What changed in this filing

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Item 4. Controls and Procedures

2023-06-30 compared with 2022-11-08 · 41 added, 22 removed, 2 unchanged (97% of the section changed)

Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Securities Exchange Act of 1934 (the “Exchange Act”) reports is recorded,

processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to management, including the Chief Executive Officer and

Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Management necessarily applies its judgment in assessing the costs and benefits of such controls and procedures, which, by their nature, can provide

only reasonable assurance regarding management’s control objectives.

The Company’s management, including the Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures can prevent all possible

errors or fraud.

A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.

There are inherent limitations in all control systems, including

the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple errors or mistakes.

Additionally, controls can be circumvented by the intentional acts of one or more persons.

The design of any system

of controls is based in part upon certain assumptions about the likelihood of future events, and, while our disclosure controls and procedures are designed to be effective under circumstances where they should reasonably be expected to operate

effectively, there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

Because of the inherent limitations in any control system, misstatements due to possible errors or fraud may

occur and may not be detected.

An evaluation was performed under the supervision and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of

our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) as of the end of the period covered by this report.

Based on that evaluation, our management, including the Chief Executive Officer and Chief

Financial Officer, concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report.

There have been no changes in our internal control over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to

materially affect, our internal control over financial reporting.

Evaluation of Disclosure Controls and Procedures

Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting for the Company.

The Company’s internal control over financial

reporting system has been designed to provide reasonable assurance regarding the reliability and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

Management recognizes that

there are inherent limitations in the effectiveness of any internal control system.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect all misstatements.

Furthermore, the application of any

evaluations of effectiveness on future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Therefore, even those

systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

As of the end of the period covered by this report, an evaluation was performed under the supervision and with the participation of our management, including the Chief Executive Officer and Chief

Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934).

Based on that evaluation, management,

including the Chief Executive Officer and Chief Financial Officer, concluded that disclosure controls and procedures were not effective as of that date due to a material weakness in internal control over financial reporting described below.

Material Weakness in Internal Control Over Financial Reporting

As disclosed in Part II, Item 9A.

“Controls and Procedures” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, we have identified certain deficiencies in internal

control that we believe rise to the level of a material weakness.

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material

misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

Specifically, management determined that certain process controls over the development, testing, and implementation of our actuarial

models used to estimate certain values in the Medicare supplement line of business within our life and health segment were not effective and the related management review controls did not operate at an appropriate level of precision to identify

anomalies in results timely enough to allow management to respond without delays in our financial reporting process.

Notwithstanding these deficiencies, management believes that, as a result of the actions taken by management to address and

correct these deficiencies prior to the completion and filing of this Quarterly Report on Form 10-Q, and the effective operation of other internal controls over financial reporting, the material weakness did not result in any identified material

misstatements to our financial statements.

As a result, there were no changes to any of our previously-released financial statements.

Changes in Internal Control Over Financial Reporting

The Company has implemented changes in processes that include enhanced controls over the development, testing, and implementation of actuarial models, and additional controls over the reporting

of the financial information that is obtained from these models.

Specifically, the Company has taken the following actions:

Developed enhanced documentation of the product parameters and assumptions used in actuarial models and enhanced controls over their testing and implementation in the models.

Improved reconciliations of the policyholder data between the source administrative systems and the actuarial models.

Implemented additional controls over the reporting processes, including enhanced analytical procedures and establishing a second independent reviewer.

Hired additional actuarial staff to assist with actuarial model implementation and actuarial valuation.

Except for the changes described above, which were initiated during the quarter ended December 31, 2022, and continued into the six months ending June 30, 2023, there were no changes in the

Company’s internal control over financial reporting during the quarter ended March 31, 2023, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

No system of controls, no matter how well designed and implemented, can provide absolute assurance that the objectives of the system of controls are met.

Furthermore, no evaluation of controls

can provide absolute assurance that all control issues and any instances of fraud within a company have been detected.

OTHER INFORMATION

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 4. Controls and Procedures