on the Company’s ability to procure life expectancy reports from AVS in the future, AVS’s ability to continue its operations or whether other market participants will continue to use AVS life expectancy reports for valuation purposes going forward. As a result of these developments, the Company may need to adjust the application of life expectancy reports in its fair value methodology or source reports from different life expectancy providers in future periods, which could have a material impact on the Company’s fair value calculations and materially and adversely effect our business, financial condition and results of operations.

Principal Revenue and Expense Items

Components of Revenue / Income

Unrealized change in fair value of Life Settlements and Structured Settlement Receivables

We have elected to carry our investments in life settlements at fair value. As of July 1, 2010, we elected to adopt the fair value option, in accordance with ASC 825, Financial Instruments, to record certain newly-acquired structured settlement receivables at fair value. Any change in fair value upon re-measurement of these investments is recorded through our unrealized change in fair value of life settlements and structured settlement receivables.

Gain on Sale of Structured Settlements

We purchase a certain number of fixed (life-contingent or non life-contingent), scheduled future settlement payments on a discounted basis in exchange for a single lump sum payment. We negotiate a purchase price that is calculated as the present value of the future payments to be purchased, discounted at a rate equal to our required investment yield. From time to time, we sell portfolios of structured settlements to institutional investors. The sale price is calculated as the present value of the future payments to be sold, discounted at a negotiated yield. We record any amounts of sale proceeds in excess of our carrying value as a gain on sale.

Gain on Maturities of Life Settlements with Subrogation Rights, net

The Company accounts for the maturities of life settlements with subrogation rights (net of subrogation expenses) as contingent gains in accordance with ASC 450, Contingencies and recognizes the revenue from the maturities of these policies when all contingencies are resolved.

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Interest Income

We receive interest income that accrues over the life of the premium finance loan and is due upon the date of maturity or upon repayment of the loan. Substantially all of the interest rates we charged on our premium finance loans are floating rates that were calculated at the one-month LIBOR rate plus an applicable margin. In addition, our premium finance loans have a floor interest rate and are capped at 16.0% per annum. For loans with floating rates, each month the interest rate is recalculated to equal one-month LIBOR plus the applicable margin, and then, if necessary, adjusted so as to remain at or above the stated floor rate and at or below the capped rate of 16.0% per annum. Interest income is recognized using the effective interest method over the life of the loan.

The weighted average per annum interest rate for premium finance loans outstanding as of the dates below is as follows:

	Year Ended December 31,
	2012			2011			2010
Weighted average per annum interest rate		13.4	%		12.5	%		11.4	%

Interest income also includes interest earned on structured settlement receivables. Until we sell our structured settlement receivables, the structured settlements are held on our balance sheet. Purchase discounts are accreted into interest income using the effective-interest method. As a result of the voluntary termination of our premium finance business, we will cease earning interest income from premium finance loans once our outstanding premium finance loans mature.

Servicing Income

We receive income from servicing life insurance policies controlled by a third party. These services include verifying premiums are paid and correctly applied and updating files for medical history and ongoing premiums.

Gain on Sale of Life Settlements

Gain on sale of life settlements includes gain from company-owned life settlements and gains from sales on behalf of third parties.

Origination Fee Income

We charged our borrowers an origination fee as part of the premium finance loan origination process. It was a one-time fee that is added to the loan amount and is due upon the date of maturity or upon repayment of the loan. Origination fees are recognized on an effective-interest method over the term of the loan.

Origination fees as a percentage of the principal balance of loans originated during the periods below are as follows:

	Year Ended December 31,
	2012			2011			2010
Origination fees as a percentage of the principal balance of the loans		—	%		25.0	%		41.5	%
Origination fees per annum as a percentage of the principal balance of the loan		—	%		24.3	%		22.7	%

As a result of the voluntary termination of our premium finance business, we will cease accruing origination fee income once our outstanding premium finance loans mature.

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Agency Fee Income

In connection with our premium finance business, we earned agency fees that were paid by the referring life insurance agents. Because agency fees were not paid by the borrower, such fees do not accrue over the term of the loan. Referring insurance agents paid the agency fees to our subsidiary, Imperial Life and Annuity Services, LLC, a licensed insurance agency, for the due diligence performed in underwriting the premium finance transaction. The amount of the agency fee paid by a referring life insurance agent was negotiated with the referring agents based on a number of factors, including the size of the policy and the amount of premiums on the policy. Agency fees as a percentage of the principal balance of loans originated during the periods below are as follows:

	Year Ended December 31,
	2012			2011			2010
Agency fees as a percentage of the principal balance of the loans originated		—	%		33.0	%		48.8	%

As a result of the voluntary termination of our premium finance business, we did not receive any revenue from agency fees in 2012 and Imperial Life and Annuity Services, LLC has voluntarily surrendered all its insurance agency licenses during the year ended December 31, 2012.

Components of Expenses

Interest Expense

Interest expense is interest accrued monthly on credit facility borrowings that were used to fund premium finance loans and promissory notes that were used to fund operations and corporate expenses. Interest is generally compounded monthly and payable as the collateralized loans mature.

Our weighted average interest rate for our credit facilities and promissory notes outstanding as of the dates indicated below is as follows:

	December 31,
	2012			2011			2010
Weighted average interest rate under credit facilities		0.0	%		15.7	%		17.1	%
Weighted average interest rate under promissory note		0.0	%		0.0	%		16.5	%
Total weighted average interest rate		0.0	%		15.7	%		17.0	%

Provision for Losses on Loans Receivable

We specifically evaluate all loans for impairment, on a monthly basis, based on the fair value of the underlying life insurance policies as collectability is primarily collateral dependent. The fair value of the life insurance policy is determined using our valuation model, which is a Level 3 fair value measurement. For loans with lender protection insurance, the insured value is also considered when determining the fair value of the life insurance policy. The insured value is not directly correlated to any portion of the loan, such as principal, accrued interest, accreted origination income, or other fees, which may be charged or incurred on these types of loans. The insured value is the amount we would receive in the event that we filed a lender protection insurance claim. The lender protection insurer limits the insured value to an amount equal to or less than its determination of the value of the life insurance policy underlying our premium finance loan based on its own models and assumptions, which may be equal to or less than the carrying value of the loan receivable. For all loans, the amount of loan impairment, if any, is calculated as the difference in the fair value of the life insurance policy and the carrying value of the loan receivable. Loan impairments are charged to the provision for losses on loans receivable in our consolidated statement of operations.

In some instances, we make a loan to an insured whereby we immediately record a loan impairment valuation adjustment against the principal of the loan. Loans that experience an immediate impairment are made

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when the transaction components that are not included in the loan, such as agency fees, offset or exceed the amount of the impairment.

For loans that matured and were not repaid at maturity, the borrower typically relinquishes ownership of the policy to us in exchange for our release of the debt (or we enforce our security interests in the beneficial interests in the trust that owns the policy). For loans that have lender protection insurance, we make a claim against the lender protection insurance policy and, subject to policy terms and conditions, the insurer has the right to direct control or take beneficial ownership of the policy upon payment of our claim.

For loans that had lender protection insurance and matured during the years ended December 31, 2012 and 2011, 88 and 131 loans were not repaid at maturity, respectively, all of which were submitted to our lender protection insurer and 95.5% and 100% paid by such insurer. The net carrying value of the loans (which includes principal, accrued interest income, and accrued origination fees, net of impairment) at the time of payoff during the years ended December 31, 2012 and 2011 was $25.3 million and $49.7 million, respectively. The amount of cash received by us for those loans was $25.6 million and $51.5 million, respectively. This resulted in a gain during the years ended December 31, 2012 and 2011 of $29,000 and $737,000, respectively. This gain was primarily attributable to the insurance amount at the time of payoff exceeding the contractual amounts due under the terms of the loan agreement. Therefore, the amount of claims paid by the lender protection insurer was in excess of 100% of the net carrying value of the loans. The following table provides information on the insured loans that were not repaid at maturity for the periods indicated below (dollars in thousands):

	Year Ended December 31, 2012			Year Ended December 31, 2011
Number of loans matured		89			138
Number of loans impaired at maturity		61			52
Loans not repaid at maturity		88			131
Claims submitted to lender protection insurer		88			131
Claims paid by lender protection insurer		85			131
Amount of claims paid	$	25,646		$	51,480
Net carrying value of loans at payoff	$	25,303		$	49,706
Gain on LPIC payoffs (all loans)		29			737
Gain on LPIC payoffs (impaired loans)		104			607
Percent of claims paid by lender protection insurer		95.5	%*		100	%

* Claims have been filed with the LPIC carrier and the Company is pending reimbursement for the remaining 4.5%, a provision for losses on loans receivable of $515,000 was established as collectability of the LPIC claim is uncertain.

The following table shows the percentage of the total number of loans outstanding with lender protection insurance and the percentage of our total loans receivable balance covered by lender protection insurance as of the dates indicated below:

	December 31,
	2012			2011			2010
Percentage of total number of loans outstanding with lender protection insurance		22.7	%		65.9	%		93.9	%
Percentage of total loans receivable, net balance covered by lender protection insurance		3.0	%		70.1	%		94.1	%

We use a method to determine the loan impairment valuation adjustment, which assumes the “worst case” scenario for the fair value of the collateral based on the insured coverage amount. At the time of loan origination,

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we recorded impairment even though no loans are considered non-performing as no payments are due by the borrower. Loans with insured collateral represented 22.7% and 65.9% of our loans as of December 31, 2012 and 2011, respectively.

The following table shows the amount of impairment recorded on loans outstanding with and without lender protection insurance during each period (dollars in thousands):

	Year Ended December 31, 2012		Year Ended December 31, 2011
Provision for losses on loans receivable with lender protection insurance	$	437	$	57
Provision (recoveries) for losses on loans receivable without lender protection insurance		—		7,532
Total provision for losses on loans receivable	$	437	$	7,589

Loss on Loan Payoffs and Settlements, Net

When a premium finance loan matures, we record the difference between the net carrying value of the loan receivable (which includes the loan principal balance, accrued interest and accreted origination fees, net of any impairment valuation adjustment) and the cash received, or the fair value of the life insurance policy that is obtained if there is a default and the policy is relinquished, as a gain or loss on loan payoffs and settlements, net. This account was significantly impacted by the Acorn settlement, as discussed below, whereby we recorded a loss on loan payoffs and settlements, net, of zero, $4.1 million and $5.5 million during the years ended December 31, 2012, 2011 and 2010, respectively, under the direct write-off method, as opposed to charging our provision for losses on loan receivables.

Beginning in July 2008, Acorn Capital Group stopped funding under its credit facility with us without any advance notice. Therefore, we did not have access to funds necessary to pay the ongoing premiums on the policies serving as collateral for our borrower’s loans that were financed under the Acorn facility. We did not incur liability with our borrowers because the terms of the Acorn loans provide that we are only required to fund future premiums if our lender provides us with funds. Through December 31, 2011, a total of 119 policies financed under the Acorn facility incurred losses primarily due to non-payment of premiums.

In May 2009, we entered into a settlement agreement with Acorn whereby all obligations under the credit agreement were terminated. Acorn subsequently assigned its rights under the settlement agreement to Asset Based Resource Group, LLC (“ABRG”), an entity that is not related to us. As part of the settlement agreement, we continue to service the original loans and ABRG determines whether or not it will continue to fund the loans. We believe that ABRG will elect to fund the loan only if it believes there is value in the policy serving as collateral for the loan. If ABRG chooses not to continue funding a loan, we have the option to fund the loan or try to sell the loan or related policy to another party. We elect to fund the loan only if we believe there is value in the policy serving as collateral for the loan after considering the costs of keeping the policy in force. Regardless of whether we fund the loan or sell the loan or related policy to another party, our debt under the Acorn facility is forgiven and we record a gain on the forgiveness of debt. If we fund the loan, it remains as an asset on our balance sheet, otherwise it is written off and we record the amount written off as a loss on loan payoffs and settlements, net.

On the notes that were cancelled under the Acorn facility, we had debt forgiven totaling zero and $5.0 million for the years ended December 31, 2012 and 2011, respectively. We recorded these amounts as gain on forgiveness of debt. Partially offsetting these gains, we had loan losses totaling zero and $4.1 million during the years ended December 31, 2012, and 2011, respectively. We recorded these amounts as loss on loan payoffs and settlements, net. As of December 31, 2012, there were no loans that remained outstanding from the original 119 loans financed in the Acorn facility.

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The following table highlights the number of loans impacted by the Acorn settlement during the periods indicated below (dollars in thousands):

			Acorn Credit Facility
			Year Ended December 31,
	2012		2011		2010		2009		2008
Number of loans held at end of period		—		—		15		49		112
Loans receivable, net, balance at end of period	$	—	$	—	$	4,183	$	9,601	$	21,073
Number of loans impacted during period		—		15		48		63		7

The following table highlights the impact of the Acorn settlement on our financial statements during the periods indicated below (dollars in thousands):

	Acorn Credit Facility
			Year Ended December 31,
	2012		2011			2010			2009			2008			Total
Gain on forgiveness of debt	$	—	$	5,023		$	7,599		$	16,410		$	—		$	29,032
Loss on loan payoffs and settlements, net		—		(4,141	)		(5,501	)		(10,182	)		(1,868	)	$	(21,692	)
Impact on net income (loss)	$	—	$	882		$	2,098		$	6,228		$	(1,868	)	$	7,340

The $7.3 million impact on net income is due to 28 policies that we decided to continue to fund the premiums after ABRG elected not to continue to fund the premiums. With respect to the associated loans, we received a gain on forgiveness of debt with no offsetting loss on loan payoffs and settlements, net.

Amortization of Deferred Costs

Deferred costs include premium payments made by us to our lender protection insurer. These expenses are deferred and recognized over the life of the note using the effective interest method. Deferred costs also include credit facility closing costs such as legal and professional fees associated with the establishment of our credit facilities, which deferred costs are recognized over the life of the debt. We expect our deferred costs to decline over time as our portfolio of loans with lender protection insurance matures.

Selling, General and Administrative Expenses

Selling, general, and administrative expenses include salaries and benefits, professional and consulting fees, marketing, depreciation and amortization, bad debt expense, and other related expenses to support our ongoing businesses. As a result of the USAO Investigation, the SEC Investigation and related shareholder litigation, we have incurred significant legal expenses, and we expect to continue to incur significant legal expenses pending the resolution of those matters.

Critical Accounting Policies

Critical Accounting Estimates

The preparation of the financial statements requires us to make judgments, estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. We base our judgments, estimates and assumptions on historical experience and on various other factors that are believed to be reasonable under the circumstances. Actual results could differ materially from these estimates under different assumptions and conditions. We evaluate our judgments, estimates and assumptions on a regular basis and make changes accordingly. We believe that the judgments, estimates and assumptions involved in the accounting for the loan impairment valuation, allowance for doubtful accounts, income taxes, valuation of structured settlements and the

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valuation of investments in life settlements have the greatest potential impact on our financial statements and accordingly believe these to be our critical accounting estimates. Below we discuss the critical accounting policies associated with the estimates as well as selected other critical accounting policies. For further information on our critical accounting policies, see the discussion in Note 2 to our audited consolidated financial statements.

Life Finance Loans Receivable

We report loans receivable acquired or originated by us at cost, adjusted for any deferred fees or costs in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 310-20, Receivables—Nonrefundable Fees and Other Costs, discounts, and loan impairment valuation. All loans are collateralized by life insurance policies. Interest income is accrued on the unpaid principal balance on a monthly basis based on the applicable rate of interest on the loans.

In accordance with ASC 310, Receivables, we specifically evaluate all loans for impairment based on the fair value of the underlying policies as collectability is primarily collateral dependent. The loans are considered to be collateral dependent as the repayment of the loans is expected to be provided by the underlying insurance policies. In the event of default, the borrower typically relinquishes ownership of the policy to us in exchange for our release of the debt (or we enforce our security interests in the beneficial interests in the trust that owns the policy). For loans that have lender protection insurance, we make a claim against the lender protection insurance policy and, subject to terms and conditions of the lender protection insurance policy, our lender protection insurer has the right to direct control or take beneficial ownership of the policy upon payment of our claim. For loans without lender protection insurance, we have the option of selling the policy or maintaining it on our balance sheet for investment.

We evaluate the loan impairment valuation on a monthly basis based on our periodic review of the estimated value of the underlying collateral. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available. The loan impairment valuation is established as losses on loans are estimated and the provision is charged to earnings. Once established, the loan impairment valuation cannot be reversed to earnings.

In order to originate premium finance transactions our lenders required that we procure lender protection insurance. This lender protection insurance mitigates our exposure to losses which may be caused by declines in the fair value of the underlying policies. At the end of each reporting period, for loans that have lender protection insurance, a loan impairment valuation is established if the carrying value of the loan receivable exceeds the amount of coverage. The lender protection insurance program was terminated as of December 31, 2010, and all loans originated after December 31, 2010, do not carry lender protection insurance coverage. Thus, for all loans originated in 2011 and beyond, a loan impairment valuation is established if the carrying value of a loan receivable exceeds the fair value of the underlying collateral. The Company ceased originating loans in the fourth quarter of 2011.

Fair Value Option

As of July 1, 2010, we elected to adopt the fair value option, in accordance with ASC 825, Financial Instruments, to record newly-acquired structured settlements at fair value. We have the option to measure eligible financial assets, financial liabilities, and commitments at fair value on an instrument-by-instrument basis. This option is available when we first recognize a financial asset or financial liability or enter into a firm commitment. Subsequent changes in the fair value of assets, liabilities, and commitments where we have elected the fair value option are recorded in our consolidated statement of operations. We have made this election for our structured settlement assets because it is our intention to sell these assets within the next twelve months, and we believe it significantly reduces the disparity that exists between the GAAP carrying value of these structured settlements and our estimate of their economic value.

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Fair Value Measurement Guidance

We follow ASC 820, Fair Value Measurements and Disclosures, which defines fair value as an exit price representing the amount that would be received if an asset were sold or that would be paid to transfer a liability in an orderly transaction between market participants at the measurement date. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions the guidance establishes a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. Level 1 relates to quoted prices in active markets for identical assets or liabilities. Level 2 relates to observable inputs other than quoted prices included in Level 1. Level 3 relates to unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Our investments in life insurance policies and structured settlements are considered Level 3 assets as there is currently no active market where we are able to observe quoted prices for identical assets and our valuation model incorporates significant inputs that are not observable. Our impaired loans are measured at fair value on a non-recurring basis, as the carrying value is based on the fair value of the underlying collateral. The method used to estimate the fair value of impaired collateral-dependent loans depends on the nature of the collateral. For collateral that has lender protection insurance coverage, the fair value measurement is considered to be Level 3 as the insured value is an observable input to the Company, but not observable to market participants. For collateral that does not have lender protection insurance coverage, the fair value measurement is considered to be Level 3 as the estimated fair value is based on a model whose significant inputs are the life expectancy of the insured and the discount rate, which are not observable.

Ownership of Life Insurance Policies

In the ordinary course of business, a large portion of our borrowers default by not paying off the loan and relinquish ownership of the life insurance policy to us in exchange for our release of the obligation to pay amounts due. We also buy life insurance policies in the secondary and tertiary markets. We account for life insurance policies that we own as investments in life settlements (life insurance policies) in accordance with ASC 325-30, Investments in Insurance Contracts, which requires us to use either the investment method or the fair value method. The election is made on an instrument-by-instrument basis and is irrevocable. We have elected to account for these life insurance policies as investments using the fair value method.

We initially record investments in life settlements at the transaction price. For policies acquired upon relinquishment by our borrowers, we determine the transaction price based on fair value of the acquired policies at the date of relinquishment. The difference between the net carrying value of the loan and the transaction price is recorded as a gain (loss) on loan payoffs and settlement. For policies acquired for cash, the transaction price is the amount paid.

Valuation of Insurance Policies

Our valuation of insurance policies is a critical component of our estimate for the loan impairment valuation and the fair value of our investments in life settlements (life insurance policies). We currently use a probabilistic method of valuing life insurance policies, which we believe to be the preferred valuation method in the industry. The most significant assumptions which we estimate are the life expectancy of the insured and the discount rate.

In determining the life expectancy estimate, we analyze medical reviews from independent secondary market life expectancy providers (each a “LE provider”). An LE provider reviews the medical records and identifies all medical conditions it feels are relevant to the life expectancy of the insured. Debits and credits are then assigned by each LE provider to the individual’s health based on these medical conditions. The debit or credit that an LE provider assigns to a medical condition is derived from the experience of mortality attributed to this condition in the portfolio of lives that it monitors. The health of the insured is summarized by the LE provider into a life assessment of the individual’s life expectancy expressed both in terms of months and in mortality factor.

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The resulting mortality factor represents an indication as to the degree to which the given life can be considered more or less impaired than a standard life having similar characteristics (e.g. gender, age, smoking, etc.). For example, a standard insured (the average life for the given mortality table) would carry a mortality rating of 100%. A similar but impaired life bearing a mortality rating of 200% would be considered to have twice the chance of dying earlier than the standard life. Historically, the Company has procured the majority of its life expectancy reports from two life expectancy report providers and only used AVS life expectancy reports for valuation purposes. Beginning in the quarter ended September 30, 2012, the Company began utilizing life expectancy reports from 21st Services for valuation purposes and began averaging or “blending,” the results of the two life expectancy reports to establish a composite mortality factor. However, when “blending” the AVS and 21st Services life expectancy reports, if the difference in the probability of mortality between the reports is greater than 150%, the Company will reduce the higher mortality factor until the difference is 150%.

The probability of mortality for an insured is then calculated by applying the blended life expectancy estimate to a mortality table. The mortality table is created based on the rates of death among groups categorized by gender, age, and smoking status. By measuring how many deaths occur before the start of each year, the table allows for a calculation of the probability of death in a given year for each category of insured people. The probability of mortality for an insured is found by applying the mortality rating from the life expectancy assessment to the probability found in the actuarial table for the insured’s age, sex and smoking status. As discussed above in Use of Updated Life Expectancies and Change in Mortality Table in Management’s Discussion and Analysis of Financial Condition and Results of Operations, the Company has historically applied an actuarial table developed by a third party. However, beginning in the quarter ended September 30, 2012, the Company transitioned to a table developed by the U.S. Society of Actuaries known as the 2008 Valuation Basic Table, or the 2008 VBT. However, because the 2008 VBT table does not account for anticipated improvements in mortality in the insured population, the table was modified in conjunction with outside consultants to reflect these expected mortality improvements. The Company believes that the change in mortality table does not materially impact the valuation of its life insurance policies and that its adoption of a modified 2008 VBT table is consistent with modified tables used by market participants and third party medical underwriters.

The mortality rating is used to create a series of best estimate probabalistic cash flows. This probability represents a mathematical curve known as a mortality curve. This curve is then used to generate a series of expected cash flows over the remaining expected lifespan of the insured and the corresponding policy. A discounted present value calculation is then used to determine the value of the policy. If the insured dies earlier than expected, the return will be higher than if the insured dies when expected or later than expected.

The calculation allows for the possibility that if the insured dies earlier than expected, the premiums needed to keep the policy in force will not have to be paid. Conversely, the calculation also considers the possibility that if the insured lives longer than expected, more premium payments will be necessary. Based on these considerations, each possible outcome is assigned a probability and the range of possible outcomes is then used to create a price for the policy.

As is the case with most market participants at December 31, 2012, the Company used a blend of life expectancies that are provided by two third-party LE providers. These are estimates of an insured’s remaining years. If all of the insured lives in the Company’s life settlement portfolio live six months shorter or longer than the life expectancies provided by these third parties, the change in fair market value would be as follows (dollars in thousands):

Life Expectancy Months Adjustment	Value		Change in Value
+6		95,658		(17,783	)
—		113,441		—
-6		132,540		19,099

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As noted above, the Company takes an average, or blend, of the two life expectancy reports to derive a composite mortality factor, unless the difference in the probability of mortality between the reports is greater than 150%. In such instances and as reflected in the fair market value at December 31, 2012, the Company will cap the higher mortality factor at amount that is 150% above the lower mortality factor, which ultimately reduces the mortality factor inputted into the Company’s fair value model. At December 31, 2012, had the Company not implemented such a cap on affected policies, the fair value of the Company’s portfolio would have increased from the reported amount by $9.5 million. Additionally, the Company lengthened the life expectancy inputs to its fair value model on 45 policies with life expectancy reports that were more than two years old at December 31, 2012 based on the average lengthening reported on the 149 policies where update life expectancy reports were received. Had the Company not implemented such an adjustment on affected policies, the fair value of the Company’s portfolio would have increased from the reported amount by $5.8 million.

The Company believes that investors in esoteric assets, such as life insurance policies, typically target yields averaging between 12%—17% for investments of more than a 5 year duration, and had historically used a 15%—17% range of discount rates to value its life insurance policies. In the third quarter of 2011 and in the immediate aftermath of becoming aware of the USAO investigation, the Company substantially increased the discount rates inputted into its fair value model as it believed that USAO Investigation along with certain unfavorable court decisions unrelated to the Company contributed to a contraction in the marketplace that has continued to reverberate. Since that time, the Company has been re-evaluating its discount rates at the end of every reporting period in order to reflect the estimated discount rates that could reasonably be used in a market transaction involving the Company’s portfolio of life insurance policies. In doing so, the Company relies on management insight, engages third party consultants to corroborate its assessment, engages in discussions with other market participants and potential financing sources and extrapolates the discount rate underlying actual sales of policies.

Although the Company believes that its entry into the Non-Prosecution Agreement had a positive effect on the market generally and for premium financed life insurance policies specifically, the Company believes that, when given the choice to invest in a policy that was associated with the Company’s premium finance business and a similar policy without such an association, all else being equal, an investor would have generally opted to invest in the policy that was not associated with the Company’s premium finance business. However, since entering into the Non-Prosecution Agreement, investors have required less of a risk premium to transact in these policies and the Company expects that, in time, investors will continue to require less of a risk premium to transact in policies associated with its premium finance business.

As of December 31, 2012, the Company owned 214 policies with an aggregate investment in life settlements of $113.4 million. Of these 214 policies, 171 were previously premium financed and are valued using discount rates that range from 16.80% to 33.80%. The remaining 43 policies are valued using discount rates that range from 14.80% to 21.30%.

The discount rate incorporates current information about market interest rates, the credit exposure to the insurance company that issued the life insurance policy and our estimate of the risk premium an investor in the policy would require. The extent to which the fair value could vary in the near term has been quantified by evaluating the effect of changes in the weighted average discount rate on the death benefit used to estimate the fair value. If the weighted average discount rate were increased or decreased by 1/2 of 1% and the other assumptions used to estimate fair value remained the same, the change in fair market value would be as follows (dollars in thousands):

Weighted Average Rate	Rate Adjustment			Value		Change in Value
23.51%		-.50	%		116,300		2,859
24.01%		—			113,441		—
24.51%		+.50	%		110,694		(2,747	)

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Future changes in the discount rates we use to value life insurance policies could have a material effect on our yield on life settlement transactions, which could have a material adverse effect on our business, financial condition and results of our operations.

At the end of each reporting period we re-value the life insurance policies using our valuation model in order to update our loan impairment valuation for loans receivable and our estimate of fair value for investments in policies held on our balance sheet. This includes reviewing our assumptions for discount rates and life expectancies as well as incorporating current information for premium payments and the passage of time.

Revenue/Income Recognition

Our primary sources of revenue/income are in the form of unrealized change in fair value of life settlements, agency fees, interest income, and origination fee income, servicing income and realized gains on sales of structured settlements. Our revenue/income recognition policies for these sources of revenue/income are as follows:

• Unrealized Change in Fair Value of Life Settlements—When the Company acquires certain life insurance policies we initially record these investments at the transaction price, which is the fair value of the policy for those acquired upon relinquishment or the amount paid for policies acquired for cash. The fair value of the investment in insurance policies is evaluated at the end of each reporting period. Changes in the fair value of the investment based on evaluations are recorded as changes in fair value of life settlements in our consolidated statement of operations. The fair value is determined on a discounted cash flow basis that incorporates current life expectancy assumptions. The discount rate incorporates current information about market interest rates, the credit exposure to the insurance company that issued the life insurance policy and our estimate of the risk premium an investor in the policy would require.

• Agency Fees—Agency fees were paid by the referring life insurance agents based on negotiations between the parties and are recognized at the time a life finance loan is funded. Because agency fees are not paid by the borrower, such fees do not accrue over the term of the loan. A separate origination fee was charged to the borrower which is amortized into income over the life of the loan.

• Interest Income—Interest income on life finance loans is recognized when it is realizable and earned, in accordance with ASC 605, Revenue Recognition. Discounts on structured settlement receivables are accreted over the life of the settlement using the effective interest method.

• Origination Fee Income—Loans often include origination fees which are fees payable to us on the date the loan matures. The fees are negotiated at the inception of the loan on a transaction by transaction basis. The fees are accreted into income over the term of the loan using the effective interest method.

• Servicing Income—We receive income from servicing life insurance policies controlled by a third party. These services include verifying premiums are paid and correctly applied and updating files for medical history and ongoing premiums.

• Realized Gains on Sales of Structured Settlements—Realized gains on sales of structured settlements are recorded when the structured settlements have been transferred to a third party and we no longer have continuing involvement, in accordance with ASC 860, Transfers and Servicing.

• Interest and origination income on impaired loans is recognized when it is realizable and earned in accordance with ASC 605, Revenue Recognition. Persuasive evidence of an arrangement exists through a loan agreement which is signed by a borrower prior to funding and sets forth the agreed upon terms of the interest and origination fees. Interest income and origination income are earned over the term of the loan and are accreted using the effective interest method. The interest and origination fees are fixed and determinable based on the loan agreement. For impaired loans, we do not recognize interest and origination income that we believe is uncollectible. At the end of the reporting period, we review the

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accrued interest and accrued origination fees in conjunction with our loan impairment analysis to determine our best estimate of uncollectible income that is then reversed. We continually reassess whether the interest and origination income are collectible as the fair value of the collateral typically increases over the term of the loan. Since our loans are due upon maturity, we cannot determine whether a loan is performing or non-performing until maturity. For impaired loans, our estimate of proceeds to be received upon maturity of the loan is generally correlated to our current fair value estimate of the collateral, but also incorporates expected increases in fair value of the collateral over the term of the loan, trends in the market, sales activity for life insurance policies and our experience with loans payoffs.

Deferred Costs

Deferred costs include costs incurred in connection with acquiring and maintaining credit facilities and costs incurred in connection with securing lender protection insurance. These costs are amortized over the life of the related loan using the effective interest method and are classified as amortization of deferred costs in the accompanying consolidated statement of operations.

Loss in Loan Payoffs and Settlements, Net

When a premium finance loan matures, we record the difference between the net carrying value of the loan and the cash received, or the fair value of the life insurance policy that is obtained in the event of payment default, as a gain or loss on loan payoffs and settlements, net. This account was significantly impacted by the Acorn settlement, as discussed above, whereby we recorded a loss on loan payoffs and settlements, net, of $0 million, $4.1 million and $5.5 million during the years ended December 31, 2012, 2011 and 2010, respectively.

Income Taxes

Prior to our initial public offering in 2011, we converted from a Florida limited liability company to a Florida corporation (the “Conversion”). Prior to the Conversion we were treated as a partnership for federal and state income tax purposes. As a partnership our taxable income and losses were attributed to our members, and accordingly, no provision or liability for income taxes was reflected in the accompanying consolidated financial statements for periods prior to the Conversion.

After the Conversion, we began to account for income taxes in accordance with ASC 740, Income Taxes. Under ASC 740, deferred income taxes are determined based on the estimated future tax effects of differences between the financial statement and tax basis of assets and liabilities given the provisions of enacted tax laws. Deferred income tax provisions and benefits are based on changes to the assets or liabilities from year to year. In providing for deferred taxes, we consider tax regulations of the jurisdictions in which we operate, estimates of future taxable income and available tax planning strategies. If tax regulations, operating results or the ability to implement tax-planning strategies varies adjustments to the carrying value of the deferred tax assets and liabilities may be required. Valuation allowances are based on the “more likely than not” criteria of ASC 740.

At December 31, 2012 and 2011, due to the large losses and the uncertainties that resulted from the USAO Investigation, SEC investigation, Non-Prosecution Agreement and class action lawsuits, we recorded a full valuation allowance against our net deferred tax asset of $27.8 million and $11.1 million, respectively, as it is more likely than not that the net deferred tax asset is not realizable. As a result of these increases in the valuation allowance, we recorded no income tax benefit for 2012 and 2011.

The accounting for uncertain tax positions guidance under ASC 740 requires that we recognize the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than

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not sustain the position following an audit. For tax positions meeting the more-likely-than-not threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement with the relevant tax authority. We recognize interest and penalties (if any) on uncertain tax positions as a component of income tax expense.

In February of 2013 the Company was notified by the Internal Revenue Service of its intention to examine the Company’s partnership return for the year ended December 31, 2010. Audit field work for this examination has not been scheduled.

Stock-Based Compensation

We have adopted ASC 718, Compensation—Stock Compensation. ASC 718 addresses accounting for share-based awards, including stock options, with compensation expense measured using fair value and recorded over the requisite service or performance period of the award. The fair value of equity instruments awarded upon or after the closing of our initial public offering will be determined based on a valuation using an option pricing model which takes into account various assumptions that are subjective. Key assumptions used in the valuation will include the expected term of the equity award taking into account both the contractual term of the award, the effects of expected exercise and post-vesting termination behavior, expected volatility, expected dividends and the risk-free interest rate for the expected term of the award.

Investment Securities Available for Sale

Investment securities available for sale are carried at fair value, inclusive of unrealized gains and losses, and net of discount accretion and premium amortization computed using the level yield method. Net unrealized gains and losses are included in other comprehensive income (loss) net of applicable income taxes. Gains or losses on sales of investment securities available for sale are recognized on the specific identification basis.

Management evaluates securities for other than-temporary-impairment on a quarterly basis. Impairment is evaluated considering numerous factors, and their relative significance varies depending on the situation. Factors considered include the Company’s intent to hold the security until maturity or for a period of time sufficient for a recovery in value, whether it is more likely than not that the Company will be required to sell the security prior to recovery of its amortized cost basis, the length of time and extent to which fair value has been less than amortized cost, the historical and implied volatility of the fair value of the security, failure of the issuer of the security to make scheduled interest or principal payments, any changes to the rating of the security by a rating agency and recoveries or additional declines in fair value subsequent to the balance sheet date.

Gain on Maturities of Life Settlements with Subrogation Rights, net

Every credit facility entered into by subsidiaries of the Company between December 2007 and December 2010 to finance the premium finance lending business required lender protection insurance for each loan originated under such credit facility. Generally, when the Company exercises its right to foreclose on collateral the Company’s lender protection insurer has the right to direct control or take beneficial ownership of the life insurance policy, subject to the terms and conditions of the lender protection insurance policy, including notice and timing requirements. Otherwise, the lender protection insurer maintains its salvage collection and subrogation rights. The lender protection insurer’s salvage collection and subrogation rights generally provide a remedy by which the insurer can seek to recover the amount of the lender protection claim paid plus premiums paid by it, expenses and interest thereon.

In most instances where the Company has foreclosed on the collateral, the lender protection insurer has maintained its salvage collection and subrogation rights, and also covers the cost of the ongoing premiums needed to maintain certain of these life insurance policies. However, the lender protection insurer may elect at

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any time to discontinue the payment of premiums, which would result in lapse of the policies if the Company does not otherwise pay the premiums. The Company views these policies as having uncertain value because the lender protection insurer controls what happens to the policy from a payment of premium standpoint, and the amount of the lender protection insurer’s salvage collection and subrogation claim rights on any individual life insurance policy could equal the cash flow received by the Company with respect to any such policy. For these reasons, the Company does not rely on these policies for revenue generation and these policies are considered contingent

The Company accounts for the maturities of life settlements with subrogation rights, net of subrogation expenses as contingent gains in accordance with Accounting Standards Codification (ASC) 450, Contingencies and recognizes the revenue from the maturities of these policies when all contingencies are resolved.

Accounting Changes

Note 2 of the Notes to Consolidated Financial Statements discusses accounting standards adopted in 2012, as well as accounting standards recently issued but not yet required to be adopted and the expected impact of these changes in accounting standards. Any material impact of adoption is discussed in Management’s Discussion and Analysis of Financial Condition and Results of Operations and in the Notes to the Consolidated Financial Statements.

Results of Operations

The following is our analysis of the results of operations for the periods indicated below. This analysis should be read in conjunction with our financial statements, including the related notes to the financial statements. Our results of operations are discussed below in two parts: (i) our consolidated results of operations and (ii) our results of operations by segment.

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Consolidated Results of Operations (in thousands)

Imperial Holdings, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF OPERATIONS

For the Years Ended December 31,

	2012			2011			2010
Income
Agency fee income	$	—		$	6,470		$	10,149
Interest income		2,014			8,303			18,660
Interest and dividends on investment securities available for sale		391			640			—
Origination fee income		500			6,480			19,938
Realized gain on sale of structured settlements		11,509			5,817			6,595
Realized gain on life settlements, net		151			5			1,951
Gain on forgiveness of debt		—			5,023			7,599
Unrealized change in fair value of life settlements		(5,660	)		570			10,156
Unrealized change in fair value of structured settlements		1,823			5,302			2,477
Change in equity investments		—			—			(1,284	)
Servicing fee income		1,183			1,814			413
Gain on maturities of life settlements with subrogation rights, net		6,090			3,188			—
Other income		1,082			602			242
Total income		19,083			44,214			76,896
Expenses
Interest expense		1,255			8,524			28,155
Provision for losses on loans receivable		515			7,589			4,476
Loss on loan payoffs and settlements, net		125			3,837			4,981
Amortization of deferred costs		1,867			6,076			24,465
Personnel costs		16,087			18,933			12,370
Marketing costs		5,023			6,104			5,077
Department of Justice Settlement		—			8,000			—
Legal fees		26,053			12,097			3,444
Professional fees		6,934			5,684			3,966
Insurance		2,330			756			358
Other selling, general and administrative expenses		3,567			5,812			5,301
Total expenses		63,756			83,412			92,593
Loss before income taxes		(44,673	)		(39,198	)		(15,697	)
Benefit for income taxes		(39	)		—			—
Net loss	$	(44,634	)	$	(39,198	)	$	(15,697	)

Life finance Segment Results (in thousands)

	For the Year Ended December 31,
	2012			2011			2010
Income	$	4,024		$	31,499		$	67,366
Expenses		17,835			38,949			68,634
Segment operating loss	$	(13,811	)	$	(7,450	)	$	(1,268	)

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Structured Settlement Segment Results (in thousands)

	For the Year Ended December 31,
	2012			2011			2010
Income	$	13,994		$	11,933		$	9,530
Expenses		21,547			21,951			13,066
Segment operating loss	$	(7,553	)	$	(10,018	)	$	(3,536	)

Reconciliation of Segment Results to Consolidated Results (in thousands)

	Year Ended December 31,
	2012			2011			2010
Segment operating loss		(21,364	)		(17,468	)		(4,804	)
Unallocated income
Interest and dividends on investment securities available for sale		391			640			—
Other income		674			142			—
Unallocated expenses
Interest expense		4			297			3,767
Personnel costs		707			2,928			4,364
Department of Justice		—			8,000			—
Legal fees		20,047			7,196			469
Professional fees		3,202			2,730			1,581
Insurance		107			199			95
Other selling, general and administrative expenses		307			1,162			617
		24,374			22,512			10,893
Loss before income taxes		(44,673	)		(39,198	)		(15,697	)
Benefit for income taxes		(39	)		—			—
Net loss	$	(44,634	)	$	(39,198	)	$	(15,697	)

2012 Compared to 2011

Net loss for the year ended December 31, 2012 was $44.7 million as compared to a net loss of $39.2 million for the year ended December 31, 2011, an increase of $5.5 million or 14%. Total income was $19.2 million for the year ended December 31, 2012, a 57% decrease over total income of $44.2 million during the year ended in 2011. Total expenses were $63.9 million for the year ended December 31, 2012 compared to total expenses of $83.4 million incurred during the year ended December 31, 2011, a reduction of $19.5 million, or 23%.

In our life finance segment, which includes our premium finance business, its operating loss increased by $6.3 million to $13.8 million. As a result of the voluntary termination of our premium finance business, we had decreases in agency fee income of $6.5 million, interest income of $6.1 million and origination income of $6.0 million. In addition, we recorded a loss in unrealized change in fair value of life settlements, which resulted in a decrease of $6.3 million and a decrease in forgiveness of debt of $5.0 million. These decreases were offset by increase in gain on maturity of life settlements with subrogation rights, net of $2.9 million.

Life finance segment expenses were $18.0 million during the year ended December 31, 2012 compared to $39.0 million during the year ended December 31, 2011, a decline of $21.0 million, or 54%. These declines were driven primarily by a $7.1 million reduction in provision for losses on loans receivable, a $6.9 million reduction

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in interest expense, a decline in amortization of deferred costs of $4.2 million, and a decline of $3.7 million in loss on loan payoffs and settlements, net, offset by an increase of $847,000 in selling, general and administrative expenses.

Results of operations in our life finance segment were adversely impacted by the USAO Investigation and related matters. Once the premium finance loans on our balance sheet mature, we will no longer have any revenue generated from interest income and origination income from premium finance loans.

Shortly after the Company was informed on September 27, 2011 that its premium finance loan business was the subject of the USAO Investigation, the Company decided to suspend originating new premium finance loans. During the year ended December 31, 2012, we originated zero loans, compared to 55 loans originated during the year ended December 31, 2011.

As of December 31, 2012, we had loans receivable totaling $3.0 million compared to $29.4 million as of December 31, 2011, a decrease of $26.4 million, or 90%. Loans outstanding declined from 138 to 22. As a result, origination income and interest income, which accrue over the life of the loan and are therefore a function of the amount of loans outstanding, declined from $6.5 million and $7.8 million, respectively, during the year ended December 31, 2011, to $500,000 and $1.7 million, respectively, a reduction of $6.0 million and $6.1 million or 92% and 78% respectively, during the same period in 2012.

During 2011, two individuals covered under policies that were subject to subrogation claims unexpectedly passed away. The Company collected the death benefit on one of these policies in the amount of $3.2 million, net of subrogation expense. For the year ended December 31, 2012, the Company negotiated a settlement in respect of the larger policy and collected approximately $6.1 million, net of subrogation expenses. A gain from the settlement was recorded in accordance with ASC 450, Contingencies in its consolidated statement of operations for the year ended December 31, 2012 as all contingencies were resolved.

Interest expense declined to $1.3 million compared to $8.2 million, a reduction of $6.9 million or 84%, as notes payable declined from $19.3 million as of December 31, 2011 to zero as of December 31, 2012. These notes payable, the majority of which were guaranteed under LPIC which was discontinued as of December 2010, declined as premium finance loans serving as collateral for these notes matured during the year ended December 31, 2012.

Provision for losses on loans receivable was $515,000 during the year ended December 31, 2012, compared to $7.6 million during the year ended December 31, 2011, a decrease of $7.1 million or 93%. This provision records impairments on existing loans in order to adjust the carrying value of the loan receivable to the fair value of the underlying policy or when collectability of the LPIC claim payment is uncertain.

Amortization of deferred costs, which are comprised primarily of upfront premiums previously paid to the LPIC insurer, was $1.9 million during the year ended December 31, 2012 as compared to $6.1 million for 2011, a decrease of $4.2 million, or 69%. Lender protection insurance related costs accounted for $1.5 million and $4.9 million of total amortization of deferred costs during the years ended December 31, 2012 and 2011, respectively. As described previously, the lender protection insurance program was terminated as of December 31, 2010 and 5 loans with lender protection insurance remained outstanding as of December 31, 2012. Only $7,000 of lender protection insurance related costs remains to be amortized.

As of December 31, 2012, the Company owned 214 policies with a fair market value of $113.4 million compared to $90.9 million at December 31, 2011, an increase of $22.5 million or 25%. During the year ended December 31, 2012, the Company acquired 31 life insurance policies compared to 151 policies during the year ended December 31, 2011. Total aggregate death benefit of polices acquired was $166.0 million and $774.3 million for the year ended December 31, 2012 and December 31, 2011, respectively. Of the 31 policies acquired during 2012, 29 were as a result of certain of the Company’s borrowers defaulting on premium finance loans and

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relinquishing the underlying policy to the Company, compared to 14 policies acquired in the same manner for 2011. As of December 31, 2012, the aggregate death benefit of the Company’s investment in life settlements is $1.1 billion. During the year ended December 31, 2012, we sold 6 policies and wrote off 1 policy.

Of these 214 policies owned as of December 31, 2012, 171 were previously premium financed and are valued using discount rates that range from 16.80% – 33.80%. The remaining 43 policies are valued using discount rates that range from 14.80% – 21.30%.

Unrealized change in fair value of life settlements was a loss of approximately $5.7 million for the year ended December 31, 2012 compared to a gain of $570,000 for the year ended December 31, 2011, a decrease of $6.3 million. This loss was primarily driven by increased life expectancy inputs to the Company’s fair value model reflected in the updated life expectancy reports procured by the Company in respect of 149 insured lives. These reports showed that, in the aggregate, there was less health impairment and thus longer life expectancies relative to the original life expectancy reports inputted into the Company’s fair value model. The $570,000 unrealized changed in fair value recorded during the year ended December 31, 2011 included $3.0 million attributable to revisions made to the application of our valuation technique and assumptions used in our fair value calculation made in the quarter ended March 31, 2011, as described in Note 2, Principles of Consolidation and Basis of Presentation. During the year ended December 31, 2012, the 29 policies which were acquired as a result of certain of the Company’s borrowers defaulting on premium finance loans and relinquishing the underlying policy to the Company resulted in a decrease in unrealized change in fair value of $264,000 and 6 polices were sold that resulted in a gain of $291,000.

Two updated life expectancy reports show discrepancies with the previously reviewed and relied upon medical records of two insureds, resulting in significant extensions to the insureds’ life expectancies. Unrealized change in fair value of life settlements for these two policies accounted for approximately $3.3 million of the $5.7 million loss for the year ended December 31, 2012.

In our structured settlements segment, total income was $14.0 million for the year ended December 31, 2012 compared to $11.9 million in December 31, 2011, an increase of $2.1 million or 18%. This was due to an increase in transactions sold. During the year ended December 31, 2012, 1,235 structured settlements that were sold that resulted in a gain of $11.5 million compared to 979 structured settlements that were sold that resulted in a gain of $5.8 million during the year ended December 31, 2011. Unrealized change in fair value of structured settlements receivable was $1.8 million for the year ended December 31, 2012 compared to $5.3 million in 2011.

Selling, general and administrative expenses decreased by $400,000 to $21.5 million. Significant expense reductions were made in marketing costs of $1.1 million associated with a reduction in advertising and other promotional activities to drive new business and in other expenses of $1.2 million. These reductions were offset by increases in personnel costs of $400,000, professional fees of $600,000 and D&O insurance of $780,000.

This segment continues to be characterized by high growth in lead generation and sales as well as high operating costs. This led to a segment operating loss of $7.5 million during the year ended December 31, 2012, a decrease of $2.5 million over the segment operating loss of $10.0 million recorded during 2011.

Non-direct segment expense was $24.5 million compared to $22.5 million for the year ended December 31, 2012, an increase of $1.5 million or 7%. This is primarily driven by increases in legal fees of $4.8 million or 32%, offset by a reduction in personnel cost of $2.2 million, which is mainly due to a redistribution of costs directly to Company segments and a reduction in SG&A of $892,000. Total legal expenses for 2012 were $20.0 million and included $14.3 million associated with the USAO Investigation, compared $6.0 million for 2011. This figure includes $5.1 million associated with the proposed settlement of the class action litigation and derivative action. During 2011, expense totaling $8.0 million of the $22.5 million was associated with the settlement of the USAO Investigation.

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Due to the USAO Investigation, SEC investigation, Non-Prosecution Agreement and the class action lawsuits and the effect that they and related matters have had on our business, the Company determined that it was more likely than not that the net deferred tax asset at December 31, 2012 and 2011 was not realizable and accordingly, established a 100 percent valuation allowance against it net deferred tax asset at December 31, 2012 and 2011. As a consequence, the Company had no income tax provision or benefit for the years ended December 31, 2012 and 2011.

2011 Compared to 2010

Net loss for the year ended December 31, 2011 was $39.2 million as compared to a net loss of $15.7 million for the year ended December 31, 2010, a decrease of $23.5 million. Total income was $44.2 million for 2011, a 43% decrease over total income of $76.9 million during 2010. Total expenses were $83.4 million for the period compared to total expenses of $92.6 million incurred during 2010, a reduction of $9.2 million, or 10%.

In our life finance segment which includes our premium finance business, its operating loss increased by $6.2 million to $7.5 million, primarily driven by decreases in agency fee income, origination income and interest income totaling $30.6 million. Life finance segment expenses were $38.9 million in 2011 compared to $68.6 million during 2010, a decline of $29.7 million, or 43%. These declines were driven primarily by a $16.2 million reduction in interest expense, a decline in amortization of deferred costs of $18.4 million, and a decline of $1.1 million in loss on loan payoffs and settlements, net offset by an increase of $3.1 million in provision for losses on loan receivables and an increase of $2.9 million in selling, general and administrative expenses.

Results of operations in our life finance segment were adversely impacted by the USAO Investigation and related matters. During 2011, we originated 55 loans using equity capital, compared to 97 loans originated under the LPIC program during the year ended December 31, 2010. All 55 of these loans were originated during the nine months ended September 30, 2011, after which we suspended origination of premium finance loans. In connection with the Non-Prosecution Agreement, we voluntarily terminated our premium finance business and we anticipate that we will no longer be originating any premium finance loans.

This decrease in the number of loans originated resulted in a reduction in agency fees from $10.1 million during 2010 to $6.5 million during 2011, a decrease of $3.6 million. As of December 31, 2011, we had loans receivable totaling $29.4 million compared to $90.0 million as of December 31, 2010, a decrease of $60.6 million, or 67%. Loans outstanding declined from 325 to 138. As a result, origination income and interest income, which accrue over the life of the loan and are therefore a function of the amount of loans outstanding, declined from $19.9 million and $18.7 million, respectively, during the year ended December 31, 2010, to $6.5 million and $7.8 million, respectively, during the year ended December 31, 2011. Offsetting these declines were a reduction of total life finance segment expenses from $68.6 million during the year ended December 31, 2010 to $38.9 million during the year ended December 31, 2011, a decrease of $29.7 million. Interest expense declined to $8.2 million, a reduction of $16.2 million, as notes payable declined from $91.6 million in 2010 to $19.3 million in 2011. Provision for losses on loans receivable was $7.6 million during 2011, compared to $4.5 million during the year ended December 31, 2010. Provision for losses on loans receivable for uninsured loans increased during the year ended December 31, 2011, as a result of the impairment of the collateral based on decreases in the fair value of the collateral underlying those loans. Amortization of deferred costs, which are comprised primarily of upfront premiums previously paid to the LPIC insurer, were $6.1 million during the year ended December 31, 2011 compared to $24.5 million during the year ended December 31, 2010, a decline of $18.4 million. In connection with the Non-Prosecution Agreement, we voluntarily terminated our premium finance business and, as a result, we will no longer be generating agency fees that are tied directly to loan originations. Further, we will no longer generate loan, interest income, or origination income once our remaining loans mature.

As of December 31, 2011, the Company owned 190 policies with an aggregate investment in life settlements of $90.9 million. Of these 190 policies, 145 were previously premium financed and are valued using discount rates that range from 18.65% – 32.25%. The remaining 45 policies are valued using a discount rate of

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16.65%. During the year ended December 31, 2011, the Company acquired 151 life insurance policies through purchases in the secondary and tertiary markets and as a result of certain of the Company’s borrowers defaulting on premium finance loans and relinquishing the underlying policy to the Company. Total aggregate death benefit of polices acquired during the year ended December 31, 2011 was $744.3 million.

Unrealized change in fair value of life settlements was an approximately $570,000 gain for the year ended December 31, 2011. This figure was negatively affected by a $14.1 million and $13.5 million reduction in fair value during the three months ended September 30, 2011 and December 31, 2011, respectively, as a result of decreases in the fair value of the Company’s portfolio of life insurance policies, compared to $10.2 million gain for the year ended December 31, 2010. The approximately $570,000 unrealized change in fair value recorded during the year ended December 31, 2011 included $3.0 million attributable to revisions made to the application of our valuation technique and assumptions used in our fair value calculation made in the quarter ended March 31, 2011, as described in Note 2, Principles of Consolidation and Basis of Presentation. These changes impacted the unrealized change in fair value by a gain of $3.0 million on 41 life settlement policies owned as of December 31, 2010.

The Company originated 55 premium finance loans during the year ended December 31, 2011. As a result of the aforementioned changes to the estimated fair value of the loan collateral, the provision for losses on loans receivable for these uninsured loans increased by $7.9 million in the year ended December 31, 2011.

Of the 55 premium finance loans originated during the year ended December 31, 2011, 11 are the Type 2 loans. These loans have an average principal balance of approximately $549,000 compared to approximately $280,000 on Type 1 loans originated during the year ended December 31, 2011. Agency fees as a percent of the principal balance of the loans averaged 39.0% and 20.7% on Type 1 and Type 2 loans, respectively.

In the third quarter of 2011, two individuals covered under policies which were subject to subrogation claims unexpectedly passed away. The Company collected the death benefit on one of these policies in the amount of $3.5 million during the third quarter. The other was the result of an accidental death and the $10.0 million face value of the policy was larger than average. The Company did not collect the $10.0 million death benefit under this policy as of December 31, 2011. The Company accounted for each of these polices as contingent gains in accordance with ASC 450, Contingencies and recognized $3.2 million in death benefits net of subrogation expense of $312,000 in its consolidated statement of operations during the third quarter of 2011. In accordance with ASC 450, the Company expected to recognize death benefits, net of subrogation expenses on the larger policy in the second quarter of 2012. The Company believes these contingent gains to be unpredictable. No expectations for similar gains in the future should be inferred from the events occurring in the third quarter of 2011.

In our structured settlements segment, total income was $11.9 million for the year ended December 31, 2011 compared to $9.5 million in 2010, an increase of $2.4 million. This increase was due to an increase in transactions originated to 873 during the year ended December 31, 2011 compared to 565 transactions originated during the year ended December 31, 2010. Segment SG&A expenses increased by $8.9 million to $22.0 million as we continued to build our infrastructure. This led to a segment operating loss of $10.0 million during 2011 an increase of $6.5 million over segment operating loss of $3.5 million recorded during 2010.

For the period 2011, the unallocated expenses for 2011 were $22.5 million as compared to $10.9 million in 2010 an increase of $ 11.6 million. This increase was primarily due to the USAO Investigation whereby the company paid a penalty of $8.0 million coupled with legal fees of $ 6.0 million offset by a decrease in interest expense of $3.5 million.

Upon the implementation of ASC 740 in 2011, we recorded a one-time deferred tax liability of approximately $4.6 million for the federal and state tax effects of cumulative differences between financial and tax reporting which existed at the time of the Conversion. Pursuant to ASC 740 these deferred taxes were

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recorded in income tax expense, In addition, following the Conversion and prior to the initial public offering, one of our founding members entered into a reorganization that allowed us to assume the corporate shareholder’s tax attributes. These tax attributes include approximately $11.2 million of NOLs. Accordingly, in the second quarter we recorded a one-time deferred tax asset of approximately $4.3 million related to these tax attributes and this amount was recorded as an income tax benefit.

Following the conversion and prior to the initial public offering, one of the founding members entered into a reorganization that allowed the Company to assume the corporate shareholder’s tax attributes. These tax attributes include approximately $11.2 million of NOLs. During the second quarter of 2011, the Company completed an evaluation of this transaction and determined that the Company was entitled to assume the NOLs of this founding member. Accordingly, in the second quarter of 2011, the Company recorded a one-time deferred tax asset of approximately $4.3 million related to these tax attributes.

Due to the USAO Investigation and the effect that it and related matters have had on our business, the Company determined that it was more likely than not that the net deferred tax asset at December 31, 2011 was not realizable and accordingly, established a 100 percent valuation allowance against it net deferred tax asset. As a consequence, the Company had no income tax provision or benefit for the year ended December 31, 2011.

Segment Information

We operate our business through two reportable segments: life finance and structured settlements. Our segment data discussed below may not be indicative of our future operations.

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Life Finance Business

Our results of operations for our life segment for the periods indicated are as follows (in thousands):

	Year Ended December 31,
	2012			2011			2010
Life finance
Income
Agency fee income	$	—		$	6,470		$	10,146
Interest income		1,685			7,751			18,326
Origination income		500			6,480			19,938
Gain on forgiveness of debt		—			5,023			7,599
Unrealized change in fair value of life settlements		(5,660	)		570			10,156
Realized gain on life settlements, net		151			5			1,951
Change in equity investments								(1,284	)
Servicing fee income		1,183			1,814			403
Gain on maturities of life settlements with subrogation rights, net		6,090			3,188			—
Other		75			198			131
		4,024			31,499			67,366
Direct segment expenses
Interest expense		1,250			8,229			24,388
Provision for losses on loan receivables		515			7,589			4,476
Loss on loans payoffs and settlements, net		125			3,837			4,981
Amortization of deferred costs		1,868			6,076			24,465
Personnel costs		5,746			6,840			3,185
Marketing costs		—			16			3
Legal fees		3,676			2,658			1,537
Professional fees		1,777			1,831			1,551
Insurance		1,115			237			110
Other selling, general and administrative expenses		1,763			1,636			3,938
		17,835			38,949			68,634
Segment operating loss	$	(13,811	)	$	(7,450	)	$	(1,268	)

2012 Compared to 2011

Income

Agency Fee Income. Agency fee income was zero for the year ended December 31, 2012 compared to $6.5 million for 2011, a decrease of $6.5 million. Agency fee income is earned solely as a function of originating loans. We did not fund any loans during the year ended December 31, 2012, compared to the 55 loans funded during 2011. As a result of the voluntary termination of our premium finance business, we did not receive any revenue from agency fees in 2012 and will not in the future.

Interest Income. Interest income was $1.7 million for the year ended December 31, 2012 compared to $7.8 million for 2011, a decrease of $6.1 million, or 78%. During the years ended December 31, 2012 and December 31, 2011, the Company originated zero and 55 loans respectively. Interest income declined as the balance of loans receivable, net decreased from $29.4 million as of December 31, 2011 to $3.0 million as of December 31, 2012 due to significant loan maturities. There were no significant changes in interest rates. The

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weighted average per annum interest rate for life finance loans outstanding as of December 31, 2012 and 2011 was 13.4% and 12.3%, respectively. As a result of the voluntary termination of our premium finance business, we will cease earning interest income once our outstanding premium finance loans mature.

Origination Fee Income. Origination fee income was $500,000 for the year ended December 31, 2012, compared to $6.5 million for 2011, a decrease of $6.0 million, or 92%. Origination fee income decreased due to a decline in the average balance of loans receivable, net, as noted above. Also, the Company reduced origination fees charged after ceasing the LPIC program, under which the majority of origination fees were passed along to the LPIC provider. Origination fees as a percentage of the principal balance of the loans originated was 25.0% during 2011. As a result of the voluntary termination of our premium finance business, we did not originate any loans or origination fees during 2012. We will cease accruing origination fee income once our outstanding premium finance loans mature.

Gain on Forgiveness of Debt. Gain on forgiveness of debt was zero for the year ended December 31 2012 compared to $5.0 million in 2011, a decrease of $5.0 million. These gains arise out of a settlement agreement with Acorn Capital in 2011. Zero loans out of 119 loans financed in the Acorn facility remained outstanding as of December 31, 2012. The gains were largely offset by a loss on loan payoffs, net related to Acorn loans of $4.1 million during 2011.

Unrealized Change in Fair Value of Life Settlements. Unrealized change in fair value of life settlements was a loss of approximately $5.7 million for the year ended December 31, 2012 compared to a gain of $570,000 in 2011, a decrease of $6.3 million. This loss was primarily driven by increased life expectancy inputs to the Company’s fair value model reflected in the updated life expectancy reports procured by the Company in respect of 149 insured lives. These reports showed that, in the aggregate, there was less health impairment and thus longer life expectancies relative to the original life expectancy reports inputted into the Company’s fair value model. The $570,000 unrealized changed in fair value recorded during the year ended December 31, 2011 included $3.0 million attributable to revisions made to the application of our valuation technique and assumptions used in our fair value calculation made in the quarter ended March 31, 2011, as described in Note 2, Principles of Consolidation and Basis of Presentation. During the year ended December 31, 2012, the 29 policies which were acquired as a result of certain of the Company’s borrowers defaulting on premium finance loans and relinquishing the underlying policy to the Company, resulted in a decrease in unrealized change in fair value of $264,000 and 6 polices were sold resulting in a gain of $291,000.

The discount rates used in the fair value calculation for the year ended December 31, 2012 ranged from 14.80% to 33.80% an increase from the range 16.65% to 32.25% rates used during 2011. See Note 14 to the accompanying consolidated financial statements.

Servicing Fee Income. Servicing income was $1.2 million for the year ended December 31, 2012 compared to $1.8 million for 2011, a decrease of $600,000 or 33%. Servicing fee income is earned in providing asset servicing for third parties, which we began providing during the fourth quarter of 2010. This decrease was primarily due to a reduction in the number of policies serviced.

Gain on Maturities of Life Settlements with Subrogation Rights, net. During 2011, two individuals covered under policies that were subject to subrogation claims unexpectedly passed away. The Company collected the death benefit on one of these polices in the amount of $3.2 million, net of subrogation expenses. In 2012 the Company negotiated a settlement in respect to the larger policy and collected approximately $6.1 million, net of subrogation expenses. A gain was reported in accordance with ASC 450, contingencies in its consolidated statement of operations for the year ended December 31, 2012 as all contingencies were resolved.

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Expenses

Interest Expense. Interest expense was $1.3 million for the year ended December 31, 2012 compared to $8.2 million for 2011, a decrease of $6.9 million, or 84%. The decrease in interest expense is due to a decline in notes payable from $19.3 million as of December 31, 2011 to zero as of December 31, 2012, a decrease of $19.3 million, or 100%.

Provision for Losses on Loans Receivable. Provision for losses on loans receivable was $515,000 during the year ended December 31, 2012, compared to $7.6 million during 2011, a decrease of $7.1 million or 93%. This provision records impairments on existing loans in order to adjust the carrying value of the loan receivable to the fair value of the underlying policy or when collectability of the LPIC claim payment is uncertain. See Notes 9, 13 and 14 to the accompanying consolidated financial statements.

Loss on Loan Payoffs and Settlements, Net. Loss on loan payoffs and settlements, net, was $125,000 for the year ended December 31, 2012 compared to $3.8 million in 2011, a decrease of $3.7 million, or 97%. In the year ended December 31, 2012, we wrote off zero loans compared to 15 loans written off in 2011, all of which were included in the Acorn settlement. Excluding the impact of the Acorn settlements, we had a loss of $125,000 and a gain of $772,000 on loan payoffs and settlements, net, for the years ended December 31, 2012 and 2011, respectively.

Amortization of Deferred Costs. Amortization of deferred costs was $1.9 million during the year ended December 31, 2012 as compared to $6.1 million for 2011, a decrease of $4.2 million, or 69%. Lender protection insurance related costs accounted for $1.5 million and $4.9 million of total amortization of deferred costs during the years ended December 31, 2012 and 2011, respectively. As described previously, the lender protection insurance program was terminated as of December 31, 2010 and 5 loans with lender protection insurance remained outstanding as of December 31, 2012. Only $7,000 of lender protection insurance related costs remains to be amortized.

Selling, General and Administrative Expenses. SG&A expenses were $14.1 million for the year ended December 31, 2012 compared to $13.2 million for 2011, an increase of $900,000 million or 7%. This was due primarily to an increase in legal expenses of $1.0 million related to two carrier rescission cases and D&O insurance expense of $863,000. These increases were offset by a decrease in personnel costs of $1.1 million mainly attributable to reduction in head count.

Adjustments to our allowance for doubtful accounts for past due agency fees are charged to bad debt expense during 2011. There was no charge to bad debt expense for agency fee receivable for the year ended December 31, 2012. Our determination of the allowance is based on an evaluation of the agency fee receivable, prior collection history, current economic conditions and other inherent risks. The allowance for doubtful accounts for past due agency fees as was $260,000 as of December 31, 2012 and 2011.

2011 Compared to 2010

Income

Agency Fee Income. Agency fee income was $6.5 million for the year ended December 31, 2011 compared to $10.1 million in 2010, a decrease of $3.6 million, or 36%. Agency fee income is earned solely as a function of originating loans. We funded 55 loans during the year ended December 31, 2011, a 43% decrease compared to the 97 loans funded during 2010 under credit facilities with lender protection insurance. The Company began originating loans using equity capital instead of debt in late February 2011 after the completion of our initial public offering. As a result of the voluntary termination of our premium finance business, we will not receive any revenue from agency fees in 2012 and beyond, and Imperial Life and Annuity has begun to voluntarily surrender its insurance agency licenses.

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Interest Income. Interest income was $7.8 million for the year ended December 31, 2011 compared to $18.3 million in 2010, a decrease of $10.5 million, or 57%. During the years ended December 31, 2011 and December 31, 2010, the Company originated 55 and 97 loans respectively. Interest income declined as the balance of loans receivable, net decreased from $90.0 million as of December 31, 2010 to $29.4 million as of December 31, 2011 due to significant loan maturities. There were no significant changes in interest rates. The weighted average per annum interest rate for life finance loans outstanding as of December 31, 2011 and 2010 was 12.3% and 11.4%, respectively. As a result of the voluntary termination of our premium finance business, we will cease earning interest income once our outstanding premium finance loans mature.

Origination Fee Income. Origination fee income was $6.5 million for the year ended December 31, 2011, compared to $19.9 million in 2010, a decrease of $13.4 million, or 68%. Origination fee income decreased due to a decline in the average balance of loans receivable, net, as noted above. Also, the Company reduced origination fees charged after ceasing the LPIC program, under which the majority of origination fees were passed along to the LPIC provider. Origination fees as a percentage of the principal balance of the loans originated was 25.0% during 2011 compared to 41.5% in 2010. As a result of the voluntary termination of our premium finance business, we will cease accruing origination fee income once our outstanding premium finance loans mature.

Gain on Forgiveness of Debt. Gain on forgiveness of debt was $5.0 million for the year ended December 31 2011 compared to $7.6 million in 2010, a decrease of $2.6 million, or 34%. These gains arise out of a settlement agreement with Acorn Capital. Zero loans out of 119 loans financed in the Acorn facility remained outstanding as of December 31, 2011. The gains were largely offset by a loss on loan payoffs, net related to Acorn loans of $4.1 million and $5.5 million during the year ended December 31, 2011, and 2010, respectively.

Unrealized Change in Fair Value of Life Settlements. Unrealized change in fair value of life settlements was a gain of approximately $570,000 for the year ended December 31, 2011 compared to $10.2 million for the year ended December 31, 2010. The change in fair value is included in unrealized change in fair value of life settlements in the accompanying consolidated statement of operations. At December 31, 2011, the Company considered the discount rate based on information that was then available and further adjusted discount rates, resulting in a weighted average discount rate of 24.31%.

Servicing Fee Income. Servicing income was $1.8 million for the year ended December 31, 2011 compared to $403,000 in 2010. Servicing fee income is earned in providing asset servicing for third parties, which we began providing during the fourth quarter of 2010.

Gain on Maturities of Life Settlements with Subrogation Rights, net. In the third quarter of 2011, two individuals covered under policies that were subject to subrogation claims passed away. The Company collected the death benefit on one of these policies in the amount of $3.5 million during the third quarter. The other was the result of an accidental death and the $10.0 million face value of the policy was larger than average. The Company had not collected the $10.0 million death benefit under this policy as of December 31, 2011. The Company accounted for the maturities of each of these polices as contingent gains in accordance with ASC 450, Contingencies and recognized $3.2 million in death benefits net of subrogation expenses of $312,000 in its consolidated statement of operations during the third quarter of 2011. In 2012, the Company negotiated a settlement in respect of the larger policy and, in accordance with ASC 450, the Company expects to recognize death benefits, net of subrogation expenses on the larger policy in the second quarter of 2012. See Note 26—Subsequent Events. No expectations for similar gains in the future should be inferred from the events occurring in the third quarter of 2011.

Expenses

Interest Expense. Interest expense was $8.2 million for the year ended December 31, 2011 compared to $24.4 million in 2010, a decrease of $16.2 million, or 66%. The decrease in interest expense was due to a decline in notes payable from $89.2 million as of December 31, 2010 to $19.3 million as of December 31, 2011, a decrease of $69.9 million, or 78%.

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Provision for Losses on Loans Receivable. Provision for losses on loans receivable was $7.6 million for the year ended December 31, 2011 compared to $4.5 million in 2010, an increase of $3.1 million. This provision records loan impairments on existing loans in order to adjust the carrying value of the loan receivable to the fair value of the underlying policy. For 2011, the provision for losses on loans receivable increased in the latter half of the year as a result of the decline in the estimated fair value of the collateral due to the higher discount rate we applied in the fair value model. See Notes 10, 15 and 16 to the accompanying consolidated financial statements.

Loss on Loan Payoffs and Settlements, Net. Loss on loan payoffs and settlements, net, was $3.8 million for the year ended December 31, 2011 compared to $5.0 million in 2010, a decrease of $1.2 million, or 23%. In the year ended December 31, 2011, we wrote off 15 loans compared to 22 loans written off in the year ended December 31, 2010, all of which were included in the Acorn settlement. Excluding the impact of the Acorn settlements, we had a gain on loan payoffs and settlements, net, of approximately $772,000 and a $500,000 for the years ended December 31, 2011 and 2010, respectively.

Amortization of Deferred Costs. Amortization of deferred costs was $6.1 million during the year ended December 31, 2011 as compared to $24.5 million in 2010, a decrease of $18.4 million, or 75%. Lender protection insurance related costs accounted for $4.9 million and $20.7 million of total amortization of deferred costs during the years ended December 31, 2011 and 2010, respectively. As described previously, the lender protection insurance program was terminated as of December 31, 2010 and 91 loans with lender protection insurance remained outstanding as of December 31, 2011. Only $1.1 million of lender protection insurance related costs remain to be amortized as of the same date.

Selling, General and Administrative Expenses. Selling, general and administrative expenses were $13.2 million for the year ended December 31, 2011 compared to $10.3 million in 2010, an increase of $2.9 million or 28%. This increase was due primarily to an increase in personnel expenses of $500,000 due to hiring additional employees, $1.1 million in stock-based compensation and employee bonuses in connection with our IPO, expenses related to a work-force reduction at the end of 2011 and an increase in legal fees of $1.1 million.

Adjustments to our allowance for doubtful accounts for past due agency fees are charged to bad debt expense. Our determination of the allowance is based on an evaluation of the agency fee receivable, prior collection history, current economic conditions and other inherent risks. The allowance for doubtful accounts for past due agency fees as of December 31, 2011 was $260,000 as compared to $205,000 as of December 31, 2010. Throughout 2011, we continued to evaluate the collectability of agency fee receivables and recorded approximately $82,000 in bad debt expense during the year ended December 31, 2011.

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Structured Settlements

Our results of operations for our structured settlement business segment for the periods indicated are as follows (in thousands):

	Year Ended December 31,
	2012			2011			2010
Income
Realized gain on sale of structured settlements	$	11,509		$	5,817		$	6,595
Interest income		329			553			334
Unrealized change in fair value of structured settlements		1,822			5,302			2,477
Servicing fee income		—			—			11
Other income		334			261			113
		13,994			11,933			9,530
Direct segment expenses
Personnel costs		9,634			9,170			4,821
Marketing costs		5,023			6,088			5,034
Legal fees		2,331			2,243			1,438
Professional fees		1,955			1,418			834
Insurance		1,108			320			153
Other selling, general and administrative expenses		1,496			2,712			786
		21,547			21,951			13,066
Segment operating loss	$	(7,553	)	$	(10,018	)	$	(3,536	)
Consolidated

2012 Compared to 2011

Income

Interest Income. Interest income was $329,000 for year ended December 31, 2012 compared to $553,000 for 2011, a decrease of $224,000 or 41% as a result of a reduction of the asset held during the year ended December 31, 2011. Interest income is accretion during the period on the structured settlement assets held on our balance sheet.

Realized Gain on Sale of Structured Settlements. During the year ended December 31, 2012, 1,235 structured settlements were sold which resulted in a gain of $11.5 million compared to 601 structured settlements sold with a gain of $5.8 million during the year ended December 31, 2011. Segment financing costs remained high during the first three quarters of 2012 as a result of the USAO Investigation, which impacted the realized gain on sale of structured settlements.

Unrealized Change in Fair Value of Structured Settlement Receivables. Unrealized change in fair value of investments and structured receivables was $1.8 million for the year ended December 31, 2012 compared to $5.3 million for the same period in 2011. At December 31, 2012 we had 37 structured receivables on our balance sheet compared with 288 structured settlement receivables on our balance sheet as of December 31, 2011. The large decrease was due to the Company’s ability to finance these receivables in the dedicated Imperial Settlements Financing 2010, LLC financing facility during 2012.

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Expenses

Selling, General and Administrative Expenses. Selling, general and administrative expenses decreased by $400,000 to $21.5 million for the year ended December 21, 2012. Significant expense reductions were made in marketing costs of $1.1 million associated with a reduction in advertising and other promotional activities to drive new business and in other expenses of $1.2 million. These reductions were offset by increases in personnel costs of $400,000, professional fees of $600,000 and D&O insurance of $780,000.

This segment continues to be characterized by high growth in lead generation and sales, as well as high operating costs. This led to a segment operating loss of $7.5 million during the year ended December 31, 2012, a decrease of $2.5 million over the segment operating loss of $10.0 million recorded during year ended December 31, 2011.

2011 Compared to 2010

Income

Interest Income. Interest income was $553,000 for year ended December 31, 2011 compared to $334,000 for 2010, an increase of $219,000.

Realized Gain on Sale of Structured Settlements. Realized gain on sale of structured settlements was $5.8 million for the year ended December 31, 2011 compared to $6.6 million in 2010. During the year ended December 31, 2011, we sold 601 of structured settlements for a gain of $5.8 million. During the year ended December 31, 2010, we sold 630 structured settlements for a gain of $6.6 million. Included in these 2010 results was a portfolio purchase and sale of 131 transactions that resulted in a gain of $64,000.

Unrealized Change in Fair Value of Structured Settlement Receivables. Unrealized change in fair value of investments and structured receivables was $5.3 million for the year ended December 31, 2011 compared to $2.5 million for the same period in 2010. At December 31, 2011 we had 288 structured receivables on our balance sheet compared with 84 structured settlement receivables on our balance sheet as of December 30, 2010. The large increase was due to the Company’s inability to finance these receivables in the dedicated financing facility

Expenses

Selling, General and Administrative Expenses. Selling, general and administrative expenses $22.0 million for the year ended December 31, 2011 compared to $13.1 million in December 31, 2010, an increase $8.9 million or 68%. This increase was due in part to an increase in personnel expenses of 5.8 million due to due to hiring additional employees throughout 2011 and stock-based compensation and employee bonuses in connection with our initial public offer in 2011. In addition, we recorded additional indirect variable expenses associated with the increase in the number of structured settlements originated during the period, including an increase in advertising of $1.2 million, an increase in legal expenses $804,000, an increase in office supplies professional fees of approximately $512,000 and a net increase in other expenses of approximately $600,000.

Liquidity and Capital Resources

We anticipate that our liquidity needs for 2013 and for 2014 will be in excess of the amounts of cash and cash equivalents held by the Company as of December 31, 2012, as a result of matters associated with the USAO and SEC Investigations and related shareholder litigation. The Company has expended considerable resources resolving the USAO Investigation, as well as responding to the SEC investigation and related litigation, advancing indemnification costs on behalf of certain employees and in conducting an independent investigation of the facts and circumstances surrounding the USAO Investigation. As of December 31, 2012, the Company’s cumulative legal and related fees in respect of these matters were $29.1 million, including $22.3 million paid during the year ended December 31, 2012.

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We believe we will continue to spend significant amounts on legal matters related to the USAO and SEC investigations, shareholder litigation and other potential claims over the next year, and possibly beyond. We expect to meet our liquidity needs for the next year primarily through our cash resources and, to a lesser extent, through cash flows from sales and financings of structured settlements. We have only purchased 2 life insurance policies during the 12 months ended December 31, 2012 in an effort to conserve capital, are seeking capital and may also sell certain life insurance policies in our portfolio. We may also seek to reduce our operating expenses in order to preserve the value of our existing portfolio of policies, and/or, under certain scenarios, lapse or sell certain of our policies or some combination of the above. The lapsing of policies, if any, would create losses as such assets would be written down to zero. In connection with the Non-Prosecution Agreement, we have ceased originating new premium finance loans. We expect debt maturities to be covered by cash receipts from LPIC claims as discussed further below, and we do not currently have any material planned capital expenditures.

We estimate that we will need to pay $27.7 million in premiums to keep our current portfolio of life insurance policies in force through 2013. As of December 31, 2012, we had approximately $19.1 million of cash and cash equivalents, and marketable securities, including $1.1 million of restricted cash. Additionally, we have not yet experienced the mortalities of insureds or received the resulting death benefits from our life insurance policies (other than from policies with subrogation rights that are not reported on our balance sheet and that are considered contingent assets). On March 27, 2013, a subsidiary of the Company borrowed $45 million under an 18-month bridge facility. The facility was funded by entities affiliated with certain of the Company’s shareholders, Indaba Capital Management, LLC, Brooklyn Capital Management, LLC, Nantahala Capital Management LLC and NS Advisors LLC, and is secured by substantially all of the Company’s life insurance policies. This facility should provide the Company with adequate liquidity to pay premiums on its portfolio of life insurance through December 31, 2013.

The Company also expects during the next 12 months that, as part of the framework for the settlement embodied by the Term Sheet, it will, among other things, agree to pay $1.0 million of a $12.0 million payment to settle the class action litigation and will agree to contribute $500,000 to a trust to cover certain claims under its director and officer liability insurance policies, which will further stress the Company’s liquidity position. In addition, under the Term Sheet, the Company will undertake to advance legal fees and indemnify certain individuals covered under the director and officer liability insurance policies. The obligation to advance and indemnify on behalf of these individuals, while currently unquantifiable, may be substantial and could have an adverse effect on the Company’s financial position and results of operations.

Financing Arrangements Summary

Bridge Facility

On March 27, 2013, Greenwood, as issuer, and the Company and OLIPP IV, LLC, as guarantors, entered into an indenture with Wilmington Trust Company, as indenture trustee, under which an aggregate principal amount of $45 million in 12% increasing rate senior secured bridge notes were issued (the “Bridge Facility”).

Interest under the Bridge Facility accrues at 12% per annum for the first nine months from the issue date, and increases by 600 basis points thereafter to 18% per annum. Up to 25% of the net proceeds from the Bridge Facility after transaction expenses may be used by the Company for general corporate purposes, including for premium payments on life insurance policies not owned by Greenwood, with the balance used to pay fees and expenses associated with the Bridge Facility and for premiums on life insurance policies owned by Greenwood. The Bridge Facility is guaranteed by the Company and secured by the cash on account at Greenwood and its portfolio of life insurance policies. The Bridge Facility is also secured by pledges of the equity interests of Greenwood’s direct parent and each subsidiary of the Company, other than its licensed life settlement provider, that holds life insurance policies that are not subject to the subrogation rights of the Company’s lender protection insurance carrier.

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Notes under the Bridge Facility were issued at 92% of their face amount and are pre-payable at par at any time. The Bridge Facility is subject to mandatory prepayment provisions upon the issuance of additional debt, equity raises and asset sales. Mandatory prepayments are generally at par although certain asset sales and a change of control each trigger a mandatory prepayment obligation at 109%. The Bridge Facility requires the maintenance of a 2 times asset coverage ratio and six months of cash on hand to pay interest on the Bridge Facility and premiums on life insurance policies owned by Greenwood. Upon a failure to maintain requisite cash on hand, the Company may be obligated to sell policies to repay the lenders under the Bridge Facility.

Structured Settlement Financing Arrangements

8.39% Fixed Rate Asset Backed Variable Funding Notes. We formed Imperial Settlements Funding (“ISF”) as a subsidiary of Washington Square Financial, LLC (“WSF”) to serve as a special purpose financing entity to allow us to borrow against certain of our structured settlements and assignable annuities, which we refer to as receivables, to provide us liquidity. On September 24, 2011, we entered into an arrangement to provide financing up to $50 million in financing. Under this arrangement, a subsidiary of Partner Re, Ltd., or the noteholder, became the initial holder of ISF 2011’s 8.39% Fixed Rate Asset Backed Variable Funding Notes issued under a master trust indenture and related indenture supplement, or the indenture, pursuant to which the noteholder has committed to advance up to $50 million upon the terms and conditions set forth in the indenture. The note is secured by the receivables that ISF 2011 acquires from Washington Square from time to time. The note is due and payable on or before January 1, 2057, but principal and interest must be repaid pursuant to a schedule of fixed payments from the receivables that secure the notes. The arrangement generally has a concentration limit of 15% for the providers of the receivables that secure the notes. Wilmington Trust is the collateral trustee.

Upon the occurrence of certain events of default under the indenture, all amounts due under the note are automatically accelerated. ISF 2011 is subject to several restrictive covenants under the terms of the indenture. The restrictive covenants include that ISF 2011 cannot: (i) create, incur, assume or permit to exist any lien on or with respect to any assets other than certain permitted liens, (ii) create, incur, assume, guarantee or permit to exist any additional indebtedness, (iii) declare or pay any dividend or other distribution on account of any equity interests of ISF 2011 other than certain permitted distributions from available cash, (iv) make any repurchase or redemption of any equity interests of ISF 2011 other than certain permitted repurchases or redemptions from available cash, (v) enter into any transactions with affiliates other than the transactions contemplated by the indenture, or (vi) liquidate or dissolve.

During the third quarter of 2011, the Company suspended financing under this agreement, but resumed financing on January 12, 2012 pursuant to an acknowledgement that provided for WSF to make a $258,000 payment in respect of, the transfer of the ownership of certain lock-box accounts associated with the facility. As of December 31, 2012, the Company had available commitments under this facility of $6.8 million. We also have other parties to whom we have sold term-certain structured settlement assets and to whom we believe we can sell such assets in the future.

The Life-contingent Structured Settlement Facility. On December 30, 2011, WSF entered into a forward purchase and sale agreement (“PSA”) to sell up to $40.0 million of life-contingent structured settlement receivables to Compass Settlements, LLC (“Compass”). Subject to predetermined eligibility criteria and on-going funding conditions, Compass committed, in increments of $5.0 million, up to $40.0 million to purchase life-contingent structured settlement receivables from WSF. The PSA obligates WSF to sell the eligible life-contingent structured settlement receivables it originates to Compass on an exclusive basis for twenty-four months, subject to Compass maintaining certain purchase commitment levels. Additionally, the Company agreed to guaranty WSF’s obligation to repurchase any ineligible receivables sold under the PSA and certain other related obligations. As of December 31, 2012, the Company had available commitments under this facility of $6.6 million.

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Premium Finance Loan Maturities

The following table summarizes the maturities of our premium finance loans outstanding as of December 31, 2012 (dollars in thousands):

	Year Ending 12/31/2013
Carrying value (loan principal balance, accreted origination fees, and accrued interest receivable)	$	8,073
Weighted average per annum interest rate		13.8	%
Per annum origination fee as a percentage of the principal balance of the loan at origination		12.2	%

Cash Flows

The following table summarizes our cash flows from operating, investing and financing activities for the years ended December 31, 2012, 2011 and 2010 (in thousands):

	Year Ended December 31,
	2012			2011			2010
Statement of Cash Flows Data:
Total cash (used in) provided by:
Operating activities	$	(38,142	)	$	(46,362	)	$	(27,796	)
Investing activities		48,636			(92,542	)		102,956
Financing activities		(19,747	)		140,935			(76,827	)
(Decrease) increase in cash and cash equivalents	$	(9,254	)	$	2,031		$	(1,667	)

Operating Activities

Net cash used in operating activities for the year ended December 31, 2012 was $38.1 million, a decrease of $8.3 million from $46.4 million of cash used in operation activities in 2011. The decrease was mainly due to a reduction in accounts payable and accrued expenses of $19.1 million and interest payable of $1.3 million as a result of paying down loans outstanding. These were offset by increased structured settlement receivables of $18.4 million, other liabilities of $20.1 million, which is mainly attributable to liabilities associated with the class action and derivative action proposed settlement, prepaid expenses and other assets of $8.8 million that are mainly associated with insurance coverage for Directors and Officers, insurance recoverable related to the class action and derivative proposed settlement and deposits of $2.0 million.

Net cash used in operating activities for the year ended December 31, 2011 was $46.4 million, an increase of $18.6 million from $27.8 million of cash used in operation activities in 2010. The increase was primarily due to a decrease of a $3.1 million in the collection of agency fees, an increase of $3.6 million in payroll and related costs and an $11.9 million increase in legal fees due to the USAO Investigation and other expenses during the period.

Investing Activities

Net cash provided by investing activities for the year ended December 31, 2012 was $48.6 million, an increase of $141.2 million from $92.5 million of cash used in investing activities in 2011. The increase was primarily due to $10.3 million increase in proceeds from the sale and repayment of investment securities available-for-sale, $51.8 million decrease in originations of loans receivable, $45.4 million decrease in cash proceeds from loan payoffs and lender protection insurance claims received in advance and $5.6 million increase in proceeds from sale of life settlements. These were offset by $92.5 million decrease in purchases of investment securities available-for-sale, $11.4 million increase in premiums paid on investments in life settlements and $50.4 million decrease in purchases of life insurance policies.

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Net cash used in investing activities for the year ended December 31, 2011 was $92.5 million, an increase of $195.5 million from $103.0 million of cash provided in investing activities in 2010. The increase was primarily due to a $128.0 million increase in purchases of investment securities available-for-sale, a $77.1 million decrease in cash proceeds from loan payoffs and lender protection insurance claims received in advance, a $49.2 million increase in purchases of life insurance policies, and a $15.6 million increase in premiums paid on investments in life settlements, offset by a $69.5 million increase in proceeds from the sale and repayment of investment securities available-for-sale and a decrease of $6.0 million in originations of loans receivable during the period.

Financing Activities

Net cash used in financing activities for the year ended December 31, 2012 was $19.7 million, a decrease of $160.6 million from $140.9 million of cash provided by investing activities in 2011. The decrease was primarily due to a decrease of $174.2 million in proceeds from our initial public offering, net of offering costs, $16.9 million decrease in cash used in the repayment of borrowings under credit facilities, $2.6 million decrease in borrowings from affiliates and a $234,000 decrease in borrowings under credit facilities.

Net cash provided by financing activities for the year ended December 31, 2011 was $140.9 million, an increase of $217.8 million from $76.8 million of cash used in investing activities in 2010. The increase was primarily due to an increase of $174.2 million in proceeds from our initial public offering, net of offering costs and a $93.2 million decrease in cash used in the repayment of borrowings from affiliates offset by a $45.7 million decrease in borrowings under credit facilities and from affiliates during the year ended December 31, 2011.

Contractual Obligations

The following table summarizes our contractual obligations as of December 31, 2012 (in thousands):

	Total		Due in Less than 1 Year		Due 1-3 Years		Due 3-5 Years		More than 5 Years
Operating leases	$	1,024,234	$	547,051	$	477,183		—		—

Inflation

Our assets and liabilities are, and will be in the future, interest-rate sensitive in nature. As a result, interest rates may influence our performance far more than does inflation. Changes in interest rates do not necessarily correlate with inflation or changes in inflation rates. We do not believe that inflation had any material impact on our results of operations in the periods presented in our financial statements presented in this report.

Off-Balance Sheet Arrangements

Except as described below in “—Subrogation Rights, Net,” there are no off-balance sheet arrangements between us and any other entity that have, or are reasonably likely to have, a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to stockholders.

Subrogation Rights, Net

As described above in “—Critical Accounting Policies—Gain on Maturities of Life Settlements with Subrogation Rights, Net,” the Company considers policies that it acquired as a result of borrower default as contingent assets and does not include those policies in the amount of life settlement policies on its consolidated balance sheet. In the third quarter of 2011, two individuals covered under policies that were subject to subrogation claims passed away. The Company collected the death benefit on one of these policies in the amount of $3.5 million during the third quarter of 2011.

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The other was the result of an accidental death and the $10.0 million face value of the policy was larger than average. In the second quarter of 2012, the Company negotiated a settlement in respect of the larger policy and collected approximately $6.1 million, net of subrogation expenses of 910,000, in respect of the larger policy and reported a gain in accordance with ASC 450, Contingencies in its consolidated statement of operations for the second quarter of 2012. The Company believes these contingent gains to be unpredictable because the lender protection insurer can discontinue paying the premiums necessary to keep policies subject to subrogation and salvage claims in force at any time and the amount of the lender protection insurer’s subrogation and salvage claim on any individual life insurance policy could, and in time will, equal the cash flow received by the Company with respect to any such policy. No expectations for similar gains in the future should be inferred from these contingent gains.

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

Market risk is the risk of potential economic loss principally arising from adverse changes in the fair value of financial instruments. The major components of market risk are credit risk, interest rate risk and foreign currency risk. We have no exposure in our operations to foreign currency risk.

Credit Risk

In our life finance business segment, with respect to life insurance policies collateralizing our loans or that we acquire upon relinquishment, credit risk consists primarily of the potential loss arising from adverse changes in the financial condition of the issuers of the life insurance policies. We manage our credit risk related to these life insurance policy issuers by generally only funding premium finance loans for policies issued by companies that have a credit rating of at least ““A” by Standard & Poor’s, at least “A2” by Moody’s, at least “A” by A.M. Best Company or at least “A-” by Fitch. At December 31, 2012, all of our loan collateral was for policies issued by companies rated “investment grade” (credit ratings of “A+” to “BBB-”) by Standard & Poor’s, and we owned 7 policies issued by a carrier rated below investment grade.

The following table shows the percentage of the total number of loans outstanding with lender protection insurance and the percentage of our total loans receivable balance covered by lender protection insurance as of the dates indicated below:

	December 31,
	2012			2011			2010
Percentage of total number of loans outstanding with lender protection insurance		22.7	%		65.9	%		93.9	%
Percentage of total loans receivable, net balance covered by lender protection insurance		3.0	%		70.1	%		94.1	%

For the loans that had lender protection insurance and that matured during the years ended December 31, 2012 and December 31, 2011, the lender protection insurance claims paid to us were 95.5 % and 94.7 %, respectively, of the contractual amount of the insured loans.

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Our premium finance loans are originated with borrowers residing throughout the United States. We do not believe there are any geographic concentrations of loans that would cause them to be similarly impacted by economic or other conditions. However, there is concentration in the life insurance carriers that issued these life insurance policies that serve as our loan collateral. The following table provides information about the life insurance issuer concentrations that exceed 10% of total death benefit of the collateral and 10% of outstanding loan balance as of December 31, 2012:

Carrier	Percentage of Total Outstanding Loan Balance			Percentage of Total Death Benefit			Moody’s Rating		S&P Rating
Lincoln National Life Insurance Company		38.7	%		24.3	%		A2		AA-
Lincoln Benefit Life Company		21.0	%		16.7	%		A2		A
AXA Equitable Life Insurance Company		15.8	%		29.6	%		Aa3		AA-

As of December 31, 2012, our lender protection insurer, Lexington, had a financial strength rating of “A” with a stable outlook by Standard & Poor’s.

The following table provides information about the life insurance issuer concentrations that exceed 10% of total death benefit and 10% of total fair value of our investments in life settlements as of December 31, 2012:

Carrier	Percentage of Total Fair Value			Percentage of Total Death Benefit			Moody’s Rating		S&P Rating
Lincoln National Life Insurance Company		19.7	%		15.2	%		A2		AA-
AXA Equitable Life Insurance Company		11.9	%		13.5	%		Aa3		A+

In our structured settlements segment, credit risk consists of the potential loss arising principally from adverse changes in the financial condition of the issuers of the annuities that arise from a structured settlement. Although certain purchasers of structured settlements may require higher credit ratings, we manage our credit risk related to the obligors of our structured settlements by generally requiring that they have a credit rating of “A-” or better by Standard & Poor’s. The risk of default in our structured settlement portfolio is mitigated by the relatively short period of time that we hold structured settlements as investments. We have not experienced any credit losses in this segment and we believe such risk is minimal.

Interest Rate Risk

In our life finance segment, most of our credit facilities and promissory notes provide us with fixed-rate financing. Therefore, fluctuations in interest rates currently have minimal impact, if any, on our interest expense under these facilities. However, increases in interest rates may impact the rates at which we are able to obtain financing in the future.

We currently earn revenue from interest charged on loans and loan origination fees. In addition, we earn income on the unrealized changes in fair value of life insurance policies we acquire in the life settlement and secondary markets. However, if the fair value of the life insurance policies we own decreases, we record this reduction as a loss. We receive interest income that accrues over the life of the life finance loan and is due at maturity. Substantially all of the interest rates we charged on our premium finance loans were floating rates that are calculated at the one-month LIBOR rate plus an applicable margin. In addition, our life finance loans have a floor interest rate and are capped at 16.0% per annum. For loans with floating rates, each month the interest rate is recalculated to equal one-month LIBOR plus the applicable margin, and then, if necessary, adjusted so as to remain at or above the stated floor rate and at or below the capped rate of 16.0% per annum. While the floor and cap interest rates mitigate our exposure to changes in interest rates, our interest income may nonetheless be impacted by changes in interest rates. Origination fees are fixed and are therefore not subject to changes based on movements in interest rates, although we do charge interest on origination fees.

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As of December 31, 2012, we owned investments in life settlements (life insurance policies) in the amount of $113.4 million. A rise in interest rates could potentially have an adverse impact on the sale price if we were to sell some or all of these assets. There are several factors that affect the market value of life settlements (life insurance policies), including the age and health of the insured, investors’ demand, available liquidity in the marketplace, duration and longevity of the policy, and interest rates. We currently do not view the risk of a decline in the sale price of life settlements (life insurance policies) due to normal changes in interest rates as a material risk.

In our structured settlements segment, our profitability is affected by levels of and fluctuations in interest rates. Such profitability is largely determined by the difference , or “spread,” between the discount rate at which we purchase the structured settlements and the discount rate at which we can resell these assets or the interest rate at which we can finance those assets. Structured settlements are purchased at effective yields that are fixed, while rates at which structured settlements are sold, with the exception of forward purchase arrangements, are generally a function of the prevailing market rates for short-term borrowings. As a result, increases in prevailing market interest rates after structured settlements are acquired could have an adverse effect on our yield on structured settlement transactions. Currently, we do not view this risk to be material because nearly all of our structured settlements acquired are sold into forward purchase arrangements.

Risks Associated with Investments Securities Available for Sale

Imperial purchases fixed income securities and U.S. treasuries to provide consistent investment income, may or may not preserve capital unless held to maturity and provide liquidity to fund expected premium payments. Changes in market interest rates associated with Imperial’s investment securities could have a material adverse effect on Imperial’s carrying value of its securities. Temporary changes in the carrying value of securities classified as available for sale are reflected, net of taxes, as a component of stockholders’ equity, while other-than-temporary impairment charges, if any, are recorded in earnings.

Item 8. Financial Statements and Supplementary Data

The financial statements required by this Item are included in Item 15 of this Annual Report on Form 10-K and are presented beginning on page F-1.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Not Applicable.

Item 9A. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our chief executive officer and chief financial officer, conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Based on this evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this Annual Report on Form 10-K.

Management’s Report on Internal Control Over Financial Reporting

Management of Imperial Holdings, Inc. is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rule 13a-15(f) of the Exchange Act. The Company’s management, with the participation of our chief executive officer and chief financial officer, conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control—

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Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission published in 1987. Based on that evaluation, management concluded that our internal control over financial reporting was effective as of December 31, 2012.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting during the fourth quarter ended December 31, 2012 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Item 9B. Other Information

None

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PART III

Item 10. Directors, Executive Officers and Corporate Governance

The information relating to the directors and officers of the Company, information regarding compliance with Section 16(a) of the Exchange Act and information regarding the audit committee and audit committee financial expert is incorporated herein by reference to the Company’s Proxy Statement for the 2013 Annual Meeting of Stockholders (the “Proxy Statement”) to be filed 120 days after December 31, 2012.

All of the Company’s directors, officers and employees must act in accordance with the Code of Ethics, which has been adopted by the Company’s Board of Directors. A copy of the Code of Ethics is available on the Company’s website at www.imperial.com in the “Investor Relations” section, under the Corporate Governance tab. The Company intends to satisfy the disclosure requirement under Item 5.05 of Form 8-K regarding disclosure of an amendment to, or waiver from, a provision of this Code of Ethics with respect to its principal executive officer, principal financial officer, principal accounting officer or persons performing similar functions, by posting such information on the Company’s website discussed above, unless a Form 8-K is otherwise required by law or applicable listing rules.

Item 11. Executive Compensation

The information regarding executive compensation is incorporated herein by reference to the Proxy Statement to be filed within 120 days after December 31, 2012.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Information setting forth the security ownership of certain beneficial owners and management is hereby incorporated by reference to the Proxy Statement to be filed within 120 days after December 31, 2012.

Shown below is certain information as of December 31, 2012 regarding equity compensation plans:

Plan category	Number of securities to be issued upon exercise of outstanding options and warrants (a)		Weighted- average exercise price of outstanding options and warrants (b)		Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c)
Equity compensation plans approved by security holders		N/A		N/A		N/A
Equity compensation plans not approved by security holders		4,727,935		14.12		569,074
Total		4,727,935		14.12		569,074

Item 13. Certain Relationships and Related Transactions, and Director Independence

The information relating to certain relationships and related transactions and director independence is incorporated herein by reference to the Proxy Statement to be filed within120 days after December  31, 2012.

Item 14. Principal Accountant Fees and Services

The information relating to the principal accountant fees and expenses is incorporated herein by reference to the Proxy Statement to be filed with 120 days after December 31, 2012.

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PART IV

Item 15. Exhibits and Financial Statement Schedules

(a)(1) Financial Statements:

Our consolidated financial statements identified in the accompanying Index to Financial Statements at page F-1 herein are filed as part of this Annual Report on Form 10-K.

(a)(2) Financial Statement Schedules: The schedules are omitted because they are not applicable or the required information is shown in the consolidated financial statements or notes thereto.

(a)(3) Exhibits:

The accompanying Exhibit Index on page E-1 sets forth the exhibits that are filed as part of this Annual Report on Form 10-K.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

IMPERIAL HOLDINGS, INC.
By:	/S/    ANTONY MITCHELL
Name:	Antony Mitchell
Title:	Chief Executive Officer

Date: March 27, 2013

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature	Title	Date
/S/    ANTONY MITCHELL Antony Mitchell	Chief Executive Officer and Director (Principal Executive Officer)	March 27, 2013
/S/    RICHARD O’CONNELL, JR. Richard O’Connell, Jr.	Chief Financial Officer and Chief Credit Officer (Principal Financial and Accounting Officer)	March 27, 2013
/S/    MICHAEL A. CROW Michael A. Crow	Director	March 27, 2013
/S/    ANDREW DAKOS Andrew Dakos	Director	March 27, 2013
/S/    PHILLIP GOLDSTEIN Phillip Goldstein	Chairman of the Board of Directors	March 27, 2013
/S/    GERALD HELLERMAN Gerald Hellerman	Director	March 27, 2013
/S/    ROBERT ROSENBERG Robert Rosenberg	Director	March 27, 2013

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INDEX TO FINANCIAL STATEMENTS

Audited Consolidated Financial Statements as of December 31, 2012 and 2011 and for each of the three years in the period ended December 31, 2012 of Imperial Holdings, Inc. and its Subsidiaries

Report of Grant Thornton LLP, Independent Registered Public Accounting Firm	F-2
Consolidated Balance Sheets as of December 31, 2012 and 2011	F-3
Consolidated Statements of Operations for the years ended December 31, 2012, 2011 and 2010	F-4
Consolidated Statements of Comprehensive Loss for the years ended December 31, 2012, 2011 and 2010	F-5
Consolidated Statements of Stockholders’/Members’ Equity for the years ended December  31, 2012, 2011 and 2010	F-6
Consolidated Statements of Cash Flows for the years ended December 31, 2012, 2011 and 2010	F-7
Notes to Consolidated Financial Statements	F-9

Imperial Holdings, Inc. succeeded to the business of Imperial Holdings, LLC and its assets and liabilities pursuant to the corporate conversion of Imperial Holdings, LLC effective February 3, 2011.

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC

ACCOUNTING FIRM

Board of Directors and Shareholders

Imperial Holdings, Inc.

We have audited the accompanying consolidated balance sheets of Imperial Holdings, Inc. (a Delaware corporation) and subsidiaries (the “Company”) as of December 31, 2012 and 2011, and the related consolidated statements of operations, comprehensive loss, changes in stockholders’/members’ equity, and cash flows for each of the three years in the period ended December 31, 2012. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Imperial Holdings, Inc. and subsidiaries as of December 31, 2012 and 2011, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2012 in conformity with accounting principles generally accepted in the United States of America.

/s/ GRANT THORNTON LLP

Fort Lauderdale, Florida

March 27, 2013

F-2

Imperial Holdings, Inc. and Subsidiaries

CONSOLIDATED BALANCE SHEETS

December 31,

	2012			2011
	(In thousands except share data)
ASSETS
Assets
Cash and cash equivalents	$	7,001		$	16,255
Restricted cash		1,162			691
Certificate of deposit - restricted		—			891
Investment securities available for sale, at estimated fair value		12,147			57,242
Deferred costs, net		7			1,874
Prepaid expenses and other assets		14,165			3,277
Deposits - other		2,855			761
Interest receivable, net		822			5,758
Loans receivable, net		3,044			29,376
Structured settlement receivables at estimated fair value		1,680			12,376
Structured settlement receivables at cost, net		1,574			1,553
Investment in life settlements, at estimated fair value		113,441			90,917
Fixed assets, net		232			585
Investment in affiliates		2,212			1,043
Total assets	$	160,342		$	222,599
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities
Accounts payable and accrued expenses	$	6,606		$	16,336
Other liabilities		20,796			4,279
Interest payable		—			5,505
Notes payable		—			19,277
Income taxes payable		6,295			6,295
Total liabilities		33,697			51,692
Commitments and Contingencies (Note 17)		—			—
Stockholders’ Equity
Common stock (80,000,000 authorized; 21,206,121 and 21,202,614 issued and outstanding as of December 31, 2012 and 2011, respectively)		212			212
Additional paid-in-capital		238,064			237,755
Accumulated other comprehensive loss		(3	)		(66	)
Accumulated deficit		(111,628	)		(66,994	)
Total stockholders’ equity		126,645			170,907
Total liabilities and stockholders’ equity	$	160,342		$	222,599

The accompanying notes are an integral part of this financial statement.

F-3

Imperial Holdings, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF OPERATIONS

For the Years Ended December 31,

	2012			2011			2010
	(in thousands, except share and per share data)
Income
Agency fee income	$	—		$	6,470		$	10,149
Interest income		2,014			8,303			18,660
Interest and dividends on investment securities available for sale		391			640			—
Origination fee income		500			6,480			19,938
Realized gain on sale of structured settlements		11,509			5,817			6,595
Realized gain on life settlements, net		151			5			1,951
Gain on forgiveness of debt		—			5,023			7,599
Unrealized change in fair value of life settlements		(5,660	)		570			10,156
Unrealized change in fair value of structured settlements		1,823			5,302			2,477
Change in equity investments		—			—			(1,284	)
Servicing fee income		1,183			1,814			413
Gain on maturities of life settlements with subrogation rights, net		6,090			3,188			—
Other income		1,082			602			242
Total income		19,083			44,214			76,896
Expenses
Interest expense		1,255			8,524			28,155
Provision for losses on loans receivable		515			7,589			4,476
Loss on loan payoffs and settlements, net		125			3,837			4,981
Amortization of deferred costs		1,867			6,076			24,465
Personnel costs		16,087			18,933			12,370
Marketing costs		5,023			6,104			5,077
Department of Justice Settlement		—			8,000			—
Legal fees		26,053			12,097			3,444
Professional fees		6,934			5,684			3,966
Insurance		2,330			756			358
Other selling, general and administrative expenses		3,567			5,812			5,301
Total expenses		63,756			83,412			92,593
Loss before income taxes		(44,673	)		(39,198	)		(15,697	)
Benefit for income taxes		(39	)		—			—
Net loss	$	(44,634	)	$	(39,198	)	$	(15,697	)
Loss per share:
Basic	$	(2.10	)	$	(2.03	)	$	(4.36	)
Diluted	$	(2.10	)	$	(2.03	)	$	(4.36	)
Weighted average shares outstanding:
Basic		21,205,747			19,352,063			3,600,000
Diluted		21,205,747			19,352,063			3,600,000

The accompanying notes are an integral part of this financial statement.

F-4

Imperial Holdings, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

	For the Years Ended December 31,
	2012			2011			2010
	(In thousands)
Net loss	$	(44,634	)	$	(39,198	)	$	(15,697	)
Other comprehensive loss, net of tax:
Unrealized gains (loss) on investment securities available for sale		63			(66	)		—
Comprehensive loss	$	(44,571	)	$	(39,264	)	$	(15,697	)

The accompanying notes are an integral part of this financial statement.

F-5

Imperial Holdings, Inc.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’/MEMBERS’ EQUITY

For the Years Ended December 31, 2012, 2011 and 2010

	Member Units - Common						Member Units - Preferred A						Member Units - Preferred B						Member Units - Preferred C						Member Units - Preferred D						Member Units - Preferred E						Common Stock				Additional Paid-in		Retained Earnings (Accumulated			Accumulated Other Comprehensive
	Units			Amount			Units			Amount			Units			Amount			Units			Amount			Units			Amount			Units			Amount			Shares		Amount		Capital		Deficit)			Income (Loss)			Total
	(in thousands, except per share data)
Balance, December 31, 2009		450,000		$	19,923			90,796		$	4,035			50,000		$	5,000			—			—			—			—			—			—			—		—		—	$	(12,099	)		—		$	16,859
Comprehensive loss		—			—			—			—			—			—			—			—			—			—			—			—			—		—		—		(15,697	)		—			(15,697	)
Proceeds from sale of preferred units		—			—			—			—			—			—			70,000			7,000			7,000			700			73,000			7,300			—		—		—		—			—			15,000
Repurchase of common and preferred units		(112,500	)		(8,461	)		—			—			(25,000	)		(2,500	)		—			—			—						—			—			—		—		—		—			—			(10,961	)
Balance, December 31, 2010		337,500		$	11,462			90,796		$	4,035			25,000		$	2,500			70,000		$	7,000			7,000		$	700			73,000		$	7,300			—		—		—	$	(27,796	)		—		$	5,201
Comprehensive loss		—			—			—			—			—			—			—			—			—			—			—			—			—		—		—		(39,198	)		(66	)		(39,264	)
Conversion of debt and membership units into common shares		(337,500	)		(11,462	)		(90,796	)		(4,035	)		(25,000	)		(2,500	)		(70,000	)		(7,000	)		(7,000	)		(700	)		(73,000	)		(7,300	)		2,300,273		23		38,132		—			—			5,158
Conversion of Skarbonka debt into common shares, net of tax		—			—			—			—			—			—			—			—			—			—			—			—			1,272,727		13		23,693		—			—			23,706
Phantom shares converted into common shares		—			—			—			—			—			—			—			—			—			—			—			—			27,000		—		290		—			—			290
Issuance of common stock pursunat to IPO, net of offering costs		—			—			—			—			—			—			—			—			—			—			—			—			17,602,614		176		174,057		—			—			174,233
Stock-based compensation		—			—			—			—			—			—			—			—			—			—			—			—			—		—		1,583		—			—			1,583
Balance, December 31, 2011		—			—			—			—			—			—			—			—			—			—			—			—			21,202,614	$	212		237,755	$	(66,994	)	$	(66	)	$	170,907
Comprehensive loss		—			—			—			—			—			—			—			—			—			—			—			—			—		—		—		(44,634	)		63			(44,571	)
Stock-based compensation		—			—			—			—			—			—			—			—			—			—			—			—			—		—		309		—			—			309
Restricted stock issued		—			—			—			—			—			—			—			—			—			—			—			—			3,507		—		—		—			—			—
Balance, December 31, 2012		—			—			—			—			—			—			—			—			—			—			—			—			21,206,121		212		238,064		(111,628	)		(3	)	$	126,645

The accompanying notes are an integral part of these financial statements.

F-6

Imperial Holdings, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Years Ended December 31,

	2012			2011			2010
	(In thousands)
Cash flows from operating activities					—			—
Net loss	$	(44,634	)	$	(39,198	)	$	(15,697	)
Adjustments to reconcile net loss to net cash used in operating activites:
Depreciation and amortization		385			612			722
Amortization of premiums and accretion of discounts on available for sale securities sale securities		962			1,198			—
Provision for doubtful accounts		—			661			85
Provision for losses on loans receivable		515			7,589			4,476
Stock-based compensation		309			1,873			—
Loss on loan payoffs and settlements, net		125			3,837			4,981
Origination fee income		(500	)		(6,480	)		(19,938	)
Unrealized change in fair value of life settlements		5,660			(570	)		(10,156	)
Unrealized change in fair value of structured settlements		(1,823	)		(5,302	)		(2,477	)
Gain on forgiveness of debt		—			(5,023	)		(7,599	)
Interest income on loans		(2,014	)		(8,303	)		(18,660	)
Amortization of deferred costs		1,867			6,076			24,465
Accretion of discount on debenture payable		—			233			—
Change in equity investments		—			—			1,284
Gain on sale and prepayment of investment securities available for sale		(53	)		(21	)		—
Realized gain on life settlements, net		(151	)		(5	)		—
Change in assets and liabilities:
Purchase of certificate of deposit-restricted		895			—			(200	)
Deposits - other		(2,094	)		(68	)		54
Agency fees receivable		—			479			1,519
Investment in affiliates		(1,171	)		(964	)		(71	)
Structured settlement receivables		12,827			(5,539	)		523
Prepaid expenses and other assets		(10,833	)		(1,996	)		(3,467	)
Deferred Costs		—			2,755			—
Accounts payable and accrued expenses		(9,730	)		12,625			1,017
Other liabilities		16,517			(3,634	)		7,914
Interest receivable		343			(439	)		—  .
Interest payable		(5,505	)		(6,758	)		3,429
Deferred income tax		(39	)		—			—
Net cash used in operating activities		(38,142	)		(46,362	)		(27,796	)

F-7

	2012			2011			2010
	(In thousands)
Cash flows from investing activities
Purchase of fixed assets, net of disposals		(21	)		(311	)		(261	)
Purchase of intangible assets		—			—			(160	)
Investment in life settlement fund		—			—			(727	)
Purchase of investment securities available for sale		(35,492	)		(127,974	)		—
Proceeds from sale and prepayments of investment securities available for sale		79,781			69,490			—
Premiums paid on investments in life settlements		(27,804	)		(16,321	)		(745	)
Purchases of investments in life settlements		(130	)		(50,480	)		(1,324	)
Proceeds from sale of investments in life settlements		5,626			—			—
Proceeds from sale of investments, net		—			—			2,070
Proceeds from loan payoffs and lender protection insurance claims received in advance		26,676			51,778			128,847
Originations of loans receivable		—			(18,724	)		(24,744	)
Net cash provided by (used in) investing activities		48,636			(92,542	)		102,956
Cash flows from financing activities
Proceeds from sale of preferred units		—			—			15,000
Payments of cash pledged as restricted deposits		—			—			(455	)
Proceeds from initial public offering, net of offering expenses		—			174,233			—
Payment of financing fees		—			—			(6,010	)
Repayment of borrowings under credit facilities		(19,277	)		(36,176	)		(40,827	)
Restricted Cash		(471	)		—			—
Repayment of borrowings from affiliates		—			—			(93,216	)
Borrowings under credit facilities		—			234			24,247
Borrowings from affiliates		—			2,644			24,434
Net cash (used in) provided by financing activities		(19,748	)		140,935			(76,827	)
Net (decrease) increase in cash and cash equivalents		(9,254	)		2,031			(1,667	)
Cash and cash equivalents, at beginning of the year		16,255			14,224			15,891
Cash and cash equivalents, at end of the year	$	7,001		$	16,255		$	14,224
Supplemental disclosures of cash flow information:
Cash paid for interest during the period	$	6,746		$	14,992		$	26,743
Supplemental disclosures of non-cash financing activities:
Subscription to purchase Member units - Series E preferred	$	—		$	—		$	5,000
Repurchase of common and preferred units	$	—		$	—		$	10,961
Repayment of borrowings paid directly by our lender protection insurance carrier	$	—		$	—		$	63,968
Conversion of debt to common stock	$	—		$	35,158		$	—
Supplemental disclosures of non-cash investing activities:
Investment in life settlements acquired in foreclosure	$	5,724		$	6,409		$	11,901

The accompanying notes are an integral part of these financial statements.

F-8

Imperial Holdings, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2012

NOTE 1—ORGANIZATION AND DESCRIPTION OF BUSINESS ACTIVITIES

Imperial Holdings, Inc. (“Imperial,” the “Company,” “we” or “us”) was formed initially as a Florida limited liability Company pursuant to an operating agreement dated December 15, 2006 between IFS Holdings, Inc., IMEX Settlement Corporation, Premium Funding, Inc. and Red Oak Finance, LLC. In connection with the Company’s initial public offering on February 3, 2011, the Company succeeded to the business, assets and liabilities of the limited liability Company.

The Company, operating through its subsidiaries, is a specialty finance company with its corporate office in Boca Raton, Florida. The Company operates in two reportable business segments: life finance (formerly referred to as premium finance) and structured settlements. In the life finance business, the Company earns revenue/income from interest accruing on outstanding loans and loan origination fees over the life of the outstanding loans, servicing income, changes in the fair value of life settlements the Company acquires and receipt of death benefits with respect to matured life insurance policies it owns. In the structured settlement business, the Company purchases structured settlements at a discounted rate and sells such assets to third parties.

In February 2011, the Company completed the sale of 17,602,614 shares of common stock in its initial public offering at a price of $10.75 per share. The Company received net proceeds of approximately $174.2 million after deducting the underwriting discounts and commissions and its offering expenses.

On September 27, 2011, the Company was informed that it was being investigated by the U.S. Attorney’s Office for the District of New Hampshire (the “USAO Investigation”). At that time, the Company was informed that, among other individuals, its former president and chief operating officer, former general counsel, three former life finance sales executives, two vice presidents and a funding manager were considered “targets” of the USAO Investigation. The USAO Investigation focused on the Company’s premium finance loan business.

On February 17, 2012, the Company received a subpoena issued by the staff of the U.S. Securities and Exchange Commission (the “SEC”) seeking documents from 2007 through the present, generally related to the Company’s premium finance business and corresponding financial reporting. The SEC is investigating whether any violations of federal securities laws have occurred and the Company has been cooperating with the SEC regarding this matter. The Company is unable to predict what action, if any, might be taken in the future by the SEC or its staff as a result of the matters that are the subject of the subpoena or what impact, if any, the cost of responding to the subpoena might have on the Company’s financial position, results of operations, or cash flows. The Company has not established any provision for losses in respect of this matter.

On April 30, 2012, the Company entered into a Non-Prosecution Agreement (the “Non-Prosecution Agreement”) with the USAO, which agreed not to prosecute the Company for its involvement in the making of misrepresentations on life insurance applications in connection with its premium finance business or any potential securities fraud claims related to its premium finance business. In the Non-Prosecution Agreement, the USAO and the Company agreed among other things, that the following facts are true and correct: (i) at all relevant times (x) certain insurance companies required that the prospective insured applying for a life insurance policy, and sometimes the agent, disclose information relating to premium financing on applications for life insurance policies, and (y) the questions typically required the prospective insured to disclose if he or she intended to seek premium financing in connection with the policy and sometimes required the agent to disclose if he or she was aware of any such intent on the part of the applicant; (ii) in connection with a portion of the Company’s retail operation known as “retail non-seminar” that began in December 2006 and was discontinued in January 2009, Imperial had a practice of disclosing on applications that the prospective insured was seeking premium financing when the life insurance company allowed premium financing from Imperial; however, in

F-9

certain circumstances, Imperial internal life agents facilitated and/or made misrepresentations on applications that the prospective insured was not seeking premium financing when the insurance carrier was likely to deny the policy on the basis of premium financing; and (iii) to the extent that external agents, brokers and insureds caused other misrepresentations to be made in life insurance applications in connection with the retail non-seminar business, Imperial failed to appropriately tailor controls to prevent potential fraudulent practices in that business. As of December 31, 2012, the Company had 12 policies in its portfolio that once served as collateral for premium finance loans derived through the retail non-seminar business.

In connection with the Non-Prosecution Agreement, Imperial voluntarily agreed to terminate its premium finance business, which historically accounted for the majority of the Company’s revenues and terminated certain senior sales staff associated with the premium finance business. Additionally, the Company paid the United States Government $8.0 million, and agreed to cooperate fully with the USAO’s ongoing investigation and to refrain from and self-report any criminal conduct. The Non-Prosecution Agreement has a term of three years until April 30, 2015, but after April 30, 2014 the Company may petition the USAO to forego the final year of the Non-Prosecution Agreement, if we otherwise comply with all of our obligations under the Non-Prosecution Agreement. Should the USAO conclude that Imperial has not abided by its obligations under the Non-Prosecution Agreement, the USAO could choose to terminate the Non-Prosecution Agreement, resume its investigation of the Company, or bring charges against Imperial.

On August 2, 2012, the Board of Directors of the Company appointed Andrew Dakos, Phillip Goldstein and Gerald Hellerman to serve as directors of the Company in connection with a settlement (the “Settlement”) with Opportunity Partners L.P. (“Opportunity”). The Settlement resulted in Opportunity withdrawing its demand for a special meeting of shareholders, which it had submitted to the Company on May 23, 2012 and agreeing to dismiss its lawsuit to compel an annual meeting of shareholders. In connection with the Settlement, Walter Higgins and A. Penn Wyrough resigned from the Board of Directors. On August 14, 2012, Antony Mitchell, the Company’s chief executive officer, resigned as Chairman of the Board (though he continues to serve as a director and as the Company’s chief executive officer) and Mr. Goldstein was elected Chairman. On January 14, 2013, David Buzen resigned from the Board of Directors and on March 12, 2013, Robert Rosenberg informed the Board of Directors that he would not stand for re-election at the Company’s annual meeting of shareholders.

As of December 31, 2012, the Company had approximately $20.3 million of cash, cash equivalents, and marketable securities including $1.2 million in restricted cash. This limited cash position was driven primarily by the defense and investigation of the Company and certain employees in connection with the USAO Investigation, SEC investigation and related shareholder litigation, which required significant, unbudgeted cash outlays. As previously reported in earlier periodic reports filed with the SEC, the Company anticipated a liquidity shortfall in the second quarter of 2013. Accordingly, to avoid lapsing policies, the Company sought additional capital and, on March 27, 2013, Greenwood Asset Portfolio, LLC (“Greenwood”), a subsidiary of the Company, borrowed $45 million in aggregate principal amount under the terms of an eighteen-month bridge facility, secured by substantially all of the Company’s portfolio of life insurance policies. Principal was borrowed under the facility at 92% resulting in net proceeds after transaction expenses of $41.4 million. After transaction expenses, up to 25% of the proceeds of the facility may be used by the Company for general corporate purposes, with the balance used by Greenwood to pay premiums on the life insurance policies it owns. Interest under the facility accrues at 12% per annum for nine months and thereafter increases to 18% for the remainder of the term of the facility. The Company intends to replace this facility, which is pre-payable at par without penalty, and refinance the bridge facility with more permanent capital once it is sourced. There can be no assurance, however, that we will be able to obtain capital on more favorable terms or at all. The facility should provide the Company with adequate liquidity to pay premiums on its portfolio of life insurance through 2013. See Note 22 Subsequent Events.

NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

The consolidated financial statements include the accounts of the Company, all of its wholly-owned subsidiaries and its special purpose entities, with the exception of Imperial Settlements Financing 2010, LLC

F-10

(“ISF 2010”), an unconsolidated special purpose entity (see Note 12). The special purpose entity has been created to fulfill specific objectives. All significant intercompany balances and transactions have been eliminated in consolidation.

Life Finance Loans Receivable

We report loans receivable acquired or originated by us at cost, adjusted for any deferred fees or costs in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 310-20, Receivables—Nonrefundable Fees and Other Costs, discounts, and loan impairment valuation. All loans are collateralized by life insurance policies. Interest income is accrued on the unpaid principal balance on a monthly basis based on the applicable rate of interest on the loans.

In accordance with ASC 310, Receivables, we specifically evaluate all loans for impairment based on the fair value of the underlying policies as collectability is primarily collateral dependent. The loans are considered to be collateral dependent as the repayment of the loans is expected to be provided by the underlying insurance policies. In the event of default, the borrower typically relinquishes beneficial ownership of the policy to us in exchange for our release of the debt (or we enforce our security interests in the beneficial interests in the trust that owns the policy). For loans that have lender protection insurance, we make a claim against the lender protection insurance policy and, subject to terms and conditions of the lender protection insurance policy, our lender protection insurer has the right to direct control or take beneficial ownership of the policy upon payment of our claim. For loans without lender protection insurance, we have the option of selling the policy or maintaining it on our balance sheet for investment.

We evaluate the loan impairment valuation on a monthly basis based on our periodic review of the estimated value of the underlying collateral. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available. The loan impairment valuation is established as losses on loans are estimated and the provision is charged to earnings. Once established, the loan impairment valuation cannot be reversed to earnings.

In order to originate premium finance transactions our lenders required that we procure lender protection insurance. This lender protection insurance mitigates our exposure to losses which may be caused by declines in the fair value of the underlying policies. At the end of each reporting period, for loans that have lender protection insurance, a loan impairment valuation is established if the carrying value of the loan receivable exceeds the amount of coverage. The lender protection insurance program was terminated as of December 31, 2010, and all loans originated after December 31, 2010, do not carry lender protection insurance coverage. Thus, for all loans originated in 2011 and beyond, a loan impairment valuation is established if the carrying value of a loan receivable exceeds the fair value of the underlying collateral. See Notes 9, 13 and 14 to the accompanying consolidated financial statements.

Ownership of Life Insurance Policies

In the ordinary course of business, a large portion of our borrowers default by not paying off the loan and relinquish ownership of the life insurance policy to us in exchange for our release of the obligation to pay amounts due. We also buy life insurance policies in the secondary and tertiary markets. We account for life insurance policies that we own as investments in life settlements (life insurance policies) in accordance with ASC 325-30, Investments in Insurance Contracts, which requires us to use either the investment method or the fair value method. The election is made on an instrument-by-instrument basis and is irrevocable. We have elected to account for these life insurance policies as investments using the fair value method.

We initially record investments in life settlements at the transaction price. For policies acquired upon relinquishment by our borrowers, we determine the transaction price based on fair value of the acquired policies at the date of relinquishment. The difference between the net carrying value of the loan and the transaction price

F-11

is recorded as a gain (loss) on loan payoffs and settlements. For policies acquired for cash, the transaction price is the amount paid.

Valuation of Insurance Policies

Our valuation of insurance policies is a critical component of our estimate for the loan impairment valuation and the fair value of our investments in life settlements (life insurance policies). We currently use a probabilistic method of valuing life insurance policies, which we believe to be the preferred valuation method in the industry. The most significant assumptions which we estimate are the life expectancy of the insured and the discount rate.

In determining the life expectancy estimate, we analyze medical reviews from independent secondary market life expectancy providers (each a “LE provider”). An LE provider reviews the medical records and identifies all medical conditions it feels are relevant to the life expectancy of the insured. Debits and credits are then assigned by each LE provider to the individual’s health based on these medical conditions. The debit or credit that an LE provider assigns to a medical condition is derived from the experience of mortality attributed to this condition in the portfolio of lives that it monitors. The health of the insured is summarized by the LE provider into a life assessment of the individual’s life expectancy expressed both in terms of months and in mortality factor.

The resulting mortality factor represents an indication as to the degree to which the given life can be considered more or less impaired than a standard life having similar characteristics (e.g. gender, age, smoking, etc.). For example, a standard insured (the average life for the given mortality table) would carry a mortality rating of 100%. A similar but impaired life bearing a mortality rating of 200% would be considered to have twice the chance of dying earlier than the standard life. Historically, the Company has procured the majority of its life expectancy reports from two life expectancy report providers and only used AVS life expectancy reports for valuation purposes. Beginning in the quarter ended September 30, 2012, the Company began utilizing life expectancy reports from 21st Services for valuation purposes and began averaging or “blending,” the results of the two life expectancy reports to establish a composite mortality factor. However, when “blending” the AVS and 21st Services life expectancy reports, if the difference in the probability of mortality between the reports is greater than 150%, the Company will reduce the higher mortality factor until the difference is 150%.

The probability of mortality for an insured is then calculated by applying the blended life expectancy estimate to a mortality table. The mortality table is created based on the rates of death among groups categorized by gender, age, and smoking status. By measuring how many deaths occur during each year, the table allows for a calculation of the probability of death in a given year for each category of insured people. The probability of mortality for an insured is found by applying the mortality rating from the life expectancy assessment to the probability found in the actuarial table for the insured’s age, sex and smoking status. As discussed in Use of Updated Life Expectancies and Change in Mortality Table in Management’s Discussion and Analysis of Financial Condition and Results of Operations, the Company has historically applied an actuarial table developed by a third party. However, beginning in the quarter ended September 30, 2012, the Company transitioned to a table developed by the U.S. Society of Actuaries known as the 2008 Valuation Basic Table, or the 2008 VBT. However, because the 2008 VBT table does not account for anticipated improvements in mortality in the insured population, the table was modified in conjunction with outside consultants to reflect these expected mortality improvements. The Company believes that the change in mortality table does not materially impact the valuation of its life insurance policies and that its adoption of a modified 2008 VBT table is consistent with modified tables used by market participants.

The mortality rating is used to create a series of best estimate probablistic cash flows. This probability represents a mathematical curve known as a mortality curve. This curve is then used to generate a series of expected cash flows over the remaining expected lifespan of the insured and the corresponding policy. A discounted present value calculation is then used to determine the value of the policy. If the insured dies earlier than expected, the return will be higher than if the insured dies when expected or later than expected.

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The calculation allows for the possibility that if the insured dies earlier than expected, the premiums needed to keep the policy in force will not have to be paid. Conversely, the calculation also considers the possibility that if the insured lives longer than expected, more premium payments will be necessary. Based on these considerations, each possible outcome is assigned a probability and the range of possible outcomes is then used to create a price for the policy.

As is the case with most market participants at December 31, 2012, the Company used a blend of life expectancies that are provided by two third-party LE providers. These are estimates of an insured’s remaining years. If all of the insured lives in the Company’s life settlement portfolio live six months shorter or longer than the life expectancies provided by these third parties, the change in fair market value would be as follows (dollars in thousands):

Life Expectancy Months Adjustment	Value		Change in Value
+6		95,658		(17,783	)
—		113,441		—
-6		132,540		19,099

As noted above, the Company takes an average, or blend, of the two life expectancy reports to derive a composite mortality factor, unless the difference in the probability of mortality between the reports is greater than 150%. In such instances and as reflected in the fair market value at December 31, 2012, the Company will cap the higher mortality factor at amount that is 150% above the lower mortality factor , which ultimately reduces the mortality factor inputted into the Company’s fair value model. At December 31, 2012, had the Company not implemented such a cap on affected policies, the fair value of the Company’s portfolio would have increased from the reported amount by $9.5 million. Additionally, the Company lengthened the life expectancy inputs to its fair value model on 45 policies with life expectancy reports that were more than two years old at December 31, 2012 based on the average lengthening reported on the 149 policies where update life expectancy reports were received. Had the Company not implemented such an adjustment on affected policies, the fair value of the Company’s portfolio would have increased from the reported amount by $5.8 million.

The Company believes that investors in esoteric assets such as life insurance policies typically target yields averaging between 12%—17% for investments of more than a 5 year duration, and had historically used a 15%—17% range of discount rates to value its life insurance policies. In the third quarter of 2011 and in the immediate aftermath of becoming aware of the USAO investigation, the Company substantially increased the discount rates inputted into its fair value model as it believed the USAO Investigation along with certain unfavorable court decisions unrelated to the Company contributed to a contraction in the marketplace that has continued to reverberate. Since that time, the Company has been re-evaluating its discount rates at the end of every reporting period in order to reflect the estimated discount rates that could reasonably be used in a market transaction involving the Company’s portfolio of life insurance policies. In doing so, the Company relies on management insight, engages third party consultants to corroborate its assessment, engages in discussions with other market participants and potential financing sources and extrapolates the discount rate underlying actual sales of policies.

Although the Company believes that its entry into the Non-Prosecution Agreement had a positive effect on the market generally and for premium financed life insurance policies specifically, the Company believes that, when given the choice to invest in a policy that was associated with the Company’s premium finance business and a similar policy without such an association, all else being equal, an investor would have generally opted to invest in the policy that was not associated with the Company’s premium finance business. However, since entering into the Non-Prosecution Agreement, investors have required less of a risk premium to transact in these policies and the Company expects that, in time, investors will continue to require less of a risk premium to transact in policies associated with its premium finance business. Accordingly, the Company expects that its discount rates for policies associated with its premium finance business will continue to decrease in future periods.

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As of December 31, 2012, the Company owned 214 policies with an aggregate investment in life settlements of $113.4 million. Of these 214 policies, 171 were previously premium financed and are valued using discount rates that range from 16.80% to 33.80%. The remaining 43 policies are valued using discount rates that range from 14.80% to 21.30%. The discount rate incorporates current information about market interest rates, the credit exposure to the insurance company that issued the life insurance policy and our estimate of the risk premium an investor in the policy would require. The extent to which the fair value could vary in the near term has been quantified by evaluating the effect of changes in the weighted average discount rate on the death benefit used to estimate the fair value. If the weighted average discount rate were increased or decreased by 1/2 of 1% and the other assumptions used to estimate fair value remained the same, the change in fair market value would be as follows (dollars in thousands):

Weighted Average Rate	Rate Adjustment			Value		Change in Value
23.51%		-.50	%		116,300		2,859
24.01%		—			113,441		—
24.51%		+.50	%		110,694		(2,747	)

Future changes in the discount rates we use to value life insurance policies could have a material effect on our yield on life settlement transactions, which could have a material adverse effect on our business, financial condition and results of our operations.

At the end of each reporting period we re-value the life insurance policies using our valuation model in order to update our loan impairment valuation for loans receivable and our estimate of fair value for investments in policies held on our balance sheet. This includes reviewing our assumptions for discount rates and life expectancies as well as incorporating current information for premium payments and the passage of time.

Use of Estimates

The preparation of these consolidated financial statements, in conformity with accounting principles generally accepted in the United States of America, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from these estimates and such differences could be material. Significant estimates made by management include the loan impairment valuation, allowance for doubtful accounts, the valuation of structured settlements and the valuation of investments in life settlements.

Change in Accounting Estimate

The Company has elected to account for the life settlement policies it acquired using the fair value method. The fair value is determined on a discounted cash flow basis, incorporating current life expectancy, expected premiums and discount rate assumptions (see Note 14). During the first quarter of 2011, the Company made revisions to the application of its valuation technique and assumptions used to measure fair value of the life settlement policies it acquired. The Company accounted for this change in accounting estimate prospectively in accordance with ASC 250-10-45-17, Change in Accounting Estimate, resulting in recognition of a pretax gain of $3.0 million recorded in unrealized change in fair value of life settlements in the accompanying consolidated statement of operations for the year ended December 31, 2011.

The Company’s decision to revise its fair value calculations used to value all life insurance policies on hand at March 31, 2011 was driven by two factors. Firstly, with consideration to the wind-down of the lender protection insurance coverage (LPIC) program which ended on December 31, 2010, the value of the collateral serving the Company’s new lending activity is no longer determined primarily by the limit of liability provided by the LPIC coverage. Instead, the value of the collateral is based solely on the Company’s valuation model. Secondly, as a result of the Company’s initial public offering in February, 2011 and the new capital structure provided by it, the Company planned to build and retain a large and diversified pool of life policies.

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As discussed above, the Company uses a discounted cash flow model to calculate the fair value of its life insurance policy portfolio. That model is based on three principal factors: life expectancy, expected premiums and the discount rate. As discussed in Note 14, the Company began receiving updated life expectancy reports on the insureds represented in the Company’s portfolio of life insurance policies during 2012. As a result, the calculation of the life expectancy and discount rate inputs have changed. While the Company is endeavoring to obtain updated life expectancy reports for all of its policies, at December 31, 2012, the Company had only received updated life expectancies for 149 of the 214 policies in its portfolio. All updated reports that were obtained have been blended and inputted in the Company’s fair value model at December 31, 2012, which drove a decline of $31.3 million in the fair market value of the portfolio of life insurance policies during the year ended December 31, 2012. This decline was partially offset by premium payments, accretion due to the passage of time, and other changes to the Company’s fair value model, which resulted in a net unrealized change in fair value of approximately $5.7 million during the year ended December 31, 2012.

Cash and Cash Equivalents

Cash and cash equivalents include cash on hand, investments and all highly liquid instruments purchased with an original maturity of three months or less. The Company maintains the majority of its cash in several operating accounts with one commercial bank. Included in cash and cash equivalents is $110,000 and $3.0 million to be used by the Company to service policies as part of servicing a portfolio of life insurance policies for a third party as of December 31, 2012 and 2011, respectively. We also have a related servicing liability of $110,000 and $3.0 million which is included in other liabilities in the accompanying consolidated balance sheet as of December 31, 2012, and 2011, respectively.

Investment Securities Available for Sale

Investment securities available for sale are carried at fair value, inclusive of unrealized gains and losses, and net of discount accretion and premium amortization computed using the level yield method. Net unrealized gains and losses are included in other comprehensive income (loss) net of applicable income taxes. Gains or losses on sales of investment securities available for sale are recognized on the specific identification basis.

Management evaluates securities for other than-temporary-impairment on a quarterly basis. Impairment is evaluated considering numerous factors, and their relative significance varies depending on the situation. Factors considered include the Company’s intent to hold the security until maturity or for a period of time sufficient for a recovery in value, whether it is more likely than not that the Company will be required to sell the security prior to recovery of its amortized cost basis, the length of time and extent to which fair value has been less than amortized cost, the historical and implied volatility of the fair value of the security, failure of the issuer of the security to make scheduled interest or principal payments, any changes to the rating of the security by a rating agency and recoveries or additional declines in fair value subsequent to the balance sheet date.

Gain on Maturities of Life Settlements with Subrogation Rights, net

Every credit facility entered into by subsidiaries of the Company between December 2007 and December 2010 to finance the premium finance lending business required lender protection insurance for each loan originated under such credit facility. Generally, when the Company exercises its right to foreclose on collateral the Company’s lender protection insurer has the right to direct control or take beneficial ownership of the life insurance policy, subject to the terms and conditions of the lender protection insurance policy, including notice and timing requirements. Otherwise, the lender protection insurer maintains its salvage collection and subrogation rights. The lender protection insurer’s salvage collection and subrogation rights generally provide a remedy by which the insurer can seek to recover the amount of the lender protection claim paid plus premiums paid by it, expenses and interest thereon.

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In those instances where the Company has foreclosed on the collateral, the lender protection insurer has maintained its salvage collection and subrogation rights, and has been covering the cost of the ongoing premiums needed to maintain certain of these life insurance policies. However, the lender protection insurer may elect at any time to discontinue the payment of premiums which would result in lapse of the policies if the Company does not otherwise pay the premiums. The Company views these policies as having uncertain value because the lender protection insurer controls what happens to the policy from a payment of premium standpoint, and the amount of the lender protection insurer’s salvage collection and subrogation claim rights on any individual life insurance policy could equal the cash flow received by the Company with respect to any such policy. For these reasons, , the Company does not rely on these policies for revenue generation, and these policies are considered contingent assets and not included in the amount of life insurance policies on the accompanying consolidated balance sheet.

The Company accounts for the maturities of life insurance policies with subrogation rights, net of subrogation expenses as contingent gains in accordance with ASC 450, Contingencies and recognizes the revenue from the maturities of these policies when all contingencies are resolved.

Loan Impairment Valuation

In accordance with ASC 310, Receivables, the Company specifically evaluates all loans for impairment based on the fair value of the underlying policies as collectability is primarily collateral dependent. The loans are considered to be collateral dependent as the repayment of the loans is expected to be provided by the underlying insurance policies. In the event of default of a loan, the Company has the option to take control of the underlying life insurance policy enabling it to sell the policy or, for those loans that are insured (see below), collect the face value of the insurance certificate.

The loan impairment valuation is evaluated on a monthly basis by management and is based on management’s periodic review of the fair value of the underlying collateral. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available. The loan impairment valuation is established when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal, interest, and origination fee due according to the contractual terms of the loan agreement. Once established, the impairment cannot be reversed to earnings.

The Company purchased lender protection insurance coverage on loans that were sold to or participated by Imperial Life Financing, LLC, Imperial PFC Financing, LLC, Imperial Life Financing II, LLC, and Imperial PFC Financing II, LLC. This insurance mitigates the Company’s exposure to significant losses which may be caused by declines in the value of the underlying life insurance policies. For loans that have lender protection insurance coverage, a loan impairment valuation adjustment is established if the carrying value of the loan exceeds the amount of coverage at the end of the period.

For the year ended December 31, 2012 the Company recognized an impairment charge of approximately $437,000 and $78,000 on the loans and related interest, respectively, and is reflected as a component of the provision for losses on loans receivable in the accompanying consolidated statement of operations. For the year ended December 31, 2011, the Company recognized an impairment charge of approximately $6.8 million and $796,000 related to impaired loans and interest, respectively. For the year ended December 31, 2010, the Company recognized an impairment charge of approximately $2.3 million and $2.2 million related to impaired loans and interest, respectively. See Notes 9, 13 and 14 to the accompanying consolidated financial statements.

Agency Fees Receivable

Agency fees are charged for services related to premium finance transactions. Agency fees are due per the signed fee agreement. Agency fees receivable are reported net of an allowance for doubtful accounts.

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Management’s determination of the allowance for doubtful accounts is based on an evaluation of the commission receivable, prior collection history, current economic conditions, and other inherent risks. The Company reviews agency fees receivable aging on a regular basis to determine if any of the receivables are past due. The Company writes off all uncollectible agency fee receivable balances against its allowance. The allowance for doubtful accounts was approximately $260,000 as of December 31, 2012 and 2011.

Deferred Costs

Deferred costs include costs incurred in connection with acquiring and maintaining credit facilities and costs incurred in connection with securing lender protection insurance. These costs are amortized over the life of the related loan using the effective interest method and are classified as amortization of deferred costs in the accompanying consolidated statement of operations.

Interest Income and Origination Income

Interest income consists of interest earned on loans receivable, income from accretion of discounts on purchased loans, and accretion of discounts on purchased structured settlement receivables. Interest income is recognized when it is realizable and earned, in accordance with ASC 605, Revenue Recognition. Discounts are accreted over the remaining life of the loan using the effective interest method.

Loans often include origination fees which are fees payable to the Company on the date the loan matures. The fees are negotiated at the inception of the loan on a transaction by transaction basis. The fees are accreted into income over the term of the loan using the effective interest method.

Payments on loans are not due until maturity of the loan. As such, we typically do not have non-performing loans or non-accrual loans until post maturity of the loan. At maturity, the loans stop earning interest and origination income.

Interest and origination income on impaired loans is recognized when it is realizable and earned accordance with ASC 605, Revenue Recognition. Persuasive evidence of an arrangement exists through a loan agreement which is signed by a borrower prior to funding and sets forth the agreed upon terms of the interest and origination fees. Interest income and origination income are earned over the term of the loan and are accreted using the effective interest method. The interest and origination fees are fixed and determinable based on the loan agreement. For impaired loans, we continually reassess whether the collectability of the interest income and origination income is reasonably assured because the fair value of the collateral typically increases over the term of the loan. Our assessment of whether collectability of interest income and origination income is probable is based on our estimate of proceeds to be received upon maturity of the loan. To the extent that additional interest income is not recognized as collectability is not considered probable, origination income is not recognized. This is consistent with the objective of the interest method, as described in ASC 310-20, of maintaining a constant effective yield on the net investment in the receivable. Since our loans are due upon maturity, we cannot determine whether a loan is performing or non-performing until maturity. For impaired loans, our estimate of proceeds to be received upon maturity of the loan is generally correlated to our current estimate of fair value of the insurance policy, which is the measure to which the loans have been impaired, but also incorporates expected increases in fair value of the insurance policy over the term of the loan, trends in the market, and our experience with loan payoffs.

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Revenue/Income Recognition

Our primary sources of revenue/income are in the form of unrealized change in fair value of life settlements and structured settlements, agency fees, interest income, origination fee income, servicing income, gains on maturities of life settlements with subrogation rights, net and realized gains on sales of structured settlements. Our revenue/income recognition policies for these sources of revenue/income are as follows:

• Unrealized Change in Fair Value of Life Settlements—When the Company acquires life insurance policies we initially record these investments at the transaction price, which is the fair value of the policy for those acquired upon relinquishment or the amount paid for policies acquired for cash. The fair value of the investment in insurance policies is evaluated at the end of each reporting period. Changes in the fair value of the investment based on evaluations are recorded as changes in fair value of life settlements in our consolidated statement of operations. The fair value is determined on a discounted cash flow basis that incorporates current life expectancy assumptions. The discount rate incorporates current information about market interest rates, the credit exposure to the insurance company that issued the life insurance policy and our estimate of the risk premium an investor in the policy would require.

• Agency Fees—Agency fees were paid by the referring life insurance agents based on negotiations between the parties and were recognized at the time a life finance loan is funded. Because agency fees are not paid by the borrower, such fees do not accrue over the term of the loan. A separate origination fee was charged to the borrower which is amortized into income over the life of the loan.

• Interest Income—Interest income on life finance loans is recognized when it is realizable and earned, in accordance with ASC 605, Revenue Recognition. Discounts on structured settlement receivables are accreted over the life of the settlement using the effective interest method.

• Origination Fee Income—Loans often include origination fees that are fees payable to us on the date the loan matures. The fees are negotiated at the inception of the loan on a transaction by transaction basis. The fees are accreted into income over the term of the loan using the effective interest method.

• Servicing Income—Servicing income is recorded when services are provided. Servicing income is primarily from servicing a portfolio of life insurance policies controlled by a third party. These services include verifying premiums are paid and correctly applied and updating files for medical history and ongoing premiums.

• Realized Gains on Sales of Structured Settlements—Realized gains on sales of structured settlements are recorded when the structured settlements have been transferred to a third party and we no longer have continuing involvement, in accordance with ASC 860, Transfers and Servicing.

Fixed Assets

Fixed assets are stated at cost less accumulated depreciation and amortization. The Company provides for depreciation of fixed assets on a straight-line basis over the estimated useful lives of the assets which range from three to five years. Leasehold improvements are amortized using the straight-line method over the shorter of the expected life of the improvement or the remaining lease term.

Intangible Assets

Intangible assets represents amounts the Company paid to a third party in a settlement agreement to acquire the rights, title and interest to the domain name “Imperial.com” for a price of $160,000, and is included in prepaid expenses and other assets in the accompanying consolidated balance sheet. The domain name is being amortized using the straight-line method over its estimated useful life.

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Loss on Loan Payoffs and Settlements, Net

When a premium finance loan matures, we record the difference between the net carrying value of the loan and the cash received, or the fair value of the life insurance policy that is obtained in the event of payment default, as a gain or loss on loan payoffs and settlements, net. This account was significantly impacted by the Acorn settlement whereby the Company recorded a loss on loan payoffs and settlements of zero and $4.1 million during the years ended December 31, 2012 and 2011, respectively.

Advertising Expense

Advertising costs are expensed as incurred and were approximately $5.0 million and $6.1 million for the years ended December 31, 2012 and 2011, respectively. These costs are included within selling, general and administrative expenses in the consolidated statement of operations.

Fair Value Measurements

The Company follows ASC 820, Fair Value Measurements and Disclosures when required to measure fair value for recognition or disclosure purposes. ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 also establishes a three-level hierarchy for fair value measurements which prioritizes and ranks the level of market price observability used in measuring investments at fair value. Investments measured and reported at fair value are classified and disclosed in one of the following categories:

Level 1—Valuation is based on unadjusted quoted prices in active markets for identical assets and liabilities that are accessible at the reporting date. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these products does not entail a significant degree of judgment.

Level 2—Valuation is determined from pricing inputs that are other than quoted prices in active markets that are either directly or indirectly observable as of the reporting date. Observable inputs include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, and interest rates and yield curves that are observable at commonly quoted intervals.

Level 3—Valuation is based on inputs that are both significant to the fair value measurement and unobservable. Level 3 inputs include situations where there is little, if any, market activity for the financial instrument. The inputs into the determination of fair value generally require significant management judgment or estimation.

The availability of valuation techniques and observable inputs can vary from investment to investment and is affected by a wide variety of factors including, the type of investment, whether the investment is new and not yet established in the marketplace, and other characteristics particular to the transaction.

To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Those estimated values do not necessarily represent the amounts that may be ultimately realized due to the occurrence of future circumstances that cannot be reasonably determined. Because of the inherent uncertainty of valuation, those estimated values may be materially higher or lower than the values that would have been used had a ready market for the investments existed. Accordingly, the degree of judgment exercised by the Company in determining fair value of assets and liabilities is greatest for items categorized in Level 3. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement in its entirety falls is determined based on the lowest level input that is significant to the fair value measurement.

Fair value is a market-based measure considered from the perspective of a market participant rather than an entity-specific measure. Therefore, even when market assumptions are not readily available, the Company’s own

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assumptions are set to reflect those that market participants would use in pricing the asset or liability at the measurement date. The Company uses prices and inputs that are current as of the reporting date, including periods of market dislocation. In periods of market dislocation, the observability of prices and inputs may be reduced for many investments. This condition could cause an investment to be reclassified to a lower level within the fair value hierarchy (see Note 14).

Fair Value Option

As of July 1, 2010, we elected to adopt the fair value option, in accordance with ASC 825, Financial Instruments, to record certain newly-acquired structured settlements at fair value. We have the option to measure eligible financial assets, financial liabilities, and commitments at fair value on an instrument-by-instrument basis. This option is available when we first recognize a financial asset or financial liability or enter into a firm commitment. Subsequent changes in fair value of assets, liabilities, and commitments where we have elected fair value option are recorded in our consolidated statement of operations. We have made this election because it is our intention to sell these assets within the next twelve months, and we believe it significantly reduces the disparity that exists between the GAAP carrying value of these structured settlements and our estimate of their economic value. All structured settlements that were acquired subsequent to July 1, 2010 were marked to fair value. Structured settlements that were acquired prior to July 1, 2010 are recorded at cost. For the six months ended December 31, 2010, changes in the fair value of structured settlements where we elected the fair value option resulted in income of approximately $2.5 million. For the year ended December 31, 2012 and 2011, changes in fair value of fair value of structured settlements where we elected the fair value option resulted in income of approximately $1.8 million and $5.3 million, respectively.

Income Taxes

Prior to our initial public offering in 2011, we converted from a Florida limited liability company to a Florida corporation (the “Conversion”). Prior to the Conversion we were treated as a partnership for federal and state income tax purposes. As a partnership our taxable income and losses were attributed to our members, and accordingly, no provision or liability for income taxes was reflected in the accompanying consolidated financial statements for periods prior to the Conversion.

After the Conversion, we began to account for income taxes in accordance with ASC 740, Income Taxes. Under ASC 740, deferred income taxes are determined based on the estimated future tax effects of differences between the financial statement and tax basis of assets and liabilities given the provisions of enacted tax laws. Deferred income tax provisions and benefits are based on changes to the assets or liabilities from year to year. In providing for deferred taxes, we consider tax regulations of the jurisdictions in which we operate, estimates of future taxable income and available tax planning strategies. If tax regulations, operating results or the ability to implement tax-planning strategies varies, adjustments to the carrying value of the deferred tax assets and liabilities may be required. Valuation allowances are based on the “more likely than not” criteria of ASC 740.

At December 31, 2012 and 2011, due to the large losses and the uncertainties that resulted from the USAO Investigation, SEC investigation, Non-Prosecution Agreement and class action lawsuits, we recorded a full valuation allowance against our net deferred tax asset of $27.8 million and $11.1 million, respectively, as it is more likely than not that the net deferred tax asset is not realizable. As a result of these increases in the valuation allowance, we recorded no income tax benefit for 2012 and 2011.

The accounting for uncertain tax positions guidance under ASC 740 requires that we recognize the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the more-likely-than-not threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement with the relevant tax authority. We recognize interest and penalties (if any) on uncertain tax positions as a component of income tax expense.

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The Company’s corporate income tax returns for all years are subject to examination. Various state jurisdiction tax years remain open to examination.

In February of 2013 the Company was notified by the Internal Revenue Service of its intention to examine the Company’s partnership return for the year ended December 31, 2010. Audit field work for this examination has not been scheduled.

Stock-Based Compensation

We have adopted ASC 718, Compensation—Stock Compensation. ASC 718 addresses accounting for share-based awards, including stock options, with compensation expense measured using fair value and recorded over the requisite service or performance period of the award. The fair value of equity instruments issued upon or after the closing of our offering will be determined based on a valuation using an option pricing model which takes into account various assumptions that are subjective. Key assumptions used in the valuation will include the expected term of the equity award taking into account both the contractual term of the award, the effects of expected exercise and post-vesting termination behavior, expected volatility, expected dividends and the risk-free interest rate for the expected term of the award.

Earnings Per Share

The Company computes net income per share/unit in accordance with ASC 260, Earnings Per Share. Under the provisions of ASC 260, basic net income per share is computed by dividing the net income available to common shareholders by the weighted average common shares outstanding during the period. Diluted net income per share adjusts basic net income per share for the effects of stock options and restricted stock awards only in periods in which such effect is dilutive. ASC 260 also requires the Company to present basic and diluted earnings per share information separately for each class of equity instruments that participate in any income distribution with primary equity instruments.

Restricted Cash

The Cedar Lane credit facility requires the Company to retain 2% of the principal amount of each loan made to the borrower, for the purposes of indemnifying the facility for any breaches of representations, warranties or covenants of the borrower, as well as to fund collection efforts, if required. As of December 31, 2012 and December 31, 2011 the Company’s consolidated financial statements reflected balances of approximately $1.2 million and $691,000 included in restricted cash, respectively (see Note 22).

Gain on Sale of Life Settlements

Gain on sale of life settlements includes gain from company-owned life settlements.

Risks and Uncertainties

In the normal course of business, the Company encounters economic, legal and longevity risk. There are three main components of economic risk: credit risk, market risk and concentration of credit risk. Credit risk is the risk of default on the Company’s loan portfolio that results from a borrower’s inability or unwillingness to make contractually required payments. Market risk for the Company includes interest rate risk. Market risk also reflects the risk of declines in valuation of the Company’s investments, including declines caused by the selection of increased discount rates associated with the Company’s fair value model for investments in life settlements. It is reasonably possible that future changes to estimates involved in valuing life settlements could change and result in material effects to the future financial statements. Concentration of credit risk includes both the risk that lenders under the Company’s structured settlement financing facilities do not fund the purchase of structured settlement receivables when contractually obligated to do so and also includes the risk that an

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insurance carrier who has issued life insurance policies held by the Company in its portfolio does not remit the amount due under those policies upon policy maturities due to the deteriorating financial condition of the carrier or otherwise. Legal risk includes the risk that statutes define or courts interpret insurable interest in a manner adverse to the Company’s ownership rights in its portfolio of life insurance policies and the risk that courts allow insurance carriers to retain premiums paid by the Company in respect of insurance policies that have been successfully rescinded or contested. Longevity risk refers to the risk that the Company does not experience the mortalities of insureds in its portfolio of life insurance policies that are anticipated to occur on an actuarial basis in a timely manner, which would result in the Company expending additional amounts for the payment of premiums. See Note 17, Commitments and Contingencies.

Investment in Other Companies

The Company uses the equity method of accounting to account for its investment in other companies which the Company does not control but over which it exerts significant influence; generally this represents ownership interest of at least 20% and not more than 50%. The Company considers whether the fair values of any of its investments have declined below their carrying values whenever adverse events or changes in circumstances indicate that recorded values may not be recoverable. If the Company considers any such decline to be other than temporary, a write-down would be recorded to estimated fair value. During 2010, the Company wrote-off its entire investment in MXT as the Company determined that the estimated fair value of its investment in MXT was zero and the decline was other than temporary.

Recent Accounting Pronouncements

In May 2011, the FASB issued Accounting Standards Update (ASU) No. 2011-04, Fair Value Measurement (Topic 820): Amendments to Achieve Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs. This update clarifies existing guidance about how fair value should be applied where it already is required or permitted and provides wording changes that align this standard with International Financial Reporting Standards (IFRS). We are required to apply this guidance prospectively beginning with our first quarterly filing in 2012. The adoption of this new guidance has not had an impact on our financial position or results of operations.

June 2011, the FASB issued ASU No. 2011-05, Comprehensive Income (Topic 220): Presentation of Comprehensive Income. This update increases the prominence of other comprehensive income in financial statements, eliminating the option of presenting other comprehensive income in the statement of changes in equity, and instead, requiring the components of net income and comprehensive income to be presented in either one or two consecutive financial statements. We are required to comply with this guidance prospectively beginning with our first quarterly filing in 2012. The adoption of this new guidance has not had an impact on our financial position or results of operations.

In September 2011, the FASB issued ASU No. 2011-08, Intangibles–Goodwill and Other (Topic 350): Testing Goodwill for Impairment. This update allows entities testing goodwill for impairment the option of performing a qualitative assessment before calculating the fair value of the reporting unit (i.e., step one of the two-step goodwill impairment test). If entities determine, on the basis of qualitative factors, that the fair value of the reporting unit is more likely than not less than the carrying amount, the two-step impairment test would be required. The amendments are effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. The adoption of this new guidance has not had an impact on our financial position or results of operations.

In December 2011, the FASB issued ASU No. 2011-12, Comprehensive Income (Topic 220): Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05. This update delays the effective date of the requirement to present reclassification adjustments for each component of accumulated other comprehensive income in both net income and other comprehensive income on the face of the financial statements.

F-22

In February 2013, the FASB issued ASU No. 2013-02, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income. This update adds new disclosure requirements for items reclassified out of accumulated other comprehensive income. We are required to apply this guidance prospectively beginning with our first quarterly filing in 2013. The adoption of this new guidance will not impact our financial position or statement of operations, other than changes in presentation.

NOTE 3—EARNINGS PER SHARE

As of February 3, 2011, the Company had 3,600,000 shares of common stock outstanding. The impact of the Company’s corporate conversion has been applied on a retrospective basis to January 1, 2010 to determine earnings per share for the years ended December 31, 2011 and 2010.

As of December 31, 2012 and 2011, there were 21,206,121 and 21,202,614 issued and outstanding shares, respectively.

Basic net income per share is computed by dividing the net earnings attributable to common shareholders by the weighted average number of common shares outstanding during the period.

Diluted earnings per share is computed by dividing net income attributable to common shareholders by the weighted average number of common shares outstanding, increased to include the number of additional common shares that would have been outstanding if the dilutive potential common shares had been issued. Conversion or exercise of the potential common shares is not reflected in diluted earnings per share unless the effect is dilutive. The dilutive effect, if any, of outstanding common share equivalents is reflected in diluted earnings per share by application of the treasury stock method, as applicable. In determining whether outstanding stock options, restricted stock, and common stock warrants should be considered for their dilutive effect, the average market price of the common stock for the period has to exceed the exercise price of the outstanding common share equivalent.

The following tables reconcile actual basic and diluted earnings per share for the years ended December 31, 2012, 2011 and 2010 (in thousands except per share data).

	2012			2011			2010
Basic loss per share:
Numerator:
Net loss available to common stockholders	$	(44,634	)	$	(39,198	)	$	(15,697	)
Denominator:
Weighted average common shares outstanding		21,205,747			19,352,063			3,600,000
Basic loss per share	$	(2.10	)	$	(2.03	)	$	(4.36	)
Diluted loss per share:
Numerator:
Net loss available to common stockholders	$	(44,634	)	$	(39,198	)	$	(15,697	)
Denominator:
Diluted weighted average shares outstanding		21,205,747			19,352,063			3,600,000
Diluted loss per share(1)(2)	$	(2.10	)	$	(2.03	)	$	(4.36	)

(1) The computation of diluted EPS did not include 487,314 options and 4,240,521 warrants for the year ended December 31, 2012, as the effect of their inclusion would have been anti-dilutive.

(2) The computation of diluted EPS did not include 627,419 options, 4,240,521 warrants and 3,507 shares of restricted stock for the year ended December 31, 2011, as the effect of their inclusion would have been anti-dilutive.

F-23

Pro Forma Earnings Per Share

The pro forma earnings per share for the years ended December 31, 2011 and 2010, gives effect to (i) the consummation of the corporate conversion, pursuant to which all outstanding common and preferred limited liability company units (including all accrued but unpaid dividends thereon) and all principal and accrued interest outstanding under our promissory note in favor of IMPEX Enterprises, Ltd. were converted into 2,300,273 shares of our common stock; (ii) the issuance of 27,000 shares of common stock to two of our employees pursuant to the terms of each of their respective phantom stock agreements; and (iii) the issuance and conversion of a $30.0 million debenture into 1,272,727 shares of our common stock as if these events had been completed by January 2010.

Unaudited pro forma net income attributable to common stockholders per share is computed using the weighted-average number of common shares outstanding, including the pro forma effect of (i) to (iii) above, as if such conversion occurred at January 1, 2010. The pro forma net income/(loss) reflects a reduction of interest expense of $178,000, net of tax and $3.1 million for the years ended December 31, 2011 and 2010, respectively, due to the conversion of a promissory note in favor of IMPEX Enterprises, Ltd. into shares of our common stock, which occurred prior to the closing of our initial public offering, and the conversion of our promissory note in favor of Branch Office of Skarbonka Sp. z o.o into a $30.0 million debenture, and the conversion of that $30.0 million debenture into shares of our common stock, which occurred immediately prior to the closing of our offering.

The following tables reconcile pro forma basic and diluted earnings per share for the years ended December 31, 2011 and 2010 (in thousands except per share data).

	2011			2010
Basic loss per share:
Numerator:
Net loss available to common stockholders(1)(3)	$	(39,020	)	$	(12,636	)
Denominator:
Weighted average common shares outstanding		19,352,063			3,600,000
Basic loss per share	$	(2.02	)	$	(3.51	)
Diluted earnings per share:
Numerator:
Net loss available to common stockholders	$	(39,020	)	$	(12,636	)
Denominator:
Diluted weighted average shares outstanding		19,352,063			3,600,000
Diluted loss per share(2)	$	(2.02	)	$	(3.51	)

(1) Reflects a reduction of interest expense $178,000, net of tax and $3.1 million for the years ended December 31, 2011 and 2010, respectively, due to the conversion of our promissory note in favor of IMPEX Enterprises, Ltd. into shares of our common stock, which occurred prior to the closing of our initial public offering, and the conversion of our promissory note in favor of Branch Office of Skarbonka Sp. z o.o into a $30.0 million debenture, and the conversion of that $30.0 million debenture into shares of our common stock, which occurred immediately prior to the closing of our initial public offering.

(2) The computation of diluted EPS did not include 627,419 options, 4,240,521 warrants and 3,507 shares of restricted stock for the year ended December 31, 2011, as the effect of their inclusion would have been anti-dilutive.

(3) For the pro forma period for the years ended December 31, 2011 and 2010, the results of the Company being treated for the pro forma presentation as a “C” corporation resulted in no impact to the consolidated balance sheet or statement of operations. The primary reasons for this are that the losses produce no current

F-24

benefit and any net operating losses generated and other deferred assets (net of liabilities) at that time would have been fully reserved due to historical operating losses. The Company, therefore, has not recorded any pro forma tax provision.

NOTE 4—DEFERRED COSTS

During 2010 and 2009, the Company paid lender protection insurance premiums which were capitalized and are being amortized over the life of the loans using the effective interest method. The balance of costs related to lender protection insurance premium included in deferred costs in the accompanying balance sheet at December 31, 2012 and 2011 was zero and approximately $1.1 million, respectively. The state surplus taxes on the lender protection insurance premiums are 3.6% to 4.0% of the premiums paid. These costs were also capitalized and amortized over the life of the loans using the effective interest method. The balance of costs related to state surplus taxes included in deferred costs in the accompanying balance sheets at December 31, 2012 and 2011 was zero and approximately $498,000, respectively.

During 2010 and 2009, the Company paid loan closing fees related to the closing of certain financing agreements. These costs were being capitalized and amortized over the life of the credit facilities using the effective interest method. The balance of costs related to securing credit facilities included in deferred costs in the accompanying balance sheet at December 31, 2012 and 2011 was approximately $7,000 and $301,000, respectively.

NOTE 5—DEPOSITS—OTHER

The Company has provided three $100,000 deposits and a $125,000 deposit to various states as a requirement for applying for and obtaining life settlement licenses in those states. The deposits are held by the state or custodians of the state and bear interest at market rates. Interest is generally distributed to the Company on a quarterly basis. Interest income of approximately $3,500, $3,000 and $3,000 has been recognized on these deposits for the years ended December 31, 2012, 2011 and 2010, respectively. Amount deposited with various states was $425,000 for the years ended December 31, 2012 and 2011.

The Company has purchased surety bonds in various amounts as a requirement for applying for and obtaining life settlement licenses in certain states. As of December 31, 2012, the Company has surety bonds in seven states which total $850,000 and expire in May 2013. The surety bonds were originally backed by a letter of credit from a national bank in the amount of $850,000, which was collateralized by certificates of deposit with the bank in the amount of $895,000, including accrued interest. As the letter of credit matured on May 8, 2012, the surety bond underwriter drew on the facility totaling $850,000. The certificates of deposit were not renewed and the amounts are currently being held with the underwriter as a deposit as collateral for the surety bonds. The Company expects to continue to maintain the deposit with the surety bond underwriter as collateral for the foreseeable future.

As of December 31, 2012 and 2011 the Company had an additional deposit of $250,000 in connection with its Cedar Lane credit facility. The Company also had approximately $1.3 million in deposits held with various credit facilities for potential financing opportunities at December 31, 2012 and approximately $78,000 and $86,000 in miscellaneous deposits recorded in deposits-other in the accompanying balance sheet at December 31, 2012 and 2011, respectively.

F-25

NOTE 6—FIXED ASSETS

Fixed assets at December 31, 2012 and 2011 are summarized as follows (in thousands):

	For the Year Ended December 31,
	2012		2011
Computer software and equipment	$	2,320	$	2,286
Furniture, fixtures and equipment		670		1,046
Leasehold improvements		773		666
		3,763		3,998
Less: Accumulated depreciation		3,531		3,413
Fixed assets, net	$	232	$	585

Depreciation expense for the years ended December 31, 2012, 2011 and 2010 was approximately $365,000, $602,000 and $722,000, respectively, the Company also recorded $9,000 related to fixed asset write offs during 2012 and these are included in selling, general, and administrative expenses in the accompanying consolidated statement of income. During 2012 and 2011, the Company recorded $11,000 and $10,000, respectively, in amortization expense related to its domain name which was acquired in 2011 (See Note 2) which is included in selling, general and administrative expenses in the accompanying consolidated statement of income.

NOTE 7—GAIN ON MATURITIES OF LIFE SETTLEMENTS WITH SUBROGATION RIGHTS

During 2011, two individuals covered under policies which were subject to subrogation claims unexpectedly passed away. The Company collected the death benefit on one of these policies in the amount of $3.5 million during the third quarter of 2011. The other was the result of an accidental death and the $10.0 million face value of the policy was larger than average.

The Company accounted for the maturities of each of these polices as contingent gains in accordance with ASC 450, Contingencies and recognized $3.2 million in death benefits net of subrogation expenses of $312,000 in its consolidated statement of operations during the year ended December 31, 2011. During 2012, the Company negotiated a settlement in respect of the larger policy and collected approximately $6.1 million, net of subrogation expenses of $910,000, and has reported a gain in accordance with ASC 450, Contingencies in its consolidated statement of operations for the year ended December 31, 2012 as all contingencies were resolved.

The Company believes these contingent gains to be unpredictable because the lender protection insurer can discontinue paying the premiums necessary to keep a policy subject to subrogation and salvage claims in force at any time and the amount of the lender protection insurer’s subrogation and salvage claim on any individual life insurance policy could equal the cash flow received by the Company with respect to any such policy. No expectations for similar gains in the future should be inferred from the events occurring in the third quarter of 2011 and second quarter of 2012.

NOTE 8—INVESTMENT SECURITIES AVAILABLE FOR SALE

The amortized cost and estimated fair values of securities available for sale at December 31, 2012 are as follows (in thousands):

	December 31, 2012
Description of Securities	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair  Value
Corporate bonds	$	8,275		25	$	(67	)	$	8,233
Government bonds		3,524		76		—			3,600
Other bonds		310		4		—			314
Total available for sale securities	$	12,109	$	105	$	(67	)	$	12,147

F-26

The amortized cost and estimated fair values of securities available for sale at December 31, 2011 are as follows (in thousands):

	December 31, 2011
Description of Securities	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
Corporate bonds	$	41,697		32	$	(127	)	$	41,602
Government bonds		14,789		39		(9	)		14,819
Other bonds		821		—		—			821
Total available for sale securities	$	57,307	$	71	$	(136	)	$	57,242

The scheduled maturities of securities at December 31, 2012, by contractual maturity, are shown below. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties (in thousands).

	December 31, 2012
	Amortized Cost		Estimated Fair Value
Due in one year or less	$	6,172	$	6,197
Due after one year but less than five years		2,413		2,350
Due after five years but less than ten years		3,524		3,600
Total available for sale securities	$	12,109	$	12,147

The scheduled maturities of securities at December 31, 2011, by contractual maturity, are shown below. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties (in thousands).

	December 31, 2011
	Amortized Cost		Estimated Fair Value
Due in one year or less	$	25,904	$	25,892
Due after one year but less than five years		20,243		20,160
Due after five years but less than ten years		11,160		11,190
Total available for sale securities	$	57,307	$	57,242

Information pertaining to securities with gross unrealized losses at December 31, 2012, aggregated by investment category and length of time that the individual securities have been in a continuous unrealized loss position is as follows (in thousands):

	December 31, 2012
	Less than 12 Months					12 Months or More				Total
Description of Securities	Estimated Fair Value		Unrealized Loss			Estimated Fair Value		Unrealized Loss		Estimated Fair Value		Unrealized Loss
Corporate bonds		1,932		(67	)		—		—		1,932		(67	)
Government bonds		—		—			—		—		—		—
Other bonds		—		—			—		—		—		—
Total available for sale securities	$	1,932	$	(67	)	$	—	$	—	$	1,932	$	(67	)

F-27

Information pertaining to securities with gross unrealized losses at December 31, 2011, aggregated by investment category and length of time that the individual securities have been in a continuous unrealized loss position is as follows (in thousands):

	December 31, 2011
	Less than 12 Months					12 Months or More				Total
Description of Securities	Estimated Fair Value		Unrealized Loss			Estimated Fair Value		Unrealized Loss		Estimated Fair Value		Unrealized Loss
Corporate bonds		26,051		(127	)						26,051		(127	)
Government bonds		5,927		(9	)						5,927		(9	)
Other bonds		—		—							—		—
Total available for sale securities	$	31,978	$	(136	)	$	—	$	—	$	31,978	$	(136	)

Proceeds from sale and prepayment of investment securities available for sale during the year ended December 31, 2012 amounted to approximately $79.8 million, resulting in gross realized gains of approximately $53,000.

The Company monitors its investment securities available for sale for other-than-temporary impairment, or OTTI, on an individual security basis considering numerous factors, including the Company’s intent to sell securities in an unrealized loss position, the likelihood that the Company will be required to sell these securities before an anticipated recovery in value, the length of time and extent to which fair value has been less than amortized cost, the historical and implied volatility of the fair value of the security, failure of the issuer of the security to make scheduled interest or principal payments, any changes to the rating of the security by a rating agency and recoveries or additional declines in fair value subsequent to the balance sheet date. The relative significance of each of these factors varies depending on the circumstances related to each security.

At December 31, 2012 and 2011, 2 and 31 securities were in unrealized loss positions, respectively. The amount of unrealized losses related to all of these securities was considered insignificant, totaling approximately $67,000 and $136,000 for December 31, 2012 and 2011, respectively.

NOTE 9—LOANS RECEIVABLE

A summary of loans receivables at December 31, 2012 and 2011 is as follows (in thousands):

	2012			2011
Loan principal balance	$	5,255		$	31,264
Loan origination fees, net		1,157			8,307
Loan impairment valuation		(3,368	)		(10,195	)
Loans receivable, net	$	3,044		$	29,376

The Company also had interest receivable, net which consisted of approximately $727,000 and $5.3 million in accrued and unpaid interest at December 31, 2012 and 2011, respectively and a related impairment valuation of approximately $947,000 and $1.9 million, respectively.

F-28

An analysis of the changes in loans receivable principal balance during the years ended December 31, 2012 and 2011 is as follows (in thousands):

	2012			2011
Loan principal balance, beginning	$	31,264		$	76,939
Loan originations		—			18,385
Subsequent year premiums paid, net of reimbursement		—			339
Loan write-offs		—			(3,058	)
Loan payoffs		(17,116	)		(55,277	)
Loans transferred to investments in life settlements		(8,893	)		(6,064	)
Loan principal balance, ending	$	5,255		$	31,264

Loan origination fees include origination fees that are payable to the Company on the date the loan matures. The loan origination fees are reduced by any direct costs that are directly related to the creation of the loan receivable in accordance with ASC 310-20, Receivables—Nonrefundable Fees and Other Costs, and the net balance is accreted over the life of the loan using the effective interest method. Discounts include purchase discounts, net of accretion, which are attributable to loans that were acquired from affiliated companies under common ownership and control.

In accordance with ASC 310, Receivables, the Company specifically evaluates all loans for impairment based on the fair value of the underlying policies as foreclosure is considered probable. The loans are considered to be collateral dependent as the repayment of the loans is expected to be provided by the underlying policies. See Note 14.

An analysis of the loan impairment valuation for the year ended December 31, 2012 is as follows (in thousands):

	Loans Receivable			Interest Receivable			Total
Balance at beginning of period	$	10,195		$	1,920		$	12,115
Provision for loan losses		437			78			515
Charge-offs		(7,264	)		(1,051	)		(8,315	)
Balance at end of period	$	3,368		$	947		$	4,315

An analysis of the loan impairment valuation for the year ended December 31, 2011 is as follows (in thousands):

	Loans Receivable			Interest Receivable			Total
Balance at beginning of period	$	7,176		$	1,340		$	8,516
Provision for loan losses		6,793			796			7,589
Charge-offs		(3,774	)		(216	)		(3,990	)
Balance at end of period	$	10,195		$	1,920		$	12,115

An analysis of the loan impairment valuation for the year ended December 31, 2010 is as follows (in thousands):

	Loans Receivable			Interest Receivable			Total
Balance at beginning of period	$	11,599		$	1,788		$	13,387
Provision for loan losses		2,276			2,200			4,476
Charge-offs		(8,205	)		(2,647	)		(10,852	)
Recoveries		1,506			—			1,506
Balance at end of period	$	7,176		$	1,341		$	8,517

F-29

An analysis of the allowance for loan losses and recorded investment in loans by loan type for the year ended December 31, 2012 is as follows (in thousands):

	Uninsured Loans			Insured Loans			Total
Loan impairment valuation
Balance at beginning of period	$	6,914		$	3,281		$	10,195
Provision for loan losses		—			437			437
Charge-offs		(4,222	)		(3,042	)		(7,264	)
Ending balance	$	2,692		$	676		$	3,368
Ending balance: individually evaluated for impairment	$	2,692		$	676		$	3,368

An analysis of the allowance for loan losses and recorded investment in loans by loan type for the year ended December 31, 2011 is as follows (in thousands):

	Uninsured Loans			Insured Loans			Total
Loan impairment valuation
Balance at beginning of period	$	888		$	6,288		$	7,176
Provision for loan losses		6,774			19			6,793
Charge-offs		(748	)		(3,026	)		(3,774	)
Ending balance	$	6,914		$	3,281		$	10,195
Ending balance: individually evaluated for impairment	$	6,914		$	3,281		$	10,195

All loans were individually evaluated for impairment as of December 31, 2012 and 2011. There were no loans collectively evaluated for impairment and there were no loans acquired with deteriorated credit quality. See Note 14.

An analysis of the allowance for loan losses and recorded investment in loans by loan type for the year ended December 31, 2010 is as follows (in thousands):

	Uninsured Loans			Insured Loans			Total
Loan impairment valuation
Balance at beginning of period	$	1,983		$	9,616		$	11,599
Provision for loan losses		—			2,276			2,276
Charge-offs		(2,601	)		(5,604	)		(8,205	)
Recoveries		1,506			—			1,506
Ending balance	$	888		$	6,288		$	7,176
Ending balance: individually evaluated for impairment	$	888		$	6,288		$	7,176

F-30

An analysis of the credit quality indicators by loan type at December 31, 2012 is presented in the following table (dollars in thousands):

	Uninsured					Insured(1)
S&P Designation	Unpaid Principal Balance		Percent			Unpaid Principal Balance		Percent
AAA	$	—		0.00	%	$	—		0.00	%
AA+		—		0.00	%		—		0.00	%
AA		—		0.00	%		—		0.00	%
AA-		2,072		43.58	%		408		81.44	%
A+		2,548		53.97	%		93		18.56	%
A1		—		0.00	%		—		0.00	%
A		—		0.00	%		—		0.00	%
BB-		134		2.45	%		—		0.00	%
Total	$	4,754		100	%	$	501		100	%

An analysis of the credit quality indicators by loan type at December 31, 2011 is presented in the following table (dollars in thousands):

	Uninsured					Insured(1)
S&P Designation	Unpaid Principal Balance		Percent			Unpaid Principal Balance		Percent
AAA	$	—		0.00	%	$	—		0.00	%
AA+		694		5.08	%		222		1.26	%
AA		—		0.00	%		—		0.00	%
AA-		6,558		48.05	%		9,085		51.57	%
A+		3,060		22.42	%		1,287		7.31	%
A1		—		0.00	%		—		0.00	%
A		3,336		24.44	%		7,022		39.86	%
BB-		—		0.00	%		—		0.00	%
Total	$	13,648		100	%	$	17,616		100	%

(1) All of the Company’s insured loans have lender protection coverage with Lexington Insurance Company. As of December 31, 2012, Lexington had a financial strength rating of “A” with a stable outlook by Standard & Poors (S&P).

A summary of our investment in impaired loans at December 31, 2012 and 2011 is as follows (in thousands):

	2012		2011
Loan receivable, net	$	3,011	$	17,424
Interest receivable, net		724		6,799
Investment in impaired loans	$	3,735	$	24,223

F-31

An analysis of impaired loans with and without a related allowance at December 31, 2012 is presented in the following table by loan type (in thousands):

	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:
Uninsured Loans	$	—	$	—	$	—	$	—	$	—
Insured Loans		—		—		—		—		—
With an allowance recorded:
Uninsured Loans		3,623		4,735		3,413		6,887		1,444
Insured Loans		112		501		902		7,091		227
Total Impaired Loans	$	3,735	$	5,236	$	4,315	$	13,978	$	1,671

An analysis of impaired loans with and without a related allowance at December 31, 2011 is presented in the following table by loan type (in thousands):

	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:
Uninsured Loans	$	—	$	—	$	—	$	—	$	—
Insured Loans		—		—		—		—		—
With an allowance recorded:
Uninsured Loans		10,153		13,628		6,894		6,764		1,684
Insured Loans		14,070		10,391		3,301		24,847		3,195
Total Impaired Loans	$	24,223	$	24,019	$	10,195	$	31,611	$	4,879

The amount of the investment in impaired loans that had an allowance as of December 31, 2012 and 2011 was $3.7 million and $24.2 million, respectively. The amount of the investment in impaired loans that did not have an allowance was zero as of December 31, 2012 and 2011. The average investment in impaired loans during the years ended December 31, 2012 and 2011 was approximately $14.0 million and $31.6 million, respectively. The interest recognized on the impaired loans was approximately $1.7 million and $4.9 million for the years ended December 31, 2012 and 2011, respectively.

An analysis of past due at December 31, 2012 is presented in the following table by loan type (in thousands):

	30-59 Days Past Due		60-89 Days Past Due		Greater Than 90 Days Past Due		Total Past Due
Uninsured Loans	$	—	$	—	$	599	$	599
Insured Loans		—		—		315		315
Total	$	—	$	—	$	914	$	914

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An analysis of past due at December 31, 2011 is presented in the following table by loan type (in thousands):

	30-59 Days Past Due		60-89 Days Past Due		Greater Than 90 Days Past Due		Total Past Due
Uninsured Loans	$	—	$	—	$	599	$	599
Insured Loans		1,570		—		—		1,570
Total	$	1,570	$	—	$	599	$	2,169

During the years ended December 31, 2012 and 2011, the Company originated zero and 58 loans receivable with a principal balance of zero and approximately $18.3 million, respectively. Loan interest receivable at December 31, 2012 and 2011 was approximately $727,000 and $5.3 million net of impairment of approximately $947,000, and $1.9 million, respectively. As of December 31, 2012, there were 22 loans with the average loan balance of approximately $181,000.

The allowance for interest receivable represents interest that is not expected to be collected. At the time the interest income was recognized and at the end of the reporting period in which the interest income was recognized, the interest income was believed to be collectible. The Company continually reassesses whether interest income is collectible in conjunction with its loan impairment analysis. The allowance for interest receivable represents interest that was determined to be uncollectible during a reporting period subsequent to the initial recognition of the interest income. As of December 31, 2012, the loan portfolio consisted of loans with original maturities of 2 to 4 years and variable interest rates at an average interest rate of 12.98%. During the year ended December 31, 2012 and 2011, 85 and 79 of our loans were paid off with proceeds of lender protection insurance totaling approximately $25.6 million and $24.0 million, respectively, of which approximately $16.7 million, and $15.6 million was for the principal of the loans and approximately $6.5 million and $6.0 million was for accrued interest, respectively, and accreted origination fees of approximately $7.1 million and $6.6 million, respectively. The Company had an impairment associated with these loans of approximately $4.9 million and $4.6 million, respectively. We recognized a loss of approximately $29,000 and $14,000 on these transactions, respectively.

Our premium finance borrowers were generally referred to us through independent insurance agents and brokers although, prior to January 2009, we originated some premium finance loans that were sold by life insurance agents that we employed. In certain of these instances, the life insurance agents employed by the Company worked with external brokers and agents to obtain insurance for policyholders with the Company extending a premium finance loan to a borrower. We refer to these instances as the “retail non-seminar business,” which began in December 2006 and was discontinued in January 2009. In total, the Company originated 114 premium finance loans as part of the retail non-seminar business. As of December 31, 2012, the Company had 12 policies in its portfolio that once served as collateral for premium finance loans derived through the retail non-seminar business.

During the year ended December 31, 2012 two loans were paid off with proceeds from trusts totaling $1.0 million of which $686,000 was for principal of the loans and $280,000 was for accrued interest, and accreted origination fees of $262,000. The Company had an impairment associated with these loans of $101,000 and recognized a loss of $96,000.

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NOTE 10—ORIGINATION FEES

A summary of the balances of origination fees that are included in loans receivable in the consolidated balance sheet as of December 31 is as follows (in thousands):

	2012			2011
Loan origination fees gross	$	1,334		$	10,844
Un-accreted origination fees		(190	)		(2,666	)
Amortized loan originations costs		13			129
	$	1,157		$	8,307

Loan origination fees are fees payable to the Company on the date of loan maturity or repayment. Loan origination costs are deferred costs that are directly related to the creation of the loan receivable.

NOTE 11—STOCK-BASED COMPENSATION

In connection with the Company’s initial public offering, the Company established the Imperial Holdings 2011 Omnibus Incentive Plan (the “Omnibus Plan”). The purpose of the Omnibus Plan is to attract, retain and motivate participating employees and to attract and retain well-qualified individuals to serve as members of the board of directors, consultants and advisors through the use of incentives based upon the value of our common stock. Awards under the Omnibus Plan may consist of incentive awards, stock options, stock appreciation rights, performance shares, performance units, and shares of common stock, restricted stock, restricted stock units or other stock-based awards as determined by the compensation committee. The Omnibus Plan provides that an aggregate of 1,200,000 shares of common stock are reserved for issuance under the Omnibus Plan, subject to adjustment as provided in the Omnibus Plan. The Company recognized approximately $305,000 and $1.5 million in stock-based compensation expense relating to stock options it granted under the Omnibus Plan during the years ended December 31, 2012 and 2011, respectively. The Company incurred additional stock-based compensation expense of approximately $290,000 related to the conversion of two phantom stock agreements it had with two employees into 27,000 shares of common stock in connection with its corporate conversion in the first quarter of 2011 and approximately $4,000 and $34,000 in stock-based compensation relating to restricted stock granted to its board of directors during the years ended December 31, 2012 and 2011, respectively. Prior to our initial public offering, the Company had no equity compensation plan.

Options

As of December 31, 2012, options to purchase 487,414 shares of common stock were outstanding and unexercised under the Omnibus Plan at a weighted average exercise price of $10.75 per share. All of the outstanding options expire seven years after the date of grant and were granted with a strike price at $10.75 which was the offering price of our initial public offering or fair market value (closing price) of the stock on the date of grant and vest over three years from the date of issue.

The Company has used the Black-Scholes model to calculate fair values of options awarded. This model requires assumptions as to expected volatility, dividends, terms, and risk free rates. Assumptions used for the periods covered herein, are outlined in the table below:

	Year Ended December 31, 2011
Expected Volatility		54.18% – 54.23	%
Expected Dividend		0	%
Expected Term in Years		4.5
Risk Free Rate		2.16% – 2.29	%

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The Company commenced its initial public offering of common stock in February 2011. Accordingly, there was no public market for the Company’s common stock prior to this date. Therefore, the Company identified comparable public entities and used the average volatility of those entities to reasonably estimate its expected volatility. The Company does not expect to pay dividends on its common stock for the foreseeable future. Expected term is the period of time over which the options granted are expected to remain outstanding and is based on the simplified method as outlined in the SEC Staff Accounting Bulletin 110. The Company will continue to estimate expected lives based on the simplified method until reliable historical data becomes available. The risk free rate is based on the U.S Treasury yield curve in effect at the time of grant for the appropriate life of each option.

The following table presents the activity of the Company’s outstanding stock options of common stock for the year ended December 31, 2012:

Common Stock Options	Number of Shares			Weighted Average  Price per Share		Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value
Options outstanding, December 31, 2011		627,419			—		—	$	—
Options granted		—		$	10.75		6.11	$	—
Options exercised		—			—		—		—
Options forfeited		(140,105	)		10.75		—		—
Options expired		—			—		—		—
Options outstanding, December 31, 2012		487,314		$	10.75		5.11	$	—
Exercisable at December 31, 2012		287,988			10.74		5.11	$	—
Unvested at December 31, 2012		199,326		$	10.75		5.11	$	—

As of December 31, 2012, all outstanding stock options had an exercise price above the fair market value of the common stock on that date.

The remaining unamortized amounts of approximately $336,000 and $21,000 will be expensed during 2013 and 2014, respectively.

Restricted Stock

3,507 shares of restricted stock granted to our directors under the Omnibus Plan subject to a one year vesting schedule commencing on the date of grant vested during the year ended December 31, 2012. The fair value of the unvested restricted stock was valued at $38,000 based on the closing price of the Company’s shares on the grant date.

The following table presents the activity of the Company’s unvested restricted common shares for the year ended December 31, 2012:

Common Unvested Shares	Number of Shares
Outstanding December 31, 2011		3,507
Granted		—
Vested		(3,507	)
Forfeited		—
Outstanding December 31, 2012		—

There were no restricted stock awards granted during the year ended December 31, 2012.

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NOTE 12—STRUCTURED SETTLEMENTS

The balances of the Company’s structured settlements are as follows (in thousands):

	December 31,		December 31,
	2012		2011
Structured settlements - at cost	$	1,574	$	1,553
Structured settlements - at fair value		1,680		12,376
Structured settlements receivable, net	$	3,254	$	13,929

All structured settlements that were acquired subsequent to July 1, 2010 were marked to fair value. Structured settlements that were acquired prior to July 1, 2010 were recorded at cost. During 2011, the Company reacquired certain structured settlements that were originally acquired prior to July 1, 2010 and the Company continued to carry those structured settlements at cost upon reacquisition.

Certain financing arrangements for the Company’s structured settlements are described below:

Life-Contingent Structured Settlement Facility

On the same day the Omnibus Termination Agreement was executed, December 30, 2011, Washington Square Financial, LLC (“WSF”) entered into a forward purchase and sale agreement (“PSA”) to sell up to $40.0 million of life contingent structured settlement receivables to Compass Settlements LLC (“Compass”), an entity managed by Beacon Annuity Fund, LP (“Beacon”). Subject to predetermined eligibility criteria and on-going funding conditions, Compass committed, in increments of $5.0 million, up to $40.0 million to purchase life-contingent structured settlement receivables from WSF. The PSA obligates WSF to sell the life-contingent structured settlement receivables it originates to Compass on an exclusive basis for twenty-four months, subject to Compass maintaining certain purchase commitment levels. Additionally, the Company has agreed to guaranty WSF’s obligation to repurchase any ineligible receivables sold under the PSA and certain other related obligations.

For the year ended December 31, 2012, the Company recognized income from the sale of 380 structured settlement transactions under this facility generating income of approximately $2.6 million recorded as gain on sale of structured settlements in the attached financial statements. Of the 380 structured transactions, 107 were previously recorded at the market rate generating income of approximately $1.1 million and the change in value was recorded as an unrealized change in fair value on the financial statements presented for the year ended December 31, 2011 and 73 were previously recorded at the market rate generating income of approximately $712,000 with the change in value recorded as an unrealized change in fair value on the financial statements presented for the year ended December 31, 2012.

The Company also realized income of approximately $72,000 that was recorded as an unrealized change in fair value during the year ended December 31, 2012 on structured settlements that are intended for sale to Compass.

8.39% Fixed Rate Asset Backed Variable Funding Notes

Imperial Settlements Financing 2010, LLC (“ISF 2010”) was formed as an affiliate of the Company to serve as a special purpose financing entity to allow the Company to sell structured settlements and assignable annuities, which are referred to as receivables, to ISF 2010 and ISF 2010 to borrow against certain of its receivables to provide ISF 2010 liquidity. ISF 2010 is a non-consolidated special purpose financing entity. On September 24, 2010, ISF 2010 entered into an arrangement to obtain up to $50 million in financing. Under this arrangement, a subsidiary of Partner Re, Ltd. (the “noteholder”) became the initial holder of ISF 2010’s 8.39% Fixed Rate Asset Backed Variable Funding Note issued under a master trust indenture and related indenture

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supplement (collectively, the “Indenture”) pursuant to which the noteholder has committed to advance ISF 2010 up to $50 million upon the terms and conditions set forth in the Indenture. The note is secured by the receivables that ISF 2010 acquires from the Company from time to time. The note is due and payable on or before January 1, 2057, but principal and interest must be repaid pursuant to a schedule of fixed payments from the receivables that secure the notes. The arrangement generally has a concentration limit of 15% for the providers of the receivables that secure the notes. Wilmington Trust is the collateral trustee. As of December 31, 2012 and December 31, 2011, the balance of the notes outstanding on the special purpose financing entity’s books was $43.2 million and $20.6 million, respectively.

Upon the occurrence of certain events of default under the Indenture, all amounts due under the note are automatically accelerated. The Company’s maximum exposure related to ISF 2010 is limited to 5% of the dollar value of the ISF 2010 transactions, which is held back by ISF 2010 at the time of sale, and is designed to absorb potential losses in collecting the receivables. The obligations of ISF 2010 are non-recourse to the Company. The total funds held back by ISF 2010 as of December 30, 2012 and December 31, 2011 were approximately $2.2 million and $1.0 million and are included in investment in affiliate in the accompanying consolidated balance sheet.

During the years ended December 31, 2012 and 2011, the Company sold 565 and 485 term certain structured settlements, respectively, 181 and 12 of which were originated in 2011 and 2010, respectively, generating income of approximately of $3.2 million and $129,000, respectively, which was recorded as an unrealized change in fair value of structured settlements in 2011 and 2010, respectively. The Company originated and sold 384 and 307 guaranteed structured settlement transactions under this facility generating income of approximately $4.9 million and $3.8 million, respectively, which was recorded as a realized gain on sale of structured settlements during the years ended December 31, 2012 and 2011, respectively. During the year ended December 31, 2011, the Company also had three SPV’s that pledged 38 guaranteed structured settlement transactions under this facility generating income of approximately $32,000, which was recorded as an unrealized change in the fail value of structured settlements. The Company also realized income of approximately $559,000 and $3.4 million that was recorded as an unrealized change in fair value during the years ended December 31, 2012 and 2011, respectively, on structured settlements that are intended for sale to ISF 2010. The Company receives 95% of the purchase price in cash from ISF 2010. Of the remaining 5%, which represents the Company’s interest in ISF 2010, 1% is required to be contributed to a cash reserve account held by Wilmington Trust. In addition, the Company also purchased and sold 131 guaranteed structure transactions generating income of $64,000 that was recorded as a realized gain on sale of structured settlements in 2011.

When the transfer of the receivables occurs, the Company records the transaction as a sale and derecognizes the asset from its balance sheet. In determining whether the Company is the primary beneficiary of the trust, the Company concluded that it does not control the servicing, which is the activity which most significantly impacts the trust performance. An independent third party is the master servicer and they can only be replaced by the control partner, which is the entity that holds the majority of the outstanding notes. The Company is a back-up servicer which is insignificant to ISF 2010 performance.

Washington Square Financial 3rd Party Sales

For the year ended December 31, 2012, in addition to its intended sales to Compass and ISF 2010, the Company also sold 282 deals to unrelated parties for $6.7 million generating income of $4.0 million recorded as a gain on sale of structured settlements and $322,000 that was previously recorded as an unrealized change in fair value.

For the years ended December 31, 2012 and 2011, respectively, the Company recorded income of approximately $158,000 and $135,000, respectively, that was recorded as unrealized change in fair value on structured settlements that are intended for sale to other parties

Total income recognized through accretion of interest income on structured settlement transactions for the years ended December 31, 2012 and 2011, respectively, was approximately $329,000 and $552,000, respectively.

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Such income was recognized in interest income in the accompanying consolidated statement of operations. The receivables at December 31, 2012 and December 31, 2011 were approximately $3.3 million and $13.9 million, respectively, net of a discount of approximately $4.6 million and $27.8 million, respectively.

The Company recognized a gain on the sale of approximately $215,000 through the collection of holdback funds during the year ended December 31, 2011. The holdback is equal to the aggregate amount of payments due and payable by the annuity holder within 90 days after the date of sale. These amounts are held back in accordance with the purchase agreement and were released upon proof of collections by the Company acting as servicer.

NOTE 13—INVESTMENT IN LIFE SETTLEMENTS (LIFE INSURANCE POLICIES)

During the years ended December 31, 2012 and 2011, the Company acquired life insurance policies as a result of certain of the Company’s borrowers defaulting on premium finance loans and relinquishing the underlying policy to the Company in exchange for being released from further obligations under the loan. In 2011, the Company also began acquiring life insurance policies in the secondary and tertiary markets. The Company elected to account for these policies using the fair value method in accordance with ASC 325-30-50 Investments – Other – Investment in Insurance Contracts. Under the fair value method, the Company recognizes the initial investment at the purchase price. For policies that were relinquished in satisfaction of premium finance loans at maturity, this is the loan carrying value and for policies purchased in the secondary or tertiary markets, this is the amount of cash outlay at the time of purchase. At each reporting period, the Company re-measures the investment at fair value in its entirety and recognizes changes in fair value in earnings in the period in which the changes occur. See Note 14.

As of December 31, 2012 and 2011, the Company owned 214 and 190 policies, respectively, with an aggregate estimated fair value of investments in life settlements of $113.4 million and $90.9 million, respectively.

The weighted average life expectancy calculated based on death benefit of insureds in the policies owned by the Company at December 31, 2012 was 10.6 years. The following table describes the Company’s investment in life settlements as of December 31, 2012 (dollars in thousands):

Remaining Life Expectancy (In Years)	Number of Life  Settlement Contracts		Fair Value		Face Value
0 - 1		—	$	—	$	—
1 - 2		—		—		—
2 - 3		1		1,222		2,500
3 - 4		4		3,319		11,450
4 - 5		7		11,375		30,950
Thereafter		202		97,525		1,028,256
Total		214		113,441		1,073,156

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The weighted average life expectancy calculated based on death benefit of insureds in the policies owned by the Company at December 31, 2011 was 10.6 years. The following table describes the Company’s investment in life settlements as of December 31, 2011 (in thousands):

Remaining Life Expectancy (In Years)	Number of Life Settlement Contracts		Fair Value		Face Value
0 – 1		—	$	—	$	—
1 – 2		1		3,033		5,000
2 – 3		2		2,484		4,500
3 – 4		4		7,084		20,200
4 – 5		3		2,357		7,950
Thereafter		180		75,959		897,816
Total		190		90,917		935,466

Premiums to be paid for each of the five succeeding fiscal years to keep the life insurance policies in force as of December 31, 2012, are as follows (in thousands):

2013		27,703
2014		26,281
2015		26,533
2016		26,978
2017		28,002
Thereafter		324,884
	$	460,381

The amount of $460.4 million noted above represents the estimated total future premium payments required to keep the life insurance policies in force during the life expectancies of all the underlying insured lives and does not give effect to projected receipt of death benefits. The Company has not yet experienced the mortalities of insureds or received the resulting death benefits from our life insurance policies (other than from policies with subrogation rights that are not reported on our balance sheet and that are considered contingent assets). The estimated total future premium payments could increase or decrease significantly to the extent that actual mortalities of insureds differs from the estimated life expectancies.

NOTE 14—FAIR VALUE MEASUREMENTS

We carry investments in life and structured settlements at fair value in the consolidated balance sheets. Fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. As such, fair value is a market based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. Fair value measurements are classified based on the following fair value hierarchy:

Level 1—Valuation is based on unadjusted quoted prices in active markets for identical assets and liabilities that are accessible at the reporting date. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these products does not entail a significant degree of judgment.

Level 2—Valuation is determined from pricing inputs that are other than quoted prices in active markets that are either directly or indirectly observable as of the reporting date. Observable inputs include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, and interest rates and yield curves that are observable at commonly quoted intervals.

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Level 3—Valuation is based on inputs that are both significant to the fair value measurement and unobservable. Level 3 inputs include situations where there is little, if any, market activity for the financial instrument. The inputs into the determination of fair value generally require significant management judgment or estimation.

Assets and liabilities measured at fair value on a recurring basis

The balances of the Company’s assets measured at fair value on a recurring basis as of December 31, 2012, are as follows (in thousands):

	Level 1		Level 2		Level 3		Total Fair Value
Assets:
Investment in life settlements	$	—	$	—	$	113,441	$	113,441
Structured settlement receivables		—		—		1,680		1,680
Investment securities available for sale		—		12,147		—		12,147
	$	—	$	12,147	$	115,121	$	127,268

The balances of the Company’s assets measured at fair value on a recurring basis as of December 31, 2011, are as follows (in thousands):

	Level 1		Level 2		Level 3		Total Fair Value
Assets:
Investment in life settlements	$	—	$	—	$	90,917	$	90,917
Structured settlement receivables		—		—		12,376		12,376
Investment securities available for sale		—		57,242		—		57,242
	$	—	$	57,242	$	103,293	$	160,535

The Company values its investment in life settlement portfolio in two classes, non-premium financed and premium financed. In considering the categories, it is generally believed that market participants would require a lower risk premium for policies that were non-premium financed, while a higher risk premium would be required for policies that were premium financed.

($ in thousands)			Quantitative Information about Level 3 Fair Value Measurements
	Fair Value at 12/31/12		Aggregate death benefit 12/31/12		Valuation Technique (s)	Unobservable Input	Range ( Weighted Average)
Non-premium financed	$	36,039	$	206,450	Discounted cash flow	Discount rate	14.80% - 21.30%
						Life expectancy evaluation	9.1 years
Premium financed		77,402		866,706	Discounted cash flow	Discount rate	16.80% -  33.80%
						Life expectancy evaluation	10.9 years
Investment in life settlements	$	113,441	$	1,073,156	Discounted cash flow	Discount rate	(24.01%)
						Life expectancy evaluation	(10.6 years)
Structured settlements receivables	$	1,680			Discounted cash flow	Facility sales discount rates	6.25% - 15.35%

Following is a description of the methodologies used to estimate the fair values of assets and liabilities measured at fair value on a recurring basis and within the fair value hierarchy.

Investment in life settlements— The Company has elected to account for the life settlement policies it acquires using the fair value method. Due to the inactive market for life settlements, the Company uses a present

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value technique to estimate the fair value of our investments in life settlements, which is a Level 3 fair value measurement as the significant inputs are unobservable and require significant management judgment or estimation. The Company currently uses a probabilistic method of valuing life insurance policies, which we believe to be the preferred valuation method in the industry. The most significant assumptions which we estimate are the life expectancy of the insured and the discount rate.

In determining the life expectancy estimate, we analyze medical reviews from independent secondary market life expectancy providers (each a “LE provider”). An LE provider reviews the medical records and identifies all medical conditions it feels are relevant to the life expectancy of the insured. Debits and credits are then assigned by each LE provider to the individual’s health based on these medical conditions. The debit or credit that an LE provider assigns to a medical condition is derived from the experience of mortality attributed to this condition in the portfolio of lives that it monitors. The health of the insured is summarized by the LE provider into a life assessment of the individual’s life expectancy expressed both in terms of months and in mortality factor.

The resulting mortality factor represents an indication as to the degree to which the given life can be considered more or less impaired than a standard life having similar characteristics (e.g. gender, age, smoking, etc.). For example, a standard insured (the average life for the given mortality table) would carry a mortality rating of 100%. A similar but impaired life bearing a mortality rating of 200% would be considered to have twice the chance of dying earlier than the standard life. Historically, the Company has procured the majority of its life expectancy reports from two life expectancy report providers and only used AVS life expectancy reports for valuation purposes. Beginning in the quarter ended September 30, 2012, the Company began utilizing life expectancy reports from 21st Services for valuation purposes and began averaging or “blending,” the results of the two life expectancy reports to establish a composite mortality factor. However, when “blending” the AVS and 21st Services life expectancy reports, if the difference in the probability of mortality between the reports is greater than 150%, the Company will reduce the higher mortality factor until the difference is 150%.

The probability of mortality for an insured is then calculated by applying the blended life expectancy estimate to a mortality table. The mortality table is created based on the rates of death among groups categorized by gender, age, and smoking status. By measuring how many deaths occur during each year, the table allows for a calculation of the probability of death in a given year for each category of insured people. The probability of mortality for an insured is found by applying the mortality rating from the life expectancy assessment to the probability found in the actuarial table for the insured’s age, sex and smoking status. As discussed above in Use of Updated Life Expectancies and Change in Mortality Table in Management’s Discussion and Analysis of Financial Condition and Results of Operations, the Company has historically applied an actuarial table developed by a third party. However, beginning in the quarter ended September 30, 2012, the Company transitioned to a table developed by the U.S. Society of Actuaries known as the 2008 Valuation Basic Table, or the 2008 VBT. However, because the 2008 VBT table does not account for anticipated improvements in mortality in the insured population, the table was modified by outside consultants to reflect these expected mortality improvements. The Company believes that the change in mortality table does not materially impact the valuation of its life insurance policies and that its adoption of a modified 2008 VBT table is consistent with modified tables used by market participants and third party medical underwriters. The Company believes that the change in mortality table does not materially impact the valuation of its life insurance policies and that its adoption of a modified 2008 VBT table is consistent with modified tables used by market participants and third party medical underwriters.

The mortality rating is used to create a series of best estimate probablistic cash flows. This probability represents a mathematical curve known as a mortality curve. This curve is then used to generate a series of expected cash flows over the remaining expected lifespan of the insured and the corresponding policy. A discounted present value calculation is then used to determine the value of the policy. If the insured dies earlier than expected, the return will be higher than if the insured dies when expected or later than expected.

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The calculation allows for the possibility that if the insured dies earlier than expected, the premiums needed to keep the policy in force will not have to be paid. Conversely, the calculation also considers the possibility that if the insured lives longer than expected, more premium payments will be necessary. Based on these considerations, each possible outcome is assigned a probability and the range of possible outcomes is then used to create a price for the policy.

Life expectancy sensitivity analysis

As is the case with most market participants at December 31, 2012, the Company used a blend of life expectancies that are provided by two third-party LE providers. These are estimates of an insured’s remaining years. If all of the insured lives in the Company’s life settlement portfolio live six months shorter or longer than the life expectancies provided by these third parties, the change in fair market value would be as follows (dollars in thousands):

Life Expectancy Months Adjustment	Value		Change in Value
+6		95,658		(17,783	)
-		113,441		—
-6		132,540		19,099

As noted above, the Company takes an average, or blend, of the two life expectancy reports to derive a composite mortality factor, unless the probability of mortality between the reports is greater than 150%. In such instances and as reflected in the fair market value at December 31, 2012, the Company will cap the higher mortality factor at amount that is 150% above the lower mortality factor, which ultimately reduces the mortality factor inputted into the Company’s fair value model. At December 31, 2012, had the Company not implemented such a cap on affected policies, the fair value of the Company’s portfolio would have increased from the reported amount by $9.5 million. Additionally, the Company lengthened the life expectancy inputs to its fair value model on 45 policies with life expectancy reports that were more than two years old at December 31, 2012 based on the average lengthening reported on the 149 policies where update life expectancy reports were received. Had the Company not implemented such an adjustment on affected policies, the fair value of the Company’s portfolio would have increased from the reported amount by $5.8 million.

Discount rate

The discount rate incorporates current information about market interest rates, the credit exposure to the insurance company that issued the life insurance policy and our estimate of the risk premium an investor in the policy would require.

The Company believes that investors in esoteric assets such as life insurance policies typically target yields averaging between 12%—17% for investments of more than a 5 year duration, and had historically used a 15%—17% range of discount rates to value its life insurance policies. In the third quarter of 2011 and in the immediate aftermath of becoming aware of the USAO investigation, the Company substantially increased the discount rates inputted into its fair value model as it believed that the USAO Investigation along with certain unfavorable court decisions unrelated to the Company contributed to a contraction in the marketplace that has continued to reverberate. Since that time, the Company has been re-evaluating its discount rates at the end of every reporting period in order to reflect the estimated discount rates that could reasonably be used in a market transaction involving the Company’s portfolio of life insurance policies. In doing so, the Company relies on management insight, engages third party consultants to corroborate its assessment, engages in discussions with other market participants and potential financing sources and extrapolates the discount rate underlying actual sales of policies.

Although the Company believes that its entry into the Non-Prosecution Agreement had a positive effect on the market generally and for premium financed life insurance policies specifically, the Company believes that, when given the choice to invest in a policy that was associated with the Company’s premium finance business and a similar policy without such an association, all else being equal, an investor would have generally opted to

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invest in the policy that was not associated with the Company’s premium finance business. However, since entering into the Non-Prosecution Agreement, investors have required less of a risk premium to transact in these policies and the Company expects that, in time, investors will continue to require less of a risk premium to transact in policies associated with its premium finance business.

Credit exposure of insurance company

The company considers the financial standing of the issuer of each policy typically, we seek to hold policies issued by insurance companies with investment-grade ratings of at least single-A. At December 31, 2012, the Company had six life insurance policies issued by one carrier that was rated non-investment grade by S&P at December 31, 2012. In order to compensate a market participant for the perceived credit and challenge risks associated with these policies, the Company applied an additional 300 basis point risk premium.

Estimated risk premium

As of December 31, 2012, the Company owned 214 policies with an aggregate investment in life settlements of $113.4 million. Of these 214 policies, 171 were previously premium financed and are valued using discount rates that range from 16.80% to 33.80%. The remaining 43 policies are valued using discount rates that range from 14.80% to 21.30%. As of December 31, 2012, the weighted average discount rate calculated based on death benefit used in valuing the policies in our life settlement portfolio was 24.01%.

The discount rate incorporates current information about market interest rates, the credit exposure to the insurance company that issued the life insurance policy and our estimate of the risk premium an investor in the policy would require. The extent to which the fair value could vary in the near term has been quantified by evaluating the effect of changes in the weighted average discount rate on the death benefit used to estimate the fair value. If the weighted average discount rate were increased or decreased by 1/2 of 1% and the other assumptions used to estimate fair value remained the same, the change in fair market value would be as follows (dollars in thousands):

Market interest rate sensitivity analysis

Weighted Average Rate Calculated Based on Death Benefit	Rate Adjustment			Value		Change in Value
23.51%		-.50	%		116,300		2,859
24.01%		—			113,441		—
24.51%		+.50	%		110,694		(2,747	)

Future changes in the discount rates we use to value life insurance policies could have a material effect on our yield on life settlement transactions, which could have a material adverse effect on our business, financial condition and results of our operations.

At the end of each reporting period we re-value the life insurance policies using our valuation model in order to update our loan impairment valuation for loans receivable and our estimate of fair value for investments in policies held on our balance sheet. This includes reviewing our assumptions for discount rates and life expectancies as well as incorporating current information for premium payments and the passage of time.

Structured settlement receivables— All structured settlements that were acquired subsequent to July 1, 2010 were marked to fair value. Structured settlements that were acquired prior to July 1, 2010 were recorded at cost. We make this election because it is our intention to sell these assets within the next twelve months. Structured settlements are purchased at effective yields which are fixed. Purchase discounts are accreted into interest income using the effective-interest method for those structured settlements marked to fair value. As of December 31, 2012, the Company had 36 newly-acquired structured settlements with an estimated fair value of $1.7 million. The average sales discount rate for these newly-acquired structured settlements was 9.25%.

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Changes in Fair Value

The following tables provide a roll-forward in the changes in fair value for the year ended December 31, 2012, for all assets for which the Company determines fair value using a material level of unobservable (Level 3) inputs (in thousands):

Life Settlements:
Balance, December 31, 2011	$	90,917
Purchase of policies		130
Acquired in foreclosure		5,724
Unrealized change in fair value		(5,660	)
Transfers into level 3		—
Trannsfers out of level 3		—
Sale of policies		(5,334	)
Premiums paid		27,804
Policies lapsed/written off		(140	)
Balance, December 31, 2012	$	113,441
Changes in fair value included in earnings for the period relating to assets held at December 31, 2012	$	(5,898	)

The Company recorded unrealized change in fair value of approximately $5.7 million and a gain of approximately $570,000 for the year ended December 31, 2012 and 2011, respectively.

Structured Settlements:
Balance, December 31, 2011	$	12,376
Purchase of contracts		24,313
Unrealized change in fair value		1,823
Sale of contracts		(36,615	)
Collections		(217	)
Transfers into level 3		—
Transfers out of level 3		—
Balance, December 31, 2012	$	1,680
Changes in fair value included in earnings for the period relating to assets held at December 31, 2012	$	255

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The following tables provide a roll-forward in the changes in fair value for the year ended December 31, 2011, for all assets for which the Company determines fair value using a material level of unobservable (Level 3) inputs (in thousands).

Life Settlements:
Balance, December 31, 2010	$	17,138
Purchase of policies		50,480
Acquired in foreclosure		6,409
Unrealized change in fair value		570
Premiums paid		16,320
Transfers into Level 3		—
Transfers out of Level 3		—
Balance, September 30, 2011	$	90,917
Changes in fair value included in earnings for the period relating to assets held at December 31, 2011	$	570
Structured Settlements:
Balance, December 31, 2010	$	1,446
Purchase of contracts		27,545
Unrealized change in fair value		5,302
Sale of contracts		(21,723	)
Collections		(194	)
Transfers into Level 3		—
Transfers out of Level 3		—
Balance, September 30, 2011		12,376
Changes in fair value included in earnings for the period relating to assets held at December 31, 2011	$	4,218

There were no transfers of financial assets between levels of the fair value hierarchy during the years ended December 31, 2012 and 2011.

Assets and liabilities measured at fair value on a non-recurring basis

Following is a description of the methodologies used to estimate the fair values of assets and liabilities measured at fair value on a non-recurring basis, and the level within the fair value hierarchy in which those measurements are typically classified.

The Company’s impaired loans are measured at fair value on a non-recurring basis, as the carrying value is based on the fair value of the underlying collateral. The method used to estimate the fair value of impaired collateral-dependent loans depends on the nature of the collateral. For collateral that has lender protection insurance coverage, the fair value measurement is considered to be Level 2 as the insured value is an observable input and there are no material unobservable inputs. For collateral that does not have lender protection insurance coverage, the fair value measurement is considered to be Level 3 as the estimated fair value is based on a model whose significant inputs are the life expectancy of the insured and the discount rate, which are not observable inputs. As of December 31, 2012 and 2011, the Company had insured impaired loans with a net carrying value, which includes principal, accrued interest, and accreted origination fees, net of impairment, of approximately $112,000 and $14.1 million, respectively. As of December 31, 2012 and 2011, the Company had uninsured impaired loans (Level 3) with a net carrying value of approximately $3.6 million and $10.2 million, respectively. The provision for losses on loans receivable related to impaired loans was approximately 515,000 and $7.6 million for the years ended December 31, 2012 and 2011, respectively. See Notes 9 and 13.

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NOTE 15—NOTES AND DEBENTURE PAYABLE

A summary of the principal balances of notes payable included in the consolidated balance sheet as of December 31, 2012 and 2011 is as follows (in thousands):

	Total Notes Payble
	December 31,		December 31,
	2012		2011
Cedar Lane	$	—	$	19,104
White Oak, Inc.		—		173
Total		—		19,277

Cedar Lane

On December 2, 2009, Imperial PFC Financing II, LLC was formed to enter into a financing agreement with Cedar Lane Capital, LLC, so that Imperial PFC Financing II, LLC could purchase Imperial Premium Finance notes for cash or a participation interest in the notes. The financing agreement was for a minimum of $5 million to a maximum of $250 million. The agreement was for a term of 28 months from the time of borrowing and the borrowings bore an annual interest rate of 14%, 15% or 16%, depending on the class of lender and were compounded monthly. All of the assets of Imperial PFC Financing II, LLC served as collateral under this credit facility. The Company was subject to several restrictive covenants under the facility. The restrictive covenants included items such as restrictions on the ability to pay dividends or incur additional indebtedness by Imperial PFC Financing II, LLC. The Company believes it was in compliance at December 31, 2012. The outstanding principal at December 31, 2012 and 2011 was approximately zero and $19.1 million, respectively, and accrued interest was approximately zero and $5.4 million, respectively. The Company was required to retain 2% of the principal amount of each loan made to the borrower, for purposes of indemnifying the facility for any breaches of representations, warranties or covenants of the borrower, as well as to fund collection efforts, if required. All remaining amounts under this facility were repaid during the year and December 31, 2012. Our lender protection insurer ceased providing us with lender protection insurance under this credit facility on December 31, 2010.

White Oak, Inc.

On February 5, 2009, Imperial Life Financing II, LLC, was formed to enter into a loan agreement with White Oak Global Advisors, LLC, so that Imperial Life Financing II, LLC could purchase Imperial Premium Finance notes in exchange for cash or a participation interest in the notes.

In September 2009, the Imperial Life Financing II, LLC loan agreement was amended to increase the commitment by $12 million to a total commitment of $27 million. All of the assets of Imperial Life Financing II, LLC served as collateral under this facility. The notes were payable 6-26 months from issuance and the facility matured on March 11, 2012. The outstanding principal at December 31, 2012 and 2011, was zero and $172,000, respectively, and accrued interest was zero and $104,000, respectively. After December 31, 2010, we ceased originating premium finance loans with lender protection insurance. All remaining amounts under this facility were repaid during the year ended December 31, 2012.

NOTE 16—SEGMENT INFORMATION

The Company operates in two segments: life finance and structured settlements. The life finance segment provides financing in the form of loans to trusts and individuals for the payment of premiums of life insurance policies until the end of the third quarter of 2011. Beginning in 2011, in this segment, the Company also acquired life insurance policies through policy purchases in the secondary and tertiary markets. The structured settlements segment purchases structured settlements from individuals.

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Recipients of structured settlements are permitted to sell their deferred payment streams to a structured settlement purchaser pursuant to state statutes that require certain disclosures, notice to the obligors and state court approval. Through such sales, the Company purchases a certain number of fixed, scheduled future settlement payments on a discounted basis in exchange for a single lump sum payment.

The performance of the segments is evaluated on the segment level by members of the Company’s senior management team. Cash and income taxes generally are managed centrally. Performance of the segments is based on revenue and cost control.

Segment results and reconciliation to consolidated net income were as follows (in thousands):

	Year Ended December 31,
	2012			2011			2010
Life finance
Income
Agency fee income	$	—		$	6,470		$	10,146
Interest income		1,685			7,751			18,326
Origination income		500			6,480			19,938
Gain on forgiveness of debt		—			5,023			7,599
Unrealized change in fair value of life settlements		(5,660	)		570			10,156
Realized gain on life settlements, net		151			5			1,951
Change in equity investments		—			—			(1,284	)
Servicing fee income		1,183			1,814			403
Gain on maturities of life settlements with subrogation rights, net		6,090			3,188			—
Other		75			198			131
		4,024			31,499			67,366
Direct segment expenses
Interest expense		1,250			8,229			24,388
Provision for losses on loan receivables		515			7,589			4,476
Loss on loans payoffs and settlements, net		125			3,837			4,981
Amortization of deferred costs		1,868			6,076			24,465
Personnel costs		5,746			6,840			3,185
Marketing costs		—			16			3
Legal fees		3,676			2,658			1,537
Professional fees		1,777			1,831			1,551
Insurance		1,115			237			110
Other selling, general and administrative expenses		1,763			1,636			3,938
		17,835			38,949			68,634
Segment operating loss	$	(13,811	)	$	(7,450	)	$	(1,268	)
Structured settlements
Income
Realized gain on sale of structured settlements	$	11,509		$	5,817		$	6,595
Interest income		329			553			334
Unrealized change in fair value of structured settlements		1,822			5,302			2,477
Servicing fee income		—			—			11
Other income		334			261			113
		13,994			11,933			9,530

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	Year Ended December 31,
	2012			2011			2010
Direct segment expenses
Personnel costs		9,634			9,170			4,821
Marketing costs		5,023			6,088			5,034
Legal fees		2,331			2,243			1,438
Professional fees		1,955			1,418			834
Insurance		1,108			320			153
Other selling, general and administrative expenses		1,496			2,712			786
		21,547			21,951			13,066
Segment operating loss	$	(7,553	)	$	(10,018	)	$	(3,536	)
Consolidated
Segment operating loss		(21,364	)		(17,468	)		(4,804	)
Unallocated income
Interest and dividends on investment securities available for sale		391			640			—
Other income		674			142			—
Unallocated expenses
Interest expense		4			297			3,767
Personnel costs		707			2,928			4,364
Department of Justice		—			8,000			—
Legal fees		20,047			7,196			469
Professional fees		3,202			2,730			1,581
Insurance		107			199			95
Other selling, general and administrative expenses		307			1,162			617
		24,374			22,512			10,893
Loss before income taxes		(44,673	)		(39,198	)		(15,697	)
Benefit for income taxes		(39	)		—			—
Net loss	$	(44,634	)	$	(39,198	)	$	(15,697	)

Segment assets and reconciliation to consolidated total assets were as follows (in thousands):

	December 31,		December 31,
	2012		2011
Direct segment assets
Life finance	$	123,581	$	138,520
Structured settlements		6,862		17,155
		130,443		155,675
Other unallocated assets		29,899		66,924
	$	160,342	$	222,599

Amounts are attributed to the segment that holds the assets. There are no intercompany sales and all intercompany account balances are eliminated in segment reporting.

NOTE 17—COMMITMENTS AND CONTINGENCIES

In accordance with applicable accounting guidance, the Company establishes an accrued liability for litigation and regulatory matters when those matters present loss contingencies that are both probable and estimable. In such cases, there may be an exposure to loss in excess of any amounts accrued. When a loss contingency is not both probable and estimable, the Company does not establish an accrued liability. As a

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litigation or regulatory matter develops, the Company, in conjunction with any outside counsel handling the matter, evaluates on an ongoing basis whether such matter presents a loss contingency that is probable and estimable. If, at the time of evaluation, the loss contingency related to a litigation or regulatory matter is not both probable and estimable, the matter will continue to be monitored for further developments that would make such loss contingency both probable and estimable. Once the loss contingency related to a litigation or regulatory matter is deemed to be both probable and estimable, the Company will establish an accrued liability with respect to such loss contingency and record a corresponding amount of litigation-related expense. The Company continues to monitor the matter for further developments that could affect the amount of the accrued liability that has been previously established. Excluding expenses of external legal service providers, litigation-related fees of $14.3 million and $14.0 million was recognized for the years ended December 31, 2012 and December 31, 2011, respectively.

Lease Agreements

The Company leases office space under operating lease agreements. On May 1, 2012, the Company renewed its lease to expire on October 31, 2014. The lease contains a provision for a 5% increase of the base rent annually on the anniversary of the rent commencement date.

Future minimum payments under operating leases for years subsequent to December 31, 2012 are as follows:

Year Ended December 31,
2013	$	547,051
2014		477,183
	$	1,024,234

Rent expense under these leases was approximately $528,000, 546,000 and $545,000 for the years ended December 31, 2012, 2011 and 2010, respectively. Rent expense is recorded on a straight-line basis over the term of the lease. The difference between actual rent payments and straight-line rent expense is recorded as deferred rent. Deferred rent in the amount of $102,000 and $110,000 at December 31, 2012 and 2011, respectively, is included in other liabilities in the accompanying consolidated balance sheets.

Employment Agreements

In connection with our initial public offering, we entered into employment agreements with certain of our executive officers. The agreement for our chief executive officer provides for substantial payments in the event that the executive terminates his employment with us due to a material change in the geographic location where such officer performs his duties or upon a material diminution of his base salary or responsibilities, with or without cause. For our chief executive officer, payments are equal to three times the sum of base salary and the average of the three years’ annual cash bonus, unless the triggering event occurs during the first three years of his employment agreement, in which case the payments are equal to six times base salary. For our chief executive officer, the agreement provides for bonus incentives based on pre-tax income thresholds.

On April 26, 2012, the Company entered into a Separation Agreement and General Release of Claims (the “Separation Agreement”) with its chief operating officer, Jonathan Neuman. As part of the Separation Agreement, Mr. Neuman resigned as a member of the Company’s board of directors and as an employee of Company. Pursuant to the Separation Agreement, the Company paid Mr. Neuman a separation payment of $1.4 million. The Separation Agreement does not include a covenant by Mr. Neuman to refrain from competing with Imperial, but does contain customary non-disparagement and non-solicitation provisions. The Separation Agreement provides releases by each party and also obligates the Company to continue to indemnify Mr. Neuman for his legal expenses substantially in the same manner contemplated by his employment agreement with the Company.

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On February 15, 2012, the Company entered into a retention arrangement with its Chief Financial Officer and Chief Credit Officer, Richard O’Connell, Jr. The arrangement provides that, in the event Mr. O’Connell’s employment is terminated without cause or Mr. O’Connell terminates his employment with the Company for good reason, in each case, prior to December 31, 2013, Mr. O’Connell will be entitled to 24 months’ base salary in addition to any accrued benefits. Additionally, unless Mr. O’Connell’s employment is terminated for cause, Mr. O’Connell will be entitled to a minimum bonus of $250,000 for each of 2012 and 2013, subject to the Company’s Board of Directors’ right to terminate the bonus payment in respect of 2013 prior to January 1, 2013. Except for the provisions relating to severance and other termination benefits, the terms of Mr. O’Connell’s Employment and Severance Agreement entered into with the Company as of November 4, 2010 remain in effect during the term of the retention arrangement and the provisions of the employment agreement relating to severance and other termination benefits will again be in effect following any termination of the retention arrangement if Mr. O’Connell is then employed by the Company.

During the first quarter of 2012, the Company also entered into severance and retention award agreements with certain of its executive officers (other than the CEO and CFO). The agreements generally provide for a minimum guaranteed bonus in each of 2012 and 2013 as well as severance payments equal to two years base salary in the event of termination by the Company without Cause (as defined in the respective agreement) provided the executive executes a general release of claims against the Company.

We do not have any general policies regarding the use of employment agreements, but may, from time to time, enter into such a written agreement to reflect the terms and conditions of employment of a particular named executive officer, whether at the time of hire or thereafter.

Subrogation Rights, net

Every credit facility entered into by subsidiaries of the Company between December 2007 and December 2010 to finance the premium finance lending business required lender protection insurance for each loan originated under such credit facility. Generally, when the Company exercises its right to foreclose on collateral, the Company’s lender protection insurer has the right to direct control or take beneficial ownership of the life insurance policy, subject to the terms and conditions of the lender protection insurance policy, including notice and timing requirements. Otherwise, the lender protection insurer maintains its salvage collection and subrogation rights. The lender protection insurer’s salvage collection and subrogation rights generally provide a remedy by which the insurer can seek to recover the amount of the lender protection claim paid plus premiums paid by it, expenses and interest thereon.

In those instances where the Company has foreclosed on the collateral, the lender protection insurer has maintained its salvage collection and subrogation rights and has been covering the cost of the ongoing premiums needed to maintain certain of these life insurance policies. However, the lender protection insurer may elect at any time to discontinue the payment of premiums which would result in lapse of the policies if the Company does not otherwise pay the premiums. The Company views these policies as having uncertain value because the lender protection insurer controls what happens to the policy from a payment of premium standpoint, and the amount of the lender protection insurer’s salvage collection and subrogation claim rights on any individual life insurance policy could equal the cash flow received by the Company with respect to any such policy. For these reasons, , the Company does not rely on these policies for revenue generation, and these policies are considered contingent assets and are not included in the amount of life settlements on the accompanying consolidated balance sheet.

The Company accounts for the maturities of life settlements with subrogation rights net of subrogation expenses as contingent gains in accordance with ASC 450, Contingencies and recognizes the revenue from the maturities of these policies when all contingencies are resolved.

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Class Action Litigation, Derivative Demands and the Insurance Coverage Declaratory Relief Complaint

The Class Action Litigation

Initially on September 29, 2011, the Company, and certain of its officers and directors were named as defendants in a putative securities class action filed in the Circuit Court of the 15th Judicial Circuit in and for Palm Beach County, Florida, entitled Martin J. Fuller v. Imperial Holdings, Inc. et al. Also named as defendants were the underwriters of the Company’s initial public offering. That complaint asserted claims under Sections 11, 12 and 15 of the Securities Act of 1933, as amended, alleging that the Company should have but failed to disclose in the registration statement for its initial public offering purported wrongful conduct relating to its life finance business which gave rise to the USAO Investigation. On October 21, 2011, an amended complaint was filed that asserts claims under Sections 11, 12 and 15 of the Securities Act of 1933, based on similar allegations. On October 25, 2011, defendants removed the case to the United States District Court for the Southern District of Florida.

On October 31, 2011, another putative class action case was filed in the Circuit Court of the 15th Judicial Circuit in and for Palm Beach County, Florida, entitled City of Roseville Employees Retirement System v. Imperial Holdings, et al, naming the same defendants and also bringing claims under Sections 11, 12 and 15 of the Securities Act based on similar allegations. On November 28, 2011, defendants removed the case to the United States District Court for the Southern District of Florida. The plaintiffs in the Fuller and City of Roseville cases moved to remand their cases back to state court. Those motions were fully briefed and argued.

On November 18, 2011, a putative class action case was filed in the United States District Court for the Southern District of Florida, entitled Sauer v. Imperial Holdings, Inc., et al, naming the same defendants and bringing claims under Sections 11 and 15 of the Securities Act of 1933 based on similar allegations.

On December 14, 2011, another putative class action case filed in United States District Court for the Southern District of Florida, entitled Pondick v. Imperial Holdings, Inc., et al., naming the same defendants and bringing claims under Sections 11, 12, and 15 of the Securities Act of 1933 based on similar allegations.

On February 24, 2012, the four putative class actions were consolidated and designated: Fuller v. Imperial Holdings et al. in the United States District Court for the Southern District of Florida, and lead plaintiffs were appointed.

In addition, the underwriters of the Company’s initial public offering have asserted that the Company is required by its Underwriting Agreement to indemnify the underwriters’ expenses and potential liabilities in connection with the litigation.

The Insurance Coverage Declaratory Relief Complaint

On June 13, 2012, Catlin Insurance Company (UK) Ltd. (“Catlin”) filed a declaratory relief action against the Company in the United States District Court for the Southern District of Florida. The complaint seeks a determination that there is no coverage under Catlin’s primary Directors, Officers and Company Liability Policy (the “Policy”) issued to the Company for the period February 3, 2012 to February 3, 2012, based on a prior and pending litigation exclusion (the “Exclusion”). Catlin also seeks a determination that it is entitled to reimbursement of the approximately $0.8 million in defense costs and fees advanced to the Company in the first quarter of 2012 under the Policy if it is determined that the Exclusion precludes coverage. As of the filing of this Annual Report on Form 10-K, the Company has not yet been served with the complaint.

Derivative Damands

On November 16, 2011, the Company’s Board of Directors received a shareholder derivative demand from Harry Rothenberg (the “Rothenberg Demand”), which was referred to the special committee for a thorough

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investigation of the issues, occurrences and facts relating to, connected to, and arising from the USAO Investigation referenced in the Rothenberg Demand. On May 8, 2012, the Company’s Board of Directors received a derivative demand made by another shareholder, Robert Andrzejczyk (the “Andrzejczyk Demand”). The Andrzejczyk Demand, like the Rothenberg Demand was referred to the special committee, which determined that it did not contain any allegations that differed materially from those alleged in the Rothenberg Demand. On July 20, 2012, the Company (as nominal defendant) and certain of the Company’s officers, directors, and a former director were named as defendants in a shareholder derivative action filed in the Circuit Court of the 15^th Judicial Circuit in and for Palm Beach County, Florida, entitled Robert Andrzejczyk v. Imperial Holdings, Inc. et al. The complaint alleges, among other things, that the Special Committee’s refusal of the Andrzejczyk Demand was improper.

The Proposed Settlement

On December 18, 2012, attorneys for the Company signed a Term Sheet for Global Settlement Regarding Imperial Holdings, Inc. Matters (the “Term Sheet”) setting forth the terms upon which each of the parties to the matters described in “Class Action Litigation, Derivative Demands and the Insurance Coverage Declaratory Relief Complaint” would be willing to settle the class action litigation and derivative actions as well as the declaratory relief action filed by Catlin, respectively. In addition to the Company’s attorneys, the Term Sheet was signed by attorneys representing the plaintiffs in the class action lawsuits and derivative actions instituted against the Company, as well attorneys for the Company’s director and officer liability insurance carriers (“D&O Carriers”), certain individual defendants named in the class actions and the underwriters in the Company’s initial public offering.

While non-binding and subject to certain contingencies, the Term Sheet provides that each of the parties will endeavor to enter into definitive settlement agreements in respect of the class action litigation, derivative action and insurance coverage declaratory relief complaint. Although definitive settlement agreements have not been executed as of the filing of this Annual Report on Form 10-K, the Company does expect to continue to work in good faith with the other parties to the Term Sheet to execute settlement agreements as soon as is practicable.

The terms of the class action settlement include a cash payment of $12.0 million, of which $11.0 million is to be contributed by the Company’s primary and excess D&O Carriers and the issuance of two million warrants for shares of the Company’s stock with an estimated value of $3.1 million at the date of the signing of the Term Sheet. The value of the warrants will be re-asses at issuance. The warrants will have a five-year term with an exercise price of $10.75 and will be issued when the settlement proceeds are distributed to the claimants. In addition, the underwriters in Company’s initial public offering are to waive their rights to indemnity and contribution by the Company. The Company established a reserve related to the proposed settlement of $15.1 million, which is included in other liabilities and a receivable for insurance recoverable from the Company’s D&O Carrier of $11.0 million, which is included in prepaid and other assets. The $4.1 million net effect of the proposed settlement is included in legal fees in the statement of operations for the year ended December 31, 2012.

The derivative actions would be settled for implementation of certain compliance reforms. The Term Sheet also contemplates payment by the Company’s primary D&O carrier of $1.5 million for legal fees in respect of the derivative actions and the contribution of $500,000 in the Company’s stock.

In addition, the Term Sheet contemplates that the Company will contribute $500,000 to a trust to cover certain claims under its director and officer liability insurance policies.

The Company established a reserve to the proposed derivative settlement and insurance trust of $2.5 million, which is included in other liabilities and a receivable for insurance recoverable from the Company’s D&O Carrier of $1.5 million, which is included in prepaid and other assets. The net effect of the settlement of $1.0 million is included in legal fees in the settlement of operations for the year ended December 31, 2012.

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The proposed settlement also requires the Company to advance legal fees to and indemnify certain individuals covered under the policies. The obligation to advance and indemnify on behalf of these individuals, while currently unquantifiable, may be substantial and could have a material adverse effect on the Company’s financial position and results of operations.

SEC Investigation

On February 17, 2012, the Company received a subpoena issued by the staff of the SEC seeking documents from 2007 through the present, generally related to the Company’s premium finance business and corresponding financial reporting. The SEC is investigating whether any violations of federal securities laws have occurred and the Company has been cooperating with the SEC regarding this matter. The Company is unable to predict what action, if any, might be taken in the future by the SEC or its staff as a result of the matters that are the subject of the subpoena or what impact, if any, the cost of responding to the subpoena might have on the Company’s financial position, results of operations, or cash flows. The Company has not established any provision for losses in respect of this matter.

Litigation

We are party to various other legal proceedings that arise in the ordinary course of business. We believe that the resolution of these other proceedings will not, based on information currently available to us, have a material adverse effect on our financial position or results of operations. See Note 22 – Subsequent Events.

NOTE 18—STOCKHOLDERS’ EQUITY

In January 2011, Imex Settlement Corporation executed an agreement to purchase from the Company 110,000 Series F Preferred Units for an $11.0 million promissory note. The Series F Preferred Units were non-voting and would be redeemed at any time by the Company for an amount equal to the applicable unreturned preferred capital amount allocable to the Series F Preferred Units sought to be redeemed, plus any accrued and unpaid preferred return. The cumulative rate of preferred return was equal to 16.0% of the outstanding units, per annum. The Series F Preferred units and the $11.0 million promissory note were extinguished as a result of the corporate conversion.

On February 3, 2011, the Company converted from a Florida limited liability company to a Florida corporation at which time the members of Imperial Holdings, LLC became shareholders of Imperial Holdings, Inc. As a limited liability company, the Company was treated as a partnership for United States federal and state income tax purposes and, as such, the Company was not subject to taxation. For all periods subsequent to such conversion, the Company will be subject to corporate-level United States federal and state income taxes.

As part of the corporate conversion, the Company entered into a plan of conversion with its shareholders on January 12, 2011, as amended on February 3, 2011. Pursuant to the plan of conversion, all of the Company’s outstanding common units and Series A, B, C, D and E preferred units and all principal and accrued and unpaid interest outstanding under our promissory note in favor of IMPEX Enterprises, Ltd. were converted into 2,300,273 shares of our common stock. The plan of conversion, which describes the corporate conversion as well as other transactions and agreements by the parties with an interest in the Company’s equity, reflects an agreement among its then shareholders as to the allocation of the shares of common stock to be issued to its shareholders in the corporate conversion. Thus, there is no formula that may be used to describe the conversion of a common unit or a Series A, B, C, D and E preferred unit into common stock.

Immediately after the corporate conversion and prior to the conversion of the Skarbonka debenture and the closing of the Company’s initial public offering on February 11, 2011, the Company’s shareholders consisted of two Florida corporations and one Florida limited liability company. These three shareholders reorganized so that their beneficial owners received the same number of shares of common stock of Imperial Holdings, Inc. issuable to the members of Imperial Holdings, LLC in the corporate conversion.

F-53

After the corporate conversion and prior to the closing of the Company’s initial public offering on February 11, 2011, the Company converted two phantom stock agreements it had with two employees into 27,000 shares of common stock and incurred stock compensation of approximately $290,000.

In addition, following the corporate conversion and upon the closing of the Company’s initial public offering on February 11, 2011, three shareholders received ownership of warrants that may be exercised for up to a total of 4,053,333 shares of the Company’s common stock at a weighted average exercise price of $14.51 per share. In connection with the over-allotment option, the same three shareholders received ownership of 187,188 additional warrants. One-third of the warrants will have an exercise price equal to 120% of the price of the common stock sold in this offering, one-third of the warrants will have an exercise price equal to 135% of the price of the common stock sold in this offering, and one-third of the warrants will have an exercise price equal to 150% of the price of the common stock sold in this offering. The warrants will expire 7 years after the date of issuance and the exercisability of the warrant will vest ratably over four years.

On February 11, 2011, the Company closed its initial public offering of 16,666,667 shares of common stock at $10.75 per share. On February 15, 2011 Imperial Holdings, Inc. sold an additional 935,947 shares of common stock. The sale was in connection with the over-allotment option Imperial Holdings, Inc. granted to its underwriters in connection with Imperial’s initial public offering. As a result, the total initial public offering size was 17,602,614 shares. All shares were sold to the public at a price of $10.75. The Company received net proceeds of approximately $174.2 million after deducting the underwriting discounts and commissions and our offering expenses.

After giving effect to (i) the corporate conversion, pursuant to which all outstanding common and preferred limited liability company units of Imperial Holdings, LLC (including all accrued and unpaid dividends thereon) and all principal and accrued and unpaid interest outstanding under the Company’s promissory note in favor of IMPEX Enterprises, Ltd. were converted into 2,300,273 shares of the Company’s common stock; (ii) the issuance of 27,000 shares of common stock to two employees pursuant to the terms of each of their respective phantom stock agreements; (iii) the conversion of a $30.0 million debenture into 1,272,727 shares of common stock (iv) the sale of 16,666,667 shares in the Company’s offering, and (v) the sale of 935,947 shares in connection with the over-allotment option granted to the Company’s underwriters, there are 21,202,614 shares of common stock outstanding. Up to an additional 4,240,521 shares of common stock will be issuable upon the exercise of warrants issued to existing members of the Company. Moreover, the Company reserved an aggregate of 1,200,000 shares of common stock under its Omnibus Plan, of which 665,956 options to purchase shares of common stock were granted to existing employees, directors and named executive officers at a weighted average exercise price of $10.75 per share, and an additional 3,507 shares of restricted stock had been granted under the plan subject to vesting. The remaining 530,537 shares of common stock are available for future awards.

NOTE 19—EMPLOYEE BENEFIT PLAN

The Company has adopted a 401(k) plan that covers employees that have reached 18 years of age and completed three months of service. The plan provides for voluntary employee contributions through salary reductions, as well as discretionary employer contributions. For the years ended December 31, 2012 and 2011, there were no employer contributions made.

F-54

NOTE 20—SUMMARY OF QUARTERLY FINANCIAL DATA (UNAUDITED)

The following tables set forth our unaudited consolidated financial data regarding operations for each quarter of fiscal 2012 and 2011 (in thousands). This information, in the opinion of management, includes all adjustments necessary, consisting only of normal and recurring adjustments, to state fairly the information set forth therein. Certain amounts previously reported have been reclassified to conform to the current presentation. These reclassifications had no net impact on the results of operations (in thousands).

	Fiscal 2012
	1st Quarter			2nd Quarter			3rd Quarter			4th Quarter
Revenues		9,966			16,183			(14,171	)		7,106
Income/(Loss) from Operations		(8,912	)		(625	)		(31,480	)		(3,656	)
Net Income/(Loss)		(8,871	)		(625	)		(31,475	)		(3,663	)

	Fiscal 2011
	1st Quarter			2nd Quarter		3rd Quarter			4th Quarter
Revenues		24,862			29,211		(1,763	)		(8,096	)
Income/(Loss) from Operations		7,425			13,788		(20,377	)		(40,034	)
Net Income/(Loss)		(571	)		12,605		(12,550	)		(38,682	)

NOTE 21—INCOME TAXES

The provision (benefit) for income taxes consisted of (in thousands):

	12/31/2012			12/31/2011
Current
Federal	$	—		$	—
State		—			—
		—			—
Deferred
Federal	$	(14,377	)	$	(9,474	)
State		(2,391	)		(1,575	)
		(16,768	)		(11,049	)
Valuation allowance increase	$	16,729			11,049
Benefit for income taxes	$	(39	)	$	—

The Company’s actual provision (benefit) for income taxes from continuing operations differ from the Federal expected income tax provision as follows (in thousands):

	2012						2011
	Amount			Rate			Amount			Rate
Tax Benefit at statutory rate	$	(15,636	)		35.00	%	$	(13,719	)		35.00	%
Increase (decrease) in taxes resulting from:
State tax (net of federal benefit)		(1,555	)		3.48			(1,045	)		2.67
Pre-conversion loss		—			—			678			(1.73	)
Pre-conversion deferred tax asset		—			—			223			(0.57	)
Other		423			(0.94	)		14			(0.04	)
Department of Justice settlement		—			—			2,800			(7.14	)
Valuation allowance increase		16,729			(37.45	)		11,049			(28.19	)
Benefit for income taxes	$	(39	)		0.09	%	$	—			0.00	%

F-55

On February 3, 2011, the Company converted from a Florida limited liability company to a Florida corporation (the “conversion”). Prior to the conversion the company was treated as a partnership for federal and state income tax purposes. As a partnership our taxable income and losses were attributed to our members, and accordingly, no provision or liability for income taxes was reflected in the accompanying consolidated financial statements for periods prior to the conversion.

As a result of the conversion of the Company from a partnership to a corporation, the company recorded a one-time deferred tax liability of approximately $4.5 million for the federal and state tax effects of cumulative differences between financial and tax reporting which existed at the time of the conversion. Pursuant to ASC 740 these deferred taxes were recorded in income tax expense for the year ending December 31, 2011.

Following the conversion and prior to the initial public offering, one of the founding members entered into a reorganization that allowed the Company to assume the corporate shareholder’s tax attributes. These tax attributes include approximately $11.2 million of net operating loss carryovers (“NOLs”). Accordingly, the Company recorded a one-time deferred tax asset of approximately $4.3 million related to these tax attributes and this amount was recorded as an income tax benefit. The utilization of the acquired NOLs is subject to an annual limitation based on the value of the Company at the time they were acquired. These NOLs expire starting in 2028.

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and tax liabilities were (in thousands):

	December 31,			December 31,
	2012			2011
Deferred tax assets:
Federal and State net operating loss carryforward	$	25,454		$	13,488
Allowance for doubtful accounts		1,969			3,362
Unrealized loss on available for sale investment securities		—			25
Unrealized loss on life and structured settlements, net		1,813			—
Litigation reserves		2,324			68
Other		693			704
Total gross deferred tax assets		32,253			17,647
Less valuation allowance		(27,803	)		(11,074	)
Total deferred tax assets		4,450			6,573
Deferred tax liabilities:
Unrealized gains on life and structured settlements		—			5,075
Gain on structured settlements deferred for tax purposes		4,436			1,498
Unrealized gain on available for sale investment securities		14
Other		—			—
Total gross deferred tax liabilities		4,450			6,573
Total net deferred tax asset (liability)	$	—		$	—

The Company evaluates its deferred tax assets to determine if valuation allowances are required. In its evaluation, management considers taxable loss carryback availability, expectations of sufficient future taxable

F-56

income, trends in earnings, existence of taxable income in recent years, the future reversal of temporary differences, and available tax planning strategies that could be implemented, if required. Valuation allowances are established based on the consideration of all available evidence using a more likely than not standard. Based on the Company’s evaluation, a full deferred tax valuation allowance was established against its net deferred tax assets as of December 31, 2012 and 2011. This valuation allowance was recognized as a charge to income tax expense. If the valuation allowance is reduced or eliminated, future tax benefits will be recognized as a reduction to income tax expense that will have a positive non-cash impact on net income and stockholders’ equity. The Company’s deferred tax asset valuation allowance would be reversed if and when it becomes more likely than not that the Company will generate sufficient taxable income in the future to utilize the tax benefits of the related deferred tax assets.

Generally, the amount of tax expense or benefit allocated to continuing operations is determined without regard to the tax effects of other categories of income or loss, such as other comprehensive income. However, an exception to the general rule is provided when, in the presence of a valuation allowance against deferred tax assets, there is a pretax loss from continuing operations and pretax income from other categories. In such instances, income from other categories must offset the current loss from operations, the tax benefit of such offset being reflected in continuing operations. For the period ended December 31, 2012 we reduced our deferred tax valuation allowance from continuing operations by $39,000 to reflect the future taxable income associated with unrealized gains in accumulated other comprehensive income.

The Federal and state NOL generated by the Company since its conversion to a corporation was approximately $54.8 million which expire beginning in 2031.

The Company’s income tax returns for all years are subject to examination. Various state jurisdiction tax years remain open to examination.

In February of 2013, the Company was notified by the Internal Revenue Service of its intention to examine the Company’s partnership return for the year ended December 31, 2010. Audit field work for this examination has not been scheduled.

The Company recognizes interest and penalties accrued related to unrecognized tax benefits in tax expense.

A reconciliation of the total amounts of unrecognized benefits at the beginning and end of the period was as follows (in thousands):

	December 31,		December 31,
	2012		2011
Balance as of beginning of period	$	6,295	$	—
Additions based on tax positions taken in the current year		—		6,295
Reductions of tax positions for prior years		—		—
Balance as of end of period	$	6,295	$	6,295

The recognition of the unrecognized tax benefits would result in a 0% decrease in the Company’s effective tax rate.

NOTE 22—SUBSEQUENT EVENTS

Bridge Facility

On December 21, 2012, Greenwood opened a securities intermediary account, which provides for a securities intermediary to hold Greenwood’s life insurance policies on its behalf. On March 27, 2013,

F-57

Greenwood, as issuer, and the Company and OLIPP IV, LLC, as guarantors, entered into an indenture with Wilmington Trust Company, as indenture trustee, under which an aggregate principal amount of $45 million in senior secured bridge notes were issued (the “Bridge Facility”).

Interest under the Bridge Facility accrues at 12% per annum for the first nine months from the issue date, and increases by 600 basis points thereafter to 18% per annum. Up to 25% of the net proceeds from the Bridge Facility after transaction expenses may be used by the Company for general corporate purposes, including for premium payments on life insurance policies not owned by Greenwood, with the balance used to pay fees and expenses associated with the Bridge Facility and for premiums on life insurance policies owned by Greenwood. The Bridge Facility is guaranteed by the Company and secured by the cash on account at Greenwood and its portfolio of life insurance policies. The Bridge Facility is also secured by pledges of the equity interests of Greenwood’s direct parent and each subsidiary of the Company, other than its licensed life settlement provider, that holds life insurance policies that are not subject to the subrogation rights of the Company’s lender protection insurance carrier.

Notes under the Bridge Facility were issued at 92% of their face amount and are pre-payable at par at any time. The Bridge Facility is subject to mandatory prepayment provisions upon the issuance of additional debt, equity raises and asset sales. Mandatory prepayments are generally at par although certain asset sales or a change of control each trigger a mandatory prepayment obligation at 109%. The Bridge Facility requires the maintenance of a 2 times asset coverage ratio and six months of cash on hand to pay interest on the Bridge Facility and premiums on life insurance policies owned by Greenwood. Upon a failure to maintain requisite cash on hand, the Company may be obligated to sell policies to repay the lenders under the Bridge Facility. There can be no assurance, however, that we will be able to obtain capital on more favorable terms or at all.

As of December 31, 2012, OLIPP IV (“OLIPP”) contributed 191 life settlements with an estimated fair value of approximately $104.6 million to Greenwood. In accordance with ASC 810, Consolidation, the Company determined that OLIPP was the primary beneficiary of Greenwood having a controlling financial interest in the variable interest enity and therefore, the Company will consolidate Greenwood in its financial statements beginning in the first quarter of 2013.

21st Services, LLC (“21st Services”) and AVS Underwriting LLC (“AVS”)

On January 22, 2013, 21st Services announced significant revisions to its underwriting methodology. On February 4, 2013, 21st Services then announced that it was correcting errors discovered in its revised methodology. According to the provider, these revisions have generally been understood to lengthen the average reported life expectancy furnished by 21st Services by 19% and, accordingly, will likely negatively impact the valuation of the Company’s portfolio of life insurance policies. However, the Company has not received life expectancy reports from 21st Services that utilize its revised methodology and the fair value of the Company’s portfolio of life insurance policies at December 31, 2012 does not take into account changes to life expectancy estimates that may result from 21st Services updated methodology. While the Company is still evaluating the general impact that these revisions might have on the value of its portfolio, the Company may determine to cease utilizing, or adjust the weighting of, 21st Services reports as an input into its fair value model in future periods as market practice responds to the adjusted methodology. Additionally, the Company’s other life expectancy provider, AVS Underwriting LLC (“AVS”), filed for federal bankruptcy protection under Chapter 11 on February 12, 2013. The Company cannot, at this time, predict what impact the bankruptcy filing will have on the Company’s ability to procure life expectancy reports from AVS in the future, AVS’s ability to continue its operations or whether other market participants will continue to use AVS life expectancy reports for valuation purposes going forward. As a result of these developments, the Company may need to adjust the application of life expectancy reports in its fair value methodology or source reports from different life expectancy providers in future periods, which could have a material impact on the Company’s fair value calculations.

F-58

EXHIBIT INDEX

In reviewing the agreements included as exhibits to this report, please remember they are included to provide you with information regarding their terms and are not intended to provide any other factual or disclosure information about the Company, its subsidiaries or other parties to the agreements. The Agreements contain representations and warranties by each of the parties to the applicable agreement. These representations and warranties have been made solely for the benefit of the other parties to the applicable agreement and:

• should not in all instances be treated as categorical statements of fact, but rather as a way of allocating the risk to one of the parties if those statements prove to be inaccurate;

• have been qualified by disclosures that were made to the other party in connection with the negotiation of the applicable agreement, which disclosures are not necessarily reflected in the agreement;

• may apply standards of materiality in a way that is different from what may be viewed as material to you or other investors; and

• were made only as of the date of the applicable agreement or such other date or dates as may be specified in the agreement and are subject to more recent developments.

Accordingly, these representations and warranties may not describe the actual state of affairs as of the date they were made or at any other time. We acknowledge that, notwithstanding the inclusion of the foregoing cautionary statements, we are responsible for considering whether additional specific disclosures of material information regarding material contractual provisions are required to make the statements in this report not misleading. Additional information about the Company may be found elsewhere in this report and the Company’s other public files, which are available without charge through the SEC’s website at http://www.sec.gov.

Exhibit Number	Exhibit Description	Form	Exhibit	Filing Date	Filed Herewith
3.1	Articles of Incorporation of Registrant.	S-1/A	3.1	10/1/10
3.2	Bylaws of Registrant.	8-K/A	3.2	8/16/12
4.1	Form of Common Stock Certificate.	S-1/A	4.1	11/10/10
4.2	Indenture, dated as of March 27, 2013, by and among Greenwood Asset Portfolio, LLC, the guarantors named therein and Wilmington Trust Company as indenture trustee.				*
10.1†	Employment Agreement between the Registrant and Antony Mitchell dated November 8, 2010.	S-1/A	10.1	11/10/10
10.2†	Employment Agreement between the Registrant and Richard O’Connell dated November 4, 2010.	S-1/A	10.3	11/10/10
10.3†	Severance Agreement, dated February 15, 2012, between Imperial Holdings, Inc. and Richard O’Connell, Jr.	8-K	10.1	2/15/12
10.4†	Letter Agreement, dated February 15, 2012, between Imperial Holdings, Inc. and Richard O’Connell, Jr.	8-K	10.2	2/15/12
10.5†	Severance Agreement, dated January 31, 2012, between Imperial Holdings, Inc. and Michael Altschuler.	10-K	10.7	10/5/12
10.6†	First Amendment to Severance Agreement, effective February 13, 2012, between Imperial Holdings, Inc. and Michael Altschuler.	10-K	10.8	10/5/12

E-1

Exhibit Number	Exhibit Description	Form	Exhibit	Filing Date	Filed Herewith
10.7†	Letter Agreement, dated January 31, 2012, between Imperial Holdings, Inc. and Michael Altschuler.	10-K	10.9	10/5/12
10.8†	Severance Agreement, dated February 9, 2012, between Imperial Holdings, Inc. and Miriam Martinez.	10-K	10.10	10/5/12
10.9†	First Amendment to Severance Agreement, effective February 13, 2012, between Imperial Holdings, Inc. and Miriam Martinez.	10-K	10.11	10/5/12
10.10†	Letter Agreement, dated February 9, 2012, between Imperial Holdings, Inc. and Miriam Martinez.	10-K	10.12	10/5/12
10.11	Separation Agreement and General Release of Claims between Imperial Holdings, Inc. and Jonathan Neuman, dated April 26, 2012.	8-K	10.2	4/30/12
10.12†	Imperial Holdings 2010 Omnibus Incentive Plan.	S-1/A	10.6	10/1/10
10.13†	2010 Omnibus Incentive Plan Form of Stock Option Award Agreement.	S-1/A	10.7	10/1/10
10.14	Omnibus Claims Settlement Agreement dated as of September 8, 2010 by and between Imperial PFC Financing, LLC and Lexington Insurance Company.	S-1/A	10.8	11/19/10
10.15	Pledge and Security Agreement dated September 8, 2010 by Imperial Premium Finance, LLC.	S-1/A	10.9	11/19/10
10.16	Master Trust Indenture dated as of September 24, 2010 by and among Imperial Settlements Financing 2010, LLC as the Issuer, Portfolio Financial Servicing Company as the Initial Master Servicer, and Wilmington Trust Company as the Trustee and Collateral Trustee.	S-1/A	10.15	11/10/10
10.17	Series 2010-1 Supplement dated as of September 24, 2010 to the Master Trust Indenture dated as of September 24, 2010 by and among Imperial Settlements Financing 2010, LLC as the Issuer, Portfolio Financial Servicing Company as the Initial Servicer, and Wilmington Trust Company as the Trustee and Collateral Trustee.	S-1/A	10.16	11/10/10
††10.18	Purchase and Sale Agreement, dated as of December 30, 2011, by and among Compass Settlements LLC and Washington Square Financial, LLC.	10-K	10.36	10/5/12
10.19	Non-Prosecution Agreement between Imperial Holdings, Inc. and the United States Attorney’s Office for the District of New Hampshire, dated April 30, 2012.	8-K	10.1	4/30/12
10.20	Form of Note Purchase Agreement, to be dated as of March 27, 2013, by and among Greenwood Asset Portfolio, LLC, the guarantors named therein and the purchasers thereto.				*
21.1	Subsidiaries of the Registrant.				*

E-2

Exhibit Number	Exhibit Description	Form	Exhibit	Filing Date	Filed Herewith
23.1	Consent of Grant Thornton LLP.				*
31.1	Chief Executive Officer Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.				*
31.2	Chief Financial Officer Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.				*
32.1	Chief Executive Officer Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.				*
					*
32.2	Chief Financial Officer Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.				*
101	Interactive Data Files.				*
101.INS	XBRL Instance Document				*
101.SCH	XBRL Taxonomy Extension Schema Document				*
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document				*
101.DEF	XBRL Taxonomy Definition Linkbase Document				*
101.LAB	XBRL Taxonomy Extension Label Linkbase Document 10.1 & 10.2				*
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

†† Certain portions of the exhibit have been omitted pursuant to a confidential treatment order. An unredacted copy of the exhibit has been filed separately with the United States Securities and Exchange Commission pursuant to a request for confidential treatment.

* Filed herewith.

** Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933 not filed for such purposes of Section 18 of the Securities Exchange Act of 1934 and otherwise are not subject to liability under such sections.

† Management compensatory arrangement

E-3

EX-4.2

Exhibit 4.2

GREENWOOD ASSET PORTFOLIO, LLC,

as Issuer,

and the Guarantors named herein

12% Senior Secured Increasing Rate Notes due 2014

INDENTURE

Dated as of March 27, 2013

WILMINGTON TRUST, NATIONAL ASSOCIATION,

as Indenture Trustee

TABLE OF CONTENTS

		Page
ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE			3
SECTION 1.01.	Definitions		3
SECTION 1.02.	Other Definitions		19
SECTION 1.03.	Rules of Construction		19
ARTICLE 2 THE SECURITIES			20
SECTION 2.01.	Forms; Denominations		20
SECTION 2.02.	Execution, Authentication, Delivery and Dating		21
SECTION 2.03.	Interest, Payment of Note Balance of Outstanding Notes		22
SECTION 2.04.	Registration of Transfer and Exchange of Notes		22
SECTION 2.05.	Mutilated, Destroyed, Lost or Stolen Notes		24
SECTION 2.06.	Holder Lists		25
SECTION 2.07.	Persons Deemed Owners		25
SECTION 2.08.	Collateral Account		25
SECTION 2.09.	Payments on the Notes		28
SECTION 2.10.	Compliance with Withholding and Other Requirements		29
SECTION 2.11.	Cancellation		29
SECTION 2.12.	Lien of the Indenture		30
SECTION 2.13.	Uniform Commercial Code Matters		30
SECTION 2.14.	CUSIP Numbers		30
ARTICLE 3 REDEMPTION			31
SECTION 3.01.	Applicability of Article		31
SECTION 3.02.	Optional Redemption; Notices to Indenture Trustee		31
SECTION 3.03.	Effect of Notice of Redemption		31

-i-

TABLE OF CONTENTS

(continued)

		Page
SECTION 3.04.	Deposit of Redemption Price		31
SECTION 3.05.	Notes Redeemed in Part		32
SECTION 3.06.	Mandatory Redemption of Notes		32
SECTION 3.07.	Change of Control		33
ARTICLE 4 COVENANTS			33
SECTION 4.01.	Deposit and Payment of Notes		33
SECTION 4.02.	Reports and Other Information		33
SECTION 4.03.	Limitation on Incurrence of Indebtedness		36
SECTION 4.04.	Limitation on Restricted Payments		37
SECTION 4.05.	Dividend and Other Payment Restrictions Affecting Subsidiaries		38
SECTION 4.06.	Asset Sales		39
SECTION 4.07.	Transactions with Affiliates		39
SECTION 4.08.	Further Instruments and Acts		41
SECTION 4.09.	Liens		41
SECTION 4.10.	Maintenance of Office or Agency		41
SECTION 4.11.	Amendment of Security Documents		41
SECTION 4.12.	Use of Proceeds; Ownership of Portfolio Policies		42
SECTION 4.13.	Sale Trigger		42
SECTION 4.14.	Asset Coverage Ratio		42
SECTION 4.15.	Policy Valuation		43
SECTION 4.16.	Separateness of Issuer		43
SECTION 4.17.	Limited Purpose		43
SECTION 4.18.	Maintenance of Existence; Compliance		43

-ii-

TABLE OF CONTENTS

(continued)

		Page
SECTION 4.19.	Maintenance of Property; Insurance		43
SECTION 4.20.	Inspection of Property; Books and Records; Discussions		44
ARTICLE 5 DEFAULTS AND REMEDIES			44
SECTION 5.01.	Events of Default		44
SECTION 5.02.	Acceleration		47
SECTION 5.03.	Other Remedies		47
SECTION 5.04.	Waiver of Past Defaults		47
SECTION 5.05.	Control by Majority		48
SECTION 5.06.	Limitation on Suits		48
SECTION 5.07.	Rights of the Holders to Receive Payment		48
SECTION 5.08.	Collection Suit by Indenture Trustee		48
SECTION 5.09.	Indenture Trustee May File Proofs of Claim		49
SECTION 5.10.	Priorities		49
SECTION 5.11.	Waiver of Stay or Extension Laws		49
ARTICLE 6 TRUSTEE			50
SECTION 6.01.	Duties of Indenture Trustee		50
SECTION 6.02.	Rights of Indenture Trustee		51
SECTION 6.03.	Individual Rights of Indenture Trustee		55
SECTION 6.04.	Indenture Trustee’s Disclaimer		55
SECTION 6.05.	Reserved		55
SECTION 6.06.	Compensation and Indemnity		55
SECTION 6.07.	Replacement of Indenture Trustee		57
SECTION 6.08.	Successor Indenture Trustee by Merger		58

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TABLE OF CONTENTS

(continued)

		Page
SECTION 6.09.	Eligibility; Disqualification		58
SECTION 6.10.	Confidential Information		58
SECTION 6.11.	Securities Intermediary		59
ARTICLE 7 SATISFACTION AND DISCHARGE			62
SECTION 7.01.	Satisfaction and Discharge of Indenture		62
SECTION 7.02.	Application of Trust Money		63
ARTICLE 8 AMENDMENTS AND WAIVERS			63
SECTION 8.01.	Without Consent of the Holders		63
SECTION 8.02.	With Consent of the Holders		63
SECTION 8.03.	Revocation and Effect of Consents and Waivers		64
SECTION 8.04.	Notation on or Exchange of Notes		65
SECTION 8.05.	Indenture Trustee to Sign Amendments		65
SECTION 8.06.	Payment for Consent		65
SECTION 8.07.	Additional Voting Terms; Calculation of Principal Amount		65
ARTICLE 9 GUARANTEES			66
SECTION 9.01.	Guarantees		66
SECTION 9.02.	Limitation on Liability		68
SECTION 9.03.	Successors and Assigns		68
SECTION 9.04.	No Waiver		69
SECTION 9.05.	Modification		69
SECTION 9.06.	Non Impairment		69
ARTICLE 10 SECURITY DOCUMENTS			69
SECTION 10.01.	Collateral and Security Documents		69

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TABLE OF CONTENTS

(continued)

		Page
SECTION 10.02.	Reserved		70
SECTION 10.03.	Release of Collateral		70
SECTION 10.04.	Permitted Releases Not To Impair Lien		70
SECTION 10.05.	Suits To Protect the Collateral		70
SECTION 10.06.	Authorization of Receipt of Funds by the Indenture Trustee Under the Security Documents		71
SECTION 10.07.	Purchaser Protected		71
SECTION 10.08.	Powers Exercisable by Receiver or Indenture Trustee		71
SECTION 10.09.	Release Upon Termination of the Issuer’s Obligations		71
ARTICLE 11 MISCELLANEOUS			72
SECTION 11.01.	Notices		72
SECTION 11.02.	Certificate and Opinion as to Conditions Precedent		73
SECTION 11.03.	Statements Required in Certificate or Opinion		73
SECTION 11.04.	When Notes Disregarded		74
SECTION 11.05.	Rules by Indenture Trustee and Note Registrar		74
SECTION 11.06.	Legal Holidays		74
SECTION 11.07.	GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF IMMUNITY		74
SECTION 11.08.	Successors		75
SECTION 11.09.	Multiple Originals		75
SECTION 11.10.	Table of Contents; Headings		75
SECTION 11.11.	Indenture Controls		75
SECTION 11.12.	Severability		75

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TABLE OF CONTENTS

			Page
EXHIBIT INDEX
Exhibit A	-	Form of Note and Indenture Trustee’s Certificate of Authentication	A
Exhibit B	-	Form of Transferor Certificate	B-1
		Form of Transferee Certificate	B-2
Exhibit C	-	Indenture Trustee Signature Page Legend	C
SCHEDULE INDEX
Schedule 4.03		Existing Indebtedness	S-1
Schedule 4.07		Equityholders / Stockholders Agreements	S-2

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INDENTURE dated as of March 27, 2013 among Greenwood Asset Portfolio, LLC, a Delaware limited liability company (the “Issuer”), the Guarantors, and Wilmington Trust, National Association, as indenture trustee (as more fully defined in Section 1.01, the “Indenture Trustee”).

PRELIMINARY STATEMENT

The Issuer has duly authorized the execution and delivery of this Indenture to provide for the issuance of its senior secured increasing rate notes (the “Notes”) to be issued pursuant to this Indenture in an aggregate amount not to exceed $45,000,000. All covenants and agreements made by the Issuer herein are for the benefit and security of the Holders and the Indenture Trustee (collectively, the “Secured Parties”). The Issuer has entered into this Indenture, and the Indenture Trustee has accepted the trust created hereby, for good and valuable consideration, the receipt and sufficiency of which have been and are hereby acknowledged by the parties hereto.

All things necessary to make the Notes, whenever the Notes are (or have been) executed by the Issuer and authenticated and delivered by the Indenture Trustee hereunder and duly issued by the Issuer, the valid and legally binding obligations of the Issuer enforceable in accordance with their terms, and to make this Indenture a valid and legally binding agreement of the Issuer enforceable in accordance with its terms, have been done.

GRANTING CLAUSE

The Issuer hereby Grants to the Indenture Trustee, for the benefit and security of the Secured Parties, all of its right, title and interest, whether now owned or hereafter acquired in, to and under the following property:

(a) all Portfolio Policies and all rights of the Issuer with respect thereto (including without limitation the right to direct the related Carrier (through the Securities Intermediary or otherwise) to pay the proceeds of Portfolio Policies to the Collateral Account) and all payments thereon or with respect thereto, (b) the Accounts, all Financial Assets, and money, instruments, investment property, and other property credited thereto or deposited therein and all income from the investment of funds therein, (c) the Issuer’s rights and benefits, but none of its obligations or burdens, under each Transaction Document to which the Issuer is a party or pursuant to which it has rights, (d) all accounts, chattel paper, deposit accounts, documents, general intangibles, goods, instruments, investment property, letter-of-credit rights, letters of credit and money, consisting of, arising from, or relating to, any of the foregoing, (e) all other property of the Issuer, and (f) all proceeds, accessions, profits, income, benefits, substitutions and replacements, whether voluntary or involuntary, of or with respect to any of the foregoing (collectively, the “Trust Estate”).

Such Grant is made, however, in trust, to secure the Notes equally and ratably without prejudice, priority or distinction between any Note and any other Note by reason of difference in time of issuance or otherwise, except as expressly provided in this Indenture, and to secure, subject to and in accordance with the priorities set forth herein, (i) the payment of all amounts due on the Notes in accordance with their respective terms, and (ii) the payment of all other sums payable under this Indenture and the other Transaction Documents (collectively, the “Secured Obligations”).

Until payment in full of the Secured Obligations and except to the extent otherwise provided in this Indenture, the Issuer does hereby constitute and irrevocably appoint the Indenture Trustee the true and lawful attorney of the Issuer, with full power (in the name of the Issuer or otherwise), to exercise all rights of the Issuer with respect to the Trust Estate, and to ask, require, demand, receive, settle, compromise, compound and give acquittance for any and all moneys and claims for moneys due and to become due under or arising out of any of the Trust Estate, to indorse any checks or other instruments or orders in connection therewith and to file any claims or take any action or institute any proceedings which the Indenture Trustee may deem to be necessary or advisable. The power of attorney granted pursuant to this Indenture and all authority hereby conferred are granted and conferred solely to protect the Indenture Trustee’s interest in the Trust Estate, and shall not impose any duty upon the Indenture Trustee to exercise any power. This power of attorney shall be irrevocable as one coupled with an interest prior to the payment in full of all the Secured Obligations.

This Indenture shall constitute a security agreement under the laws of the State of New York. In addition to any other rights available under this Indenture or any property included in the Trust Estate, or otherwise available at law or in equity, the Indenture Trustee shall have all rights and remedies of a secured party under the laws of the State of New York and other applicable law to enforce the security interest granted herein in the manner and at the times specified herein and, in addition, shall have the right, subject to compliance with any mandatory requirements of applicable law, to sell or apply any item of the Trust Estate in accordance with the terms hereof at public or private sale.

It is expressly agreed that anything therein contained to the contrary notwithstanding, the Issuer shall remain liable under any instruments or other agreements included in the Trust Estate to perform all the obligations assumed by it thereunder, all in accordance with and pursuant to the terms and provisions thereof, and except as otherwise expressly provided herein, the Indenture Trustee shall not have any obligations or liabilities under such instruments or other agreements by reason of or arising out of this Indenture, nor shall the Indenture Trustee be required or obligated in any manner to perform or fulfill any obligations of the Issuer under or pursuant to such instruments or other agreements or to make any payment, to make any inquiry as to the nature or sufficiency of any payment received by it, to present or file any claim, or to take any action to collect or enforce the payment of any amounts which may have been assigned to it or to which it may be entitled at any time or times.

The Indenture Trustee acknowledges such Grant, accepts the trusts hereunder in accordance with the express provisions hereof, and agrees to perform its duties herein pursuant to the express terms hereof.

GENERAL COVENANT

AND IT IS HEREBY COVENANTED AND DECLARED that the Notes are to be authenticated and delivered by the Indenture Trustee, that the Trust Estate is to be held by or on behalf of the Indenture Trustee and that monies in the Trust Estate are to be applied by the

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Indenture Trustee for the benefit of the Holders, subject to the further covenants, conditions and trusts hereinafter set forth, and each of the Issuer and each of the Guarantors does hereby represent and warrant, and covenant and agree, to and with the Indenture Trustee, for the equal and proportionate benefit and security of each Holder, as follows:

ARTICLE 1

DEFINITIONS AND INCORPORATION BY REFERENCE

SECTION 1.01. Definitions.

“Accounts” means the Collateral Account and the Securities Account.

“Affiliate” of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For purposes of this definition, “control” (including, with correlative meanings, the terms “controlling,” “controlled by” and “under common control with”), as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise.

“Asset Coverage Ratio” means, at any time, the ratio which the most recent Policy Valuation of the Portfolio Policies bears to the aggregate amount of all outstanding principal of and accrued and unpaid interest on the Notes at such time.

“Asset Sale” means the sale, conveyance, transfer or other disposition (whether in a single transaction or a series of related transactions) of property or assets of any Group Company (including of any Life Policy owned by any Group Company and including Capital Stock owned by such Group Company in any Subsidiary) (each referred to in this definition as a “disposition”), other than:

(a) a disposition of Cash Equivalents or obsolete, damaged or worn out property or equipment in the ordinary course of business;

(b) any Restricted Payment or Permitted Investment that is permitted to be made, and is made, under Section 4.04;

(c) the lease, assignment or sublease of any real or personal property in the ordinary course of business;

(d) dispositions consisting of Permitted Liens;

(e) dispositions of receivables in connection with the compromise, settlement or collection thereof in the ordinary course of business or in bankruptcy or similar proceedings and exclusive of factoring or similar arrangements;

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(f) any surrender or waiver of contract rights or the settlement of, release of, recovery on or surrender of contract, tort or other claims of any kind; and

(g) the sale of structured settlements in the ordinary course of business by Washington Square Financial, LLC and its Wholly Owned Subsidiaries.

“Board of Directors” means, as to any Person, the Board of Directors or Board of Managers, as applicable, of such Person (or, if such Person is a partnership, the board of directors or other governing body of the general partner of such Person) or any duly authorized committee thereof. References in this Indenture to directors (on a Board of Directors) shall also be deemed to refer to managers (on a Board of Managers).

“Budget” means a schedule showing (i) the aggregate amount of Permitted Payments to be made during each Monthly Reporting Period prior to the Final Maturity Date, including the amount of Permitted Payments to be made on the Issue Date (it being understood that the Issuer shall ensure that in no event shall the aggregate amount of all such projected Permitted Payments exceed the Permitted Payments Amount), (ii) the aggregate projected premium payments on the Portfolio Policies for each Monthly Reporting Period prior to the Final Maturity Date, (iii) the cash interest payments due on the Notes for each Monthly Reporting Period prior to the Final Maturity Date and (iv) the projected amount of fees and expenses that will be due and payable to the Indenture Trustee and the Securities Intermediary for each Monthly Reporting Period prior to the Final Maturity Date to the extent such amounts are not included in the item described in clause (i) of this definition.

“Business Day” means a day other than a Saturday, Sunday or other day on which banking institutions are authorized or required by law to close in New York City, Birmingham, Michigan or the city in which the Indenture Trustee’s corporate trust office is located.

“Capital Stock” means:

(1) in the case of a corporation, corporate stock or shares;

(2) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock;

(3) in the case of a partnership or limited liability company, partnership or membership interests (whether general or limited); and

(4) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person;

in each case to the extent treated as equity in accordance with GAAP.

“Carrier” means an insurance company that issued any of the Life Policies (or its successor).

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“Cash Balance Report” means a written report showing, for the next Monthly Reporting Period (or for the current Monthly Reporting Period in the case of the first Cash Balance Report) (i) the cash balance in the Collateral Account as of the Monthly Reporting Date on which such report is required to be delivered, (ii) (A) the projected premium payments on the Portfolio Policies for the following six Monthly Reporting Periods (or, if shorter, until the Final Maturity Date) plus (B) the cash interest payments due on the Notes for the following six Monthly Reporting Periods (or, if shorter, until the Final Maturity Date), (iii) whether a Sale Trigger has occurred, and if not then the estimated date on which the Sale Trigger will occur assuming no repayments of the Note Balances are made, all projected disbursements are made from the Collateral Account in accordance with the Budget, and no additional deposits are made to the Collateral Account for any reason, and (iv) a calculation indicating whether the Issuer is in compliance with the Asset Coverage Ratio as of such Monthly Reporting Date (such calculation to show the Policy Valuation in the aggregate for the Portfolio Policies and for each Portfolio Policy).

“Cash Equivalents” means:

(1) U.S. Dollars;

(2) securities issued or directly and fully guaranteed or insured by the U.S. government maturing not more than two years from the date of acquisition;

(3) certificates of deposit, time deposits and eurodollar time deposits with maturities of one year or less from the date of acquisition, bankers’ acceptances, with maturities not exceeding one year and with any commercial bank having capital and surplus in excess of $500 million and whose long-term debt is rated “A” or the equivalent thereof by Moody’s or S&P;

(4) repurchase obligations for underlying securities of the types described in clauses (2) and (3) above entered into with any financial institution meeting the qualifications specified in clause (3) above;

(5) commercial paper issued by a corporation (other than an Affiliate of the Issuer) rated at least “A-1” or the equivalent thereof by Moody’s or S&P, and maturing within one year after the date of acquisition;

(6) readily marketable direct obligations issued by any state of the United States of America or any political subdivision thereof having one of the two highest rating categories obtainable from either Moody’s or S&P, with maturities not exceeding two years from the date of acquisition;

(7) Indebtedness issued by Persons (other than an Affiliate of the Issuer) with a rating of “A” or higher from S&P or “A-2” or higher from Moody’s, with maturities not exceeding two years from the date of acquisition; and

(8) investment funds investing at least 95% of their assets in securities of the types described in clauses (1) through (7) above.

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“Change of Control” means the occurrence of any of the following events:

(i) the sale, lease or transfer, in one or a series of related transactions, of all or substantially all the assets of Holdings; or

(ii) Holdings becomes aware (by way of a report or any other filing pursuant to Section 13(d) of the Exchange Act, proxy, vote, written notice or otherwise) of the acquisition by any Person or group (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act, or any successor provision), including any group acting for the purpose of acquiring, holding or disposing of securities (within the meaning of Rule 13d-5(b)(1) under the Exchange Act or any successor provision), in a single transaction or in a related series of transactions, by way of merger, consolidation or other business combination or purchase of beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act, or any successor provision), of more than 50% of the total voting power of the Voting Stock of Holdings; or

(iii) individuals who on the Issue Date constituted the Board of Directors of Holdings (together with any new directors whose election by the Board of Directors of Holdings, or whose nomination for election by the shareholders of Holdings, was approved or ratified by a vote of a majority of the directors of Holdings, then still in office who were either directors on the Issue Date or whose election or nomination was previously so approved or ratified) cease for any reason to constitute a majority of the Board of Directors of Holdings, then in office.

“Code” means the United States Internal Revenue Code of 1986, as amended.

“Collateral” means the Trust Estate and all other property subject, or purported to be subject from time to time, to a Lien under any Security Documents.

“Contingent Obligations” means, with respect to any Person, any obligation of such Person guaranteeing any leases, dividends or other obligations that do not constitute Indebtedness (“primary obligations”) of any other Person (the “primary obligor”) in any manner, whether directly or indirectly, including, without limitation, any obligation of such Person, whether or not contingent:

(1) to purchase any such primary obligation or any property constituting direct or indirect security therefor,

(2) to advance or supply funds:

(a) for the purchase or payment of any such primary obligation; or

(b) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor; or

(3) to purchase property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation against loss in respect thereof.

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“Default” means any event which is, or after notice or passage of time or both would be, an Event of Default.

“Eligible Account” means a segregated account, which may be an account maintained by the Indenture Trustee, which is either (a) maintained with a depositary institution or trust company whose long-term unsecured debt obligations are rated at least “A” by S&P and “A2” by Moody’s and whose short-term unsecured obligations are rated at least “A-1” by S&P and “P-1” by Moody’s; or (b) a trust account or similar account maintained at the corporate trust department of the Indenture Trustee or the Securities Intermediary held in the name of and for the benefit of the Secured Parties and the Issuer.

“Eligible Investments” means one or both of the following:

(1) obligations of, or guaranteed as to timely payment of principal and interest by, the United States or any agency or instrumentality thereof when such obligations are backed by the full faith and credit of the United States; and

(2) repurchase obligations with a term of not more than thirty days, 102 percent collateralized, for underlying securities of the types described in clause (1) above, entered into with any bank or trust company or its respective affiliate incorporated under the laws of the United States or any state, provided that, at the date of acquisition, such investment, and/or the commercial paper or other short term debt obligation of such bank or trust company has a short-term credit rating or ratings from Moody’s and/or S&P, each at least P-1 or A-1;

provided, that (i) no instrument shall be an Eligible Investment if such instrument evidences a right to receive only interest payments with respect to the obligations underlying such instrument, and (ii) no Eligible Investment may be purchased at a price in excess of par. Eligible Investments may include those Eligible Investments with respect to which the Indenture Trustee or an Affiliate thereof provides services; and provided, further, that the Issuer may not exercise any voting rights affecting Eligible Investments.

Investments in any Eligible Investments are not obligations of, or endorsed or guaranteed by, the Indenture Trustee or its Affiliates and are not insured by the Federal Deposit Insurance Corporation. The Indenture Trustee and its Affiliates may provide various services for any Eligible Investments and may be paid fees for such services.

“Encumbered Policy” means a Life Policy that is subject to the subrogation, salvage or similar rights of a lender protection insurer as of the Issue Date.

“Equity Interests” means Capital Stock and all warrants, options or other rights to acquire Capital Stock (but excluding any debt security that is convertible into, or exchangeable for, Capital Stock).

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time.

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“ERISA Affiliate” means any trade or business (whether or not incorporated) that, together with any Obligor, is treated as a single employer under Section 414 of the Code.

“ERISA Event” means (a) any Reportable Event; (b) the existence with respect to any Plan of a Prohibited Transaction; (c) any failure by any Pension Plan to satisfy the minimum funding standards (within the meaning of Section 412 of the Code or Section 302 of ERISA) applicable to such Pension Plan, including any “accumulated funding deficiency” (as defined in Section 412 of the Code or Section 302 of ERISA), whether or not waived; (d) the filing pursuant to Section 412 of the Code or Section 303 of ERISA of an application for a waiver of the minimum funding standard with respect to any Pension Plan, the failure to make by its due date a required installment under Section 412(m) of the Code with respect to any Pension Plan or the failure by any Obligor or any ERISA Affiliate to make any required contribution to a Multiemployer Plan; (d) the incurrence by any Obligor or any ERISA Affiliate of any liability under Title IV of ERISA with respect to the termination of any Pension Plan, including but not limited to the imposition of any Lien in favor of the PBGC or any Pension Plan; (f) a determination that any Pension Plan is, or is expected to be, in “at risk” status (within the meaning of Title IV of ERISA); (g) the receipt by any Obligor or any ERISA Affiliate from the PBGC or a plan administrator of any notice relating to an intention to terminate any Pension Plan or to appoint a trustee to administer any Pension Plan under Section 4042 of ERISA; (h) the incurrence by any Obligor or any ERISA Affiliate of any liability with respect to the withdrawal or partial withdrawal from any Pension Plan or Multiemployer Plan; or (i) the receipt by any Obligor or any ERISA Affiliate of any notice, or the receipt by any Multiemployer Plan from a Obligor or any ERISA Affiliate of any notice, concerning the imposition of Withdrawal Liability or a determination that a Multiemployer Plan is, or is expected to be, Insolvent, in Reorganization or in endangered or critical status, within the meaning of Section 432 of the Code or Section 305 or Title IV of ERISA.

“Exchange Act” means the United States Securities Exchange Act of 1934, as amended, and the rules and regulations of the SEC promulgated thereunder.

“Fair Market Value” means, with respect to any asset or property, the price which could be negotiated in an arm’s-length transaction, for cash, between a willing seller and a willing and able buyer, neither of whom is under undue pressure or compulsion to complete the transaction.

“Financial Asset” has the meaning assigned to such term in Section 8-102(a)(9) of the Uniform Commercial Code.

“Financial Officer” of any Person shall mean the Chief Financial Officer, principal accounting officer, Treasurer, Assistant Treasurer or Controller of such Person.

“Final Maturity Date” shall mean the Payment Date occurring in September, 2014.

“GAAP” means generally accepted accounting principles in the United States set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as have been approved by a significant segment of the accounting profession. For the purposes of this Indenture, the term “consolidated” with respect to any Person shall mean such Person consolidated with its Subsidiaries.

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“Governmental Authority” means the government of the United States or any other nation, or of any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government.

“Grant” means to mortgage, pledge, bargain, sell, warrant, alienate, demise, convey, assign, transfer, grant a security interest in, create a right of setoff against, deposit, set over and confirm. A Grant of any item of Collateral shall include all rights, powers and options (but none of the obligations) of the granting party thereunder, including without limitation the immediate and continuing right to claim for, collect, receive and give receipt for principal and interest payments in respect of such item of Collateral and all other monies and proceeds payable thereunder, to give and receive notices and other communications, to make waivers or other agreements, to exercise all rights and options, to bring proceedings in the name of the granting party or otherwise, and generally to do and receive anything which the granting party is or may be entitled to do or receive thereunder or with respect thereto.

“Group Companies” means Holdings and its Subsidiaries.

“guarantee” means a guarantee (other than by endorsement of negotiable instruments for collection in the ordinary course of business), direct or indirect, in any manner (including, without limitation, letters of credit and reimbursement agreements in respect thereof), of all or any part of any Indebtedness or other obligations.

“Guarantee” means any guarantee of the obligations of the Issuer under this Indenture and the Notes by any Person in accordance with the provisions of this Indenture.

“Guarantors” means Holdings and Parent.

“Hedging Obligations” means, with respect to any Person, the obligations of such Person under:

(1) currency exchange, interest rate or commodity swap agreements, currency exchange, interest rate or commodity cap agreements and currency exchange, interest rate or commodity collar agreements; and

(2) other agreements or arrangements designed to protect such Person against fluctuations in currency exchange, interest rates or asset prices.

“Holder” means the Person in whose name a Note is registered on the Note Registrar’s books.

“Holdings” means Imperial Holdings, Inc., a Florida corporation.

“Increase Date” shall mean the Payment Date occurring in December, 2013.

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“Incur” means issue, assume, guarantee, incur or otherwise become liable for; provided, however, that any Indebtedness or Capital Stock of a Person existing at the time such Person becomes a Subsidiary (whether by merger, amalgamation, consolidation, acquisition or otherwise) shall be deemed to be Incurred by such Person at the time it becomes a Subsidiary.

“Indebtedness” means, with respect to any Person:

(1) the principal and premium (if any) of any indebtedness of such Person, whether or not contingent, (a) in respect of borrowed money, (b) evidenced by bonds, notes, debentures or similar instruments or letters of credit or bankers’ acceptances (or, without duplication, reimbursement agreements in respect thereof), (c) representing the deferred and unpaid purchase price of any property (except (i) any such balance that constitutes a trade payable or similar obligation to a trade creditor Incurred in the ordinary course of business and (ii) any liabilities accrued in the ordinary course of business), which purchase price is due more than six months after the date of placing the property in service or taking delivery and title thereto, (d) in respect of capitalized lease obligations, or (e) representing any Hedging Obligations, if and to the extent that any of the foregoing indebtedness (other than letters of credit and Hedging Obligations) would appear as a liability on a balance sheet (excluding the footnotes thereto) of such Person prepared in accordance with GAAP;

(2) to the extent not otherwise included, any obligation of such Person to be liable for, or to pay, as obligor, guarantor or otherwise, on the Indebtedness of another Person (other than by endorsement of negotiable instruments for collection in the ordinary course of business); and

(3) to the extent not otherwise included, Indebtedness of another Person secured by a Lien on any asset owned by such Person (whether or not such Indebtedness is assumed by such Person); provided, however, that the amount of such Indebtedness will be the lesser of: (a) the Fair Market Value (as determined in good faith by the Issuer) of such asset at such date of determination, and (b) the amount of such Indebtedness of such other Person;

provided, however, that notwithstanding the foregoing, Indebtedness shall be deemed not to include (1) Contingent Obligations incurred in the ordinary course of business and not in respect of borrowed money; (2) deferred or prepaid revenues; (3) purchase price holdbacks in respect of a portion of the purchase price of an asset to satisfy warranty or other unperformed obligations of the respective seller; or (4) any earn-out obligations, purchase price adjustments, deferred purchase money amounts, milestone and/or bonus payments (whether performance or time-based), and royalty, licensing, revenue and/or profit sharing arrangements, in each case, characterized as such and arising expressly out of purchase and sale contracts, development arrangements or licensing arrangements.

“Indenture” means this Indenture as amended or supplemented from time to time.

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“Indenture Trustee” means the party named as such in this Indenture until a successor replaces it in accordance with the applicable provisions of this Indenture and, thereafter, means such successor.

“Independent Financial Advisor” means an accounting, appraisal or investment banking firm or consultant, in each case of nationally recognized standing, that is, in the good faith determination of the Issuer, qualified to perform the task for which it has been engaged.

“Initial Note Balance” means, for any Note, the principal amount stated on the face of such Note at the time it is issued.

“Interest Period” means the period from and including the Issue Date to but excluding the initial Payment Date, and thereafter each period from and including a Payment Date to but excluding the following Payment Date (or the Final Maturity Date, in the case of the last Interest Period).

“Investments” means, with respect to any Person, all investments by such Person in other Persons (including Affiliates) in the form of loans (including guarantees), advances or capital contributions (excluding accounts receivable, trade credit and advances to customers and commission, travel and similar advances to officers, employees and consultants made in the ordinary course of business), purchases or other acquisitions for consideration of Indebtedness, Equity Interests or other securities issued by any other Person and investments that are required by GAAP to be classified on the balance sheet of such Person in the same manner as the other investments included in this definition to the extent such transactions involve the transfer of cash or other property.

“IRS” means the U.S. Internal Revenue Service.

“Issue Date” means March 27, 2013.

“Issuer Order” means a written request or order signed in the name of the Issuer by an Officer of the Issuer.

“Lien” means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law (including any conditional sale or other title retention agreement, any lease in the nature thereof, any option or other agreement to sell or give a security interest in and any filing of or agreement to give any financing statement under the Uniform Commercial Code (or equivalent statutes) of any jurisdiction); provided that in no event shall an operating lease be deemed to constitute a Lien.

“Life Policy” means any life insurance policy (including an Encumbered Policy).

“Material Adverse Effect” means a material adverse effect on (a) the business, property, operations, condition (financial or otherwise) or prospects of (i) the Issuer, or (ii) Holdings and its Subsidiaries taken as a whole, (b) the validity or enforceability of this Agreement or any of the other Transaction Documents or the rights or remedies of the Indenture Trustee or the Holders hereunder or thereunder or of the Liens created by any of the Security Documents, (c)

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the value of the Portfolio Policies, or (d) the ability of any Obligor to perform its obligations under the Transaction Documents; provided, however, that Holdings’ impending liquidity shortfall projected to occur in the second quarter of 2013 and disclosed in Holdings’ filings with the Securities and Exchange Commission shall not constitute a material adverse effect on the Issuer, Holdings or any of Holdings’ subsidiaries or the business, property, operations, condition or prospects of any of them.

“Monthly Reporting Date” means the third day (or if such day is not a Business Day, the next Business Day thereafter) prior to the start of a Monthly Reporting Period, except for the first Monthly Reporting Date which shall be the Issue Date.

“Monthly Reporting Period” means each calendar month, with the first Monthly Reporting Period being the period from and including the Issue Date to and including April 30, 2013, and with the last Monthly Reporting Period ending on the Final Maturity Date.

“Moody’s” means Moody’s Investors Service, Inc. or any successor to the rating agency business thereof.

“Multiemployer Plan” means a Plan that is a multiemployer plan as defined in Section 4001(a)(3) of ERISA.

“Net Proceeds” means (i) the aggregate cash proceeds received by Holdings or any other Group Company in respect of any Asset Sale or the maturity of any Life Policy excluding the assumption by the acquiring Person of Indebtedness relating to the disposed assets, net of the direct costs relating to such Asset Sale (including, without limitation, legal, accounting and investment banking fees, and brokerage and sales commissions), and any taxes paid or payable as a result thereof (after taking into account any available tax credits or deductions and any tax sharing arrangements to the extent related thereto), amounts required to be applied to the repayment of principal, premium (if any) and interest on Indebtedness (other than the Secured Obligations) required to be paid as a result of such transaction (or other obligations payable to a lender protection insurer as a result of the maturity or sale of, or other transaction involving, an Encumbered Policy or deposits, escrows or holdbacks required to be made as a result of such transaction), and any deduction of appropriate amounts to be provided by such Group Company as a reserve in accordance with GAAP against any liabilities associated with the asset disposed of in such transaction and retained by such Group Company after such sale or other disposition thereof, including, without limitation, pension and other post-employment benefit liabilities and liabilities against any indemnification obligations associated with such transaction, or (ii) the aggregate cash proceeds received by Holdings or any other Group Company in respect of the issue of any Capital Stock or the incurrence of Indebtedness, net of the direct costs relating thereto (including, without limitation, legal, accounting and investment banking fees, discount, and brokerage and sales commissions).

“Note Balance” means, with respect to any Note, as of any date, the Initial Note Balance of such Note less any principal previously paid on such Note.

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“Note Interest Rate” means 12% per annum; provided that for any Note outstanding after the Increase Date, the Note Interest Rate thereon shall be 18% per annum on and after the Increase Date.

“Note Purchase Agreement” means the Note Purchase Agreement, dated as of March 27, 2013, among the Issuer, the Guarantors, and each purchaser party thereto.

“Obligations” means any principal, interest, penalties, fees, indemnifications, reimbursements (including, without limitation, reimbursement obligations with respect to letters of credit and bankers’ acceptances), damages and other liabilities payable under the documentation governing any Indebtedness.

“Obligors” means the Issuer and Guarantors.

“Officer” of an Obligor means the Chairman of the Board, Chief Executive Officer, Chief Financial Officer, President, any Executive Vice President, Senior Vice President or Vice President, the Treasurer or the Secretary of such Obligor or of Imperial Holdings, Inc., as managing member.

“Officers’ Certificate” means a certificate signed on behalf of the Issuer by two Officers of the Issuer (or of Imperial Holdings, Inc., as managing member of the Issuer’s managing member), one of whom must be the principal executive officer, the principal financial officer, the treasurer or the principal accounting officer of the Issuer (or of Imperial Holdings, Inc., as managing member of the Issuer’s managing member) that meets the requirements set forth in this Indenture.

“Operating Agreement” shall mean the Amended and Restated Limited Liability Company Operating Agreement of the Issuer, dated as of March 27, 2013.

“Opinion of Counsel” means a written opinion from legal counsel who is acceptable to the Indenture Trustee. If such counsel is otherwise acceptable to the Indenture Trustee, such counsel may be an employee of or counsel to an Obligor or the Indenture Trustee.

“Parent” means OLIPP IV, LLC, a Delaware limited liability company.

“Payment Date” means the 27^th day of each calendar month, with the initial Payment Date being April 27, 2013.

“PBGC” means the Pension Benefit Guaranty Corporation established pursuant to Subtitle A of Title IV of ERISA (or any successor).

“Pension Plan” means any Plan (other than a Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section 412 of the Code or Section 302 of ERISA, and in respect of which any Obligor or any ERISA Affiliate is (or, if such Plan were terminated, would under Section 4069 of ERISA be deemed to be) an “employer” as defined in section 3(5) of ERISA.

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“Permitted Investments” means:

(1) any Investment in the Issuer or any Wholly Owned Subsidiary of Holdings;

(2) any Investment in Cash Equivalents;

(3) any Investment acquired by any Group Company (a) in exchange for any other Investment or accounts receivable held by any such Group Company in connection with or as a result of a bankruptcy, workout, reorganization or recapitalization of the issuer of such other Investment or accounts receivable, or (b) as a result of a foreclosure by any Group Company with respect to any secured Investment or other transfer of title with respect to any secured Investment in default;

(4) any transaction to the extent it constitutes an Investment that is permitted by and made in accordance with the provisions of Section 4.07(b) (except transactions described in clauses (ii) and (iv) of such Section);

(5) Permitted Payments from the Issuer to Holdings, made at any time when there is no Default or Event of Default that has occurred and is continuing, up to an aggregate amount following the Issue Date of no more than the Permitted Payments Amount;

(6) guarantees issued in accordance with Section 4.03;

(7) any payment of premiums on Life Policies; and

(8) any purchase of structured settlements in the ordinary course of business by Washington Square Financial, LLC or its Wholly Owned Subsidiaries

“Permitted Liens” means, with respect to any Person:

(1) pledges or deposits by such Person under workmen’s compensation laws, unemployment insurance laws or similar legislation, or good faith deposits in connection with bids, tenders, contracts (other than for the payment of Indebtedness) or leases to which such Person is a party, or deposits to secure public or statutory obligations of such Person or deposits of cash or U.S. government bonds to secure surety or appeal bonds to which such Person is a party, or deposits as security for contested taxes or import duties or for the payment of rent, in each case Incurred in the ordinary course of business;

(2) Liens imposed by law, such as carriers’, warehousemen’s and mechanics’ Liens, in each case for sums not yet due or being contested in good faith by appropriate proceedings or other Liens arising out of judgments or awards against such Person with respect to which such Person shall then be proceeding with an appeal or other proceedings for review;

(3) Liens for taxes, assessments or other governmental charges not yet due or payable or subject to penalties for nonpayment or which are being contested in good faith by appropriate proceedings;

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(4) Liens in favor of issuers of performance and surety bonds or bid bonds or with respect to other regulatory requirements or letters of credit issued pursuant to the request of and for the account of such Person in the ordinary course of its business;

(5) minor survey exceptions, minor encumbrances, easements or reservations of, or rights of others for, licenses, rights-of-way, sewers, electric lines, telegraph and telephone lines and other similar purposes, or zoning or other restrictions as to the use of real properties or Liens incidental to the conduct of the business of such Person or to the ownership of its properties which were not Incurred in connection with Indebtedness and which do not in the aggregate materially adversely affect the value of said properties or materially impair their use in the operation of the business of such Person;

(6) Liens securing Indebtedness or other obligations of a Subsidiary owing to another Subsidiary of Holdings permitted to be Incurred in accordance with Section 4.03;

(7) leases and subleases of real property which do not materially interfere with the ordinary conduct of the business of any Group Company;

(8) Liens arising from Uniform Commercial Code financing statement filings regarding operating leases entered into by any Group Company in the ordinary course of business;

(9) Liens in favor of any Guarantor;

(10) deposits made in the ordinary course of business to secure liability to insurance carriers;

(11) Liens arising by virtue of any statutory or common law provisions relating to banker’s Liens, rights of set-off or similar rights and remedies as to deposit accounts or other funds maintained with a depository or financial institution;

(12) Liens on any Encumbered Policy; and

(13) the contractual claim of a beneficiary of a Portfolio Policy arising by virtue of the original owner of such Portfolio Policy having designated such beneficiary to retain a portion of the death benefit when such policy was acquired by an Affiliate of the Issuer, provided that such claims (as of the Issue Date) affect fewer than ten Portfolio Policies.

“Permitted Payments” means payments made by the Issuer from the Collateral Account to Holdings for general corporate purposes of Holdings, including for the payment of premiums on Life Policies owned by Imperial Life Settlements, LLC or by the Pledged Entities other than the Issuer or the Parent.

“Permitted Payments Amount” means $10,221,982.67.

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“Person” means any individual, corporation, partnership, limited liability company, joint venture, association, joint-stock company, trust, unincorporated organization, government or any agency or political subdivision thereof or any other entity.

“Plan” means any employee benefit plan as defined in Section 3(3) of ERISA, including any employee welfare benefit plan (as defined in Section 3(1) of ERISA), any employee pension benefit plan (as defined in Section 3(2) of ERISA), and any plan which is both an employee welfare benefit plan and an employee pension benefit plan, and in respect of which any Obligor or any ERISA Affiliate is an “employer” as defined in Section 3(5) of ERISA.

“Pledge Agreement” means the pledge agreement, dated as of the date hereof, entered into by the Guarantors in favor of the Indenture Trustee as secured party.

“Pledged Entities” means the Issuer, Parent, OLIPP I, LLC and PSC Financial, LLC.

“Policy Valuation” means the value of the Portfolio Policies reported by Holdings in its most recent SEC filing, or (in the circumstances described in Section 4.15) the value derived in accordance with Section 4.15.

“Portfolio Policies” means all Life Policies now owned (beneficially or otherwise) or hereafter acquired by the Issuer.

“Portfolio Premium Schedule” means a list of the premium payments due on each Portfolio Policy to be made during the period from the Issue Date to the Final Maturity Date in sufficient detail, including policy name and number, Carrier name, due date, premium amount and payment instructions, to enable the Indenture Trustee or the Securities Intermediary to make such payments.

“Preferred Stock” means any Equity Interest with preferential right of payment of dividends or upon liquidation, dissolution or winding up.

“Protected Purchaser” has the meaning specified in Section 8-303 of the Uniform Commercial Code.

“Record Date” means, with respect to any Payment Date and any Note, the fifth Business Day preceding the related Payment Date.

“Reportable Event” means any of the events set forth in Section 4043(c) of ERISA, other than those events as to which the thirty day notice period is waived under subsections .27, .28, .29, .30, .31, .32, .34 or .35 of PBGC Reg. § 4043, with respect to a Pension Plan.

“Required Holders” means the Holders of more than 50% in principal amount of Notes then outstanding, voting as a single class.

“Requirements of Law” means, as to any Person, the certificate of incorporation and bylaws or other organizational or governing documents of such Person, and any law, treaty, rule or regulation or determination of an arbitrator or a court or other Governmental Authority, in each case applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject.

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“Restricted Investment” means an Investment other than a Permitted Investment.

“S&P” means Standard & Poor’s Ratings Services or any successor to the rating agency business thereof.

“Sale Trigger” means the event which occurs when (i) the cash balance in the Collateral Account is less than (ii) the sum of (A) the projected premium payments on the Portfolio Policies for the next six months or, if shorter, until the Final Maturity Date, as reported in the then most recent Cash Balance Report plus (B) the cash interest payments due on the Notes for the next six months or, if shorter, until the Final Maturity Date, as reported in the then most recent Cash Balance Report.

“SEC” means the United States Securities and Exchange Commission.

“Secured Indebtedness” means any Indebtedness secured by a Lien.

“Securities Account” means the “Account” as defined in the Securities Account Control Agreement (that is, the non-interest bearing account identified as “103697-000 Greenwood Asset Portfolio LLC” established at the Securities Intermediary).

“Securities Account Control Agreement” means the amended and restated securities account control and custodian agreement dated as of March 27, 2013, entered into by the Issuer, the Indenture Trustee, the Securities Intermediary, and the Custodian (as defined therein) as the same may be amended from time to time in accordance with the terms thereof.

“Securities Act” means the United States Securities Act of 1933, as amended, and the rules and regulations of the SEC promulgated thereunder.

“Security Documents” means this Indenture, the Pledge Agreement, the Securities Account Control Agreement, and any other security agreement of any kind, as amended, supplemented, restated, renewed, refunded, replaced, restructured, repaid, refinanced or otherwise modified from time to time, creating the security interests in the Collateral as contemplated by this Indenture.

“Significant Subsidiary” means (i) each Pledged Entity and any Subsidiary of a Pledged Entity, (ii) any Subsidiary conducting the structured settlements business, (iii) any Subsidiary owning any Life Policies or holding a license as a life settlements provider in any state, (iv) Imperial Finance and Trading, LLC, and (v) any other Subsidiary, if any, that would be a “Significant Subsidiary” of Holdings within the meaning of Rule 1-02 under Regulation S-X promulgated by the SEC (or any successor provision).

“Similar Business” means a business, the majority of whose revenues are derived from the activities of the Group Companies as of the Issue Date or any business or activity that is reasonably similar or complementary thereto or a reasonable extension, development or expansion thereof or ancillary thereto.

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“Subsidiary” means, with respect to any Person, (1) any corporation, association or other business entity (other than a partnership, joint venture or limited liability company) of which more than 50% of the total voting power of shares of Capital Stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time of determination owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of that Person or a combination thereof, and (2) any partnership, joint venture or limited liability company of which (x) more than 50% of the capital accounts, distribution rights, total equity and voting interests or general and limited partnership interests, as applicable, are owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of that Person or a combination thereof, whether in the form of membership, general, special or limited partnership interests or otherwise, and (y) such Person or any Subsidiary of such Person is a controlling general partner or otherwise controls such entity. For purposes of clarity, a Subsidiary of a Person shall not include any Person that is under common control with the first Person solely by virtue of having directors, managers or trustees in common and shall not include any Person that is solely under common control with the first Person (i.e., a sister company with a common parent).

“Transaction Documents” means, collectively, this Indenture, the Notes, the Note Purchase Agreement, the Security Documents, the fee letter dated March 1, 2013 among Holdings and the Holders, and the other documents related hereto.

“Trust Officer” means any officer within the corporate trust department of the Indenture Trustee, including any vice president, assistant vice president, assistant secretary, assistant treasurer, trust officer or any other officer of the Indenture Trustee (a) who customarily performs functions similar to those performed by the Persons who at the time shall be such officers, respectively, or to whom any corporate trust matter is referred because of such Person’s knowledge of and familiarity with the particular subject, and (b) who shall have direct responsibility for the administration of this Indenture.

“Uniform Commercial Code” means the New York Uniform Commercial Code as in effect from time to time.

“Voting Stock” of any Person as of any date means the Capital Stock of such Person that is at the time entitled to vote in the election of the Board of Directors of such Person.

“Withdrawal Liability” means any liability to a Multiemployer Plan as a result of a complete or partial withdrawal from such Multiemployer Plan, as such terms are defined in Title IV of ERISA.

“Wholly Owned Subsidiary” of any Person means a Subsidiary of such Person 100% of the outstanding Capital Stock or other ownership interests of which are at the time owned by such Person or by one or more Wholly Owned Subsidiaries of such Person.

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SECTION 1.02. Other Definitions.

Term	Defined in Section
“Affiliate Transaction”	4.07(a)
“Applicable Regulations”	2.10
“Authenticating Agent”	2.02(b)
“Bankruptcy Law”	5.01
“Claim Notice”	6.06
“Collateral Account”	2.08
“consolidated”	“GAAP” definition
“custodian”	5.01
“Event of Default”	5.01
“Guaranteed Obligations”	9.01(a)
“Indemnified Person”	6.06
“Issuer”	Preamble
“Note Registrar”	2.04(a)
“Note Register”	2.04(a)
“Notes”	Preamble
“primary obligations”	“Contingent Obligations” definition
“primary obligor”	“Contingent Obligations” definition
“Private Investor Information”	4.02(i)
“Public Investor Information”	4.02(i)
“Restricted Payments”	4.04(a)
“Retained Counsel”	6.06
“Secured Obligations”	Granting Clause
“Secured Parties”	Preamble
“Securities Intermediary”	6.11
“Selection Notice”	6.06
“Site”	6.02(y)
“Trust Estate”	Granting Clause

SECTION 1.03. Rules of Construction. For all purposes of this Indenture, except as otherwise expressly provided or unless the context otherwise requires:

(a) the terms defined in this Article have the meanings assigned to them in this Article and include the plural as well as the singular;

(b) all accounting terms not otherwise defined herein have the meanings assigned to them in accordance with generally accepted accounting principles in the United States and, except as otherwise herein expressly provided, the term “generally accepted accounting principles” with respect to any computation required or permitted hereunder means such accounting principles as are generally accepted in the United States;

(c) the word “including” shall be construed to be followed by the words “without limitation”; the word “or” shall not be deemed to be exclusive;

(d) article and section headings are for the convenience of the reader and shall not be considered in interpreting this Indenture or the intent of the parties hereto;

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(e) the words “herein,” “hereof” and “hereunder” and other words of similar import refer to this Indenture as a whole and not to any particular article, section or other subdivision;

(f) the pronouns used herein are used in the masculine and neuter genders but shall be construed as feminine, masculine or neuter, as the context requires;

(g) a reference herein to any Person shall be construed to include such Person’s successors and permitted assigns;

(h) a reference to any statute, regulation, proclamation, ordinance or law includes all statutes, regulations, proclamations, ordinances or laws varying, consolidating or replacing the same from time to time, and a reference to a statute includes all regulations, policies, protocols, codes, proclamations and ordinances issued or otherwise applicable under that statute unless, in any such case, otherwise expressly provided in any such statute;

(i) a definition of or reference to any document, instrument or agreement includes an amendment or supplement to, or restatement, replacement, modification or novation of, any such document, instrument or agreement unless otherwise specified in such definition or in the context in which such reference is used;

(j) terms used herein that are defined in the New York Uniform Commercial Code and not otherwise defined herein shall have the meanings set forth in the New York Uniform Commercial Code, unless the context requires otherwise; and

(k) to the extent any provision of this Indenture conflicts with the express provisions of any other Transaction Documents, the provisions of this Indenture shall govern and be controlling.

ARTICLE 2

THE SECURITIES

SECTION 2.01. Forms; Denominations.

Each Note shall be issued in physical, registered form only in initial denominations of not less than $250,000 and in integral multiples of $1,000 in excess thereof. The Notes will be substantially in the form attached hereto as Exhibit A; provided that any of the Notes may be issued with appropriate insertions, omissions, substitutions and variations as are required or permitted by this Indenture, and may have imprinted or otherwise reproduced thereon such legend or legends, not inconsistent with the provisions of this Indenture, as may be required to comply with any Requirements of Law or any other applicable law or with rules or regulations pursuant thereto, or with the rules of any securities market in which the Notes are admitted to trading, or to conform to general usage. The maximum principal amount of Notes to be issued hereunder is $45,000,000.

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SECTION 2.02. Execution, Authentication, Delivery and Dating.

(a) The Notes shall be executed by manual or facsimile signature on behalf of the Issuer by any Officer of the Issuer. Notes bearing the manual or facsimile signatures of individuals who were at any time the Officers of the Issuer shall be entitled to all benefits under this Indenture, subject to the following sentence, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Notes or did not hold such offices at the date of such Notes. No Note shall be entitled to any benefit under this Indenture, or be valid for any purpose, however, unless there appears on such Note a certificate of authentication substantially in the form provided for herein executed by the Indenture Trustee by manual signature, and such certificate of authentication upon any Note shall be conclusive evidence, and the only evidence, that such Note has been duly authenticated and delivered hereunder. All Notes shall be dated the date of their authentication. Upon initial issuance, the Notes shall be authenticated by the Indenture Trustee pursuant to, and upon the Indenture Trustee’s receipt of, an Issuer Order.

(b) The Indenture Trustee may appoint one or more agents (each an “Authenticating Agent”) with power to act on its behalf and subject to its direction in the authentication of Notes in connection with transfers and exchanges under Sections 2.04 and 2.05, as fully to all intents and purposes as though each such Authenticating Agent had been expressly authorized by those Sections to authenticate the Notes. For all purposes of this Indenture, the authentication of Notes by an Authenticating Agent shall be deemed to be the authentication of Notes “by the Indenture Trustee”.

Any corporation, bank, trust company or association into which any Authenticating Agent may be merged or converted or with which it may be consolidated, or any corporation, bank, trust company or association resulting from any merger, consolidation or conversion to which any Authenticating Agent shall be a party, or any corporation, bank, trust company or association succeeding to the corporate trust business of an Authenticating Agent, shall be the successor of such Authenticating Agent hereunder, without the execution or filing of any further act on the part of the parties hereto or such Authenticating Agent or such successor corporation, bank, trust company or association.

Any Authenticating Agent may at any time resign by giving written notice of resignation to the Indenture Trustee and the Issuer. The Indenture Trustee may at any time terminate the agency of any Authenticating Agent by giving written notice of termination to such Authenticating Agent and the Issuer. Upon receiving such notice of resignation or upon such a termination, the Indenture Trustee may but shall not be obligated to appoint a successor Authenticating Agent, and, upon such appointment, the Indenture Trustee will give written notice of such appointment to the Issuer and the Holders. In the event such a successor is not appointed by the Indenture Trustee, the role of Authenticating Agent will revert to the Indenture Trustee.

Each Authenticating Agent shall be entitled to all of the protections, privileges, limitations on liability, rights of reimbursement and indemnities that the Indenture Trustee is entitled to hereunder as fully as if it were the Indenture Trustee.

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SECTION 2.03. Interest, Payment of Note Balance of Outstanding Notes.

(a) Each Note will accrue interest during each Interest Period on its Note Balance at the Note Interest Rate calculated based on the actual number of days elapsed and a 360-day year.

(b) Accrued interest will be due and payable in cash on each Payment Date, or following declaration of acceleration pursuant to Section 5.02, on demand, and such accrued interest will accrue at the then applicable Note Interest Rate to the extent permitted by applicable law.

(c) The Note Balance of each Note plus any accrued interest is due and payable on the Final Maturity Date, unless the Note Balance and accrued interest of the Note becomes due and payable at an earlier date by declaration of acceleration, voluntary or mandatory redemption or otherwise.

(d) The Notes may be prepaid at any time in whole, or in part, together with all accrued interest as set forth in Section 3.02, and are subject to mandatory redemption in whole, or in part, as set forth in Section 3.06, and are subject to mandatory redemption in whole, but not in part, as set forth in Section 3.07.

SECTION 2.04. Registration of Transfer and Exchange of Notes.

(a) At all times during the term of this Indenture, there shall be maintained at the office of a registrar appointed by the Issuer (the “Note Registrar”) a register (the “Note Register”) in which, subject to such reasonable regulations as the Note Registrar may prescribe, the Note Registrar shall provide for the registration of Notes and of transfers and exchanges of Notes as herein provided. The Indenture Trustee is hereby initially appointed (and hereby agrees to act in accordance with the terms hereof) as Note Registrar for the purpose of registering Notes and transfers and exchanges of Notes as herein provided. If the Indenture Trustee resigns or is removed in accordance with the terms hereof, the successor indenture trustee shall immediately succeed to its predecessor’s duties as Note Registrar, absent appointment of any other bank or trust company to act as Note Registrar.

(b) No transfer, sale, pledge or other disposition of any Note or interest therein shall be made unless that transfer, sale, pledge or other disposition is exempt from the registration and/or qualification requirements of the Securities Act, regulations promulgated thereunder and any applicable state securities laws, or is otherwise made in accordance with the Securities Act, regulations promulgated thereunder and such state securities laws. None of the Issuer, the Indenture Trustee or the Note Registrar is obligated to register or qualify any Notes under the Securities Act, regulations promulgated thereunder or any other securities law or to take any action not otherwise required under this Indenture to permit the transfer of any Note or interest therein without registration or qualification. Any Holder desiring to effect a transfer of Notes or interests therein shall, and is hereby deemed to have agreed to, indemnify and hold harmless the Issuer, the Indenture Trustee and the Note Registrar against costs, damages, or any other liability that may result if the transfer is not so exempt or is not made in accordance with such federal and state laws.

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(c) The Note Registrar shall refuse to register any requested transfer unless it receives (and upon receipt, may conclusively rely upon) a certification from the transferring Holder in substantially the form of Exhibit B-1 hereto, and a representation letter from the transferee, in substantially the form of Exhibit B-2 hereto, and shall have no duty to determine whether such transfer is so exempt or complies with such federal and state laws.

(d) Any purported transfer of a Note to a Person that does not comply with the requirements set forth above will be null and void ab initio and the transferor (or the last preceding Holder of such Note (or interest therein)) that was not so disqualified shall be restored to all rights as a Holder thereof retroactively to the date of transfer of such Note by such disqualified transferee. None of the Indenture Trustee, the Note Registrar or any other Person shall be obligated to register or otherwise recognize such purported transfer of a Note. Nothing herein shall impose an affirmative duty on the Note Registrar or Indenture Trustee to investigate or make other inquiries as to whether a purported transferee has complied with the requirements set forth above.

(e) If a Person is acquiring any Note or interest therein as a fiduciary or agent for one or more accounts, such Person shall be required to deliver to the Note Registrar a certification to the effect that it has (i) sole investment discretion with respect to each such account and (ii) full power to make the foregoing acknowledgments, representations, warranties, certifications and agreements with respect to each such account as set forth in this Section 2.04 (and upon receipt, the Note Registrar may conclusively rely upon such certification) and shall have no duty to determine whether the Person acquiring such Note or interest therein is such a fiduciary or agent, or has such discretion or power, as the case may be.

(f) Subject to the preceding provisions of this Section 2.04, upon surrender for registration of transfer of any Note at the offices of the Note Registrar maintained for such purpose, the Issuer shall execute and the Indenture Trustee shall authenticate and deliver, in the name of the designated transferee or transferees (and, to the extent that only a portion of the transferring Holder’s Note Balance is being transferred, to the transferring Holder), one or more new Notes, of a like Note Balance.

(g) At the option of any Holder, its Notes may be exchanged for other Notes of a like Note Balance upon surrender of the Notes to be exchanged at the offices of the Note Registrar maintained for such purpose. Whenever any Notes are so surrendered for exchange, the Issuer shall execute and the Indenture Trustee shall authenticate and deliver the Notes which the Holder making the exchange is entitled to receive.

(h) Every Note presented or surrendered for transfer or exchange shall (if so required by the Note Registrar) be duly endorsed by, or be accompanied by a written instrument of transfer in form satisfactory to the Note Registrar duly executed by, the Holder thereof or its attorney duly authorized in writing. The Note Registrar may require

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any Holder, among other things, to furnish any appropriate endorsements and transfer documents, and to have signatures guaranteed by an “eligible guarantor institution” that is a member or participant in a recognized “signature guarantee program” (e.g., the securities Transfer Agents Medallion Program, the Stock Exchange Medallion Program or the New York Stock Exchange, Inc. Medallion signature Program).

(i) No service charge shall be imposed for any transfer or exchange of Notes, but the Indenture Trustee or the Note Registrar may require payment from the Holder of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any transfer or exchange of Notes.

(j) All Notes surrendered for transfer and exchange shall be physically canceled by the Note Registrar, and the Note Registrar shall dispose of such canceled Notes in accordance with its standard procedures.

(k) The Note Registrar shall provide to the Issuer or the Indenture Trustee, upon reasonable prior written request, and at the expense of the Issuer, an updated copy of the Note Register. The Issuer and the Indenture Trustee shall have the right to obtain a copy thereof within a reasonable amount of time after receipt of notice by the Note Registrar, and to rely conclusively upon a certificate of the Note Registrar as to the information set forth in the Note Register.

(l) Neither the Note Registrar nor the Indenture Trustee shall be under any duty to monitor or determine compliance with any federal, state or other securities or tax laws that may be applicable; provided, however, that the Note Registrar or the Indenture Trustee, as the case may be, shall be under a duty to receive and to examine to determine whether it substantially appears on its face to conform with such exhibit as attached to this Indenture, the certificate in substantially the form of Exhibit B-1 or the representation letter in substantially the form of Exhibit B-2 specifically required by the express terms of this Section 2.04 to be delivered to the Note Registrar or the Indenture Trustee as a requirement of the registration of a transfer of a Note.

(m) The Note Registrar shall be entitled to all of the protections, privileges, limitations on liability, rights of reimbursement and indemnities that the Indenture Trustee is entitled to hereunder as fully as if it were the Indenture Trustee.

SECTION 2.05. Mutilated, Destroyed, Lost or Stolen Notes.

If any mutilated Note is surrendered to the Note Registrar, the Issuer shall execute and the Indenture Trustee shall authenticate and deliver, in exchange therefor, a new Note of the same tenor and denomination, registered in the same manner, dated the date of its authentication and bearing a number not contemporaneously outstanding.

If there shall be delivered to the Issuer, the Indenture Trustee and the Note Registrar (i) evidence to their satisfaction of the destruction (including mutilation tantamount to destruction), loss or theft of any Note and the ownership thereof and (ii) such security or indemnity as may be reasonably required by them to hold each of them, and any agent of any of them harmless, then, in the absence of notice received by the Issuer or a Trust Officer that such

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Note has been acquired by a Protected Purchaser, the Issuer shall execute and the Indenture Trustee shall authenticate and deliver, in lieu of any such destroyed, lost or stolen Note, a new Note of the same tenor and denomination registered in the same manner, dated the date of its authentication and bearing a number not contemporaneously outstanding.

Upon the issuance of any new Note under this Section 2.05, the Indenture Trustee and the Note Registrar may require the payment by the Holder of an amount sufficient to pay or discharge any tax or other governmental charge that may be imposed in relation thereto and any other reasonable expenses, but no service charge.

Every new Note issued pursuant to this Section 2.05 in lieu of any destroyed, mutilated, lost or stolen Note shall constitute an original additional contractual obligation of the Issuer, whether or not the destroyed, mutilated, lost or stolen Note shall be at any time enforceable by any Person, and such new Note shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other Notes duly issued hereunder.

The provisions of this Section 2.05 are exclusive and shall preclude (to the extent permitted by applicable law) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Notes.

SECTION 2.06. Holder Lists.

The Note Registrar shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of Holders, which list, upon request, will be made available to the Indenture Trustee insofar as the Indenture Trustee is no longer the Note Registrar. Upon written request of any Holder made for purposes of communicating with other Holders with respect to their rights under this Indenture (which purpose the Note Registrar shall have no duty to determine or inquire about), the Note Registrar shall within five (5) Business Days after its receipt of such written request furnish such Holder with a list of the other Holders of record identified in the Note Register at the time of the request. Every Holder, by receiving such access, agrees with the Note Registrar that the Note Registrar will not have any liability or be held accountable in any way by reason of the disclosure of any information as to the names and addresses of any Holder regardless of the source from which such information was derived.

SECTION 2.07. Persons Deemed Owners.

The Issuer, the Indenture Trustee, the Note Registrar and any agents of any of them, may treat the Person in whose name a Note is registered as the owner of such Note on the applicable Record Date for the purpose of receiving payments of principal, interest and other amounts in respect of such Note and on any other date for all other purposes whatsoever, whether or not such Note shall be overdue, and none of the Issuer, the Indenture Trustee, the Note Registrar or any agents of any of them, shall be affected by notice to the contrary.

SECTION 2.08. Collateral Account.

(a) (i) On the date hereof, the Indenture Trustee is directed to establish with the Securities Intermediary, and the Securities Intermediary does hereby establish an

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Eligible Account which shall be a segregated non-interest bearing securities account entitled “Greenwood Asset Portfolio Collateral Account” (the “Collateral Account”) bearing a designation clearly indicating that such account and all property credited thereto are held for the exclusive benefit of the Secured Parties and the Issuer. The net proceeds from the issuance of the Notes (net of discount and after deduction of costs and expenses pursuant to the Note Purchase Agreement) shall, in accordance with Section 4.12, be deposited in the Collateral Account on the Issue Date pursuant to the Note Purchase Agreement. In addition, the Indenture Trustee shall credit or cause to be credited to the Collateral Account upon receipt by the Indenture Trustee or the Securities Intermediary, all payments and other collections payable to the Issuer (including through the Securities Intermediary) under or in respect of the Portfolio Policies, including without limitation death benefits paid in respect of any Portfolio Policies and the net sale proceeds of any Portfolio Policy. The Indenture Trustee, in accordance with the terms of this Indenture, shall have exclusive control and sole right of withdrawal with respect to the Collateral Account. Property in the Collateral Account shall not be commingled with any monies of other Persons. All property credited to the Collateral Account, together with any investments in which funds included in such property are or will be invested or reinvested during the term of this Indenture, and any income or other gain realized from such investments, shall be held by the Securities Intermediary in the Collateral Account as part of the Collateral subject to disbursement and withdrawal as provided in Section 2.08(c).

(ii) All of the funds credited to the Collateral Account may be invested in Eligible Investments pursuant to this Section 2.08(ii) or Section 2.08(iii). By written direction (which shall be in a form of instructions acceptable to the Securities Intermediary), the Issuer may direct the Securities Intermediary to, and, upon receipt of such direction, the Securities Intermediary shall, invest all funds received into the Collateral Account in such Eligible Investments specified by the Issuer in such direction.

(iii) If, prior to the occurrence of an Event of Default, the Issuer shall not have given the Securities Intermediary any investment directions pursuant to Section 2.08(a)(ii), the Securities Intermediary shall invest and reinvest the funds held in such Collateral Account, as fully as practicable, in such Eligible Investments directed by the Required Holders (which shall be in a form of instructions acceptable to the Securities Intermediary). If neither the Issuer delivers the direction described in Section 2.08(a), nor the Required Holders deliver the direction described in the immediately preceding sentence of this Section 2.08(iii), funds in the Collateral Account shall not be invested. Neither the Securities Intermediary nor the Indenture Trustee shall in any way be held liable by reason of any insufficiency of the Collateral Account resulting from any loss relating to any such investment. All earnings on investments of the funds in the Collateral Account shall become part of the Collateral Account and shall be disbursed by the Securities Intermediary in accordance with the terms of this Indenture. Each of the parties hereto understands and agrees that Eligible Investments are not obligations or recommendations of, or endorsed or guaranteed by, the Indenture Trustee, the Securities Intermediary or their Affiliates and may

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not be insured by the Federal Deposit Insurance Corporation. Similarly, each of the parties hereto understands and agrees that proceeds of the sale of investments of the funds in the Collateral Account will be deposited by the Securities Intermediary into the Collateral Account on the Business Day on which the Securities Intermediary receives such funds if received by the Securities Intermediary prior to the deadline for same day sale of such Eligible Investments. If the Securities Intermediary receives such funds after the applicable deadline for the sale of such investments, such proceeds will be deposited by the Securities Intermediary into the Collateral Account on the next succeeding Business Day. Each of the parties hereto acknowledges and agrees that neither the Securities Intermediary nor the Indenture Trustee is providing investment supervision, recommendations, or advice. It is expressly agreed and understood by each of the parties hereto that neither the Indenture Trustee nor the Securities Intermediary shall in any way whatsoever be liable for any losses on any investments, including without limitation, losses from market risks due to premature liquidation or resulting from other actions taken pursuant to and consistent with this Indenture, except to the extent that such losses are solely the result of the Securities Intermediary’s or the Indenture Trustee’s gross negligence or willful misconduct. The parties agree that, for tax reporting purposes, all interest or other income from investment in the Collateral Account shall, as of the end of each calendar year and to the extent required by the Internal Revenue Service be reported as having been earned by the Issuer whether or not income was disbursed during a particular year. On the Issue Date, the Issuer shall provide the Securities Intermediary with certified tax identification numbers by furnishing appropriate forms W-9 or W-8 and such other forms and documents that the Securities Intermediary may request. Each of the parties hereto understands that if such tax reporting documentation is not provided and certified to the Securities Intermediary, the Securities Intermediary may be required by the Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder, to withhold a portion of any interest or other income earned on the investment of monies or other property held by the Securities Intermediary pursuant to this Indenture.

(iv) The Indenture Trustee will promptly (and, in any event, within three Business Days) notify the Holders if, at any time, an amount less than $9,000,000 is on deposit in the Collateral Account.

(b) The Issuer shall cause all death benefits paid in respect of the Portfolio Policies to be deposited to the Collateral Account directly by the Carriers, and the Issuer shall cause the purchaser of any Portfolio Policy (or another Person on such purchaser’s behalf) to deposit directly in the Collateral Account the net sale price for the purchase of any Portfolio Policy from the Issuer on the date payment in respect of such purchase is made.

(c) Funds on deposit in the Collateral Account will be disbursed by the Securities Intermediary at the direction of the Indenture Trustee (which direction shall be in accordance with the Budget and Portfolio Premium Schedule provided by the Issuer) (i) to make payments to the Secured Parties in respect of principal or interest or

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redemption price or other amounts in respect of the Secured Obligations, (ii) (a) on the date hereof, to make Permitted Payments in the amount of $1,959,121 and (b) to make Permitted Payments in accordance with the Budget, and (iii) to pay premiums on the Portfolio Policies as shown on the most recent Portfolio Premium Schedule; provided that, (x) the aggregate amount disbursed from the Collateral Account pursuant to the preceding clause (ii) may not exceed the Permitted Payments Amount, and (y) after the occurrence and during the continuance of a Default or an Event of Default the Indenture Trustee will not cause the Securities Intermediary to make disbursements from the Collateral Account for the purposes set forth in (A) clause (ii) above without the consent of the Required Holders and (B) clause (iii) above upon instruction from the Required Holders not to make such disbursements. In the event that the Issuer fails to give direction to make any payments contemplated by clause (iii) of this Section 2.08(c) within three (3) Business Days after a Monthly Reporting Date, the Indenture Trustee shall cause the Securities Intermediary to make such payments in accordance with the Portfolio Premium Schedule most recently received by it.

For purposes of causing the application of funds in accordance with this Section 2.08(c), the Indenture Trustee and the Securities Intermediary shall be entitled to rely exclusively upon the Budget and Portfolio Premium Schedule provided by the Issuer with respect to any payments to be made pursuant to such Section, and shall have no duty to independently determine or verify any information therein, including with respect to the amounts or recipients set forth in such Budget and Portfolio Premium Schedule, except as expressly required hereby. The Budget and Portfolio Premium Schedule shall be deemed to be the Trustee’s instruction to the Securities Intermediary for purposes of this Section 2.08(c).

(d) The parties hereto hereby agree that any property credited to the Accounts (whether “investment property,” “financial asset,” “security,” each as defined in the UCC, or cash or any other property, including any Life Policy and any proceeds thereof) shall be treated as a Financial Asset for all purposes under Article 8 of the UCC.

SECTION 2.09. Payments on the Notes.

(a) With respect to each Payment Date, any interest, principal and other amounts payable on the Notes shall be paid to the Person that is the registered Holder thereof at the close of business on the related Record Date. Payments of interest, principal and other amounts on the Notes shall be made by wire transfer to such account as such Holder shall designate by written instruction received by the Indenture Trustee not later than five Business Days prior to the Record Date related to the applicable Payment Date.

(b) If a Note is issued in exchange for any other Note during the period commencing at the close of business at the office of the Note Registrar where such exchange occurs on any Record Date and ending before the opening of business at such office of the Note Registrar on the related Payment Date, no interest, principal or other amounts will be payable on such Payment Date in respect of such new Note, but will be payable on such Payment Date only in respect of the prior Note to the Person that is the registered Holder thereof at the close of business on the related Record Date.

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(c) The Issuer shall deposit or cause to be deposited in the Collateral Account sufficient funds in an amount to pay in full all amounts of interest, principal, and if any, premium due on any Payment Date, redemption date, the Final Maturity Date, or otherwise prior to 11.00 a.m. Eastern time on such date.

(d) The Indenture Trustee shall cause the Securities Intermediary to pay each Note in full as provided herein on the Final Maturity Date, out of the Collateral Account in immediately available funds, no later than 3:00 p.m., New York City time, on such Final Maturity Date. Such payment to the Holder of each Note shall be made on the Final Maturity Date of such Note and such Holder shall present the Note promptly thereafter.

SECTION 2.10. Compliance with Withholding and Other Requirements.

Each of the Indenture Trustee and the Securities Intermediary shall comply with all backup withholding tax and information reporting requirements that it is required to comply with under applicable law (including the Code and the Treasury regulations issued thereunder) in respect of any payment on, or in respect of, the Notes.

By acceptance of any Note issued hereunder, each Holder is deemed to agree to provide to the Issuer or Indenture Trustee any certification that may be required under applicable law and to update or replace such form or certification in accordance with its terms or its subsequent amendments to the extent necessary. Failure of a Holder to provide the Indenture Trustee and the Issuer with required tax certificates may result in amounts of tax being withheld from the payment to such Holder.

In order to comply with the laws, rules, regulations and executive orders in effect from time to time applicable to banking institutions, including those relating to the funding of terrorist activities and money laundering (collectively, “Applicable Regulations”), the Indenture Trustee, is required to obtain, verify and record certain information relating to individuals and entities which maintain a business relationship with the Indenture Trustee. Accordingly, each of the parties hereto and each Holder agrees to provide the Indenture Trustee, upon its request from time to time, such identifying information and documentation as may be necessary in order to enable the Indenture Trustee to comply with such Applicable Regulations. It is expressly agreed that the Indenture Trustee shall have no duty to perform any services hereunder for, on behalf of or for the benefit of, any Person not having furnished such information as the Indenture, in its sole discretion, determines to be necessary to comply with the Applicable Regulations.

SECTION 2.11. Cancellation.

The Issuer may at any time deliver to the Note Registrar for cancellation any Notes previously authenticated and delivered hereunder which the Issuer may have acquired in any manner whatsoever, and all Notes so delivered shall, in accordance with an Issuer Order, be promptly canceled by the Note Registrar.

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All Notes delivered to the Indenture Trustee for payment shall be forwarded by the Indenture Trustee to the Note Registrar. All such Notes and all Notes surrendered for transfer and exchange in accordance with the terms hereof shall be canceled and disposed of by the Note Registrar in accordance with its customary procedures.

SECTION 2.12. Lien of the Indenture.

This Indenture shall evidence a continuing Lien on and security interest in the Trust Estate to secure the full payment of the principal, interest and other amounts on all the Notes, which shall in all respects be equally and ratably secured hereby without preference, priority or distinction on account of the actual time or times of the authentication and delivery of the Notes.

SECTION 2.13. Uniform Commercial Code Matters.

(a) The Issuer shall take all actions, including the authorization and filing of all financing statements and amendments thereto, as are necessary to perfect and maintain the perfection and priority under the laws of all relevant jurisdictions of the security interest Granted by the Issuer to the Indenture Trustee hereunder. The Issuer hereby irrevocably authorizes the filing of financing statements (and amendments of financing statements and continuation statements) that name the Issuer as debtor and the Indenture Trustee as secured party and that cover all personal property of the Issuer. The Issuer also hereby ratifies its authorization of the filing of any such financing statements (or amendments of financing statements or continuation statements) that were filed prior to the execution hereof. The Indenture Trustee shall have no obligation to file or monitor any financing statements (or amendments of financing statements or continuation statements). If the Indenture Trustee notifies the Issuer that it intends to file any financing statements, continuation statements or amendments thereto but fails to do so, and does not in connection therewith timely instruct the Issuer to file such item or items, then the Issuer shall not be and shall not be deemed to be in breach of any covenant, representation or warranty concerning the perfection of related or affected security interests.

(b) The Indenture Trustee acknowledges and agrees that it holds each item of Collateral within its possession or control on behalf of and for the benefit of the Secured Parties. Notwithstanding any other provision of this Indenture, the Indenture Trustee shall not hold any item of Collateral through an agent or nominee except as expressly permitted by the Transaction Documents to which it is a party.

SECTION 2.14. CUSIP Numbers.

The Issuer in issuing the Notes may, and at the request of a Holder shall, use CUSIP numbers, ISINs and “Common Code” numbers (if then generally in use) and, if so, the Indenture Trustee shall use CUSIP numbers, ISINs and “Common Code” numbers in notices (including notices of redemption) as a convenience to Holders; provided, however, that any such notice may state that no representation is made as to the correctness of such numbers, either as printed on the Notes or as contained in any notice that reliance may be placed only on the other identification

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numbers printed on the Notes and that any such notice shall not be affected by any defect in or omission of such numbers. The Issuer shall advise the Indenture Trustee of any change in the CUSIP numbers, ISINs and “Common Code” numbers, on which notice the Indenture Trustee may conclusively rely without investigation.

ARTICLE 3

REDEMPTION

SECTION 3.01. Applicability of Article. Redemption of Notes at the election of the Issuer or otherwise, as permitted or required by any provision of this Indenture, shall be made in accordance with such provision and this Article 3.

SECTION 3.02. Optional Redemption; Notices to Indenture Trustee.

(a) The Issuer may elect to redeem the Notes at any time prior to the Final Maturity Date, in whole or in part, at a price equal to 100% of the principal amount thereof plus accrued interest to the date of repayment.

(b) If the Issuer redeems the Notes pursuant to this Article 3 (whether such redemption is optional or mandatory), it shall notify the Indenture Trustee and the Holders in writing of (i) the Section of this Indenture pursuant to which the redemption shall occur, (ii) the redemption date, (iii) the principal amount of Notes to be redeemed and (iv) the redemption price. Selection of the Notes for redemption will be made by the Indenture Trustee on a pro rata basis to the extent practicable. The Issuer shall mail notice to the Indenture Trustee and the Holders provided for in this Section 3.02(b) at least three Business Days before a redemption date, unless a shorter period is acceptable to the Holders. Such notice shall be accompanied by an Officers’ Certificate to the effect that such redemption will comply with the conditions herein. If fewer than all the Notes are to be redeemed, the record date relating to such redemption shall be selected by the Issuer and given to the Indenture Trustee and the Holders. Any such notice may be canceled at any time prior to notice of such redemption being mailed to any Holder and shall thereby be void and of no effect.

SECTION 3.03. Effect of Notice of Redemption. Once notice of redemption is mailed in accordance with Section 3.02(b), Notes called for redemption become due and payable on the redemption date and at the redemption price stated in the notice, subject to the satisfaction or waiver of any conditions precedent in the notice of redemption. Such Notes shall be paid at the redemption price stated in the notice, plus accrued interest, to, but not including, the redemption date; provided, however, that if the redemption date is after a Record Date and on or prior to the related Payment Date, the accrued interest shall be payable to the Holder of the redeemed Notes registered on such Record Date. Failure to give notice or any defect in the notice to any Holder shall not affect the validity of the notice to any other Holder.

SECTION 3.04. Deposit of Redemption Price. Pursuant to Section 2.09(c), the Issuer shall deposit in the Collateral Account money sufficient to pay the redemption price of and accrued interest on all Notes or portions thereof to be redeemed on the redemption date other than Notes or portions of Notes called for redemption that have been delivered by the Issuer to the Indenture Trustee for cancellation.

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SECTION 3.05. Notes Redeemed in Part. Upon surrender of a Note that is redeemed in part and at the request of the Holder, the Issuer shall execute and the Indenture Trustee shall authenticate for the Holder (at the Issuer’s expense) a new Note equal in principal amount to the unredeemed portion of the Note surrendered.

SECTION 3.06. Mandatory Redemption of Notes.

(a) On the date of receipt by any Group Company of any amount described below, the Issuer shall cause the principal of the Notes to be redeemed in the amounts described below at the redemption price described in Section 3.06(b) and subject to the notice provisions in Section 3.02(b):

(i) 100% of any Net Proceeds received by any Group Company after the Issue Date from the issue of any Capital Stock (other than an issuance to a Wholly Owned Subsidiary of Holdings);

(ii) 100% of any Net Proceeds of any Indebtedness of any Group Company issued or incurred after the Issue Date (other than Indebtedness that is otherwise expressly permitted pursuant to Section 4.03(b));

(iii) 100% of any Net Proceeds from (a) any maturity of Portfolio Policies, or from any maturity of other Life Policies (other than Encumbered Policies) owned by any Group Company (other than the Issuer), or (b) any sale or maturity of Encumbered Policies, or (c) any sale of the structured settlements business; and

(iv) 100% of any Net Proceeds from any Asset Sale, but excluding any sales which are covered in clause (iii) above.

(b) With respect to any mandatory redemption pursuant to Section 3.06(a), the Notes shall be redeemed at a redemption price in cash equal to (i) 100% of the Note Balance thereof, plus accrued and unpaid interest on the Note Balance redeemed to the date of repayment, in the case of any mandatory redemption pursuant to clauses (i), (ii), or (iii) of Section 3.06(a), (ii) 109% of the Note Balance thereof, plus accrued and unpaid interest on the Note Balance redeemed to the date of repayment, in the case of any mandatory redemption pursuant to clause (iv) of Section 3.06(a), other than as a result of sales of Life Policies, (iii) 109% of the Note Balance thereof, plus accrued and unpaid interest on the Note Balance redeemed to the date of repayment, in the case of any mandatory redemption pursuant to clause (iv) of Section 3.06(a) arising from any sale of Life Policies for a sale price in a single transaction of $15.0 million or more, and (iv) 100% of the Note Balance thereof, plus accrued and unpaid interest on the Note Balance redeemed to the date of repayment, in the case of any mandatory redemption pursuant to clause (iv) of Section 3.06(a) arising from any sale of Life Policies for a sale price in a single transaction of less than $15.0 million or more, until the aggregate of such sale proceeds described in this clause (iv) of Section 3.06(b) reaches $15.0 million, and

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thereafter with respect to the portion of any such sale proceeds that exceeds $15.0 million in aggregate sale proceeds from the sale of Life Policies, 109% of the Note Balance thereof, plus accrued and unpaid interest on the Note Balance redeemed to the date of repayment.

SECTION 3.07. Change of Control. Upon a Change of Control and subject to the notice provision in Section 3.02(b), the Issuer shall cause the Note Balance of the Notes to be redeemed in full at a redemption price in cash equal to 109% of such Note Balance thereof, plus accrued and unpaid interest on such Note Balance redeemed to the date of repayment.

ARTICLE 4

COVENANTS

SECTION 4.01. Deposit and Payment of Notes. The Issuer shall promptly pay the principal of and interest on the Notes on the dates and in the manner provided in the Notes and in this Indenture.

SECTION 4.02. Reports and Other Information.

(a) Annual Financials. Holdings shall post on the SEC EDGAR website, as soon as available, but in any event within 120 days (or such earlier date on which Holdings is required to file a Form 10-K under the Exchange Act, if applicable) after the end of each fiscal year of the Issuer, beginning with the fiscal year ending December 31, 2012, a consolidated and consolidating balance sheet of Holdings and its Subsidiaries as of the end of such fiscal year, and the related consolidated and consolidating statements of income, cash flows and stockholder’s equity for such fiscal year, setting forth in each case in comparative form the figures for the previous fiscal year, all prepared in accordance with GAAP, with such consolidated and consolidating financial statements to be audited and accompanied by (i) a report and opinion of Holdings’ independent certified public accounting firm of recognized national standing (which report and opinion shall be prepared in accordance with GAAP), stating that such financial statements fairly present, in all material respects, the consolidated financial condition, results of operations and cash flows of Holdings as of the dates and for the periods specified in accordance with GAAP, and (ii) (if and only if Holdings is required to comply with the internal control provisions pursuant to Section 404 of the Sarbanes-Oxley Act of 2002 requiring an attestation report of such independent certified public accounting firm) an attestation report of such independent certified public accounting firm as to Holdings’ internal controls pursuant to Section 404 of the Sarbanes-Oxley Act of 2002 attesting that such internal controls meet the requirements of the Sarbanes-Oxley Act of 2002. Such consolidated and consolidating financial statements shall be certified by a Financial Officer as fairly presenting the consolidated and consolidating financial condition, results of operations and cash flows of Holdings and its Subsidiaries as of the dates and for the periods specified in accordance with GAAP consistently applied.

(b) Quarterly Financials. Holdings shall post on the SEC EDGAR website, as soon as available, but in any event within 60 days (or such earlier date on which Holdings

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is required to file a Form 10-Q under the Exchange Act, if applicable) after the end of each of the first three fiscal quarters of each fiscal year of Holdings, beginning with the fiscal quarter ending March 31, 2013, a consolidated and consolidating balance sheet of Holdings and its Subsidiaries as of the end of such fiscal quarter, and the related consolidated and consolidating statements of income, cash flows and stockholder’s equity for such fiscal quarter and (in respect of the second and third fiscal quarters of such fiscal year) for the then-elapsed portion of Holdings’ fiscal year, setting forth in each case in comparative form the figures for the comparable period or periods in the previous fiscal year, all prepared in accordance with GAAP, with such consolidated and consolidating financial statements to be certified by a Financial Officer as fairly presenting the consolidated and consolidating financial condition, results of operations and cash flows of Holdings and its Subsidiaries as of the dates and for the periods specified in accordance with GAAP consistently applied, and on a basis consistent with the audited consolidated financial statements referred to under Section 4.02(a), subject to normal year-end audit adjustments and the absence of footnotes.

(c) Budget and Portfolio Premium Schedule.

(i) On or prior to the Issue Date, the Issuer shall deliver to the Indenture Trustee the initial Budget, the Portfolio Premium Schedule and the initial Cash Balance Report.

(ii) On any applicable Monthly Reporting Date after the Issue Date, (A) to the extent that a Portfolio Policy has (1) lapsed, (2) matured, (3) been sold, or (4) the Issuer has determined it is prudent and in the best interests of the Issuer with the objective of optimizing premium payments to alter the payment date for the payment of premium on any Portfolio Policy, the Issuer shall deliver to the Indenture Trustee a revised Portfolio Premium Schedule reflecting such changes; provided, that in the case of changes as a result of the preceding clause (4), such changes only alter any such payment date to another date in the same calendar month, and (B) to the extent that the aggregate of all Permitted Payments actually made through such Monthly Reporting Date is less than was shown on the latest Budget that was in effect, the Issuer may deliver to the Indenture Trustee a revised Budget showing all projected Permitted Payments for each remaining Monthly Reporting Period prior to the Final Maturity Date. The Indenture Trustee will notify the Holders by electronic mail within five (5) Business Days of receipt that it has received a revised Portfolio Premium Schedule or revised Budget (but will not forward a copy of such revised document unless requested).

(d) Cash Balance Report. On each Monthly Reporting Date, the Issuer will deliver to the Indenture Trustee a Cash Balance Report for the following Monthly Reporting Period (or in the case of the first Cash Balance Report, for the then current Monthly Reporting Period). The Indenture Trustee will within three (3) Business Days thereof notify the Holders by electronic mail if (i) a Cash Balance Report is not received within three (3) Business Days after a Monthly Reporting Date or (ii) a Cash Balance Report provides on its face that the Asset Coverage Ratio has not been satisfied.

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(e) Information During Event of Default. The Issuer shall deliver to the Indenture Trustee, promptly, such additional information regarding the business or financial affairs of Holdings or any of its Subsidiaries, or compliance with the terms of this Indenture, as the Indenture Trustee, any Holder or any holder of beneficial interests in the Notes may from time to time reasonably request during the existence of any Event of Default or following a Sale Trigger (subject to reasonable requirement of confidentiality, including requirements imposed by law or contract; and provided that the Issuer shall not be obligated to disclose any information that is reasonably subject to the assertion of attorney-client privilege). The Issuer shall further inform the Indenture Trustee that such additional information is being delivered pursuant to this Section 4.02(e). The Indenture Trustee will within three (3) Business Days of receipt notify the Holders by electronic mail of receipt of such information (subject to the provisions of Section 4.02(j)).

(f) Rule 144A Information. The Issuer shall deliver to the Holders and any prospective purchaser of the Notes designated by a Holder, promptly upon the request of any such Person, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act.

(g) Notice of Default. The Issuer shall deliver to the Indenture Trustee promptly and in any event within three Business Days after the occurrence thereof, (i) notice of any Default or Event of Default and specifying the nature thereof in reasonable detail, and (ii) notice of a Sale Trigger and the exact date on which such Sale Trigger occurred (and the other Sale Trigger notices required in accordance with Section 4.13 hereof). The Indenture Trustee will promptly (and, in any event, within three (3) Business Days of receipt) notify the Holders by electronic mail of receipt of any such notice of Default or Event of Default, but shall not notify the Holders of receipt of any notice of a Sale Trigger.

(h) Supplementary Information. Each Obligor shall deliver to the Indenture Trustee, promptly upon request, such other information regarding such Obligor or any of its Subsidiaries, including with respect to any Life Policies owned by any of them or with respect to any other Collateral, as the Indenture Trustee or any Holder may reasonably request in writing to such Obligor. The Indenture Trustee will within five (5) Business Days of receipt thereof notify the Holders by electronic mail of receipt of such supplementary information.

(i) Portfolio Policy Lapse. The Issuer shall promptly notify the Indenture Trustee if a Portfolio Policy lapses. The Indenture Trustee will within three (3) Business Days of receipt thereof notify the Holders of receipt of such notice or of the receipt of such notice from the Securities Intermediary.

(j) Communication of Information. The applicable Obligor, shall identify all reports and other documents delivered to the Indenture Trustee under paragraph (e) or (h) above as being (i) of a type that would be publicly available if the Obligors were public reporting companies or (ii) not material with respect to the Obligors or their respective Subsidiaries or any of their respective securities for purposes of foreign, United States

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federal and state securities laws (all such information and documentation referred to in (i) and (ii) being “Public Investor Information”). Any information and documentation that is identified as not Public Investor Information by an Obligor is referred to herein as “Private Investor Information.” The applicable Obligor shall further clearly label or stamp any such report or document as either (x) containing Private Investor Information (which documents will be disseminated by the Issuer or Indenture Trustee by electronic mail, as applicable, only to Holders that request Private Investor Information) or (y) containing solely Public Investor Information. The Indenture Trustee will deliver by electronic mail reports, documents and other information containing Private Investor Information only to those Holders that request receipt of such information.

SECTION 4.03. Limitation on Incurrence of Indebtedness. (a) None of the Obligors shall, and Holdings shall not permit any Group Company to, directly or indirectly, Incur any Indebtedness.

(b) The limitations set forth in Section 4.03(a) shall not apply to:

(i) the Incurrence by the Issuer and the Guarantors of Indebtedness represented by the Notes and the Guarantees;

(ii) Indebtedness of Washington Square Financial, LLC and its Wholly Owned Subsidiaries to finance the purchase of structured settlement receivables in the ordinary course of business;

(iii) Indebtedness of Holdings to another Guarantor or the Issuer; provided, that any subsequent issuance or transfer of any Capital Stock or any other event that results in any such Guarantor ceasing to be a Subsidiary of Holdings or any other subsequent transfer of any such Indebtedness (except to Holdings or another Guarantor or any pledge of such Indebtedness constituting a Permitted Lien) shall be deemed, in each case, to be an Incurrence of such Indebtedness not permitted by this clause (iii);

(iv) Indebtedness of a Guarantor to the Issuer or another Guarantor; provided, that any subsequent issuance or transfer of any Capital Stock or any other event that results in any Guarantor holding such Indebtedness ceasing to be a Subsidiary of Holdings or any other subsequent transfer of any such Indebtedness (except to the Issuer or another Subsidiary or any pledge of such Indebtedness constituting a Permitted Lien) shall be deemed, in each case, to be an Incurrence of such Indebtedness not permitted by this clause (iv);

(v) Indebtedness of any Group Company set forth on Schedule 4.03;

(vi) any guarantee by a Guarantor of Indebtedness or other obligations of any Group Company so long as the Incurrence of such Indebtedness is otherwise permitted under the terms of this Indenture;

(vii) Indebtedness in respect of any Encumbered Policy;

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(viii) Indebtedness of any Group Company in respect of surety bonds in the ordinary course of business; and

(ix) Indebtedness arising in connection with endorsement of instruments for deposit in the ordinary course of business.

(c) Notwithstanding Section 4.03(a), Indebtedness not permitted by Section 4.03(b) may be incurred or issued by (i) any Group Company (other than the Issuer) provided that an amount equal to the proceeds thereof is applied to redeem the Notes in accordance with and to the extent required by Section 3.06, and (ii) the Issuer provided that an amount equal to the proceeds thereof is applied to redeem the Notes in full in accordance with Section 3.06.

SECTION 4.04. Limitation on Restricted Payments. (a) None of the Obligors shall, and Holdings shall not permit any Group Company to, directly or indirectly:

(i) declare or pay any dividend or make any distribution on account of its Equity Interests, including any payment made in connection with any merger, amalgamation or consolidation (other than dividends or distributions by a Subsidiary so long as, in the case of any dividend or distribution payable on or in respect of any class or series of securities issued by a Subsidiary other than a Wholly Owned Subsidiary, Holdings or a Subsidiary receives at least its pro rata share of such dividend or distribution in accordance with its Equity Interests in such class or series of securities);

(ii) purchase or otherwise acquire or retire for value any Equity Interests of the Issuer;

(iii) make any principal payment on, or redeem, repurchase, defease or otherwise acquire or retire for value, in each case prior to any scheduled repayment or scheduled maturity, any Indebtedness (other than the payment, redemption, repurchase, defeasance, acquisition or retirement of the Notes); or

(iv) make any Restricted Investment.

(b) The provisions of Section 4.04(a) shall not prohibit any Restricted Payments in connection with:

(i) transactions permitted by Section 4.07 and

(ii) Permitted Payments from the Issuer to Holdings as contemplated in Section 2.08.

(c) Holdings shall not permit to exist any Subsidiary that is not organized or existing under the laws of the United States of America or any state or territory thereof or the District of Columbia (other than offshore special purpose entities formed in connection with a financing or proposed financing transaction).

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SECTION 4.05. Dividend and Other Payment Restrictions Affecting Subsidiaries. None of the Obligors shall, and Holdings shall not permit any Group Company to, directly or indirectly, create or otherwise cause or suffer to exist or become effective any consensual encumbrance or consensual restriction on the ability of any Subsidiary to:

(a) (i) pay dividends or make any other distributions to Holdings or any of its Subsidiaries (1) on its Capital Stock; or (2) with respect to any other interest or participation in, or measured by, its profits; or (ii) pay any Indebtedness owed to Holdings or any of its Subsidiaries;

(b) make loans or advances to Holdings or any of its Subsidiaries; or

(c) sell, lease or transfer any of its properties or assets to Holdings or any of its Subsidiaries,

except in each case for such encumbrances or restrictions existing under or by reason of:

(1) contractual encumbrances or restrictions in effect on the Issue Date (and not described in clauses (2) through (9) below);

(2) the Transaction Documents;

(3) Requirements of Law;

(4) contracts or agreements for the sale of assets, including any restriction with respect to a Subsidiary imposed pursuant to an agreement entered into for the sale or disposition of the Capital Stock or assets of such Subsidiary pending the closing of such sale or disposition;

(5) Indebtedness otherwise permitted to be Incurred pursuant to Sections 4.03 that limit the rights of the debtor to dispose of the assets securing such Indebtedness or to pay dividends or distributions or pay any Indebtedness owed to Holdings or any Subsidiary;

(6) restrictions on cash or other deposits or net worth imposed by customers under contracts entered into in the ordinary course of business;

(7) customary provisions contained in leases, licenses and other similar agreements entered into in the ordinary course of business;

(8) any Restricted Investment not prohibited by Section 4.04 and any Permitted Investment;

(9) customary provisions in partnership agreements, limited liability company organizational governance documents, joint venture agreements and other similar agreements entered into in the ordinary course of business that restrict the transfer of ownership interests in such partnership, limited liability company, joint venture or similar Person; or

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(10) any encumbrances or restrictions of the type referred to in clauses (a), (b) and (c) above imposed by any amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings of the contracts, instruments or obligations referred to in clauses (1) through (9) above; provided that such amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings are, in the good faith judgment of the Issuer, no more restrictive with respect to such dividend and other payment restrictions than those contained in the dividend or other payment restrictions prior to such amendment, modification, restatement, renewal, increase, supplement, refunding, replacement or refinancing.

For purposes of determining compliance with this Section 4.05, (i) the priority of any Preferred Stock in receiving dividends or liquidating distributions prior to dividends or liquidating distributions being paid on common stock shall not be deemed a restriction on the ability to make distributions on Capital Stock and (ii) the subordination of loans or advances made to the Issuer or a Subsidiary of the Issuer to other Indebtedness Incurred by the Issuer or any such Subsidiary shall not be deemed a restriction on the ability to make loans or advances.

SECTION 4.06. Asset Sales. None of the Obligors shall, and Holdings shall not permit any Group Company to, cause or make an Asset Sale other than in cash and in accordance with Section 3.06 hereof.

SECTION 4.07. Transactions with Affiliates. (a) None of the Obligors shall, and Holdings shall not permit any Group Company to, directly or indirectly, make any payment to, or sell, lease, transfer or otherwise dispose of any of its properties or assets to, or purchase any property or assets from, or enter into or make or amend any transaction or series of transactions, contract, agreement, understanding, loan, advance or guarantee with, or for the benefit of, any Affiliate of the Issuer (each of the foregoing, an “Affiliate Transaction”), unless:

(i) such Affiliate Transaction is on terms that are not materially less favorable to such Obligor or the relevant Subsidiary than those that could have been obtained in a comparable transaction by such Obligor or such Subsidiary with an unrelated Person; and

(ii) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $5.0 million, such Obligor or such Subsidiary delivers to the Indenture Trustee a resolution adopted in good faith by the majority of the Board of Directors of such Obligor or such Subsidiary, approving such Affiliate Transaction and set forth in an Officers’ Certificate certifying that such Affiliate Transaction complies with clause (i) above. The Indenture Trustee shall have no duty or obligation with respect to any such resolution.

(b) The provisions of Section 4.07(a) shall not apply to the following:

(i)  (A) transactions between or among Holdings and/or any of its Subsidiaries (or an entity that becomes a Subsidiary as a result of such

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transaction) and (B) any merger, consolidation or amalgamation of a Group Company with its direct parent; provided that such parent shall have no material liabilities and no material assets other than cash, Cash Equivalents and the Capital Stock of the Subsidiary and such merger, consolidation or amalgamation is otherwise in compliance with the terms of this Indenture and effected for a bona fide business purpose;

(ii) Restricted Payments permitted by Section 4.04 and Permitted Investments;

(iii) the payment of reasonable and customary compensation (including bonuses), fees and reimbursement of expenses paid to, and indemnity provided on behalf of, officers, directors, employees or consultants of such Obligor or any Subsidiary;

(iv) transactions in which such Obligor or such Subsidiary, as the case may be, delivers to the Indenture Trustee a letter from an Independent Financial Advisor stating that such transaction is fair to such Obligor or such Subsidiary from a financial point of view or meets the requirements of clause (i) of Section 4.07(a); provided, that the Indenture Trustee shall have no duty or obligation with respect to any such letter;

(v) the existence of, or the performance by such Obligor or such Subsidiary of its obligations under the terms of any stockholders or equityholders agreement (including any registration rights agreement or purchase agreement related thereto) to which it is a party as of the Issue Date and that is set forth on Schedule 4.07;

(vi) any contribution to the capital of the Issuer;

(vii) transactions between Holdings and any Person, a director of which is also a director of Holdings; provided, however, that such director abstains from voting as a director of Holdings on any matter involving such other Person;

(viii) any employment agreements entered into by such Obligor or such Subsidiary in the ordinary course of business;

(ix) the payment of allocated expenses under any shared services agreement; and

(x) (A) any related party transactions described in Holdings’ 2011 annual report on Form 10-K as such arrangements may be amended or replaced in any manner that, taken as a whole, is not more disadvantageous to the Holders or the Issuer in any material respect than such arrangement as it was in effect on the date of this Indenture or (B) any transaction pursuant to any arrangement referred to in the immediately preceding clause (A).

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SECTION 4.08. Further Instruments and Acts. Upon request of the Indenture Trustee, each Obligor shall execute and deliver such further instruments and do such further acts as may be reasonably necessary or proper to carry out more effectively the purpose of this Indenture.

SECTION 4.09. Liens. None of the Obligors shall, and Holdings shall not permit any Group Company to, directly or indirectly, create, Incur or suffer to exist any Lien on any asset or property of such Obligor or such Subsidiary, other than (i) Permitted Liens on any asset or property not comprising Collateral, (ii) Liens securing the Notes or the Guarantees and (iii) collateral assignments for the benefit of a third party filed with Carriers on the Portfolio Policies only to the extent such collateral assignments are in contemplation of a refinancing in full of the Secured Obligations and the Indenture Trustee is in possession of cancellation instructions that may be delivered to such Carriers within 90 days following the date of this Indenture (it being understood and agreed that the Liens in favor of the Indenture Trustee shall remain in place and perfected until termination in accordance with the terms of the Transaction Documents and that the Indenture Trustee shall have no duty with respect to such collateral assignments or any cancellation instructions with respect thereto, except as expressly set forth in this Section 4.09). The Indenture Trustee shall hold such cancellation instructions and deliver them in accordance with the instructions of the Required Holders.

SECTION 4.10. Maintenance of Office or Agency. (a) The Issuer shall maintain an office or agency (which may be an office of the Indenture Trustee or an affiliate of the Indenture Trustee or Note Registrar) where Notes may be surrendered for registration of transfer or for exchange and where notices and demands to or upon the Issuer in respect of the Notes and this Indenture may be served. The Issuer shall give prompt written notice to the Indenture Trustee of the location, and any change in the location, of such office or agency. If at any time the Issuer shall fail to maintain any such required office or agency or shall fail to furnish the Indenture Trustee with the address thereof, such presentations and surrenders may be made at the corporate trust place of payment and notices and demands may be made or served at the corporate trust office of the Indenture Trustee as set forth in Section 11.01.

(b) The Issuer may also from time to time designate one or more other offices or agencies where the Notes may be presented or surrendered for any or all such purposes and may from time to time rescind such designations; provided, however, that no such designation or rescission shall in any manner relieve the Issuer of its obligation to maintain an office or agency for such purposes. The Issuer shall give prompt written notice to the Indenture Trustee of any such designation or rescission and of any change in the location of any such other office or agency.

(c) The Issuer hereby designates the corporate trust office of the Indenture Trustee or its agent as such office or agency of the Issuer in accordance with Section 2.04.

SECTION 4.11. Amendment of Security Documents. The Issuer shall not amend, modify or supplement, or permit or consent to any amendment, modification or supplement of, the Security Documents in any way that would be adverse to the Holders of the Notes in any material respect, except as described in Article 10 or as permitted in Article 8.

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SECTION 4.12. Use of Proceeds; Ownership of Portfolio Policies. (a) The Issuer shall deposit on the Issue Date the net proceeds of the issuance of the Notes into the Collateral Account pursuant to the Note Purchase Agreement and direct the usage of such proceeds only in accordance with Section 2.08.

(b) With respect to any Portfolio Policies owned by the Issuer but not credited to the Securities Account as of the Issue Date, the Issuer shall use commercially reasonable efforts to transfer title to such Portfolio Policies into the name of the Securities Intermediary under and as defined in the Securities Account Control Agreement and to credit such Portfolio Policies to the Securities Account within 30 days of the Issue Date (subject to delays caused by any Carrier). Following the Issue Date, any Portfolio Policy shall be titled in the name of such Securities Intermediary and credited to the Securities Account as promptly as possible (subject to delays caused by any Carrier).

SECTION 4.13. Sale Trigger. Upon the occurrence of a Sale Trigger, the Issuer shall commence efforts to market and sell sufficient Portfolio Policies to repay the Note Balance and accrued interest on the Notes in full. In furtherance of such sale and repayment, the Issuer shall (i) retain a sales and marketing advisor to conduct a sale of such selected Portfolio Policies and notify the Indenture Trustee of such retention within 45 days of the Sale Trigger (such notice to include the date the Sale Trigger occurred and the date the advisor was appointed), (ii) in conjunction with such advisor select the Portfolio Policies for sale and notify the Indenture Trustee that such selection has been made within 10 days of appointing the advisor, (iii) market the Portfolio Policies in accordance with typical, standard market policies and procedures using an auction process designed by such advisor and commence such auction process and notify the Indenture Trustee thereof within 20 days of appointing such advisor (such notice to the Indenture Trustee to identify the date on which the auction process was commenced), and (iv) work diligently to complete the auction process and sell such Portfolio Policies for a price and on terms and conditions that such advisor deems commercially reasonable under then current market conditions (any sale made to the highest bidder following receipt of two or more bids being deemed “commercially reasonable” for this purpose), such sale to be completed within 90 days of the date of occurrence of the Sale Trigger, and notify the Indenture Trustee and the Holders of the completion of such sale prior to or on such 90^th day. Notwithstanding the foregoing, the Issuer shall not be required to engage a sales and marketing advisor or engage in an auction if the Issuer receives a bid to sell Portfolio Policies at a price no less than their aggregate reported Policy Valuation within 30 days of the occurrence of a Sale Trigger and such sale is completed within 45 days of the date of occurrence of the Sale Trigger. The Indenture Trustee will notify the Holders if the Issuer does not deliver any notice when required under this Section 4.13 within five (5) Business Days of the date on which such notice was first not delivered (it being understood that the Indenture Trustee will not notify the Holders upon receipt of notice of a Sale Trigger itself).

SECTION 4.14. Asset Coverage Ratio. The Issuer shall not permit the Asset Coverage Ratio to be (i) if the aggregate Initial Note Balance is at least $35,000,000 and less than $40,000,000, less than 2.6 to 1.0, (ii) if the aggregate Initial Note Balance is at least $40,000,000 and less than $45,000,000, less than 2.25 to 1.0, and (iii) if the Aggregate Initial Note Balance is $45,000,000, less than 2.0 to 1.0, at any time.

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SECTION 4.15. Policy Valuation. The Required Holders will have the right to institute an independent appraisal of the Portfolio Policies on one occasion after the Issue Date and at the Holders’ expense; provided that upon the occurrence and continuation of an Event of Default the Required Holders may request an independent appraisal thereof at any time without restriction and at Holdings’ expense. If any valuation obtained by the Required Holders pursuant to the preceding sentence is less than the value of the Portfolio Policies reported by Holdings in its most recent SEC filing by 15% or more, then Holdings and the Required Holders shall appoint a mutually agreeable independent appraiser to conduct an independent appraisal of the Portfolio Policies; provided, that, if Holdings and the Required Holders are unable to mutually agree on an independent appraiser, Holdings on one hand and the Required Holders on the other shall each select an independent appraiser and those two independent appraisers shall select a third independent appraiser to conduct the independent appraisal of the Portfolio Policies, and in any such case the Policy Valuation thereafter shall be no greater than the value provided by such independent appraiser without the consent of the Required Holders.

SECTION 4.16. Separateness of Issuer. The Issuer shall comply with the separateness provisions of the Operating Agreement and shall not amend the Operating Agreement without the consent of the Indenture Trustee, which consent shall only be provided in accordance with the direction of the Required Holders.

SECTION 4.17. Limited Purpose. (a) The Issuer agrees that, as long as any of the Notes are outstanding, it will not, directly or through any agent, hold any assets or engage in any activities other than: (i) entering into this Indenture; (ii) entering into the other Transaction Documents to which it is a party; (iii) acquiring and holding the Portfolio Policies (through the Securities Intermediary or otherwise); (iv) selling or causing the sale of the Portfolio Policies; (v) making payments on the Notes and payments of other obligations of the Issuer permitted to be paid in accordance with this Indenture; and (vi) taking such actions as are reasonable or necessary to perform its obligations or enforce its rights under any of the foregoing agreements.

(b) Holdings shall not and shall not permit any of the Group Companies to engage in any business other than the business engaged in by Holdings and the Group Companies on the Issue Date and any Similar Business.

SECTION 4.18. Maintenance of Existence; Compliance. (a) Each of the Obligors shall, and Holdings shall cause each Group Company to, (i) preserve, renew and keep in full force and effect its organizational existence and (ii) take all reasonable action to maintain all rights, privileges and franchises necessary or desirable in the normal conduct of its business, except, in the case of clause (ii) above, to the extent that failure to do so could not reasonably be expected to have a Material Adverse Effect; and (b) comply with all contractual obligations and Requirements of Law except to the extent that failure to comply therewith could not, in the aggregate, reasonably be expected to have a Material Adverse Effect.

SECTION 4.19. Maintenance of Property; Insurance. Each of the Obligors shall, and Holdings shall cause each Pledged Entity to, (i) keep all property useful and necessary in its business in good working order and condition, ordinary wear and tear excepted and (ii) maintain with financially sound and reputable insurance companies insurance on all its property in at least such amounts and against at least such risks (but including in any event public liability, product liability and business interruption) as are usually insured against in the same general area by companies engaged in the same or a Similar Business.

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SECTION 4.20. Inspection of Property; Books and Records; Discussions. Each of the Obligors shall, and Holdings shall cause each Group Company to, (i) keep proper books of records and account in which full, true and correct entries in conformity with GAAP and all Requirements of Law shall be made of all dealings and transactions in relation to its business and activities and (ii) following the occurrence and during the continuation of an Event of Default or Sale Trigger, permit representatives of the Indenture Trustee or any Holder to visit and inspect any of its properties and examine and make abstracts from any of its books and records at any reasonable time and as often as may reasonably be desired and to discuss the business, operations, properties and financial and other condition of the Group Companies with officers and employees of the Group Companies and with their independent certified public accountants.

ARTICLE 5

DEFAULTS AND REMEDIES

SECTION 5.01. Events of Default. An “Event of Default” occurs if:

(a) the Issuer fails to pay (i) principal or premium, if any, of any Note when due, whether at its Final Maturity Date, upon optional or mandatory redemption, upon declaration of acceleration or otherwise or (ii) interest and other amounts due under the Transaction Documents (other than principal or premium) when due and, with respect to clause (ii), such failure continues for three Business Days,

(b) any Obligor fails to comply with any of its agreements (other than those referred to elsewhere in this Section 5.01) set forth in (i) Section 4.02(g), Section 4.03, Section 4.06, Section 4.09, Section 4.12, Section 4.13, Section 4.16, Section 4.17 or Section 4.18 , or (ii) other clauses of Section 4.02, Section 4.04, Section 4.05, Section 4.07, Section 4.08, Section 4.10, Section 4.11, Section 4.14, Section 4.15, Section 4.19 and Section 4.20 and in the case of this clause (ii) such failure continues for 10 days,

(c) any Obligor fails to comply with any of its agreements in the Notes or this Indenture (other than those referred to elsewhere in this Section 5.01) and such failure continues for 30 days,

(d) a representation or warranty of an Obligor set forth in the Note Purchase Agreement or any other Transaction Document is shown to be false in any material respect when made, and if capable of cure, such breach remains uncured for 15 days,

(e) any Obligor or any Significant Subsidiary fails to pay any Indebtedness (other than Indebtedness owing to a Group Company) within any applicable grace period after final maturity or the acceleration of any such Indebtedness by the holders thereof because of a default, in each case, if the total amount of such Indebtedness unpaid or accelerated exceeds $500,000 or its foreign currency equivalent,

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(f) any Obligor or any Significant Subsidiary pursuant to or within the meaning of any Bankruptcy Law:

(i) commences a voluntary case;

(ii) consents to the entry of an order for relief against it in an involuntary case;

(iii) consents to the appointment of a custodian of it or for any substantial part of its property; or

(iv) makes a general assignment for the benefit of its creditors or takes any comparable action under any foreign laws relating to insolvency,

(g) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that:

(i) is for relief against any Obligor or any Significant Subsidiary in an involuntary case;

(ii) appoints a custodian of any Obligor or any Significant Subsidiary or for any substantial part of its property; or

(iii) orders the winding up or liquidation of any Obligor or any Significant Subsidiary;

and the order or decree remains unstayed and in effect for 60 days,

(h) any Obligor or any Significant Subsidiary fails to pay final judgments aggregating in excess of $500,000 or its foreign currency equivalent (net of any amounts which are covered by enforceable insurance policies issued by solvent carriers), which judgments are not discharged, waived or stayed for a period of 60 days following the entry thereof,

(i) any Guarantee ceases to be in full force and effect (except as contemplated by the terms thereof) or any Guarantor denies or disaffirms its obligations under this Indenture or any Guarantee,

(j) any Obligor shall assert, in any pleading in any court of competent jurisdiction, that any Lien created under any Security Document is invalid or unenforceable,

(k) any Obligor fails to comply for 30 days after notice with its other agreements contained in the Security Documents except for a failure that would not be material to the Holders of the Notes and would not materially affect the value of the Collateral taken as a whole,

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(l) a Cash Balance Report is not delivered on any Monthly Reporting Date, or within the next three following Business Days, to the Indenture Trustee,

(m) there is a lapse of any Portfolio Policy;

(n) there is a lapse of any Life Policy legally or beneficially owned by any Group Company (other than the Issuer), excluding (a) lapses of Encumbered Policies and (b) lapses of one or more of 25 policies separately identified on the Issue Date to the Indenture Trustee (which the Indenture Trustee shall have no duty to track or monitor); provided that the aggregate Policy Valuation for all such lapsed policies described in this clause (b) shall be no more than $4,000,000,

(o) the Issuer fails to maintain aggregate cash of at least $9,000,000 at any time in the Collateral Account;

(p) an ERISA Event shall have occurred, (ii) a trustee shall be appointed by a United States district court to administer any Pension Plan, (iii) the PBGC shall institute proceedings to terminate any Pension Plan(s), (iv) any Obligor or any of their respective ERISA Affiliates shall have been notified by the sponsor of a Multiemployer Plan that it has incurred or will be assessed Withdrawal Liability to such Multiemployer Plan and such entity does not have reasonable grounds for contesting such Withdrawal Liability or is not contesting such Withdrawal Liability in a timely and appropriate manner; or (v) any other event or condition shall occur or exist with respect to a Plan; and in each case in clauses (i) through (v) above, such event or condition, together with all other such events or conditions, if any, could, in the sole judgment of the Required Holders reasonably be expected to result in a Material Adverse Effect;

(q) any Obligor becomes an investment company required to be registered under the Investment Company Act of 1940, as amended, and such event has an adverse effect on the interests of the Holders (in the sole discretion of the Required Holders);

(r) Holdings commits a material breach of the Non-Prosecution Agreement dated April 30, 2012 between Holdings and the United States Department of Justice (U.S. Attorney for the District of New Hampshire); or

(s) items identified in an Exception Report (as defined in the Securities Account Control Agreement) are not cured, or waived by the Required Holders, within ten (10) Business Days of the delivery to the Holders by the Indenture Trustee of an Exception Notice (as defined in the Securities Account Control Agreement).

The foregoing shall constitute Events of Default whatever the reason for any such Event of Default and whether it is voluntary or involuntary or is effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body.

The term “Bankruptcy Law” means Title 11, United States Code, or any similar U.S. federal or state law for the relief of debtors (or their foreign equivalents). The term “custodian” means any receiver, trustee, assignee, liquidator, custodian or similar official under any Bankruptcy Law.

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SECTION 5.02. Acceleration. If an Event of Default (other than an Event of Default specified in Section 5.01(f) or (g) with respect to the Issuer) occurs and is continuing, the Indenture Trustee or the Required Holders by notice to the Issuer may, and if such notice is given by the Required Holders such notice shall be given to the Issuer and the Indenture Trustee, declare that the principal of, and the premium, if any, and accrued but unpaid interest on, all Notes is due and payable. Upon such a declaration, such principal and interest shall be due and payable immediately. If an Event of Default specified in Section 5.01(f) or (g) with respect to the Issuer occurs, the principal of, and the premium, if any, and accrued but unpaid interest on, all the Notes shall ipso facto become and be immediately due and payable, without any declaration or other act on the part of the Indenture Trustee or any Holders. The Required Holders by notice to the Indenture Trustee may rescind an acceleration and its consequences if such Required Holders determine that the rescission would not conflict with any judgment or decree and if all existing Events of Default (except nonpayment of principal, interest or premium that has become due solely because of the acceleration) have been cured or waived.

SECTION 5.03. Other Remedies. If an Event of Default occurs and is continuing, the Indenture Trustee, after notice to the Holders and receipt of specific written direction from the Required Holders as to how to proceed, may pursue any available remedy at law or in equity to collect the payment of principal of or interest on the Notes or to enforce the performance of any provision of the Notes or this Indenture.

The Indenture Trustee may maintain a proceeding even if it does not possess any of the Notes or does not produce any of them in the proceeding. A delay or omission by the Indenture Trustee or any Holder in exercising any right or remedy accruing upon an Event of Default shall not impair the right or remedy or constitute a waiver of or acquiescence in the Event of Default. No remedy is exclusive of any other remedy. To the extent required by law, all available remedies are cumulative.

Following an Event of Default, the Required Holders may instruct the Indenture Trustee to deliver the “Notice of Exclusive Control” under and as defined in the Securities Account Control Agreement.

SECTION 5.04. Waiver of Past Defaults. Provided the Notes are not then due and payable by reason of a declaration of acceleration, the Required Holders by written notice to the Indenture Trustee may waive an existing Default or an Event of Default and its consequences except (a) a Default or an Event of Default in the payment of the principal of or interest on a Note, (b) a Default or an Event of Default arising from the failure to redeem or purchase any Note when required pursuant to the terms of this Indenture or (c) a Default or an Event of Default in respect of a provision that under Section 8.02 cannot be amended without the consent of each Holder affected. When a Default or an Event of Default is waived, it is deemed cured and the Issuer, the Indenture Trustee and the Holders will be restored to their former positions and rights under this Indenture, but no such waiver shall extend to any subsequent or other Default or an Event of Default or impair any consequent right. Any past Default or an Event of Default or compliance with any provisions may be waived with the consent of the Required Holders.

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SECTION 5.05. Control by Majority. The Required Holders may direct the time, method and place of conducting any proceeding for any remedy available to the Indenture Trustee or of exercising any trust or power conferred on the Indenture Trustee. However, the Indenture Trustee may refuse to follow any direction that conflicts with law or this Indenture or that the Indenture Trustee determines is unduly prejudicial to the rights of any other Holder or that would involve the Indenture Trustee in personal liability. Prior to taking any action under this Indenture, the Indenture Trustee shall be entitled to indemnification satisfactory to it in its sole discretion against all losses and expenses caused by taking or not taking such action. The Holders understand and agree that in fulfilling its role as Indenture Trustee under the Securities Account Control Agreement, the Indenture Trustee shall act solely in accordance with the written direction of the Required Holders. Without limiting the generality of the foregoing, the Holders hereby authorize and direct the Indenture Trustee to hold any notices received from the Securities Intermediary (other than those notices specifically described in Section 4.02(i) hereto) for the benefit of the Holders, it being understood and agreed that the Indenture Trustee shall have no other duties or obligations with respect to such notices, except as expressly set forth in this Indenture.

SECTION 5.06. Limitation on Suits. (a) Except to enforce the right to receive payment of principal, premium (if any) or interest when due, no Holder may pursue any remedy with respect to this Indenture or the Notes unless:

(i) the Holder gives the Indenture Trustee written notice stating that an Event of Default is continuing;

(ii) the Required Holders make a written request to the Indenture Trustee to pursue the remedy;

(iii) such Holder or Holders offer to the Indenture Trustee security or indemnity satisfactory to it against any loss, liability or expense; and

(iv) the Indenture Trustee does not comply with the request within 30 days after receipt of the request and the offer of security or indemnity.

(b) A Holder may not use this Indenture to prejudice the rights of another Holder or to obtain a preference or priority over another Holder.

SECTION 5.07. Rights of the Holders to Receive Payment. Notwithstanding any other provision of this Indenture, the right of any Holder to receive payment of principal of and interest on the Notes held by such Holder, on or after the respective due dates expressed or provided for in this Indenture or in the Notes, or to bring suit for the enforcement of any such payment on or after such respective dates, shall not be impaired or affected without the consent of such Holder.

SECTION 5.08. Collection Suit by Indenture Trustee. If an Event of Default specified in Section 5.01(a) occurs and is continuing, the Indenture Trustee may recover

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judgment in its own name and as trustee of an express trust against the Issuer or any other obligor on the Notes for the whole amount then due and owing (together with interest on overdue principal and (to the extent lawful) on any unpaid interest at the rate provided for in the Notes) and the amounts provided for in Section 6.06.

SECTION 5.09. Indenture Trustee May File Proofs of Claim. The Indenture Trustee may file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Indenture Trustee (including any claim for reasonable compensation, expenses disbursements and advances of the Indenture Trustee (including counsel, accountants, experts or such other professionals as the Indenture Trustee deems necessary, advisable or appropriate)) and the Holders allowed in any judicial proceedings relative to the Issuer or any Guarantor, their creditors or their property, shall be entitled to participate as a member, voting or otherwise, of any official committee of creditors appointed in such matters and, unless prohibited by law or applicable regulations, may vote on behalf of the Holders in any election of a trustee in bankruptcy or other Person performing similar functions and be a member of a creditors’ or other similar committee, and any custodian in any such judicial proceeding is hereby authorized by each Holder to make payments to the Indenture Trustee and, in the event that the Indenture Trustee shall consent to the making of such payments directly to the Holders, to pay to the Indenture Trustee any amount due it for the reasonable compensation, expenses, disbursements and advances of the Indenture Trustee, its agents and its counsel, and any other amounts due the Indenture Trustee under Section 6.06.

SECTION 5.10. Priorities. If the Indenture Trustee collects any money or property pursuant to this Article 5, it shall pay out such money or property in the following order:

FIRST: to the Indenture Trustee for amounts due under Section 6.06;

SECOND: to the Holders for amounts due and unpaid on the Notes for interest, ratably, without preference or priority of any kind, according to the amounts due and payable on the Notes for interest;

THIRD: to the Holders for amounts due and unpaid on the Notes for principal, and premium, if any, ratably, without preference or priority of any kind, according to the amounts due and payable on the Notes for principal and, if any, premium; and

FOURTH: to the Issuer.

The Indenture Trustee may fix a record date and payment date for any payment to the Holders pursuant to this Section 5.10. At least 15 days before such record date, the Indenture Trustee shall mail to each Holder and the Issuer a notice that states the record date, the payment date and amount to be paid.

SECTION 5.11. Waiver of Stay or Extension Laws. Neither the Issuer nor any Guarantor (to the extent it may lawfully do so) shall at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay or extension law wherever enacted, now or at any time hereafter in force, which may affect the covenants or the performance of this Indenture; and the Issuer and each Guarantor (to the extent that it may

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lawfully do so) hereby expressly waive all benefit or advantage of any such law, and shall not hinder, delay or impede the execution of any power herein granted to the Indenture Trustee, but shall suffer and permit the execution of every such power as though no such law had been enacted.

ARTICLE 6

TRUSTEE

SECTION 6.01. Duties of Indenture Trustee. (a) Each Holder and each of the Obligors authorizes and directs the Indenture Trustee to enter into the Transaction Documents to which it is a party and to perform its obligations and exercise its rights thereunder in accordance therewith.

(b) Notwithstanding any provision of this Indenture or any other Transaction Document to the contrary:

(i) the Indenture Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Indenture and each Transaction Document to which it is a party and no implied duties, covenants or obligations shall be read into this Indenture or such Transaction Document against the Indenture Trustee (it being agreed that the permissive right of the Indenture Trustee to do things enumerated in this Indenture or any Transaction Document shall not be construed as a duty); and

(ii) in the absence of bad faith on its part, the Indenture Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Indenture Trustee and conforming to the requirements of this Indenture. The Indenture Trustee shall be under no duty to make any investigation as to any statement contained in any such instance, but may accept the same as conclusive evidence of the truth and accuracy of such statement or the correctness of such opinions. However, in the case of certificates or opinions required by any provision hereof to be provided to it, the Indenture Trustee shall examine the certificates and opinions to determine whether or not they conform to the requirements of this Indenture.

(c) The Indenture Trustee may not be relieved from liability for its own grossly negligent action, its own grossly negligent failure to act or its own willful misconduct, except that:

(i) this paragraph does not limit the effect of paragraph (b) of this Section 6.01;

(ii) the Indenture Trustee shall not be liable for any error of judgment made in good faith by a Trust Officer unless it is proved that the Indenture Trustee was grossly negligent in ascertaining the pertinent facts;

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(iii) the Indenture Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 5.05; and

(iv) no provision of this Indenture or any other Transaction Document shall require the Indenture Trustee to expend or risk its own funds or otherwise incur financial liability in the performance of any of its duties hereunder or in the exercise of any of its rights or powers.

(d) Every provision of this Indenture or any other Transaction Document that in any way relates to the Indenture Trustee is subject to this Section 6.01.

(e) The Indenture Trustee shall not be liable for interest on any money received by it except as the Indenture Trustee may agree in writing with the Issuer.

(f) Money held in trust by the Indenture Trustee need not be segregated from other funds except to the extent required by law.

(g) Every provision of this Indenture or any other Transaction Document relating to the conduct or affecting the liability of or affording protection to the Indenture Trustee shall be subject to the provisions of this Section.

SECTION 6.02. Rights of Indenture Trustee. (a) The Indenture Trustee may conclusively rely on any document believed by it to be genuine and to have been signed or presented by the proper person. The Indenture Trustee need not investigate any fact or matter stated in the document. Without limiting the generality of the foregoing, the following provisions of this Section 6.02 shall apply notwithstanding any provision of this Agreement or any other Transaction Document to the contrary.

(b) Before the Indenture Trustee acts or refrains from acting, it may require, at the expense of the Issuer, an Officers’ Certificate or an Opinion of Counsel or both. The Indenture Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on any Officers’ Certificate or Opinion of Counsel.

(c) The Indenture Trustee may act through agents and shall not be responsible for the misconduct or negligence of any agent appointed with due care.

(d) The Indenture Trustee shall not be liable for any action it takes or omits to take in good faith which it believes to be authorized or within its rights or powers; provided, however, that the Indenture Trustee’s conduct does not constitute willful misconduct or gross negligence.

(e) The Indenture Trustee may, at the expense of Issuer, consult with counsel of its own selection and the advice or opinion of counsel with respect to legal matters relating to this Indenture, the Notes, or any other Transaction Documents or any Opinion of Counsel shall be full and complete authorization and protection from liability in respect of any action taken, omitted or suffered by it hereunder in good faith and in accordance with the advice or opinion of such counsel or Opinion of Counsel.

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(f) The Indenture Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, approval, bond, debenture, note or other paper or document unless requested in writing to do so by the Required Holders, but the Indenture Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Indenture Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine the books, records and premises of the Issuer, personally or by agent or attorney, at the expense of the Issuer and shall incur no liability of any kind by reason of such inquiry or investigation.

(g) The Indenture Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture or any other Transaction Document at the request or direction of any of the Holders pursuant to this Indenture, unless such Holders shall have offered to the Indenture Trustee security or indemnity satisfactory to the Indenture Trustee in its sole discretion against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction.

(h) The rights, privileges, protections, immunities and benefits given to the Indenture Trustee, including its right to be compensated, reimbursed and indemnified as provided in Section 6.06, are extended to, and shall be enforceable by, the Indenture Trustee in each of its capacities hereunder, and each agent, custodian and other Person employed to act hereunder.

(i) The Indenture Trustee shall not be liable for any action taken or omitted by it in good faith at the direction of the Required Holders or the Holders of a majority in principal amount of the Notes, including, without limitation, any action with respect to the time, method and place of conducting any proceedings for any remedy available to the Indenture Trustee or the exercising of any power conferred by this Indenture or any other Transaction Document.

(j) Any action taken, or omitted to be taken, by the Indenture Trustee in good faith pursuant to this Indenture or any other Transaction Document upon the request or authority or consent of any Person who, at the time of making such request or giving such authority or consent, is the Holder of any Note shall be conclusive and binding upon future Holders of Notes and upon Notes executed and delivered in exchange therefor or in place thereof.

(k) In no event shall the Indenture Trustee be responsible or liable for any failure or delay in the performance of its obligations hereunder arising out of or caused by, directly or indirectly, forces beyond its control, including, without limitation, any force majeure event, or strikes, work stoppages, accidents, acts of war or terrorism, civil or military disturbances, nuclear or natural catastrophes or acts of God, and interruptions, loss or malfunctions of utilities, communications or computer (software and hardware) services; it being understood that the Indenture Trustee shall use commercially reasonable efforts which are consistent with accepted practices in the banking industry to resume performance as soon as practicable under the circumstances.

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(l) In the event the signature of the Indenture Trustee is required in connection with any sale of any portion of the Collateral, the Issuer, or if during or after an Event of Default, the Holders, shall ensure that the language set forth in Exhibit C shall be included in any document where such signature(s) may be required. The failure of such language to be so included shall excuse the Indenture Trustee from being required to join in the execution of such documents, without regard to any consequences that may result therefrom.

(m) Any request or direction of the Issuer mentioned herein shall be sufficiently evidenced by an Issuer Order.

(n) As a condition to the taking or omitting of any action by it hereunder, the Indenture Trustee may at the expense of the Issuer consult with counsel and the advice of such counsel or any opinion of counsel shall be full and complete authorization and protection in respect of any action taken or omitted by it hereunder in good faith and in reliance thereon. The Indenture Trustee shall not be required to take any action hereunder or otherwise if it shall have reasonably determined, on the advice of counsel, that such action is likely to result in liability on the part of the Indenture Trustee for which it has not received adequate indemnity or is contrary to the terms hereof or is otherwise contrary to law.

(o) Whenever this Indenture or any other Transaction Document provides that an action may be taken or not taken at the option, election or in the discretion of the Indenture Trustee, the Indenture Trustee shall have no obligation or duty to exercise such option, make such election, or exercise such discretion except upon the reasonable written instructions of the Issuer or the Required Holders. The Indenture Trustee shall have no liability to any party for carrying out any such direction.

(p) The permissive rights of the Indenture Trustee to take or refrain from taking any action enumerated in this Indenture or any other Transaction Document shall not be treated as a duty.

(q) Notwithstanding anything contained herein or in any other Transaction Document to the contrary, the Indenture Trustee (as such and in its individual capacity) shall have no duty or responsibility to perform any calculations for, or make any determinations as to the amounts, times, recipients, or other particulars of, any payments and/or transfers to be made by the Indenture Trustee or any other Person under this Indenture or any other Transaction Document, except as expressly required by the terms of this Indenture.

(r) The Indenture Trustee shall not be responsible for or in respect of and makes no representation as to the validity or sufficiency of any provision of this Indenture or for the due execution hereof by the Issuer or any other Obligor or for the form, character, genuineness, sufficiency, value or validity of any of the Collateral, and the Indenture Trustee shall in no event assume or incur any liability, duty or obligation to the Issuer, to any Holders, or to any other Person other than as expressly provided for herein.

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(s) The Indenture Trustee shall not be required to give any bond or surety in respect of the execution of this Indenture or any other Transaction Document or otherwise.

(t) Whether or not therein expressly so provided, every provision of this Indenture relating to the conduct, rights, powers, duties obligations or affecting the liability of or affording protection to the Indenture Trustee shall be subject to the provisions of this Section 6.02.

(u) The Issuer hereby agrees and, as evidenced by its acceptance of any benefits hereunder, each Holder agrees that the Indenture Trustee in any capacity has not provided and will not provide in the future, any advice, counsel or opinion regarding the tax, financial, investment or insurance implications and consequences of the preservation, funding, ongoing administration or otherwise with respect to the Collateral.

(v) The Indenture Trustee shall be under no obligation to institute, conduct or defend any litigation under this Indenture or in relation to this Indenture or any other Transaction Document, at the request, order or direction of any of the Holders, pursuant to the provisions of this Indenture or any other Transaction Document, unless such Holders shall have offered to the Indenture Trustee reasonable security or indemnity against the costs, expenses and liabilities that may be incurred therein or thereby.

(w) If the Indenture Trustee believes inconsistent alternative courses of action are permitted or required by the terms of this Indenture or any of the Transaction Documents, to which the Indenture Trustee is a party, believes that the terms of the Indenture or any of the Transaction Documents, to which the Indenture Trustee is a party are ambiguous, or is unsure as to the application, intent, interpretation or meaning of any provision of this Indenture or any other Transaction Document to which it is a party, the Indenture Trustee after reasonable diligence and consultation with counsel, shall take such action which, in its view, is in the best interest of the Holders and consistent with this Indenture unless it otherwise receives written direction from the Required Holders prior to such action, and notwithstanding any provision of this Indenture or any Transaction Document, or otherwise, the Indenture Trustee shall have no liability to any Person for any such action or following such direction.

(x) The receipt by the Indenture Trustee of any reports, information or other documents that are provided to the Indenture Trustee for purposes of enabling the sending party to comply with its document delivery requirements hereunder shall not constitute constructive or actual notice of any information contained therein or determinable from any information contained therein, including any other Person’s compliance with any of its covenants, representations or warranties hereunder, unless otherwise specifically set forth in this Indenture.

(y) The parties hereto hereby agree that to the extent that any security or instrument issued by the Issuer is rated by a nationally recognized statistical rating organization, Wilmington Trust, National Association, whether in its capacity as Indenture Trustee or any other capacity hereunder, shall have no duty or obligation to (i) maintain any password-protected web site within the meaning of 17 CFR 240.17g-5 (a “Site”), or (ii) upload any information required to be maintained on such Site.

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SECTION 6.03. Individual Rights of Indenture Trustee. The Indenture Trustee in its individual or any other capacity may become the owner or pledgee of Notes and may otherwise deal with the Issuer or its Affiliates with the same rights it would have if it were not Indenture Trustee. The Indenture Trustee and its affiliates have engaged, currently are engaged and may in the future engage in financial or other transactions with the Issuer and its affiliates in the ordinary course of their respective businesses. Any Note Registrar may do the same with like rights. However, the Indenture Trustee must comply with Section 6.10.

SECTION 6.04. Indenture Trustee’s Disclaimer. The Indenture Trustee shall not be responsible for and makes no representation as to the validity or adequacy of this Indenture, any Guarantee, the Notes, any Security Documents or any other Transaction Documents, it shall not be accountable for the Issuer’s use of the proceeds from the Notes, and it shall not be responsible for any statement of the Issuer or any Guarantor in this Indenture or in any document issued in connection with the sale of the Notes or in the Notes other than the Indenture Trustee’s certificate of authentication. The Indenture Trustee shall not be charged with knowledge of any Default or Event of Default or of the identity of any Significant Subsidiary unless either (a) a Trust Officer shall have actual knowledge thereof or (b) a Trust Officer shall have received written notice thereof in accordance with Section 11.01 hereof from the Issuer, any Guarantor or any Holder.

SECTION 6.05. Reserved.

SECTION 6.06. Compensation and Indemnity. The Issuer shall pay to the Indenture Trustee from time to time reasonable compensation for its services as set forth in a separate instrument. The Indenture Trustee’s compensation shall not be limited by any law on compensation of a trustee of an express trust. The Issuer shall reimburse the Indenture Trustee upon request for all reasonable out-of-pocket expenses incurred or made by it, including costs of collection, in addition to the compensation for its services. Such expenses shall include the reasonable compensation and expenses, disbursements and advances of the Indenture Trustee’s agents, counsel, accountants and experts. The Issuer and each Guarantor, jointly and severally, shall indemnify, protect, defend and hold harmless the Indenture Trustee, and each of its officers, directors, shareholders, employees and agents (collectively, the “Indemnified Persons”) against any and all loss, liability, claim, damage or expense (including reasonable attorneys’ fees and expenses) incurred by such Person or in connection with the acceptance or administration of this trust and the performance of its duties hereunder and under any other Transaction Document, including the costs and expenses of enforcing this Indenture or any other Transaction Document or a Guarantee against the Issuer or a Guarantor (including this Section 6.06) and defending itself against or investigating any claim (whether asserted by the Issuer, any Guarantor, any Holder or any other Person). The obligation to pay such amounts shall survive the payment in full or defeasance of the Notes or the removal or resignation of the Indenture Trustee. The Indenture Trustee shall notify the Issuer of any claim for which it may seek indemnity promptly upon obtaining actual knowledge thereof (such notice, the “Claim Notice”); provided, however, that any failure so to notify the Issuer shall not relieve the Issuer or any Guarantor of its indemnity obligations hereunder. The Issuer need not reimburse any expense or indemnify against any loss, liability or expense incurred by an indemnified party through such party’s own willful misconduct, gross negligence or bad faith.

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To secure the Issuer’s and the Guarantors’ payment obligations in this Section 6.06, the Indenture Trustee shall have a Lien prior to the Notes on all money or property held or collected by the Indenture Trustee other than money or property held in trust to pay principal of and interest on particular Notes.

The Issuer’s and the Guarantors’ payment obligations pursuant to this Section 6.06 shall survive the satisfaction or discharge of this Indenture, any rejection or termination of this Indenture under any bankruptcy law or the resignation or removal of the Indenture Trustee. Without prejudice to any other rights available to the Indenture Trustee under applicable law, when the Indenture Trustee incurs expenses after the occurrence of a Default specified in Section 5.01(f) or Section 5.01(g) with respect to the Issuer, the expenses are intended to constitute expenses of administration under the Bankruptcy Law.

No provision of this Indenture shall require the Indenture Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if repayment of such funds or adequate indemnity against such risk or liability is not assured to its satisfaction.

The Issuer may assume the defense of such proceeding, with a nationally recognized (or regionally recognized, if local counsel is necessary in such jurisdiction) counsel of its choosing, by delivering written notice of the Issuer’s election to do so to the Indemnified Person (the “Selection Notice”); provided, that, without limiting the generality of subsections (i)-(iii) of this paragraph, such counsel shall not assume the defense of any Indemnified Person if such Indemnified Person objects to the appointment of such counsel within a commercially reasonable time period after its receipt of the Selection Notice. The parties hereto hereby agree that for purposes of the proviso immediately preceding this sentence, a “commercially reasonable time period” shall include a minimum of fifteen (15) business days after the Indenture Trustee’s receipt of the Selection Notice. After delivery of the Selection Notice and the retention of such counsel by the Issuer without objection by the Indenture Trustee as provided in this Section 6.06 (the “Retained Counsel”), the Issuer shall not be liable to the Indemnified Person under this Indenture for any fees or expenses of counsel subsequently incurred by the Indemnified Person with respect to the same proceeding, provided that if (i) the employment of counsel other than the Retained Counsel has been previously authorized by the Issuer in writing with respect to the loss, liability or expense described in the Claim Notice, (ii) the Indemnified Person shall have reasonably concluded that there may be a conflict of interest between the Issuer and the Indemnified Person in the conduct of any such defense after providing prior written notice to the Issuer of the Indemnified Person’s reasonable conclusion of a conflict of interest and providing the Issuer a reasonable opportunity, and the Indemnified Person’s reasonable cooperation, to cure such conflict, if practicable, or (iii) the Issuer shall not, in fact, within a commercially reasonable amount of time after its receipt of the Claim Notice, have employed counsel to assume the defense of such proceeding, then the reasonable fees and expenses of the Indemnified Person’s counsel shall be borne by the Issuer in accordance with this Section 6.06. For the avoidance of doubt, the Indemnified Person shall have the right to employ their own counsel in any proceeding for which a Claim Notice has been received by the

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Issuer, at the Indemnified Person’s sole cost and expense, in which event the Issuer shall have no further obligation or liability to the Indemnified Person under this Indenture for any fees or expenses of counsel subsequently incurred by the Indemnified Person with respect to such proceeding. Neither the Issuer nor the Indemnified Person will unreasonably withhold its or their consent to any proposed settlement of a Claim, provided, however, that any such consent will be without prejudice to the right of the Indemnified Person to receive indemnification hereunder.

SECTION 6.07. Replacement of Indenture Trustee. (a) The Indenture Trustee may resign at any time by so notifying the Issuer. The Required Holders may remove the Indenture Trustee by so notifying the Indenture Trustee and may appoint a successor Indenture Trustee. The Issuer shall remove the Indenture Trustee if:

(i) the Indenture Trustee fails to comply with Section 6.09;

(ii) the Indenture Trustee is adjudged bankrupt or insolvent;

(iii) a receiver or other public officer takes charge of the Indenture Trustee or its property; or

(iv) the Indenture Trustee otherwise becomes incapable of acting.

(b) If the Indenture Trustee resigns or is removed by the Issuer or by the Required Holders and such Required Holders do not reasonably promptly appoint a successor Indenture Trustee, or if a vacancy exists in the office of Indenture Trustee for any reason (the Indenture Trustee in such event being referred to herein as the retiring Indenture Trustee), the Issuer shall promptly appoint a successor Indenture Trustee.

(c) A successor Indenture Trustee shall deliver a written acceptance of its appointment to the retiring Indenture Trustee and to the Issuer. Thereupon the resignation or removal of the retiring Indenture Trustee shall become effective, and the successor Indenture Trustee shall have all the rights, powers and duties of the Indenture Trustee under this Indenture. The successor Indenture Trustee shall mail a notice of its succession to the Holders. The retiring Indenture Trustee shall promptly transfer all property held by it as Indenture Trustee to the successor Indenture Trustee, subject to the Lien provided for in Section 6.06.

(d) If a successor Indenture Trustee does not take office within 60 days after the retiring Indenture Trustee resigns or is removed, the retiring Indenture Trustee or the Holders of 10% in principal amount of the Notes may petition at the expense of the Issuer any court of competent jurisdiction for the appointment of a successor Indenture Trustee.

(e) Notwithstanding the replacement of the Indenture Trustee pursuant to this Section 6.07, the Issuer’s and each Guarantor’s obligations under Section 6.06 shall continue for the benefit of the retiring Indenture Trustee.

(f) With respect to the role of the Securities Intermediary under the Securities Account Control Agreement, the Securities Intermediary may also be removed at any time by written notice from the Indenture Trustee, at the request of the Required Holders.

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In the case of resignation or removal of the Securities Intermediary under the Securities Account Control Agreement, the Indenture Trustee shall appoint a successor that satisfies the provisions of the Securities Account Control Agreement.

SECTION 6.08. Successor Indenture Trustee by Merger. If the Indenture Trustee consolidates with, merges with or converts into, or transfers all or substantially all its corporate trust business or assets to, another corporation or banking association, the resulting, surviving or transferee corporation or banking association without any further act shall be the successor Indenture Trustee.

In case at the time such successor or successors by merger, conversion or consolidation to the Indenture Trustee shall succeed to the trusts created by this Indenture any of the Notes shall have been authenticated but not delivered, any such successor to the Indenture Trustee may adopt the certificate of authentication of any predecessor trustee, and deliver such Notes so authenticated; and in case at that time any of the Notes shall not have been authenticated, any successor to the Indenture Trustee may authenticate such Notes either in the name of any predecessor hereunder or in the name of the successor to the Indenture Trustee; and in all such cases such certificates shall have the full force which it is anywhere in the Notes or in this Indenture provided that the certificate of the Indenture Trustee shall have.

SECTION 6.09. Eligibility; Disqualification. The Indenture Trustee shall have a combined capital and surplus of at least $100 million as set forth in its most recent published annual report of condition.

SECTION 6.10. Confidential Information. The Indenture Trustee, in its individual capacity and as Indenture Trustee, agrees and acknowledges that all information provided to the Indenture Trustee by the Issuer or any Group Company (or any direct or indirect equityholder of the Issuer or such Group Company) or any Holder may be considered to be proprietary and confidential information. The Indenture Trustee agrees to take all reasonable precautions necessary to keep such information confidential, which precautions shall be no less stringent than those that the Indenture Trustee employs to protect its own confidential information. The Indenture Trustee shall not disclose to any third party other than as set forth herein or in any other Transaction Document, and shall not use for any purpose other than the exercise of the Indenture Trustee’s rights and the performance of its obligations under this Indenture or any other Transaction Document, any such information without the prior written consent of the Issuer or such Holder (or such holder of a beneficial interest in the Notes), as applicable. The Indenture Trustee shall limit access to such information received hereunder, and shall have the right to disclose any and all such information, to (a) its directors, officers, managers, employees and agents and (b) its legal advisors, inside and outside auditors, accountants, and other advisors, to each of whom disclosure of such information is necessary for the purposes described above; provided, however, that in each case such party has expressly agreed to maintain such information in confidence under terms and conditions substantially identical to the terms of this Section 6.10.

In the event the Indenture Trustee is required to disclose any such information received hereunder in order to comply with any Requirements of Law, it may disclose such information only to the extent necessary for such compliance; provided, however, that it shall

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give the Issuer or any Holder (or any holder of a beneficial interest in the Notes), as applicable, reasonable advance written notice of any court proceeding in which such disclosure may be required pursuant to a court order so as to afford the Issuer or any Holder (or any holder of a beneficial interest in the Notes), as applicable, full and fair opportunity to oppose the issuance of such order and to appeal therefrom and shall cooperate reasonably with the Issuer or any Holder (or any holder of a beneficial interest in the Notes), as applicable, in opposing such court order and in securing confidential treatment of any such information to be disclosed and/or obtaining a protective order narrowing the scope of such disclosure.

The Note Registrar agrees to be bound by this Section 6.10 to the same extent as the Indenture Trustee.

Notwithstanding anything herein to the contrary, the foregoing shall not be construed to prohibit (i) disclosure of any and all information that is or becomes publicly known, (ii) disclosure of any and all information (A) if required to do so by any Requirements of Law, (B) to any government agency or regulatory body having or claiming authority to regulate or oversee any respects of the Indenture Trustee’s business or that of its affiliates, or (C) pursuant to any subpoena, civil investigative demand or similar demand or request of any court, regulatory authority, arbitrator or arbitration to which the Indenture Trustee, or an officer, director, employer, shareholder or affiliate of any of the foregoing is a party.

SECTION 6.11. Securities Intermediary.

(a) There shall at all times be a securities intermediary appointed for purposes of the Collateral Account (the “Securities Intermediary”). Wilmington Trust, National Association is hereby appointed as the initial Securities Intermediary with respect to the Collateral Account and accepts such appointment. This Section 6.11 applies only to the Collateral Account.

(b) The Securities Intermediary represents, warrants, and covenants, and the parties hereto agree, that at all times prior to the termination of this Indenture:

(i) The Securities Intermediary shall be a corporation, national or state bank or federal savings bank that in the ordinary course of its business maintains securities accounts for others and is acting in that capacity hereunder.

(ii) The Securities Intermediary shall treat the Indenture Trustee as the entitlement holder entitled to exercise the rights that comprise such financial assets.

(iii) The Securities Intermediary shall comply with entitlement orders (as defined in Section 102(a)(8) of the Uniform Commercial Code) originated by the Indenture Trustee without further consent by the Issuer or any other person or entity.

(iv) The Securities Intermediary shall not agree with any person or entity other than the Indenture Trustee that it will comply with entitlement orders originated by any person or entity other than the Indenture Trustee.

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(v) The Securities Intermediary shall not be a party to any agreement that is inconsistent with the provisions of this Indenture. The Securities Intermediary shall not take any action inconsistent with the provisions of this Indenture applicable to it.

(vi) Each item of property credited to the Collateral Account shall not be subject to any security interest, lien, claim, encumbrance, or right of setoff in favor of the Securities Intermediary or anyone claiming through the Securities Intermediary (other than the Indenture Trustee, in such capacity, for the benefit of the Secured Parties).

(vii) In no event shall any financial asset held in the Collateral Account be registered in the name of, payable to the order of, or specially indorsed to, the Issuer unless such financial asset has also been indorsed in blank or to the Securities Intermediary that holds such financial asset in the Collateral Account.

(c) It is the intent of the Indenture Trustee and the Issuer that the Collateral Account shall be a securities account of the Indenture Trustee and not an account of the Issuer.

(d) The Securities Intermediary shall be entitled to all of the protections available to a securities intermediary under the New York Uniform Commercial Code.

(e) The Securities Intermediary may at any time resign by giving 90 days prior written notice of its resignation to the Indenture Trustee and may at any time be removed by written notice from the Required Holders. The Required Holders shall appoint a successor Securities Intermediary that satisfies the provisions of this Indenture. The Required Holders shall cause (i) the Collateral Account to be established and maintained with such successor Securities Intermediary in accordance with the terms hereof, and (ii) the successor Securities Intermediary to execute and deliver to the Indenture Trustee and the Issuer a written agreement in which it agrees to be the Securities Intermediary hereunder and to be bound by the provisions of this Indenture applicable to the Securities Intermediary. The duties and obligations of the retiring Securities Intermediary hereunder shall remain in effect until the Collateral Account and all of the Collateral credited thereto have been transferred to the successor Securities Intermediary; provided, however, that the retiring Securities Intermediary or the Holders of 10% in principal amount of the Notes may petition at the expense of the Issuer any court of competent jurisdiction for the appointment of a successor Securities Intermediary. Notwithstanding anything herein or any other Transaction Document to the contrary, for so long as Wilmington Trust, National Association is serving as Indenture Trustee under the Indenture, Wilmington Trust, National Association shall also serve in the capacity of Securities Intermediary hereunder and under the Securities Account Control Agreement . Any removal of, or resignation by, Wilmington Trust, National Association in its capacity as Indenture Trustee or Securities Intermediary shall, notwithstanding anything herein to the contrary, be deemed to constitute a removal of, or resignation by, Wilmington Trust, National Association in each of such other capacities, and the provisions of this Agreement and the Securities Account Control Agreement, including, without limitation, the removal and resignation provisions hereof, shall be interpreted consistently with this Section 6.11(e).

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(f) Any corporation into which the Securities Intermediary may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, consolidation or conversion to which the Securities Intermediary shall be a party, shall be the successor of the Securities Intermediary hereunder, without the execution or filing of any further document on the part of the parties hereto or such successor corporation.

(g) The Securities Intermediary shall be entitled to all of the protections, privileges, limitations on liability, rights of reimbursement and indemnities that the Indenture Trustee is entitled to hereunder as fully as if it were the Indenture Trustee and shall also be entitled all of the protections, privileges, limitations on liability, rights of reimbursement and indemnities provided to the Securities Intermediary under the Securities Account Control Agreement, which protections, privileges, limitations on liability, rights of reimbursement and indemnities are incorporated herein by reference, with the same force and effect as if expressly set forth herein.

(h) Each party hereto agrees that each item of property (including, without limitation, any investment property, financial assets, securities, instruments, general intangibles or cash) credited to the Collateral Account shall be treated as a Financial Asset and that the Collateral Account shall constitute a “securities account” within the meaning of Section 8-501(a) of the Uniform Commercial Code as in effect in the State of New York and the Securities Intermediary shall be acting as a “securities intermediary” within the meaning of Section 8-102(a)(14) of the Uniform Commercial Code as in effect in the State of New York.

(i) Regardless of any provision in any other agreement, the securities intermediary’s jurisdiction for purposes of Article 8 of the Uniform Commercial Code with respect to the Collateral Account shall be the State of New York. If, notwithstanding the provisions of this Indenture, all or any portion of the Collateral Account is deemed to be a “deposit account” within the meaning of Section 9-102(a)(29) of the Uniform Commercial Code as in effect in the State of New York, then the Securities Intermediary shall be acting as a “bank” within the meaning of Section 9-102(a)(8) of the Uniform Commercial Code as in effect in the State of New York, in its capacity as the depositary bank maintaining such account, and hereby agrees that the State of New York shall be deemed to be the “bank’s jurisdiction” within the meaning of Section 9-304 of the Uniform Commercial Code.

(j) The Securities Intermediary shall provide the Indenture Trustee with any information it may request with respect to the Collateral Account, including electronic access to view balance and activity in the Collateral Account.

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ARTICLE 7

SATISFACTION AND DISCHARGE

SECTION 7.01. Satisfaction and Discharge of Indenture.

(a) This Indenture, the Notes, the Guarantee and the other Security Documents shall cease to be of further effect except as to (i) any surviving rights herein expressly provided for and (ii) in the case of clause (1)(B) below, the rights of the Holders hereunder to receive payment of the Note Balance of and interest on the Notes and any other rights of the Holders hereunder, when

(1) either (A) all Notes theretofore authenticated and delivered to Holders (other than (i) Notes which have been mutilated, destroyed, lost or stolen and which have been replaced or paid as provided in Section 2.05, and (ii) Notes for which payment of money has theretofore been deposited in the Collateral Account by the Indenture Trustee and thereafter repaid to the Issuer, as provided in Section 5.10) have been delivered to the Note Registrar for cancellation; or (B) all such Notes not theretofore delivered to the Note Registrar for cancellation have been paid in full;

(2) the Issuer has paid or caused to be paid all other sums payable hereunder or reasonably expected to become payable hereunder and the other Transaction Documents (including amounts associated with the termination thereof) by the Issuer to the Indenture Trustee, the Note Registrar, and each of the Holders (in each case, if any); and

(3) the Issuer has delivered to the Indenture Trustee an Officer’s Certificate stating that all conditions precedent herein provided for relating to the satisfaction and discharge of this Indenture have been complied with.

Notwithstanding the foregoing, the rights, privileges, protection and immunities afforded the Indenture Trustee under Article 6, the obligations of the Issuer and the Guarantors to the Indenture Trustee under Section 6.06 shall survive satisfaction and discharge of this Indenture.

(b) Upon payment of all the outstanding Notes in full, the Indenture Trustee shall (i) deliver or cause to be delivered to the Issuer any releases or termination statements prepared by the Issuer which the Issuer reasonably requests to evidence discharge of the lien hereof as to the Trust Estate; and (ii) deliver or cause to be delivered all other items reasonably requested by the Issuer, and take all other actions reasonably requested by the Issuer, in order to cause transfer of any portion of the Collateral to the relevant Obligor or its designee.

(c) Upon the satisfaction and discharge of this Indenture pursuant to the foregoing, the Indenture Trustee shall pay, in accordance with the direction of the Issuer all amounts, if any, held by it remaining on deposit in the Collateral Account.

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SECTION 7.02. Application of Trust Money.

All cash deposited with the Indenture Trustee or the Securities Intermediary pursuant to this Indenture shall be deposited into and held in the Collateral Account and applied by the Indenture Trustee, in accordance with Section 2.08(c) to pay the Persons entitled thereto, the interest, principal and other amounts payable on the Notes and to pay or reimburse the Indenture Trustee or the Securities Intermediary pursuant to Section 6.06.

ARTICLE 8

AMENDMENTS AND WAIVERS

SECTION 8.01. Without Consent of the Holders. The Issuer, the Guarantors and the Indenture Trustee may amend this Indenture, the Notes or the Security Documents without notice to or consent of any Holder:

(i) to cure any ambiguity, omission, mistake, defect or inconsistency;

(ii) to add additional Guarantees with respect to the Notes;

(iii) to add to the covenants of the Issuer for the benefit of the Holders or to surrender any right or power herein conferred upon any Obligor;

(iv) to make any change that does not adversely affect the rights of any Holder;

(v) to add additional assets as Collateral to secure the Notes; or

(vi) to release Collateral from the Lien pursuant to this Indenture and the Security Documents when permitted or required by this Indenture or the Security Documents.

After an amendment under this Section 8.01 becomes effective, the Issuer shall mail to the Holders a notice briefly describing such amendment. The failure to give such notice to all Holders, or any defect therein, shall not impair or affect the validity of an amendment under this Section 8.01.

SECTION 8.02. With Consent of the Holders. (a) The Issuer, the Guarantors and the Indenture Trustee may amend this Indenture, the Notes and the Security Documents with the written consent of the Required Holders. However, without the consent of each Holder of an outstanding Note affected, an amendment may not:

(i) reduce the amount of Notes whose Holders must consent to an amendment,

(ii) reduce the rate of or extend the time for payment of interest on any Note,

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(iii) reduce the principal of or change the Final Maturity Date of any Note,

(iv) reduce the premium payable upon the redemption of any Note or change the time at which any Note may be redeemed in accordance with Article 3,

(v) make any Note payable in money other than that stated in such Note,

(vi) expressly subordinate the Notes or any Guarantees to any other Indebtedness of the Issuer or any Guarantor,

(vii) impair the right of any Holder to receive payment of principal of or premium, if any, and interest on such Holder’s Notes on or after the due dates therefor or to institute suit for the enforcement of any payment on or with respect to such Holder’s Notes,

(viii) make any change in this Section 8.02,

(ix) modify any Guarantees in any manner adverse to the Holders,

(x) release all or substantially all of the Collateral from the Lien of this Indenture and the Security Documents, or

(xi) make any change in the provisions in this Indenture dealing with the application of proceeds of Collateral that would adversely affect the Holders of the Notes.

It shall not be necessary for the consent of the Holders under this Section 8.02 to approve the particular form of any proposed amendment, but it shall be sufficient if such consent approves the substance thereof.

(b) After an amendment under this Section 8.02 becomes effective, the Issuer shall mail to the Holders a notice briefly describing such amendment. The failure to give such notice to all Holders, or any defect therein, shall not impair or affect the validity of an amendment under this Section 8.02.

SECTION 8.03. Revocation and Effect of Consents and Waivers. (a) A consent to an amendment or a waiver by a Holder of a Note shall bind the Holder and every subsequent Holder of that Note or portion of the Note that evidences the same debt as the consenting Holder’s Note, even if notation of the consent or waiver is not made on the Note. However, any such Holder or subsequent Holder may revoke the consent or waiver as to such Holder’s Note or portion of the Note if the Indenture Trustee receives the notice of revocation before the date on which the Indenture Trustee receives an Officers’ Certificate from the Issuer certifying that the requisite principal amount of Notes have consented. After an amendment or waiver becomes effective, it shall bind every Holder. An amendment or waiver becomes effective upon the (i) receipt by the Issuer or the Indenture Trustee of consents by the Holders of the requisite principal

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amount of Notes, (ii) satisfaction of conditions to effectiveness as set forth in this Indenture and any indenture supplemental hereto containing such amendment or waiver, (iii) execution of such amendment or waiver (or supplemental indenture) by the Issuer, the Guarantors and the Indenture Trustee and (iv) delivery to the Indenture Trustee of each Officers’ Certificate and Opinion of Counsel required under Section 8.05 and Article 11 hereof.

(b) The Issuer may, but shall not be obligated to, fix a record date for the purpose of determining the Holders entitled to give their consent or take any other action described above or required or permitted to be taken pursuant to this Indenture. If a record date is fixed, then notwithstanding Section 8.03(a), those Persons who were Holders at such record date (or their duly designated proxies), and only those Persons, shall be entitled to give such consent or to revoke any consent previously given or to take any such action, whether or not such Persons continue to be Holders after such record date. No such consent shall be valid or effective for more than 120 days after such record date.

SECTION 8.04. Notation on or Exchange of Notes. If an amendment, supplement or waiver changes the terms of a Note, the Issuer may require the Holder of the Note to deliver it to the Indenture Trustee. The Indenture Trustee may place an appropriate notation on the Note regarding the changed terms and return it to the Holder. Alternatively, if the Issuer or the Indenture Trustee so determines, the Issuer in exchange for the Note shall issue and the Indenture Trustee, in accordance with an Issuer Order, shall authenticate a new Note that reflects the changed terms. Failure to make the appropriate notation or to issue a new Note shall not affect the validity of such amendment, supplement or waiver.

SECTION 8.05. Indenture Trustee to Sign Amendments. The Indenture Trustee shall sign any amendment, supplement or waiver authorized pursuant to this Article 8 if the amendment does not adversely affect the rights, duties, liabilities or immunities of the Indenture Trustee. If it does, the Indenture Trustee may but need not sign it. In signing any amendment, the Indenture Trustee shall be entitled to receive indemnity reasonably satisfactory to it and shall be provided with, and shall be fully protected in relying upon, an Officers’ Certificate and an Opinion of Counsel stating that such amendment, supplement or waiver (i) is authorized or permitted by this Indenture, (ii) is the legal, valid and binding obligation of the Issuer and the Guarantors, enforceable against them in accordance with its terms, subject to customary exceptions, (iii) has been authorized by the requisite principal amount of Notes, (iv) complies with the provisions hereof (including Section 8.03), and (v) will not adversely affect the interests of any Holder.

SECTION 8.06. Payment for Consent. Neither the Issuer nor any Affiliate of the Issuer shall, directly or indirectly, pay or cause to be paid any consideration, whether by way of interest, fee or otherwise, to any Holder for or as an inducement to any consent, waiver or amendment of any of the terms or provisions of this Indenture or the Notes unless such consideration is offered to be paid to all Holders that so consent, waive or agree to amend in the time frame set forth in solicitation documents relating to such consent, waiver or agreement.

SECTION 8.07. Additional Voting Terms; Calculation of Principal Amount. All Notes issued under this Indenture shall vote and consent together on all matters (as to which any of such Notes may vote) as one class. Determinations as to whether Holders of the requisite aggregate principal amount of Notes have concurred in any direction, waiver or consent shall be made in accordance with this Article 8.

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ARTICLE 9

GUARANTEES

SECTION 9.01. Guarantees. (a) Each Guarantor hereby jointly and severally irrevocably and unconditionally guarantees as a primary obligor and not merely as a surety on a senior basis to each Holder and to the Indenture Trustee and its successors and assigns (i) the full and punctual payment when due, whether at the Final Maturity Date, by acceleration, by redemption or otherwise, of all obligations of the Issuer under this Indenture (including obligations to the Indenture Trustee and the Notes, whether for payment of principal of, or premium, if any, or interest on, the Notes and all other monetary obligations of the Issuer under this Indenture and the Notes, and (ii) the full and punctual performance within applicable grace periods of all other obligations of the Issuer, whether for fees, expenses, indemnification or otherwise under this Indenture and the Notes (all the foregoing being hereinafter collectively called the “Guaranteed Obligations”). Each Guarantor further agrees that the Guaranteed Obligations may be extended or renewed, in whole or in part, without notice or further assent from each such Guarantor, and that each such Guarantor shall remain bound under this Article 9 notwithstanding any extension or renewal of any Guaranteed Obligation. The Guaranteed Obligations of a Guarantor will be secured by security interests (subject to Permitted Liens) in the Collateral owned by such Guarantor to the extent provided for in the Security Documents and as required pursuant to Sections 4.08 and 4.09.

(b) Each Guarantor waives presentation to, demand of payment from and protest to the Issuer of any of the Guaranteed Obligations and also waives notice of protest for nonpayment. Each Guarantor waives notice of any default under the Notes or the Guaranteed Obligations. The obligations of each Guarantor hereunder shall not be affected by (i) the failure of any Holder or the Indenture Trustee to assert any claim or demand or to enforce any right or remedy against the Issuer or any other Person under this Indenture, the Notes, any Security Document, or any other agreement or otherwise; (ii) any extension or renewal of this Indenture, the Notes, any Security Document or any other agreement; (iii) any rescission, waiver, amendment or modification of any of the terms or provisions of this Indenture, the Notes, any Security Document or any other agreement; (iv) the release of any security held by any Holder or the Indenture Trustee for the Guaranteed Obligations or any Guarantor; (v) the failure of any Holder or the Indenture Trustee to exercise any right or remedy against any other guarantor of the Guaranteed Obligations; or (vi) any change in the ownership of such Guarantor, except as provided in Section 9.02(b).

(c) Each Guarantor hereby waives any right to which it may be entitled to have its obligations hereunder divided among the Guarantors, such that such Guarantor’s obligations would be less than the full amount claimed. Each Guarantor hereby waives any right to which it may be entitled to have the assets of the Issuer or any other Guarantor first be used and depleted as payment of the Issuer’s or such Guarantor’s

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obligations hereunder prior to any amounts being claimed from or paid by such Guarantor hereunder. Each Guarantor hereby waives any right to which it may be entitled to require that the Issuer be sued prior to an action being initiated against such Guarantor.

(d) Each Guarantor further agrees that its Guarantee herein constitutes a guarantee of payment, performance and compliance when due (and not a guarantee of collection) and waives any right to require that any resort be had by any Holder or the Indenture Trustee to any security held for payment of the Guaranteed Obligations.

(e) Except as expressly set forth in Sections 7.01 and 9.02, the obligations of each Guarantor hereunder shall not be subject to any reduction, limitation, impairment or termination for any reason, including any claim of waiver, release, surrender, alteration or compromise, and shall not be subject to any defense of setoff, counterclaim, recoupment or termination whatsoever or by reason of the invalidity, illegality or unenforceability of the Guaranteed Obligations or otherwise. Without limiting the generality of the foregoing, the obligations of each Guarantor herein shall not be discharged or impaired or otherwise affected by the failure of any Holder or the Indenture Trustee to assert any claim or demand or to enforce any remedy under this Indenture, the Notes, any Security Document or any other agreement, by any waiver or modification of any thereof, by any default, failure or delay, willful or otherwise, in the performance of the obligations, or by any other act or thing or omission or delay to do any other act or thing which may or might in any manner or to any extent vary the risk of any Guarantor or would otherwise operate as a discharge of any Guarantor as a matter of law or equity.

(f) Except as expressly set forth in Sections 7.01 and 9.02, each Guarantor agrees that its Guarantee shall remain in full force and effect until payment in full of all the Guaranteed Obligations. Except as expressly set forth in Sections 7.01 and 9.02, each Guarantor further agrees that its Guarantee herein shall continue to be effective or be reinstated, as the case may be, if at any time payment, or any part thereof, of principal of or interest on any Guaranteed Obligation is rescinded or must otherwise be restored by any Holder or the Indenture Trustee upon the bankruptcy or reorganization of the Issuer or otherwise.

(g) In furtherance of the foregoing and not in limitation of any other right which any Holder or the Indenture Trustee has at law or in equity against any Guarantor by virtue hereof, upon the failure of the Issuer to pay the principal of or interest on any Guaranteed Obligation when and as the same shall become due, whether at maturity, by acceleration, by redemption or otherwise, or to perform or comply with any other Guaranteed Obligation, each Guarantor hereby promises to and shall, upon receipt of written demand by the Indenture Trustee in accordance with this Indenture, forthwith pay, or cause to be paid, in cash, to the Holders or the Indenture Trustee an amount equal to the sum of (i) the unpaid principal amount of such Guaranteed Obligations, (ii) accrued and unpaid interest on such Guaranteed Obligations (but only to the extent not prohibited by applicable law) and (iii) all other monetary obligations of the Issuer then due to the Holders or the Indenture Trustee in respect of the Guaranteed Obligations.

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(h) Each Guarantor agrees that it shall not be entitled to any right of subrogation in relation to the Holders in respect of any Guaranteed Obligations guaranteed hereby until payment in full of all Guaranteed Obligations. Each Guarantor further agrees that, as between it, on the one hand, and the Holders and the Indenture Trustee, on the other hand, (i) the maturity of the Guaranteed Obligations guaranteed hereby may be accelerated as provided in Article 5 for the purposes of any Guarantee herein, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the Guaranteed Obligations guaranteed hereby, and (ii) in the event of any declaration of acceleration of such Guaranteed Obligations as provided in Article 5, such Guaranteed Obligations (whether or not due and payable) shall forthwith become due and payable by such Guarantor for the purposes of this Section 9.01.

(i) Each Guarantor also agrees to pay any and all costs and expenses (including reasonable attorneys’ fees and expenses) incurred by the Indenture Trustee or any Holder in enforcing any rights under this Section 9.01.

(j) Upon request of the Indenture Trustee, each Guarantor shall execute and deliver such further instruments and do such further acts as may be reasonably necessary or proper to carry out more effectively the purpose of this Indenture.

SECTION 9.02. Limitation on Liability. (a) Any term or provision of this Indenture to the contrary notwithstanding, the maximum aggregate amount of the Guaranteed Obligations guaranteed hereunder by any Guarantor shall not exceed the maximum amount that can be hereby guaranteed without rendering the Guarantee, as it relates to such Guarantor, voidable under applicable law relating to fraudulent conveyance or fraudulent transfer or similar laws affecting the rights of creditors generally.

(b) Except for such Guaranteed Obligation that shall survive pursuant to the express terms of this Indenture, a Guarantee as to any Guarantor shall terminate and be of no further force or effect and such Guarantor shall be deemed to be automatically released from all obligations under this Article 9 upon:

(i) the sale, disposition, exchange or other transfer (including through merger, consolidation, amalgamation or otherwise) of the Capital Stock (including any sale, disposition or other transfer following which the applicable Guarantor is no longer a Subsidiary), or all or substantially all the assets, of the applicable Guarantor if such sale, disposition, exchange or other transfer is made in a manner not in violation of this Indenture;

(ii) the Issuer’s exercise of the Issuer’s legal defeasance option or covenant defeasance option in accordance with Section 7.01 or if the obligations of the Issuer and such Guarantor under this Indenture are discharged in accordance with the terms of this Indenture.

SECTION 9.03. Successors and Assigns. This Article 9 shall be binding upon each Guarantor and its successors and assigns and shall inure to the benefit of the Indenture Trustee and the Holders and their successors and assigns and, in the event of any transfer or

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assignment of rights by any Holder or the Indenture Trustee, the rights and privileges conferred upon that party in this Indenture and in the Notes shall automatically extend to and be vested in such transferee or assignee, all subject to the terms and conditions of this Indenture.

SECTION 9.04. No Waiver. Neither a failure nor a delay on the part of the Indenture Trustee or the Holders in exercising any right, power or privilege under this Article 9 shall operate as a waiver thereof, nor shall a single or partial exercise thereof preclude any other or further exercise of any right, power or privilege. The rights, remedies and benefits of the Indenture Trustee and the Holders herein expressly specified are cumulative and not exclusive of any other rights, remedies or benefits which any of them may have under this Article 9 at law, in equity, by statute or otherwise.

SECTION 9.05. Modification. No modification, amendment or waiver of any provision of this Article 9, nor the consent to any departure by any Guarantor therefrom, shall in any event be effective unless the same shall be in writing and signed by the Indenture Trustee, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. No notice to or demand on any Guarantor in any case shall entitle such Guarantor to any other or further notice or demand in the same, similar or other circumstances.

SECTION 9.06. Non Impairment. The failure to endorse a Guarantee on any Note shall not affect or impair the validity thereof.

ARTICLE 10

SECURITY DOCUMENTS

SECTION 10.01. Collateral and Security Documents. The due and punctual payment of the principal of and interest on the Notes when and as the same shall be due and payable, whether on a Payment Date, at the Final Maturity Date, or by acceleration, repurchase, redemption or otherwise, and interest on the overdue principal of and interest on the Notes and performance of all other Guaranteed Obligations of the Issuer and the Guarantors to the Holders or the Indenture Trustee under this Indenture, the Notes and the other Security Documents, according to the terms hereunder or thereunder, shall be secured as provided in the Security Documents, which define the terms of the Liens that secure the Guaranteed Obligations. The Obligors hereby acknowledge and agree that the Indenture Trustee holds the Collateral in trust for the benefit of the Holders, pursuant to the terms of the Security Documents. Each Holder, by accepting a Note, consents and agrees to the terms of the Security Documents (including the provisions providing for the possession, use, release and foreclosure of Collateral) as the same may be in effect or may be amended from time to time in accordance with their respective terms and this Indenture, and authorizes and directs the Indenture Trustee to enter into the Security Documents and to perform its obligations and exercise its rights thereunder in accordance therewith. The Issuer shall take, and shall cause the Guarantors to take, any and all actions reasonably required to cause the Security Documents to create and maintain at all times, as security for the Obligations of the Issuer and the Guarantors hereunder, a valid and enforceable perfected Lien on all of the Collateral, in favor of the Indenture Trustee for the benefit of the Holders under the Security Documents.

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SECTION 10.02. Reserved.

SECTION 10.03. Release of Collateral. (a) Subject to Section 9.03(b) and 9.04 hereof, the Collateral may be released from the Lien and security interest created by the Security Documents at any time or from time to time in accordance with the provisions of the Security Documents or as provided hereby. The Issuer and the Guarantors will be entitled to a release of assets included in the Collateral from the Liens securing the Notes, and the Indenture Trustee shall release the same from such Liens at the Issuer’s sole cost and expense, under one or more of the following circumstances:

(1) to enable the Issuer or any Subsidiary to sell, exchange or otherwise dispose of any of the Collateral to the extent not prohibited under Section 4.06 or to the extent such transaction complies with Section 3.06;

(2) in the case of a Guarantor that is released from its Guarantee with respect to the Notes in accordance with this Indenture, the release of the property and assets of such Guarantor; or

(3) pursuant to an amendment or waiver in accordance with Article 8 of this Indenture.

Upon receipt of an Officers’ Certificate (and upon receipt, the Indenture Trustee may conclusively rely upon such Officer’s Certificate and shall have no duty to make any determination or investigation with respect to the contents thereof) certifying that all conditions precedent under this Indenture and the Security Documents, if any, to such release have been met and any necessary or proper instruments of termination, satisfaction or release have been prepared by the Issuer, the Indenture Trustee shall execute, deliver or acknowledge (at the Issuer’s expense) such instruments or releases to evidence the release of any Collateral permitted to be released pursuant to this Indenture or the Security Documents

(b) At any time when an Event of Default has occurred and is continuing and the maturity of the Notes has been accelerated (whether by declaration or otherwise), no release of Collateral pursuant to the provisions of this Indenture or the Security Documents will be effective as against the Holders.

SECTION 10.04. Permitted Releases Not To Impair Lien. The release of any Collateral from the terms hereof and of the Security Documents or the release of, in whole or in part, the Liens created by the Security Documents, will not be deemed to impair the security under this Indenture in contravention of the provisions hereof if and to the extent the Collateral or Liens are released pursuant to the applicable Security Documents and the terms of this Article 10. Each of the Holders acknowledges that a release of Collateral or a Lien in accordance with the terms of the Security Documents and of this Article 10 will not be deemed for any purpose to be in contravention of the terms of this Indenture.

SECTION 10.05. Suits To Protect the Collateral. Subject to the provisions of Article 6 hereof, the Indenture Trustee in its sole discretion and without the consent of the Holders, on behalf of the Holders, may take all actions it deems necessary or appropriate in order to:

(a) enforce any of the terms of the Security Documents; and

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(b) collect and receive any and all amounts payable in respect of the Guaranteed Obligations of the Issuer hereunder.

Subject to the provisions of the Security Documents, the Indenture Trustee shall have power (but not the obligation) to institute and to maintain such suits and proceedings as it may deem expedient to prevent any impairment of the Collateral by any acts which may be unlawful or in violation of any of the Security Documents or this Indenture, and such suits and proceedings as the Indenture Trustee, in its sole discretion, may deem expedient to preserve or protect its interests and the interests of the Holders in the Collateral (including power to institute and maintain suits or proceedings to restrain the enforcement of or compliance with any legislative or other governmental enactment, rule or order that may be unconstitutional or otherwise invalid if the enforcement of, or compliance with, such enactment, rule or order would impair the Lien on the Collateral or be prejudicial to the interests of the Holders or the Indenture Trustee).

SECTION 10.06. Authorization of Receipt of Funds by the Indenture Trustee Under the Security Documents. The Indenture Trustee is authorized to receive any funds for the benefit of the Holders distributed under the Security Documents, and to make further distributions of such funds to the Holders according to the provisions of this Indenture.

SECTION 10.07. Purchaser Protected. In no event shall any purchaser in good faith of any property purported to be released hereunder be bound to ascertain the authority of the Indenture Trustee to execute the release or to inquire as to the satisfaction of any conditions required by the provisions hereof for the exercise of such authority or to see to the application of any consideration given by such purchaser or other transferee; nor shall any purchaser or other transferee of any property or rights permitted by this Article 10 to be sold be under any obligation to ascertain or inquire into the authority of the Issuer or the applicable Guarantor to make any such sale or other transfer.

SECTION 10.08. Powers Exercisable by Receiver or Indenture Trustee. In case the Collateral shall be in the possession of a receiver or trustee, lawfully appointed, the powers conferred in this Article 10 upon the Issuer or a Guarantor with respect to the release, sale or other disposition of such property may be exercised by such receiver or trustee, and an instrument signed by such receiver or trustee shall be deemed the equivalent of any similar instrument of the Issuer or a Guarantor or of any officer or officers thereof required by the provisions of this Article 10; and if the Indenture Trustee shall be in the possession of the Collateral under any provision of this Indenture, then such powers may be exercised by the Indenture Trustee.

SECTION 10.09. Release Upon Termination of the Issuer’s Obligations. In the event that the Issuer delivers to the Indenture Trustee, in form and substance reasonably acceptable to the Indenture Trustee, an Officers’ Certificate (and upon receipt, the Indenture Trustee may conclusively rely upon such Officer’s Certificate and shall have no duty to make any determination or investigation with respect to the contents thereof) certifying that (i) payment in full of the principal of, together with accrued and unpaid interest on, the Notes and

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all other Obligations under this Indenture, the Guarantees and the Security Documents that are due and payable at or prior to the time such principal, together with accrued and unpaid interest (including additional interest, if any), are paid, or (ii) all the obligations under this Indenture, the Notes and the Security Documents have been satisfied and discharged by complying with the provisions of Article 7, the Indenture Trustee shall deliver to the Issuer a notice stating that the Indenture Trustee, on behalf of the Holders, disclaims and gives up any and all rights it has in or to the Collateral, and any rights it has under the Security Documents, and upon delivery of such notice, the Indenture Trustee shall be deemed not to hold a Lien in the Collateral on behalf of the Holders and shall do or cause to be done all acts reasonably necessary to release such Lien as soon as is reasonably practicable.

ARTICLE 11

MISCELLANEOUS

SECTION 11.01. Notices. (a) Any notice or communication required or permitted hereunder shall be in writing and delivered in person, via facsimile, via overnight courier or via first-class mail addressed as follows:

if to the Issuer:

Greenwood Asset Portfolio, LLC

701 Park of Commerce Boulevard, Suite 301

Boca Raton, FL 33487

Attention of: Office of the General Counsel

Facsimile:

if to Holdings:

Imperial Holdings, Inc.

701 Park of Commerce Boulevard, Suite 301

Boca Raton, FL 33487

Attention of: Office of the General Counsel

Facsimile:

if to Parent:

OLIPP IV, LLC

701 Park of Commerce Boulevard, Suite 301

Boca Raton, FL 33487

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Attention of: Office of the General Counsel

Facsimile:

if to the Indenture Trustee or the Securities Intermediary:

Wilmington Trust, N.A., as Indenture Trustee

300 Park Street, Suite 390

Birmingham, Michigan 48309

Attention: Capital Markets Insurance Services

Facsimile:

Telephone:

E-mail:

The Issuer or the Indenture Trustee by notice to the other may designate additional or different addresses for subsequent notices or communications.

(b) Any notice or communication mailed to a Holder shall be mailed, first class mail, to the Holder at the Holder’s address as it appears on the registration books of the Note Registrar and shall be sufficiently given if so mailed within the time prescribed.

(c) Failure to mail a notice or communication to a Holder or any defect in it shall not affect its sufficiency with respect to other Holders. If a notice or communication is mailed in the manner provided above, it is duly given, whether or not the addressee receives it, except that notices to the Indenture Trustee are effective only if received.

SECTION 11.02. Certificate and Opinion as to Conditions Precedent. Upon any request or application by the Issuer to the Indenture Trustee to take or refrain from taking any action under this Indenture, the Issuer shall furnish to the Indenture Trustee at the request of the Indenture Trustee (which request shall not be made unreasonably):

(a) an Officers’ Certificate in form reasonably satisfactory to the Indenture Trustee stating that, in the opinion of the signers, all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with; and

(b) an Opinion of Counsel in form reasonably satisfactory to the Indenture Trustee stating that, in the opinion of such counsel, all such conditions precedent have been complied with.

SECTION 11.03. Statements Required in Certificate or Opinion. Each certificate or opinion with respect to compliance with a covenant or condition provided for in this Indenture shall include:

(a) a statement that the individual making such certificate or opinion has read such covenant or condition;

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(b) a statement that, in the opinion of such individual, he or she has made such examination or investigation as is necessary to enable him or her to express an informed opinion as to whether or not such covenant or condition has been complied with; and

(c) a statement as to whether or not, in the opinion of such individual, such covenant or condition has been complied with; provided, however, that with respect to matters of fact an Opinion of Counsel may rely on an Officers’ Certificate or certificates of public officials.

SECTION 11.04. When Notes Disregarded. In determining whether the Holders of the required principal amount of Notes have concurred in any direction, waiver or consent, Notes owned by or on behalf of any Group Companies shall be disregarded and deemed not to be outstanding, except that, for the purpose of determining whether the Indenture Trustee shall be protected in relying on any such direction, waiver or consent, only Notes with respect to which the Indenture Trustee has actual knowledge are so owned shall be so disregarded. Subject to the foregoing, only Notes outstanding at the time shall be considered in any such determination. Notwithstanding the foregoing, if any such Person or Persons owns 100% of all the Notes outstanding, such Notes shall not be so disregarded as aforesaid. On the Issue Date the Issuer shall identify in writing to the Indenture Trustee which, if any, Notes are owned by or on behalf of Group Companies.

SECTION 11.05. Rules by Indenture Trustee and Note Registrar. The Indenture Trustee may make reasonable rules for action by or a meeting of the Holders. The Note Registrar may make reasonable rules for their functions.

SECTION 11.06. Legal Holidays. If a Payment Date is not a Business Day, payment shall be made on the next succeeding day that is a Business Day, and no interest shall accrue on any amount that would have been otherwise payable on such Payment Date if it were a Business Day for the intervening period. If a Record Date is not a Business Day, the Record Date shall not be affected.

SECTION 11.07. GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF IMMUNITY. THIS INDENTURE, THE SECURITIES AND THE SECURITY DOCUMENTS SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW (OTHER THAN SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW) EXCEPT TO THE EXTENT THAT LOCAL LAW GOVERNS THE CREATION, PERFECTION, PRIORITY OR ENFORCEMENT OF SECURITY INTERESTS. The Issuer, the Guarantors, the Indenture Trustee, and, by its acceptance of a Note, each Holder (and holder of beneficial interests in a Note) hereby submit to the non-exclusive jurisdiction of the federal and state courts of competent jurisdiction in the Borough of Manhattan in The City of New York in any suit or proceeding arising out of or relating to this Indenture or the transactions contemplated hereby.

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SECTION 11.08. Successors. All agreements of the Issuer and each Guarantor in this Indenture and the Notes shall bind its successors. All agreements of the Indenture Trustee in this Indenture shall bind its successors.

SECTION 11.09. Multiple Originals. The parties may sign any number of copies of this Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. One signed copy is enough to prove this Indenture.

SECTION 11.10. Table of Contents; Headings. The table of contents and headings of the Articles and Sections of this Indenture have been inserted for convenience of reference only, are not intended to be considered a part hereof and shall not modify or restrict any of the terms or provisions hereof.

SECTION 11.11. Indenture Controls. If and to the extent that any provision of the Notes limits, qualifies or conflicts with a provision of this Indenture, such provision of this Indenture shall control.

SECTION 11.12. Severability. In case any provision in this Indenture shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby and such provision shall be ineffective only to the extent of such invalidity, illegality or unenforceability.

[Remainder of page intentionally left blank]

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IN WITNESS WHEREOF, the parties have caused this Indenture to be duly executed as of the date first written above.

GREENWOOD PORTFOLIO ASSET, LLC, a Delaware limited liability company By: OLIPP IV, LLC, a Delaware limited liability company, its sole member and manager By: Imperial Holdings, Inc., a Florida corporation, its sole member and manager
By:	/s/ Antony Mitchell
Name:	Antony Mitchell
Title:	Chief Executive Officer

[Indenture Signature Page – Greenwood Asset Portfolio, LLC]

GUARANTOR
OLIPP IV, LLC, a Delaware limited liability company By: Imperial Holdings, Inc., a Florida corporation, its sole member and manager
By:	/s/ Antony Mitchell
Name:	Antony Mitchell
Title:	Chief Executive Officer

[Indenture Signature Page – OLIPP IV, LLC]

GUARANTOR
IMPERIAL HOLDINGS, INC., a Florida corporation
By:	/s/ Antony Mitchell
Name:	Antony Mitchell
Title:	Chief Executive Officer

[Indenture Signature Page – Imperial Holdings, Inc.]

WILMINGTON TRUST, NATIONAL ASSOCIATION, as Indenture Trustee
By:	/s/ Robert Donaldson
Name:	Robert Donaldson
Title:	Vice President

[Indenture Signature Page – Wilmington Trust, National Association]

WILMINGTON TRUST, NATIONAL ASSOCIATION, as Securities Intermediary
By:	/s/ Robert Donaldson
Name:	Robert Donaldson
Title:	Vice President

[Indenture Signature Page – Wilmington Trust, National Association]

Schedule 4.03

Existing Indebtedness

None.

S-1

Schedule 4.07

Equityholders / Stockholders Agreements

None.

S-2

EX-10.20

Exhibit 10.20

Form of Note Purchase Agreement

NOTE PURCHASE AGREEMENT (this “Agreement”), dated as of March 27, 2013, by and among GREENWOOD ASSET PORTFOLIO, LLC, a Delaware limited liability company (the “Issuer”), the direct and indirect parent companies of the Issuer named on the signature pages hereto (the “Guarantors” and, together with the Issuer, the “Obligors”), and the purchasers named on the signature pages hereto (the “Purchasers”).

W I T N E S S E T H:

WHEREAS, the Issuer proposes to sell to the Purchasers senior secured increasing rate notes (the “Notes”) with an aggregate Initial Note Balance (as defined in the Indenture described below) of up to $45,000,000, and previously entered into a Commitment Letter, dated March 1, 2013, with the Guarantors and the Commitment Parties named therein (the “Commitment Letter”);

WHEREAS, the Notes will be issued pursuant to the Indenture, dated the date hereof, among the Issuer, the Guarantors, and Wilmington Trust, National Association, as indenture trustee (capitalized terms used in this Agreement and not defined have the meanings specified in the Indenture; rules of construction set forth in Section 1.03 of the Indenture apply equally to this Agreement); and

WHEREAS, the Notes are being offered and sold to the Purchasers without being registered under the Securities Act, in reliance on an exemption therefrom;

NOW THEREFORE, in consideration of the mutual covenants herein contained, and other good and valuable consideration, the receipt and adequacy of which are hereby expressly acknowledged, the parties hereto agree as follows:

SECTION I. PURCHASE AND SALE; ISSUE DATE

Section 1.1 Purchase and Sale.

(a) On and subject to the terms and conditions of this Agreement and the Indenture, on the Issue Date, the Issuer agrees to issue, sell and deliver to each Purchaser the Note with an Initial Note Balance set forth opposite such Purchaser’s name on Schedule 1, and on the basis of the representations and warranties of the Obligors set forth in this Agreement and the other Transaction Documents, and subject to the terms and conditions set forth herein and therein, each Purchaser hereby agrees to purchase such Note on the Issue Date from the Issuer in accordance with the terms set forth herein.

(b) The purchase price for each Note is 92% of its Initial Note Balance (the “Purchase Price”)

Section 1.2 Issue Date.

(a) Prior to 1:00 p.m. on the Issue Date, each Purchaser shall transfer in immediately available funds the Purchase Price for its Note to the Collateral Account. After the

aggregate Purchase Price for Notes with an aggregate Initial Note Balance of $45,000,000 has been received by the Indenture Trustee, (i) the Notes shall be issued and delivered to the Purchasers thereof, and (ii) the Indenture Trustee, in accordance with the written direction of the Issuer, shall transfer from the Collateral Account to Holdings the Permitted Payment permitted to be paid on the Issue Date pursuant to the Indenture and shall pay from the Collateral Account on behalf of the Issuer the amounts referred to below in Section 2.1(e). Funds may be deemed received by the Indenture Trustee upon receipt by the Indenture Trustee and the Issuer of a Fedwire reference number in the correct amount from the relevant Purchaser prior to the time specified.

(b) If any Purchaser fails to transfer its Purchase Price as provided and prior to the time set forth in Section 1.2(a) (a “Defaulting Purchaser”), the purchase of the other Notes by the other Purchasers (the “Non-Defaulting Purchasers”) will proceed in accordance with this Agreement, provided that (i) Notes with an aggregate Initial Note Balance of at least $35,000,000 are purchased by the Non-Defaulting Purchasers pursuant to Section 1.2(a), and (ii) any Purchasers defined as “Indaba” or “Nantahala” in the Commitment Letter are not required to proceed with their purchases of Notes if any of the Purchasers defined as “Bulldog” in the Commitment Letter are Defaulting Purchasers.

(c) Notwithstanding the foregoing, in the event there is a Non-Defaulting Purchaser, one of the other Purchasers or one or more third-party investors, in each case, if approved in writing by Indaba Capital Management LLC and Nantahala Capital Management, LLC (such approval only being required of each of them to the extent that no Purchaser defined as “Indaba” or “Nantahala”, respectively, in the Commitment Letter is a Defaulting Purchaser) may purchase such Defaulting Purchaser’s Note from the Issuer.

(d) If the Purchase Price for Notes with at least an aggregate Initial Note Balance of $35,000,000 is not received by the Indenture Trustee prior to 1:00 p.m. on the Issue Date, any Purchase Price received shall be returned in full to the relevant Purchaser by the Indenture Trustee in accordance with the written direction of the Issuer, and this Agreement shall terminate.

SECTION II. CONDITIONS PRECEDENT

Section 2.1 Conditions to Purchase. The following shall be conditions precedent to the Purchase:

(a) The Notes shall have been duly authorized, executed, authenticated, delivered and issued and, upon payment of the Purchase Price, shall be entitled to the benefits of the Indenture. This Agreement and each of the other Transaction Documents shall have been duly authorized, executed and delivered by the respective parties thereto and shall be in full force and effect, and all conditions precedent contained in the Transaction Documents shall have been satisfied.

(b) The Purchasers shall have received a written legal opinion under United States and New York State law, in form and substance satisfactory to the Purchasers, from each of (i) Foley & Lardner LLP, covering corporate, enforceability, Lien perfection,

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non-contravention of law, no required approvals, no registration, Investment Company Act and such other matters as the Purchasers may reasonably request and (ii) general counsel of the Obligors, covering non-contravention of material agreements and absence of material litigation.

(c) The Purchasers and the Indenture Trustee shall have each received signature and incumbency certificates executed by the authorized officers of each of the Guarantors and the Issuer, to enable each of them to enter into the Transaction Documents to which such entity is a party.

(d) The Purchasers and the Indenture Trustee shall have received a closing certificate from each Obligor, including (i) the certificate of incorporation or articles of organization of such Obligor, as applicable, certified by the relevant authority of the jurisdiction of organization of such Obligor, (ii) certified bylaws or other operating agreement, as applicable, of such Obligor and (iii) a good standing certificate for such Obligor from its jurisdiction of organization.

(e) The costs and expenses incurred by any Purchaser on or prior to the Issue Date and described in the first sentence of Section 3 of the Commitment Letter shall have been reimbursed to such Purchaser, or paid directly, by the Issuer. Such costs and expenses shall be set forth on a “closing schedule of fees and expenses” approved by the Purchasers and the Issuer and submitted by the Issuer to the Indenture Trustee with appropriate wire instructions.

(f) The representations and warranties of the Issuer set forth or referred to in Section 3.1 hereof and in the other Transaction Documents shall be true and correct on the Issue Date.

(g) No Default or Event of Default has occurred and is continuing.

(h) All corporate and other proceedings in connection with the transactions contemplated hereby and the other Transaction Documents and all documents, opinions and certificates incident thereto shall be satisfactory in form and in substance to the Purchasers.

(i) The Indenture Trustee shall have received the initial Budget, Portfolio Premium Schedule and Cash Balance Report due on the Issue Date in accordance with the terms of the Indenture. The initial Budget (but not such other documents) shall be provided to the Purchasers.

(j) All governmental and third party approvals necessary in connection with the continuing operations of the Group Companies and the transactions contemplated hereby shall have been obtained and be in full force and effect.

(k) The Purchasers and the Indenture Trustee shall have received the results of a recent Lien search with respect to each Obligor, and such search shall reveal no Liens on any of the assets of the Obligors except for Permitted Liens, to the extent such Permitted Liens may be present on such assets under the Indenture.

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(l) The Indenture Trustee shall have received the certificates representing the Pledged Collateral as defined in and pledged pursuant to the Pledge Agreement, together with an undated stock power for each such certificate executed in blank by a duly authorized officer of the pledgor thereof. UCC financing statements contemplated by the Security Documents shall have been recorded in the appropriate filing office.

(m) The Issuer shall have obtained, and provided to the Purchasers, a CUSIP number for the Notes.

(n) The Issuer shall have provided the Securities Intermediary with certified tax identification numbers by furnishing appropriate forms W-9 or W-8 and such other forms and documents that the Securities Intermediary may request.

(o) Unless a waiver shall have been obtained in accordance with Section 2.2, the Issuer’s acceptance of the proceeds of the Note issued on the Issuance Date shall be deemed its acknowledgement that the conditions to closing set forth herein have been complied with or otherwise waived as of such date.

Section 2.2 Purchaser’s Waiver of Compliance. Any Purchaser may in its sole discretion waive compliance with any conditions to the obligations of such Purchaser set forth in Section 2.1 hereof.

SECTION III. REPRESENTATIONS AND WARRANTIES

Section 3.1 Representations and Warranties of the Obligors. Each Obligor hereby represents and warrants to the Indenture Trustee and the Purchasers that as of the Issue Date:

(a) Organization and Good Standing. Such Obligor has been duly formed and is validly existing and in good standing under the laws of its state of organization or incorporation, as applicable, with power and authority to own its properties and to conduct its business as presently conducted and has the power and authority to own and convey all of its properties and to execute and deliver this Agreement and the Transaction Documents to which it is a party and to perform the transactions contemplated hereby and thereby.

(b) Binding Obligation. This Agreement and the other Transaction Documents to which it is a party have each been duly executed and delivered on behalf of such Obligor and this Agreement and each other Transaction Document to which it is a party constitutes a legal, valid and binding obligation of such Obligor enforceable in accordance with its terms except as may be limited by bankruptcy, insolvency, moratorium or other similar laws affecting creditors’ rights and by general principles of equity.

(c) No Consent Required. No consent of, or other action by, and no notice to or filing with, any Governmental Authority or any other party, is required for the due execution, delivery and performance by such Obligor of this Agreement or any of the other Transaction Documents or for the perfection of or the exercise by the Indenture Trustee or the Purchasers of any of their rights or remedies thereunder which have not been duly obtained.

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(d) No Violation. The consummation of the transaction contemplated by this Agreement and the Indenture and the fulfillment of the terms hereof shall not conflict with, result in any material breach of any of the terms and provisions of, nor constitute (with or without notice or lapse of time) a default under, the organizational documents of such Obligor, or any indenture, agreement or other instrument to which such Obligor is a party or by which it is bound; nor violate any law, treaty, rule or regulation or determination of an arbitrator or a court or other Governmental Authority; nor result in the creation or imposition of any Lien upon any of its properties pursuant to the terms of any such indenture, agreement or other instrument (other than pursuant to the Security Documents).

(e) No Proceedings. There is no pending or, to such Obligor’s knowledge, threatened action, suit or proceeding, nor any injunction, writ, restraining order or other order of any nature against or affecting such Obligor, its officers or directors, or the property of such Obligor, in any court or tribunal, or before any arbitrator of any kind or before or by any Governmental Authority (i) asserting the invalidity of this Agreement or any of the Transaction Documents, (ii) seeking to prevent the pledge of any of the Portfolio Policies or any other part of the Collateral or the consummation of any of the transactions contemplated thereby, (iii) seeking any determination or ruling that might materially and adversely affect (A) the performance by any Obligor of this Agreement or any of the Transaction Documents or the interests of the Purchasers in the Portfolio Policies or any other part of the Collateral or (B) the validity or enforceability of this Agreement or any of the Transaction Documents or (iv) asserting a claim for payment of money adverse to such Obligor or the conduct of its business other than the litigation disclosed in Holdings’ filings posted on the SEC Edgar website or which is inconsistent with the due consummation of the transactions contemplated by this Agreement or any of the Transaction Documents.

(f) Obligor Not Insolvent. Such Obligor is solvent and will not become insolvent after giving effect to the transactions contemplated by this Agreement and each of the other Transaction Documents.

(g) Name. The legal name of such Obligor is as set forth in the signature page of this Agreement and the Issuer does not have any tradenames, fictitious names, assumed names or “doing business as” names.

(h) Schedule of Portfolio Policies. As of the Issue Date Issuer is the 100% beneficial owner of at least 195 Life Policies, at least 190 of which are titled in the name of the Securities Intermediary and are held in the Securities Account.

(i) Fair Market Value of Policies. The Fair Market Value of the Portfolio Policies on the Issue Date is at least $95,000,000, and there have been no sales of any of the Portfolio Policies between March, 1, 2013 and the Issue Date (inclusive).

(j) Financial Statements. The audited consolidated balance sheets of Holdings as at December 31, 2011 and December 31 2010, and the related consolidated statements of income and of cash flows for the fiscal years ended on such dates, reported on by and accompanied by an unqualified report from Grant Thornton LLP, present fairly the consolidated financial condition of Holdings as at such date, and the consolidated results of

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its operations and its consolidated cash flows for the respective fiscal years then ended. The unaudited consolidated balance sheet of Holdings as at September 30, 2012, and the related unaudited consolidated statements of income and cash flows for the nine-month period ended on such date, present fairly the consolidated financial condition of Holdings as at such date, and the consolidated results of its operations and its consolidated cash flows for the nine-month period then ended (subject to normal year end audit adjustments). All such financial statements, including the related schedules and notes thereto, have been prepared in accordance with GAAP applied consistently throughout the periods involved (except as approved by the aforementioned firm of accountants and disclosed therein).

(k) No Change. Since September 30, 2012, there has been no development or event that has had or could reasonably be expected to have a Material Adverse Effect.

(l) Ownership of Properties; Liens. Each Obligor has good title to, or a valid leasehold interest in, (i) all Collateral owned by it and (ii) all of its property that is essential to its business as conducted on the Issue Date, and none of such Collateral or other property is subject to any Lien except as permitted by Section 4.09 of the Indenture.

(m) Taxes. Each Obligor has filed or caused to be filed all Federal, state and other material tax returns that are required to be filed and has paid all taxes shown to be due and payable on said returns or on any assessments made against it or any of its property and all other taxes, fees or other charges imposed on it or any of its property by any Governmental Authority (other than any the amount or validity of which are currently being contested in good faith by appropriate proceedings and with respect to which reserves in conformity with GAAP have been provided on the books of the relevant Obligor); no tax Lien has been filed, and, to the knowledge of the applicable Obligor, no claim is being asserted, with respect to any such tax, fee or other charge, except in respect of an audit of Holdings for 2010.

(n) Federal Regulations. No part of the proceeds of the sale of any Notes, will be used (a) for “buying” or “carrying” any “margin stock” within the respective meanings of each of the quoted terms under Regulation U as now and from time to time hereafter in effect for any purpose that violates the provisions of the regulations of the Board of Governors of the Federal Reserve System of the United States (or any successor) (the “Board”). If requested by any Purchaser or the Indenture Trustee, the Issuer will furnish to the Indenture Trustee and each Holder a statement to the foregoing effect in conformity with the requirements of FR Form G-3 or FR Form U 1, as applicable, referred to in Regulation U.

(o) Labor Matters. Except as, in the aggregate, could not reasonably be expected to have a Material Adverse Effect: (a) there are no strikes or other labor disputes against any Obligor pending or, to the knowledge of such Obligor, threatened; (b) hours worked by and payment made to employees of each Obligor have not been in violation of the Fair Labor Standards Act or any other applicable Requirements of Law dealing with such matters; and (c) all payments due from any Obligor on account of employee health and welfare insurance have been paid or accrued as a liability on the books of the relevant Obligor.

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(p) ERISA. Except as could not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect: (i) each Obligor and each of their respective ERISA Affiliates is in compliance with the applicable provisions of ERISA and the provisions of the Code relating to Plans and the regulations and published interpretations thereunder; (ii) no ERISA Event has occurred or is reasonably expected to occur; and (iii) all amounts required by applicable law with respect to, or by the terms of, any retiree welfare benefit arrangement maintained by any Obligor or any ERISA Affiliate or to which any Obligor or any ERISA Affiliate has an obligation to contribute have been accrued in accordance with Statement of Financial Accounting Standards No. 106. The present value of all accumulated benefit obligations under each Pension Plan (based on the assumptions used for purposes of Statement of Financial Accounting Standards No. 87) did not, as of the date of the most recent financial statements reflecting such amounts, exceed by more than $100,000 the fair market value of the assets of such Pension Plan allocable to such accrued benefits, and the present value of all accumulated benefit obligations of all underfunded Pension Plans (based on the assumptions used for purposes of Statement of Financial Accounting Standards No. 87) did not, as of the date of the most recent financial statements reflecting such amounts, exceed by more than $100,000 the fair market value of the assets of all such underfunded Pension Plans.

(q) Investment Company Act; Other Regulations. No Obligor is an “investment company”, or a company “controlled” by an “investment company”, within the meaning of the Investment Company Act of 1940, as amended. No Obligor is subject to regulation under any Requirement of Law (other than Regulation X of the Board) that limits its ability to incur Indebtedness.

(r) Accuracy of Information. No statement or information contained in this Agreement, any other Transaction Document or any other document, certificate or statement furnished by or on behalf of any Obligor to the Indenture Trustee or the Purchasers, or any of them, for use in connection with the transactions contemplated by this Agreement or the other Transaction Documents, contained as of the date such statement, information, document or certificate was so furnished, any untrue statement of a material fact or omitted to state a material fact necessary to make the statements contained herein or therein not misleading. Holdings has complied with its disclosure obligations set forth in Section 2 of the Commitment Letter.

(s) Security Documents. Each of the Indenture and each Security Document is effective to create in favor of the Indenture Trustee, for the benefit of the Purchasers, a legal, valid and enforceable security interest in the Collateral described therein and proceeds thereof. In the case of the Collateral described in the Pledge Agreement, when certificates representing such Collateral are delivered to the Indenture Trustee (together with a properly completed and signed power or endorsement), and in the case of the other Collateral described herein and the Security Documents, when financing statements and other filings in appropriate form are filed, the Indenture and each Security Document shall constitute a fully perfected Lien on, and security interest in, all right, title and interest of the

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Obligors in such Collateral and the proceeds thereof, as security for the Secured Obligations (in the case of the Issuer) or the Obligations (as defined in the Pledge Agreement, in the case of the Guarantors), in each case prior and superior in right to any other Person.

(t) Reserved.

(u) Portfolio Policy Representations. The Issuer represents and warrants to the Indenture Trustee and the Purchasers as of the Issue Date, with respect to each Portfolio Policy, as follows:

(i) The contestability period and suicide period have expired.

(ii) Subject to any issue relating to insurable interest, except with respect to any Portfolio Policy where the original owner designated a beneficiary to retain a portion of the death benefit associated with such policy upon its acquisition by an Affiliate of the Issuer, such Portfolio Policy and the legal and beneficial interests in the death benefit are capable of being sold, transferred and conveyed to a purchaser in a manner such that the purchaser will acquire 100% of the legal and beneficial interests in such Portfolio Policy, that to the knowledge of the Issuer will be free and clear of any Liens, claims or encumbrances of any nature whatsoever.

(iii) To the knowledge of the Issuer, there is no dispute, claim, action or proceeding pending or, threatened, which alleges that a person other than the Issuer has a beneficial or ownership interest in, to or under such Portfolio Policy or that the Issuer does not have a valid and enforceable claim to collect the death benefits on such Portfolio Policy.

(iv) Applicable Requirements of Law do not prohibit the transfer of legal or beneficial ownership of such Portfolio Policy.

(v) The original owners of each Portfolio Policy were: the insured, the insured’s spouse, child or children, other individual or business relation with insurable interest in the life of the insured, or an irrevocable life insurance trust where the beneficiaries of such trust were one or more of the foregoing.

(v) No Solicitation. No form of general solicitation or general advertising was used by any Obligor or its representatives in connection with the offer and sale of the Notes. No investors were solicited or otherwise approached by such Obligor or any representative of such Obligor for the purpose of offering the Notes for sale who were not institutional investors. Such Obligor has not issued or sold any Notes within the six-month period immediately preceding the date hereof or securities that could be integrated with the Notes. Neither such Obligor nor any representative on its behalf has offered or sold, nor will any of them offer or sell, any Notes in any manner that would render the issuance and sale of the Notes a violation of the Securities Act or any state securities or “Blue Sky” laws, or require registration pursuant thereto, nor has any of them authorized, nor will any authorize, any Person to act in such manner.

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(w) Registration Exemption. The offer and sale of the Notes to the Purchasers in the manner contemplated by this Agreement will be exempt from the registration requirements of the Securities Act and it is not necessary to qualify an indenture in respect of the Notes. The Indenture is not required to be qualified under the Trust Indenture Act of 1939 (15 U.S.C. Sections 77aaa-77bbbb) as in effect on the date of this Agreement.

(x) No Other Sales Contracts. Such Obligor has not entered and will not enter into any contractual arrangement with respect to the distribution or sale of the Notes except for this Agreement.

(y) Third Party Beneficiary. The Obligors acknowledge and agree that the Indenture Trustee is a third-party beneficiary of this Section 3.1 and the other provisions of this Agreement related hereto (including, without limitation, Section 4.1).

Section 3.2 Representations and Warranties of the Purchasers. Each Purchaser hereby represents and warrants to the Issuer that as of the date hereof:

(a) Due Authorization. This Agreement has been duly authorized by such Purchaser and, on the Issue Date, will have been duly executed and delivered by such Purchaser.

(b) Binding Obligation. Assuming the due authorization, execution and delivery thereof by the other parties thereto, this Agreement constitutes a valid and legally binding obligation of such Purchaser, enforceable in accordance with its respective terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors’ rights and to general equity principles.

(c) No Violation. The execution, delivery and performance of this Agreement by such Purchaser and compliance with the terms and provisions hereof will not result in a breach or violation of any of the terms and provisions of, or constitute a default under or conflict with, (i) any statute, rule, regulation or order of any governmental agency or body or any court, domestic or foreign, having jurisdiction over such Purchaser or any of its properties, (ii) any agreement or instrument to which such Purchaser is a party or by which such Purchaser is bound or to which any of the properties of such Purchaser is subject, or (iii) the organizational documents of such Purchaser.

(d) Purchaser Letter. Each Purchaser hereby delivers a letter in the form of Exhibit A hereto (a “Purchaser Letter”) to the Issuer and makes the representations and warranties set forth in such Purchaser Letter to the Issuer.

(e) Securities Act. Each Purchaser represents and warranty that it is an “accredited investor”, as defined in Rule 501(a) of Regulation D under the Securities Act, that it will transfer interests in any Note only in accordance with the Indenture.

Section 3.3 Survival of Representations and Warranties. All representations and warranties contained herein shall survive the execution and delivery of this Agreement and

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the other Transaction Documents, the purchase or transfer by any Purchaser of any Note or portion thereof or interest therein and the payment of any Note, and may be relied upon by any subsequent Holder of a Note, regardless of any investigation made at any time by or on behalf of such Purchaser or any other Holder of a Note. All statements contained in any certificate or other instrument delivered by or on behalf of any Obligor pursuant to this Agreement shall be deemed representations and warranties of such Obligor under this Agreement.

SECTION IV. INDEMNIFICATION

Section 4.1 Each Obligor jointly and severally agrees to indemnify and hold harmless each of the Purchasers and their respective affiliates (including, without limitation, controlling persons) and each member, partner, director, officer, employee, advisor, agent, affiliate, successor, partner, representative and assign of each of the forgoing (each an “Indemnified Person”) from and against any and all actions, suits, investigation, inquiry, claims, losses, damages, liabilities, expenses or proceedings of any kind or nature whatsoever which may be incurred by or asserted against or involve any such Indemnified Person as a result of or arising out of or in any way related to or resulting from the Transaction Documents, the use of proceeds thereof or the other transactions contemplated thereby (regardless of whether any such Indemnified Person is a party thereto and regardless of whether such matter is initiated by a third party or otherwise) (any of the foregoing, a “Proceeding”), and each such Obligor jointly and severally agrees to reimburse each Indemnified Person upon demand for any legal or other out-of-pocket expenses incurred in connection with investigating, defending, preparing to defend or participating in any such Proceeding; provided, however, that no Indemnified Person will be indemnified for any such cost, expense or liability to the extent determined by a final, nonappealable judgment of a court of competent jurisdiction to have resulted solely from the gross negligence or willful misconduct of such Indemnified Person. In the case of any Proceeding to which the indemnity in this paragraph applies, such indemnity and reimbursement obligations shall be effective, whether or not such Proceeding is brought by any of the Obligors or their respective securityholders or creditors, an Indemnified Person or any other person, or an Indemnified Person is otherwise a party thereto and whether or not any aspect of the Transaction Documents or the transactions thereunder are consummated. Notwithstanding any other provision of this Transaction Documents, (i) no Indemnified Person shall be responsible or liable for damages arising from the unauthorized use by others of information or other materials obtained through internet, electronic, telecommunications or other information transmission and (ii) no Indemnified Person shall have any liability (whether direct or indirect, in contract, tort or otherwise) to the Obligors, or any of your or their respective securityholders or creditors arising out of, related to or in connection with the Transaction Documents or the other transactions contemplated thereby, except to the extent of direct (as opposed to special, indirect, consequential or punitive) damages determined in a final, nonappealable judgment by a court of competent jurisdiction to have resulted solely from such Indemnified Person’s gross negligence or willful misconduct, and it is further agreed that the Purchasers shall have liability (if any) only to the Obligors (as opposed to any other Person) and that each Purchaser shall be liable solely in respect of its own commitment under the Transaction Documents on a several, and not joint, basis with any other Purchaser.

No Obligor will, without the prior written consent of the Indemnified Person, settle, compromise, consent to the entry of any judgment in or otherwise seek to terminate any

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Proceeding in respect of which indemnification may be sought hereunder (whether or not any Indemnified Person is a party thereto) unless such settlement, compromise, consent or termination (i) includes an unconditional release of each Indemnified Person from all liability arising out of such Proceeding and (ii) does not include a statement as to, or an admission of, fault, culpability, or a failure to act by or on behalf of such Indemnified Person.

SECTION V. MISCELLANEOUS

Section 5.1 Amendments and Waivers. This Agreement may only be amended in writing by all of the parties hereto (other than as expressly set forth in Section 2.2 hereof).

Section 5.2 Notices. All notices, requests and demands to or upon the respective parties hereto to be effective shall be in writing (including by telecopy), and, unless otherwise expressly provided herein, shall be deemed to have been duly given or made when delivered by hand, or, in the case of mail or telecopy notice, when received, addressed as follows in the case of the Issuer and the Guarantors and as set forth on Exhibit B in the case of any Purchaser, or, to such other address as may be hereafter notified to the Indenture Trustee by the respective parties hereto:

The Issuer:	Greenwood Asset Portfolio, LLC
	701 Park of Commerce Boulevard, Suite 301
	Boca Raton, FL 33487
	Attention of: Office of the General Counsel
	Facsimile:
Holdings:	Imperial Holdings, Inc.
	701 Park of Commerce Boulevard, Suite 301
	Boca Raton, FL 33487
	Attention of: Office of the General Counsel
	Facsimile:
Parent:	OLIPP IV, LLC
	701 Park of Commerce Boulevard, Suite 301
	Boca Raton, FL 33487
	Attention of: Office of the General Counsel
	Facsimile:

Section 5.3 No Waiver; Cumulative Remedies. No failure to exercise and no delay in exercising, on the part of any party hereto, any right, remedy, power or privilege under any of the Transaction Documents shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege under any of the Transaction Documents preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges provided in the Transaction Documents are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law.

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Section 5.4 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the Issuer and the Purchasers, and their respective successors and assigns, provided that the Issuer may not assign its rights hereunder without prior written consent from the Purchasers.

Section 5.5 Counterparts. This Agreement may be executed by the parties to this Agreement on any number of separate counterparts, and all of said counterparts taken together shall be deemed to constitute one and the same instrument.

Section 5.6 Severability. Any provisions of this Agreement which are prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provisions in any other jurisdiction.

Section 5.7 Governing Law. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAW OTHER THAN SECTIONS 5-1401 AND 5-1402 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK.

Section 5.8 Termination. This Agreement shall remain in full force and effect until the payment in full of the principal of and interest on the Notes and all other amounts payable to the Purchasers or the Indenture Trustee under the Transaction Documents and the termination of the Commitment.

Section 5.9 Limited Recourse; No Proceedings. The obligations of the Obligors under this Agreement are solely the obligations of the Obligors. No recourse shall be had for the payment of any fee or other obligation or claim arising out of or relating to this Agreement or any other agreement, instrument, document or certificate executed and delivered or issued by the Obligors, or any officer of it in connection therewith, against any partner, member, stockholder, employee, officer, director or incorporator of the Obligors.

Section 5.10 Survival of Representations and Warranties and Indemnification. All representations and warranties made and indemnification provided hereunder and in any document, certificate or statement delivered pursuant hereto or in connection herewith shall survive the execution and delivery of this Agreement, the purchase of the Notes hereunder and the termination of this Agreement and shall survive until the termination as provided under the Indenture.

Section 5.11 Submission to Jurisdiction; Waivers. EACH OF EACH OBLIGOR AND EACH PURCHASER HEREBY IRREVOCABLY AND UNCONDITIONALLY:

(1) SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT TO WHICH IT IS A PARTY, OR FOR

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RECOGNITION AND ENFORCEMENT OF ANY JUDGMENT IN RESPECT THEREOF, TO THE NON-EXCLUSIVE GENERAL JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK LOCATED IN NEW YORK COUNTY, AND APPELLATE COURTS FROM ANY THEREOF;

(2) CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY BE BROUGHT IN SUCH COURTS AND WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY SUCH COURT OR THAT SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN INCONVENIENT COURT AND AGREES NOT TO PLEAD OR CLAIM THE SAME;

(3) AGREES THAT SERVICE OF PROCESS IN ANY SUCH ACTION OR PROCEEDING MAY BE EFFECTED BY MAILING A COPY THEREOF BY REGISTERED OR CERTIFIED MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE PREPAID, TO SUCH PARTY AT ITS ADDRESS SET FORTH IN SECTION 5.2 OR AT SUCH OTHER ADDRESS OF WHICH THE INDENTURE TRUSTEE SHALL HAVE BEEN NOTIFIED PURSUANT THERETO; AND

(4) AGREES THAT NOTHING HEREIN SHALL AFFECT THE RIGHT TO EFFECT SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT TO SUE IN ANY OTHER JURISDICTION.

Section 5.12 WAIVERS OF JURY TRIAL. EACH OF EACH OBLIGOR AND EACH PURCHASER HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING DIRECTLY OR INDIRECTLY TO THIS AGREEMENT OR ANY OTHER DOCUMENT OR INSTRUMENT RELATED HERETO AND FOR ANY COUNTERCLAIM THEREIN.

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective officers as of the day and year first above written.

GREENWOOD ASSET PORTFOLIO, LLC, as Issuer

By:

Name:

Title:

OLIPP IV, LLC, as Guarantor

By:

Name:

Title:

IMPERIAL HOLDINGS, INC., as Guarantor

By:

Name:

Title:

[Note Purchase Agreement Signature Page – Greenwood Asset Portfolio, LLC/OLIPP IV LLC/Imperial Holdings, Inc.]

PURCHASER:

[Name of Purchaser]

By:

Name:

Title:

[Note Purchase Agreement Signature Page]

SCHEDULE 1

PURCHASERS AND INITIAL NOTE BALANCES

EXHIBIT A

FORM OF PURCHASER LETTER

[Date]

GREENWOOD ASSET PORTFOLIO, LLC

701 Park of Commerce Boulevard

Boca Raton, FL 33487

Re GREENWOOD ASSET PORTFOLIO, LLC

Notes

Ladies and Gentlemen:

This letter (the “Investor Letter”) is delivered by the undersigned (the “Purchaser”) pursuant to that certain Note Purchase Agreement dated as of March 27, 2013 (as in effect, the “Note Purchase Agreement”), between Greenwood Asset Portfolio as Issuer, certain of the Issuer’s affiliates as guarantors, and the Purchasers. Capitalized terms used herein without definition shall have the meanings set forth in the Note Purchase Agreement. The Purchaser represents to and agrees with the Issuer as follows:

(a) The Purchaser is authorized to enter into the Note Purchase Agreement and to perform its obligations thereunder and to consummate the transactions contemplated thereby.

(b) The Purchaser has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of its investment in the Notes, is experienced in investing in the capital markets and is able to bear the economic risk of such investment. The Purchaser is aware that investment in the Notes involves a high degree of risk, and the Notes are, therefore, a speculative investment.

(c) The Purchaser has been afforded the opportunity to ask such questions as it deems necessary to make an investment decision, and has received all information it has requested and deemed necessary in connection with making such investment decision. The Purchaser has, independently and without reliance upon any other Purchaser, and based on such documents and information as it has deemed appropriate and adequate for such purpose, made its own appraisal of and investigation into the business, operations, property, financial and other condition, prospects and creditworthiness of the Issuer, and made its own decision to purchase its interest in the Notes (including, without limitation, having considered the income tax consequences of purchasing, owning or disposing of the Notes in light of the Purchaser’s particular situation and tax residence as well as any consequences arising under the laws of any taxing jurisdiction), and will, independently and without reliance upon any other Purchaser, and based on such documents and information as it shall deem appropriate at the time, continue to make its own analysis, appraisals and decisions in taking or not taking action under the Note Purchase Agreement, and to make such investigation as it deems necessary to inform itself as to the business, operations, property, financial and other condition and creditworthiness of the Issuer.

(d) The Purchaser is an “accredited investor”, as defined in Rule 501, promulgated by the Securities and Exchange Commission (the “Commission”) under the Securities Act of 1933, as amended (the “Securities Act”) or is a “qualified institutional buyer” (within the meaning of Rule 144A thereunder) and is acquiring the Notes (or an interest in the Notes) for its own account for investment purposes. The Purchaser understands that the offering and sale of the Notes (or any interest in therein) has not been and will not be registered under the Securities Act and has not and will not be registered or qualified under any applicable “Blue Sky” law, and that the offering and sale of the Notes (or any interests therein) have not been reviewed by, passed on or submitted to any federal or state agency or commission, securities exchange or other regulatory body.

(d) The Purchaser is not an employee benefit plan subject to Title I of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), or section 4975 of the Internal Revenue Code of 1986, as amended (the “Code”) (each such plan, an “Employee Plan”), an entity whose underlying assets include the assets of any Employee Plan, or a governmental plan that is subject to any federal, state or local law which is substantially similar to the provisions of Section 406 of ERISA or Section 4975 of the Code or the Purchaser’s purchase, holding and disposition of the Notes does not result in a prohibited transaction under Section 406 of ERISA or Section 4975 of the Code (or, in the case of a governmental plan, any substantially similar federal, state or local law) for which an exemption is not available.

(e) The Purchaser is acquiring an interest in the Notes without a view to any distribution, resale or other transfer except as contemplated in the following sentence. The Purchaser will not resell or otherwise transfer the Notes, or any interest or participation in the Notes, except in a transaction exempt from the registration requirements of the Securities Act, and applicable state securities or “blue sky” laws. The Purchaser understands and acknowledges that no Obligor has made or will be making any representation as to the availability of Rule 144A, Regulation S or Rule 144 under the Securities Act for the reoffer, resale, pledge or transfer of the Notes.

(f) This Investor Letter has been duly executed and delivered and constitutes the legal, valid and binding obligation of the Purchaser, enforceable against the Purchaser in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles affecting the enforcement of creditors’ rights generally and general principles of equity.

Very truly yours,

[NAME OF PURCHASER]

By:

Name:

Title:

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EXHIBIT B

PURCHASER NOTICE INFORMATION

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EX-21.1

Exhibit 21.1

Subsidiaries of Imperial Holdings, Inc., a Florida corporation

Entity	Jurisdiction
Contingent Settlements I, LLC	Georgia
Greenwood Asset Portfolio, LLC	Delaware
Haverhill Receivables, LLC	Georgia
Imperial Finance & Trading, LLC	Florida
Imperial Life and Annuity Services, LLC	Florida
Imperial Life Financing II, LLC	Georgia
Imperial Life Settlements, LLC	Delaware
Imperial Litigation Funding, LLC	Florida
Imperial PFC Financing, LLC	Illinois
Imperial PFC Financing II, LLC	Georgia
Imperial Premium Finance, LLC	Florida
Imperial Settlements Financing 2010, LLC	Georgia
Imperial SRC V, LLC	Florida
MXT Investments, LLC	Florida
OLIPP I, LLC	Delaware
OLIPP II, LLC	Delaware
OLIPP III, LLC	Delaware
OLIPP IV, LLC	Delaware
OLIPP Ireland Limited	Ireland
Portfolio Servicing, LLC	Florida
PSC Financial, LLC	Florida
Sovereign Life Financing, LLC	Delaware
Washington Square Financial, LLC**	Georgia
WSF Contingent, LLC	Florida
WSF Guaranteed, LLC	Florida

** Does business as Imperial Structured Settlements

EX-23.1

Exhibit 23.1

Consent of Independent Registered Public Accounting Firm

We have issued our report dated March 27, 2013, with respect to the consolidated financial statements included in the Annual Report of Imperial Holdings, Inc. on Form 10-K for the year ended December 31, 2012. We hereby consent to the incorporation by reference of said report in the Registration Statement of Imperial Holdings, Inc. on Form S-8 (File No. 333-172113, effective February 8, 2011).

/s/ Grant Thornton LLP

Fort Lauderdale, Florida

March 27, 2013

EX-31.1

Exhibit 31.1

CERTIFICATIONS

I, Antony Mitchell, certify that:

1. I have reviewed this Annual Report on Form 10-K of Imperial Holdings, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

c. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ Antony Mitchell

Antony Mitchell

Chief Executive Officer and Director

(Principal Executive Officer)

March 27, 2013

EX-31.2

Exhibit 31.2

CERTIFICATIONS

I, Richard S. O’Connell, Jr., certify that:

1. I have reviewed this Annual Report on Form 10-K of Imperial Holdings, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

c. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ Richard S. O’Connell, Jr.

Richard S. O’Connell, Jr.

Chief Financial Officer and Chief Credit Officer

(Principal Financial Officer)

March 27, 2013

EX-32.1

Exhibit 32.1

Certification of the Chief Executive Officer

Pursuant to 18 U.S.C. Section 1350,

As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Annual Report of Imperial Holdings, Inc. (the Registrant) on Form 10-K for the period ended December 31, 2012 as filed with the U.S. Securities and Exchange Commission on the date hereof (the Report), I, Antony Mitchell, Chairman and Chief Executive Officer of the Registrant, certify to the best of my knowledge, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

/s/ Antony Mitchell

Antony Mitchell

Chief Executive Officer and Director

March 27, 2013

EX-32.2

Exhibit 32.2

Certification of the Chief Financial Officer

Pursuant to 18 U.S.C. Section 1350,

As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Annual Report of Imperial Holdings, Inc. (the Registrant) on Form 10-K for the period ended December 31, 2012 as filed with the Securities and Exchange Commission on the date hereof (the Report), I, Richard S. O’Connell, Jr., Chief Financial Officer and Chief Credit Officer of the Registrant, certify to the best of my knowledge, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

/s/ Richard S. O’Connell, Jr.

Richard S. O’Connell, Jr.

Chief Financial Officer and Chief Credit Officer

March 27, 2013

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Investment in Life Settlements (Life Insurance Policies) (Tables)

12 Months Ended

Dec. 31, 2012

Investment in Life Settlements

The weighted average life expectancy calculated based on death benefit of insureds in the policies owned by the Company at December 31, 2012 was 10.6 years. The following table describes the Company’s investment in life settlements as of December 31, 2012 (dollars in thousands):

Remaining Life Expectancy (In Years)	Number of Life  Settlement Contracts		Fair Value		Face Value
0 - 1		—	$	—	$	—
1 - 2		—		—		—
2 - 3		1		1,222		2,500
3 - 4		4		3,319		11,450
4 - 5		7		11,375		30,950
Thereafter		202		97,525		1,028,256
Total		214		113,441		1,073,156

The weighted average life expectancy calculated based on death benefit of insureds in the policies owned by the Company at December 31, 2011 was 10.6 years. The following table describes the Company’s investment in life settlements as of December 31, 2011 (in thousands):

Remaining Life Expectancy (In Years)	Number of Life Settlement Contracts		Fair Value		Face Value
0 – 1		—	$	—	$	—
1 – 2		1		3,033		5,000
2 – 3		2		2,484		4,500
3 – 4		4		7,084		20,200
4 – 5		3		2,357		7,950
Thereafter		180		75,959		897,816
Total		190		90,917		935,466

Estimated Premiums To Be Paid

Premiums to be paid for each of the five succeeding fiscal years to keep the life insurance policies in force as of December 31, 2012, are as follows (in thousands):

2013		27,703
2014		26,281
2015		26,533
2016		26,978
2017		28,002
Thereafter		324,884
	$	460,381

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Deferred Costs - Additional Information (Detail) (USD $)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Line Items]
Deferred Cost	$ 7,000	$ 1,874,000
State surplus taxes on lender protection premiums	3.48%	2.67%
Deferred cost related to securing credit facility	7,000	301,000
Insurance Premiums
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Line Items]
Deferred Cost	0	1,100,000
State surplus taxes on lender protection premiums	3.60%	4.00%
State
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Line Items]
Deferred Cost	$ 0	$ 498,000

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Changes in Weighted Average Discount Rate Used to Estimate Fair Value Policy (Detail) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Weighted Average Rate	24.01%
Value	$ 113,441	$ 90,917
Change in Value	151	5	1,951
.50% Decrease in Discount Rate
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Weighted Average Rate	23.51%
Value	116,300
Change in Value	2,859
.50% Increase in Discount Rate
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Weighted Average Rate	24.51%
Value	110,694
Change in Value	$ (2,747)

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Impaired Loans With and Without Related Allowance (Detail) (USD $)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
Financing Receivable, Impaired [Line Items]
With no Related Allowance	$ 0	$ 0
With an allowance recorded, recorded investment	3,735,000	24,223,000
With an related allowance recorded, unpaid principal balance	5,236,000	24,019,000
Related Allowance	4,315,000	10,195,000
With an allowance recorded, average recorded investment	13,978,000	31,611,000
With an allowance recorded, interest income recognized	1,671,000	4,879,000
Uninsured Loans
Financing Receivable, Impaired [Line Items]
With no related allowance recorded, recorded investment
With no related allowance recorded, unpaid principal balance
With no Related Allowance
With no related allowance recorded, recorded investment
With no related allowance recorded, interest income recognized
With an allowance recorded, recorded investment	3,623,000	10,153,000
With an related allowance recorded, unpaid principal balance	4,735,000	13,628,000
Related Allowance	3,413,000	6,894,000
With an allowance recorded, average recorded investment	6,887,000	6,764,000
With an allowance recorded, interest income recognized	1,444,000	1,684,000
Insured Loans
Financing Receivable, Impaired [Line Items]
With no related allowance recorded, recorded investment
With no related allowance recorded, unpaid principal balance
With no Related Allowance
With no related allowance recorded, recorded investment
With no related allowance recorded, interest income recognized
With an allowance recorded, recorded investment	112,000	14,070,000
With an related allowance recorded, unpaid principal balance	501,000	10,391,000
Related Allowance	902,000	3,301,000
With an allowance recorded, average recorded investment	7,091,000	24,847,000
With an allowance recorded, interest income recognized	$ 227,000	$ 3,195,000

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Deposits- Other - Additional Information (Detail) (USD $)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Deposits And Other Assets [Line Items]
Interest on deposits	$ 3,500	$ 3,000	$ 3,000
Letter of Credit	850,000
Collateralized amounts for letter of credit	895,000
Other Credit Facilities
Deposits And Other Assets [Line Items]
Deposits	1,300,000
Miscellaneous
Deposits And Other Assets [Line Items]
Deposits	78,000	86,000
Cedar Lane
Deposits And Other Assets [Line Items]
Deposits	250,000	250,000
Surety Bond
Deposits And Other Assets [Line Items]
Guarantee amount for obtaining life settlement licenses	850,000
Number of states	7
Guarantee expiration date	2013-05
Location 1
Deposits And Other Assets [Line Items]
Deposits	100,000
Location 2
Deposits And Other Assets [Line Items]
Deposits	100,000
Location 3
Deposits And Other Assets [Line Items]
Deposits	100,000
Location 4
Deposits And Other Assets [Line Items]
Deposits	125,000
Location 5
Deposits And Other Assets [Line Items]
Deposits	$ 425,000	$ 425,000

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Structured Settlements - Additional Information (Detail) (USD $)	12 Months Ended																12 Months Ended						12 Months Ended		9 Months Ended	12 Months Ended		12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2012 Structured settlements	Dec. 31, 2011 Structured settlements	Dec. 31, 2012 Unrelated Parties	Dec. 31, 2011 Unrelated Parties	Dec. 31, 2011 SPV Contract	Dec. 31, 2012 Structured Settlements Intended for Sale to ISF	Dec. 31, 2011 Structured Settlements Intended for Sale to ISF	Dec. 31, 2012 8.39% Fixed Rate Asset Backed Variable Funding Notes	Dec. 31, 2011 8.39% Fixed Rate Asset Backed Variable Funding Notes	Dec. 31, 2010 8.39% Fixed Rate Asset Backed Variable Funding Notes	Dec. 31, 2012 8.39% Fixed Rate Asset Backed Variable Funding Notes Guaranteed Insurance Contracts Contract	Dec. 31, 2011 8.39% Fixed Rate Asset Backed Variable Funding Notes Guaranteed Insurance Contracts Contract	Dec. 31, 2012 Maximum	Dec. 31, 2012 Scenario, Previously Reported Unrelated Parties	Dec. 31, 2012 ISF 2010 Contract	Dec. 31, 2012 ISF 2010 8.39% Fixed Rate Asset Backed Variable Funding Notes	Dec. 30, 2012 ISF 2010 8.39% Fixed Rate Asset Backed Variable Funding Notes	Dec. 31, 2011 ISF 2010 8.39% Fixed Rate Asset Backed Variable Funding Notes	Sep. 24, 2010 ISF 2010 8.39% Fixed Rate Asset Backed Variable Funding Notes	Dec. 31, 2012 ISF 2010 Maximum 8.39% Fixed Rate Asset Backed Variable Funding Notes	Dec. 31, 2012 Life Contingent Structured Settlement Facility Contract	Sep. 30, 2012 Life Contingent Structured Settlement Facility Scenario, Previously Reported	Dec. 31, 2011 Life Contingent Structured Settlement Facility Scenario, Previously Reported Contract	Dec. 31, 2012 Life Contingent Structured Settlement Facility Scenario, Previously Reported Contract	Dec. 31, 2012 Life Contingent Structured Settlement Facility Compass	Dec. 31, 2011 Life Contingent Structured Settlement Facility Compass	Dec. 31, 2011 Life Contingent Structured Settlement Facility Compass Maximum	Dec. 31, 2011 Life Contingent Structured Settlement Facility WSF Maximum
Securities Financing Transaction [Line Items]
Proceeds from sale of investments in life settlements			$ 2,070,000			$ 6,700,000																									$ 40,000,000
Purchases of investments in life settlements																													5,000,000	40,000,000
Number of structured settlement contracts								38						384	307			131						380		73	107
Gain on sale of structured settlements	11,509,000	5,817,000	6,595,000			4,000,000					4,900,000	3,800,000						64,000						2,600,000
Unrealized change in fair value of life settlements	(5,660,000)	570,000	10,156,000						559,000	3,400,000															712,000	1,100,000		72,000
Credit facility, maximum borrowing																						50,000,000
Debt instrument maturity date																			Jan. 01, 2057
Percent of credit facility limit																			15.00%				5.00%
Credit facility outstanding																			43,200,000		20,600,000
Total funds held amount																				2,200,000	1,000,000
Number of policies sold											565	485
Number of policies originated												181	12
Unrealized change in fair value of structured settlements	1,823,000	5,302,000	2,477,000			158,000	135,000	32,000				3,200,000	129,000				322,000
Acquisition purchase price percentage	95.00%
Ownership Interest																50.00%		5.00%
Percentage contributed to cash reserve held by Wilmington Trust	1.00%
Number of policies sold						282
Interest income	2,014,000	8,303,000	18,660,000	329,000	552,000
Other receivable				3,300,000	13,900,000
Discount on receivables				4,600,000	27,800,000
Gain on sale of holdback funds		$ 215,000
Payments due by holder period		90 days

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Summary Of Significant Accounting Policies - Additional Information (Detail) (USD $)	3 Months Ended	12 Months Ended
	Sep. 30, 2012	Dec. 31, 2012 Contract	Dec. 31, 2011 Contract	Dec. 31, 2010	Dec. 31, 2009
Organization And Basis Of Presentation [Line Items]
Mortality rate	100.00%	100.00%
Maximum mortality rate	150.00%	150.00%
Life settlement contracts, fair value method, change in expectations	As noted above, the Company takes an average, or blend, of the two life expectancy reports to derive a composite mortality factor, unless the probability of mortality between the reports is greater than 150%. In such instances and as reflected in the fair market value at September 30, 2012, the Company will cap the higher mortality factor at amount that is 150% above the lower mortality factor , which ultimately reduces the mortality factor inputted into the Company's fair value model.	As noted above, the Company takes an average, or blend, of the two life expectancy reports to derive a composite mortality factor, unless the difference in the probability of mortality between the reports is greater than 150%. In such instances and as reflected in the fair market value at December 31, 2012, the Company will cap the higher mortality factor at amount that is 150% above the lower mortality factor , which ultimately reduces the mortality factor inputted into the Company’s fair value model.
Change in fair value of portfolios		$ 9,500,000
Number of life settlement contracts		214	190
Investment in life settlements		113,441,000	90,917,000
Unrealized change in fair value of life settlements		(5,660,000)	570,000	10,156,000
Decline in the fair market value of the Company's portfolio of life insurance policies		(31,300,000)
Unrealized change in fair value of life settlements		5,700,000
Cash and cash equivalents		7,001,000	16,255,000	14,224,000	15,891,000
Servicing liability		110,000	3,000,000
Cash and cash equivalents maturity period		3 months
Impairment charges related to loans		437,000	6,800,000	2,300,000
Impairment charges related to interest		78,000	796,000	2,200,000
Allowance for doubtful accounts		260,000	260,000
Intangible Assets		160,000
Loss on loan payoffs and settlements		(125,000)	(3,837,000)	(4,981,000)
Advertising Expenses		5,000,000	6,100,000
Structured Settlements at fair value		1,680,000	12,376,000
Deferred tax assets valuation allowance		27,803,000	11,074,000
Income tax benefit		(39,000)
Percentage of principal amount of loan retained		2.00%
Restricted cash		1,162,000	691,000
Acorn International Inc
Organization And Basis Of Presentation [Line Items]
Loss on loan payoffs and settlements		0	4,100,000
Service Policies
Organization And Basis Of Presentation [Line Items]
Cash and cash equivalents		110,000	3,000,000
Change in Accounting Estimate
Organization And Basis Of Presentation [Line Items]
Unrealized change in fair value of life settlements			3,000,000
Effect of increase in valuation allowance
Organization And Basis Of Presentation [Line Items]
Income tax benefit		0	0
More than two years old at December 31, 2012
Organization And Basis Of Presentation [Line Items]
Number of life settlement contracts		45
Life expectancy reports were received
Organization And Basis Of Presentation [Line Items]
Number of life settlement contracts		149
Increase Due To Adjustment
Organization And Basis Of Presentation [Line Items]
Change in fair value of portfolios		5,800,000
Previously Premium Financed
Organization And Basis Of Presentation [Line Items]
Number of life settlement contracts		171
Previously Premium not Financed
Organization And Basis Of Presentation [Line Items]
Number of life settlement contracts		43
Structured settlements
Organization And Basis Of Presentation [Line Items]
Number of life settlement contracts		36
Structured Settlements at fair value		1,700,000
Structured settlements | Fair Value Option
Organization And Basis Of Presentation [Line Items]
Structured Settlements at fair value		1,800,000	5,300,000	2,500,000
Minimum
Organization And Basis Of Presentation [Line Items]
Accumulated depreciation and amortization on estimated useful lives		3 years
Ownership Interest		20.00%
Minimum | Previously Premium Financed
Organization And Basis Of Presentation [Line Items]
Discount rates		16.80%
Minimum | Previously Premium not Financed
Organization And Basis Of Presentation [Line Items]
Discount rates		14.80%
Maximum
Organization And Basis Of Presentation [Line Items]
Accumulated depreciation and amortization on estimated useful lives		5 years
Ownership Interest		50.00%
Maximum | Previously Premium Financed
Organization And Basis Of Presentation [Line Items]
Discount rates		33.80%
Maximum | Previously Premium not Financed
Organization And Basis Of Presentation [Line Items]
Discount rates		21.30%
Life Finance
Organization And Basis Of Presentation [Line Items]
Investment term		5 years
Life Finance | Minimum
Organization And Basis Of Presentation [Line Items]
Expected yield rate		12.00%
Discount rates		15.00%
Life Finance | Maximum
Organization And Basis Of Presentation [Line Items]
Expected yield rate		17.00%
Discount rates		17.00%
Life Expectancy Additional Update Received
Organization And Basis Of Presentation [Line Items]
Number of life settlement contracts		214
Life Expectancy Update Received
Organization And Basis Of Presentation [Line Items]
Number of life settlement contracts		149
MXT
Organization And Basis Of Presentation [Line Items]
Investment in Other Companies				$ 0
Impaired life bearing
Organization And Basis Of Presentation [Line Items]
Mortality rate	200.00%	200.00%

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Fixed Assets (Tables)

12 Months Ended

Dec. 31, 2012

Summary of Fixed Assets

Fixed assets at December 31, 2012 and 2011 are summarized as follows (in thousands):

	For the Year Ended December 31,
	2012		2011
Computer software and equipment	$	2,320	$	2,286
Furniture, fixtures and equipment		670		1,046
Leasehold improvements		773		666
		3,763		3,998
Less: Accumulated depreciation		3,531		3,413
Fixed assets, net	$	232	$	585

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Investment in Life Settlements - Additional Information (Detail) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012 Contract	Dec. 31, 2011 Contract
Life Insurance Premiums and Related Investment Income [Line Items]
Number of policies owned fair value of investments	214	190
Investment in life settlements, at estimated fair value	$ 113,441	$ 90,917
Average life expectancy of insured	10 years 7 months 6 days	10 years 7 months 6 days
Estimated future premium payments	$ 460,381

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Share-Based Compensation - Additional Information (Detail) (USD $)	12 Months Ended				12 Months Ended				1 Months Ended	3 Months Ended	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2012 2013	Dec. 31, 2012 2014	Dec. 31, 2012 Omnibus Plan	Dec. 31, 2012 Restricted Stock Awards	Dec. 31, 2012 Stock Option Omnibus Plan	Dec. 31, 2011 Stock Option Omnibus Plan	Feb. 11, 2011 Phantom Stock Agreement	Mar. 31, 2011 Phantom Stock Agreement Omnibus Plan	Dec. 31, 2012 Restricted Stock Omnibus Plan	Dec. 31, 2011 Restricted Stock Omnibus Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares of common stock reserved for future grant					1,200,000
Stock-based compensation expense	$ 309,000	$ 1,873,000					$ 305,000	$ 1,500,000	$ 290,000	$ 290,000	$ 4,000	$ 34,000
Stock issued under phantom stock agreements		290,000							27,000	27,000
Options outstanding and unexercised	487,314	627,419			487,414
Options outstanding and unexercised, weighted average price	$ 10.75				$ 10.75
Options outstanding and unexercised, expiry period					7 years
Options outstanding and unexercised, vesting period					3 years						1 year
Remaining unamortized amounts			336,000	21,000
Restricted stock awards granted					3,507	0					3,507
Fair value of unvested restricted stock											$ 38,000

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Notes and Debenture Payable - Additional Information (Detail) (USD $)		1 Months Ended			1 Months Ended			12 Months Ended
	Dec. 31, 2011	Sep. 30, 2009 White Oak, Inc.	Dec. 31, 2012 White Oak, Inc.	Dec. 31, 2011 White Oak, Inc.	Sep. 30, 2009 White Oak, Inc. Minimum	Sep. 30, 2009 White Oak, Inc. Maximum	Dec. 02, 2009 Cedar Lane	Dec. 31, 2012 Cedar Lane	Dec. 31, 2011 Cedar Lane	Dec. 31, 2012 Cedar Lane Premium Financed	Dec. 31, 2011 Cedar Lane Premium Financed
Debt Instrument [Line Items]
Credit facility, minimum borrowing capacity							$ 5,000,000
Credit facility, maximum borrowing		27,000,000					250,000,000
Credit facility, borrowing period							28 months
Credit facility, interest rate term							Annual interest rate of 14%, 15% or 16%, depending on the class of lender and were compounded monthly.
Credit facility covenants							The Company was subject to several restrictive covenants under the facility. The restrictive covenants included items such as restrictions on the ability to pay dividends or incur additional indebtedness by Imperial PFC Financing II, LLC. The Company believes it was in compliance at December 31, 2012.
Credit facility covenants compliance							The Company believes it was in compliance at December 31, 2012
Credit facility outstanding			0	172,000						0	19,100,000
Accrued interest	5,505,000		0	104,000				0	5,400,000
Credit facility, principal percentage amount								2.00%	2.00%
Credit facility, increase		$ 12,000,000
Notes payable repayment period					6 months	26 months
Credit facility, maturity date		Mar. 11, 2012

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Fixed Assets - Additional Information (Detail) (USD $)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Property, Plant and Equipment [Line Items]
Depreciation Expenses	$ 365,000	$ 602,000	$ 722,000
Amortization Expense	11,000	10,000
Selling, General and Administrative Expenses
Property, Plant and Equipment [Line Items]
Depreciation Expenses	$ 9,000

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Activity of Unvested Restricted Common Shares (Detail)	12 Months Ended
	Dec. 31, 2012
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Outstanding beginning period	3,507
Granted
Vested	(3,507)
Forfeited
Outstanding ending period

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Changes in Weighted Average Discount Rate Used to Estimate Fair Value (Detail) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Weighted Average Rate	24.01%
Value	$ 113,441	$ 90,917
Change in Value	151	5	1,951
.50% Decrease in Discount Rate
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Weighted Average Rate	23.51%
Value	116,300
Change in Value	2,859
.50% Increase in Discount Rate
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Weighted Average Rate	24.51%
Value	110,694
Change in Value	$ (2,747)

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Estimated Premiums to be Paid (Detail) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012
Life Insurance Premiums and Related Investment Income [Line Items]
2013	$ 27,703
2014	26,281
2015	26,533
2016	26,978
2017	28,002
Thereafter	324,884
Estimated future premium payments	$ 460,381

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Changes in Fair Value for All Assets Using Material Level of Unobservable (Level 3) Inputs (Detail) (USD $) In Thousands, unless otherwise specified	9 Months Ended	12 Months Ended
	Sep. 30, 2011	Dec. 31, 2012	Dec. 31, 2011
Life Finance
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Beginning Balance	$ 17,138	$ 90,917	$ 17,138
Purchase of contracts	50,480	130
Acquired in foreclosure	6,409	5,724
Unrealized change in fair value	570	(5,660)
Sale of contracts		(5,334)
Premiums paid	16,320	27,804
Policies lapsed/written off		(140)
Ending Balance	90,917	113,441	90,917
Changes in fair value included in earnings for the period relating to assets held at end of year		(5,898)	570
Structured settlements
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Beginning Balance	1,446	12,376	1,446
Purchase of contracts	27,545	24,313
Unrealized change in fair value	5,302	1,823
Transfers into Level 3
Transfers out of level 3
Sale of contracts	(21,723)	(36,615)
Collections	(194)	(217)
Ending Balance	12,376	1,680	12,376
Changes in fair value included in earnings for the period relating to assets held at end of year		$ 255	$ 4,218

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Structural Settlements (Detail) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Long-Duration Contracts, Assumptions by Product and Guarantee [Line Items]
Structured settlements - at cost	$ 1,574	$ 1,553
Settlements with estimated fair value	1,680	12,376
Structured settlements receivable, net	$ 3,254	$ 13,929

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Analysis of Past due Loans (Detail) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Financing Receivable, Recorded Investment, Past Due [Line Items]
30-59 Days Past Due		$ 1,570
60-89 Days Past Due
Greater Than 90 Days Past Due	914	599
Total Past Due	914	2,169
Uninsured Loans
Financing Receivable, Recorded Investment, Past Due [Line Items]
60-89 Days Past Due
Greater Than 90 Days Past Due	599	599
Total Past Due	599	599
Insured Loans
Financing Receivable, Recorded Investment, Past Due [Line Items]
30-59 Days Past Due		1,570
60-89 Days Past Due
Greater Than 90 Days Past Due	315
Total Past Due	$ 315	$ 1,570

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Stockholders' Equity

12 Months Ended

Dec. 31, 2012

Stockholders' Equity

NOTE 18—STOCKHOLDERS’ EQUITY

In January 2011, Imex Settlement Corporation executed an agreement to purchase from the Company 110,000 Series F Preferred Units for an $11.0 million promissory note. The Series F Preferred Units were non-voting and would be redeemed at any time by the Company for an amount equal to the applicable unreturned preferred capital amount allocable to the Series F Preferred Units sought to be redeemed, plus any accrued and unpaid preferred return. The cumulative rate of preferred return was equal to 16.0% of the outstanding units, per annum. The Series F Preferred units and the $11.0 million promissory note were extinguished as a result of the corporate conversion.

On February 3, 2011, the Company converted from a Florida limited liability company to a Florida corporation at which time the members of Imperial Holdings, LLC became shareholders of Imperial Holdings, Inc. As a limited liability company, the Company was treated as a partnership for United States federal and state income tax purposes and, as such, the Company was not subject to taxation. For all periods subsequent to such conversion, the Company will be subject to corporate-level United States federal and state income taxes.

As part of the corporate conversion, the Company entered into a plan of conversion with its shareholders on January 12, 2011, as amended on February 3, 2011. Pursuant to the plan of conversion, all of the Company’s outstanding common units and Series A, B, C, D and E preferred units and all principal and accrued and unpaid interest outstanding under our promissory note in favor of IMPEX Enterprises, Ltd. were converted into 2,300,273 shares of our common stock. The plan of conversion, which describes the corporate conversion as well as other transactions and agreements by the parties with an interest in the Company’s equity, reflects an agreement among its then shareholders as to the allocation of the shares of common stock to be issued to its shareholders in the corporate conversion. Thus, there is no formula that may be used to describe the conversion of a common unit or a Series A, B, C, D and E preferred unit into common stock.

Immediately after the corporate conversion and prior to the conversion of the Skarbonka debenture and the closing of the Company’s initial public offering on February 11, 2011, the Company’s shareholders consisted of two Florida corporations and one Florida limited liability company. These three shareholders reorganized so that their beneficial owners received the same number of shares of common stock of Imperial Holdings, Inc. issuable to the members of Imperial Holdings, LLC in the corporate conversion.

After the corporate conversion and prior to the closing of the Company’s initial public offering on February 11, 2011, the Company converted two phantom stock agreements it had with two employees into 27,000 shares of common stock and incurred stock compensation of approximately $290,000.

In addition, following the corporate conversion and upon the closing of the Company’s initial public offering on February 11, 2011, three shareholders received ownership of warrants that may be exercised for up to a total of 4,053,333 shares of the Company’s common stock at a weighted average exercise price of $14.51 per share. In connection with the over-allotment option, the same three shareholders received ownership of 187,188 additional warrants. One-third of the warrants will have an exercise price equal to 120% of the price of the common stock sold in this offering, one-third of the warrants will have an exercise price equal to 135% of the price of the common stock sold in this offering, and one-third of the warrants will have an exercise price equal to 150% of the price of the common stock sold in this offering. The warrants will expire 7 years after the date of issuance and the exercisability of the warrant will vest ratably over four years.

On February 11, 2011, the Company closed its initial public offering of 16,666,667 shares of common stock at $10.75 per share. On February 15, 2011 Imperial Holdings, Inc. sold an additional 935,947 shares of common stock. The sale was in connection with the over-allotment option Imperial Holdings, Inc. granted to its underwriters in connection with Imperial’s initial public offering. As a result, the total initial public offering size was 17,602,614 shares. All shares were sold to the public at a price of $10.75. The Company received net proceeds of approximately $174.2 million after deducting the underwriting discounts and commissions and our offering expenses.

After giving effect to (i) the corporate conversion, pursuant to which all outstanding common and preferred limited liability company units of Imperial Holdings, LLC (including all accrued and unpaid dividends thereon) and all principal and accrued and unpaid interest outstanding under the Company’s promissory note in favor of IMPEX Enterprises, Ltd. were converted into 2,300,273 shares of the Company’s common stock; (ii) the issuance of 27,000 shares of common stock to two employees pursuant to the terms of each of their respective phantom stock agreements; (iii) the conversion of a $30.0 million debenture into 1,272,727 shares of common stock (iv) the sale of 16,666,667 shares in the Company’s offering, and (v) the sale of 935,947 shares in connection with the over-allotment option granted to the Company’s underwriters, there are 21,202,614 shares of common stock outstanding. Up to an additional 4,240,521 shares of common stock will be issuable upon the exercise of warrants issued to existing members of the Company. Moreover, the Company reserved an aggregate of 1,200,000 shares of common stock under its Omnibus Plan, of which 665,956 options to purchase shares of common stock were granted to existing employees, directors and named executive officers at a weighted average exercise price of $10.75 per share, and an additional 3,507 shares of restricted stock had been granted under the plan subject to vesting. The remaining 530,537 shares of common stock are available for future awards.

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Reconciliation of Actual Basic and Diluted Earnings Per Share (Detail) (USD $) In Thousands, except Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2012		Dec. 31, 2011		Dec. 31, 2010
Numerator:
Net loss available to common stockholders	$ (44,634)		$ (39,198)		$ (15,697)
Denominator:
Weighted average common shares outstanding	21,205,747		19,352,063		3,600,000
Basic loss per share	$ (2.10)		$ (2.03)		$ (4.36)
Numerator:
Net loss available to common stockholders	$ (44,634)		$ (39,198)		$ (15,697)
Denominator:
Diluted weighted average shares outstanding	21,205,747		19,352,063		3,600,000
Diluted loss per share	$ (2.10)	[1],[2]	$ (2.03)	[1],[2]	$ (4.36)	[1],[2]

[1] The computation of diluted EPS did not include 627,419 options, 4,240,521 warrants and 3,507 shares of restricted stock for the year ended December 31, 2011, as the effect of their inclusion would have been anti-dilutive.

[2] The computation of diluted EPS did not include 487,314 options and 4,240,521 warrants for the year ended December 31, 2012, as the effect of their inclusion would have been anti-dilutive.

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Commitments and Contingencies (Tables)

12 Months Ended

Dec. 31, 2012

Minimum Rental Commitments Under Operating Leases

Future minimum payments under operating leases for years subsequent to December 31, 2012 are as follows:

Year Ended December 31,
2013	$	547,051
2014		477,183
	$	1,024,234

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Common Stock Options Activity (Detail) (USD $)	12 Months Ended
	Dec. 31, 2012
Number of Shares
Options outstanding, Beginning Balance	627,419
Options granted
Options exercised
Options forfeited	(140,105)
Options expired
Options outstanding, Ending Balance	487,314
Exercisable at end of period	287,988
Unvested at end of period	199,326
Weighted Average Price Per Share
Options outstanding, Beginning Balance
Options granted	$ 10.75
Options exercised
Options forfeited	$ 10.75
Options expired
Options outstanding, Ending Balance	$ 10.75
Exercisable at end of period	$ 10.74
Unvested at end of period	$ 10.75
Weighted Average Remaining Contractual Term
Options granted	6 years 1 month 10 days
Options outstanding, end of period	5 years 1 month 10 days
Exercisable at end of period	5 years 1 month 10 days
Unvested at end of period	5 years 1 month 10 days
Aggregate Intrinsic Value
Options outstanding,Beginning Balance
Options granted
Options exercised
Options forfeited
Options expired
Options outstanding, Ending Balance
Exercisable at end of period
Unvested at end of period

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Summary Quarterly Financial Data (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended								12 Months Ended
	Dec. 31, 2012	Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2011	Sep. 30, 2011	Jun. 30, 2011	Mar. 31, 2011	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Quarterly Financial Data [Line Items]
Revenues	$ 7,106	$ (14,171)	$ 16,183	$ 9,966	$ (8,096)	$ (1,763)	$ 29,211	$ 24,862	$ 19,083	$ 44,214	$ 76,896
(Loss)/Income from Operations	(3,656)	(31,480)	(625)	(8,912)	(40,034)	(20,377)	13,788	7,425
Net (Loss)/Income	$ (3,663)	$ (31,475)	$ (625)	$ (8,871)	$ (38,682)	$ (12,550)	$ 12,605	$ (571)	$ (44,634)	$ (39,198)	$ (15,697)

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Stock Based Compensation (Tables)

12 Months Ended

Dec. 31, 2012

Assumptions Used

Assumptions used for the periods covered herein, are outlined in the table below:

	Year Ended December 31, 2011
Expected Volatility		54.18% – 54.23	%
Expected Dividend		0	%
Expected Term in Years		4.5
Risk Free Rate		2.16% – 2.29	%

Activity of Outstanding Stock Options

The following table presents the activity of the Company’s outstanding stock options of common stock for the year ended December 31, 2012:

Common Stock Options	Number of Shares			Weighted Average  Price per Share		Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value
Options outstanding, December 31, 2011		627,419			—		—	$	—
Options granted		—		$	10.75		6.11	$	—
Options exercised		—			—		—		—
Options forfeited		(140,105	)		10.75		—		—
Options expired		—			—		—		—
Options outstanding, December 31, 2012		487,314		$	10.75		5.11	$	—
Exercisable at December 31, 2012		287,988			10.74		5.11	$	—
Unvested at December 31, 2012		199,326		$	10.75		5.11	$	—

Activity of Unvested Restricted Common Shares

The following table presents the activity of the Company’s unvested restricted common shares for the year ended December 31, 2012:

Common Unvested Shares	Number of Shares
Outstanding December 31, 2011		3,507
Granted		—
Vested		(3,507	)
Forfeited		—
Outstanding December 31, 2012		—

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Reconciliation of Pro Forma Basic and Diluted Earnings Per Share (Detail) (USD $) In Thousands, except Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2012		Dec. 31, 2011		Dec. 31, 2010
Numerator:
Net loss available to common stockholders	$ (44,634)		$ (39,198)		$ (15,697)
Denominator:
Weighted average common shares outstanding	21,205,747		19,352,063		3,600,000
Basic loss per share	$ (2.10)		$ (2.03)		$ (4.36)
Numerator:
Net loss available to common stockholders	(44,634)		(39,198)		(15,697)
Denominator:
Diluted weighted average shares outstanding	21,205,747		19,352,063		3,600,000
Diluted loss per share	$ (2.10)	[1],[2]	$ (2.03)	[1],[2]	$ (4.36)	[1],[2]
Pro Forma
Numerator:
Net loss available to common stockholders			(39,020)	[3],[4]	(12,636)	[3],[4]
Denominator:
Weighted average common shares outstanding			19,352,063		3,600,000
Basic loss per share			$ (2.02)		$ (3.51)
Numerator:
Net loss available to common stockholders			$ (39,020)		$ (12,636)
Denominator:
Diluted weighted average shares outstanding			19,352,063		3,600,000
Diluted loss per share			$ (2.02)	[1]	$ (3.51)	[1]

[1] The computation of diluted EPS did not include 627,419 options, 4,240,521 warrants and 3,507 shares of restricted stock for the year ended December 31, 2011, as the effect of their inclusion would have been anti-dilutive.

[2] The computation of diluted EPS did not include 487,314 options and 4,240,521 warrants for the year ended December 31, 2012, as the effect of their inclusion would have been anti-dilutive.

[3] Reflects a reduction of interest expense $178,000, net of tax and $3.1 million for the years ended December 31, 2011 and 2010, respectively, due to the conversion of our promissory note in favor of IMPEX Enterprises, Ltd. into shares of our common stock, which occurred prior to the closing of our initial public offering, and the conversion of our promissory note in favor of Branch Office of Skarbonka Sp. z o.o into a $30.0 million debenture, and the conversion of that $30.0 million debenture into shares of our common stock, which occurred immediately prior to the closing of our initial public offering.

[4] For the pro forma period for the years ended December 31, 2011 and 2010, the results of the Company being treated for the pro forma presentation as a "C" corporation resulted in no impact to the consolidated balance sheet or statement of operations. The primary reasons for this are that the losses produce no current benefit and any net operating losses generated and other deferred assets (net of liabilities) at that time would have been fully reserved due to historical operating losses. The Company, therefore, has not recorded any pro forma tax provision.

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Allowance for Loan Losses and Recorded Investment in Loans (Detail) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Financing Receivable, Allowance for Credit Losses [Line Items]
Balance at beginning of period	$ 10,195	$ 7,176	$ 11,599
Provision for loan losses	437	6,793	2,276
Charge-offs	(7,264)	(3,774)	(8,205)
Recoveries			1,506
Balance at end of period	3,368	10,195	7,176
Ending balance: individually evaluated for impairment	3,368	10,195	7,176
Uninsured Loans
Financing Receivable, Allowance for Credit Losses [Line Items]
Balance at beginning of period	6,914	888	1,983
Provision for loan losses		6,774
Charge-offs	(4,222)	(748)	(2,601)
Recoveries			1,506
Balance at end of period	2,692	6,914	888
Ending balance: individually evaluated for impairment	2,692	6,914	888
Insured Loans
Financing Receivable, Allowance for Credit Losses [Line Items]
Balance at beginning of period	3,281	6,288	9,616
Provision for loan losses	437	19	2,276
Charge-offs	(3,042)	(3,026)	(5,604)
Balance at end of period	676	3,281	6,288
Ending balance: individually evaluated for impairment	$ 676	$ 3,281	$ 6,288

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Securities in Continuous Unrealized Loss Position (Detail) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Schedule of Available-for-sale Securities [Line Items]
Less than 12 Months Estimated Fair Value	$ 1,932	$ 31,978
Less than 12 Months Unrealized Loss	(67)	(136)
12 Months or More Estimated Fair Value
12 Months or More Unrealized Loss
Total Estimated Fair Value	1,932	31,978
Total Unrealized Loss	(67)	(136)
Corporate Bonds
Schedule of Available-for-sale Securities [Line Items]
Less than 12 Months Estimated Fair Value	1,932	26,051
Less than 12 Months Unrealized Loss	(67)	(127)
12 Months or More Estimated Fair Value
12 Months or More Unrealized Loss
Total Estimated Fair Value	1,932	26,051
Total Unrealized Loss	(67)	(127)
Government Bonds
Schedule of Available-for-sale Securities [Line Items]
Less than 12 Months Estimated Fair Value		5,927
Less than 12 Months Unrealized Loss		(9)
12 Months or More Estimated Fair Value
12 Months or More Unrealized Loss
Total Estimated Fair Value		5,927
Total Unrealized Loss		(9)
Other Bonds
Schedule of Available-for-sale Securities [Line Items]
12 Months or More Estimated Fair Value
12 Months or More Unrealized Loss

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Changes in Life Expectancy Used to Estimate Fair Value Policy (Detail) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Value	$ 113,441	$ 90,917
Change in Value	151	5	1,951
+6 Life Expectancy Months Adjustment
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Value	95,658
Change in Value	(17,783)
-6 Life Expectancy Months Adjustment
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Value	132,540
Change in Value	$ 19,099

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Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2012

Summary of Significant Accounting Policies

NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

The consolidated financial statements include the accounts of the Company, all of its wholly-owned subsidiaries and its special purpose entities, with the exception of Imperial Settlements Financing 2010, LLC (“ISF 2010”), an unconsolidated special purpose entity (see Note 12). The special purpose entity has been created to fulfill specific objectives. All significant intercompany balances and transactions have been eliminated in consolidation.

Life Finance Loans Receivable

We report loans receivable acquired or originated by us at cost, adjusted for any deferred fees or costs in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 310-20, Receivables—Nonrefundable Fees and Other Costs, discounts, and loan impairment valuation. All loans are collateralized by life insurance policies. Interest income is accrued on the unpaid principal balance on a monthly basis based on the applicable rate of interest on the loans.

In accordance with ASC 310, Receivables, we specifically evaluate all loans for impairment based on the fair value of the underlying policies as collectability is primarily collateral dependent. The loans are considered to be collateral dependent as the repayment of the loans is expected to be provided by the underlying insurance policies. In the event of default, the borrower typically relinquishes beneficial ownership of the policy to us in exchange for our release of the debt (or we enforce our security interests in the beneficial interests in the trust that owns the policy). For loans that have lender protection insurance, we make a claim against the lender protection insurance policy and, subject to terms and conditions of the lender protection insurance policy, our lender protection insurer has the right to direct control or take beneficial ownership of the policy upon payment of our claim. For loans without lender protection insurance, we have the option of selling the policy or maintaining it on our balance sheet for investment.

We evaluate the loan impairment valuation on a monthly basis based on our periodic review of the estimated value of the underlying collateral. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available. The loan impairment valuation is established as losses on loans are estimated and the provision is charged to earnings. Once established, the loan impairment valuation cannot be reversed to earnings.

In order to originate premium finance transactions our lenders required that we procure lender protection insurance. This lender protection insurance mitigates our exposure to losses which may be caused by declines in the fair value of the underlying policies. At the end of each reporting period, for loans that have lender protection insurance, a loan impairment valuation is established if the carrying value of the loan receivable exceeds the amount of coverage. The lender protection insurance program was terminated as of December 31, 2010, and all loans originated after December 31, 2010, do not carry lender protection insurance coverage. Thus, for all loans originated in 2011 and beyond, a loan impairment valuation is established if the carrying value of a loan receivable exceeds the fair value of the underlying collateral. See Notes 9, 13 and 14 to the accompanying consolidated financial statements.

Ownership of Life Insurance Policies

In the ordinary course of business, a large portion of our borrowers default by not paying off the loan and relinquish ownership of the life insurance policy to us in exchange for our release of the obligation to pay amounts due. We also buy life insurance policies in the secondary and tertiary markets. We account for life insurance policies that we own as investments in life settlements (life insurance policies) in accordance with ASC 325-30, Investments in Insurance Contracts, which requires us to use either the investment method or the fair value method. The election is made on an instrument-by-instrument basis and is irrevocable. We have elected to account for these life insurance policies as investments using the fair value method.

We initially record investments in life settlements at the transaction price. For policies acquired upon relinquishment by our borrowers, we determine the transaction price based on fair value of the acquired policies at the date of relinquishment. The difference between the net carrying value of the loan and the transaction price is recorded as a gain (loss) on loan payoffs and settlements. For policies acquired for cash, the transaction price is the amount paid.

Valuation of Insurance Policies

Our valuation of insurance policies is a critical component of our estimate for the loan impairment valuation and the fair value of our investments in life settlements (life insurance policies). We currently use a probabilistic method of valuing life insurance policies, which we believe to be the preferred valuation method in the industry. The most significant assumptions which we estimate are the life expectancy of the insured and the discount rate.

In determining the life expectancy estimate, we analyze medical reviews from independent secondary market life expectancy providers (each a “LE provider”). An LE provider reviews the medical records and identifies all medical conditions it feels are relevant to the life expectancy of the insured. Debits and credits are then assigned by each LE provider to the individual’s health based on these medical conditions. The debit or credit that an LE provider assigns to a medical condition is derived from the experience of mortality attributed to this condition in the portfolio of lives that it monitors. The health of the insured is summarized by the LE provider into a life assessment of the individual’s life expectancy expressed both in terms of months and in mortality factor.

The resulting mortality factor represents an indication as to the degree to which the given life can be considered more or less impaired than a standard life having similar characteristics (e.g. gender, age, smoking, etc.). For example, a standard insured (the average life for the given mortality table) would carry a mortality rating of 100%. A similar but impaired life bearing a mortality rating of 200% would be considered to have twice the chance of dying earlier than the standard life. Historically, the Company has procured the majority of its life expectancy reports from two life expectancy report providers and only used AVS life expectancy reports for valuation purposes. Beginning in the quarter ended September 30, 2012, the Company began utilizing life expectancy reports from 21st Services for valuation purposes and began averaging or “blending,” the results of the two life expectancy reports to establish a composite mortality factor. However, when “blending” the AVS and 21st Services life expectancy reports, if the difference in the probability of mortality between the reports is greater than 150%, the Company will reduce the higher mortality factor until the difference is 150%.

The probability of mortality for an insured is then calculated by applying the blended life expectancy estimate to a mortality table. The mortality table is created based on the rates of death among groups categorized by gender, age, and smoking status. By measuring how many deaths occur during each year, the table allows for a calculation of the probability of death in a given year for each category of insured people. The probability of mortality for an insured is found by applying the mortality rating from the life expectancy assessment to the probability found in the actuarial table for the insured’s age, sex and smoking status. As discussed in Use of Updated Life Expectancies and Change in Mortality Table in Management’s Discussion and Analysis of Financial Condition and Results of Operations, the Company has historically applied an actuarial table developed by a third party. However, beginning in the quarter ended September 30, 2012, the Company transitioned to a table developed by the U.S. Society of Actuaries known as the 2008 Valuation Basic Table, or the 2008 VBT. However, because the 2008 VBT table does not account for anticipated improvements in mortality in the insured population, the table was modified in conjunction with outside consultants to reflect these expected mortality improvements. The Company believes that the change in mortality table does not materially impact the valuation of its life insurance policies and that its adoption of a modified 2008 VBT table is consistent with modified tables used by market participants.

The mortality rating is used to create a series of best estimate probablistic cash flows. This probability represents a mathematical curve known as a mortality curve. This curve is then used to generate a series of expected cash flows over the remaining expected lifespan of the insured and the corresponding policy. A discounted present value calculation is then used to determine the value of the policy. If the insured dies earlier than expected, the return will be higher than if the insured dies when expected or later than expected.

The calculation allows for the possibility that if the insured dies earlier than expected, the premiums needed to keep the policy in force will not have to be paid. Conversely, the calculation also considers the possibility that if the insured lives longer than expected, more premium payments will be necessary. Based on these considerations, each possible outcome is assigned a probability and the range of possible outcomes is then used to create a price for the policy.

As is the case with most market participants at December 31, 2012, the Company used a blend of life expectancies that are provided by two third-party LE providers. These are estimates of an insured’s remaining years. If all of the insured lives in the Company’s life settlement portfolio live six months shorter or longer than the life expectancies provided by these third parties, the change in fair market value would be as follows (dollars in thousands):

Life Expectancy Months Adjustment	Value		Change in Value
+6		95,658		(17,783	)
—		113,441		—
-6		132,540		19,099

As noted above, the Company takes an average, or blend, of the two life expectancy reports to derive a composite mortality factor, unless the difference in the probability of mortality between the reports is greater than 150%. In such instances and as reflected in the fair market value at December 31, 2012, the Company will cap the higher mortality factor at amount that is 150% above the lower mortality factor , which ultimately reduces the mortality factor inputted into the Company’s fair value model. At December 31, 2012, had the Company not implemented such a cap on affected policies, the fair value of the Company’s portfolio would have increased from the reported amount by $9.5 million. Additionally, the Company lengthened the life expectancy inputs to its fair value model on 45 policies with life expectancy reports that were more than two years old at December 31, 2012 based on the average lengthening reported on the 149 policies where update life expectancy reports were received. Had the Company not implemented such an adjustment on affected policies, the fair value of the Company’s portfolio would have increased from the reported amount by $5.8 million.

The Company believes that investors in esoteric assets such as life insurance policies typically target yields averaging between 12%—17% for investments of more than a 5 year duration, and had historically used a 15%—17% range of discount rates to value its life insurance policies. In the third quarter of 2011 and in the immediate aftermath of becoming aware of the USAO investigation, the Company substantially increased the discount rates inputted into its fair value model as it believed the USAO Investigation along with certain unfavorable court decisions unrelated to the Company contributed to a contraction in the marketplace that has continued to reverberate. Since that time, the Company has been re-evaluating its discount rates at the end of every reporting period in order to reflect the estimated discount rates that could reasonably be used in a market transaction involving the Company’s portfolio of life insurance policies. In doing so, the Company relies on management insight, engages third party consultants to corroborate its assessment, engages in discussions with other market participants and potential financing sources and extrapolates the discount rate underlying actual sales of policies.

Although the Company believes that its entry into the Non-Prosecution Agreement had a positive effect on the market generally and for premium financed life insurance policies specifically, the Company believes that, when given the choice to invest in a policy that was associated with the Company’s premium finance business and a similar policy without such an association, all else being equal, an investor would have generally opted to invest in the policy that was not associated with the Company’s premium finance business. However, since entering into the Non-Prosecution Agreement, investors have required less of a risk premium to transact in these policies and the Company expects that, in time, investors will continue to require less of a risk premium to transact in policies associated with its premium finance business. Accordingly, the Company expects that its discount rates for policies associated with its premium finance business will continue to decrease in future periods.

As of December 31, 2012, the Company owned 214 policies with an aggregate investment in life settlements of $113.4 million. Of these 214 policies, 171 were previously premium financed and are valued using discount rates that range from 16.80% to 33.80%. The remaining 43 policies are valued using discount rates that range from 14.80% to 21.30%. The discount rate incorporates current information about market interest rates, the credit exposure to the insurance company that issued the life insurance policy and our estimate of the risk premium an investor in the policy would require. The extent to which the fair value could vary in the near term has been quantified by evaluating the effect of changes in the weighted average discount rate on the death benefit used to estimate the fair value. If the weighted average discount rate were increased or decreased by 1/2 of 1% and the other assumptions used to estimate fair value remained the same, the change in fair market value would be as follows (dollars in thousands):

Weighted Average Rate	Rate Adjustment			Value		Change in Value
23.51%		-.50	%		116,300		2,859
24.01%		—			113,441		—
24.51%		+.50	%		110,694		(2,747	)

Future changes in the discount rates we use to value life insurance policies could have a material effect on our yield on life settlement transactions, which could have a material adverse effect on our business, financial condition and results of our operations.

At the end of each reporting period we re-value the life insurance policies using our valuation model in order to update our loan impairment valuation for loans receivable and our estimate of fair value for investments in policies held on our balance sheet. This includes reviewing our assumptions for discount rates and life expectancies as well as incorporating current information for premium payments and the passage of time.

Use of Estimates

The preparation of these consolidated financial statements, in conformity with accounting principles generally accepted in the United States of America, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from these estimates and such differences could be material. Significant estimates made by management include the loan impairment valuation, allowance for doubtful accounts, the valuation of structured settlements and the valuation of investments in life settlements.

Change in Accounting Estimate

The Company has elected to account for the life settlement policies it acquired using the fair value method. The fair value is determined on a discounted cash flow basis, incorporating current life expectancy, expected premiums and discount rate assumptions (see Note 14). During the first quarter of 2011, the Company made revisions to the application of its valuation technique and assumptions used to measure fair value of the life settlement policies it acquired. The Company accounted for this change in accounting estimate prospectively in accordance with ASC 250-10-45-17, Change in Accounting Estimate, resulting in recognition of a pretax gain of $3.0 million recorded in unrealized change in fair value of life settlements in the accompanying consolidated statement of operations for the year ended December 31, 2011.

The Company’s decision to revise its fair value calculations used to value all life insurance policies on hand at March 31, 2011 was driven by two factors. Firstly, with consideration to the wind-down of the lender protection insurance coverage (LPIC) program which ended on December 31, 2010, the value of the collateral serving the Company’s new lending activity is no longer determined primarily by the limit of liability provided by the LPIC coverage. Instead, the value of the collateral is based solely on the Company’s valuation model. Secondly, as a result of the Company’s initial public offering in February, 2011 and the new capital structure provided by it, the Company planned to build and retain a large and diversified pool of life policies.

As discussed above, the Company uses a discounted cash flow model to calculate the fair value of its life insurance policy portfolio. That model is based on three principal factors: life expectancy, expected premiums and the discount rate. As discussed in Note 14, the Company began receiving updated life expectancy reports on the insureds represented in the Company’s portfolio of life insurance policies during 2012. As a result, the calculation of the life expectancy and discount rate inputs have changed. While the Company is endeavoring to obtain updated life expectancy reports for all of its policies, at December 31, 2012, the Company had only received updated life expectancies for 149 of the 214 policies in its portfolio. All updated reports that were obtained have been blended and inputted in the Company’s fair value model at December 31, 2012, which drove a decline of $31.3 million in the fair market value of the portfolio of life insurance policies during the year ended December 31, 2012. This decline was partially offset by premium payments, accretion due to the passage of time, and other changes to the Company’s fair value model, which resulted in a net unrealized change in fair value of approximately $5.7 million during the year ended December 31, 2012.

Cash and Cash Equivalents

Cash and cash equivalents include cash on hand, investments and all highly liquid instruments purchased with an original maturity of three months or less. The Company maintains the majority of its cash in several operating accounts with one commercial bank. Included in cash and cash equivalents is $110,000 and $3.0 million to be used by the Company to service policies as part of servicing a portfolio of life insurance policies for a third party as of December 31, 2012 and 2011, respectively. We also have a related servicing liability of $110,000 and $3.0 million which is included in other liabilities in the accompanying consolidated balance sheet as of December 31, 2012, and 2011, respectively.

Investment Securities Available for Sale

Investment securities available for sale are carried at fair value, inclusive of unrealized gains and losses, and net of discount accretion and premium amortization computed using the level yield method. Net unrealized gains and losses are included in other comprehensive income (loss) net of applicable income taxes. Gains or losses on sales of investment securities available for sale are recognized on the specific identification basis.

Management evaluates securities for other than-temporary-impairment on a quarterly basis. Impairment is evaluated considering numerous factors, and their relative significance varies depending on the situation. Factors considered include the Company’s intent to hold the security until maturity or for a period of time sufficient for a recovery in value, whether it is more likely than not that the Company will be required to sell the security prior to recovery of its amortized cost basis, the length of time and extent to which fair value has been less than amortized cost, the historical and implied volatility of the fair value of the security, failure of the issuer of the security to make scheduled interest or principal payments, any changes to the rating of the security by a rating agency and recoveries or additional declines in fair value subsequent to the balance sheet date.

Gain on Maturities of Life Settlements with Subrogation Rights, net

Every credit facility entered into by subsidiaries of the Company between December 2007 and December 2010 to finance the premium finance lending business required lender protection insurance for each loan originated under such credit facility. Generally, when the Company exercises its right to foreclose on collateral the Company’s lender protection insurer has the right to direct control or take beneficial ownership of the life insurance policy, subject to the terms and conditions of the lender protection insurance policy, including notice and timing requirements. Otherwise, the lender protection insurer maintains its salvage collection and subrogation rights. The lender protection insurer’s salvage collection and subrogation rights generally provide a remedy by which the insurer can seek to recover the amount of the lender protection claim paid plus premiums paid by it, expenses and interest thereon.

In those instances where the Company has foreclosed on the collateral, the lender protection insurer has maintained its salvage collection and subrogation rights, and has been covering the cost of the ongoing premiums needed to maintain certain of these life insurance policies. However, the lender protection insurer may elect at any time to discontinue the payment of premiums which would result in lapse of the policies if the Company does not otherwise pay the premiums. The Company views these policies as having uncertain value because the lender protection insurer controls what happens to the policy from a payment of premium standpoint, and the amount of the lender protection insurer’s salvage collection and subrogation claim rights on any individual life insurance policy could equal the cash flow received by the Company with respect to any such policy. For these reasons, , the Company does not rely on these policies for revenue generation, and these policies are considered contingent assets and not included in the amount of life insurance policies on the accompanying consolidated balance sheet.

The Company accounts for the maturities of life insurance policies with subrogation rights, net of subrogation expenses as contingent gains in accordance with ASC 450, Contingencies and recognizes the revenue from the maturities of these policies when all contingencies are resolved.

Loan Impairment Valuation

In accordance with ASC 310, Receivables, the Company specifically evaluates all loans for impairment based on the fair value of the underlying policies as collectability is primarily collateral dependent. The loans are considered to be collateral dependent as the repayment of the loans is expected to be provided by the underlying insurance policies. In the event of default of a loan, the Company has the option to take control of the underlying life insurance policy enabling it to sell the policy or, for those loans that are insured (see below), collect the face value of the insurance certificate.

The loan impairment valuation is evaluated on a monthly basis by management and is based on management’s periodic review of the fair value of the underlying collateral. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available. The loan impairment valuation is established when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal, interest, and origination fee due according to the contractual terms of the loan agreement. Once established, the impairment cannot be reversed to earnings.

The Company purchased lender protection insurance coverage on loans that were sold to or participated by Imperial Life Financing, LLC, Imperial PFC Financing, LLC, Imperial Life Financing II, LLC, and Imperial PFC Financing II, LLC. This insurance mitigates the Company’s exposure to significant losses which may be caused by declines in the value of the underlying life insurance policies. For loans that have lender protection insurance coverage, a loan impairment valuation adjustment is established if the carrying value of the loan exceeds the amount of coverage at the end of the period.

For the year ended December 31, 2012 the Company recognized an impairment charge of approximately $437,000 and $78,000 on the loans and related interest, respectively, and is reflected as a component of the provision for losses on loans receivable in the accompanying consolidated statement of operations. For the year ended December 31, 2011, the Company recognized an impairment charge of approximately $6.8 million and $796,000 related to impaired loans and interest, respectively. For the year ended December 31, 2010, the Company recognized an impairment charge of approximately $2.3 million and $2.2 million related to impaired loans and interest, respectively. See Notes 9, 13 and 14 to the accompanying consolidated financial statements.

Agency Fees Receivable

Agency fees are charged for services related to premium finance transactions. Agency fees are due per the signed fee agreement. Agency fees receivable are reported net of an allowance for doubtful accounts.

Management’s determination of the allowance for doubtful accounts is based on an evaluation of the commission receivable, prior collection history, current economic conditions, and other inherent risks. The Company reviews agency fees receivable aging on a regular basis to determine if any of the receivables are past due. The Company writes off all uncollectible agency fee receivable balances against its allowance. The allowance for doubtful accounts was approximately $260,000 as of December 31, 2012 and 2011.

Deferred Costs

Deferred costs include costs incurred in connection with acquiring and maintaining credit facilities and costs incurred in connection with securing lender protection insurance. These costs are amortized over the life of the related loan using the effective interest method and are classified as amortization of deferred costs in the accompanying consolidated statement of operations.

Interest Income and Origination Income

Interest income consists of interest earned on loans receivable, income from accretion of discounts on purchased loans, and accretion of discounts on purchased structured settlement receivables. Interest income is recognized when it is realizable and earned, in accordance with ASC 605, Revenue Recognition. Discounts are accreted over the remaining life of the loan using the effective interest method.

Loans often include origination fees which are fees payable to the Company on the date the loan matures. The fees are negotiated at the inception of the loan on a transaction by transaction basis. The fees are accreted into income over the term of the loan using the effective interest method.

Payments on loans are not due until maturity of the loan. As such, we typically do not have non-performing loans or non-accrual loans until post maturity of the loan. At maturity, the loans stop earning interest and origination income.

Interest and origination income on impaired loans is recognized when it is realizable and earned accordance with ASC 605, Revenue Recognition. Persuasive evidence of an arrangement exists through a loan agreement which is signed by a borrower prior to funding and sets forth the agreed upon terms of the interest and origination fees. Interest income and origination income are earned over the term of the loan and are accreted using the effective interest method. The interest and origination fees are fixed and determinable based on the loan agreement. For impaired loans, we continually reassess whether the collectability of the interest income and origination income is reasonably assured because the fair value of the collateral typically increases over the term of the loan. Our assessment of whether collectability of interest income and origination income is probable is based on our estimate of proceeds to be received upon maturity of the loan. To the extent that additional interest income is not recognized as collectability is not considered probable, origination income is not recognized. This is consistent with the objective of the interest method, as described in ASC 310-20, of maintaining a constant effective yield on the net investment in the receivable. Since our loans are due upon maturity, we cannot determine whether a loan is performing or non-performing until maturity. For impaired loans, our estimate of proceeds to be received upon maturity of the loan is generally correlated to our current estimate of fair value of the insurance policy, which is the measure to which the loans have been impaired, but also incorporates expected increases in fair value of the insurance policy over the term of the loan, trends in the market, and our experience with loan payoffs.

Revenue/Income Recognition

Our primary sources of revenue/income are in the form of unrealized change in fair value of life settlements and structured settlements, agency fees, interest income, origination fee income, servicing income, gains on maturities of life settlements with subrogation rights, net and realized gains on sales of structured settlements. Our revenue/income recognition policies for these sources of revenue/income are as follows:

• Unrealized Change in Fair Value of Life Settlements—When the Company acquires life insurance policies we initially record these investments at the transaction price, which is the fair value of the policy for those acquired upon relinquishment or the amount paid for policies acquired for cash. The fair value of the investment in insurance policies is evaluated at the end of each reporting period. Changes in the fair value of the investment based on evaluations are recorded as changes in fair value of life settlements in our consolidated statement of operations. The fair value is determined on a discounted cash flow basis that incorporates current life expectancy assumptions. The discount rate incorporates current information about market interest rates, the credit exposure to the insurance company that issued the life insurance policy and our estimate of the risk premium an investor in the policy would require.

• Agency Fees—Agency fees were paid by the referring life insurance agents based on negotiations between the parties and were recognized at the time a life finance loan is funded. Because agency fees are not paid by the borrower, such fees do not accrue over the term of the loan. A separate origination fee was charged to the borrower which is amortized into income over the life of the loan.

• Interest Income—Interest income on life finance loans is recognized when it is realizable and earned, in accordance with ASC 605, Revenue Recognition. Discounts on structured settlement receivables are accreted over the life of the settlement using the effective interest method.

• Origination Fee Income—Loans often include origination fees that are fees payable to us on the date the loan matures. The fees are negotiated at the inception of the loan on a transaction by transaction basis. The fees are accreted into income over the term of the loan using the effective interest method.

• Servicing Income—Servicing income is recorded when services are provided. Servicing income is primarily from servicing a portfolio of life insurance policies controlled by a third party. These services include verifying premiums are paid and correctly applied and updating files for medical history and ongoing premiums.

• Realized Gains on Sales of Structured Settlements—Realized gains on sales of structured settlements are recorded when the structured settlements have been transferred to a third party and we no longer have continuing involvement, in accordance with ASC 860, Transfers and Servicing.

Fixed Assets

Fixed assets are stated at cost less accumulated depreciation and amortization. The Company provides for depreciation of fixed assets on a straight-line basis over the estimated useful lives of the assets which range from three to five years. Leasehold improvements are amortized using the straight-line method over the shorter of the expected life of the improvement or the remaining lease term.

Intangible Assets

Intangible assets represents amounts the Company paid to a third party in a settlement agreement to acquire the rights, title and interest to the domain name “Imperial.com” for a price of $160,000, and is included in prepaid expenses and other assets in the accompanying consolidated balance sheet. The domain name is being amortized using the straight-line method over its estimated useful life.

Loss on Loan Payoffs and Settlements, Net

When a premium finance loan matures, we record the difference between the net carrying value of the loan and the cash received, or the fair value of the life insurance policy that is obtained in the event of payment default, as a gain or loss on loan payoffs and settlements, net. This account was significantly impacted by the Acorn settlement (see Note 15) whereby the Company recorded a loss on loan payoffs and settlements of zero and $4.1 million during the years ended December 31, 2012 and 2011, respectively.

Advertising Expense

Advertising costs are expensed as incurred and were approximately $5.0 million and $6.1 million for the years ended December 31, 2012 and 2011, respectively. These costs are included within selling, general and administrative expenses in the consolidated statement of operations.

Fair Value Measurements

The Company follows ASC 820, Fair Value Measurements and Disclosures when required to measure fair value for recognition or disclosure purposes. ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 also establishes a three-level hierarchy for fair value measurements which prioritizes and ranks the level of market price observability used in measuring investments at fair value. Investments measured and reported at fair value are classified and disclosed in one of the following categories:

Level 1—Valuation is based on unadjusted quoted prices in active markets for identical assets and liabilities that are accessible at the reporting date. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these products does not entail a significant degree of judgment.

Level 2—Valuation is determined from pricing inputs that are other than quoted prices in active markets that are either directly or indirectly observable as of the reporting date. Observable inputs include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, and interest rates and yield curves that are observable at commonly quoted intervals.

Level 3—Valuation is based on inputs that are both significant to the fair value measurement and unobservable. Level 3 inputs include situations where there is little, if any, market activity for the financial instrument. The inputs into the determination of fair value generally require significant management judgment or estimation.

The availability of valuation techniques and observable inputs can vary from investment to investment and is affected by a wide variety of factors including, the type of investment, whether the investment is new and not yet established in the marketplace, and other characteristics particular to the transaction.

To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Those estimated values do not necessarily represent the amounts that may be ultimately realized due to the occurrence of future circumstances that cannot be reasonably determined. Because of the inherent uncertainty of valuation, those estimated values may be materially higher or lower than the values that would have been used had a ready market for the investments existed. Accordingly, the degree of judgment exercised by the Company in determining fair value of assets and liabilities is greatest for items categorized in Level 3. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement in its entirety falls is determined based on the lowest level input that is significant to the fair value measurement.

Fair value is a market-based measure considered from the perspective of a market participant rather than an entity-specific measure. Therefore, even when market assumptions are not readily available, the Company’s own assumptions are set to reflect those that market participants would use in pricing the asset or liability at the measurement date. The Company uses prices and inputs that are current as of the reporting date, including periods of market dislocation. In periods of market dislocation, the observability of prices and inputs may be reduced for many investments. This condition could cause an investment to be reclassified to a lower level within the fair value hierarchy (see Note 14).

Fair Value Option

As of July 1, 2010, we elected to adopt the fair value option, in accordance with ASC 825, Financial Instruments, to record certain newly-acquired structured settlements at fair value. We have the option to measure eligible financial assets, financial liabilities, and commitments at fair value on an instrument-by-instrument basis. This option is available when we first recognize a financial asset or financial liability or enter into a firm commitment. Subsequent changes in fair value of assets, liabilities, and commitments where we have elected fair value option are recorded in our consolidated statement of operations. We have made this election because it is our intention to sell these assets within the next twelve months, and we believe it significantly reduces the disparity that exists between the GAAP carrying value of these structured settlements and our estimate of their economic value. All structured settlements that were acquired subsequent to July 1, 2010 were marked to fair value. Structured settlements that were acquired prior to July 1, 2010 are recorded at cost. For the six months ended December 31, 2010, changes in the fair value of structured settlements where we elected the fair value option resulted in income of approximately $2.5 million. For the year ended December 31, 2012 and 2011, changes in fair value of fair value of structured settlements where we elected the fair value option resulted in income of approximately $1.8 million and $5.3 million, respectively.

Income Taxes

Prior to our initial public offering in 2011, we converted from a Florida limited liability company to a Florida corporation (the “Conversion”). Prior to the Conversion we were treated as a partnership for federal and state income tax purposes. As a

partnership our taxable income and losses were attributed to our members, and accordingly, no provision or liability for income taxes was reflected in the accompanying consolidated financial statements for periods prior to the Conversion.

After the Conversion, we began to account for income taxes in accordance with ASC 740, Income Taxes. Under ASC 740, deferred income taxes are determined based on the estimated future tax effects of differences between the financial statement and tax basis of assets and liabilities given the provisions of enacted tax laws. Deferred income tax provisions and benefits are based on changes to the assets or liabilities from year to year. In providing for deferred taxes, we consider tax regulations of the jurisdictions in which we operate, estimates of future taxable income and available tax planning strategies. If tax regulations, operating results or the ability to implement tax-planning strategies varies, adjustments to the carrying value of the deferred tax assets and liabilities may be required. Valuation allowances are based on the “more likely than not” criteria of ASC 740.

At December 31, 2012 and 2011, due to the large losses and the uncertainties that resulted from the USAO Investigation, SEC investigation, Non-Prosecution Agreement and class action lawsuits, we recorded a full valuation allowance against our net deferred tax asset of $27.8 million and $11.1 million, respectively, as it is more likely than not that the net deferred tax asset is not realizable. As a result of these increases in the valuation allowance, we recorded no income tax benefit for 2012 and 2011.

The accounting for uncertain tax positions guidance under ASC 740 requires that we recognize the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the more-likely-than-not threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement with the relevant tax authority. We recognize interest and penalties (if any) on uncertain tax positions as a component of income tax expense.

The Company’s corporate income tax returns for all years are subject to examination. Various state jurisdiction tax years remain open to examination.

In February of 2013 the Company was notified by the Internal Revenue Service of its intention to examine the Company’s partnership return for the year ended December 31, 2010. Audit field work for this examination has not been scheduled.

Stock-Based Compensation

We have adopted ASC 718, Compensation—Stock Compensation. ASC 718 addresses accounting for share-based awards, including stock options, with compensation expense measured using fair value and recorded over the requisite service or performance period of the award. The fair value of equity instruments issued upon or after the closing of our offering will be determined based on a valuation using an option pricing model which takes into account various assumptions that are subjective. Key assumptions used in the valuation will include the expected term of the equity award taking into account both the contractual term of the award, the effects of expected exercise and post-vesting termination behavior, expected volatility, expected dividends and the risk-free interest rate for the expected term of the award.

Earnings Per Share

The Company computes net income per share/unit in accordance with ASC 260, Earnings Per Share. Under the provisions of ASC 260, basic net income per share is computed by dividing the net income available to common shareholders by the weighted average common shares outstanding during the period. Diluted net income per share adjusts basic net income per share for the effects of stock options and restricted stock awards only in periods in which such effect is dilutive. ASC 260 also requires the Company to present basic and diluted earnings per share information separately for each class of equity instruments that participate in any income distribution with primary equity instruments.

Restricted Cash

The Cedar Lane credit facility requires the Company to retain 2% of the principal amount of each loan made to the borrower, for the purposes of indemnifying the facility for any breaches of representations, warranties or covenants of the borrower, as well as to fund collection efforts, if required. As of December 31, 2012 and December 31, 2011 the Company’s consolidated financial statements reflected balances of approximately $1.2 million and $691,000 included in restricted cash, respectively (see Note 22).

Gain on Sale of Life Settlements

Gain on sale of life settlements includes gain from company-owned life settlements.

Risks and Uncertainties

In the normal course of business, the Company encounters economic, legal and longevity risk. There are three main components of economic risk: credit risk, market risk and concentration of credit risk. Credit risk is the risk of default on the Company’s loan portfolio that results from a borrower’s inability or unwillingness to make contractually required payments. Market risk for the Company includes interest rate risk. Market risk also reflects the risk of declines in valuation of the Company’s investments, including declines caused by the selection of increased discount rates associated with the Company’s fair value model for investments in life settlements. It is reasonably possible that future changes to estimates involved in valuing life settlements could change and result in material effects to the future financial statements. Concentration of credit risk includes both the risk that lenders under the Company’s structured settlement financing facilities do not fund the purchase of structured settlement receivables when contractually obligated to do so and also includes the risk that an insurance carrier who has issued life insurance policies held by the Company in its portfolio does not remit the amount due under those policies upon policy maturities due to the deteriorating financial condition of the carrier or otherwise. Legal risk includes the risk that statutes define or courts interpret insurable interest in a manner adverse to the Company’s ownership rights in its portfolio of life insurance policies and the risk that courts allow insurance carriers to retain premiums paid by the Company in respect of insurance policies that have been successfully rescinded or contested. Longevity risk refers to the risk that the Company does not experience the mortalities of insureds in its portfolio of life insurance policies that are anticipated to occur on an actuarial basis in a timely manner, which would result in the Company expending additional amounts for the payment of premiums. See Note 17, Commitments and Contingencies.

Investment in Other Companies

The Company uses the equity method of accounting to account for its investment in other companies which the Company does not control but over which it exerts significant influence; generally this represents ownership interest of at least 20% and not more than 50%. The Company considers whether the fair values of any of its investments have declined below their carrying values whenever adverse events or changes in circumstances indicate that recorded values may not be recoverable. If the Company considers any such decline to be other than temporary, a write-down would be recorded to estimated fair value. During 2010, the Company wrote-off its entire investment in MXT as the Company determined that the estimated fair value of its investment in MXT was zero and the decline was other than temporary.

Recent Accounting Pronouncements

In May 2011, the FASB issued Accounting Standards Update (ASU) No. 2011-04, Fair Value Measurement (Topic 820): Amendments to Achieve Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs. This update clarifies existing guidance about how fair value should be applied where it already is required or permitted and provides wording changes that align this standard with International Financial Reporting Standards (IFRS). We are required to apply this guidance prospectively beginning with our first quarterly filing in 2012. The adoption of this new guidance has not had an impact on our financial position or results of operations.

June 2011, the FASB issued ASU No. 2011-05, Comprehensive Income (Topic 220): Presentation of Comprehensive Income. This update increases the prominence of other comprehensive income in financial statements, eliminating the option of presenting other comprehensive income in the statement of changes in equity, and instead, requiring the components of net income and comprehensive income to be presented in either one or two consecutive financial statements. We are required to comply with this guidance prospectively beginning with our first quarterly filing in 2012. The adoption of this new guidance has not had an impact on our financial position or results of operations.

In September 2011, the FASB issued ASU No. 2011-08, Intangibles–Goodwill and Other (Topic 350): Testing Goodwill for Impairment. This update allows entities testing goodwill for impairment the option of performing a qualitative assessment before calculating the fair value of the reporting unit (i.e., step one of the two-step goodwill impairment test). If entities determine, on the basis of qualitative factors, that the fair value of the reporting unit is more likely than not less than the carrying amount, the two-step impairment test would be required. The amendments are effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. The adoption of this new guidance has not had an impact on our financial position or results of operations.

In December 2011, the FASB issued ASU No. 2011-12, Comprehensive Income (Topic 220): Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05. This update delays the effective date of the requirement to present reclassification adjustments for each component of accumulated other comprehensive income in both net income and other comprehensive income on the face of the financial statements.

In February 2013, the FASB issued ASU No. 2013-02, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income. This update adds new disclosure requirements for items reclassified out of accumulated other comprehensive income. We are required to apply this guidance prospectively beginning with our first quarterly filing in 2013. The adoption of this new guidance will not impact our financial position or statement of operations, other than changes in presentation.

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Investment Securities Available for Sale - Additional Information (Detail) (USD $)	12 Months Ended
	Dec. 31, 2012 Securities	Dec. 31, 2011 Securities
Schedule of Investments [Line Items]
Proceeds from sale and prepayments of investment securities available for sale	$ 79,781,000	$ 69,490,000
Gross realized gains on investment securities available for sale	53,000
Number of securities in unrealized loss positions	2	31
Unrealized loss	$ 67,000	$ 136,000

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Summary Of Quarterly Financial Data (Tables)

12 Months Ended

Dec. 31, 2012

Summary Of Quarterly Financial Information

These reclassifications had no net impact on the results of operations (in thousands).

	Fiscal 2012
	1st Quarter			2nd Quarter			3rd Quarter			4th Quarter
Revenues		9,966			16,183			(14,171	)		7,106
Income/(Loss) from Operations		(8,912	)		(625	)		(31,480	)		(3,656	)
Net Income/(Loss)		(8,871	)		(625	)		(31,475	)		(3,663	)

	Fiscal 2011
	1st Quarter			2nd Quarter		3rd Quarter			4th Quarter
Revenues		24,862			29,211		(1,763	)		(8,096	)
Income/(Loss) from Operations		7,425			13,788		(20,377	)		(40,034	)
Net Income/(Loss)		(571	)		12,605		(12,550	)		(38,682	)

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Subsequent Events

12 Months Ended

Dec. 31, 2012

Subsequent Events

NOTE 22—SUBSEQUENT EVENTS

Bridge Facility

         On December 21, 2012, Greenwood opened a securities intermediary account, which provides for a securities intermediary to hold Greenwood’s life insurance policies on its behalf. On March 27, 2013, Greenwood, as issuer, and the Company and OLIPP IV, LLC, as guarantors, entered into an indenture with Wilmington Trust Company, as indenture trustee, under which an aggregate principal amount of $45 million in senior secured bridge notes were issued (the “Bridge Facility”).

Interest under the Bridge Facility accrues at 12% per annum for the first nine months from the issue date, and increases by 600 basis points thereafter to 18% per annum. Up to 25% of the net proceeds from the Bridge Facility after transaction expenses may be used by the Company for general corporate purposes, including for premium payments on life insurance policies not owned by Greenwood, with the balance used to pay fees and expenses associated with the Bridge Facility and for premiums on life insurance policies owned by Greenwood. The Bridge Facility is guaranteed by the Company and secured by the cash on account at Greenwood and its portfolio of life insurance policies. The Bridge Facility is also secured by pledges of the equity interests of Greenwood’s direct parent and each subsidiary of the Company, other than its licensed life settlement provider, that holds life insurance policies that are not subject to the subrogation rights of the Company’s lender protection insurance carrier.

Notes under the Bridge Facility were issued at 92% of their face amount and are pre-payable at par at any time. The Bridge Facility is subject to mandatory prepayment provisions upon the issuance of additional debt, equity raises and asset sales. Mandatory prepayments are generally at par although certain asset sales or a change of control each trigger a mandatory prepayment obligation at 109%. The Bridge Facility requires the maintenance of a 2 times asset coverage ratio and six months of cash on hand to pay interest on the Bridge Facility and premiums on life insurance policies owned by Greenwood. Upon a failure to maintain requisite cash on hand, the Company may be obligated to sell policies to repay the lenders under the Bridge Facility. There can be no assurance, however, that we will be able to obtain capital on more favorable terms or at all.

As of December 31, 2012, OLIPP IV (“OLIPP”) contributed 191 life settlements with an estimated fair value of approximately $104.6 million to Greenwood. In accordance with ASC 810, Consolidation, the Company determined that OLIPP was the primary beneficiary of Greenwood having a controlling financial interest in the variable interest enity and therefore, the Company will consolidate Greenwood in its financial statements beginning in the first quarter of 2013.

21st Services, LLC (“21st Services”) and AVS Underwriting LLC (“AVS”)

On January 22, 2013, 21st Services announced significant revisions to its underwriting methodology. On February 4, 2013, 21st Services then announced that it was correcting errors discovered in its revised methodology. According to the provider, these revisions have generally been understood to lengthen the average reported life expectancy furnished by 21st Services by 19% and, accordingly, will likely negatively impact the valuation of the Company’s portfolio of life insurance policies. However, the Company has not received life expectancy reports from 21st Services that utilize its revised methodology and the fair value of the Company’s portfolio of life insurance policies at December 31, 2012 does not take into account changes to life expectancy estimates that may result from 21st Services updated methodology. While the Company is still evaluating the general impact that these revisions might have on the value of its portfolio, the Company may determine to cease utilizing, or adjust the weighting of, 21st Services reports as an input into its fair value model in future periods as market practice responds to the adjusted methodology. Additionally, the Company’s other life expectancy provider, AVS Underwriting LLC (“AVS”), filed for federal bankruptcy protection under Chapter 11 on February 12, 2013. The Company cannot, at this time, predict what impact the bankruptcy filing will have on the Company’s ability to procure life expectancy reports from AVS in the future, AVS’s ability to continue its operations or whether other market participants will continue to use AVS life expectancy reports for valuation purposes going forward. As a result of these developments, the Company may need to adjust the application of life expectancy reports in its fair value methodology or source reports from different life expectancy providers in future periods, which could have a material impact on the Company’s fair value calculations.

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Income Taxes

12 Months Ended

Dec. 31, 2012

Income Taxes

NOTE 21—INCOME TAXES

The provision (benefit) for income taxes consisted of (in thousands):

	12/31/2012			12/31/2011
Current
Federal	$	—		$	—
State		—			—
		—			—
Deferred
Federal	$	(14,377	)	$	(9,474	)
State		(2,391	)		(1,575	)
		(16,768	)		(11,049	)
Valuation allowance increase	$	16,729			11,049
Benefit for income taxes	$	(39	)	$	—

The Company’s actual provision (benefit) for income taxes from continuing operations differ from the Federal expected income tax provision as follows (in thousands): 

	2012						2011
	Amount			Rate			Amount			Rate
Tax Benefit at statutory rate	$	(15,636	)		35.00	%	$	(13,719	)		35.00	%
Increase (decrease) in taxes resulting from:
State tax (net of federal benefit)		(1,555	)		3.48			(1,045	)		2.67
Pre-conversion loss		—			—			678			(1.73	)
Pre-conversion deferred tax asset		—			—			223			(0.57	)
Other		423			(0.94	)		14			(0.04	)
Department of Justice settlement		—			—			2,800			(7.14	)
Valuation allowance increase		16,729			(37.45	)		11,049			(28.19	)
Benefit for income taxes	$	(39	)		0.09	%	$	—			0.00	%

On February 3, 2011, the Company converted from a Florida limited liability company to a Florida corporation (the “conversion”). Prior to the conversion the company was treated as a partnership for federal and state income tax purposes. As a partnership our taxable income and losses were attributed to our members, and accordingly, no provision or liability for income taxes was reflected in the accompanying consolidated financial statements for periods prior to the conversion.

As a result of the conversion of the Company from a partnership to a corporation, the company recorded a one-time deferred tax liability of approximately $4.5 million for the federal and state tax effects of cumulative differences between financial and tax reporting which existed at the time of the conversion. Pursuant to ASC 740 these deferred taxes were recorded in income tax expense for the year ending December 31, 2011.

Following the conversion and prior to the initial public offering, one of the founding members entered into a reorganization that allowed the Company to assume the corporate shareholder’s tax attributes. These tax attributes include approximately $11.2 million of net operating loss carryovers (“NOLs”). Accordingly, the Company recorded a one-time deferred tax asset of approximately $4.3 million related to these tax attributes and this amount was recorded as an income tax benefit. The utilization of the acquired NOLs is subject to an annual limitation based on the value of the Company at the time they were acquired. These NOLs expire starting in 2028.

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and tax liabilities were (in thousands):

	December 31,			December 31,
	2012			2011
Deferred tax assets:
Federal and State net operating loss carryforward	$	25,454		$	13,488
Allowance for doubtful accounts		1,969			3,362
Unrealized loss on available for sale investment securities					25
Unrealized loss on life and structured settlements, net		1,813			—
Litigation reserves		2,324			68
Other		693			704
Total gross deferred tax assets		32,253			17,647
Less valuation allowance		(27,803	)		(11,074	)
Total deferred tax assets		4,450			6,573
Deferred tax liabilities:
Unrealized gains on life and structured settlements		—			5,075
Gain on structured settlements deferred for tax purposes		4,436			1,498
Unrealized gain on available for sale investment securities		14
Other		—			—
Total gross deferred tax liabilities		4,450			6,573
Total net deferred tax asset (liability)	$	—		$	—

The Company evaluates its deferred tax assets to determine if valuation allowances are required. In its evaluation, management considers taxable loss carryback availability, expectations of sufficient future taxable income, trends in earnings, existence of taxable income in recent years, the future reversal of temporary differences, and available tax planning strategies that could be implemented, if required. Valuation allowances are established based on the consideration of all available evidence using a more likely than not standard. Based on the Company’s evaluation, a full deferred tax valuation allowance was established against its net deferred tax assets as of December 31, 2012 and 2011. This valuation allowance was recognized as a charge to income tax expense. If the valuation allowance is reduced or eliminated, future tax benefits will be recognized as a reduction to income tax expense that will have a positive non-cash impact on net income and stockholders’ equity. The Company’s deferred tax asset valuation allowance would be reversed if and when it becomes more likely than not that the Company will generate sufficient taxable income in the future to utilize the tax benefits of the related deferred tax assets.

Generally, the amount of tax expense or benefit allocated to continuing operations is determined without regard to the tax effects of other categories of income or loss, such as other comprehensive income. However, an exception to the general rule is provided when, in the presence of a valuation allowance against deferred tax assets, there is a pretax loss from continuing operations and pretax income from other categories. In such instances, income from other categories must offset the current loss from operations, the tax benefit of such offset being reflected in continuing operations. For the period ended December 31, 2012 we reduced our deferred tax valuation allowance from continuing operations by $39,000 to reflect the future taxable income associated with unrealized gains in accumulated other comprehensive income.

The Federal and state NOL generated by the Company since its conversion to a corporation was approximately $54.8 million which expire beginning in 2031.

The Company’s income tax returns for all years are subject to examination. Various state jurisdiction tax years remain open to examination.

In February of 2013, the Company was notified by the Internal Revenue Service of its intention to examine the Company’s partnership return for the year ended December 31, 2010. Audit field work for this examination has not been scheduled.

The Company recognizes interest and penalties accrued related to unrecognized tax benefits in tax expense.

A reconciliation of the total amounts of unrecognized benefits at the beginning and end of the period was as follows (in thousands):

	December 31,		December 31,
	2012		2011
Balance as of beginning of period	$	6,295	$	—
Additions based on tax positions taken in the current year		—		6,295
Reductions of tax positions for prior years		—		—
Balance as of end of period	$	6,295	$	6,295

The recognition of the unrecognized tax benefits would result in a 0% decrease in the Company’s effective tax rate.

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Income Taxes - Additional Information (Detail) (USD $)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
Income Taxes [Line Items]
Provision for deferred tax liability	$ (16,768,000)	$ (11,049,000)
Net operating loss carryforward	25,454,000	13,488,000
Deferred Tax Asset	32,253,000	17,647,000
Deferred tax valuation allowance reduction	39,000
Decrease in effective tax rate due to recognition of unrecognized tax benefits	0.00%
Federal and State Income Taxes
Income Taxes [Line Items]
Provision for deferred tax liability		4,500,000
Prior
Income Taxes [Line Items]
Net operating loss carryforward		11,200,000
Deferred Tax Asset		4,300,000
Net operating loss expiration Year		2028
Federal and State
Income Taxes [Line Items]
Net operating loss carryforward	$ 54,800,000
Net operating loss expiration Year	2031

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Fixed Assets (Detail) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Property, Plant and Equipment [Line Items]
Computer software and equipment	$ 2,320	$ 2,286
Furniture, fixtures and equipment	670	1,046
Leasehold improvements	773	666
Property, Plant and Equipment, Gross, Total	3,763	3,998
Less: Accumulated depreciation	3,531	3,413
Fixed assets, net	$ 232	$ 585

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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2012

Provision (Benefit) for Income Taxes

The provision (benefit) for income taxes consisted of (in thousands):

	12/31/2012			12/31/2011
Current
Federal	$	—		$	—
State		—			—
		—			—
Deferred
Federal	$	(14,377	)	$	(9,474	)
State		(2,391	)		(1,575	)
		(16,768	)		(11,049	)
Valuation allowance increase	$	16,729			11,049
Benefit for income taxes	$	(39	)	$	—

Actual Provision (Benefit) for Income Taxes from Continuing operations Differ from Federal Expected Income Tax Provision

The Company’s actual provision (benefit) for income taxes from continuing operations differ from the Federal expected income tax provision as follows (in thousands):

	2012						2011
	Amount			Rate			Amount			Rate
Tax Benefit at statutory rate	$	(15,636	)		35.00	%	$	(13,719	)		35.00	%
Increase (decrease) in taxes resulting from:
State tax (net of federal benefit)		(1,555	)		3.48			(1,045	)		2.67
Pre-conversion loss		—			—			678			(1.73	)
Pre-conversion deferred tax asset		—			—			223			(0.57	)
Other		423			(0.94	)		14			(0.04	)
Department of Justice settlement		—			—			2,800			(7.14	)
Valuation allowance increase		16,729			(37.45	)		11,049			(28.19	)
Benefit for income taxes	$	(39	)		0.09	%	$	—			0.00	%

Significant Portions of Deferred Tax Assets and Tax Liabilities

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and tax liabilities were (in thousands):

	December 31,			December 31,
	2012			2011
Deferred tax assets:
Federal and State net operating loss carryforward	$	25,454		$	13,488
Allowance for doubtful accounts		1,969			3,362
Unrealized loss on available for sale investment securities		—			25
Unrealized loss on life and structured settlements, net		1,813			—
Litigation reserves		2,324			68
Other		693			704
Total gross deferred tax assets		32,253			17,647
Less valuation allowance		(27,803	)		(11,074	)
Total deferred tax assets		4,450			6,573
Deferred tax liabilities:
Unrealized gains on life and structured settlements		—			5,075
Gain on structured settlements deferred for tax purposes		4,436			1,498
Unrealized gain on available for sale investment securities		14
Other		—			—
Total gross deferred tax liabilities		4,450			6,573
Total net deferred tax asset (liability)	$	—		$	—

Reconciliation of Total Amounts of Unrecognized Benefits

A reconciliation of the total amounts of unrecognized benefits at the beginning and end of the period was as follows (in thousands):

	December 31,		December 31,
	2012		2011
Balance as of beginning of period	$	6,295	$	—
Additions based on tax positions taken in the current year		—		6,295
Reductions of tax positions for prior years		—		—
Balance as of end of period	$	6,295	$	6,295

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Summary of Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2012

Principles of Consolidation

Principles of Consolidation

The consolidated financial statements include the accounts of the Company, all of its wholly-owned subsidiaries and its special purpose entities, with the exception of Imperial Settlements Financing 2010, LLC (“ISF 2010”), an unconsolidated special purpose entity (see Note 12). The special purpose entity has been created to fulfill specific objectives. All significant intercompany balances and transactions have been eliminated in consolidation.

Life Finance Loans Receivable

Life Finance Loans Receivable

We report loans receivable acquired or originated by us at cost, adjusted for any deferred fees or costs in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 310-20, Receivables—Nonrefundable Fees and Other Costs, discounts, and loan impairment valuation. All loans are collateralized by life insurance policies. Interest income is accrued on the unpaid principal balance on a monthly basis based on the applicable rate of interest on the loans.

In accordance with ASC 310, Receivables, we specifically evaluate all loans for impairment based on the fair value of the underlying policies as collectability is primarily collateral dependent. The loans are considered to be collateral dependent as the repayment of the loans is expected to be provided by the underlying insurance policies. In the event of default, the borrower typically relinquishes beneficial ownership of the policy to us in exchange for our release of the debt (or we enforce our security interests in the beneficial interests in the trust that owns the policy). For loans that have lender protection insurance, we make a claim against the lender protection insurance policy and, subject to terms and conditions of the lender protection insurance policy, our lender protection insurer has the right to direct control or take beneficial ownership of the policy upon payment of our claim. For loans without lender protection insurance, we have the option of selling the policy or maintaining it on our balance sheet for investment.

We evaluate the loan impairment valuation on a monthly basis based on our periodic review of the estimated value of the underlying collateral. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available. The loan impairment valuation is established as losses on loans are estimated and the provision is charged to earnings. Once established, the loan impairment valuation cannot be reversed to earnings.

In order to originate premium finance transactions our lenders required that we procure lender protection insurance. This lender protection insurance mitigates our exposure to losses which may be caused by declines in the fair value of the underlying policies. At the end of each reporting period, for loans that have lender protection insurance, a loan impairment valuation is established if the carrying value of the loan receivable exceeds the amount of coverage. The lender protection insurance program was terminated as of December 31, 2010, and all loans originated after December 31, 2010, do not carry lender protection insurance coverage. Thus, for all loans originated in 2011 and beyond, a loan impairment valuation is established if the carrying value of a loan receivable exceeds the fair value of the underlying collateral. See Notes 9, 13 and 14 to the accompanying consolidated financial statements.

Ownership of Life Insurance Policies

Ownership of Life Insurance Policies

In the ordinary course of business, a large portion of our borrowers default by not paying off the loan and relinquish ownership of the life insurance policy to us in exchange for our release of the obligation to pay amounts due. We also buy life insurance policies in the secondary and tertiary markets. We account for life insurance policies that we own as investments in life settlements (life insurance policies) in accordance with ASC 325-30, Investments in Insurance Contracts, which requires us to use either the investment method or the fair value method. The election is made on an instrument-by-instrument basis and is irrevocable. We have elected to account for these life insurance policies as investments using the fair value method.

We initially record investments in life settlements at the transaction price. For policies acquired upon relinquishment by our borrowers, we determine the transaction price based on fair value of the acquired policies at the date of relinquishment. The difference between the net carrying value of the loan and the transaction price is recorded as a gain (loss) on loan payoffs and settlements. For policies acquired for cash, the transaction price is the amount paid.

Valuation of Insurance Policies

Valuation of Insurance Policies

Our valuation of insurance policies is a critical component of our estimate for the loan impairment valuation and the fair value of our investments in life settlements (life insurance policies). We currently use a probabilistic method of valuing life insurance policies, which we believe to be the preferred valuation method in the industry. The most significant assumptions which we estimate are the life expectancy of the insured and the discount rate.

In determining the life expectancy estimate, we analyze medical reviews from independent secondary market life expectancy providers (each a “LE provider”). An LE provider reviews the medical records and identifies all medical conditions it feels are relevant to the life expectancy of the insured. Debits and credits are then assigned by each LE provider to the individual’s health based on these medical conditions. The debit or credit that an LE provider assigns to a medical condition is derived from the experience of mortality attributed to this condition in the portfolio of lives that it monitors. The health of the insured is summarized by the LE provider into a life assessment of the individual’s life expectancy expressed both in terms of months and in mortality factor.

The resulting mortality factor represents an indication as to the degree to which the given life can be considered more or less impaired than a standard life having similar characteristics (e.g. gender, age, smoking, etc.). For example, a standard insured (the average life for the given mortality table) would carry a mortality rating of 100%. A similar but impaired life bearing a mortality rating of 200% would be considered to have twice the chance of dying earlier than the standard life. Historically, the Company has procured the majority of its life expectancy reports from two life expectancy report providers and only used AVS life expectancy reports for valuation purposes. Beginning in the quarter ended September 30, 2012, the Company began utilizing life expectancy reports from 21st Services for valuation purposes and began averaging or “blending,” the results of the two life expectancy reports to establish a composite mortality factor. However, when “blending” the AVS and 21st Services life expectancy reports, if the difference in the probability of mortality between the reports is greater than 150%, the Company will reduce the higher mortality factor until the difference is 150%.

The probability of mortality for an insured is then calculated by applying the blended life expectancy estimate to a mortality table. The mortality table is created based on the rates of death among groups categorized by gender, age, and smoking status. By measuring how many deaths occur during each year, the table allows for a calculation of the probability of death in a given year for each category of insured people. The probability of mortality for an insured is found by applying the mortality rating from the life expectancy assessment to the probability found in the actuarial table for the insured’s age, sex and smoking status. As discussed in Use of Updated Life Expectancies and Change in Mortality Table in Management’s Discussion and Analysis of Financial Condition and Results of Operations, the Company has historically applied an actuarial table developed by a third party. However, beginning in the quarter ended September 30, 2012, the Company transitioned to a table developed by the U.S. Society of Actuaries known as the 2008 Valuation Basic Table, or the 2008 VBT. However, because the 2008 VBT table does not account for anticipated improvements in mortality in the insured population, the table was modified in conjunction with outside consultants to reflect these expected mortality improvements. The Company believes that the change in mortality table does not materially impact the valuation of its life insurance policies and that its adoption of a modified 2008 VBT table is consistent with modified tables used by market participants.

The mortality rating is used to create a series of best estimate probablistic cash flows. This probability represents a mathematical curve known as a mortality curve. This curve is then used to generate a series of expected cash flows over the remaining expected lifespan of the insured and the corresponding policy. A discounted present value calculation is then used to determine the value of the policy. If the insured dies earlier than expected, the return will be higher than if the insured dies when expected or later than expected.

The calculation allows for the possibility that if the insured dies earlier than expected, the premiums needed to keep the policy in force will not have to be paid. Conversely, the calculation also considers the possibility that if the insured lives longer than expected, more premium payments will be necessary. Based on these considerations, each possible outcome is assigned a probability and the range of possible outcomes is then used to create a price for the policy.

As is the case with most market participants at December 31, 2012, the Company used a blend of life expectancies that are provided by two third-party LE providers. These are estimates of an insured’s remaining years. If all of the insured lives in the Company’s life settlement portfolio live six months shorter or longer than the life expectancies provided by these third parties, the change in fair market value would be as follows (dollars in thousands):

Life Expectancy Months Adjustment	Value		Change in Value
+6		95,658		(17,783	)
—		113,441		—
-6		132,540		19,099

As noted above, the Company takes an average, or blend, of the two life expectancy reports to derive a composite mortality factor, unless the difference in the probability of mortality between the reports is greater than 150%. In such instances and as reflected in the fair market value at December 31, 2012, the Company will cap the higher mortality factor at amount that is 150% above the lower mortality factor , which ultimately reduces the mortality factor inputted into the Company’s fair value model. At December 31, 2012, had the Company not implemented such a cap on affected policies, the fair value of the Company’s portfolio would have increased from the reported amount by $9.5 million. Additionally, the Company lengthened the life expectancy inputs to its fair value model on 45 policies with life expectancy reports that were more than two years old at December 31, 2012 based on the average lengthening reported on the 149 policies where update life expectancy reports were received. Had the Company not implemented such an adjustment on affected policies, the fair value of the Company’s portfolio would have increased from the reported amount by $5.8 million.

The Company believes that investors in esoteric assets such as life insurance policies typically target yields averaging between 12%—17% for investments of more than a 5 year duration, and had historically used a 15%—17% range of discount rates to value its life insurance policies. In the third quarter of 2011 and in the immediate aftermath of becoming aware of the USAO investigation, the Company substantially increased the discount rates inputted into its fair value model as it believed the USAO Investigation along with certain unfavorable court decisions unrelated to the Company contributed to a contraction in the marketplace that has continued to reverberate. Since that time, the Company has been re-evaluating its discount rates at the end of every reporting period in order to reflect the estimated discount rates that could reasonably be used in a market transaction involving the Company’s portfolio of life insurance policies. In doing so, the Company relies on management insight, engages third party consultants to corroborate its assessment, engages in discussions with other market participants and potential financing sources and extrapolates the discount rate underlying actual sales of policies.

Although the Company believes that its entry into the Non-Prosecution Agreement had a positive effect on the market generally and for premium financed life insurance policies specifically, the Company believes that, when given the choice to invest in a policy that was associated with the Company’s premium finance business and a similar policy without such an association, all else being equal, an investor would have generally opted to invest in the policy that was not associated with the Company’s premium finance business. However, since entering into the Non-Prosecution Agreement, investors have required less of a risk premium to transact in these policies and the Company expects that, in time, investors will continue to require less of a risk premium to transact in policies associated with its premium finance business. Accordingly, the Company expects that its discount rates for policies associated with its premium finance business will continue to decrease in future periods.

As of December 31, 2012, the Company owned 214 policies with an aggregate investment in life settlements of $113.4 million. Of these 214 policies, 171 were previously premium financed and are valued using discount rates that range from 16.80% to 33.80%. The remaining 43 policies are valued using discount rates that range from 14.80% to 21.30%. The discount rate incorporates current information about market interest rates, the credit exposure to the insurance company that issued the life insurance policy and our estimate of the risk premium an investor in the policy would require. The extent to which the fair value could vary in the near term has been quantified by evaluating the effect of changes in the weighted average discount rate on the death benefit used to estimate the fair value. If the weighted average discount rate were increased or decreased by 1/2 of 1% and the other assumptions used to estimate fair value remained the same, the change in fair market value would be as follows (dollars in thousands):

Weighted Average Rate	Rate Adjustment			Value		Change in Value
23.51%		-.50	%		116,300		2,859
24.01%		—			113,441		—
24.51%		+.50	%		110,694		(2,747	)

Future changes in the discount rates we use to value life insurance policies could have a material effect on our yield on life settlement transactions, which could have a material adverse effect on our business, financial condition and results of our operations.

At the end of each reporting period we re-value the life insurance policies using our valuation model in order to update our loan impairment valuation for loans receivable and our estimate of fair value for investments in policies held on our balance sheet. This includes reviewing our assumptions for discount rates and life expectancies as well as incorporating current information for premium payments and the passage of time.

Use of Estimates

Use of Estimates

The preparation of these consolidated financial statements, in conformity with accounting principles generally accepted in the United States of America, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from these estimates and such differences could be material. Significant estimates made by management include the loan impairment valuation, allowance for doubtful accounts, the valuation of structured settlements and the valuation of investments in life settlements.

Change in Accounting Estimate

Change in Accounting Estimate

The Company has elected to account for the life settlement policies it acquired using the fair value method. The fair value is determined on a discounted cash flow basis, incorporating current life expectancy, expected premiums and discount rate assumptions (see Note 14). During the first quarter of 2011, the Company made revisions to the application of its valuation technique and assumptions used to measure fair value of the life settlement policies it acquired. The Company accounted for this change in accounting estimate prospectively in accordance with ASC 250-10-45-17, Change in Accounting Estimate, resulting in recognition of a pretax gain of $3.0 million recorded in unrealized change in fair value of life settlements in the accompanying consolidated statement of operations for the year ended December 31, 2011.

The Company’s decision to revise its fair value calculations used to value all life insurance policies on hand at March 31, 2011 was driven by two factors. Firstly, with consideration to the wind-down of the lender protection insurance coverage (LPIC) program which ended on December 31, 2010, the value of the collateral serving the Company’s new lending activity is no longer determined primarily by the limit of liability provided by the LPIC coverage. Instead, the value of the collateral is based solely on the Company’s valuation model. Secondly, as a result of the Company’s initial public offering in February, 2011 and the new capital structure provided by it, the Company planned to build and retain a large and diversified pool of life policies.

As discussed above, the Company uses a discounted cash flow model to calculate the fair value of its life insurance policy portfolio. That model is based on three principal factors: life expectancy, expected premiums and the discount rate. As discussed in Note 14, the Company began receiving updated life expectancy reports on the insureds represented in the Company’s portfolio of life insurance policies during 2012. As a result, the calculation of the life expectancy and discount rate inputs have changed. While the Company is endeavoring to obtain updated life expectancy reports for all of its policies, at December 31, 2012, the Company had only received updated life expectancies for 149 of the 214 policies in its portfolio. All updated reports that were obtained have been blended and inputted in the Company’s fair value model at December 31, 2012, which drove a decline of $31.3 million in the fair market value of the portfolio of life insurance policies during the year ended December 31, 2012. This decline was partially offset by premium payments, accretion due to the passage of time, and other changes to the Company’s fair value model, which resulted in a net unrealized change in fair value of approximately $5.7 million during the year ended December 31, 2012.

Cash and Cash Equivalents

Cash and Cash Equivalents

Cash and cash equivalents include cash on hand, investments and all highly liquid instruments purchased with an original maturity of three months or less. The Company maintains the majority of its cash in several operating accounts with one commercial bank. Included in cash and cash equivalents is $110,000 and $3.0 million to be used by the Company to service policies as part of servicing a portfolio of life insurance policies for a third party as of December 31, 2012 and 2011, respectively. We also have a related servicing liability of $110,000 and $3.0 million which is included in other liabilities in the accompanying consolidated balance sheet as of December 31, 2012, and 2011, respectively.

Investment Securities Available for Sale

Investment Securities Available for Sale

Investment securities available for sale are carried at fair value, inclusive of unrealized gains and losses, and net of discount accretion and premium amortization computed using the level yield method. Net unrealized gains and losses are included in other comprehensive income (loss) net of applicable income taxes. Gains or losses on sales of investment securities available for sale are recognized on the specific identification basis.

Management evaluates securities for other than-temporary-impairment on a quarterly basis. Impairment is evaluated considering numerous factors, and their relative significance varies depending on the situation. Factors considered include the Company’s intent to hold the security until maturity or for a period of time sufficient for a recovery in value, whether it is more likely than not that the Company will be required to sell the security prior to recovery of its amortized cost basis, the length of time and extent to which fair value has been less than amortized cost, the historical and implied volatility of the fair value of the security, failure of the issuer of the security to make scheduled interest or principal payments, any changes to the rating of the security by a rating agency and recoveries or additional declines in fair value subsequent to the balance sheet date.

Gain on Maturities of Life Settlements with Subrogation Rights, net

Gain on Maturities of Life Settlements with Subrogation Rights, net

Every credit facility entered into by subsidiaries of the Company between December 2007 and December 2010 to finance the premium finance lending business required lender protection insurance for each loan originated under such credit facility. Generally, when the Company exercises its right to foreclose on collateral the Company’s lender protection insurer has the right to direct control or take beneficial ownership of the life insurance policy, subject to the terms and conditions of the lender protection insurance policy, including notice and timing requirements. Otherwise, the lender protection insurer maintains its salvage collection and subrogation rights. The lender protection insurer’s salvage collection and subrogation rights generally provide a remedy by which the insurer can seek to recover the amount of the lender protection claim paid plus premiums paid by it, expenses and interest thereon.

In those instances where the Company has foreclosed on the collateral, the lender protection insurer has maintained its salvage collection and subrogation rights, and has been covering the cost of the ongoing premiums needed to maintain certain of these life insurance policies. However, the lender protection insurer may elect at any time to discontinue the payment of premiums which would result in lapse of the policies if the Company does not otherwise pay the premiums. The Company views these policies as having uncertain value because the lender protection insurer controls what happens to the policy from a payment of premium standpoint, and the amount of the lender protection insurer’s salvage collection and subrogation claim rights on any individual life insurance policy could equal the cash flow received by the Company with respect to any such policy. For these reasons, , the Company does not rely on these policies for revenue generation, and these policies are considered contingent assets and not included in the amount of life insurance policies on the accompanying consolidated balance sheet.

The Company accounts for the maturities of life insurance policies with subrogation rights, net of subrogation expenses as contingent gains in accordance with ASC 450, Contingencies and recognizes the revenue from the maturities of these policies when all contingencies are resolved.

Loan Impairment Valuation

Loan Impairment Valuation

In accordance with ASC 310, Receivables, the Company specifically evaluates all loans for impairment based on the fair value of the underlying policies as collectability is primarily collateral dependent. The loans are considered to be collateral dependent as the repayment of the loans is expected to be provided by the underlying insurance policies. In the event of default of a loan, the Company has the option to take control of the underlying life insurance policy enabling it to sell the policy or, for those loans that are insured (see below), collect the face value of the insurance certificate.

The loan impairment valuation is evaluated on a monthly basis by management and is based on management’s periodic review of the fair value of the underlying collateral. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available. The loan impairment valuation is established when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal, interest, and origination fee due according to the contractual terms of the loan agreement. Once established, the impairment cannot be reversed to earnings.

The Company purchased lender protection insurance coverage on loans that were sold to or participated by Imperial Life Financing, LLC, Imperial PFC Financing, LLC, Imperial Life Financing II, LLC, and Imperial PFC Financing II, LLC. This insurance mitigates the Company’s exposure to significant losses which may be caused by declines in the value of the underlying life insurance policies. For loans that have lender protection insurance coverage, a loan impairment valuation adjustment is established if the carrying value of the loan exceeds the amount of coverage at the end of the period.

For the year ended December 31, 2012 the Company recognized an impairment charge of approximately $437,000 and $78,000 on the loans and related interest, respectively, and is reflected as a component of the provision for losses on loans receivable in the accompanying consolidated statement of operations. For the year ended December 31, 2011, the Company recognized an impairment charge of approximately $6.8 million and $796,000 related to impaired loans and interest, respectively. For the year ended December 31, 2010, the Company recognized an impairment charge of approximately $2.3 million and $2.2 million related to impaired loans and interest, respectively. See Notes 9, 13 and 14 to the accompanying consolidated financial statements.

Agency Fees Receivable

Agency Fees Receivable

Agency fees are charged for services related to premium finance transactions. Agency fees are due per the signed fee agreement. Agency fees receivable are reported net of an allowance for doubtful accounts.

Management’s determination of the allowance for doubtful accounts is based on an evaluation of the commission receivable, prior collection history, current economic conditions, and other inherent risks. The Company reviews agency fees receivable aging on a regular basis to determine if any of the receivables are past due. The Company writes off all uncollectible agency fee receivable balances against its allowance. The allowance for doubtful accounts was approximately $260,000 as of December 31, 2012 and 2011.

Deferred Costs

Deferred Costs

Deferred costs include costs incurred in connection with acquiring and maintaining credit facilities and costs incurred in connection with securing lender protection insurance. These costs are amortized over the life of the related loan using the effective interest method and are classified as amortization of deferred costs in the accompanying consolidated statement of operations

Interest Income and Origination Income

Interest Income and Origination Income

Interest income consists of interest earned on loans receivable, income from accretion of discounts on purchased loans, and accretion of discounts on purchased structured settlement receivables. Interest income is recognized when it is realizable and earned, in accordance with ASC 605, Revenue Recognition. Discounts are accreted over the remaining life of the loan using the effective interest method.

Loans often include origination fees which are fees payable to the Company on the date the loan matures. The fees are negotiated at the inception of the loan on a transaction by transaction basis. The fees are accreted into income over the term of the loan using the effective interest method.

Payments on loans are not due until maturity of the loan. As such, we typically do not have non-performing loans or non-accrual loans until post maturity of the loan. At maturity, the loans stop earning interest and origination income.

Interest and origination income on impaired loans is recognized when it is realizable and earned accordance with ASC 605, Revenue Recognition. Persuasive evidence of an arrangement exists through a loan agreement which is signed by a borrower prior to funding and sets forth the agreed upon terms of the interest and origination fees. Interest income and origination income are earned over the term of the loan and are accreted using the effective interest method. The interest and origination fees are fixed and determinable based on the loan agreement. For impaired loans, we continually reassess whether the collectability of the interest income and origination income is reasonably assured because the fair value of the collateral typically increases over the term of the loan. Our assessment of whether collectability of interest income and origination income is probable is based on our estimate of proceeds to be received upon maturity of the loan. To the extent that additional interest income is not recognized as collectability is not considered probable, origination income is not recognized. This is consistent with the objective of the interest method, as described in ASC 310-20, of maintaining a constant effective yield on the net investment in the receivable. Since our loans are due upon maturity, we cannot determine whether a loan is performing or non-performing until maturity. For impaired loans, our estimate of proceeds to be received upon maturity of the loan is generally correlated to our current estimate of fair value of the insurance policy, which is the measure to which the loans have been impaired, but also incorporates expected increases in fair value of the insurance policy over the term of the loan, trends in the market, and our experience with loan payoffs.

Revenue/Income Recognition

Revenue/Income Recognition

Our primary sources of revenue/income are in the form of unrealized change in fair value of life settlements and structured settlements, agency fees, interest income, origination fee income, servicing income, gains on maturities of life settlements with subrogation rights, net and realized gains on sales of structured settlements. Our revenue/income recognition policies for these sources of revenue/income are as follows:

• Unrealized Change in Fair Value of Life Settlements—When the Company acquires life insurance policies we initially record these investments at the transaction price, which is the fair value of the policy for those acquired upon relinquishment or the amount paid for policies acquired for cash. The fair value of the investment in insurance policies is evaluated at the end of each reporting period. Changes in the fair value of the investment based on evaluations are recorded as changes in fair value of life settlements in our consolidated statement of operations. The fair value is determined on a discounted cash flow basis that incorporates current life expectancy assumptions. The discount rate incorporates current information about market interest rates, the credit exposure to the insurance company that issued the life insurance policy and our estimate of the risk premium an investor in the policy would require.

• Agency Fees—Agency fees were paid by the referring life insurance agents based on negotiations between the parties and were recognized at the time a life finance loan is funded. Because agency fees are not paid by the borrower, such fees do not accrue over the term of the loan. A separate origination fee was charged to the borrower which is amortized into income over the life of the loan.

• Interest Income—Interest income on life finance loans is recognized when it is realizable and earned, in accordance with ASC 605, Revenue Recognition. Discounts on structured settlement receivables are accreted over the life of the settlement using the effective interest method.

• Origination Fee Income—Loans often include origination fees that are fees payable to us on the date the loan matures. The fees are negotiated at the inception of the loan on a transaction by transaction basis. The fees are accreted into income over the term of the loan using the effective interest method.

• Servicing Income—Servicing income is recorded when services are provided. Servicing income is primarily from servicing a portfolio of life insurance policies controlled by a third party. These services include verifying premiums are paid and correctly applied and updating files for medical history and ongoing premiums.

• Realized Gains on Sales of Structured Settlements—Realized gains on sales of structured settlements are recorded when the structured settlements have been transferred to a third party and we no longer have continuing involvement, in accordance with ASC 860, Transfers and Servicing.

Fixed Assets

Fixed Assets

Fixed assets are stated at cost less accumulated depreciation and amortization. The Company provides for depreciation of fixed assets on a straight-line basis over the estimated useful lives of the assets which range from three to five years. Leasehold improvements are amortized using the straight-line method over the shorter of the expected life of the improvement or the remaining lease term.

Intangible Assets

Intangible Assets

Intangible assets represents amounts the Company paid to a third party in a settlement agreement to acquire the rights, title and interest to the domain name “Imperial.com” for a price of $160,000, and is included in prepaid expenses and other assets in the accompanying consolidated balance sheet. The domain name is being amortized using the straight-line method over its estimated useful life.

Loss on Loan Payoffs and Settlements, Net

Loss on Loan Payoffs and Settlements, Net

When a premium finance loan matures, we record the difference between the net carrying value of the loan and the cash received, or the fair value of the life insurance policy that is obtained in the event of payment default, as a gain or loss on loan payoffs and settlements, net. This account was significantly impacted by the Acorn settlement (see Note 15) whereby the Company recorded a loss on loan payoffs and settlements of zero and $4.1 million during the years ended December 31, 2012 and 2011, respectively.

Advertising Expense

Advertising Expense

Advertising costs are expensed as incurred and were approximately $5.0 million and $6.1 million for the years ended December 31, 2012 and 2011, respectively. These costs are included within selling, general and administrative expenses in the consolidated statement of operations.

Fair Value Measurements

Fair Value Measurements

The Company follows ASC 820, Fair Value Measurements and Disclosures when required to measure fair value for recognition or disclosure purposes. ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 also establishes a three-level hierarchy for fair value measurements which prioritizes and ranks the level of market price observability used in measuring investments at fair value. Investments measured and reported at fair value are classified and disclosed in one of the following categories:

Level 1—Valuation is based on unadjusted quoted prices in active markets for identical assets and liabilities that are accessible at the reporting date. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these products does not entail a significant degree of judgment.

Level 2—Valuation is determined from pricing inputs that are other than quoted prices in active markets that are either directly or indirectly observable as of the reporting date. Observable inputs include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, and interest rates and yield curves that are observable at commonly quoted intervals.

Level 3—Valuation is based on inputs that are both significant to the fair value measurement and unobservable. Level 3 inputs include situations where there is little, if any, market activity for the financial instrument. The inputs into the determination of fair value generally require significant management judgment or estimation.

The availability of valuation techniques and observable inputs can vary from investment to investment and is affected by a wide variety of factors including, the type of investment, whether the investment is new and not yet established in the marketplace, and other characteristics particular to the transaction.

To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Those estimated values do not necessarily represent the amounts that may be ultimately realized due to the occurrence of future circumstances that cannot be reasonably determined. Because of the inherent uncertainty of valuation, those estimated values may be materially higher or lower than the values that would have been used had a ready market for the investments existed. Accordingly, the degree of judgment exercised by the Company in determining fair value of assets and liabilities is greatest for items categorized in Level 3. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement in its entirety falls is determined based on the lowest level input that is significant to the fair value measurement.

Fair value is a market-based measure considered from the perspective of a market participant rather than an entity-specific measure. Therefore, even when market assumptions are not readily available, the Company’s own assumptions are set to reflect those that market participants would use in pricing the asset or liability at the measurement date. The Company uses prices and inputs that are current as of the reporting date, including periods of market dislocation. In periods of market dislocation, the observability of prices and inputs may be reduced for many investments. This condition could cause an investment to be reclassified to a lower level within the fair value hierarchy (see Note 14).

Fair Value Option

Fair Value Option

As of July 1, 2010, we elected to adopt the fair value option, in accordance with ASC 825, Financial Instruments, to record certain newly-acquired structured settlements at fair value. We have the option to measure eligible financial assets, financial liabilities, and commitments at fair value on an instrument-by-instrument basis. This option is available when we first recognize a financial asset or financial liability or enter into a firm commitment. Subsequent changes in fair value of assets, liabilities, and commitments where we have elected fair value option are recorded in our consolidated statement of operations. We have made this election because it is our intention to sell these assets within the next twelve months, and we believe it significantly reduces the disparity that exists between the GAAP carrying value of these structured settlements and our estimate of their economic value. All structured settlements that were acquired subsequent to July 1, 2010 were marked to fair value. Structured settlements that were acquired prior to July 1, 2010 are recorded at cost. For the six months ended December 31, 2010, changes in the fair value of structured settlements where we elected the fair value option resulted in income of approximately $2.5 million. For the year ended December 31, 2012 and 2011, changes in fair value of fair value of structured settlements where we elected the fair value option resulted in income of approximately $1.8 million and $5.3 million, respectively.

Income Taxes

Income Taxes

Prior to our initial public offering in 2011, we converted from a Florida limited liability company to a Florida corporation (the “Conversion”). Prior to the Conversion we were treated as a partnership for federal and state income tax purposes. As a

partnership our taxable income and losses were attributed to our members, and accordingly, no provision or liability for income taxes was reflected in the accompanying consolidated financial statements for periods prior to the Conversion.

After the Conversion, we began to account for income taxes in accordance with ASC 740, Income Taxes. Under ASC 740, deferred income taxes are determined based on the estimated future tax effects of differences between the financial statement and tax basis of assets and liabilities given the provisions of enacted tax laws. Deferred income tax provisions and benefits are based on changes to the assets or liabilities from year to year. In providing for deferred taxes, we consider tax regulations of the jurisdictions in which we operate, estimates of future taxable income and available tax planning strategies. If tax regulations, operating results or the ability to implement tax-planning strategies varies, adjustments to the carrying value of the deferred tax assets and liabilities may be required. Valuation allowances are based on the “more likely than not” criteria of ASC 740.

At December 31, 2012 and 2011, due to the large losses and the uncertainties that resulted from the USAO Investigation, SEC investigation, Non-Prosecution Agreement and class action lawsuits, we recorded a full valuation allowance against our net deferred tax asset of $27.8 million and $11.1 million, respectively, as it is more likely than not that the net deferred tax asset is not realizable. As a result of these increases in the valuation allowance, we recorded no income tax benefit for 2012 and 2011.

The accounting for uncertain tax positions guidance under ASC 740 requires that we recognize the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the more-likely-than-not threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement with the relevant tax authority. We recognize interest and penalties (if any) on uncertain tax positions as a component of income tax expense.

The Company’s corporate income tax returns for all years are subject to examination. Various state jurisdiction tax years remain open to examination.

In February of 2013 the Company was notified by the Internal Revenue Service of its intention to examine the Company’s partnership return for the year ended December 31, 2010. Audit field work for this examination has not been scheduled.

Stock-Based Compensation

Stock-Based Compensation

We have adopted ASC 718, Compensation—Stock Compensation. ASC 718 addresses accounting for share-based awards, including stock options, with compensation expense measured using fair value and recorded over the requisite service or performance period of the award. The fair value of equity instruments issued upon or after the closing of our offering will be determined based on a valuation using an option pricing model which takes into account various assumptions that are subjective. Key assumptions used in the valuation will include the expected term of the equity award taking into account both the contractual term of the award, the effects of expected exercise and post-vesting termination behavior, expected volatility, expected dividends and the risk-free interest rate for the expected term of the award.

Earnings Per Share

Earnings Per Share

The Company computes net income per share/unit in accordance with ASC 260, Earnings Per Share. Under the provisions of ASC 260, basic net income per share is computed by dividing the net income available to common shareholders by the weighted average common shares outstanding during the period. Diluted net income per share adjusts basic net income per share for the effects of stock options and restricted stock awards only in periods in which such effect is dilutive. ASC 260 also requires the Company to present basic and diluted earnings per share information separately for each class of equity instruments that participate in any income distribution with primary equity instruments.

Restricted Cash

Restricted Cash

The Cedar Lane credit facility requires the Company to retain 2% of the principal amount of each loan made to the borrower, for the purposes of indemnifying the facility for any breaches of representations, warranties or covenants of the borrower, as well as to fund collection efforts, if required. As of December 31, 2012 and December 31, 2011 the Company’s consolidated financial statements reflected balances of approximately $1.2 million and $691,000 included in restricted cash, respectively (see Note 22).

Gain on Sale of Life Settlements

Gain on Sale of Life Settlements

Gain on sale of life settlements includes gain from company-owned life settlements.

Risks and Uncertainties

Risks and Uncertainties

In the normal course of business, the Company encounters economic, legal and longevity risk. There are three main components of economic risk: credit risk, market risk and concentration of credit risk. Credit risk is the risk of default on the Company’s loan portfolio that results from a borrower’s inability or unwillingness to make contractually required payments. Market risk for the Company includes interest rate risk. Market risk also reflects the risk of declines in valuation of the Company’s investments, including declines caused by the selection of increased discount rates associated with the Company’s fair value model for investments in life settlements. It is reasonably possible that future changes to estimates involved in valuing life settlements could change and result in material effects to the future financial statements. Concentration of credit risk includes both the risk that lenders under the Company’s structured settlement financing facilities do not fund the purchase of structured settlement receivables when contractually obligated to do so and also includes the risk that an insurance carrier who has issued life insurance policies held by the Company in its portfolio does not remit the amount due under those policies upon policy maturities due to the deteriorating financial condition of the carrier or otherwise. Legal risk includes the risk that statutes define or courts interpret insurable interest in a manner adverse to the Company’s ownership rights in its portfolio of life insurance policies and the risk that courts allow insurance carriers to retain premiums paid by the Company in respect of insurance policies that have been successfully rescinded or contested. Longevity risk refers to the risk that the Company does not experience the mortalities of insureds in its portfolio of life insurance policies that are anticipated to occur on an actuarial basis in a timely manner, which would result in the Company expending additional amounts for the payment of premiums. See Note 17, Commitments and Contingencies.

Investment in Other Companies

Investment in Other Companies

The Company uses the equity method of accounting to account for its investment in other companies which the Company does not control but over which it exerts significant influence; generally this represents ownership interest of at least 20% and not more than 50%. The Company considers whether the fair values of any of its investments have declined below their carrying values whenever adverse events or changes in circumstances indicate that recorded values may not be recoverable. If the Company considers any such decline to be other than temporary, a write-down would be recorded to estimated fair value. During 2010, the Company wrote-off its entire investment in MXT as the Company determined that the estimated fair value of its investment in MXT was zero and the decline was other than temporary.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

In May 2011, the FASB issued Accounting Standards Update (ASU) No. 2011-04, Fair Value Measurement (Topic 820): Amendments to Achieve Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs. This update clarifies existing guidance about how fair value should be applied where it already is required or permitted and provides wording changes that align this standard with International Financial Reporting Standards (IFRS). We are required to apply this guidance prospectively beginning with our first quarterly filing in 2012. The adoption of this new guidance has not had an impact on our financial position or results of operations.

June 2011, the FASB issued ASU No. 2011-05, Comprehensive Income (Topic 220): Presentation of Comprehensive Income. This update increases the prominence of other comprehensive income in financial statements, eliminating the option of presenting other comprehensive income in the statement of changes in equity, and instead, requiring the components of net income and comprehensive income to be presented in either one or two consecutive financial statements. We are required to comply with this guidance prospectively beginning with our first quarterly filing in 2012. The adoption of this new guidance has not had an impact on our financial position or results of operations.

In September 2011, the FASB issued ASU No. 2011-08, Intangibles–Goodwill and Other (Topic 350): Testing Goodwill for Impairment. This update allows entities testing goodwill for impairment the option of performing a qualitative assessment before calculating the fair value of the reporting unit (i.e., step one of the two-step goodwill impairment test). If entities determine, on the basis of qualitative factors, that the fair value of the reporting unit is more likely than not less than the carrying amount, the two-step impairment test would be required. The amendments are effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. The adoption of this new guidance has not had an impact on our financial position or results of operations.

In December 2011, the FASB issued ASU No. 2011-12, Comprehensive Income (Topic 220): Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05. This update delays the effective date of the requirement to present reclassification adjustments for each component of accumulated other comprehensive income in both net income and other comprehensive income on the face of the financial statements.

In February 2013, the FASB issued ASU No. 2013-02, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income. This update adds new disclosure requirements for items reclassified out of accumulated other comprehensive income. We are required to apply this guidance prospectively beginning with our first quarterly filing in 2013. The adoption of this new guidance will not impact our financial position or statement of operations, other than changes in presentation.

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Fair Value Measurements (Tables)

12 Months Ended

Dec. 31, 2012

Life Expectancies

If all of the insured lives in the Company’s life settlement portfolio live six months shorter or longer than the life expectancies provided by these third parties, the change in fair market value would be as follows (dollars in thousands):

Life Expectancy Months Adjustment	Value		Change in Value
+6		95,658		(17,783	)
—		113,441		—
-6		132,540		19,099

Market Interest Rate Sensitivity Analysis

Weighted Average Rate	Rate Adjustment			Value		Change in Value
23.51%		-.50	%		116,300		2,859
24.01%		—			113,441		—
24.51%		+.50	%		110,694		(2,747	)

Assets Measured at Fair Value on Recurring Basis

The balances of the Company’s assets measured at fair value on a recurring basis as of December 31, 2012, are as follows (in thousands):

	Level 1		Level 2		Level 3		Total Fair Value
Assets:
Investment in life settlements	$	—	$	—	$	113,441	$	113,441
Structured settlement receivables		—		—		1,680		1,680
Investment securities available for sale		—		12,147		—		12,147
	$	—	$	12,147	$	115,121	$	127,268

The balances of the Company’s assets measured at fair value on a recurring basis as of December 31, 2011, are as follows (in thousands):

	Level 1		Level 2		Level 3		Total Fair Value
Assets:
Investment in life settlements	$	—	$	—	$	90,917	$	90,917
Structured settlement receivables		—		—		12,376		12,376
Investment securities available for sale		—		57,242		—		57,242
	$	—	$	57,242	$	103,293	$	160,535

Quantative Information About Level 3 Fair Value Measurements

($ in thousands)			Quantitative Information about Level 3 Fair Value Measurements
	Fair Value at 12/31/12		Aggregate death benefit 12/31/12		Valuation Technique (s)	Unobservable Input	Range ( Weighted Average)
Non-premium financed	$	36,039	$	206,450	Discounted cash flow	Discount rate	14.80% - 21.30%
						Life expectancy evaluation	9.1 years
Premium financed		77,402		866,706	Discounted cash flow	Discount rate	16.80% -  33.80%
						Life expectancy evaluation	10.9 years
Investment in life settlements	$	113,441	$	1,073,156	Discounted cash flow	Discount rate	(24.01%)
						Life expectancy evaluation	(10.6 years)
Structured settlements receivables	$	1,680			Discounted cash flow	Facility sales discount rates	6.25% - 15.35%

Changes in Fair value for All Assets using Material Level of Unobservable (Level 3) Inputs

The following tables provide a roll-forward in the changes in fair value for the year ended December 31, 2012, for all assets for which the Company determines fair value using a material level of unobservable (Level 3) inputs (in thousands):

Life Settlements:
Balance, December 31, 2011	$	90,917
Purchase of policies		130
Acquired in foreclosure		5,724
Unrealized change in fair value		(5,660	)
Transfers into level 3		—
Trannsfers out of level 3		—
Sale of policies		(5,334	)
Premiums paid		27,804
Policies lapsed/written off		(140	)
Balance, December 31, 2012	$	113,441
Changes in fair value included in earnings for the period relating to assets held at December 31, 2012	$	(5,898	)

The Company recorded unrealized change in fair value of approximately $5.7 million and a gain of approximately $570,000 for the year ended December 31, 2012 and 2011, respectively.

Structured Settlements:
Balance, December 31, 2011	$	12,376
Purchase of contracts		24,313
Unrealized change in fair value		1,823
Sale of contracts		(36,615	)
Collections		(217	)
Transfers into level 3		—
Transfers out of level 3		—
Balance, December 31, 2012	$	1,680
Changes in fair value included in earnings for the period relating to assets held at December 31, 2012	$	255

The following tables provide a roll-forward in the changes in fair value for the year ended December 31, 2011, for all assets for which the Company determines fair value using a material level of unobservable (Level 3) inputs (in thousands).

Life Settlements:
Balance, December 31, 2010	$	17,138
Purchase of policies		50,480
Acquired in foreclosure		6,409
Unrealized change in fair value		570
Premiums paid		16,320
Transfers into Level 3		—
Transfers out of Level 3		—
Balance, September 30, 2011	$	90,917
Changes in fair value included in earnings for the period relating to assets held at December 31, 2011	$	570
Structured Settlements:
Balance, December 31, 2010	$	1,446
Purchase of contracts		27,545
Unrealized change in fair value		5,302
Sale of contracts		(21,723	)
Collections		(194	)
Transfers into Level 3		—
Transfers out of Level 3		—
Balance, September 30, 2011		12,376
Changes in fair value included in earnings for the period relating to assets held at December 31, 2011	$	4,218

Market Approach Valuation Technique

Market Interest Rate Sensitivity Analysis

Market interest rate sensitivity analysis

Weighted Average Rate Calculated Based on Death Benefit	Rate Adjustment			Value		Change in Value
23.51%		-.50	%		116,300		2,859
24.01%		—			113,441		—
24.51%		+.50	%		110,694		(2,747	)

Changes in fair market value, If all of the insured lives in the Company's life settlement portfolio live six months longer than the life expectancies provided by third parties.

Life Expectancies

If all of the insured lives in the Company’s life settlement portfolio live six months shorter or longer than the life expectancies provided by these third parties, the change in fair market value would be as follows (dollars in thousands):

Life Expectancy Months Adjustment	Value		Change in Value
+6		95,658		(17,783	)
-		113,441		—
-6		132,540		19,099

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Organization and Description of Business Activities

12 Months Ended

Dec. 31, 2012

Organization and Description of Business Activities

NOTE 1—ORGANIZATION AND DESCRIPTION OF BUSINESS ACTIVITIES

Imperial Holdings, Inc. (“Imperial,” the “Company,” “we” or “us”) was formed initially as a Florida limited liability Company pursuant to an operating agreement dated December 15, 2006 between IFS Holdings, Inc., IMEX Settlement Corporation, Premium Funding, Inc. and Red Oak Finance, LLC. In connection with the Company’s initial public offering on February 3, 2011, the Company succeeded to the business, assets and liabilities of the limited liability Company.

The Company, operating through its subsidiaries, is a specialty finance company with its corporate office in Boca Raton, Florida. The Company operates in two reportable business segments: life finance (formerly referred to as premium finance) and structured settlements. In the life finance business, the Company earns revenue/income from interest accruing on outstanding loans and loan origination fees over the life of the outstanding loans, servicing income, changes in the fair value of life settlements the Company acquires and receipt of death benefits with respect to matured life insurance policies it owns. In the structured settlement business, the Company purchases structured settlements at a discounted rate and sells such assets to third parties.

In February 2011, the Company completed the sale of 17,602,614 shares of common stock in its initial public offering at a price of $10.75 per share. The Company received net proceeds of approximately $174.2 million after deducting the underwriting discounts and commissions and its offering expenses.

On September 27, 2011, the Company was informed that it was being investigated by the U.S. Attorney’s Office for the District of New Hampshire (the “USAO Investigation”). At that time, the Company was informed that, among other individuals, its former president and chief operating officer, former general counsel, three former life finance sales executives, two vice presidents and a funding manager were considered “targets” of the USAO Investigation. The USAO Investigation focused on the Company’s premium finance loan business.

On February 17, 2012, the Company received a subpoena issued by the staff of the U.S. Securities and Exchange Commission (the “SEC”) seeking documents from 2007 through the present, generally related to the Company’s premium finance business and corresponding financial reporting. The SEC is investigating whether any violations of federal securities laws have occurred and the Company has been cooperating with the SEC regarding this matter. The Company is unable to predict what action, if any, might be taken in the future by the SEC or its staff as a result of the matters that are the subject of the subpoena or what impact, if any, the cost of responding to the subpoena might have on the Company’s financial position, results of operations, or cash flows. The Company has not established any provision for losses in respect of this matter.

On April 30, 2012, the Company entered into a Non-Prosecution Agreement (the “Non-Prosecution Agreement”) with the USAO, which agreed not to prosecute the Company for its involvement in the making of misrepresentations on life insurance applications in connection with its premium finance business or any potential securities fraud claims related to its premium finance business. In the Non-Prosecution Agreement, the USAO and the Company agreed among other things, that the following facts are true and correct: (i) at all relevant times (x) certain insurance companies required that the prospective insured applying for a life insurance policy, and sometimes the agent, disclose information relating to premium financing on applications for life insurance policies, and (y) the questions typically required the prospective insured to disclose if he or she intended to seek premium financing in connection with the policy and sometimes required the agent to disclose if he or she was aware of any such intent on the part of the applicant; (ii) in connection with a portion of the Company’s retail operation known as “retail non-seminar” that began in December 2006 and was discontinued in January 2009, Imperial had a practice of disclosing on applications that the prospective insured was seeking premium financing when the life insurance company allowed premium financing from Imperial; however, in certain circumstances, Imperial internal life agents facilitated and/or made misrepresentations on applications that the prospective insured was not seeking premium financing when the insurance carrier was likely to deny the policy on the basis of premium financing; and (iii) to the extent that external agents, brokers and insureds caused other misrepresentations to be made in life insurance applications in connection with the retail non-seminar business, Imperial failed to appropriately tailor controls to prevent potential fraudulent practices in that business. As of December 31, 2012, the Company had 12 policies in its portfolio that once served as collateral for premium finance loans derived through the retail non-seminar business.

In connection with the Non-Prosecution Agreement, Imperial voluntarily agreed to terminate its premium finance business, which historically accounted for the majority of the Company’s revenues and terminated certain senior sales staff associated with the premium finance business. Additionally, the Company paid the United States Government $8.0 million, and agreed to cooperate fully with the USAO’s ongoing investigation and to refrain from and self-report any criminal conduct. The Non-Prosecution Agreement has a term of three years until April 30, 2015, but after April 30, 2014 the Company may petition the USAO to forego the final year of the Non-Prosecution Agreement, if we otherwise comply with all of our obligations under the Non-Prosecution Agreement. Should the USAO conclude that Imperial has not abided by its obligations under the Non-Prosecution Agreement, the USAO could choose to terminate the Non-Prosecution Agreement, resume its investigation of the Company, or bring charges against Imperial.

On August 2, 2012, the Board of Directors of the Company appointed Andrew Dakos, Phillip Goldstein and Gerald Hellerman to serve as directors of the Company in connection with a settlement (the “Settlement”) with Opportunity Partners L.P. (“Opportunity”). The Settlement resulted in Opportunity withdrawing its demand for a special meeting of shareholders, which it had submitted to the Company on May 23, 2012 and agreeing to dismiss its lawsuit to compel an annual meeting of shareholders. In connection with the Settlement, Walter Higgins and A. Penn Wyrough resigned from the Board of Directors. On August 14, 2012, Antony Mitchell, the Company’s chief executive officer, resigned as Chairman of the Board (though he continues to serve as a director and as the Company’s chief executive officer) and Mr. Goldstein was elected Chairman. On January 14, 2013, David Buzen resigned from the Board of Directors and on March 12, 2013, Robert Rosenberg informed the Board of Directors that he would not stand for re-election at the Company’s annual meeting of shareholders.

As of December 31, 2012, the Company had approximately $20.3 million of cash, cash equivalents, and marketable securities including $1.2 million in restricted cash. This limited cash position was driven primarily by the defense and investigation of the Company and certain employees in connection with the USAO Investigation, SEC investigation and related shareholder litigation, which required significant, unbudgeted cash outlays. As previously reported in earlier periodic reports filed with the SEC, the Company anticipated a liquidity shortfall in the second quarter of 2013. Accordingly, to avoid lapsing policies, the Company sought additional capital and, on March 27, 2013, Greenwood Asset Portfolio, LLC (“Greenwood”), a subsidiary of the Company, borrowed $45 million in aggregate principal amount under the terms of an eighteen-month bridge facility, secured by substantially all of the Company’s portfolio of life insurance policies. Principal was borrowed under the facility at 92% resulting in net proceeds after transaction expenses of $41.4 million. After transaction expenses, up to 25% of the proceeds of the facility may be used by the Company for general corporate purposes, with the balance used by Greenwood to pay premiums on the life insurance policies it owns. Interest under the facility accrues at 12% per annum for nine months and thereafter increases to 18% for the remainder of the term of the facility. The Company intends to replace this facility, which is pre-payable at par without penalty, and refinance the bridge facility with more permanent capital once it is sourced. There can be no assurance, however, that we will be able to obtain capital on more favorable terms or at all. The facility should provide the Company with adequate liquidity to pay premiums on its portfolio of life insurance through 2013. See Note 22 Subsequent Events.

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Earnings Per Share (Tables)

12 Months Ended

Dec. 31, 2012

Reconciliation of Actual Basic and Diluted Earnings Per Share

The following tables reconcile actual basic and diluted earnings per share for the years ended December 31, 2012, 2011 and 2010 (in thousands except per share data).

	2012			2011			2010
Basic loss per share:
Numerator:
Net loss available to common stockholders	$	(44,634	)	$	(39,198	)	$	(15,697	)
Denominator:
Weighted average common shares outstanding		21,205,747			19,352,063			3,600,000
Basic loss per share	$	(2.10	)	$	(2.03	)	$	(4.36	)
Diluted loss per share:
Numerator:
Net loss available to common stockholders	$	(44,634	)	$	(39,198	)	$	(15,697	)
Denominator:
Diluted weighted average shares outstanding		21,205,747			19,352,063			3,600,000
Diluted loss per share(1)(2)	$	(2.10	)	$	(2.03	)	$	(4.36	)

(1) The computation of diluted EPS did not include 487,314 options and 4,240,521 warrants for the year ended December 31, 2012, as the effect of their inclusion would have been anti-dilutive.

(2) The computation of diluted EPS did not include 627,419 options, 4,240,521 warrants and 3,507 shares of restricted stock for the year ended December 31, 2011, as the effect of their inclusion would have been anti-dilutive.

Reconciliation of Pro Forma Basic and Diluted Earnings Per Share

The following tables reconcile pro forma basic and diluted earnings per share for the years ended December 31, 2011 and 2010 (in thousands except per share data).

	2011			2010
Basic loss per share:
Numerator:
Net loss available to common stockholders(1)(3)	$	(39,020	)	$	(12,636	)
Denominator:
Weighted average common shares outstanding		19,352,063			3,600,000
Basic loss per share	$	(2.02	)	$	(3.51	)
Diluted earnings per share:
Numerator:
Net loss available to common stockholders	$	(39,020	)	$	(12,636	)
Denominator:
Diluted weighted average shares outstanding		19,352,063			3,600,000
Diluted loss per share(2)	$	(2.02	)	$	(3.51	)

(1) Reflects a reduction of interest expense $178,000, net of tax and $3.1 million for the years ended December 31, 2011 and 2010, respectively, due to the conversion of our promissory note in favor of IMPEX Enterprises, Ltd. into shares of our common stock, which occurred prior to the closing of our initial public offering, and the conversion of our promissory note in favor of Branch Office of Skarbonka Sp. z o.o into a $30.0 million debenture, and the conversion of that $30.0 million debenture into shares of our common stock, which occurred immediately prior to the closing of our initial public offering.

(2) The computation of diluted EPS did not include 627,419 options, 4,240,521 warrants and 3,507 shares of restricted stock for the year ended December 31, 2011, as the effect of their inclusion would have been anti-dilutive.

(3) For the pro forma period for the years ended December 31, 2011 and 2010, the results of the Company being treated for the pro forma presentation as a “C” corporation resulted in no impact to the consolidated balance sheet or statement of operations. The primary reasons for this are that the losses produce no current benefit and any net operating losses generated and other deferred assets (net of liabilities) at that time would have been fully reserved due to historical operating losses. The Company, therefore, has not recorded any pro forma tax provision.

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Fair Value Measured on Recurring Basis Unobservable Input Reconciliation (Detail) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Investment in life settlements	$ 113,441	$ 90,917
Structured settlements receivables	1,680	12,376
Investment in life settlements	1,073,156	935,466
Weighted average discount rate	24.01%
Fair Value, Inputs, Level 3
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Investment in life settlements	113,441	90,917
Structured settlements receivables	1,680	12,376
Investment in life settlements	1,073,156
Fair Value, Inputs, Level 3 | Non Premium Financed
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Investment in life settlements	36,039
Investment in life settlements	206,450
Fair Value, Inputs, Level 3 | Premium Financed
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Investment in life settlements	77,402
Investment in life settlements	$ 866,706
Fair Value, Inputs, Level 3 | Life Finance
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Valuation Technique (s)	Discounted cash flow
Weighted average life expectancy valuation period	10 years 7 months 6 days
Weighted average discount rate	(24.01%)
Fair Value, Inputs, Level 3 | Life Finance | Non Premium Financed
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Valuation Technique (s)	Discounted cash flow
Weighted average life expectancy valuation period	9 years 1 month 6 days
Fair Value, Inputs, Level 3 | Life Finance | Premium Financed
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Valuation Technique (s)	Discounted cash flow
Weighted average life expectancy valuation period	10 years 10 months 24 days
Fair Value, Inputs, Level 3 | Structured settlements
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Valuation Technique (s)	Discounted cash flow
Minimum | Fair Value, Inputs, Level 3 | Life Finance | Non Premium Financed
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Discount rate	14.80%
Minimum | Fair Value, Inputs, Level 3 | Life Finance | Premium Financed
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Discount rate	16.80%
Minimum | Fair Value, Inputs, Level 3 | Structured settlements
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Discount rate	6.25%
Maximum | Fair Value, Inputs, Level 3 | Life Finance | Non Premium Financed
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Discount rate	21.30%
Maximum | Fair Value, Inputs, Level 3 | Life Finance | Premium Financed
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Discount rate	33.80%
Maximum | Fair Value, Inputs, Level 3 | Structured settlements
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Discount rate	15.35%

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Notes and Debenture Payable (Tables)

12 Months Ended

Dec. 31, 2012

Principal Balances of Notes Payable

A summary of the principal balances of notes payable included in the consolidated balance sheet as of December 31, 2012 and 2011 is as follows (in thousands):

	Total Notes Payble
	December 31,		December 31,
	2012		2011
Cedar Lane	$	—	$	19,104
White Oak, Inc.		—		173
Total		—		19,277

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Reconciliation of Pro Forma Basic and Diluted Earnings Per Share (Parenthetical) (Detail) (USD $) In Thousands, except Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items]
Interest expense	$ 1,255	$ 8,524	$ 28,155
Conversion of debt to common stock		35,158
Stock Options
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items]
Antidilutive securities excluded from computation of diluted earnings per share	487,314	627,419
Warrant
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items]
Antidilutive securities excluded from computation of diluted earnings per share	4,240,521	4,240,521
Restricted Stock
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items]
Antidilutive securities excluded from computation of diluted earnings per share		3,507
Pro Forma
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items]
Interest expense		178	3,100
Conversion of debt to common stock	30,000	30,000
Pro Forma | Stock Options
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items]
Antidilutive securities excluded from computation of diluted earnings per share		627,419
Pro Forma | Warrant
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items]
Antidilutive securities excluded from computation of diluted earnings per share		4,240,521
Pro Forma | Restricted Stock
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items]
Antidilutive securities excluded from computation of diluted earnings per share		3,507
After Conversion | Pro Forma
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items]
Interest expense		$ 178	$ 3,100

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Summary of Origination Fees in Loans Receivable (Detail) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan origination fees gross	$ 1,334	$ 10,844
Un-accreted origination fees	(190)	(2,666)
Amortized loan originations costs	13	129
Loan origination fees, net	$ 1,157	$ 8,307

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Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Assets
Cash and cash equivalents	$ 7,001	$ 16,255
Restricted cash	1,162	691
Certificate of deposit - restricted		891
Investment securities available for sale, at estimated fair value	12,147	57,242
Deferred costs, net	7	1,874
Prepaid expenses and other assets	14,165	3,277
Deposits - other	2,855	761
Interest receivable, net	822	5,758
Loans receivable, net	3,044	29,376
Structured settlement receivables at estimated fair value	1,680	12,376
Structured settlement receivables at cost, net	1,574	1,553
Investment in life settlements, at estimated fair value	113,441	90,917
Fixed assets, net	232	585
Investment in affiliates	2,212	1,043
Total assets	160,342	222,599
Liabilities
Accounts payable and accrued expenses	6,606	16,336
Other liabilities	20,796	4,279
Interest payable		5,505
Notes payable		19,277
Income taxes payable	6,295	6,295
Total liabilities	33,697	51,692
Commitments and Contingencies (Note 17)
Stockholders' Equity
Common stock (80,000,000 authorized; 21,206,121 and 21,202,614 issued and outstanding as of December 31, 2012 and 2011, respectively)	212	212
Additional paid-in-capital	238,064	237,755
Accumulated other comprehensive loss	(3)	(66)
Accumulated deficit	(111,628)	(66,994)
Total stockholders' equity	126,645	170,907
Total liabilities and stockholders' equity	$ 160,342	$ 222,599

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Organization And Description Of Business Activities - Additional Information (Detail) (USD $)	1 Months Ended			12 Months Ended			1 Months Ended
	Feb. 28, 2011	Feb. 15, 2011	Feb. 11, 2011	Dec. 31, 2012 Segment	Dec. 31, 2011	Dec. 31, 2010	Mar. 27, 2013 Subsequent Event Bridge Facility Greenwood Asset Portfolio, LLC M	Mar. 27, 2013 Subsequent Event Bridge Facility Greenwood Asset Portfolio, LLC For Nine Months	Mar. 27, 2013 Subsequent Event Bridge Facility Greenwood Asset Portfolio, LLC After Nine Months
Organization and Nature of Operations [Line Items]
Number of reportable segments				2
Sale of common stock in initial public offering	17,602,614	935,947	16,666,667
Common stock price per share	$ 10.75		$ 10.75
Proceeds from initial public offering	$ 174,233,000				$ 174,233,000
Number of policies				12
US Government ongoing investigation for criminal conduct					8,000,000
Non-Prosecution Agreement terms description					The Non-Prosecution Agreement has a term of three years, but after two years the Company may petition the USAO to forego the final year of the Non-Prosecution Agreement if we otherwise comply with all of our obligations under the Non-Prosecution Agreement.
Non-Prosecution Agreement terms					3 years
Cash, cash equivalents, and marketable securities				20,300,000
Restricted cash				1,162,000	691,000
Bridge loan amount							45,000,000
Term loan period							18
Percentage of proceed from debt issuance							92.00%
Transaction expense					$ 2,644,000	$ 24,434,000	$ 41,400,000
Percentage of net proceeds from credit facility that may be used for general corporate purposes							25.00%
Bridge loan, interest rate							Interest under the Bridge Facility accrues at 12% per annum for the first nine months from the issue date, and increases by 600 basis points thereafter to 18% per annum.
Interest under the facility								12.00%	18.00%

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Employee Benefit Plan - Additional Information (Detail) (USD $)	12 Months Ended
	Dec. 31, 2012 Y	Dec. 31, 2011
Defined Contribution Benefit Plans [Line Items]
401(k) plan that covers employees eligible age	18
401(k) plan that covers employees service period for eligible	3 months
Employer contributions	$ 0	$ 0

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Consolidated Statements Of Stockholders'/Members' Equity (USD $) In Thousands, except Share data	Total	Member Units	Series A Preferred Units	Series B Preferred Units	Series C Preferred Units	Series D Preferred Units	Series E Preferred Units	Common Stock	Additional Paid-in Capital	Retained Earnings (Accumulated Deficit)	Accumulated Other Comprehensive Income (Loss)
Beginning Balance at Dec. 31, 2009	$ 16,859	$ 19,923	$ 4,035	$ 5,000						$ (12,099)
Beginning Balance (in shares) at Dec. 31, 2009		450,000	90,796	50,000
Comprehensive loss	(15,697)									(15,697)
Proceeds from sale of preferred units, units					70,000	7,000	73,000
Proceeds from sale of preferred units	15,000				7,000	700	7,300
Repurchase of common and preferred units, units		(112,500)		(25,000)
Repurchase of common and preferred units	(10,961)	(8,461)		(2,500)
Ending Balance at Dec. 31, 2010	5,201	11,462	4,035	2,500	7,000	700	7,300			(27,796)
Ending Balance (in shares) at Dec. 31, 2010		337,500	90,796	25,000	70,000	7,000	73,000
Comprehensive loss	(39,264)									(39,198)	(66)
Conversion of debt and membership units into common shares, shares		(337,500)	(90,796)	(25,000)	(70,000)	(7,000)	(73,000)	2,300,273
Conversion of debt and membership units into common shares	5,158	(11,462)	(4,035)	(2,500)	(7,000)	(700)	(7,300)	23	38,132
Conversion of Skarbonka debt into common shares, net of tax, shares								1,272,727
Conversion of Skarbonka debt into common shares, net of tax	23,706							13	23,693
Phantom shares converted into common shares	290,000							27,000	290,000
Issuance of common stock pursunat to IPO, net of offering costs (in shares)								17,602,614
Issuance of common stock pursunat to IPO, net of offering costs	174,233							176	174,057
Stock-based compensation	1,583								1,583
Ending Balance at Dec. 31, 2011	170,907							212	237,755	(66,994)	(66)
Ending Balance (in shares) at Dec. 31, 2011								21,202,614
Comprehensive loss	(44,571)									(44,634)	63
Stock-based compensation	309								309
Restricted stock issued								3,507
Ending Balance at Dec. 31, 2012	$ 126,645							$ 212	$ 238,064	$ (111,628)	$ (3)
Ending Balance (in shares) at Dec. 31, 2012								21,206,121

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Future Minimum Payments Under Operating Leases (Detail) (USD $)	Dec. 31, 2012
Operating Leased Assets [Line Items]
2013	$ 547,051
2014	477,183
Operating Leases, Future Minimum Payments Due, Total	$ 1,024,234

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Amortized Cost and Estimated Fair Values of Securities Available for Sale (Detail) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	$ 12,109	$ 57,307
Gross Unrealized Gains	105	71
Gross Unrealized Losses	(67)	(136)
Estimated Fair Value	12,147	57,242
Corporate Bonds
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	8,275	41,697
Gross Unrealized Gains	25	32
Gross Unrealized Losses	(67)	(127)
Estimated Fair Value	8,233	41,602
Government Bonds
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	3,524	14,789
Gross Unrealized Gains	76	39
Gross Unrealized Losses		(9)
Estimated Fair Value	3,600	14,819
Other Bonds
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	310	821
Gross Unrealized Gains	4
Gross Unrealized Losses
Estimated Fair Value	$ 314	$ 821

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Difference between Actual Provision (Benefit) for Income Tax and Federal Expected Income Tax Provision (Detail) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
Income Tax Rate Reconciliation [Line Items]
Tax benefit at statutory rate	$ (15,636)	$ (13,719)
Increase (decrease) in taxes resulting from:
State tax (net of federal benefit)	(1,555)	(1,045)
Pre-conversion loss		678
Pre-conversion deferred tax asset		223
Other	423	14
Department of Justice settlement		2,800
Valuation allowance increase	16,729	11,049
Benefit for income taxes	$ (39)
Tax Benefit at statutory rate	35.00%	35.00%
Increase (decrease) in taxes resulting from:
State tax (net of federal benefit)	3.48%	2.67%
Pre-conversion loss		(1.73%)
Pre-conversion deferred tax asset		(0.57%)
Other	(0.94%)	(0.04%)
Department of Justice settlement		(7.14%)
Valuation allowance increase	(37.45%)	(28.19%)
Benefit for income taxes	0.09%	0.00%

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Loans Receivable (Tables)

12 Months Ended

Dec. 31, 2012

Summary of Loans Receivable

A summary of loans receivables at December 31, 2012 and 2011 is as follows (in thousands):

	2012			2011
Loan principal balance	$	5,255		$	31,264
Loan origination fees, net		1,157			8,307
Loan impairment valuation		(3,368	)		(10,195	)
Loans receivable, net	$	3,044		$	29,376

Changes In Loans Receivable Principal Balance

An analysis of the changes in loans receivable principal balance during the years ended December 31, 2012 and 2011 is as follows (in thousands):

	2012			2011
Loan principal balance, beginning	$	31,264		$	76,939
Loan originations		—			18,385
Subsequent year premiums paid, net of reimbursement		—			339
Loan write-offs		—			(3,058	)
Loan payoffs		(17,116	)		(55,277	)
Loans transferred to investments in life settlements		(8,893	)		(6,064	)
Loan principal balance, ending	$	5,255		$	31,264

Analysis of Loan Impairment Valuation

An analysis of the loan impairment valuation for the year ended December 31, 2012 is as follows (in thousands):

	Loans Receivable			Interest Receivable			Total
Balance at beginning of period	$	10,195		$	1,920		$	12,115
Provision for loan losses		437			78			515
Charge-offs		(7,264	)		(1,051	)		(8,315	)
Balance at end of period	$	3,368		$	947		$	4,315

An analysis of the loan impairment valuation for the year ended December 31, 2011 is as follows (in thousands):

	Loans Receivable			Interest Receivable			Total
Balance at beginning of period	$	7,176		$	1,340		$	8,516
Provision for loan losses		6,793			796			7,589
Charge-offs		(3,774	)		(216	)		(3,990	)
Balance at end of period	$	10,195		$	1,920		$	12,115

An analysis of the loan impairment valuation for the year ended December 31, 2010 is as follows (in thousands):

	Loans Receivable			Interest Receivable			Total
Balance at beginning of period	$	11,599		$	1,788		$	13,387
Provision for loan losses		2,276			2,200			4,476
Charge-offs		(8,205	)		(2,647	)		(10,852	)
Recoveries		1,506			—			1,506
Balance at end of period	$	7,176		$	1,341		$	8,517

Analysis of Allowance for Loan Losses and Recorded Investment in Loans by Loan Type

An analysis of the allowance for loan losses and recorded investment in loans by loan type for the year ended December 31, 2010 is as follows (in thousands):

	Uninsured Loans			Insured Loans			Total
Loan impairment valuation
Balance at beginning of period	$	1,983		$	9,616		$	11,599
Provision for loan losses		—			2,276			2,276
Charge-offs		(2,601	)		(5,604	)		(8,205	)
Recoveries		1,506			—			1,506
Ending balance	$	888		$	6,288		$	7,176
Ending balance: individually evaluated for impairment	$	888		$	6,288		$	7,176

Analysis of Credit Ratings

An analysis of the credit quality indicators by loan type at December 31, 2012 is presented in the following table (dollars in thousands):

	Uninsured					Insured(1)
S&P Designation	Unpaid Principal Balance		Percent			Unpaid Principal Balance		Percent
AAA	$	—		0.00	%	$	—		0.00	%
AA+		—		0.00	%		—		0.00	%
AA		—		0.00	%		—		0.00	%
AA-		2,072		43.58	%		408		81.44	%
A+		2,548		53.97	%		93		18.56	%
A1		—		0.00	%		—		0.00	%
A		—		0.00	%		—		0.00	%
BB-		134		2.45	%		—		0.00	%
Total	$	4,754		100	%	$	501		100	%

An analysis of the credit quality indicators by loan type at December 31, 2011 is presented in the following table (dollars in thousands):

	Uninsured					Insured(1)
S&P Designation	Unpaid Principal Balance		Percent			Unpaid Principal Balance		Percent
AAA	$	—		0.00	%	$	—		0.00	%
AA+		694		5.08	%		222		1.26	%
AA		—		0.00	%		—		0.00	%
AA-		6,558		48.05	%		9,085		51.57	%
A+		3,060		22.42	%		1,287		7.31	%
A1		—		0.00	%		—		0.00	%
A		3,336		24.44	%		7,022		39.86	%
BB-		—		0.00	%		—		0.00	%
Total	$	13,648		100	%	$	17,616		100	%

(1) All of the Company’s insured loans have lender protection coverage with Lexington Insurance Company. As of December 31, 2012, Lexington had a financial strength rating of “A” with a stable outlook by Standard & Poors (S&P).

Summary of Investment In Impaired Loans

A summary of our investment in impaired loans at December 31, 2012 and 2011 is as follows (in thousands):

	2012		2011
Loan receivable, net	$	3,011	$	17,424
Interest receivable, net		724		6,799
Investment in impaired loans	$	3,735	$	24,223

Impaired Loans With and Without Related Allowance

An analysis of impaired loans with and without a related allowance at December 31, 2012 is presented in the following table by loan type (in thousands):

	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:
Uninsured Loans	$	—	$	—	$	—	$	—	$	—
Insured Loans		—		—		—		—		—
With an allowance recorded:
Uninsured Loans		3,623		4,735		3,413		6,887		1,444
Insured Loans		112		501		902		7,091		227
Total Impaired Loans	$	3,735	$	5,236	$	4,315	$	13,978	$	1,671

An analysis of impaired loans with and without a related allowance at December 31, 2011 is presented in the following table by loan type (in thousands):

	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:
Uninsured Loans	$	—	$	—	$	—	$	—	$	—
Insured Loans		—		—		—		—		—
With an allowance recorded:
Uninsured Loans		10,153		13,628		6,894		6,764		1,684
Insured Loans		14,070		10,391		3,301		24,847		3,195
Total Impaired Loans	$	24,223	$	24,019	$	10,195	$	31,611	$	4,879

Analysis of Unpaid Principal Balance of Past Due Loans

An analysis of past due at December 31, 2012 is presented in the following table by loan type (in thousands):

	30-59 Days Past Due		60-89 Days Past Due		Greater Than 90 Days Past Due		Total Past Due
Uninsured Loans	$	—	$	—	$	599	$	599
Insured Loans		—		—		315		315
Total	$	—	$	—	$	914	$	914

An analysis of past due at December 31, 2011 is presented in the following table by loan type (in thousands):

	30-59 Days Past Due		60-89 Days Past Due		Greater Than 90 Days Past Due		Total Past Due
Uninsured Loans	$	—	$	—	$	599	$	599
Insured Loans		1,570		—		—		1,570
Total	$	1,570	$	—	$	599	$	2,169

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Analysis of Changes in Loans Receivable Principal Balance (Detail) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan principal balance, beginning	$ 31,264	$ 76,939
Loan originations		18,385
Subsequent year premiums paid, net of reimbursement		339
Loan write-offs		(3,058)
Loan payoffs	(17,116)	(55,277)
Loans transferred to investments in life settlements	(8,893)	(6,064)
Loan principal balance, ending	$ 5,255	$ 31,264

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Notes and Debenture Payable

12 Months Ended

Dec. 31, 2012

Notes and Debenture Payable

NOTE 15—NOTES AND DEBENTURE PAYABLE

A summary of the principal balances of notes payable included in the consolidated balance sheet as of December 31, 2012 and 2011 is as follows (in thousands):

	Total Notes Payble
	December 31,		December 31,
	2012		2011
Cedar Lane	$	—	$	19,104
White Oak, Inc.		—		173
Total		—		19,277

Cedar Lane

On December 2, 2009, Imperial PFC Financing II, LLC was formed to enter into a financing agreement with Cedar Lane Capital, LLC, so that Imperial PFC Financing II, LLC could purchase Imperial Premium Finance notes for cash or a participation interest in the notes. The financing agreement was for a minimum of $5 million to a maximum of $250 million. The agreement was for a term of 28 months from the time of borrowing and the borrowings bore an annual interest rate of 14%, 15% or 16%, depending on the class of lender and were compounded monthly. All of the assets of Imperial PFC Financing II, LLC served as collateral under this credit facility. The Company was subject to several restrictive covenants under the facility. The restrictive covenants included items such as restrictions on the ability to pay dividends or incur additional indebtedness by Imperial PFC Financing II, LLC. The Company believes it was in compliance at December 31, 2012. The outstanding principal at December 31, 2012 and 2011 was approximately zero and $19.1 million, respectively, and accrued interest was approximately zero and $5.4 million, respectively. The Company was required to retain 2% of the principal amount of each loan made to the borrower, for purposes of indemnifying the facility for any breaches of representations, warranties or covenants of the borrower, as well as to fund collection efforts, if required. All remaining amounts under this facility were repaid during the year and December 31, 2012. Our lender protection insurer ceased providing us with lender protection insurance under this credit facility on December 31, 2010.

White Oak, Inc.

On February 5, 2009, Imperial Life Financing II, LLC, was formed to enter into a loan agreement with White Oak Global Advisors, LLC, so that Imperial Life Financing II, LLC could purchase Imperial Premium Finance notes in exchange for cash or a participation interest in the notes.

In September 2009, the Imperial Life Financing II, LLC loan agreement was amended to increase the commitment by $12 million to a total commitment of $27 million. All of the assets of Imperial Life Financing II, LLC served as collateral under this facility. The notes were payable 6-26 months from issuance and the facility matured on March 11, 2012. The outstanding principal at December 31, 2012 and 2011, was zero and $172,000, respectively, and accrued interest was zero and $104,000, respectively. After December 31, 2010, we ceased originating premium finance loans with lender protection insurance. All remaining amounts under this facility were repaid during the year ended December 31, 2012.

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Origination Fees (Tables)

12 Months Ended

Dec. 31, 2012

Summary of Balance of Origination Fees

A summary of the balances of origination fees that are included in loans receivable in the consolidated balance sheet as of December 31 is as follows (in thousands):

	2012			2011
Loan origination fees gross	$	1,334		$	10,844
Un-accreted origination fees		(190	)		(2,666	)
Amortized loan originations costs		13			129
	$	1,157		$	8,307

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Provision (Benefit) For Income Taxes (Detail) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
Current
Federal
State
Current Income Tax Expense (Benefit), Total
Deferred
Federal	(14,377)	(9,474)
State	(2,391)	(1,575)
Provision for deferred tax liability	(16,768)	(11,049)
Valuation allowance increase	16,729	11,049
Benefit for income taxes	$ (39)

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Commitments and Contingencies

12 Months Ended

Dec. 31, 2012

Commitments and Contingencies

NOTE 17—COMMITMENTS AND CONTINGENCIES

In accordance with applicable accounting guidance, the Company establishes an accrued liability for litigation and regulatory matters when those matters present loss contingencies that are both probable and estimable. In such cases, there may be an exposure to loss in excess of any amounts accrued. When a loss contingency is not both probable and estimable, the Company does not establish an accrued liability. As a litigation or regulatory matter develops, the Company, in conjunction with any outside counsel handling the matter, evaluates on an ongoing basis whether such matter presents a loss contingency that is probable and estimable. If, at the time of evaluation, the loss contingency related to a litigation or regulatory matter is not both probable and estimable, the matter will continue to be monitored for further developments that would make such loss contingency both probable and estimable. Once the loss contingency related to a litigation or regulatory matter is deemed to be both probable and estimable, the Company will establish an accrued liability with respect to such loss contingency and record a corresponding amount of litigation-related expense. The Company continues to monitor the matter for further developments that could affect the amount of the accrued liability that has been previously established. Excluding expenses of external legal service providers, litigation-related fees of $14.3 million and $14.0 million was recognized for the years ended December 31, 2012 and December 31, 2011, respectively.

Lease Agreements

The Company leases office space under operating lease agreements. On May 1, 2012, the Company renewed its lease to expire on October 31, 2014. The lease contains a provision for a 5% increase of the base rent annually on the anniversary of the rent commencement date.

Future minimum payments under operating leases for years subsequent to December 31, 2012 are as follows:

Year Ended December 31,
2013	$	547,051
2014		477,183
	$	1,024,234

Rent expense under these leases was approximately $528,000, 546,000 and $545,000 for the years ended December 31, 2012, 2011 and 2010, respectively. Rent expense is recorded on a straight-line basis over the term of the lease. The difference between actual rent payments and straight-line rent expense is recorded as deferred rent. Deferred rent in the amount of $102,000 and $110,000 at December 31, 2012 and 2011, respectively, is included in other liabilities in the accompanying consolidated balance sheets.

Employment Agreements

In connection with our initial public offering, we entered into employment agreements with certain of our executive officers. The agreement for our chief executive officer provides for substantial payments in the event that the executive terminates his employment with us due to a material change in the geographic location where such officer performs his duties or upon a material diminution of his base salary or responsibilities, with or without cause. For our chief executive officer, payments are equal to three times the sum of base salary and the average of the three years’ annual cash bonus, unless the triggering event occurs during the first three years of his employment agreement, in which case the payments are equal to six times base salary. For our chief executive officer, the agreement provides for bonus incentives based on pre-tax income thresholds.

On April 26, 2012, the Company entered into a Separation Agreement and General Release of Claims (the “Separation Agreement”) with its chief operating officer, Jonathan Neuman. As part of the Separation Agreement, Mr. Neuman resigned as a member of the Company’s board of directors and as an employee of Company. Pursuant to the Separation Agreement, the Company paid Mr. Neuman a separation payment of $1.4 million. The Separation Agreement does not include a covenant by Mr. Neuman to refrain from competing with Imperial, but does contain customary non-disparagement and non-solicitation provisions. The Separation Agreement provides releases by each party and also obligates the Company to continue to indemnify Mr. Neuman for his legal expenses substantially in the same manner contemplated by his employment agreement with the Company.

On February 15, 2012, the Company entered into a retention arrangement with its Chief Financial Officer and Chief Credit Officer, Richard O’Connell, Jr. The arrangement provides that, in the event Mr. O’Connell’s employment is terminated without cause or Mr. O’Connell terminates his employment with the Company for good reason, in each case, prior to December 31, 2013, Mr. O’Connell will be entitled to 24 months’ base salary in addition to any accrued benefits. Additionally, unless Mr. O’Connell’s employment is terminated for cause, Mr. O’Connell will be entitled to a minimum bonus of $250,000 for each of 2012 and 2013, subject to the Company’s Board of Directors’ right to terminate the bonus payment in respect of 2013 prior to January 1, 2013. Except for the provisions relating to severance and other termination benefits, the terms of Mr. O’Connell’s Employment and Severance Agreement entered into with the Company as of November 4, 2010 remain in effect during the term of the retention arrangement and the provisions of the employment agreement relating to severance and other termination benefits will again be in effect following any termination of the retention arrangement if Mr. O’Connell is then employed by the Company.

During the first quarter of 2012, the Company also entered into severance and retention award agreements with certain of its executive officers (other than the CEO and CFO). The agreements generally provide for a minimum guaranteed bonus in each of 2012 and 2013 as well as severance payments equal to two years base salary in the event of termination by the Company without Cause (as defined in the respective agreement) provided the executive executes a general release of claims against the Company.

We do not have any general policies regarding the use of employment agreements, but may, from time to time, enter into such a written agreement to reflect the terms and conditions of employment of a particular named executive officer, whether at the time of hire or thereafter.

Subrogation Rights, net

Every credit facility entered into by subsidiaries of the Company between December 2007 and December 2010 to finance the premium finance lending business required lender protection insurance for each loan originated under such credit facility. Generally, when the Company exercises its right to foreclose on collateral, the Company’s lender protection insurer has the right to direct control or take beneficial ownership of the life insurance policy, subject to the terms and conditions of the lender protection insurance policy, including notice and timing requirements. Otherwise, the lender protection insurer maintains its salvage collection and subrogation rights. The lender protection insurer’s salvage collection and subrogation rights generally provide a remedy by which the insurer can seek to recover the amount of the lender protection claim paid plus premiums paid by it, expenses and interest thereon.

In those instances where the Company has foreclosed on the collateral, the lender protection insurer has maintained its salvage collection and subrogation rights and has been covering the cost of the ongoing premiums needed to maintain certain of these life insurance policies. However, the lender protection insurer may elect at any time to discontinue the payment of premiums which would result in lapse of the policies if the Company does not otherwise pay the premiums. The Company views these policies as having uncertain value because the lender protection insurer controls what happens to the policy from a payment of premium standpoint, and the amount of the lender protection insurer’s salvage collection and subrogation claim rights on any individual life insurance policy could equal the cash flow received by the Company with respect to any such policy. For these reasons, , the Company does not rely on these policies for revenue generation, and these policies are considered contingent assets and are not included in the amount of life settlements on the accompanying consolidated balance sheet.

The Company accounts for the maturities of life settlements with subrogation rights net of subrogation expenses as contingent gains in accordance with ASC 450, Contingencies and recognizes the revenue from the maturities of these policies when all contingencies are resolved.

Class Action Litigation, Derivative Demands and the Insurance Coverage Declaratory Relief Complaint

The Class Action Litigation

Initially on September 29, 2011, the Company, and certain of its officers and directors were named as defendants in a putative securities class action filed in the Circuit Court of the 15th Judicial Circuit in and for Palm Beach County, Florida, entitled Martin J. Fuller v. Imperial Holdings, Inc. et al. Also named as defendants were the underwriters of the Company’s initial public offering. That complaint asserted claims under Sections 11, 12 and 15 of the Securities Act of 1933, as amended, alleging that the Company should have but failed to disclose in the registration statement for its initial public offering purported wrongful conduct relating to its life finance business which gave rise to the USAO Investigation. On October 21, 2011, an amended complaint was filed that asserts claims under Sections 11, 12 and 15 of the Securities Act of 1933, based on similar allegations. On October 25, 2011, defendants removed the case to the United States District Court for the Southern District of Florida.

On October 31, 2011, another putative class action case was filed in the Circuit Court of the 15th Judicial Circuit in and for Palm Beach County, Florida, entitled City of Roseville Employees Retirement System v. Imperial Holdings, et al, naming the same defendants and also bringing claims under Sections 11, 12 and 15 of the Securities Act based on similar allegations. On November 28, 2011, defendants removed the case to the United States District Court for the Southern District of Florida. The plaintiffs in the Fuller and City of Roseville cases moved to remand their cases back to state court. Those motions were fully briefed and argued.

On November 18, 2011, a putative class action case was filed in the United States District Court for the Southern District of Florida, entitled Sauer v. Imperial Holdings, Inc., et al, naming the same defendants and bringing claims under Sections 11 and 15 of the Securities Act of 1933 based on similar allegations.

On December 14, 2011, another putative class action case filed in United States District Court for the Southern District of Florida, entitled Pondick v. Imperial Holdings, Inc., et al., naming the same defendants and bringing claims under Sections 11, 12, and 15 of the Securities Act of 1933 based on similar allegations.

On February 24, 2012, the four putative class actions were consolidated and designated: Fuller v. Imperial Holdings et al. in the United States District Court for the Southern District of Florida, and lead plaintiffs were appointed.

In addition, the underwriters of the Company’s initial public offering have asserted that the Company is required by its Underwriting Agreement to indemnify the underwriters’ expenses and potential liabilities in connection with the litigation.

The Insurance Coverage Declaratory Relief Complaint

On June 13, 2012, Catlin Insurance Company (UK) Ltd. (“Catlin”) filed a declaratory relief action against the Company in the United States District Court for the Southern District of Florida. The complaint seeks a determination that there is no coverage under Catlin’s primary Directors, Officers and Company Liability Policy (the “Policy”) issued to the Company for the period February 3, 2012 to February 3, 2012, based on a prior and pending litigation exclusion (the “Exclusion”). Catlin also seeks a determination that it is entitled to reimbursement of the approximately $0.8 million in defense costs and fees advanced to the Company in the first quarter of 2012 under the Policy if it is determined that the Exclusion precludes coverage. As of the filing of this Annual Report on Form 10-K, the Company has not yet been served with the complaint.

Derivative Damands

On November 16, 2011, the Company’s Board of Directors received a shareholder derivative demand from Harry Rothenberg (the “Rothenberg Demand”), which was referred to the special committee for a thorough investigation of the issues, occurrences and facts relating to, connected to, and arising from the USAO Investigation referenced in the Rothenberg Demand. On May 8, 2012, the Company’s Board of Directors received a derivative demand made by another shareholder, Robert Andrzejczyk (the “Andrzejczyk Demand”). The Andrzejczyk Demand, like the Rothenberg Demand was referred to the special committee, which determined that it did not contain any allegations that differed materially from those alleged in the Rothenberg Demand. On July 20, 2012, the Company (as nominal defendant) and certain of the Company’s officers, directors, and a former director were named as defendants in a shareholder derivative action filed in the Circuit Court of the 15^th Judicial Circuit in and for Palm Beach County, Florida, entitled Robert Andrzejczyk v. Imperial Holdings, Inc. et al. The complaint alleges, among other things, that the Special Committee’s refusal of the Andrzejczyk Demand was improper.

The Proposed Settlement

On December 18, 2012, attorneys for the Company signed a Term Sheet for Global Settlement Regarding Imperial Holdings, Inc. Matters (the “Term Sheet”) setting forth the terms upon which each of the parties to the matters described in “Class Action Litigation, Derivative Demands and the Insurance Coverage Declaratory Relief Complaint” would be willing to settle the class action litigation and derivative actions as well as the declaratory relief action filed by Catlin, respectively. In addition to the Company’s attorneys, the Term Sheet was signed by attorneys representing the plaintiffs in the class action lawsuits and derivative actions instituted against the Company, as well attorneys for the Company’s director and officer liability insurance carriers (“D&O Carriers”), certain individual defendants named in the class actions and the underwriters in the Company’s initial public offering.

While non-binding and subject to certain contingencies, the Term Sheet provides that each of the parties will endeavor to enter into definitive settlement agreements in respect of the class action litigation, derivative action and insurance coverage declaratory relief complaint. Although definitive settlement agreements have not been executed as of the filing of this Annual Report on Form 10-K, the Company does expect to continue to work in good faith with the other parties to the Term Sheet to execute settlement agreements as soon as is practicable.

The terms of the class action settlement include a cash payment of $12.0 million, of which $11.0 million is to be contributed by the Company’s primary and excess D&O Carriers and the issuance of two million warrants for shares of the Company’s stock with an estimated value of $3.1 million at the date of the signing of the Term Sheet. The value of the warrants will be re-asses at issuance. The warrants will have a five-year term with an exercise price of $10.75 and will be issued when the settlement proceeds are distributed to the claimants. In addition, the underwriters in Company’s initial public offering are to waive their rights to indemnity and contribution by the Company. The Company established a reserve related to the proposed settlement of $15.1 million, which is included in other liabilities and a receivable for insurance recoverable from the Company’s D&O Carrier of $11.0 million, which is included in prepaid and other assets. The $4.1 million net effect of the proposed settlement is included in legal fees in the statement of operations for the year ended December 31, 2012.

The derivative actions would be settled for implementation of certain compliance reforms. The Term Sheet also contemplates payment by the Company’s primary D&O carrier of $1.5 million for legal fees in respect of the derivative actions and the contribution of $500,000 in the Company’s stock.

In addition, the Term Sheet contemplates that the Company will contribute $500,000 to a trust to cover certain claims under its director and officer liability insurance policies.

The Company established a reserve to the proposed derivative settlement and insurance trust of $2.5 million, which is included in other liabilities and a receivable for insurance recoverable from the Company’s D&O Carrier of $1.5 million, which is included in prepaid and other assets. The net effect of the settlement of $1.0 million is included in legal fees in the settlement of operations for the year ended December 31, 2012.

The proposed settlement also requires the Company to advance legal fees to and indemnify certain individuals covered under the policies. The obligation to advance and indemnify on behalf of these individuals, while currently unquantifiable, may be substantial and could have a material adverse effect on the Company’s financial position and results of operations.

SEC Investigation

On February 17, 2012, the Company received a subpoena issued by the staff of the SEC seeking documents from 2007 through the present, generally related to the Company’s premium finance business and corresponding financial reporting. The SEC is investigating whether any violations of federal securities laws have occurred and the Company has been cooperating with the SEC regarding this matter. The Company is unable to predict what action, if any, might be taken in the future by the SEC or its staff as a result of the matters that are the subject of the subpoena or what impact, if any, the cost of responding to the subpoena might have on the Company’s financial position, results of operations, or cash flows. The Company has not established any provision for losses in respect of this matter.

Litigation

We are party to various other legal proceedings that arise in the ordinary course of business. We believe that the resolution of these other proceedings will not, based on information currently available to us, have a material adverse effect on our financial position or results of operations. See Note 22 – Subsequent Events.

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Analysis of Credit Ratings (Detail) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012		Dec. 31, 2011
Uninsured Loans
Financing Receivable, Recorded Investment [Line Items]
Unpaid Principal Balance	$ 4,754		$ 13,648
Percent	100.00%		100.00%
Insured Loans
Financing Receivable, Recorded Investment [Line Items]
Unpaid Principal Balance	501	[1]	17,616	[1]
Percent	100.00%	[1]	100.00%	[1]
AAA | Uninsured Loans
Financing Receivable, Recorded Investment [Line Items]
Percent	0.00%		0.00%
AAA | Insured Loans
Financing Receivable, Recorded Investment [Line Items]
Percent	0.00%	[1]	0.00%	[1]
AA+ | Uninsured Loans
Financing Receivable, Recorded Investment [Line Items]
Unpaid Principal Balance			694
Percent	0.00%		5.08%
AA+ | Insured Loans
Financing Receivable, Recorded Investment [Line Items]
Unpaid Principal Balance			222	[1]
Percent	0.00%	[1]	1.26%	[1]
AA | Uninsured Loans
Financing Receivable, Recorded Investment [Line Items]
Percent	0.00%		0.00%
AA | Insured Loans
Financing Receivable, Recorded Investment [Line Items]
Percent	0.00%	[1]	0.00%	[1]
AA- | Uninsured Loans
Financing Receivable, Recorded Investment [Line Items]
Unpaid Principal Balance	2,072		6,558
Percent	43.58%		48.05%
AA- | Insured Loans
Financing Receivable, Recorded Investment [Line Items]
Unpaid Principal Balance	408	[1]	9,085	[1]
Percent	81.44%	[1]	51.57%	[1]
A+ | Uninsured Loans
Financing Receivable, Recorded Investment [Line Items]
Unpaid Principal Balance	2,548		3,060
Percent	53.97%		22.42%
A+ | Insured Loans
Financing Receivable, Recorded Investment [Line Items]
Unpaid Principal Balance	93	[1]	1,287	[1]
Percent	18.56%	[1]	7.31%	[1]
A1 | Uninsured Loans
Financing Receivable, Recorded Investment [Line Items]
Percent	0.00%		0.00%
A1 | Insured Loans
Financing Receivable, Recorded Investment [Line Items]
Percent	0.00%	[1]	0.00%	[1]
A | Uninsured Loans
Financing Receivable, Recorded Investment [Line Items]
Unpaid Principal Balance			3,336
Percent	0.00%		24.44%
A | Insured Loans
Financing Receivable, Recorded Investment [Line Items]
Unpaid Principal Balance			7,022	[1]
Percent	0.00%	[1]	39.86%	[1]
BB- | Uninsured Loans
Financing Receivable, Recorded Investment [Line Items]
Unpaid Principal Balance	$ 134
Percent	2.45%		0.00%
BB- | Insured Loans
Financing Receivable, Recorded Investment [Line Items]
Percent	0.00%	[1]	0.00%	[1]

[1] All of the Company's insured loans have lender protection coverage with Lexington Insurance Company. As of December 31, 2012, Lexington had a financial strength rating of "A" with a stable outlook by Standard & Poors (S&P).

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Consolidated Statements Of Cash Flows (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Cash flows from operating activities
Net loss	$ (44,634)	$ (39,198)	$ (15,697)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	385	612	722
Amortization of premiums and accretion of discounts on available for sale securities sale securities	962	1,198
Provision for doubtful accounts		661	85
Provision for losses on loans receivable	515	7,589	4,476
Stock-based compensation	309	1,873
Loss on loan payoffs and settlements, net	125	3,837	4,981
Origination fee income	(500)	(6,480)	(19,938)
Unrealized change in fair value of life settlements	5,660	(570)	(10,156)
Unrealized change in fair value of structured settlements	(1,823)	(5,302)	(2,477)
Gain on forgiveness of debt		(5,023)	(7,599)
Interest income on loans	(2,014)	(8,303)	(18,660)
Amortization of deferred costs	1,867	6,076	24,465
Accretion of discount on debenture payable		233
Change in equity investments			1,284
Gain on sale and prepayment of investment securities available for sale	(53)	(21)
Realized gain on life settlements, net	(151)	(5)	(1,951)
Change in assets and liabilities:
Purchase of certificate of deposit-restricted	895		(200)
Deposits - other	(2,094)	(68)	54
Agency fees receivable		479	1,519
Other receivable	(1,171)	(964)	(71)
Structured settlement receivables	12,827	(5,539)	523
Prepaid expenses and other assets	(10,833)	(1,996)	(3,467)
Deferred Costs		2,755
Accounts payable and accrued expenses	(9,730)	12,625	1,017
Investment in affiliates	16,517	(3,634)	7,914
Interest receivable	343	(439)
Interest payable	(5,505)	(6,758)	3,429
Deferred income tax	(39)
Net cash used in operating activities	(38,142)	(46,362)	(27,796)
Cash flows from investing activities
Purchase of fixed assets, net of disposals	(21)	(311)	(261)
Purchase of intangible assets			(160)
Investment in life settlement fund			(727)
Purchase of investment securities available for sale	(35,492)	(127,974)
Proceeds from sale and prepayments of investment securities available for sale	79,781	69,490
Premiums paid on investments in life settlements	(27,804)	(16,321)	(745)
Purchases of investments in life settlements	(130)	(50,480)	(1,324)
Proceeds from sale of investments in life settlements	5,626
Proceeds from sale of investments, net			2,070
Proceeds from loan payoffs and lender protection insurance claims received in advance	26,676	51,778	128,847
Originations of loans receivable		(18,724)	(24,744)
Net cash provided by (used in) investing activities	48,636	(92,542)	102,956
Cash flows from financing activities
Proceeds from sale of preferred units			15,000
Payments of cash pledged as restricted deposits			(455)
Proceeds from initial public offering, net of offering expenses		174,233
Payment of financing fees			(6,010)
Repayment of borrowings under credit facilities	(19,277)	(36,176)	(40,827)
Restricted Cash	(471)
Repayment of borrowings from affiliates			(93,216)
Borrowings under credit facilities		234	24,247
Borrowings from affiliates		2,644	24,434
Net cash (used in) provided by financing activities	(19,748)	140,935	(76,827)
Net (decrease) increase in cash and cash equivalents	(9,254)	2,031	(1,667)
Cash and cash equivalents, at beginning of the year	16,255	14,224	15,891
Cash and cash equivalents, at end of the year	7,001	16,255	14,224
Supplemental disclosures of cash flow information:
Cash paid for interest during the period	6,746	14,992	26,743
Supplemental disclosures of non-cash financing activities:
Subscription to purchase Member units - Series E preferred			5,000
Repurchase of common and preferred units			10,961
Repayment of borrowings paid directly by our lender protection insurance carrier			63,968
Conversion of debt to common stock		35,158
Supplemental disclosures of non-cash investing activities:
Investment in life settlements acquired in foreclosure	$ 5,724	$ 6,409	$ 11,901

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Consolidated Balance Sheets (Parenthetical)	Dec. 31, 2012	Dec. 31, 2011
Common stock, shares authorized	80,000,000	80,000,000
Common stock, shares issued	21,206,121	21,202,614
Common stock, shares outstanding	21,206,121	21,202,614

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Origination Fees

12 Months Ended

Dec. 31, 2012

Origination Fees

NOTE 10—ORIGINATION FEES

A summary of the balances of origination fees that are included in loans receivable in the consolidated balance sheet as of December 31 is as follows (in thousands):

	2012			2011
Loan origination fees gross	$	1,334		$	10,844
Un-accreted origination fees		(190	)		(2,666	)
Amortized loan originations costs		13			129
	$	1,157		$	8,307

Loan origination fees are fees payable to the Company on the date of loan maturity or repayment. Loan origination costs are deferred costs that are directly related to the creation of the loan receivable.

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Subsequent Events - Additional Information (Detail) (USD $)					1 Months Ended		1 Months Ended
	Dec. 31, 2012 Contract	Dec. 31, 2011 Contract	Dec. 31, 2012 Bridge Facility Greenwood Asset Portfolio, LLC Contract	Jan. 22, 2013 Subsequent Event 21st Services	Mar. 27, 2013 Subsequent Event Bridge Facility Greenwood Asset Portfolio, LLC	Mar. 27, 2013 Subsequent Event Bridge Facility Greenwood Asset Portfolio, LLC For Nine Months	Mar. 27, 2013 Subsequent Event Bridge Facility Greenwood Asset Portfolio, LLC After Nine Months
Subsequent Event [Line Items]
Senior secured bridge notes					$ 45,000,000
Bridge loan, interest rate					Interest under the Bridge Facility accrues at 12% per annum for the first nine months from the issue date, and increases by 600 basis points thereafter to 18% per annum.
Interest under the facility						12.00%	18.00%
Interest rate increase in basis points							600
Percentage of net proceeds from credit facility that may be used for general corporate purposes					25.00%
Percentage of proceed from debt issuance					92.00%
Prepayment rate					109.00%
Asset coverage ratio					2
Bridge Facility covenant description					The Bridge Facility requires the maintenance of a 2 times asset coverage ratio and six months of cash on hand to pay interest on the Bridge Facility and premiums on life insurance policies owned by Greenwood.
Life settlements estimated fair value	$ 1,073,156,000	$ 935,466,000	$ 104,600,000
Number of life settlement contracts	214	190	191
Lengthen average reported life expectancy				19.00%

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Commitments and Contingencies - Additional Information (Detail) (USD $)	1 Months Ended			3 Months Ended	12 Months Ended
	Apr. 26, 2012	May 01, 2012	Feb. 24, 2012 LegalMatter	Mar. 31, 2012	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010	Feb. 15, 2012	Feb. 11, 2011
Commitments and Contingencies [Line Items]
Amount of litigation fees					$ 26,053,000	$ 12,097,000	$ 3,444,000
Percentage of annual increase of base rent		5.00%
Lease expiration date		Oct. 31, 2014
Rent expense under operating lease					528,000	546,000	545,000
Other liabilities					20,796,000	4,279,000
Separation payment	1,400,000
Entitled base salary, months								24 months
Putative class actions			4
Reimbursement of defense costs and fees				800,000
Exercise price of warrants									14.51
Deferred Rent Liability
Commitments and Contingencies [Line Items]
Other liabilities					102,000	110,000
Through 2013 | Minimum
Commitments and Contingencies [Line Items]
Expected bonus payment								250,000
Through 2014 | Minimum
Commitments and Contingencies [Line Items]
Expected bonus payment								250,000
Pending Litigation
Commitments and Contingencies [Line Items]
Amount of litigation fees					14,300,000	14,000,000
Class Action
Commitments and Contingencies [Line Items]
Amount of litigation fees					4,100,000
Payments for class action settlements					12,000,000
Insurance recoverable from the Company's D&O Carrier					11,000,000
Issuance of warrants shares					2,000,000
Issuance of warrants for common stock					3,100,000
Common stock warrants term					5 years
Exercise price of warrants					10.75
Proposed settlement reserved amount					15,100,000
Insurance settlement receivable					11,000,000
Derivative Actions
Commitments and Contingencies [Line Items]
Amount of litigation fees					1,000,000
Insurance recoverable from the Company's D&O Carrier					1,500,000
Proposed settlement reserved amount					2,500,000
Insurance settlement receivable					1,500,000
Derivative Actions | Directors and Officers Liability Insurance
Commitments and Contingencies [Line Items]
Amount of litigation fees					500,000
Derivative Actions | Common Stock
Commitments and Contingencies [Line Items]
Amount of litigation fees					$ 500,000

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Segment Results and Reconciliation to Consolidated Net Income (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended								12 Months Ended
	Dec. 31, 2012	Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2011	Sep. 30, 2011	Jun. 30, 2011	Mar. 31, 2011	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Agency fee income										$ 6,470	$ 10,149
Interest and dividends on investment securities available for sale									391	640
Interest income									2,014	8,303	18,660
Origination income									500	6,480	19,938
Gain on forgiveness of debt										5,023	7,599
Unrealized change in fair value of life settlements									(5,660)	570	10,156
Realized gain on life settlements, net									151	5	1,951
Change in equity investments											(1,284)
Unrealized change in fair value of structured settlements									1,823	5,302	2,477
Servicing fee income									1,183	1,814	413
Gain on maturities of life settlements with subrogation rights, net									6,090	3,188
Other income									1,082	602	242
Total income	7,106	(14,171)	16,183	9,966	(8,096)	(1,763)	29,211	24,862	19,083	44,214	76,896
Interest expense									1,255	8,524	28,155
Provision for losses on loan receivables									515	7,589	4,476
Loss on loans payoffs and settlements, net									125	3,837	4,981
Amortization of deferred costs									1,867	6,076	24,465
Department of Justice										8,000
Legal fees									26,053	12,097	3,444
Professional fees									6,934	5,684	3,966
Insurance									2,330	756	358
Other selling, general and administrative expenses									3,567	5,812	5,301
Segment operating loss	(3,656)	(31,480)	(625)	(8,912)	(40,034)	(20,377)	13,788	7,425
Loss before income taxes									(44,673)	(39,198)	(15,697)
Benefit for income taxes									39
Net loss	(3,663)	(31,475)	(625)	(8,871)	(38,682)	(12,550)	12,605	(571)	(44,634)	(39,198)	(15,697)
Life Finance
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Agency fee income										6,470	10,146
Interest income									1,685	7,751	18,326
Origination income									500	6,480	19,938
Gain on forgiveness of debt										5,023	7,599
Unrealized change in fair value of life settlements									(5,660)	570	10,156
Realized gain on life settlements, net									151	5	1,951
Change in equity investments											(1,284)
Servicing fee income									1,183	1,814	403
Gain on maturities of life settlements with subrogation rights, net									6,090	3,188
Other income									75	198	131
Total income									4,024	31,499	67,366
Structured settlements
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Interest income									329	553	334
Realized gain on life settlements, net									11,509	5,817	6,595
Unrealized change in fair value of structured settlements									1,822	5,302	2,477
Servicing fee income											11
Other income									334	261	113
Total income									13,994	11,933	9,530
Direct Segment Assets | Life Finance
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Interest expense									1,250	8,229	24,388
Provision for losses on loan receivables									515	7,589	4,476
Loss on loans payoffs and settlements, net									125	3,837	4,981
Amortization of deferred costs									1,868	6,076	24,465
Personnel costs									5,746	6,840	3,185
Marketing costs										16	3
Legal fees									3,676	2,658	1,537
Professional fees									1,777	1,831	1,551
Insurance									1,115	237	110
Other selling, general and administrative expenses									1,763	1,636	3,938
Segment Reporting Information, Operating Expense, Total									17,835	38,949	68,634
Segment operating loss									(13,811)	(7,450)	(1,268)
Direct Segment Assets | Structured settlements
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Personnel costs									9,634	9,170	4,821
Marketing costs									5,023	6,088	5,034
Legal fees									2,331	2,243	1,438
Professional fees									1,955	1,418	834
Insurance									1,108	320	153
Other selling, general and administrative expenses									1,496	2,712	786
Segment Reporting Information, Operating Expense, Total									21,547	21,951	13,066
Segment operating loss									(7,553)	(10,018)	(3,536)
Consolidated
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Segment operating loss									(21,364)	(17,468)	(4,804)
Benefit for income taxes									(39)
Unallocated Income
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Interest and dividends on investment securities available for sale									391	640
Other income									674	142
Unallocated Expenses
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Interest expense									4	297	3,767
Personnel costs									707	2,928	4,364
Department of Justice										8,000
Legal fees									20,047	7,196	469
Professional fees									3,202	2,730	1,581
Insurance									107	199	95
Other selling, general and administrative expenses									307	1,162	617
Segment Reporting Information, Operating Expense, Total									$ 24,374	$ 22,512	$ 10,893

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Document and Entity Information (USD $)	12 Months Ended
	Dec. 31, 2012	Mar. 22, 2013	Jun. 30, 2012
Document Information [Line Items]
Document Type	10-K
Amendment Flag	false
Document Period End Date	Dec. 31, 2012
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	FY
Trading Symbol	IFT
Entity Registrant Name	Imperial Holdings, Inc.
Entity Central Index Key	0001494448
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	No
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Filer Category	Non-accelerated Filer
Entity Common Stock, Shares Outstanding		21,206,121
Entity Public Float			$ 68,690,983

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Stock Based Compensation

12 Months Ended

Dec. 31, 2012

Stock Based Compensation

NOTE 11—STOCK-BASED COMPENSATION

In connection with the Company’s initial public offering, the Company established the Imperial Holdings 2011 Omnibus Incentive Plan (the “Omnibus Plan”). The purpose of the Omnibus Plan is to attract, retain and motivate participating employees and to attract and retain well-qualified individuals to serve as members of the board of directors, consultants and advisors through the use of incentives based upon the value of our common stock. Awards under the Omnibus Plan may consist of incentive awards, stock options, stock appreciation rights, performance shares, performance units, and shares of common stock, restricted stock, restricted stock units or other stock-based awards as determined by the compensation committee. The Omnibus Plan provides that an aggregate of 1,200,000 shares of common stock are reserved for issuance under the Omnibus Plan, subject to adjustment as provided in the Omnibus Plan. The Company recognized approximately $305,000 and $1.5 million in stock-based compensation expense relating to stock options it granted under the Omnibus Plan during the years ended December 31, 2012 and 2011, respectively. The Company incurred additional stock-based compensation expense of approximately $290,000 related to the conversion of two phantom stock agreements it had with two employees into 27,000 shares of common stock in connection with its corporate conversion in the first quarter of 2011 and approximately $4,000 and $34,000 in stock-based compensation relating to restricted stock granted to its board of directors during the years ended December 31, 2012 and 2011, respectively. Prior to our initial public offering, the Company had no equity compensation plan.

Options

As of December 31, 2012, options to purchase 487,414 shares of common stock were outstanding and unexercised under the Omnibus Plan at a weighted average exercise price of $10.75 per share. All of the outstanding options expire seven years after the date of grant and were granted with a strike price at $10.75 which was the offering price of our initial public offering or fair market value (closing price) of the stock on the date of grant and vest over three years from the date of issue.

The Company has used the Black-Scholes model to calculate fair values of options awarded. This model requires assumptions as to expected volatility, dividends, terms, and risk free rates. Assumptions used for the periods covered herein, are outlined in the table below:

	Year Ended December 31, 2011
Expected Volatility		54.18% – 54.23	%
Expected Dividend		0	%
Expected Term in Years		4.5
Risk Free Rate		2.16% – 2.29	%

The Company commenced its initial public offering of common stock in February 2011. Accordingly, there was no public market for the Company’s common stock prior to this date. Therefore, the Company identified comparable public entities and used the average volatility of those entities to reasonably estimate its expected volatility. The Company does not expect to pay dividends on its common stock for the foreseeable future. Expected term is the period of time over which the options granted are expected to remain outstanding and is based on the simplified method as outlined in the SEC Staff Accounting Bulletin 110. The Company will continue to estimate expected lives based on the simplified method until reliable historical data becomes available. The risk free rate is based on the U.S Treasury yield curve in effect at the time of grant for the appropriate life of each option.

The following table presents the activity of the Company’s outstanding stock options of common stock for the year ended December 31, 2012:

Common Stock Options	Number of Shares			Weighted Average  Price per Share		Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value
Options outstanding, December 31, 2011		627,419			—		—	$	—
Options granted		—		$	10.75		6.11	$	—
Options exercised		—			—		—		—
Options forfeited		(140,105	)		10.75		—		—
Options expired		—			—		—		—
Options outstanding, December 31, 2012		487,314		$	10.75		5.11	$	—
Exercisable at December 31, 2012		287,988			10.74		5.11	$	—
Unvested at December 31, 2012		199,326		$	10.75		5.11	$	—

As of December 31, 2012, all outstanding stock options had an exercise price above the fair market value of the common stock on that date.

The remaining unamortized amounts of approximately $336,000 and $21,000 will be expensed during 2013 and 2014, respectively.

Restricted Stock

3,507 shares of restricted stock granted to our directors under the Omnibus Plan subject to a one year vesting schedule commencing on the date of grant vested during the year ended December 31, 2012. The fair value of the unvested restricted stock was valued at $38,000 based on the closing price of the Company’s shares on the grant date.

The following table presents the activity of the Company’s unvested restricted common shares for the year ended December 31, 2012:

Common Unvested Shares	Number of Shares
Outstanding December 31, 2011		3,507
Granted		—
Vested		(3,507	)
Forfeited		—
Outstanding December 31, 2012		—

There were no restricted stock awards granted during the year ended December 31, 2012.

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Investments in Life settlement (Detail) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012 Contract	Dec. 31, 2011 Contract
Number of Life Settlement Contracts
0 - 1
1 - 2		1
2 - 3	1	2
3 - 4	4	4
4 - 5	7	3
Thereafter	202	180
Total	214	190
Fair Value
0 - 1
1 - 2		3,033
2 - 3	1,222	2,484
3 - 4	3,319	7,084
4 - 5	11,375	2,357
Thereafter	97,525	75,959
Total	113,441	90,917
Face Value
0 - 1
1 - 2		5,000
2 - 3	2,500	4,500
3 - 4	11,450	20,200
4 - 5	30,950	7,950
Thereafter	1,028,256	897,816
Total	$ 1,073,156	$ 935,466

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Segment Information - Additional Information (Detail)	12 Months Ended
	Dec. 31, 2012 Segment
Supplementary Insurance Information, by Segment [Line Items]
Number of operating segment	2

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Consolidated Statements Of Operations (USD $) In Thousands, except Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2012		Dec. 31, 2011		Dec. 31, 2010
Income
Agency fee income			$ 6,470		$ 10,149
Interest income	2,014		8,303		18,660
Interest and dividends on investment securities available for sale	391		640
Origination fee income	500		6,480		19,938
Realized gain on sale of structured settlements	11,509		5,817		6,595
Realized gain on life settlements, net	151		5		1,951
Gain on forgiveness of debt			5,023		7,599
Unrealized change in fair value of life settlements	(5,660)		570		10,156
Unrealized change in fair value of structured settlements	1,823		5,302		2,477
Change in equity investments					(1,284)
Servicing fee income	1,183		1,814		413
Gain on maturities of life settlements with subrogation rights, net	6,090		3,188
Other income	1,082		602		242
Total income	19,083		44,214		76,896
Expenses
Interest expense	1,255		8,524		28,155
Provision for losses on loans receivable	515		7,589		4,476
Loss on loan payoffs and settlements, net	125		3,837		4,981
Amortization of deferred costs	1,867		6,076		24,465
Personnel costs	16,087		18,933		12,370
Marketing costs	5,023		6,104		5,077
Department of Justice Settlement			8,000
Legal fees	26,053		12,097		3,444
Professional fees	6,934		5,684		3,966
Insurance	2,330		756		358
Other selling, general and administrative expenses	3,567		5,812		5,301
Total expenses	63,756		83,412		92,593
Loss before income taxes	(44,673)		(39,198)		(15,697)
Benefit for income taxes	(39)
Net loss	$ (44,634)		$ (39,198)		$ (15,697)
Loss per share:
Basic	$ (2.10)		$ (2.03)		$ (4.36)
Diluted	$ (2.10)	[1],[2]	$ (2.03)	[1],[2]	$ (4.36)	[1],[2]
Weighted average shares outstanding:
Basic	21,205,747		19,352,063		3,600,000
Diluted	21,205,747		19,352,063		3,600,000

[1] The computation of diluted EPS did not include 627,419 options, 4,240,521 warrants and 3,507 shares of restricted stock for the year ended December 31, 2011, as the effect of their inclusion would have been anti-dilutive.

[2] The computation of diluted EPS did not include 487,314 options and 4,240,521 warrants for the year ended December 31, 2012, as the effect of their inclusion would have been anti-dilutive.

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Deposits-Other

12 Months Ended

Dec. 31, 2012

Deposits-Other

NOTE 5—DEPOSITS—OTHER

The Company has provided three $100,000 deposits and a $125,000 deposit to various states as a requirement for applying for and obtaining life settlement licenses in those states. The deposits are held by the state or custodians of the state and bear interest at market rates. Interest is generally distributed to the Company on a quarterly basis. Interest income of approximately $3,500, $3,000 and $3,000 has been recognized on these deposits for the years ended December 31, 2012, 2011 and 2010, respectively. Amount deposited with various states was $425,000 for the years ended December 31, 2012 and 2011. 

The Company has purchased surety bonds in various amounts as a requirement for applying for and obtaining life settlement licenses in certain states. As of December 31, 2012, the Company has surety bonds in seven states which total $850,000 and expire in May 2013. The surety bonds were originally backed by a letter of credit from a national bank in the amount of $850,000, which was collateralized by certificates of deposit with the bank in the amount of $895,000, including accrued interest. As the letter of credit matured on May 8, 2012, the surety bond underwriter drew on the facility totaling $850,000. The certificates of deposit were not renewed and the amounts are currently being held with the underwriter as a deposit as collateral for the surety bonds. The Company expects to continue to maintain the deposit with the surety bond underwriter as collateral for the foreseeable future.

As of December 31, 2012 and 2011 the Company had an additional deposit of $250,000 in connection with its Cedar Lane credit facility. The Company also had approximately $1.3 million in deposits held with various credit facilities for potential financing opportunities at December 31, 2012 and approximately $78,000 and $86,000 in miscellaneous deposits recorded in deposits-other in the accompanying balance sheet at December 31, 2012 and 2011, respectively.

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Deferred Costs

12 Months Ended

Dec. 31, 2012

Deferred Costs

NOTE 4—DEFERRED COSTS

During 2010 and 2009, the Company paid lender protection insurance premiums which were capitalized and are being amortized over the life of the loans using the effective interest method. The balance of costs related to lender protection insurance premium included in deferred costs in the accompanying balance sheet at December 31, 2012 and 2011 was zero and approximately $1.1 million, respectively. The state surplus taxes on the lender protection insurance premiums are 3.6% to 4.0% of the premiums paid. These costs were also capitalized and amortized over the life of the loans using the effective interest method. The balance of costs related to state surplus taxes included in deferred costs in the accompanying balance sheets at December 31, 2012 and 2011 was zero and approximately $498,000, respectively.

During 2010 and 2009, the Company paid loan closing fees related to the closing of certain financing agreements. These costs were being capitalized and amortized over the life of the credit facilities using the effective interest method. The balance of costs related to securing credit facilities included in deferred costs in the accompanying balance sheet at December 31, 2012 and 2011 was approximately $7,000 and $301,000, respectively.

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Segment Information

12 Months Ended

Dec. 31, 2012

Segment Information

NOTE 16—SEGMENT INFORMATION

The Company operates in two segments: life finance and structured settlements. The life finance segment provides financing in the form of loans to trusts and individuals for the payment of premiums of life insurance policies until the end of the third quarter of 2011. Beginning in 2011, in this segment, the Company also acquired life insurance policies through policy purchases in the secondary and tertiary markets. The structured settlements segment purchases structured settlements from individuals.

Recipients of structured settlements are permitted to sell their deferred payment streams to a structured settlement purchaser pursuant to state statutes that require certain disclosures, notice to the obligors and state court approval. Through such sales, the Company purchases a certain number of fixed, scheduled future settlement payments on a discounted basis in exchange for a single lump sum payment.

The performance of the segments is evaluated on the segment level by members of the Company’s senior management team. Cash and income taxes generally are managed centrally. Performance of the segments is based on revenue and cost control.

Segment results and reconciliation to consolidated net income were as follows (in thousands):

	Year Ended December 31,
	2012			2011			2010
Life finance
Income
Agency fee income	$	—		$	6,470		$	10,146
Interest income		1,685			7,751			18,326
Origination income		500			6,480			19,938
Gain on forgiveness of debt		—			5,023			7,599
Unrealized change in fair value of life settlements		(5,660	)		570			10,156
Realized gain on life settlements, net		151			5			1,951
Change in equity investments		—			—			(1,284	)
Servicing fee income		1,183			1,814			403
Gain on maturities of life settlements with subrogation rights, net		6,090			3,188			—
Other		75			198			131
		4,024			31,499			67,366
Direct segment expenses
Interest expense		1,250			8,229			24,388
Provision for losses on loan receivables		515			7,589			4,476
Loss on loans payoffs and settlements, net		125			3,837			4,981
Amortization of deferred costs		1,868			6,076			24,465
Personnel costs		5,746			6,840			3,185
Marketing costs		—			16			3
Legal fees		3,676			2,658			1,537
Professional fees		1,777			1,831			1,551
Insurance		1,115			237			110
Other selling, general and administrative expenses		1,763			1,636			3,938
		17,835			38,949			68,634
Segment operating loss	$	(13,811	)	$	(7,450	)	$	(1,268	)
Structured settlements
Income
Realized gain on sale of structured settlements	$	11,509		$	5,817		$	6,595
Interest income		329			553			334
Unrealized change in fair value of structured settlements		1,822			5,302			2,477
Servicing fee income		—			—			11
Other income		334			261			113
		13,994			11,933			9,530
Direct segment expenses
Personnel costs		9,634			9,170			4,821
Marketing costs		5,023			6,088			5,034
Legal fees		2,331			2,243			1,438
Professional fees		1,955			1,418			834
Insurance		1,108			320			153
Other selling, general and administrative expenses		1,496			2,712			786
		21,547			21,951			13,066
Segment operating loss	$	(7,553	)	$	(10,018	)	$	(3,536	)
Consolidated
Segment operating loss		(21,364	)		(17,468	)		(4,804	)
Unallocated income
Interest and dividends on investment securities available for sale		391			640			—
Other income		674			142			—
Unallocated expenses
Interest expense		4			297			3,767
Personnel costs		707			2,928			4,364
Department of Justice		—			8,000			—
Legal fees		20,047			7,196			469
Professional fees		3,202			2,730			1,581
Insurance		107			199			95
Other selling, general and administrative expenses		307			1,162			617
		24,374			22,512			10,893
Loss before income taxes		(44,673	)		(39,198	)		(15,697	)
Benefit for income taxes		(39	)		—			—
Net loss	$	(44,634	)	$	(39,198	)	$	(15,697	)

Segment assets and reconciliation to consolidated total assets were as follows (in thousands):

	December 31,		December 31,
	2012		2011
Direct segment assets
Life finance	$	123,581	$	138,520
Structured settlements		6,862		17,155
		130,443		155,675
Other unallocated assets		29,899		66,924
	$	160,342	$	222,599

Amounts are attributed to the segment that holds the assets. There are no intercompany sales and all intercompany account balances are eliminated in segment reporting.

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Structured Settlements

12 Months Ended

Dec. 31, 2012

Structured Settlements

NOTE 12—STRUCTURED SETTLEMENTS

The balances of the Company’s structured settlements are as follows (in thousands):

	December 31,		December 31,
	2012		2011
Structured settlements - at cost	$	1,574	$	1,553
Structured settlements - at fair value		1,680		12,376
Structured settlements receivable, net	$	3,254	$	13,929

All structured settlements that were acquired subsequent to July 1, 2010 were marked to fair value. Structured settlements that were acquired prior to July 1, 2010 were recorded at cost. During 2011, the Company reacquired certain structured settlements that were originally acquired prior to July 1, 2010 and the Company continued to carry those structured settlements at cost upon reacquisition.

Certain financing arrangements for the Company’s structured settlements are described below:

Life-Contingent Structured Settlement Facility

On the same day the Omnibus Termination Agreement was executed, December 30, 2011, Washington Square Financial, LLC (“WSF”) entered into a forward purchase and sale agreement (“PSA”) to sell up to $40.0 million of life contingent structured settlement receivables to Compass Settlements LLC (“Compass”), an entity managed by Beacon Annuity Fund, LP (“Beacon”). Subject to predetermined eligibility criteria and on-going funding conditions, Compass committed, in increments of $5.0 million, up to $40.0 million to purchase life-contingent structured settlement receivables from WSF. The PSA obligates WSF to sell the life-contingent structured settlement receivables it originates to Compass on an exclusive basis for twenty-four months, subject to Compass maintaining certain purchase commitment levels. Additionally, the Company has agreed to guaranty WSF’s obligation to repurchase any ineligible receivables sold under the PSA and certain other related obligations.

For the year ended December 31, 2012, the Company recognized income from the sale of 380 structured settlement transactions under this facility generating income of approximately $2.6 million recorded as gain on sale of structured settlements in the attached financial statements. Of the 380 structured transactions, 107 were previously recorded at the market rate generating income of approximately $1.1 million and the change in value was recorded as an unrealized change in fair value on the financial statements presented for the year ended December 31, 2011 and 73 were previously recorded at the market rate generating income of approximately $712,000 with the change in value recorded as an unrealized change in fair value on the financial statements presented for the year ended December 31, 2012.

The Company also realized income of approximately $72,000 that was recorded as an unrealized change in fair value during the year ended December 31, 2012 on structured settlements that are intended for sale to Compass.

8.39% Fixed Rate Asset Backed Variable Funding Notes

Imperial Settlements Financing 2010, LLC (“ISF 2010”) was formed as an affiliate of the Company to serve as a special purpose financing entity to allow the Company to sell structured settlements and assignable annuities, which are referred to as receivables, to ISF 2010 and ISF 2010 to borrow against certain of its receivables to provide ISF 2010 liquidity. ISF 2010 is a non-consolidated special purpose financing entity. On September 24, 2010, ISF 2010 entered into an arrangement to obtain up to $50 million in financing. Under this arrangement, a subsidiary of Partner Re, Ltd. (the “noteholder”) became the initial holder of ISF 2010’s 8.39% Fixed Rate Asset Backed Variable Funding Note issued under a master trust indenture and related indenture supplement (collectively, the “Indenture”) pursuant to which the noteholder has committed to advance ISF 2010 up to $50 million upon the terms and conditions set forth in the Indenture. The note is secured by the receivables that ISF 2010 acquires from the Company from time to time. The note is due and payable on or before January 1, 2057, but principal and interest must be repaid pursuant to a schedule of fixed payments from the receivables that secure the notes. The arrangement generally has a concentration limit of 15% for the providers of the receivables that secure the notes. Wilmington Trust is the collateral trustee. As of December 31, 2012 and December 31, 2011, the balance of the notes outstanding on the special purpose financing entity’s books was $43.2 million and $20.6 million, respectively.

Upon the occurrence of certain events of default under the Indenture, all amounts due under the note are automatically accelerated. The Company’s maximum exposure related to ISF 2010 is limited to 5% of the dollar value of the ISF 2010 transactions, which is held back by ISF 2010 at the time of sale, and is designed to absorb potential losses in collecting the receivables. The obligations of ISF 2010 are non-recourse to the Company. The total funds held back by ISF 2010 as of December 30, 2012 and December 31, 2011 were approximately $2.2 million and $1.0 million and are included in investment in affiliate in the accompanying consolidated balance sheet.

During the years ended December 31, 2012 and 2011, the Company sold 565 and 485 term certain structured settlements, respectively, 181 and 12 of which were originated in 2011 and 2010, respectively, generating income of approximately of $3.2 million and $129,000, respectively, which was recorded as an unrealized change in fair value of structured settlements in 2011 and 2010, respectively. The Company originated and sold 384 and 307 guaranteed structured settlement transactions under this facility generating income of approximately $4.9 million and $3.8 million, respectively, which was recorded as a realized gain on sale of structured settlements during the years ended December 31, 2012 and 2011, respectively. During the year ended December 31, 2011, the Company also had three SPV’s that pledged 38 guaranteed structured settlement transactions under this facility generating income of approximately $32,000, which was recorded as an unrealized change in the fail value of structured settlements. The Company also realized income of approximately $559,000 and $3.4 million that was recorded as an unrealized change in fair value during the years ended December 31, 2012 and 2011, respectively, on structured settlements that are intended for sale to ISF 2010. The Company receives 95% of the purchase price in cash from ISF 2010. Of the remaining 5%, which represents the Company’s interest in ISF 2010, 1% is required to be contributed to a cash reserve account held by Wilmington Trust. In addition, the Company also purchased and sold 131 guaranteed structure transactions generating income of $64,000 that was recorded as a realized gain on sale of structured settlements in 2011.

When the transfer of the receivables occurs, the Company records the transaction as a sale and derecognizes the asset from its balance sheet. In determining whether the Company is the primary beneficiary of the trust, the Company concluded that it does not control the servicing, which is the activity which most significantly impacts the trust performance. An independent third party is the master servicer and they can only be replaced by the control partner, which is the entity that holds the majority of the outstanding notes. The Company is a back-up servicer which is insignificant to ISF 2010 performance.

Washington Square Financial 3rd Party Sales

For the year ended December 31, 2012, in addition to its intended sales to Compass and ISF 2010, the Company also sold 282 deals to unrelated parties for $6.7 million generating income of $4.0 million recorded as a gain on sale of structured settlements and $322,000 that was previously recorded as an unrealized change in fair value.

For the years ended December 31, 2012 and 2011, respectively, the Company recorded income of approximately $158,000 and $135,000, respectively, that was recorded as unrealized change in fair value on structured settlements that are intended for sale to other parties

Total income recognized through accretion of interest income on structured settlement transactions for the years ended December 31, 2012 and 2011, respectively, was approximately $329,000 and $552,000, respectively. Such income was recognized in interest income in the accompanying consolidated statement of operations. The receivables at December 31, 2012 and December 31, 2011 were approximately $3.3 million and $13.9 million, respectively, net of a discount of approximately $4.6 million and $27.8 million, respectively.

The Company recognized a gain on the sale of approximately $215,000 through the collection of holdback funds during the year ended December 31, 2011. The holdback is equal to the aggregate amount of payments due and payable by the annuity holder within 90 days after the date of sale. These amounts are held back in accordance with the purchase agreement and were released upon proof of collections by the Company acting as servicer.

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Fair Value Measurements - Additional Information (Detail) (USD $)	9 Months Ended	12 Months Ended
	Sep. 30, 2012	Dec. 31, 2012 Contract	Dec. 31, 2011 Contract	Dec. 31, 2010
Fair Value, Instruments Classified in Shareholders' Equity Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Mortality rate Assumption	The resulting mortality factor represents an indication as to the degree to which the given life can be considered more or less impaired than a standard life having similar characteristics (e.g. gender, age, smoking, etc.). For example, a standard insured (the average life for the given mortality table) would carry a mortality rating of 100%. A similar but impaired life bearing a mortality rating of 200% would be considered to have twice the chance of dying earlier than the standard life. Historically, the Company has procured the majority of its life expectancy reports from two life expectancy report providers and only used AVS life expectancy reports for valuation purposes. Beginning in the quarter ended September 30, 2012, the Company began utilizing life expectancy reports from 21st Services for valuation purposes and began averaging or “blending,” the results of the two life expectancy reports to establish a composite mortality factor. However, when “blending” the AVS and 21st Services life expectancy reports, if the difference in the probability of mortality between the reports is greater than 150%, the Company will reduce the higher mortality factor until the difference is 150%.	As noted above, the Company takes an average, or blend, of the two life expectancy reports to derive a composite mortality factor, unless the probability of mortality between the reports is greater than 150%. In such instances and as reflected in the fair market value at December 31, 2012, the Company will cap the higher mortality factor at amount that is 150% above the lower mortality factor, which ultimately reduces the mortality factor inputted into the Company's fair value model.
Mortality rate	100.00%	100.00%
Maximum mortality rate	150.00%	150.00%
Change in fair value of portfolios		$ 9,500,000
Number of life insurance policies		214	190
Investment in life settlements, at estimated fair value		113,441,000	90,917,000
Settlements with estimated fair value		1,680,000	12,376,000
Weighted average discount rate		24.01%
Unrealized change in fair value of life settlements		(5,660,000)	570,000	10,156,000
Principal, accrued interest, and accreted origination fees, net of impairment, fair value		112,000	14,100,000
Principal, accrued interest, and accreted origination fees, net of impairment, carrying value		3,600,000	10,200,000
Provision for losses on loans receivable related to impaired loans		515,000	7,589,000	4,476,000
Impaired Loans
Fair Value, Instruments Classified in Shareholders' Equity Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Provision for losses on loans receivable related to impaired loans		515,000	7,600,000
Noninvestment grade
Fair Value, Instruments Classified in Shareholders' Equity Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Number of life insurance policies		6
Additional basis point risk premium		300
Structured settlements
Fair Value, Instruments Classified in Shareholders' Equity Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Number of life insurance policies		36
Settlements with estimated fair value		1,700,000
Weighted average discount rate		9.25%
Previously Premium Financed
Fair Value, Instruments Classified in Shareholders' Equity Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Number of life insurance policies		171
Previously Premium Financed | Minimum
Fair Value, Instruments Classified in Shareholders' Equity Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Discount rates		16.80%
Previously Premium Financed | Maximum
Fair Value, Instruments Classified in Shareholders' Equity Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Discount rates		33.80%
Previously Premium not Financed
Fair Value, Instruments Classified in Shareholders' Equity Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Number of life insurance policies		43
Previously Premium not Financed | Minimum
Fair Value, Instruments Classified in Shareholders' Equity Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Discount rates		14.80%
Previously Premium not Financed | Maximum
Fair Value, Instruments Classified in Shareholders' Equity Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Discount rates		21.30%
Previously had Lender Protection Insurance
Fair Value, Instruments Classified in Shareholders' Equity Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Discount rates		24.01%
More than two years old at December 31, 2012
Fair Value, Instruments Classified in Shareholders' Equity Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Number of life insurance policies		45
Life expectancy reports were received
Fair Value, Instruments Classified in Shareholders' Equity Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Number of life insurance policies		149
Increase Due To Adjustment
Fair Value, Instruments Classified in Shareholders' Equity Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Change in fair value of portfolios		$ 5,800,000
Impaired life bearing
Fair Value, Instruments Classified in Shareholders' Equity Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Mortality rate	200.00%	200.00%
Life Finance
Fair Value, Instruments Classified in Shareholders' Equity Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Investment term		5 years
Life Finance | Minimum
Fair Value, Instruments Classified in Shareholders' Equity Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Expected yield rate		12.00%
Discount rates		15.00%
Life Finance | Maximum
Fair Value, Instruments Classified in Shareholders' Equity Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Expected yield rate		17.00%
Discount rates		17.00%

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Investment Securities Available for Sale

12 Months Ended

Dec. 31, 2012

Investment Securities Available for Sale

NOTE 8—INVESTMENT SECURITIES AVAILABLE FOR SALE

The amortized cost and estimated fair values of securities available for sale at December 31, 2012 are as follows (in thousands):

	December 31, 2012
Description of Securities	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair  Value
Corporate bonds	$	8,275		25	$	(67	)	$	8,233
Government bonds		3,524		76		—			3,600
Other bonds		310		4		—			314
Total available for sale securities	$	12,109	$	105	$	(67	)	$	12,147

The amortized cost and estimated fair values of securities available for sale at December 31, 2011 are as follows (in thousands):

	December 31, 2011
Description of Securities	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
Corporate bonds	$	41,697		32	$	(127	)	$	41,602
Government bonds		14,789		39		(9	)		14,819
Other bonds		821		—		—			821
Total available for sale securities	$	57,307	$	71	$	(136	)	$	57,242

The scheduled maturities of securities at December 31, 2012, by contractual maturity, are shown below. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties (in thousands).

	December 31, 2012
	Amortized Cost		Estimated Fair Value
Due in one year or less	$	6,172	$	6,197
Due after one year but less than five years		2,413		2,350
Due after five years but less than ten years		3,524		3,600
Total available for sale securities	$	12,109	$	12,147

The scheduled maturities of securities at December 31, 2011, by contractual maturity, are shown below. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties (in thousands).

	December 31, 2011
	Amortized Cost		Estimated Fair Value
Due in one year or less	$	25,904	$	25,892
Due after one year but less than five years		20,243		20,160
Due after five years but less than ten years		11,160		11,190
Total available for sale securities	$	57,307	$	57,242

Information pertaining to securities with gross unrealized losses at December 31, 2012, aggregated by investment category and length of time that the individual securities have been in a continuous unrealized loss position is as follows (in thousands):

	December 31, 2012
	Less than 12 Months					12 Months or More				Total
Description of Securities	Estimated Fair Value		Unrealized Loss			Estimated Fair Value		Unrealized Loss		Estimated Fair Value		Unrealized Loss
Corporate bonds		1,932		(67	)		—		—		1,932		(67	)
Government bonds		—		—			—		—		—		—
Other bonds		—		—			—		—		—		—
Total available for sale securities	$	1,932	$	(67	)	$	—	$	—	$	1,932	$	(67	)

Information pertaining to securities with gross unrealized losses at December 31, 2011, aggregated by investment category and length of time that the individual securities have been in a continuous unrealized loss position is as follows (in thousands):

	December 31, 2011
	Less than 12 Months					12 Months or More				Total
Description of Securities	Estimated Fair Value		Unrealized Loss			Estimated Fair Value		Unrealized Loss		Estimated Fair Value		Unrealized Loss
Corporate bonds		26,051		(127	)						26,051		(127	)
Government bonds		5,927		(9	)						5,927		(9	)
Other bonds		—		—							—		—
Total available for sale securities	$	31,978	$	(136	)	$	—	$	—	$	31,978	$	(136	)

Proceeds from sale and prepayment of investment securities available for sale during the year ended December 31, 2012 amounted to approximately $79.8 million, resulting in gross realized gains of approximately $53,000.

The Company monitors its investment securities available for sale for other-than-temporary impairment, or OTTI, on an individual security basis considering numerous factors, including the Company’s intent to sell securities in an unrealized loss position, the likelihood that the Company will be required to sell these securities before an anticipated recovery in value, the length of time and extent to which fair value has been less than amortized cost, the historical and implied volatility of the fair value of the security, failure of the issuer of the security to make scheduled interest or principal payments, any changes to the rating of the security by a rating agency and recoveries or additional declines in fair value subsequent to the balance sheet date. The relative significance of each of these factors varies depending on the circumstances related to each security.

At December 31, 2012 and 2011, 2 and 31 securities were in unrealized loss positions, respectively. The amount of unrealized losses related to all of these securities was considered insignificant, totaling approximately $67,000 and $136,000 for December 31, 2012 and 2011, respectively.

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Scheduled Maturities of Securities by Contractual Maturity (Detail) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Available for Sale - Amortized Cost
Due in one year or less	$ 6,172	$ 25,904
Due after one year but less than five years	2,413	20,243
Due after five years but less than ten years	3,524	11,160
Total available for sale securities	12,109	57,307
Available for Sale - Fair Value
Due in one year or less	6,197	25,892
Due after one year but less than five years	2,350	20,160
Due after five years but less than ten years	3,600	11,190
Total available for sale securities	$ 12,147	$ 57,242

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Fixed Assets

12 Months Ended

Dec. 31, 2012

Fixed Assets

NOTE 6—FIXED ASSETS

Fixed assets at December 31, 2012 and 2011 are summarized as follows (in thousands):

	For the Year Ended December 31,
	2012		2011
Computer software and equipment	$	2,320	$	2,286
Furniture, fixtures and equipment		670		1,046
Leasehold improvements		773		666
		3,763		3,998
Less: Accumulated depreciation		3,531		3,413
Fixed assets, net	$	232	$	585

Depreciation expense for the years ended December 31, 2012, 2011 and 2010 was approximately $365,000, $602,000 and $722,000, respectively, the Company also recorded $9,000 related to fixed asset write offs during 2012 and these are included in selling, general, and administrative expenses in the accompanying consolidated statement of income. During 2012 and 2011, the Company recorded $11,000 and $10,000, respectively, in amortization expense related to its domain name which was acquired in 2011 (See Note 2) which is included in selling, general and administrative expenses in the accompanying consolidated statement of income.

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Gain on Maturities of Life Settlements With Subrogation Rights

12 Months Ended

Dec. 31, 2012

Gain on Maturities of Life Settlements With Subrogation Rights

NOTE 7—GAIN ON MATURITIES OF LIFE SETTLEMENTS WITH SUBROGATION RIGHTS

During 2011, two individuals covered under policies which were subject to subrogation claims unexpectedly passed away. The Company collected the death benefit on one of these policies in the amount of $3.5 million during the third quarter of 2011. The other was the result of an accidental death and the $10.0 million face value of the policy was larger than average.

The Company accounted for the maturities of each of these polices as contingent gains in accordance with ASC 450, Contingencies and recognized $3.2 million in death benefits net of subrogation expenses of $312,000 in its consolidated statement of operations during the year ended December 31, 2011. During 2012, the Company negotiated a settlement in respect of the larger policy and collected approximately $6.1 million, net of subrogation expenses of $910,000, and has reported a gain in accordance with ASC 450, Contingencies in its consolidated statement of operations for the year ended December 31, 2012 as all contingencies were resolved.

The Company believes these contingent gains to be unpredictable because the lender protection insurer can discontinue paying the premiums necessary to keep a policy subject to subrogation and salvage claims in force at any time and the amount of the lender protection insurer’s subrogation and salvage claim on any individual life insurance policy could equal the cash flow received by the Company with respect to any such policy. No expectations for similar gains in the future should be inferred from the events occurring in the third quarter of 2011 and second quarter of 2012.

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Loans Receivable

12 Months Ended

Dec. 31, 2012

Loans Receivable

NOTE 9—LOANS RECEIVABLE

A summary of loans receivables at December 31, 2012 and 2011 is as follows (in thousands):

	2012			2011
Loan principal balance	$	5,255		$	31,264
Loan origination fees, net		1,157			8,307
Loan impairment valuation		(3,368	)		(10,195	)
Loans receivable, net	$	3,044		$	29,376

The Company also had interest receivable, net which consisted of approximately $727,000 and $5.3 million in accrued and unpaid interest at December 31, 2012 and 2011, respectively and a related impairment valuation of approximately $947,000 and $1.9 million, respectively.

An analysis of the changes in loans receivable principal balance during the years ended December 31, 2012 and 2011 is as follows (in thousands):

	2012			2011
Loan principal balance, beginning	$	31,264		$	76,939
Loan originations		—			18,385
Subsequent year premiums paid, net of reimbursement		—			339
Loan write-offs		—			(3,058	)
Loan payoffs		(17,116	)		(55,277	)
Loans transferred to investments in life settlements		(8,893	)		(6,064	)
Loan principal balance, ending	$	5,255		$	31,264

Loan origination fees include origination fees that are payable to the Company on the date the loan matures. The loan origination fees are reduced by any direct costs that are directly related to the creation of the loan receivable in accordance with ASC 310-20, Receivables—Nonrefundable Fees and Other Costs, and the net balance is accreted over the life of the loan using the effective interest method. Discounts include purchase discounts, net of accretion, which are attributable to loans that were acquired from affiliated companies under common ownership and control.

In accordance with ASC 310, Receivables, the Company specifically evaluates all loans for impairment based on the fair value of the underlying policies as foreclosure is considered probable. The loans are considered to be collateral dependent as the repayment of the loans is expected to be provided by the underlying policies. See Note 14.

An analysis of the loan impairment valuation for the year ended December 31, 2012 is as follows (in thousands):

	Loans Receivable			Interest Receivable			Total
Balance at beginning of period	$	10,195		$	1,920		$	12,115
Provision for loan losses		437			78			515
Charge-offs		(7,264	)		(1,051	)		(8,315	)
Balance at end of period	$	3,368		$	947		$	4,315

An analysis of the loan impairment valuation for the year ended December 31, 2011 is as follows (in thousands):

	Loans Receivable			Interest Receivable			Total
Balance at beginning of period	$	7,176		$	1,340		$	8,516
Provision for loan losses		6,793			796			7,589
Charge-offs		(3,774	)		(216	)		(3,990	)
Balance at end of period	$	10,195		$	1,920		$	12,115

An analysis of the loan impairment valuation for the year ended December 31, 2010 is as follows (in thousands):

	Loans Receivable			Interest Receivable			Total
Balance at beginning of period	$	11,599		$	1,788		$	13,387
Provision for loan losses		2,276			2,200			4,476
Charge-offs		(8,205	)		(2,647	)		(10,852	)
Recoveries		1,506			—			1,506
Balance at end of period	$	7,176		$	1,341		$	8,517

An analysis of the allowance for loan losses and recorded investment in loans by loan type for the year ended December 31, 2012 is as follows (in thousands):

	Uninsured Loans			Insured Loans			Total
Loan impairment valuation
Balance at beginning of period	$	6,914		$	3,281		$	10,195
Provision for loan losses		—			437			437
Charge-offs		(4,222	)		(3,042	)		(7,264	)
Ending balance	$	2,692		$	676		$	3,368
Ending balance: individually evaluated for impairment	$	2,692		$	676		$	3,368

An analysis of the allowance for loan losses and recorded investment in loans by loan type for the year ended December 31, 2011 is as follows (in thousands):

	Uninsured Loans			Insured Loans			Total
Loan impairment valuation
Balance at beginning of period	$	888		$	6,288		$	7,176
Provision for loan losses		6,774			19			6,793
Charge-offs		(748	)		(3,026	)		(3,774	)
Ending balance	$	6,914		$	3,281		$	10,195
Ending balance: individually evaluated for impairment	$	6,914		$	3,281		$	10,195

All loans were individually evaluated for impairment as of December 31, 2012 and 2011. There were no loans collectively evaluated for impairment and there were no loans acquired with deteriorated credit quality. See Note 14.

An analysis of the allowance for loan losses and recorded investment in loans by loan type for the year ended December 31, 2010 is as follows (in thousands):

	Uninsured Loans			Insured Loans			Total
Loan impairment valuation
Balance at beginning of period	$	1,983		$	9,616		$	11,599
Provision for loan losses		—			2,276			2,276
Charge-offs		(2,601	)		(5,604	)		(8,205	)
Recoveries		1,506			—			1,506
Ending balance	$	888		$	6,288		$	7,176
Ending balance: individually evaluated for impairment	$	888		$	6,288		$	7,176

An analysis of the credit quality indicators by loan type at December 31, 2012 is presented in the following table (dollars in thousands):

	Uninsured					Insured(1)
S&P Designation	Unpaid Principal Balance		Percent			Unpaid Principal Balance		Percent
AAA	$	—		0.00	%	$	—		0.00	%
AA+		—		0.00	%		—		0.00	%
AA		—		0.00	%		—		0.00	%
AA-		2,072		43.58	%		408		81.44	%
A+		2,548		53.97	%		93		18.56	%
A1		—		0.00	%		—		0.00	%
A		—		0.00	%		—		0.00	%
BB-		134		2.45	%		—		0.00	%
Total	$	4,754		100	%	$	501		100	%

An analysis of the credit quality indicators by loan type at December 31, 2011 is presented in the following table (dollars in thousands):

	Uninsured					Insured(1)
S&P Designation	Unpaid Principal Balance		Percent			Unpaid Principal Balance		Percent
AAA	$	—		0.00	%	$	—		0.00	%
AA+		694		5.08	%		222		1.26	%
AA		—		0.00	%		—		0.00	%
AA-		6,558		48.05	%		9,085		51.57	%
A+		3,060		22.42	%		1,287		7.31	%
A1		—		0.00	%		—		0.00	%
A		3,336		24.44	%		7,022		39.86	%
BB-		—		0.00	%		—		0.00	%
Total	$	13,648		100	%	$	17,616		100	%

(1) All of the Company’s insured loans have lender protection coverage with Lexington Insurance Company. As of December 31, 2012, Lexington had a financial strength rating of “A” with a stable outlook by Standard & Poors (S&P).

A summary of our investment in impaired loans at December 31, 2012 and 2011 is as follows (in thousands):

	2012		2011
Loan receivable, net	$	3,011	$	17,424
Interest receivable, net		724		6,799
Investment in impaired loans	$	3,735	$	24,223

An analysis of impaired loans with and without a related allowance at December 31, 2012 is presented in the following table by loan type (in thousands):

	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:
Uninsured Loans	$	—	$	—	$	—	$	—	$	—
Insured Loans		—		—		—		—		—
With an allowance recorded:
Uninsured Loans		3,623		4,735		3,413		6,887		1,444
Insured Loans		112		501		902		7,091		227
Total Impaired Loans	$	3,735	$	5,236	$	4,315	$	13,978	$	1,671

An analysis of impaired loans with and without a related allowance at December 31, 2011 is presented in the following table by loan type (in thousands):

	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:
Uninsured Loans	$	—	$	—	$	—	$	—	$	—
Insured Loans		—		—		—		—		—
With an allowance recorded:
Uninsured Loans		10,153		13,628		6,894		6,764		1,684
Insured Loans		14,070		10,391		3,301		24,847		3,195
Total Impaired Loans	$	24,223	$	24,019	$	10,195	$	31,611	$	4,879

The amount of the investment in impaired loans that had an allowance as of December 31, 2012 and 2011 was $3.7 million and $24.2 million, respectively. The amount of the investment in impaired loans that did not have an allowance was zero as of December 31, 2012 and 2011. The average investment in impaired loans during the years ended December 31, 2012 and 2011 was approximately $14.0 million and $31.6 million, respectively. The interest recognized on the impaired loans was approximately $1.7 million and $4.9 million for the years ended December 31, 2012 and 2011, respectively.

An analysis of past due at December 31, 2012 is presented in the following table by loan type (in thousands):

	30-59 Days Past Due		60-89 Days Past Due		Greater Than 90 Days Past Due		Total Past Due
Uninsured Loans	$	—	$	—	$	599	$	599
Insured Loans		—		—		315		315
Total	$	—	$	—	$	914	$	914

An analysis of past due at December 31, 2011 is presented in the following table by loan type (in thousands):

	30-59 Days Past Due		60-89 Days Past Due		Greater Than 90 Days Past Due		Total Past Due
Uninsured Loans	$	—	$	—	$	599	$	599
Insured Loans		1,570		—		—		1,570
Total	$	1,570	$	—	$	599	$	2,169

During the years ended December 31, 2012 and 2011, the Company originated zero and 58 loans receivable with a principal balance of zero and approximately $18.3 million, respectively. Loan interest receivable at December 31, 2012 and 2011 was approximately $727,000 and $5.3 million net of impairment of approximately $947,000, and $1.9 million, respectively. As of December 31, 2012, there were 22 loans with the average loan balance of approximately $181,000.

The allowance for interest receivable represents interest that is not expected to be collected. At the time the interest income was recognized and at the end of the reporting period in which the interest income was recognized, the interest income was believed to be collectible. The Company continually reassesses whether interest income is collectible in conjunction with its loan impairment analysis. The allowance for interest receivable represents interest that was determined to be uncollectible during a reporting period subsequent to the initial recognition of the interest income. As of December 31, 2012, the loan portfolio consisted of loans with original maturities of 2 to 4 years and variable interest rates at an average interest rate of 12.98%. During the year ended December 31, 2012 and 2011, 85 and 79 of our loans were paid off with proceeds of lender protection insurance totaling approximately $25.6 million and $24.0 million, respectively, of which approximately $16.7 million, and $15.6 million was for the principal of the loans and approximately $6.5 million and $6.0 million was for accrued interest, respectively, and accreted origination fees of approximately $7.1 million and $6.6 million, respectively. The Company had an impairment associated with these loans of approximately $4.9 million and $4.6 million, respectively. We recognized a loss of approximately $29,000 and $14,000 on these transactions, respectively.

Our premium finance borrowers were generally referred to us through independent insurance agents and brokers although, prior to January 2009, we originated some premium finance loans that were sold by life insurance agents that we employed. In certain of these instances, the life insurance agents employed by the Company worked with external brokers and agents to obtain insurance for policyholders with the Company extending a premium finance loan to a borrower. We refer to these instances as the “retail non-seminar business,” which began in December 2006 and was discontinued in January 2009. In total, the Company originated 114 premium finance loans as part of the retail non-seminar business. As of December 31, 2012, the Company had 12 policies in its portfolio that once served as collateral for premium finance loans derived through the retail non-seminar business.

During the year ended December 31, 2012 two loans were paid off with proceeds from trusts totaling $1.0 million of which $686,000 was for principal of the loans and $280,000 was for accrued interest, and accreted origination fees of $262,000. The Company had an impairment associated with these loans of $101,000 and recognized a loss of $96,000.

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Loans Receivable - Additional Information (Detail) (USD $)	12 Months Ended
	Dec. 31, 2012 Loan Contract	Dec. 31, 2011 Loan Contract	Dec. 31, 2010	Dec. 31, 2009
Accounts, Notes, Loans and Financing Receivable [Line Items]
Interest receivable	$ 822,000	$ 5,758,000
Loan impairment valuation	3,368,000	10,195,000	7,176,000	11,599,000
Investment in impaired loans with an allowance recorded investment	3,735,000	24,223,000
Related Allowance	0	0
With an allowance recorded, average recorded investment	13,978,000	31,611,000
Interest on impaired loans	1,700,000	4,900,000
Number of loans receivable originated	0	58
Loans principal balance	5,255,000	31,264,000	76,939,000
Loan impairment charges	947,000	1,900,000
Number of loans	22
Average loan daily balance	181,000
Proceeds from loans principal balance	(17,116,000)	(55,277,000)
Proceeds from loan origination fees		18,385,000
Number of policies owned fair value of investments	214	190
Retail non-seminar business
Accounts, Notes, Loans and Financing Receivable [Line Items]
Number of Premium Finance Loans	114
Number of policies owned fair value of investments	12
Trusts
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan impairment charges	101,000
Number of loans paid off	2
Proceeds from loans payoff	1,000,000
Proceeds from loans principal balance	686,000
Proceeds from loans interest accrued	280,000
Proceeds from loan origination fees	262,000
Gain on loans transactions	96,000
Accrued and Unpaid Interest
Accounts, Notes, Loans and Financing Receivable [Line Items]
Interest receivable	727,000	5,300,000
Loan impairment valuation	947,000	1,900,000
Loan Origination
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans principal balance	0	18,300,000
Loan Portfolio
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan impairment charges	4,900,000	4,600,000
Average interest rate	12.98%
Number of loans paid off	85	79
Proceeds from loans payoff	25,600,000	24,000,000
Proceeds from loans principal balance	16,700,000	15,600,000
Proceeds from loans interest accrued	6,500,000	6,000,000
Proceeds from loan origination fees	7,100,000	6,600,000
Gain on loans transactions	$ 29,000	$ 14,000
Loan Portfolio | Minimum
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan maturity period	2 years
Loan Portfolio | Maximum
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan maturity period	4 years

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Changes in Life Expectancy Used to Estimate Fair Value (Detail) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Value	$ 113,441	$ 90,917
Change in Value	151	5	1,951
+6 Life Expectancy Months Adjustment
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Value	95,658
Change in Value	(17,783)
-6 Life Expectancy Months Adjustment
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Value	132,540
Change in Value	$ 19,099

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Loan Impairment Valuation (Detail) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Financing Receivable, Impaired [Line Items]
Balance at beginning of period	$ 10,195	$ 7,176	$ 11,599
Provision for loan losses	(515)	(7,589)	(4,476)
Charge-offs	(7,264)	(3,774)	(8,205)
Recoveries			1,506
Balance at end of period	3,368	10,195	7,176
Loan Impairment Valuation
Financing Receivable, Impaired [Line Items]
Balance at beginning of period	12,115	8,517	13,387
Provision for loan losses	515	7,589	4,476
Charge-offs	(8,315)	(3,990)	(10,852)
Recoveries			1,506
Balance at end of period	4,315	12,115	8,517
Loans Receivable | Loan Impairment Valuation
Financing Receivable, Impaired [Line Items]
Balance at beginning of period	10,195	7,176	11,599
Provision for loan losses	437	6,793	2,276
Charge-offs	(7,264)	(3,774)	(8,205)
Recoveries			1,506
Balance at end of period	3,368	10,195	7,176
Interest Receivable | Loan Impairment Valuation
Financing Receivable, Impaired [Line Items]
Balance at beginning of period	1,920	1,341	1,788
Provision for loan losses	78	796	2,200
Charge-offs	(1,051)	(216)	(2,647)
Balance at end of period	$ 947	$ 1,920	$ 1,341

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Reconciliation of Total Amounts of Unrecognized Benefits (Detail) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
Income Tax Rate Reconciliation [Line Items]
Beginning Balance	$ 6,295
Additions based on tax positions taken in the current year		6,295
Reductions of tax positions for prior years
Ending Balance	$ 6,295	$ 6,295

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Summary of Loans Receivables (Detail) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan principal balance	$ 5,255	$ 31,264	$ 76,939
Loan origination fees, net	1,157	8,307
Loan impairment valuation	(3,368)	(10,195)	(7,176)	(11,599)
Loans receivable, net	$ 3,044	$ 29,376

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Segment Assets and Reconciliation to Consolidated Total Assets (Detail) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Segment Reporting, Asset Reconciling Item [Line Items]
Assets	$ 160,342	$ 222,599
Direct Segment Assets
Segment Reporting, Asset Reconciling Item [Line Items]
Assets	130,443	155,675
Life Finance | Direct Segment Assets
Segment Reporting, Asset Reconciling Item [Line Items]
Assets	123,581	138,520
Structured settlements | Direct Segment Assets
Segment Reporting, Asset Reconciling Item [Line Items]
Assets	6,862	17,155
Other Unallocated Assets
Segment Reporting, Asset Reconciling Item [Line Items]
Assets	29,899	66,924
Total Segment Assets
Segment Reporting, Asset Reconciling Item [Line Items]
Assets	$ 160,342	$ 222,599

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Investment Securities Available for Sale (Tables)

12 Months Ended

Dec. 31, 2012

Amortized Cost and Estimated Fair Values of Securities Available for Sale

The amortized cost and estimated fair values of securities available for sale at December 31, 2012 are as follows (in thousands):

	December 31, 2012
Description of Securities	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair  Value
Corporate bonds	$	8,275		25	$	(67	)	$	8,233
Government bonds		3,524		76		—			3,600
Other bonds		310		4		—			314
Total available for sale securities	$	12,109	$	105	$	(67	)	$	12,147

The amortized cost and estimated fair values of securities available for sale at December 31, 2011 are as follows (in thousands):

	December 31, 2011
Description of Securities	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
Corporate bonds	$	41,697		32	$	(127	)	$	41,602
Government bonds		14,789		39		(9	)		14,819
Other bonds		821		—		—			821
Total available for sale securities	$	57,307	$	71	$	(136	)	$	57,242

Scheduled Maturities of Securities by Contractual Maturity

The scheduled maturities of securities at December 31, 2012, by contractual maturity, are shown below. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties (in thousands).

	December 31, 2012
	Amortized Cost		Estimated Fair Value
Due in one year or less	$	6,172	$	6,197
Due after one year but less than five years		2,413		2,350
Due after five years but less than ten years		3,524		3,600
Total available for sale securities	$	12,109	$	12,147

The scheduled maturities of securities at December 31, 2011, by contractual maturity, are shown below. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties (in thousands).

	December 31, 2011
	Amortized Cost		Estimated Fair Value
Due in one year or less	$	25,904	$	25,892
Due after one year but less than five years		20,243		20,160
Due after five years but less than ten years		11,160		11,190
Total available for sale securities	$	57,307	$	57,242

Securities in Continuous Unrealized Loss Position

Information pertaining to securities with gross unrealized losses at December 31, 2012, aggregated by investment category and length of time that the individual securities have been in a continuous unrealized loss position is as follows (in thousands):

	December 31, 2012
	Less than 12 Months					12 Months or More				Total
Description of Securities	Estimated Fair Value		Unrealized Loss			Estimated Fair Value		Unrealized Loss		Estimated Fair Value		Unrealized Loss
Corporate bonds		1,932		(67	)		—		—		1,932		(67	)
Government bonds		—		—			—		—		—		—
Other bonds		—		—			—		—		—		—
Total available for sale securities	$	1,932	$	(67	)	$	—	$	—	$	1,932	$	(67	)

Information pertaining to securities with gross unrealized losses at December 31, 2011, aggregated by investment category and length of time that the individual securities have been in a continuous unrealized loss position is as follows (in thousands):

	December 31, 2011
	Less than 12 Months					12 Months or More				Total
Description of Securities	Estimated Fair Value		Unrealized Loss			Estimated Fair Value		Unrealized Loss		Estimated Fair Value		Unrealized Loss
Corporate bonds		26,051		(127	)						26,051		(127	)
Government bonds		5,927		(9	)						5,927		(9	)
Other bonds		—		—							—		—
Total available for sale securities	$	31,978	$	(136	)	$	—	$	—	$	31,978	$	(136	)

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Reconciliation of Actual Basic and Diluted Earnings Per Share (Parenthetical) (Detail)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
Stock Options
Schedule of Earnings Per Share, Basic and Diluted, by Common Class [Line Items]
Antidilutive securities excluded from computation of diluted earnings per share	487,314	627,419
Warrant
Schedule of Earnings Per Share, Basic and Diluted, by Common Class [Line Items]
Antidilutive securities excluded from computation of diluted earnings per share	4,240,521	4,240,521
Restricted Stock
Schedule of Earnings Per Share, Basic and Diluted, by Common Class [Line Items]
Antidilutive securities excluded from computation of diluted earnings per share		3,507

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Fair Value Measurements

12 Months Ended

Dec. 31, 2012

Fair Value Measurements

NOTE 14—FAIR VALUE MEASUREMENTS

We carry investments in life and structured settlements at fair value in the consolidated balance sheets. Fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. As such, fair value is a market based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. Fair value measurements are classified based on the following fair value hierarchy:

Level 1—Valuation is based on unadjusted quoted prices in active markets for identical assets and liabilities that are accessible at the reporting date. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these products does not entail a significant degree of judgment.

Level 2—Valuation is determined from pricing inputs that are other than quoted prices in active markets that are either directly or indirectly observable as of the reporting date. Observable inputs include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, and interest rates and yield curves that are observable at commonly quoted intervals.

Level 3—Valuation is based on inputs that are both significant to the fair value measurement and unobservable. Level 3 inputs include situations where there is little, if any, market activity for the financial instrument. The inputs into the determination of fair value generally require significant management judgment or estimation.

Assets and liabilities measured at fair value on a recurring basis

The balances of the Company’s assets measured at fair value on a recurring basis as of December 31, 2012, are as follows (in thousands):

	Level 1		Level 2		Level 3		Total Fair Value
Assets:
Investment in life settlements	$	—	$	—	$	113,441	$	113,441
Structured settlement receivables		—		—		1,680		1,680
Investment securities available for sale		—		12,147		—		12,147
	$	—	$	12,147	$	115,121	$	127,268

The balances of the Company’s assets measured at fair value on a recurring basis as of December 31, 2011, are as follows (in thousands):

	Level 1		Level 2		Level 3		Total Fair Value
Assets:
Investment in life settlements	$	—	$	—	$	90,917	$	90,917
Structured settlement receivables		—		—		12,376		12,376
Investment securities available for sale		—		57,242		—		57,242
	$	—	$	57,242	$	103,293	$	160,535

The Company values its investment in life settlement portfolio in two classes, non-premium financed and premium financed. In considering the categories, it is generally believed that market participants would require a lower risk premium for policies that were non-premium financed, while a higher risk premium would be required for policies that were premium financed.

($ in thousands)			Quantitative Information about Level 3 Fair Value Measurements
	Fair Value at 12/31/12		Aggregate death benefit 12/31/12		Valuation Technique (s)	Unobservable Input	Range ( Weighted Average)
Non-premium financed	$	36,039	$	206,450	Discounted cash flow	Discount rate	14.80% - 21.30%
						Life expectancy evaluation	9.1 years
Premium financed		77,402		866,706	Discounted cash flow	Discount rate	16.80% -  33.80%
						Life expectancy evaluation	10.9 years
Investment in life settlements	$	113,441	$	1,073,156	Discounted cash flow	Discount rate	(24.01%)
						Life expectancy evaluation	(10.6 years)
Structured settlements receivables	$	1,680			Discounted cash flow	Facility sales discount rates	6.25% - 15.35%

Following is a description of the methodologies used to estimate the fair values of assets and liabilities measured at fair value on a recurring basis and within the fair value hierarchy.

Investment in life settlements— The Company has elected to account for the life settlement policies it acquires using the fair value method. Due to the inactive market for life settlements, the Company uses a present value technique to estimate the fair value of our investments in life settlements, which is a Level 3 fair value measurement as the significant inputs are unobservable and require significant management judgment or estimation. The Company currently uses a probabilistic method of valuing life insurance policies, which we believe to be the preferred valuation method in the industry. The most significant assumptions which we estimate are the life expectancy of the insured and the discount rate.

In determining the life expectancy estimate, we analyze medical reviews from independent secondary market life expectancy providers (each a “LE provider”). An LE provider reviews the medical records and identifies all medical conditions it feels are relevant to the life expectancy of the insured. Debits and credits are then assigned by each LE provider to the individual’s health based on these medical conditions. The debit or credit that an LE provider assigns to a medical condition is derived from the experience of mortality attributed to this condition in the portfolio of lives that it monitors. The health of the insured is summarized by the LE provider into a life assessment of the individual’s life expectancy expressed both in terms of months and in mortality factor.

The resulting mortality factor represents an indication as to the degree to which the given life can be considered more or less impaired than a standard life having similar characteristics (e.g. gender, age, smoking, etc.). For example, a standard insured (the average life for the given mortality table) would carry a mortality rating of 100%. A similar but impaired life bearing a mortality rating of 200% would be considered to have twice the chance of dying earlier than the standard life. Historically, the Company has procured the majority of its life expectancy reports from two life expectancy report providers and only used AVS life expectancy reports for valuation purposes. Beginning in the quarter ended September 30, 2012, the Company began utilizing life expectancy reports from 21st Services for valuation purposes and began averaging or “blending,” the results of the two life expectancy reports to establish a composite mortality factor. However, when “blending” the AVS and 21st Services life expectancy reports, if the difference in the probability of mortality between the reports is greater than 150%, the Company will reduce the higher mortality factor until the difference is 150%.

The probability of mortality for an insured is then calculated by applying the blended life expectancy estimate to a mortality table. The mortality table is created based on the rates of death among groups categorized by gender, age, and smoking status. By measuring how many deaths occur during each year, the table allows for a calculation of the probability of death in a given year for each category of insured people. The probability of mortality for an insured is found by applying the mortality rating from the life expectancy assessment to the probability found in the actuarial table for the insured’s age, sex and smoking status. As discussed above in Use of Updated Life Expectancies and Change in Mortality Table in Management’s Discussion and Analysis of Financial Condition and Results of Operations, the Company has historically applied an actuarial table developed by a third party. However, beginning in the quarter ended September 30, 2012, the Company transitioned to a table developed by the U.S. Society of Actuaries known as the 2008 Valuation Basic Table, or the 2008 VBT. However, because the 2008 VBT table does not account for anticipated improvements in mortality in the insured population, the table was modified by outside consultants to reflect these expected mortality improvements. The Company believes that the change in mortality table does not materially impact the valuation of its life insurance policies and that its adoption of a modified 2008 VBT table is consistent with modified tables used by market participants and third party medical underwriters. The Company believes that the change in mortality table does not materially impact the valuation of its life insurance policies and that its adoption of a modified 2008 VBT table is consistent with modified tables used by market participants and third party medical underwriters.

The mortality rating is used to create a series of best estimate probablistic cash flows. This probability represents a mathematical curve known as a mortality curve. This curve is then used to generate a series of expected cash flows over the remaining expected lifespan of the insured and the corresponding policy. A discounted present value calculation is then used to determine the value of the policy. If the insured dies earlier than expected, the return will be higher than if the insured dies when expected or later than expected.

The calculation allows for the possibility that if the insured dies earlier than expected, the premiums needed to keep the policy in force will not have to be paid. Conversely, the calculation also considers the possibility that if the insured lives longer than expected, more premium payments will be necessary. Based on these considerations, each possible outcome is assigned a probability and the range of possible outcomes is then used to create a price for the policy.

Life expectancy sensitivity analysis

As is the case with most market participants at December 31, 2012, the Company used a blend of life expectancies that are provided by two third-party LE providers. These are estimates of an insured’s remaining years. If all of the insured lives in the Company’s life settlement portfolio live six months shorter or longer than the life expectancies provided by these third parties, the change in fair market value would be as follows (dollars in thousands):

Life Expectancy Months Adjustment	Value		Change in Value
+6		95,658		(17,783	)
-		113,441		—
-6		132,540		19,099

As noted above, the Company takes an average, or blend, of the two life expectancy reports to derive a composite mortality factor, unless the probability of mortality between the reports is greater than 150%. In such instances and as reflected in the fair market value at December 31, 2012, the Company will cap the higher mortality factor at amount that is 150% above the lower mortality factor, which ultimately reduces the mortality factor inputted into the Company’s fair value model. At December 31, 2012, had the Company not implemented such a cap on affected policies, the fair value of the Company’s portfolio would have increased from the reported amount by $9.5 million. Additionally, the Company lengthened the life expectancy inputs to its fair value model on 45 policies with life expectancy reports that were more than two years old at December 31, 2012 based on the average lengthening reported on the 149 policies where update life expectancy reports were received. Had the Company not implemented such an adjustment on affected policies, the fair value of the Company’s portfolio would have increased from the reported amount by $5.8 million.

Discount rate

The discount rate incorporates current information about market interest rates, the credit exposure to the insurance company that issued the life insurance policy and our estimate of the risk premium an investor in the policy would require.

The Company believes that investors in esoteric assets such as life insurance policies typically target yields averaging between 12%—17% for investments of more than a 5 year duration, and had historically used a 15%—17% range of discount rates to value its life insurance policies. In the third quarter of 2011 and in the immediate aftermath of becoming aware of the USAO investigation, the Company substantially increased the discount rates inputted into its fair value model as it believed that the USAO Investigation along with certain unfavorable court decisions unrelated to the Company contributed to a contraction in the marketplace that has continued to reverberate. Since that time, the Company has been re-evaluating its discount rates at the end of every reporting period in order to reflect the estimated discount rates that could reasonably be used in a market transaction involving the Company’s portfolio of life insurance policies. In doing so, the Company relies on management insight, engages third party consultants to corroborate its assessment, engages in discussions with other market participants and potential financing sources and extrapolates the discount rate underlying actual sales of policies.

Although the Company believes that its entry into the Non-Prosecution Agreement had a positive effect on the market generally and for premium financed life insurance policies specifically, the Company believes that, when given the choice to invest in a policy that was associated with the Company’s premium finance business and a similar policy without such an association, all else being equal, an investor would have generally opted to invest in the policy that was not associated with the Company’s premium finance business. However, since entering into the Non-Prosecution Agreement, investors have required less of a risk premium to transact in these policies and the Company expects that, in time, investors will continue to require less of a risk premium to transact in policies associated with its premium finance business.

Credit exposure of insurance company

The company considers the financial standing of the issuer of each policy typically, we seek to hold policies issued by insurance companies with investment-grade ratings of at least single-A. At December 31, 2012, the Company had six life insurance policies issued by one carrier that was rated non-investment grade by S&P at December 31, 2012. In order to compensate a market participant for the perceived credit and challenge risks associated with these policies, the Company applied an additional 300 basis point risk premium.

Estimated risk premium

As of December 31, 2012, the Company owned 214 policies with an aggregate investment in life settlements of $113.4 million. Of these 214 policies, 171 were previously premium financed and are valued using discount rates that range from 16.80% to 33.80%. The remaining 43 policies are valued using discount rates that range from 14.80% to 21.30%. As of December 31, 2012, the weighted average discount rate calculated based on death benefit used in valuing the policies in our life settlement portfolio was 24.01%.

The discount rate incorporates current information about market interest rates, the credit exposure to the insurance company that issued the life insurance policy and our estimate of the risk premium an investor in the policy would require. The extent to which the fair value could vary in the near term has been quantified by evaluating the effect of changes in the weighted average discount rate on the death benefit used to estimate the fair value. If the weighted average discount rate were increased or decreased by 1/2 of 1% and the other assumptions used to estimate fair value remained the same, the change in fair market value would be as follows (dollars in thousands):

Market interest rate sensitivity analysis

Weighted Average Rate Calculated Based on Death Benefit	Rate Adjustment			Value		Change in Value
23.51%		-.50	%		116,300		2,859
24.01%		—			113,441		—
24.51%		+.50	%		110,694		(2,747	)

Future changes in the discount rates we use to value life insurance policies could have a material effect on our yield on life settlement transactions, which could have a material adverse effect on our business, financial condition and results of our operations.

At the end of each reporting period we re-value the life insurance policies using our valuation model in order to update our loan impairment valuation for loans receivable and our estimate of fair value for investments in policies held on our balance sheet. This includes reviewing our assumptions for discount rates and life expectancies as well as incorporating current information for premium payments and the passage of time.

Structured settlement receivables— All structured settlements that were acquired subsequent to July 1, 2010 were marked to fair value. Structured settlements that were acquired prior to July 1, 2010 were recorded at cost. We make this election because it is our intention to sell these assets within the next twelve months. Structured settlements are purchased at effective yields which are fixed. Purchase discounts are accreted into interest income using the effective-interest method for those structured settlements marked to fair value. As of December 31, 2012, the Company had 36 newly-acquired structured settlements with an estimated fair value of $1.7 million. The average sales discount rate for these newly-acquired structured settlements was 9.25%.

Changes in Fair Value

The following tables provide a roll-forward in the changes in fair value for the year ended December 31, 2012, for all assets for which the Company determines fair value using a material level of unobservable (Level 3) inputs (in thousands):

Life Settlements:
Balance, December 31, 2011	$	90,917
Purchase of policies		130
Acquired in foreclosure		5,724
Unrealized change in fair value		(5,660	)
Transfers into level 3		—
Trannsfers out of level 3		—
Sale of policies		(5,334	)
Premiums paid		27,804
Policies lapsed/written off		(140	)
Balance, December 31, 2012	$	113,441
Changes in fair value included in earnings for the period relating to assets held at December 31, 2012	$	(5,898	)

The Company recorded unrealized change in fair value of approximately $5.7 million and a gain of approximately $570,000 for the year ended December 31, 2012 and 2011, respectively.

Structured Settlements:
Balance, December 31, 2011	$	12,376
Purchase of contracts		24,313
Unrealized change in fair value		1,823
Sale of contracts		(36,615	)
Collections		(217	)
Transfers into level 3		—
Transfers out of level 3		—
Balance, December 31, 2012	$	1,680
Changes in fair value included in earnings for the period relating to assets held at December 31, 2012	$	255

The following tables provide a roll-forward in the changes in fair value for the year ended December 31, 2011, for all assets for which the Company determines fair value using a material level of unobservable (Level 3) inputs (in thousands).

Life Settlements:
Balance, December 31, 2010	$	17,138
Purchase of policies		50,480
Acquired in foreclosure		6,409
Unrealized change in fair value		570
Premiums paid		16,320
Transfers into Level 3		—
Transfers out of Level 3		—
Balance, September 30, 2011	$	90,917
Changes in fair value included in earnings for the period relating to assets held at December 31, 2011	$	570
Structured Settlements:
Balance, December 31, 2010	$	1,446
Purchase of contracts		27,545
Unrealized change in fair value		5,302
Sale of contracts		(21,723	)
Collections		(194	)
Transfers into Level 3		—
Transfers out of Level 3		—
Balance, September 30, 2011		12,376
Changes in fair value included in earnings for the period relating to assets held at December 31, 2011	$	4,218

There were no transfers of financial assets between levels of the fair value hierarchy during the years ended December 31, 2012 and 2011.

Assets and liabilities measured at fair value on a non-recurring basis

Following is a description of the methodologies used to estimate the fair values of assets and liabilities measured at fair value on a non-recurring basis, and the level within the fair value hierarchy in which those measurements are typically classified.

The Company’s impaired loans are measured at fair value on a non-recurring basis, as the carrying value is based on the fair value of the underlying collateral. The method used to estimate the fair value of impaired collateral-dependent loans depends on the nature of the collateral. For collateral that has lender protection insurance coverage, the fair value measurement is considered to be Level 2 as the insured value is an observable input and there are no material unobservable inputs. For collateral that does not have lender protection insurance coverage, the fair value measurement is considered to be Level 3 as the estimated fair value is based on a model whose significant inputs are the life expectancy of the insured and the discount rate, which are not observable inputs. As of December 31, 2012 and 2011, the Company had insured impaired loans with a net carrying value, which includes principal, accrued interest, and accreted origination fees, net of impairment, of approximately $112,000 and $14.1 million, respectively. As of December 31, 2012 and 2011, the Company had uninsured impaired loans (Level 3) with a net carrying value of approximately $3.6 million and $10.2 million, respectively. The provision for losses on loans receivable related to impaired loans was approximately 515,000 and $7.6 million for the years ended December 31, 2012 and 2011, respectively. See Notes 9 and 13.

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Employee Benefit Plan

12 Months Ended

Dec. 31, 2012

Employee Benefit Plan

NOTE 19—EMPLOYEE BENEFIT PLAN

The Company has adopted a 401(k) plan that covers employees that have reached 18 years of age and completed three months of service. The plan provides for voluntary employee contributions through salary reductions, as well as discretionary employer contributions. For the years ended December 31, 2012 and 2011, there were no employer contributions made.

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Stockholders' Equity - Additional Information (Detail) (USD $)	1 Months Ended				12 Months Ended			1 Months Ended			12 Months Ended	3 Months Ended	1 Months Ended				1 Months Ended
	Feb. 28, 2011	Feb. 15, 2011	Feb. 11, 2011	Feb. 03, 2011	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2012 Common Stock	Feb. 11, 2011 Phantom Stock Agreement	Feb. 11, 2011 Maximum	Dec. 31, 2012 Maximum	Dec. 31, 2012 Omnibus Plan	Mar. 31, 2011 Omnibus Plan Phantom Stock Agreement	Feb. 11, 2011 Additional Warrants	Feb. 11, 2011 One-third	Feb. 11, 2011 One-third	Feb. 11, 2011 One-third	Jan. 31, 2011 Series F Preferred Stock Redeemable Preferred Stock	Jan. 31, 2011 Series F Preferred Stock Redeemable Preferred Stock Promissory Note
Stockholders Equity [Line Items]
Stock issued upon conversion of debt to equity							1,272,727										110,000
Debt converted to shares converted amount						$ 35,158,000	$ 30,000,000											$ 11,000,000
Cumulative rate of preferred return																	16.00%
Conversion of Impex debt and membership units into common shares (shares)				2,300,273
Stock issued under phantom stock agreements						290,000		27,000				27,000
Stock-based compensation expense					309,000	1,873,000		290,000				290,000
Warrants issued									4,053,333				187,188
Warrants exercise price			14.51
Warrant exercise price as percentage of offering price														120.00%	135.00%	150.00%
Warrant expiration period			7 years
Warrant vesting period			4 years
Sale of common stock in initial public offering	17,602,614	935,947	16,666,667
Common stock price per share	$ 10.75		$ 10.75
Proceeds from initial public offering	$ 174,233,000					$ 174,233,000
Common stock, shares outstanding				3,600,000	21,206,121	21,202,614
Common stock to be issued upon exercise of warrant										4,240,521
Shares of common stock reserved for future grant											1,200,000
Options to purchase shares of common stock granted											665,956
Options to purchase shares of common stock, weighted average exercise price					$ 10.75						$ 10.75
Shares of restricted stock granted											3,507
Shares of common stock are available for future awards											530,537

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Earnings Per Share - Additional Information (Detail) (USD $) In Thousands, except Share data, unless otherwise specified	1 Months Ended				12 Months Ended
	Feb. 28, 2011	Feb. 15, 2011	Feb. 11, 2011	Feb. 03, 2011	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items]
Common stock, shares outstanding				3,600,000	21,206,121	21,202,614
Common stock, shares issued					21,206,121	21,202,614
Conversion of Impex debt and membership units into common shares (shares)				2,300,273
Issuance of common stock, shares	17,602,614	935,947	16,666,667
Conversion of debt to common stock						$ 35,158
Interest expense					1,255	8,524	28,155
Pro Forma
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items]
Conversion of Impex debt and membership units into common shares (shares)					2,300,273
Issuance of common stock, shares					27,000
Conversion of debt to common stock					30,000	30,000
Conversion of debt to common stock (shares)					1,272,727
Interest expense						$ 178	$ 3,100

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Segment Information (Tables)

12 Months Ended

Dec. 31, 2012

Segment Results and Reconciliation to Consolidated Net Income

Segment results and reconciliation to consolidated net income were as follows (in thousands):

	Year Ended December 31,
	2012			2011			2010
Life finance
Income
Agency fee income	$	—		$	6,470		$	10,146
Interest income		1,685			7,751			18,326
Origination income		500			6,480			19,938
Gain on forgiveness of debt		—			5,023			7,599
Unrealized change in fair value of life settlements		(5,660	)		570			10,156
Realized gain on life settlements, net		151			5			1,951
Change in equity investments		—			—			(1,284	)
Servicing fee income		1,183			1,814			403
Gain on maturities of life settlements with subrogation rights, net		6,090			3,188			—
Other		75			198			131
		4,024			31,499			67,366
Direct segment expenses
Interest expense		1,250			8,229			24,388
Provision for losses on loan receivables		515			7,589			4,476
Loss on loans payoffs and settlements, net		125			3,837			4,981
Amortization of deferred costs		1,868			6,076			24,465
Personnel costs		5,746			6,840			3,185
Marketing costs		—			16			3
Legal fees		3,676			2,658			1,537
Professional fees		1,777			1,831			1,551
Insurance		1,115			237			110
Other selling, general and administrative expenses		1,763			1,636			3,938
		17,835			38,949			68,634
Segment operating loss	$	(13,811	)	$	(7,450	)	$	(1,268	)
Structured settlements
Income
Realized gain on sale of structured settlements	$	11,509		$	5,817		$	6,595
Interest income		329			553			334
Unrealized change in fair value of structured settlements		1,822			5,302			2,477
Servicing fee income		—			—			11
Other income		334			261			113
		13,994			11,933			9,530
Direct segment expenses
Personnel costs		9,634			9,170			4,821
Marketing costs		5,023			6,088			5,034
Legal fees		2,331			2,243			1,438
Professional fees		1,955			1,418			834
Insurance		1,108			320			153
Other selling, general and administrative expenses		1,496			2,712			786
		21,547			21,951			13,066
Segment operating loss	$	(7,553	)	$	(10,018	)	$	(3,536	)
Consolidated
Segment operating loss		(21,364	)		(17,468	)		(4,804	)
Unallocated income
Interest and dividends on investment securities available for sale		391			640			—
Other income		674			142			—
Unallocated expenses
Interest expense		4			297			3,767
Personnel costs		707			2,928			4,364
Department of Justice		—			8,000			—
Legal fees		20,047			7,196			469
Professional fees		3,202			2,730			1,581
Insurance		107			199			95
Other selling, general and administrative expenses		307			1,162			617
		24,374			22,512			10,893
Loss before income taxes		(44,673	)		(39,198	)		(15,697	)
Benefit for income taxes		(39	)		—			—
Net loss	$	(44,634	)	$	(39,198	)	$	(15,697	)

Segment Assets and Reconcilation to Consolidated Assets

Segment assets and reconciliation to consolidated total assets were as follows (in thousands):

	December 31,		December 31,
	2012		2011
Direct segment assets
Life finance	$	123,581	$	138,520
Structured settlements		6,862		17,155
		130,443		155,675
Other unallocated assets		29,899		66,924
	$	160,342	$	222,599

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Consolidated Statements Of Comprehensive Loss (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
Net loss	$ (44,634)	$ (39,198)
Other comprehensive loss, net of tax:
Unrealized gains (loss) on investment securities available for sale	63	(66)
Comprehensive loss	$ (44,571)	$ (39,264)

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Summary of Principal Balances of Notes Payable (Detail) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Debt Instrument [Line Items]
Notes payable		$ 19,277
Cedar Lane
Debt Instrument [Line Items]
Notes payable		19,104
White Oak, Inc.
Debt Instrument [Line Items]
Notes payable		$ 173

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Earnings Per Share

12 Months Ended

Dec. 31, 2012

Earnings Per Share

NOTE 3—EARNINGS PER SHARE

As of February 3, 2011, the Company had 3,600,000 shares of common stock outstanding. The impact of the Company’s corporate conversion has been applied on a retrospective basis to January 1, 2010 to determine earnings per share for the years ended December 31, 2011 and 2010.

As of December 31, 2012 and 2011, there were 21,206,121 and 21,202,614 issued and outstanding shares, respectively.

Basic net income per share is computed by dividing the net earnings attributable to common shareholders by the weighted average number of common shares outstanding during the period.

Diluted earnings per share is computed by dividing net income attributable to common shareholders by the weighted average number of common shares outstanding, increased to include the number of additional common shares that would have been outstanding if the dilutive potential common shares had been issued. Conversion or exercise of the potential common shares is not reflected in diluted earnings per share unless the effect is dilutive. The dilutive effect, if any, of outstanding common share equivalents is reflected in diluted earnings per share by application of the treasury stock method, as applicable. In determining whether outstanding stock options, restricted stock, and common stock warrants should be considered for their dilutive effect, the average market price of the common stock for the period has to exceed the exercise price of the outstanding common share equivalent.

The following tables reconcile actual basic and diluted earnings per share for the years ended December 31, 2012, 2011 and 2010 (in thousands except per share data).

	2012			2011			2010
Basic loss per share:
Numerator:
Net loss available to common stockholders	$	(44,634	)	$	(39,198	)	$	(15,697	)
Denominator:
Weighted average common shares outstanding		21,205,747			19,352,063			3,600,000
Basic loss per share	$	(2.10	)	$	(2.03	)	$	(4.36	)
Diluted loss per share:
Numerator:
Net loss available to common stockholders	$	(44,634	)	$	(39,198	)	$	(15,697	)
Denominator:
Diluted weighted average shares outstanding		21,205,747			19,352,063			3,600,000
Diluted loss per share(1)(2)	$	(2.10	)	$	(2.03	)	$	(4.36	)

(1) The computation of diluted EPS did not include 487,314 options and 4,240,521 warrants for the year ended December 31, 2012, as the effect of their inclusion would have been anti-dilutive.

(2) The computation of diluted EPS did not include 627,419 options, 4,240,521 warrants and 3,507 shares of restricted stock for the year ended December 31, 2011, as the effect of their inclusion would have been anti-dilutive.

Pro Forma Earnings Per Share

The pro forma earnings per share for the years ended December 31, 2011 and 2010, gives effect to (i) the consummation of the corporate conversion, pursuant to which all outstanding common and preferred limited liability company units (including all accrued but unpaid dividends thereon) and all principal and accrued interest outstanding under our promissory note in favor of IMPEX Enterprises, Ltd. were converted into 2,300,273 shares of our common stock; (ii) the issuance of 27,000 shares of common stock to two of our employees pursuant to the terms of each of their respective phantom stock agreements; and (iii) the issuance and conversion of a $30.0 million debenture into 1,272,727 shares of our common stock as if these events had been completed by January 2010.

Unaudited pro forma net income attributable to common stockholders per share is computed using the weighted-average number of common shares outstanding, including the pro forma effect of (i) to (iii) above, as if such conversion occurred at January 1, 2010. The pro forma net income/(loss) reflects a reduction of interest expense of $178,000, net of tax and $3.1 million for the years ended December 31, 2011 and 2010, respectively, due to the conversion of a promissory note in favor of IMPEX Enterprises, Ltd. into shares of our common stock, which occurred prior to the closing of our initial public offering, and the conversion of our promissory note in favor of Branch Office of Skarbonka Sp. z o.o into a $30.0 million debenture, and the conversion of that $30.0 million debenture into shares of our common stock, which occurred immediately prior to the closing of our offering.

The following tables reconcile pro forma basic and diluted earnings per share for the years ended December 31, 2011 and 2010 (in thousands except per share data).

	2011			2010
Basic loss per share:
Numerator:
Net loss available to common stockholders(1)(3)	$	(39,020	)	$	(12,636	)
Denominator:
Weighted average common shares outstanding		19,352,063			3,600,000
Basic loss per share	$	(2.02	)	$	(3.51	)
Diluted earnings per share:
Numerator:
Net loss available to common stockholders	$	(39,020	)	$	(12,636	)
Denominator:
Diluted weighted average shares outstanding		19,352,063			3,600,000
Diluted loss per share(2)	$	(2.02	)	$	(3.51	)

(1) Reflects a reduction of interest expense $178,000, net of tax and $3.1 million for the years ended December 31, 2011 and 2010, respectively, due to the conversion of our promissory note in favor of IMPEX Enterprises, Ltd. into shares of our common stock, which occurred prior to the closing of our initial public offering, and the conversion of our promissory note in favor of Branch Office of Skarbonka Sp. z o.o into a $30.0 million debenture, and the conversion of that $30.0 million debenture into shares of our common stock, which occurred immediately prior to the closing of our initial public offering.

(2) The computation of diluted EPS did not include 627,419 options, 4,240,521 warrants and 3,507 shares of restricted stock for the year ended December 31, 2011, as the effect of their inclusion would have been anti-dilutive.

(3) For the pro forma period for the years ended December 31, 2011 and 2010, the results of the Company being treated for the pro forma presentation as a “C” corporation resulted in no impact to the consolidated balance sheet or statement of operations. The primary reasons for this are that the losses produce no current benefit and any net operating losses generated and other deferred assets (net of liabilities) at that time would have been fully reserved due to historical operating losses. The Company, therefore, has not recorded any pro forma tax provision.

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Gain on Maturities of Life Settlements with Subrogation Rights - Additional Information (Detail) (USD $)	3 Months Ended	12 Months Ended
	Sep. 30, 2011	Dec. 31, 2012	Dec. 31, 2011
Insurance Risks [Line Items]
Policy collection, net of subrogation expenses	$ 3,500,000
Face value of policy			10,000,000
Death benefit recognized, net of subrogation expenses			3,200,000
Subrogation Expenses		910,000	312,000
Proceed collected from insurance settlements		$ 6,100,000

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Assets Measured at Fair Value on Recurring Basis (Detail) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment in life settlements	$ 113,441	$ 90,917
Structured settlement receivables	1,680	12,376
Investment securities available for sale	12,147	57,242
Assets, Fair Value Disclosure, Total	127,268	160,535
Fair Value, Inputs, Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available for sale	12,147	57,242
Assets, Fair Value Disclosure, Total	12,147	57,242
Fair Value, Inputs, Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment in life settlements	113,441	90,917
Structured settlement receivables	1,680	12,376
Assets, Fair Value Disclosure, Total	$ 115,121	$ 103,293

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Summary of Investment in Impaired Loans (Detail) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Financing Receivable, Impaired [Line Items]
Loan receivable, net	$ 3,044	$ 29,376
Interest receivable, net	822	5,758
Impaired Loans
Financing Receivable, Impaired [Line Items]
Loan receivable, net	3,011	17,424
Interest receivable, net	724	6,799
Investment in impaired loans	$ 3,735	$ 24,223

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Summary Of Quarterly Financial Data

12 Months Ended

Dec. 31, 2012

Summary Of Quarterly Financial Data

NOTE 20—SUMMARY OF QUARTERLY FINANCIAL DATA (UNAUDITED)

The following tables set forth our unaudited consolidated financial data regarding operations for each quarter of fiscal 2012 and 2011 (in thousands). This information, in the opinion of management, includes all adjustments necessary, consisting only of normal and recurring adjustments, to state fairly the information set forth therein. Certain amounts previously reported have been reclassified to conform to the current presentation. These reclassifications had no net impact on the results of operations (in thousands).

	Fiscal 2012
	1st Quarter			2nd Quarter			3rd Quarter			4th Quarter
Revenues		9,966			16,183			(14,171	)		7,106
Income/(Loss) from Operations		(8,912	)		(625	)		(31,480	)		(3,656	)
Net Income/(Loss)		(8,871	)		(625	)		(31,475	)		(3,663	)

	Fiscal 2011
	1st Quarter			2nd Quarter		3rd Quarter			4th Quarter
Revenues		24,862			29,211		(1,763	)		(8,096	)
Income/(Loss) from Operations		7,425			13,788		(20,377	)		(40,034	)
Net Income/(Loss)		(571	)		12,605		(12,550	)		(38,682	)

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Assumptions Used to Estimate Fair Values of Share Options Awarded (Detail)	12 Months Ended
	Dec. 31, 2011
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected Volatility, minimum	54.18%
Expected Volatility, maximum	54.23%
Expected Dividend	0.00%
Expected Term in Years	4 years 6 months
Risk Free Rate, minimum	2.16%
Risk Free Rate, maximum	2.29%

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Structured Settlements (Tables)

12 Months Ended

Dec. 31, 2012

Balances of Structured Settlements

The balances of the Company’s structured settlements are as follows (in thousands):

	December 31,		December 31,
	2012		2011
Structured settlements - at cost	$	1,574	$	1,553
Structured settlements - at fair value		1,680		12,376
Structured settlements receivable, net	$	3,254	$	13,929

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Investment in Life Settlements (Life Insurance Policies)

12 Months Ended

Dec. 31, 2012

Investment in Life Settlements (Life Insurance Policies)

NOTE 13—INVESTMENT IN LIFE SETTLEMENTS (LIFE INSURANCE POLICIES)

During the years ended December 31, 2012 and 2011, the Company acquired life insurance policies as a result of certain of the Company’s borrowers defaulting on premium finance loans and relinquishing the underlying policy to the Company in exchange for being released from further obligations under the loan. In 2011, the Company also began acquiring life insurance policies in the secondary and tertiary markets. The Company elected to account for these policies using the fair value method in accordance with ASC 325-30-50 Investments – Other – Investment in Insurance Contracts. Under the fair value method, the Company recognizes the initial investment at the purchase price. For policies that were relinquished in satisfaction of premium finance loans at maturity, this is the loan carrying value and for policies purchased in the secondary or tertiary markets, this is the amount of cash outlay at the time of purchase. At each reporting period, the Company re-measures the investment at fair value in its entirety and recognizes changes in fair value in earnings in the period in which the changes occur. See Note 14.

As of December 31, 2012 and 2011, the Company owned 214 and 190 policies, respectively, with an aggregate estimated fair value of investments in life settlements of $113.4 million and $90.9 million, respectively.

The weighted average life expectancy calculated based on death benefit of insureds in the policies owned by the Company at December 31, 2012 was 10.6 years. The following table describes the Company’s investment in life settlements as of December 31, 2012 (dollars in thousands):

Remaining Life Expectancy (In Years)	Number of Life  Settlement Contracts		Fair Value		Face Value
0 - 1		—	$	—	$	—
1 - 2		—		—		—
2 - 3		1		1,222		2,500
3 - 4		4		3,319		11,450
4 - 5		7		11,375		30,950
Thereafter		202		97,525		1,028,256
Total		214		113,441		1,073,156

The weighted average life expectancy calculated based on death benefit of insureds in the policies owned by the Company at December 31, 2011 was 10.6 years. The following table describes the Company’s investment in life settlements as of December 31, 2011 (in thousands):

Remaining Life Expectancy (In Years)	Number of Life Settlement Contracts		Fair Value		Face Value
0 – 1		—	$	—	$	—
1 – 2		1		3,033		5,000
2 – 3		2		2,484		4,500
3 – 4		4		7,084		20,200
4 – 5		3		2,357		7,950
Thereafter		180		75,959		897,816
Total		190		90,917		935,466

Premiums to be paid for each of the five succeeding fiscal years to keep the life insurance policies in force as of December 31, 2012, are as follows (in thousands):

2013		27,703
2014		26,281
2015		26,533
2016		26,978
2017		28,002
Thereafter		324,884
	$	460,381

The amount of $460.4 million noted above represents the estimated total future premium payments required to keep the life insurance policies in force during the life expectancies of all the underlying insured lives and does not give effect to projected receipt of death benefits. The Company has not yet experienced the mortalities of insureds or received the resulting death benefits from our life insurance policies (other than from policies with subrogation rights that are not reported on our balance sheet and that are considered contingent assets). The estimated total future premium payments could increase or decrease significantly to the extent that actual mortalities of insureds differs from the estimated life expectancies.

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Deferred Tax Assets And Liabilities (Detail) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Deferred tax assets:
Federal and State net operating loss carryforward	$ 25,454	$ 13,488
Allowance for doubtful accounts	1,969	3,362
Unrealized loss on available for sale investment securities		25
Unrealized loss on life and structured settlements, net	1,813
Litigation reserves	2,324	68
Other	693	704
Total gross deferred tax assets	32,253	17,647
Less valuation allowance	(27,803)	(11,074)
Total deferred tax assets	4,450	6,573
Deferred tax liabilities:
Unrealized gains on life and structured settlements		5,075
Gain on structured settlements deferred for tax purposes	4,436	1,498
Unrealized gain on available for sale investment securities	14
Other
Total gross deferred tax liabilities	4,450	6,573
Total net deferred tax asset (liability)