Imperial Holdings, Inc. Announces Third Quarter 2011 Results

Imperial Holdings, Inc. (NYSE: IFT) ("Imperial”), a specialty finance company providing liquidity solutions with a focus on individual life insurance policies and purchasing structured settlement payments, today announced financial results for its third quarter and nine months ended September 30, 2011.

Financial Results

Imperial reported a total loss of $1.8 million for the third quarter of 2011, compared to third quarter 2010 total income of $20.0 million. In the life finance segment, total income decreased by $22.3 million during the third quarter to a total loss of $5.5 million, compared to total income of $16.8 million for the same period in 2010. The decrease was primarily driven by a non-cash, unrealized change in fair value expense of $14.1 million in its investment in life settlements during the third quarter of 2011 compared to a $3.5 million non-cash unrealized change in fair value gain during the same period in 2010, resulting from a lower estimated fair value of these Level 3 assets due to a change in the discount rate in the Company’s fair value model. The decrease was also due in part to agency fee income, interest income and origination income declining in total by $4.5 million to $5.0 million during the third quarter of 2011 compared to $9.5 million during the third quarter of 2010. In the Structured Settlements segment, total income increased $137,000 during the third quarter of 2011 to $3.4 million from $3.2 million for the same period in 2010.

Total expenses were $18.6 million for the three months ended September 30, 2011 compared to total expenses of $26.8 million incurred during the three months ended September 30, 2010, a decrease of $8.2 million. Loss before income taxes for the three months ended September 30, 2011 was approximately $20.4 million compared to a loss before income taxes of $6.8 million for the three months ended September 30, 2010, an increase of $13.6 million.

Net loss for the three months ended September 30, 2011 was $12.6 million as compared to a net loss of $6.8 million for the three months ended September 30, 2010. Fully diluted earnings per share for the third quarter was a loss of $(0.59) compared to a loss per share of $(1.90) for the same period last year.

For the first nine months of 2011, the Company reported total income of $52.3 million, compared to total income of $60.4 million for the same period in 2010. Income before taxes was $836,000 for the first nine months of 2011 compared to a loss of $16.4 million during the same period last year, an increase of $17.2 million. Net loss was $516,000 for the first nine months of 2011 compared to a net loss of $16.4 million for the same period in 2010, an increase of $15.9 million. Total expenses were $51.5 million for the period compared to total expenses of $76.8 million incurred during the nine months ended September 30, 2010, a reduction of $25.3 million.

The Company had cash, cash equivalents and investment securities available for sale of approximately $95.1 million at September 30, 2011 compared to $131.4 million at the end of the second quarter 2011. The Company had a book value of $9.87 at September 30, 2011.

Government Investigation

On September 27, 2011, the Company learned of a government investigation of the Company and certain of the Company’s employees, including its chairman and chief executive officer and its president and chief operating officer, by the U.S. Attorney’s Office for the District of New Hampshire ("government investigation”). The Company has been informed that the focus of the government investigation concerns its premium finance loan business and the Company continues to cooperate with the government investigation. There can be no assurances that the ultimate outcome of the investigation will not result in administrative, civil or criminal actions against us or our employees.

Antony Mitchell, Chairman and Chief Executive Officer, commented, "As a result of the government investigation late in the third quarter we have initiated several internal measures to conserve cash while still being able to maintain our investment in life settlement assets. We made adjustments to account for their estimated fair value in the market today. We remain committed to preserving our assets and we will curtail cash deployment in life settlements for the remainder of the year.” Mr. Mitchell continued, "We are in the process of reevaluating our premium finance loan business and have suspended the origination of premium finance loans.”

Mr. Mitchell continued, "On the Structured Settlements side of the business, we continued to deliver strong transactional growth during the quarter, originating 211 transactions, a 53% increase over the third quarter of 2010. Since we have learned of the government’s investigation, there have been no advances made under our Structured Settlements financing facilities. We look to resolve the necessary banking relationships and financing arrangements needed to resume normal funding operations in the near future.”

Conference Call Information

Imperial will host a conference call Tuesday, November 15, 2011, at 9:00 a.m. ET to discuss its third quarter 2011 results. To listen to the live call, please dial (888) 437-9364 or log on to the investor relations page of the company’s website at www.imperial.com. In addition, an audio replay of the call will be available two hours after its conclusion and archived through November 29, 2011. This archived call may be accessed by dialing (877) 870-5176; replay pin number "4791826”.

About Imperial Holdings, Inc.

Imperial is a leading specialty finance company that, through its operating subsidiaries, provides customized liquidity solutions to owners of illiquid financial assets. Imperial’s primary operating units are Life Finance and Structured Settlements. In its Life Finance unit, Imperial provides premium finance loans to policyholders for the payment of premiums and purchases life insurance policies. In its Structured Settlements unit, Imperial purchases from individuals long-term annuity payments issued by highly rated U.S. domestic insurance companies. More information about Imperial can be found at www.imperial.com.

Safe Harbor Statement

This press release may contain certain "forward-looking statements" relating to the business of Imperial Holdings, Inc. and its subsidiary companies. All statements, other than statements of historical fact included herein are "forward-looking statements." These forward-looking statements are often identified by the use of forward-looking terminology such as "believes," "expects" or similar expressions, and involve known and unknown risks and uncertainties. Although Imperial believes that the expectations reflected in these forward-looking statements are reasonable, they do involve assumptions, risks and uncertainties, and these expectations may prove to be incorrect. Investors should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Imperial's actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those discussed in Imperial's periodic reports that are filed with the Securities and Exchange Commission and available on its website at www.sec.gov. All forward-looking statements attributable to Imperial or persons acting on its behalf are expressly qualified in their entirety by these factors. Other than as required under the securities laws, Imperial does not assume a duty to update these forward-looking statements.

The following table highlights certain selected operating data in our life finance segment for the periods indicated (in thousands except number of loans percentage, age and life expectancy):

The following table highlights certain selected operating data in our structured settlements segment for the periods indicated (dollars in thousands):