Abacus Refutes Misleading Balance Sheet Claims With Independent Third-Party Actuarial Valuation

Rhea-AI Summary

Abacus Global Management (NASDAQ: ABL) has strongly refuted recent short seller claims regarding its balance sheet valuation practices. The company provided evidence through an independent third-party actuarial validation by Lewis and Ellis, which confirmed their Q1 2025 life settlement portfolio valuation of $449 million, aligning within 1% of Abacus's stated $446 million valuation. Multiple analysts maintain positive ratings with price targets ranging from $12-$15. The company clarified its dual valuation approach: using life expectancy estimates for consumer transactions while employing market-based valuations for portfolio management. Recent Q2 sales of 226 policies for $141.4 million validated their mark-to-market approach, generating a 1.65% gain over their March 31 valuations. Management, owning 46% of shares, faces a lock-up expiration in July 2025, with anticipated inclusion in Russell 2000 and 3000 indices in August 2025.

Positive

• Independent third-party actuarial firm Lewis and Ellis validated Abacus's portfolio valuation of $449M, within 1% of stated value
• Strong analyst support with multiple Buy/Outperform ratings and price targets of $12-$15
• Recent Q2 policy sales of $141.4M exceeded book value by 1.65%, validating mark-to-market approach
• Management owns 46% of shares, demonstrating alignment with shareholders
• Expected inclusion in Russell 2000 and 3000 indices in August 2025

Negative

• Company faces short seller allegations regarding balance sheet valuation practices
• Share lock-up period expires in July 2025, potentially creating selling pressure
• Negative operating cash flow likely to continue due to portfolio growth strategy

Insights

Financial Analyst specializing in Alternative Asset Management

Abacus provides strong third-party validation refuting short-seller claims about balance sheet overvaluation, strengthening their financial credibility.

Abacus Global Management (NASDAQ: ABL) has issued a comprehensive rebuttal to a short attack published on June 4th that questioned their balance sheet valuation methodology. The short report alleged that Abacus overrelied on a single life expectancy provider (Lapetus Solutions) and inflated its $446 million life settlements valuation.

The company's defense rests on several pillars that significantly strengthen their position:

• Independent verification from Lewis and Ellis, a respected third-party actuarial firm, validated Abacus's portfolio valuation at $449 million without using Lapetus data—within 1% of Abacus's stated valuation
• Recent market transactions support their valuation approach—Abacus sold 226 policies in Q2 for $141.4 million, realizing a 1.65% gain over their March 31st book value of $139.1 million
• Multiple research analysts maintain Buy/Outperform ratings with price targets between $12-$15, suggesting confidence in their methodology
• Grant Thornton (their auditor) has affirmed their mark-to-market valuation approach

What's particularly compelling is Abacus's explanation of their dual valuation methodology: using life expectancy models for consumer-facing transactions (paying consumers an average of 20.4% of policy face value) while employing market-based valuation for balance sheet management. This approach aligns with their high-turnover strategy (target ~2x annual portfolio turnover).

The lock-up expiration on July 3rd (during a blackout period) was addressed proactively, with management suggesting their 46% ownership stake will remain largely intact as they pursue Russell index inclusion in August 2025—a potential catalyst for the stock. Management compensation is heavily equity-based, creating alignment with shareholders.

The comprehensive rebuttal with third-party validation significantly strengthens Abacus's credibility against the short attack, though investors should monitor upcoming transactions following the lock-up expiration to confirm management's commitment.

ORLANDO, Fla., June 10, 2025 (GLOBE NEWSWIRE) -- Abacus Global Management, Inc. (“Abacus” or the “Company”) (NASDAQ: ABL), a leader in the alternative asset management space, today provided the following response to last week's false and misleading short attack.

Our shareholders have been subjected to a false and uninformed short attack. The short seller's report published on June 4, 2025 makes two key allegations: first, that Abacus relies too heavily on a single life expectancy provider (Lapetus Solutions), and second, that this reliance has significantly inflated our balance sheet valuation. Both are incorrect.

Abacus remains resolute in our process, valuation methodology, and the benefit we provide to both policyholders and investors. Our market coverage analysts share this sentiment as well, and have supported our process with published statements and maintained buy, outperform, or overweight ratings on our stock:

• Autonomous/Bernstein: "Abacus Global Management - Morpheus Misleading," June 4, 2025 (with follow up on June 9, 2025)
  • Rating: Outperform
  • Price Target: $12
• BRiley: "Abacus Global Management - Take Advantage of Oversold Position," June 5, 2025
  • Rating: Buy
  • Price Target: $15
• Piper Sandler: "Shares sink on short report – stock reaction overdone and Abacus responds," June 4, 2025
  • Rating: Overweight
  • Price Target: $12
• TD Bank: "ABL's model, reliant on direct originations and a short holding period, would seem to argue against overvaluation of policies." June 4, 2025 (with follow up on June 5, 2025)
  • Rating: Buy
  • Price Target: $14
• Northland: "Abacus Global Management (ABL) Trends in Fair Value, Gains and Other Stuff Tell Positive Story," June 5, 2025
  • Rating: Outperform
  • Price Target: $13.50
    

In addition to research analyst support, our auditor Grant Thornton has also affirmed our mark-to-market valuation approach for the policies we hold on our balance sheet, and has not seen any reason to revise that opinion since the publication of the short report. It is important to note that the report contained a misleading statement attributed to a Grant Thornton UK CEO. The UK-based company is a separate legal entity from our auditor, Grant Thornton US, and each firm operates independently and manages its own affairs.

Executive Summary

Section 1: Third-Party Analysis Confirms that Lapetus Is Not a Meaningful Input to Our Valuation Model

Section 2: Mark-to-Market Valuation Depends On Much More Than Life Expectancy

Section 3: The Most Recent Market Transactions Confirm the Accuracy of Our Valuation Model

Section 4: Shareholder Commitment to Success of the Business and Anticipated Additions to Russell 2000 and 3000 in August 2025

Section 1: Independent Third-Party Actuarial Validation

A core claim of the short report is that "Abacus’ reliance on Lapetus to value its portfolio presents a material risk to the $446 million in claimed life settlements on its books as of Q1 2025." This is wrong in so many ways, most importantly that Abacus does not "rel[y] on Lapetus to value its portfolio." And to prove it, Abacus engaged Lewis and Ellis¹, a third-party actuarial firm, to review the entire policy balance sheet as stated in our Q1 2025 10-Q filing (over 700 policies), removing all Lapetus life expectancy estimates from the analysis.   

For over 55 years, Lewis and Ellis has maintained a sterling reputation and client list with testimonials from organizations including the Ohio Department of Insurance, Arkansas Insurance Department, Maryland Insurance Administration, Americo, Pacific Guardian Life, American Life, American Fidelity, Michigan Department of Insurance, Oklahoma Department of Insurance, and many others.  

To produce the valuation, Lewis and Ellis has utilized a discount rate methodology to calculate the net present value of the portfolio. Premium streams, life expectancies (not including Lapetus Solutions), face values of policies and discount rates are all inputs for their analysis. The professionals responsible for producing this valuation are members and meet Qualification Standards of the American Academy of Actuaries.

The new Lewis and Ellis valuation concurred with our prior valuation, resulting in a total policy valuation of $449 million as of March 31, 2025. The valuation provider aligned with a discount rate and range of ±2% as disclosed in the Q1 2025 10-Q filing. The Lewis and Ellis valuation of $449 million falls within a 1% margin of error from our stated valuation of $446 million.

Section 2: The Short Report Confuses Individualized Pricing with Portfolio-Wide Valuations, and Misstates the Relevance of Life Expectancy to Each

Abacus Global Management has developed a sophisticated valuation framework that optimizes for different business objectives at each stage of the asset lifecycle. This dual approach uses life expectancy for consumer-facing transactions while employing market-based valuation for balance sheet management. Life expectancy valuation models assume the value of the asset held to maturity, and thus calculating the maturity date is critically important. On the other hand, the market approach is based on the price of policy sales between informed, intelligent and willing buyers, and willing sellers.

Both approaches have merit. When acquiring policies from consumers, Abacus uses life expectancy estimates to ensure fair pricing, which results in Abacus paying consumers an average of 20.4% of policy face value in 2023², prioritizing fair consumer outcomes. But once policies enter Abacus's trading portfolio, the company shifts to a market-based valuation system that prioritizes actual market results.

Abacus values its balance sheet using the mark-to-market model. Therefore, the blanket claim in the short report that "The Fair Value Of Life Settlements Depends On Accurately Predicting Life Expectancy" not only collapses the two distinct valuation approaches, it leads the reader to conclude that Abacus values its balance sheet primarily based on life expectancy data. But this ignores the clear description of the Abacus valuation approach in its Consolidated Financial Statements, included in the Company’s most recent 10-K: "The Company determines fair value based on assumptions that market participants would use in pricing an asset or a liability in the principal or most advantageous market."

In accordance with U.S. GAAP, Abacus’ balance sheet valuation model estimates the price it would receive on the sale of its life settlement policies based on applying data it has from actual policy trading activity, and then applies this and other data to inform its assumptions of what a buyer would pay if it used primarily a discounted cash flow and life expectancy analysis, which results in the reported discount rate. As such our balance sheet valuation model is not driven solely by life expectancy estimates or forecasted discount rates³. Our calculation of fair value for purposes of balance sheet valuation results from data that we observe in the market for life settlement policies, drawing on our experience of prior deals with our trading partners, institutional and representatives of a large, growing market, including the largest private credit asset managers, global alternative asset managers, family offices, insurance companies, and reinsurers.

Consumer Purchase Stage: Life Expectancy Optimization

Why This Hybrid Approach Works

Traditional life settlement models suffer from a fundamental mismatch: they use the same methodology (life expectancy projections and selected discount rates) for both consumer fairness and active trading portfolio accuracy. Abacus recognizes these require different tools:

• Consumer Transactions Need Predictive Models: Life expectancy estimates help ensure fair pricing when purchasing from consumers who deserve transparent, actuarially-sound offers.
• Trading Portfolios Need Market Reality: Active trading strategies require balance sheet valuations based on actual transaction history, not theoretical projections that can shift with model updates.

This dual methodology perfectly supports Abacus's core strategy as an active life settlement market-maker:

• High Portfolio Turnover: Target balance sheet turn of ~2x annually, making market-based marks more relevant than hold-to-maturity projections
• Daily Trading Activity: Real-time valuation accuracy matters more than long-term actuarial estimates for a short-term strategy
• Revenue Structure: Unrealized gains require marks that reflect actual selling capability
  

The Strategic Result

Abacus has solved the life settlement industry's core valuation dilemma by recognizing that consumer fairness and active balance sheet accuracy require different approaches. This isn't a compromise—it's an optimization that delivers better outcomes at both stages.

Section 3: The Most Recent Market Transactions Confirms the Accuracy of the Company’s Fair Value Approach

Abacus operates an active life settlement trading business, continuously acquiring and disposing of life insurance policies to optimize balance sheet returns and maintain target return on equity metrics. This means it is ideally positioned to provide a check on its own fair value accounting. And our actual realized results support our valuation. This quarter, Abacus has sold polices at prices that match its mark-to-market approach. In Q2, through June 2nd, Abacus sold 226 policies for a total $141.4 million. As of March 31, 2025, those sold policies had an estimated balance sheet value of $139.1 million. Not only was Abacus able to crystalize its mark, but it has also realized an incremental gain of 1.65%.

As Abacus is continuously in the market buying and selling policies, at any given time, a portion of its revenue will be unrealized if it is still holding policies it hasn’t sold. Further, if Abacus continues to grow its portfolio by recycling the capital from policy sales, cash flow from operating activities will likely be negative. This may change in the future.

Section 4: Executives and Shareholders Are Aligned on Creating the Brightest Possible Future for Abacus

We appreciate the investor concerns around the coming expiration of the share lock-up, which the short report described as an opportunity for "cashing out." Jay Jackson, Sean McNealy, Scott Kirby, and Matt Ganovsky collectively own approximately 46% of the outstanding shares. They accepted two-year restricted lock-ups at the time of the deSPAC transaction. This lengthy lock-up period was double the average of any share lock-up compared to any other company, both IPO and deSPAC. The lock-up expires on July 3, 2025. The restriction period ends during a blackout period which will continue until our post-earnings release which is expected in August.

The expiration of the lock-up period does not mean that the founders and senior management are about to cut and run. Just the opposite: these large shareholders are looking forward to the expiration of the lockup not so they can "cash out," but so they can take the company to its next milestone.

These shareholders and the Board understand that the Russell 2000 and Russell 3000 now require the expiration of the longest lock-up period before a stock can be listed as part of their indices. Abacus believes the positive impact of index inclusion would be beneficial to shareholders. If Abacus maintains the current course with respect to the lock-up expiration, we expect to be added to these indices in August 2025.

Nonetheless, should these large block holders wish to sell shares in the future, we are committed to working closely with our shareholders and institutional investment partners on a purposeful, transparent, and organized sale of shares if one were to occur. We have committed over two decades of service to this company, and our intent is to recognize the highest valuation possible. Our 2025 Board-approved compensation is heavily equity-based and incentivized to increase value to our shareholders through both increased revenue and adjusted net income, as well as company market capitalization.

Conclusion

In summary, Abacus strongly refutes the misleading and incorrect claims made by the short seller. We are supported by outside market research analysts, third-party actuarial firms, our auditor, and our transparent accounting methodology used in fair market reporting driven by mark-to-market valuations.

Abacus is a leading alternative asset manager, market maker, technology company, and growing private wealth manager. We will not allow this distraction to slow our growth and expansion.

Forward-Looking Statements

All statements in this press release (and oral statements made regarding the subjects of this press release) other than historical facts are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements rely on a number of assumptions concerning future events and are subject to a number of uncertainties and factors that could cause actual results to differ materially from such statements, many of which are outside the control of Abacus. Forward-looking information includes, but is not limited to, statements regarding: Abacus’s financial and operational outlook; Abacus’s operational and financial strategies, including planned growth initiatives and the benefits thereof, Abacus’s ability to successfully effect those strategies, and the expected results therefrom. These forward-looking statements generally are identified by the words "believe," "project," "estimate," "expect," ‎‎"intend," "anticipate," "goals," "prospects," "will," "would," "will continue," "will likely result," and similar expressions (including the negative versions of such words or expressions).

While Abacus believes that the assumptions concerning future events are reasonable, it cautions that there are inherent difficulties in predicting certain important factors that could impact the future performance or results of its business. The factors that could cause results to differ materially from those indicated by such forward-looking statements include, but are not limited to: the ‎fact that Abacus’s loss reserves are bases on estimates and may be inadequate to cover ‎its actual losses; the failure to properly price Abacus’s insurance policies; the ‎geographic concentration of Abacus’s business; the cyclical nature of Abacus’s industry; the ‎impact of regulation on Abacus’s business; the effects of competition on Abacus’s business; the failure of ‎Abacus’s relationships with independent agencies; the failure to meet Abacus’s investment ‎objectives; the inability to raise capital on favorable terms or at all; the ‎effects of acts of terrorism; and the effectiveness of Abacus’s control environment, including the identification of control deficiencies.

These forward-looking statements are also affected by the risk factors, forward-looking statements and challenges and uncertainties set forth in documents filed by Abacus with ‎the U.S. Securities and Exchange Commission from time to time, including the Annual ‎Report on Form 10-K and Quarterly Reports on Form 10-Q and subsequent ‎periodic reports. These filings identify and address other important risks and uncertainties that could cause actual events and results to differ materially from those contained in the forward-looking statements. Abacus cautions you not to place undue reliance on the ‎forward-looking statements contained in this press release. Forward-looking statements speak only as of the date they are made. Readers are cautioned not to put undue reliance on forward-looking statements, and Abacus assumes no obligation and, except as required by law, does not intend to update or revise these forward-looking statements, whether as a result of new information, future events, or otherwise. Abacus does not give any assurance that it will achieve its expectations.

About Abacus

Abacus Global Management (NASDAQ: ABL) is a leading financial services company specializing in alternative asset management, data-driven wealth solutions, technology innovations, and institutional services. With a focus on longevity-based assets and personalized financial planning, Abacus leverages proprietary data analytics and decades of industry expertise to deliver innovative solutions that optimize financial outcomes for individuals and institutions worldwide.

Contacts:
Investor Relations
Robert F. Phillips – SVP Investor Relations and Corporate Affairs
rob@abacusgm.com
(321) 290-1198

David Jackson – Director of IR/Capital Markets
david@abacusgm.com
(321) 299-0716

Abacus Global Management Public Relations
press@abacusgm.com

____________________

¹ Since going public, Abacus has paid Lewis and Ellis a total of $70,105, inclusive of this valuation engagement.
² Data as per The Deal.
³ Discount rates are an output imputed from our valuations, rather than input for determining valuations.

FAQ

What are the main allegations in the short seller report against Abacus (ABL)?

The short seller report made two key allegations: that Abacus relies too heavily on a single life expectancy provider (Lapetus Solutions) and that this reliance has significantly inflated their balance sheet valuation.

How did Abacus (ABL) validate their portfolio valuation against short seller claims?

Abacus engaged Lewis and Ellis, an independent third-party actuarial firm, which reviewed over 700 policies and confirmed a valuation of $449M, within 1% of Abacus's stated $446M valuation, without using Lapetus life expectancy estimates.

What is Abacus's (ABL) current market valuation approach?

Abacus uses a dual approach: life expectancy estimates for consumer-facing transactions and mark-to-market valuation based on actual trading activity for portfolio management, with recent Q2 sales validating their approach.

When does the share lock-up period expire for Abacus (ABL) management?

The share lock-up period expires on July 3, 2025, during a blackout period that continues until the post-earnings release expected in August 2025.

What is the expected impact of Russell index inclusion for Abacus (ABL)?

Abacus expects to be added to the Russell 2000 and Russell 3000 indices in August 2025 after the lock-up expiration, which management believes would be beneficial to shareholders.