Distributions

How we calculate distributions

Perhaps the most frequent question we receive from investors is when is the next distribution going to be made and how much will it be. The short answer is we don’t know but we want to explain the process that goes into it so you have a better understanding.

Distributions can only occur when the Trust builds up sufficient cash to be able to make a distribution. Our only source of money is from insurance policy benefits when an insured dies. So first someone has to die, and we don’t know when that will occur, but we do have projections. Second, once they die, we have to obtain a death certificate and right now that is taking more time than it used to because of government offices being closed or only partially open due to COVID-19 issues. Once we get the death certificate, we have to file a death claim with the insurance carrier and wait on them to send the check.

Once we get the check a lot of it has to be used for specific purposes as required by the bankruptcy plan. Generally, about 40% of it goes to the Continuing Fractional Holders who have a position in the policy. Some of it goes into a sinking fund (saving account) to apply toward NIRAN payments. The balance can then go into the Trust accounts which is then used to pay the operating costs of the Trust and premiums which are more than $5 million a month. Any remaining money can be set aside to pay a distribution. So, the faster people die and the faster we get the money the faster we can build cash.

In order to make a distribution such that the checks going out are substantial enough to justify the distribution, we need to build about $20 million after taking into account reserves. In other words, we need to be sure we can continue to operate without going broke. So, you can see it takes time to build enough excess cash and we can’t really tell you when that is going to be. But as soon as we can see that we are going to have $20 million or more we begin planning for a distribution and announce it in a letter from the Trustee to investors. We are committed to making distributions happen as quickly as we can, but we MUST plan for unforeseen events and delays as well.

 

PRIOR DISTRIBUTIONS

On November 15, 2019, the Trust made its first general distribution out of excess funds in the Trust. The total amount paid to unit holders was $20 million and was paid based upon your pro-rata share of the total number of units in the Trust at that time. At the time of the first distribution, there were 1,235,891,333 [489,696,911 PHT units plus 746,194,422 IRAP units] total units in the Trust so the amount you received was .0162 (1.62¢) per unit. So if you held 5000 units, you received $80.91 less any lien you may have owed.

On August 3, 2020, the Trust made a second general distribution out of excess funds in the Trust. The total amount paid to unit holders was $30 million and was paid based upon your pro-rata share of the total number of units in the Trust at that time. At the time of the second distribution, there were 1,244,434,360 [499,288,964 PHT units plus 745,145,396 IRAP units] in the Trust so the amount you received was .0241 (2.41¢) per unit. So if you held 5000 units, you received $120.51 less any lien you may have owed.