Life Receivables, a company backed by Dermot Desmond's IIU investment vehicle and which deals in life policies in the United States, made a loss of €6.6 million in its first year of operations.
Accounts filed recently with the Companies Office, also show that it is in dispute with a third party, which is not named, in relation to a hedging contract that is designed to limit the "total future funding requirements on its life policies".
The dispute is the subject of "ongoing" independent arbitration. A note to the accounts said the directors were "confident that a satisfactory and appropriate outcome will be achieved", in which case Life Receivables would be able to recover its legal costs.
No comment was available from IIU.
The accounts show that the company had a portfolio of life policies valued at $126.1 million (€95.97 million), funded by borrowings. The company buys these policies from people for a lump sum and continues paying the premia until they mature.
Life Receivables deals in US-based policies. Known as viatical and life settlements, they allow either terminally ill or elderly people to receive a lump sum for their policies in advance of maturity and are common in the US. The sum paid is calculated based on how long is likely to be left on the policy before maturity.
Life Receivables' accounts show that it earned $2.8 million (€2.1 million)from life policies that had matured. An "expense recharge" of $62,390 was also paid to the Desmond-backed company and it received interest on cash balances of $5,924.
On the expenditure side, the IFSC-based company spent $966,321 on administration expenses, and audit, legal and annual return fees. It also spent $8.5 million in interest on its loans. A potential "deferred tax provision" of $1.6 million was not recognised as "the directors are not in a position to conclude at this stage that the company will realise sufficient gains to use the tax losses at a future date".
Life Receivables has no employees. Based at IIU's offices, it has engaged a company called Peachtree Settlement Funding to provide it with administration services.
Chris McHugh, formerly of IIU, stepped down as a director in October 2006. John Bateson, an IIU director, is listed as a director of the life company with Gerald Smyth its company secretary. No fees were paid to directors.
