Company: SUND
Filing Date: 2025-06-30
Form Type: 10-K
Source: 0001641172-25-017143
Chunk: 101

Company: Sundance Strategies, Inc.
Filing Date: 2025-06-30
Form: 10-K
Item: Item 1A
Chunk 101
---
 if life expectancies prove wrong
cash flows will change. If the insured lives longer than any or all of the life expectancy appraisals predict, then the amounts available
to life settlement interests could be diminished, perhaps significantly, due to the additional time during which premiums will have to
be paid and financing and other related expenses incurred in order to keep the related policy in force. If the insureds with respect
to too many life insurance policies live longer than their respective life expectancies, then Holders may have to liquidate such life
insurance policies. The market value of such Policies will necessarily be significantly less than the related death benefits.

12

Having
relatively few insureds could cause the overall performance to be unduly influenced by a relatively small number of underlying policies
that perform better or worse than expected.

Our
life expectancy actuarial results related to smaller portfolios may not be as reliable as they would be if the underlying portfolios
were larger. We understand that Standard & Poor’s has stated that at least 1,000 lives are required to achieve actuarial stability,
while A.M. Best concluded that at least 300 lives are necessary. Having fewer lives in a policy portfolio can cause the overall performance
of such portfolio to be unduly influenced by a relatively small number of “outliers” where the assets perform better or worse
than expected. The industry has sought to mitigate this risk by obtaining MRI coverage, which has the effect of accelerating cash flows
in cases where the assets underperform and reducing the volatility normally associated with a portfolio with fewer lives.

Increased
general market interests rates could increase the carrying costs of the life insurance policies and reduce the related cash flows.

If
general market interest rates increase, the value of life insurance portfolios would likely decrease. Some of the Holder’s carrying
costs associated with the life insurance policy portfolios (specifically interest payments on the MRI coverage outstanding balance) are
tied to interest rates. If interest rates increase, the Holder’s carrying costs will increase and the return on our investment
will decrease. Because the Holders pay all of the costs associated with the life insurance policy portfolios, an increase in the Holder’s
carrying costs will correspondingly decrease the amount of cash flows.

In
addition, if the interest rates used to determine the market value of a life insurance policy change, the present value of the policy
may also change. Generally, as interest rates increase, the present value of a life insurance policy decreases. If a Holder is forced