Abacus Global Management, Inc. (ABX) Earnings Call Transcript
September 30, 2026
Earnings Call Speaker Segments
It's my pleasure to welcome Abacus Management's Chairman and CEO, Jay Jackson. Jay, thanks for joining us this morning.
Yes, excited. Thank you.
Perhaps to start for investors that might not be as close to your story in this world, I think it'd be helpful to get a quick overview of what life settlements is, your position in that market and why you think it's such a compelling asset class for investors.
Sure. Super interesting asset. And one thing that really take into consideration is where Abacus sits in this process is that we're the origination company, the market maker of the asset. This is a highly regulated asset where we're licensed in nearly every state that requires it. We're regulated by the state insurance department. And to source the asset, we typically source these from financial advisers, potentially their insurance agents and/or the policyholder themselves. And this is really just about an information campaign. It's really what it comes down to. We educate people that their life insurance policy is actually personal property is set forth by the Supreme Court over 100 years ago. There's $14 trillion of life insurance assets in force today, 90% of those assets will not pay a claim. And not because the insurance company has done anything nefarious. It's just that the way traditionally people have used their life insurance policy is that they use it for a certain amount of time, their kids' age, their family goes up. They don't really need it anymore. And then they simply just return it back to the carrier by stop making payments. What Abacus does is steps into that process and just wait a minute, it's personal property, what's the net present value of that contract today. So if you're 80 years old, you have $1 million life insurance policy you've been paying into, that net present value could be as high as $300,000 or $400,000, and we do that by helping them better understand how much more time they have in that contract. That's the sale for NPV, and we aggregate their medical files. We received their signed HIPAA through the medical files. We use an excessive amount of data to help establish what their mortality outcome most probabilistically looks like by actual mortalities that have occurred based upon the same medical profile that they have. So in a nutshell, where Abacus sits in this is you look at our flywheel, the core of this is that we're an origination and market maker company that also asset manages the business. We sell the data and technology we capitalize on that through our Abacus Intel. And then now we're taking that, moving that into private wealth and wealth management because we create so much wealth for our clients. Like we'll pay out nearly $0.25 billion in new capital to people in retirement. And then how is that liquidity ultimately going to get allocated. We want to make sure that we can kind of monetize that into our own fee structure.
And you talked a lot about how it's compelling for the investors selling you their life policies. How is it compelling for investors that are investing in your products and securitizations as we think of evolving to be more of a third-party business?
Absolutely. And the institutional interest in this asset has really grown significantly over the last decade. And in the last 2 or 3 years, it's really grown. And I would even argue that last year, we've seen some volatility in private credit type products. What makes this asset so unique or the 3 -- here's 3 unique qualities. One is that it's typically -- if it's a form of credit, it's issued by an A-rated carrier that has a default ratio of near 0 over the last 100 years. So you've got a very high creditworthy type of counterparty here that has cash reserve, regulatory against that contract. So now it's going, okay, typically, those contracts would trade at a much lower type of yield, but because there's some volatility around understanding the longevity of the contract, that volatility creates a higher yield profile, but in addition to that creates a very little correlation, a very low correlation to the other markets. I mean if you think about it, the example I just laid out, you have a 80-year-old who's going to sell his contract for, let's say, $300, 000 or $400,000. Ultimately, every year, this contract becomes more valuable. It's like kind of like a mortality-driven 0 coupon. As you get closer to par, right, driven by the mortality, that's what drives your returns. And therefore, if you have market volatility, it's not subject to traditional interest rate volatility, bond volatility or equity market volatility. So here, you've got this kind of lower correlated or uncorrelated yielding products in the high to low single digits that is effectively an A-rated piece of paper. And the issue from institutional investors isn't the underlying investment. It's instead how do they get it? And that's where Abacus sits. And we've been working really hard in building structured products to gain them access in a much more simplified format like a securitization.
Great. That's helpful. So you recently had a great Investor Day in July and kind of framed the story in a way that asked investors to stop viewing Abacus as life settlement transactional business trading business instead see it as infrastructure for lifespan linked finance. What are early externally measurable milestones you're looking to and we should be looking to over the next 1 or 2 years that would prove that reframe it?
For sure because it's important to know, here's what we're not. We're not an insurance company. We don't issue capacities. We're an alt asset manager. And Traditionally, we had taken our tranche of assets, let's say, our portfolio, our balance sheet and sold those to third-party asset managers. It logically made sense to convert that into fee-related earnings through our own asset management. We've grown from $50 million AUM to over $3.5 billion AUM just in the last 3 years. That's the demand. Just in the last 12 months, it's almost $1.5 billion in new AUM has come into this asset and specifically through us. And so that reframing is happening actually in real time. And it wasn't something that we said, gosh, we hope this works out. This is what we're trying to do. It was based upon what was actually happening. And when you think about the financial infrastructure that we're creating, one, we're creating financial infrastructure related to unique products like securitizations that I'm sure we'll talk more about, but you've got an asset in high demand, right? There's several billion dollars trying to chase the asset, and they're just kind of a hard time getting it. But then the other piece that I don't want to underscore here that is super important is the data. Think about the data I just collected on Mr. Jones. All of his medical files, his history, mortality history of everyone just like him and then capitalizing on that longevity data to produce products that's usable in financial planning, one, right, if the #1 fear is running out of money in retirement, shouldn't we think about addressing that sphere by telling people how long they're going to be in retirement. We have the unique data set to support that. And then secondly, we currently sell and monetize a lot of that data is some of the largest pension funds in the United States. Some of our largest clients are literally the largest pension funds in the United States who source our mortality data and soon to be some of our lifespan based data so that they can enhance their outcomes. Our premise is, if I've just paid you $0.5 million for your life insurance policy, you should invest like the pension fund, stay in equities longer, be in alts, be able to utilize that because you can do that allocation based upon having the information on how long you're going to be there. And the most important piece, how do we monetize? What does that monetize -- monetization actually look like? And we laid out a plan over the next 5 years to get to 70% fee-related earnings. That is not because we're going to see a decrease in origination. That's instead in addition to what we're currently doing. Our origination and market maker business grows at about 20% per year. If we do nothing, we'll get pretty close to hitting our 3-year target, even if we don't diversify all the revenue, right? Like we'll go from -- I think consensus is north of $150 million this year and targeting $250 million over the next 3 years or 2 years out. We'll get there alone just on that. But if you think about what we're adding, right, we've seen a significant increase in AUM. We are monetizing our data already to now millions of people that we track mortalities for in pensions. And when we think about the asset management piece on financial advisers, this is a tool that we're looking at monetizing in a way that we would charge a fee against all their assets just to have access to the tool. So I'm not here to compete with RIAs. I'm here to provide financial infrastructure for them so that they can help their clients make more informed investment decisions. Will we have internal RIA products? Have we made a minority allocation into Manning in a peer, which is a multibillion-dollar asset manager? Of course, we have, and we're going to launch that product directly onto their platform right away. However, we're also going to add this as a monetization product and think about it, this should be available to trillions of dollars here. And if you're making a single-digit 5-plus basis points per dollar on that, you're doing really, really well on $1 trillion. And I think that's the scale and scope we see here. I think that in the end, 5 years out, we've underestimated what we could be.
So you kind of touched on my next question a little bit. this idea that you're moving to 70% recurring from 16% recurring now, obviously seeing a strong trajectory in the AUM growth. What is your definition of recurring? And how should we think about the balance that 70% between asset wealth management, this new 5 kind of basis point per dollar you're talking about?
Sure. The way that I look at recurring revenue for us is not unlike any traditional alternative asset manager, you see. Certainly, fee-related earnings related to management fees. One of the things unique things that we also have, though, is servicing fees. So if you think about securitization, we retained servicing fees, which has the same qualities as a management fee, right? Like it's the same type of annual fee that you're charging on those underlying assets that we're able to pick up because we have several different verticals within that same product line. The other way that we look at it is that we just highlighted, if we think about the asset management fee for financial advisory, because we do have our own funds, we have ETFs that we'll be rolling out, we'll be able to acknowledge and pick up some of those fees there. Abacus Intel is a separate vehicle. And what we typically do when we sign up clients there, those are 3- and 5-year contracts. This isn't, hey, it's a monthly contract on a per life basis, yes, but these are 3- and 5-year contracts that graduate fee increases over time. The same thing will happen when we're providing this lifespan based financial planning data to some of the largest RIAs in the country. And I can tell you where we haven't been able to officially announce the names of these firms yet, but we've already got 2 agreements done with financial firms. And so they're going to be using LifeARC, applying this and more to come, right? We are receiving inquiries on a daily basis where large RIAs across the country, some largest out there want to use this platform so that they can enhance their own clients' outcomes.
And is that -- and that would be the 5 basis points you're talking about? Or is that kind of...
Yes. And there's 2 ways Yes, there's 2 ways to think about that. There's the 5 basis points where this is just their current clients, right? And if you think about it, they have tens of billions in assets under management that are going to now capitalize on this program. It will be like a scaling model. It might start lower and then scale back up. And then we generate so many new inquiries, leads, payouts we work with. And in those cases, a little bit different, right? These are our clients. We might -- we'll have an internal RIA team that will work with them specifically on how they can best meet those allocations. And potentially as they graduate into maybe larger platforms, ultra, ultra high net worth. We've got some clients that have reached out to us that have north of $100 million of net worth that want to work with us on their allocation, capitalizing on lifespan based financial planning, where we've taken them through LifeARC, shown them how they can improve their outcomes. Like somewhere the $100 million are less concerned about their retirement income and they're more concerned about their growth and how they allocate and then how can they distribute that to the next generation. And then we're sitting down with our next generation and helping the next-generation plan because when you have an ultra-high net worth, you know what the next generation really wants to know, when they're going to inherit the well. And this actually really helps them do this. And our campaign is normalizing that conversation because that is one issue is getting people comfortable with the idea that says, "Hey, mom and dad are at 120 months and 120 months is effectively 10 years. We tend to not talk in years, we tend to talk in months because it makes people understand how much time they really do have, which is a lot, right? One of the first pieces of the campaign, I'll be putting my number out. My number is 408 months. And my gosh, if I make it, my family will probably be sick of me, but that's my target. And that's probably where I'm going to lay out. And if I plant that, I appreciate where I'm at in my own process much better, right? Like I appreciate time, I appreciate my investment, and I'm going to focus on my health if I have a better understanding of what it is.
That's helpful. And I imagine this is obviously a nice kind of Trojan horse into introducing your asset management products to these RIAs. Yes.
Right. Right. And we gain those contracts into those RIAs. Naturally, we're asking them to take a look at distribution agreements for our own funds, including our interval fund.
Yes. All right. On that, let's move to kind of some news last couple of weeks, got a nice proof of concept on the viability of life settlement as a more scaled institutional asset class with your closing of a $400 million securitization. I think that was 8x larger than the first one you did last year. How would you frame the makeup of the investor base there, the demand, the process of getting that out because I think it took a little bit longer than we were thinking? And then how should we think about it being a more consistent AUM contributor now that it's getting more scale?
Yes. I think we had focused specifically on this kind of what I would call our new distribution channel, i.e., the securitization channel, and we had spent a lot of time trying to educate our shareholders and you on the impact this would have in a positive way. I think everyone appreciates and understands the impact this has on an institutional basis, right? You have consistent capital. It's rated. It means that the access to institutions to be able to invest into the asset broadens who can invest and what part of their own investment book that they might invest through. So brands it to pension funds, brands it to insurance companies, broadens that investment pool to very large private asset managers, where we had initial work through was with the rating agency and without saying who it is because it was a private deal technically, it was one of the large rating agencies. It's almost like, I can tell you who it wasn't. And it was not one of the smaller ones that has other issues. This was one of the larger rating agencies that does these deals on a regular basis. And to get investment grade and better on the underlying asset was a true test to the structure of what this was. And that took us almost 7 months. And we had to run so many iterations of the underlying portfolio to provide comfort around extension risk and the extension risk was related to ultimately lifespan extension. And how do you get comfortable with you have a little bit of a moving target, and we had to do things like improvements related to understanding what that extension risk was and having additional cash reserve there to ensure that there was a lot of comfort from both the rating agency and the investors. The result of that ultimately was a securitization that had some of the most well-known and largest investors that any of us would check a box and some names you cover. So it was those types of...
I figured.
Yes. And so -- and also what I was very pleased with, large insurance companies came in. I mean the largest. And ultimately, what happened was that this was an A, B tranche, I had an A tranche and a B tranche. Both tranches were rated investment greater better, of course. And what was really impressive to me, which really spoke to the structure and the demand the securitization was 2x oversold. I mean, oversubscribed. We had to go back to those large managers and, Patrick, you know this better in all everyone. Like when you go back to them, they're not upset, but they're not happy that, hey, we're cutting your allocation back, but what a great story right? We also upsized the deal because it was so -- it was oversubscribed. We upsized which was a pleasant surprise. And now we're preparing ultimately for the next one. I think our intent is to not flood the market, you want to flood the market, but our intent is to do this probably 3 times a year. And we'll set some of those targets out on our Q3 call, but it's going to have a material impact to the amount of capital that we're raising. I mean I think that if this should put us on track on a regular basis to be raising new capital between $800 million and $1 billion a year pretty consistently because size and scale here, yes, they may not all be $400 million, some might be slightly smaller in that range, but to have those level of institutional investors, they don't like to do really small deals. So they need to know they have allocations on a go-forward basis. So if we're looking at similar size, maybe some smaller, some larger, depending on the time of year, and then we're looking at in 3 of those a year, you can quickly map out the impact that this has. And as a cost of capital, it's only going to get better as you do more, right? The first one, you run a little skinny. And then the next one, you just kind of continually see that improvement is there's a lot more comfort in the market.
And you've done the heavy lifting with the rating agencies. So...
Yes. Now it's -- we'd like to think it's rinse and repeat. You never know but it's -- you have certainly a map now of exactly the types of contracts that fit what types of shareholders are going to -- what they're going to want to see and most importantly, the documents in the platform. So that is now well established. And that's why when we're looking on a go-forward basis, we're like, look, like we would target doing another one in Q1 and kind of build through this. And I think we would feel pretty good about that.
And how should we think about the economics for you? Is it just the management fee? Are there other ancillary economics?
Yes. I think the way to think about it yes, there are some economics certainly. The way that built in a couple of ways. One, certainly the servicing fees, we retain servicing on all the contracts. So that looks and feels just like a management fee. So we will retain that, which is great. There's -- whenever you do a securitization, you have some monetization of those economics day 1. But when you're doing your early securitization, you're going to have less than you would maybe later a year from now, right? So you can expect like when you're putting your selling policies into the securitization, you can retain some of those economics just on that sale depending on where rates are at the time. But it's not your most significant piece while you do it. This also frees up a lot of capital to go and buy more policies at traditional ROEs, right? That's kind of the way that we think about it. We're not -- we're less concerned about those economics, but you do get a little bit of that. And then I would add that we kept 100% of the residuals. So there was a 15% reset on this, we kept 100% of that, which we're kind of over the moon about because we know the underlying economics of the policies. We know the tranche that was in there and there's a lot of alignment with our fellow investors there. So we're also excited about that piece.
Okay. Great. And I assume, I guess last question competitively, how defensible you think remote is here. I don't think anybody else is doing that...
Yes. It's very defensible. I -- and in a couple of ways, you have to be able to source the right kinds of contracts, right? Like traditionally, if you looked at these assets, they were originated for a very certain type of fund, the GPLP 10-year product that might have had different yield mindsets with us being the originator of the asset, we can originate new contracts that are designed to fall into that securitization. And that's what is part of this moat is that -- if not, when you look at a broader set of assets, let's just say you were to look at a large tranche that somebody else is selling to you, you may not have all the policies you need for securitization. We can manage that at origination and build into the balance sheet, the exact types of policies that fit best into that securitization. And that's why we're teed up to do another one not that far out, right? Because we already know exactly what types of policies need to fit and all of our buying structures around that. This is really hard to do for anyone else that doesn't have access to the contracts.
Right. You mentioned GP LP structures. Is there room to have a much bigger franchise there? Or do you think the demand is moving in the securitization direction and why or why not?
Yes. I think what we'll see is -- I think it's a fair point, and we will see higher demand in the securitization because the numbers are so much bigger, right? And I think we'll see some of that. In the GPLP from an economic basis, we do okay, but long term, we'll do better in the securitization. So naturally, as a company, it makes more sense to do more securitizations. And then the last thing I had, what I think we'll see is more interest into the interval fund because it's just an easier access product. We're the only one out there that has this type of fund and prices daily. Yes, it's quarterly liquidity. But this is a product that whether it's retail, more importantly, even pension funds and institutions truly understand. So I think that over time here in the next like 1 year or 2, we'll probably see more transition into an interval fund that was going to go into the GPLP because they have some liquidity. And they'll sacrifice some yields for that, but I think investors are more comfortable to have liquidity against that yield.
Okay. Well, you teed me up because that was my next question. You recently got approval after a long process with the SEC to launch the interval fund. I think it will be kind of the first high-profile that miss tests on retail demand for like settlement as an asset class, at least in the U.S. Just update us on the plan for distribution of that. But it sounds like you think there's institutional demand as well. And to what extent you can update on the pipeline for nuclear form adoption and/or how initial uptake is tracking.
Yes. We've been signing up RIAs as we speak. We have a few signed up already for distribution. The real step in an interval fund process is getting a custodian. And it's not that we face a challenge there, but there's a process, right? Fidelity has a process of x amount of dollars and x amount of time. Schwab is probably the most stringent process. That's a year long wait, regardless of who you are. I don't know, [indiscernible] gets there talk quicker, but like whatever we kind of have to work through the process. So -- and to gain access there to RIAs, they typically trade or they hold their clients' assets on a Schwab or Fidelity. So that is really your initial step of saying, okay, I've gone through this huge thing I'm active, I'm ready to go. We've put -- launched this with our own capital. And now it's on Pershing as we speak today, and now we're working with platforms like Goldman and others to get that on there. And then wants to add on, once that's there, and it's accessible to RIAs, where they can just write their single trade and just put the ticker in, that's where things really take off. And so we think in the next 60, 90 days, we'll have more feedback on those platforms. We're signing up RIAs who work on broadly like Perten and Goldman. And then you'll start to really see those assets kick up. So I would say it's probably -- even though you get approved, is technically not approved, but you get -- you're activated by the SEC for your perspective to put this out -- you've got about a 3-month process of building into custodians. We've already held our first board meeting, there's money in there now. And then you're working at RIAs who have access to some of the maybe different custodian platforms that aren't just Schwab and Fidelity. And then you build into those and that thing really takes off. So demand is really high. It's just making sure the demand meets access. People have to be able to access it in a really simple form.
That's very helpful color. So all of this, we're talking about obviously is contingent on your ability to source enough policies to fill the investor demand. And we obviously see you on TV a lot, at least for those of us that watch the financial press. So kind of firstly update us on how your efforts to educate advisers and investors on the value of their life policies, how that process is tracking. I'll start there and then I have enough follow-up.
Yes. We have spent not just dollars and marketing, but that campaign pays off more than just a commercial and a calculator. We still receive inquiries per month from our marketing campaigns traditionally that you see you're right on commercial, digital, et cetera. We also started doing different campaigns where we're being very active on periodical and utilizing things like AI, so that when people are researching this through AI, we're very active within all the AI platform so that people can learn and educate, they make that calculator available, right? Like we've made it available on Anthropic, that's going to be that next stage because you just have to remove the barriers to the education, right? Most people still today, and I say most like 90%, I just don't know that recognize that this thing it really does have value. And so the more education and the more broad we make this the better, the more accessible we make it. And then expanding from there, we -- that helps us drive this, what I call, ancillary growth through our agent and adviser channel through national accounts. So the largest firms out there that we all know that might be financial advisory firms, RIAs, broker-dealers. We're now working with them directly at a national account level and being, in some cases, the exclusive origination company to source these policies on their behalf. And here's where it's so fascinating, Patrick, you know what's getting me in the door. LifeARC, lifespan based financial planning gets us in the door, and then we talk to them about, well, wait a minute, there's a dual opportunity here. We can help you source more life insurance policies that could potentially be sold, that creates liquidity for your clients and now you better understand what their lifespan is so that you can allocate those proceeds to your own clients. And so utilizing our data and technology to gain access to these really large massive investment firms who really control the largest piece of life insurance policies and relationship to the client. We're seeing that happen in real time. So when I think about expanding the pie, it's not just running more TV ads, it's the relationships we're able to capitalize on through our own data.
That's great. And then I guess longer term, you put some pretty punchy TAM numbers out there. How should we think about how much of that is really addressable when you think about your -- what I think are stricter parameters than that whole market?
Sure. If we're really narrowing it down, I'd like to just start cutting things in half, right? Like if you take everyone over the age of 65 and you're saying, okay, how much of those policies are lapsing, right, over the age of 65, it's about arguably between $230 billion and $250 billion a year. Well, okay. Let's just cut out those 65 to 75. And let's just go 75 and older, Well, it's going to take you [indiscernible] and so that's going to take you from $23 million down to $125 million. Let's go a step further. Let's make sure they're the right type of policy we would want. And that's going to take you down from $125 million, cut it in half again, cut it down to about $75 billion. By the way, that's annually. The whole industry does pretty well. And so even if I were to say aggressively, maybe we're not just 1% or 2% of what we think a potential market would be we cut it down to what we think actually could happen. It's still we're still at sub 5%, maybe 6% of what could happen. And a lot of that has to do with people look at their life insurance policy and they just said, hey, that's just some asset that I'm going to let go away. They don't understand is personal property. And the best way to access that is, yes, commercials that drive some things, but it's really their adviser. As we get more advisers bought into this premise that their life insurance policy is an asset the life span is probably the most valuable asset they have, and we can accomplish 2 things: providing liquidity to their clients and help them allocate those funds better by capitalizing on this data. That's what's really going to flip this switch. And that's where I think you'll see us go from $1 billion capital deployed to $2 billion to $3 billion capital deployed. That was my big target. If you remember, when we first started talking, I think we were doing something like $300 million or $400 million capital deployed, and we were high fame, that's really cool. And now I've got very ambitious goals, right? And getting that north of $700 million, I thought, felt a long ways away 2 years ago, and now we're we're heading in that direction pretty quickly. And I think that we've got $1 billion that could potentially happen too on capital deployed. And so I definitely think it's there. When I think about what we are doing is we are still being thoughtful and conservative around matching the capital to the origination. Like if you think about looking at our capital deployed numbers, it's not a stretch to then see where we did the securitization at you're right, I can't come to market and not have paper. And so we're tracking that to where we are continuing to grow our originating that and making sure that we're meeting that.
Great. So the center of the flywheel is your technology advantage, right? Could you -- we touched on LifeARC a bit, a little less on MVerify. Can you kind of quickly give us an overview of the technology business and what your competitive advantage is?
Sure. It's twofold. One is that we have a significant amount of historical data that we have HIPAA releases on. And that data is really hard to get without HIPAA. HIPAA is a very stringent loss. And that allows us to capitalize on that data and make our engine more intelligent. We don't put out any individual's information to someone else. That's not what happened. It's not share that way. What we do is that we look at this in aggregate and as an individual comes in, what we do do is we say is in aggregate, this is how you compare to everyone else. You can't run that comparison unless you have the underlying data. And it is this massive advantage. And it's the type of thing that even you look at major insurance companies, yes, they have a lot of medical files. What they don't have is the actual mortality data. where they struggle is, is looking back at their population and saying, what happened when someone turned 75. Now when they underwrote them healthy at 55, but what do they look like today and they don't have that. And then comparing that what happens to the actual mortality experience because of that. So we've decided to take this data and make it very accessible to everyone. And the best way to do that was, yes, we are an AI-enabled we harnessed AI in a very positive way. And what I think AI is going to have a massive impact on is health. And the first thing we do is that we allow people, first and foremost, we help them get their medical files. If you've ever dealt with a loved one that's going to the hospital and you're trying to get their med files, it's a train wreck. It is so hard to do. Now they can literally just say here, log in. Here they are, download them, get a summary. It will all be on LifeARC for them, protected for them. And so thinking about access to that data and then improving someone's outcomes. So the first thing we're working on is improving their financial outcome by understanding how long you're going to be in retirement, you can allocate more intelligently. By the way, Patrick, this is going to have a major impact on annuity sales. I think because if you're going to do an annuity where you've got $2 million, you want to earn 5% a year for the rest of your life, where I'm saying you can take down 8% to 10%, if you just remain allocated because now you know you're not going to run out of money, what do you need an annuity for, right? It's a whole different take on that, and that data is going to have a massive impact on a trillion-dollar industry. Somebody teased me the other day and they go, this annuity company is just going to buy you and bury the data. And I guess that's good for shareholders. I guess we'll sort that when we get there. But that data advantage is what truly an where are you going to get that 20 years of data like Abacus has. And so now we've built the access to it, right? And so when firms come to us or when people come to us, we've made it easy. We've made it accessible and applying that across the board. The next thing we'll do is we're going to partner with health care companies and say, hey, how can you improve your health options while you're in retirement, while you're extending your life, you can also improve your financial outcomes. The secret to this whole thing is, it's not just a one and done, meaning we underwrite you once, and this is what it looks like. We underwrite you every year, and that's all inclusive in the feet. So there's never a cost to somebody to come back to me the next year, which we will do, and we'll update their medical file and we'll make sure they understand how there are changes. It might go longer, right? We might improve their outcome. Great. This is how we update the allocation. That doesn't impact us in a negative way. If it ends up being shorter, great, we should sit down with your ears and have a conversation what that means and how you're allocating to protect those assets maybe in a different way.
That's helpful. So I think you did a pretty good job of explaining where LifeARC stands and where it's going. It sounds like we'll get some news on that soon. But the other side is MVerify, which is tracking lives now, I think, millions of lives now, but it's pretty small revenue impact. Do you expect this to be a more meaningful contributor to earnings? Or is it more just support for the broader flywheel that we've been...
It is a little bit of both, but it is going to be more meaningful because MVerify is a function also of LifeARC, right? And so as we think about how that revenue is going to combine over time, they do kind of go hand in hand a little bit. But a couple of updates. For those of you that saw my interview on Fox Business and on Mornings with Maria, and I know since there's some transition there, but I did a shoutout to Secretary [indiscernible] and his office reply. So it was really cool. Actually really amazing. And this is -- the MVerify program is going to grow, I think, significantly on the number of lives we track. We're going to start thinking about how we can work federally on this and help prevent Medicaid, Medicare fraud. Social Security Administration. We have calls scheduled with them. And I can't say for sure whether -- how that's going to evolve, but it's certainly making progress. The way we think about the revenue there is it's kind of a step-up revenue over time. So we signed 3- and 5-year contracts that year 1 initially, your revenue is lower. And then you build into higher cost per year. So we start to naturally see that revenue uptick just based on our current client base. But then you look at what's in the pipeline, and there's millions of additional lives. And so the program itself, one of the things that helped in that in the last bill that was passed through Congress called Big Beautiful Bill, was that they're requiring states to be accountable to this data and mortality. And we were already in the house when this happened, meaning that we're already working with these states. And so we're just expanding services. Like for example, one of the largest states for all retirees in the entire country, we now do it for the entire state, not just one specific pension, we took on all the retirees within the state. And the issues with the state isn't necessarily that they have issues with their state data. It's what happens when somebody who is a teacher in California moves to Florida, right? How do you track that interstate data. And so we -- since we have this on a national scale basis, we're able to provide that. That business is going to continue to grow. It's going to be more meaningful. And the income is going to continue to step up over time.
Makes sense. I have a few more, but a reminder, if you want to ask any questions, I've already gotten a couple through e-mail, but there should be a link to Slido in your invite and you can put your question in there. Let's touch on wealth management a bit. You mentioned the minority position in Manning & Napier because beyond the strategic access of having that relationship, what is the return profile of an investment like this and kind of how is the path forward for building out a broader wealth management business from here?
It's twofold. First, the -- what we'd say are agreements that we already have in place allow us to provide resources to them to source insurance policies that we could potentially purchase from their clientele, which was a senior aging population. If we just are successful there, the minority investment will pay for itself in the near term. That's how -- that's why this was such kind of for us, kind of a no-brainer to gain that access. We get asked for like, why didn't you just do that without having to make the investment and you need a proper alignment with those firms at a very high level to get full access and to have those conversations with their clients. And so that's why we made that investment. We also made the investment because we thought, gosh, we're going to create a lot of value for Manning on their AUM because we're going to provide all this new liquidity to their clients. They're going to invest that. You're going to see an increase in fees, an increase in revenue. So it really made sense to us that if we're providing this additional revenue through additional AUM, why wouldn't we participate in that fee growth? Secondly is Legion and certainly LifeARC. Being able to launch LifeARC on that platform gives us a lot of validation, kind of day 1 as we sign up other firms. And how does that look going forward? I think that I'm less concerned about M&A on a go-forward basis around M&A acquiring and rolling up RIAs as I am is, more importantly, providing financial infrastructure tools like LifeARC all of them. That's a much bigger play for me, and it makes a ton more sense. And then operating that Legion that we can provide to firms. What we do know is that clients tend to like and work with people that are in local to them. And if we can partner with firms that are local and we generate a certain amount of leads from LifeARC or even our policy sale, our policy acquisitions or Legion on the policies, we've now built a very coherent and cyclical relationship and alignment with that RAA. Who is then going to do fees with us in relationship to, of course, our Legion, we'll earn larger fees than just what we would on LifeARC across the board. So it's truly this flywheel across all of our channels that impacts, right, we'll buy more policies because of many will increase our revenues, recurring revenues because of asset management because they're going to look at these funds that potentially they would not have looked at before, but now these RIAs are really looking at things like our interval fund because they're talking about insurance and policies and how that works. And our Abacus Intel, our actual data intact that they'll be using to enhance their own client outcome. So Manning is the first example of that, and we're seeing those economics play out in real time.
Helpful. So you just authorized -- or the Board just authorized a new $100 million repurchase program. And I think you've said in the past, M&A is a part of your growth plan. So how should we think about how you're balancing the low stock price and the repurchase program versus growth opportunities you're seeing out there?
Yes, I think we absolutely take this into consideration around M&A needs, debt right, balance that against what the stock repurchase plan was. I think for us, it was -- we wanted the market to be aware that we're very active buyers. We're going to capitalize our shareholders by buying back shares, and we're aligned with you. Going back to the Board every 2 or 3 months seemed a little silly. So we said, look, we had done $80-plus million in the prior few years. Let's just kind of make sure we have this in reserve so that we could execute on this where we find appropriate. And to give you some historical background, which I always think gives you some insight to where and how we buy. Our historic acquisition price of shares is under $8 on the first $80-plus million. So it's pretty easy to see where we'll be active. And as you get pullbacks like this that you've seen, the math is always really simple to us. if we feel like we've got a greater ROE on the stock than we do on buying policies, we will buy the stock, right? We're very disciplined when it comes to that. And we base that on this premise of like, hey, if we think that we imagine the stock in some cases is 40% or 50% undervalued based upon where we should be pricing next to our peers, makes a ton of sense to make sure that we're allocating to both those strategies. If we're looking at an M&A transaction when you have a stock price that's lower, it requires us to have even more discipline in that M&A because you can't just use your stock as currency, right? You've got to -- because you're going to over dilute, which means that if you over dilute, then you don't have your dilution per share is a negative number, and you can't put that number out. It's got to be positive. So you need a positive number on an EPS basis against what you're going to dilute in any M&A activity. So those 2 things are taken into consideration on the buyback. But more importantly, even when we do an M&A, it's got to make sure that it's non-dilutive to our shareholders.
Makes sense. In that vein, the stock recently took a leg down on the back of some founders announcing a 10b5-1 plan that has since been canceled. So getting -- I think it feeds into a broader debate we have like getting the stock more liquid would obviously help bring more investors into the fold, but tough to do it if the stock sells off like that every time you know something. So how are you thinking about the stock's liquidity as an impediment to broader ownership and what options for after what happened this month?
And they sold very few shares and that's what was really interesting about it. It was like I think they sold like 75,000 shares or something. And it was scheduled over time. They are retiring. They've been big believers and remain massive believers in the stock. I think they were going to do something like 1% of their position. So they were going to be effectively leave 99% of their net worth in the company. And so yes, we were all a little surprised at the reaction because we felt like, hey, this is a way to add some liquidity without punishing our shareholders, making sure that we're doing it in a very thoughtful way, but that's look, that's what I love about being public. The market speaks. And that's the way it went. And so we said, okay. This is partly my fault. I need to do a better job of conveying this message to our shareholders that this is not unitive, and we're trying to do this so we can put more shares out. I own that and accept responsibility for that, and I'll make sure that we convey that message in a very clean way on a go-forward basis. But what we have decided to do to kind of help alleviate this on a go-forward basis is that we're looking at instead with strategic that would be interested in buying that stock in a private block sale so that it's non-dilutive to our shareholders. We don't want that. We don't want to give the impression that anyone is selling. And we also want to leave the impression that, hey, if someone is buying the shares, it would be a strategic person who's in it for the long term and really send out that positive message to any of our shareholders over time. And that's the process on a go-forward basis. And we anticipate that we'll be able to get some more liquidity in the stock at some point in the near future, but we're definitely not going to do it at the detriment of our shareholders.
Yes. That's great to hear. I have one final conclusion question, but I'll get -- there's a couple from the audience. This one's really technical. I think I know the answer, but I'll let you can. Abacus disclosed the discount rate has moved from 21% to 10% over the last 2 years. Can you walk us through what changed in your underlying assumptions to justify that?
Sure. What's super interesting first and foremost, on the discount rate that Abacus had produced, that was an output, not an input. So the real why that's so important is that that's just what asset managers are willing to pay for the underlying asset. And the discount rate is a result of that. So if they're willing to pay more for the the discount rate comes down, if they're willing to pay less for the asset, the discount rate goes up, right? That's -- we're not sitting in a back room setting that. And I think broadly, if you just pick out 2 years, yes, you could see a 21% to 10%. If you add 8 months to that. So look at 3 years. So look at the 3-year number, it went from 12% up to 20% to 10%. What happened in interest rates over that same time period, our CIO put out what I thought was a very impressive shareholder letter describing this. And what we did is we overlaid interest rate volatility to how that discount rate moved. And it's easy to pick 21% to 10%, but if you ignore the prior year when it was at 12%, all it was, was just a recycle back to where it was. And so that volatility for us, historically, we've seen this between anywhere between 10% and 14% over the last 22 years. And what was really fascinating is that when we work it and with equity and shareholders initially kind of came at me a little bit like, wait, why are you diluting me for equity to go buy policies at 20%. And this happened in Q4 of 2024. And I said, well, because look, I can buy these at such a great rate. Fast forward at Q3 of '25 last year, our gross spread was 37%. So we took a massive advantage of that rate. And that's what we should be focused on. It's the way to think about our model, it's really cost plus. And so the thing to focus on is at the discount rate, it's actually our growth spread, which we put out every year -- or excuse me, every single quarter of 20 -- anywhere from 18% to 26%. And cost plus, if you think about it, it's almost like when you see an increase in gas prices at the gas station. And the assumption is that, oh, while gas prices have gone up, the gas station didn't make less money or more money right? Just it's costs when up. And when you see that kind of happen at kind of where we are because we're the origination company, we're able to adjust to those costs in real time. And so the resulting discount rate is just a result of where people are willing to buy the policies for. It doesn't impact how we buy doesn't impact our valuation methodology doesn't necessarily impact the underlying balance sheet. It's just where policies are transacting at that time.
Right. And if you're turning the portfolio over twice a year, that's pretty good validation on that, right? Right. The other one is on -- I think this might have been what you were hitting on the extension risk with the rate ages, but like how are you factoring in the impact on longevity from things like GLP-1s and AI, as I mentioned, AI as well as potentially extending life. Yes, yes.
Yes. We're all factoring it in. Remember, everyone we purchased isn't underwritten a decade ago. They're underwritten in real time in the last 24 months. And so you're taking a lot of these things into consideration. Specific to the GLP-1 factor, is it -- yes, you can have an increase in it looks like it could potentially reduce early onset dementia and Alzheimer's. It could obviously reduces inflammation, can have an impact cardiovascular test, et cetera. But you know what else does, it reduces your muscle mass and bone density. For seniors, this is an issue. And let's look at the securitization, right? We took into account that we were improving mortality, meaning that people were getting healthier within the securitization automatically, which takes into account at a rate which was significantly higher than social administration or anybody else does. We were assuming the population is going to get healthier, but the average age in that population was 84 years old. So ultimately, what you see is an impact to new medical technology to someone in their 80s is going to be much less impactful than somebody in their 60s. Now I think the question really comes to in 10 years from now, what's that population set going to look like, yes, it probably won't be 80-year-olds, it will be 90 year olds in the securitization, right? And we'll be able to reduce that in real time, like we'll be able to make that adjustment in real time. So those are some of the things that you'll see, but we do take those into consideration on the securitization and all the stress testing now.
Great. So to conclude, I have a higher-level question. You framed the discussion around the idea at the Investor Day that your stock has the attributes of a "100 bagger," which is obviously a statement that can pique a lot of interest for the people I talked to. So could you kind of go through the key metrics that you think check the box on that 100 bagger journey and how you think that plays out in your mind?
I think that what makes 100 Baggers unique is longevity in what they do and very successful. They also control their own destiny, right? They're clear in control of their underlying market. And then they're really, really good at building infrastructure. So if you just look at those 3 things, right, we control our own destiny. We're origination and market maker. Origination businesses over time do really, really well, and we've been doing this for 24 years. Just because we've been public the last 3, this isn't a new idea. This is an infrastructure that has been built and improved upon for north of 2 decades. And then you start to look at how that infrastructure builds into much big broader solutions. So where Abacus sits is insurance industry is massive, right? $14 trillion we've talked about that, but how this is now working into kind of cross relationships and how this flywheel is evolving in real time via financial infrastructure and gaining us access to real, real trillions of dollars here, trillions, like we talk about the wealth transfer, but this is really happening. And capitalizing on that data, that's what sets those 100 baggers apart, like what set Amazon apart from everyone else was that they had the infrastructure. They had the tracks. That no one else did. And ultimately, they capitalized on those tracks. We're doing the exact same thing, and it's happening in real time. And that's why [indiscernible] who wrote that book, 100 Bagger listed us as one of his companies because of that. We have consistent earnings. We have great margins. We have all the typical financial attributes, but most importantly, we have the infrastructure. I'll kind of leave you this one thought. I was presenting at the Milken Institute just recently and sit down with Michael Milken and what Mike said to me was super interesting. He said, you know, Jay, you remind me of way back when it was never an issue in the United States to have a bullet train just like Japan did, right? The issue was the tracks. We don't have the tracks in the United States to support a bullet train, the infrastructure. And what separates your business, which gets him excited and everyone excited is, is that we already have the tracks, and now we're just putting the train on top.
Well, that's a great way to conclude things, Jay, really helpful conversation, learned a lot. I hope everyone else did it as well. Thanks a lot for your time.
Amazing. Thank you. Really appreciate it.
Take care.
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