Company: SUND
Filing Date: 2025-06-30
Form Type: 10-K
Source: 0001641172-25-017143
Chunk: 17

Company: Sundance Strategies, Inc.
Filing Date: 2025-06-30
Form: 10-K
Item: Item 1
Chunk 17
---
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
to sell a policy in a higher interest rate environment, the market price for the policies may be less than the price at which such policy
was acquired. Furthermore, Holders are generally obligated under the senior loans financing the purchase of life insurance policies to
maintain certain loan to value ratios. If the present value of the life insurance policies decreases significantly, the Holder may be
in breach of such obligations, which could impair the Holder’s ability to obtain financing necessary to service existing life insurance
policies or acquire new policies. As a result, any life insurance portfolios may decline in value or become worthless.

Changes
to foreign banking laws and regulations or decreased lending capacity for life settlements could have a negative impact on the ability
of Holders to obtain loans with respect to purchases of life settlements.

Our
current business model relies on the availability to the Holders of senior loans from the Holders’ Lender or any other lender.
In the event of adverse regulatory changes or reduced capacity for life settlement lending, the Holders could experience the same liquidity
issues that have plagued other market participants. Changes to the Holders’ Lender’s loan to value requirements, compliance
with regulatory large exposure limits and changes to regulatory large exposure limits could