Company: SUND
Filing Date: 2025-06-30
Form Type: 10-K
Source: 0001641172-25-017143
Chunk: 16

Company: Sundance Strategies, Inc.
Filing Date: 2025-06-30
Form: 10-K
Item: Item 1
Chunk 16
---
 LE reports from different third-party LE providers for each policy. We do this to try to avoid any systemic bias
introduced by dependency on life expectancies produced by a single source. In addition, our model gives greater weight to the longer
(and more conservative) of the two LEs. By using such a long/short weighted average, our model attempts to hedge against unexpected longevities
in a portfolio.

Changes
in actuarial based life expectancy methodologies (which are determined by the Society of Actuaries and are amended every three to five
years) could have the effect of reducing the internal rate of return on the life insurance policies and could cause increased difficulty
in financing premiums. If changes are significant, they could lower prices for life insurance policies, but could also lower the value
of the life insurance policies due to the lower resulting present value of the death benefits forecasted to be paid at later dates. Holders’
senior loans require that certain loan to value ratios be maintained and decreases in policy values could result in violations of these
provisions. Default by Holders on their senior loans may impair their ability to obtain financing necessary to maintain the life insurance
policies.

In
addition, because our cash flow is usually dependent on life insurance policies coming to maturity, 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