Company: SUND
Filing Date: 2025-06-30
Form Type: 10-K
Source: 0001641172-25-017143
Chunk: 109

Company: Sundance Strategies, Inc.
Filing Date: 2025-06-30
Form: 10-K
Item: Item 1A
Chunk 109
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 part of or in connection with a practice or plan to initiate life insurance
policies for the benefit of a third-party investor who, at the time of the policy issuance, lacks a valid insurable interest in the life
of the insured. Under these laws, certain premium finance loan structures are treated as life settlements and, accordingly, may not be
entered into at the time of policy issuance and for a two or five-year period, thereafter, depending on the state. Certain court decisions
over the past few years may also increase concerns with premium-financed policies. In 2011, the Delaware Supreme Court stated in PHL
Variable Insurance Company v. Price Dawe 2006 Insurance Trust that the key focus in insurable interest cases is who paid the premiums.
While the decision was not issued in connection with a premium financed policy, investors were concerned with how the court would apply
such reasoning to premium financed policies. This concern was alleviated in the 2012 Delaware District Court case of Principal Life
Insurance Company v. Lawrence Rucker 2007 Insurance Trust that concluded that “an insured’s ability to procure a policy
is not limited to paying the premiums with his own funds; borrowing money with an obligation to repay would also qualify as an insured
procuring a policy.”

We
cannot predict whether a state regulator, insurance carrier or other party will assert that any policies should be treated as having
been issued as part of a STOLI transaction or otherwise were issued in contravention of applicable insurable interest laws. This risk
is greater where the insured materially misstated his or her income and/or net worth in the life insurance application. Decisions in
Florida have increased the risk that challenges to premium financed policies may be decided in favor of the issuing insurance company.
Moreover, because the life insurance policies are often originated in the same or a similar manner and in a limited number of states
(generally, California and Wisconsin, although the insured may reside in other states), there is a heightened risk that an adverse court
decision or other challenge or determination by a regulatory or other interested party with respect to a policy could have a material
adverse effect on a significant number of other policies, including the rescission of policies or the occurrence of other actions that
prevent us from being entitled to receive or retain the net death benefit related to the policies. Concerns of such nature could also
negatively affect the market value and/or liquidity of the life insurance policies.

Fraud
in the application for life