The L bond, a high-yielding financial instrument, was used to pay for the purchase of life insurance policies on the secondary market. The Dallas-based financial services company GWG Holdings created L bonds, a type of privately issued alternative investment. The company discontinued promoting L bonds on April 16, 2021. Between 2012 and 2021, GWG Holdings (GWGH) created and issued a specific type of high-yield bond known as the L bond, also referred to as the GWG l bonds. To learn further, read more the article below.
The Dallas-based financial services company GWG Holdings (GWGH), which specializes in alternative assets, designed and issued the L bond as part of a private placement. It was a specialized high-yield bond.
Seniors’ life insurance policies were bought by the corporation for less than their benefit value. In a viatical settlement, the business would pay an elderly person $250,000 for their $100,000 life insurance policy and take over their $30,000 annual premium payment.
The insurance provider pays GWG the $1 million benefit upon the senior’s passing. Additional life insurance assets were bought and financed using the money produced by the L bond.
In 2020, 1,081 insurance contracts worth $1.92 billion in benefits were included in the firm’s portfolio. Of that, plans for those 85 and older accounted for approximately half (46%) of the total ($882 million).
Both GWG’s annual report for the year ending December 31, 2020, and a Form 10-Q for the quarter ending March 31, 2021, were not submitted on time. GWG suspended the selling of L Bonds after failing to submit its 2020 annual report on schedule.
Between 2012 and 2021, GWG Holdings sold L Bonds. GWG’s operations were negatively impacted by accounting irregularities and the resignation of an auditor in 2022, which prompted the company to file a chapter 11 petition to handle more than $2 billion in liabilities.