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Item 4. Controls and Procedures

2024-11-12 compared with 2024-08-14 · 35 added, 32 removed, 24 unchanged (74% of the section changed)

1 unchanged sentence

Evaluation of Disclosure 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.

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.

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

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.

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.

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

14 unchanged sentences

As previously 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, 2023, we 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 the design of the controls surrounding the process of reviewing insurance reserves and deferred

acquisition costs within the Company’s life and health segment was not effective.

This deficiency in design did not enable the timely detection of anomalies in these values at the level of precision necessary to detect misstated values that may be

“Controls and Procedures” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, we 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 the design of the controls surrounding the process of reviewing insurance reserves and

deferred acquisition costs within the Company’s life and health segment was not effective.

This deficiency in design did not enable the timely detection of anomalies in these values at the level of precision necessary to detect misstated values

that may be material.

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 the

1 unchanged sentence

there were no changes to any of our previously-released financial statements.

The Company is currently in the process of remediating the material weakness as described above, which remediation efforts began in the quarter ended March 31, 2024 and continued through the quarter

ended June 30, 2024, and include developing and implementing enhanced controls related to the review of values that are estimated using actuarial models.

The enhancements include implementing reviews at the product level where management evaluates,

for each of the Company’s life and health products, the components of underwriting income and how they interrelate.

In addition, calculations that are independent from the actuarial models will, once fully developed, validate that the product

parameters and actuarial assumptions are completely and accurately reflected within the actuarial models.

The Company has also initiated the development of an array of analytical reports that will help facilitate the timely detection of anomalous values within the Company’s life and health segment.

is currently expected that these reports will be operational by September 30, 2024.

These reports will include reconciliations of actuarial values from quarter to quarter, utilizing values estimated via the actuarial models and values that are

produced by accounting processes.

The Company is currently in the process of remediating the material weakness as described above, which remediation efforts began in the quarter ended March 31, 2024, and continued through the

quarter ended September 30, 2024.

During the quarter ended September 30, 2024, management instituted a systematic review of the components of underwriting income for the Company’s life products.

An array of analytical reports designed to help

identify potential anomalous actuarial values for these products was implemented during the quarter ended September 30, 2024, and is a key component of this review.

Based on this review, management did not identify any material misstatement in the

Company’s financial statements.

The Company has continued the development of a system to perform calculations independently of the actuarial models.

This system is intended to verify that the product parameters and actuarial

assumptions are properly reflected in the reported values.

It is currently expected that this system will be operational by December 31, 2024.

Changes in Internal Control Over Financial Reporting

Other than the remediation efforts described above, there were no changes in the Company’s internal control over financial reporting during the quarter ended June 30, 2024 that have materially affected, or are

reasonably likely to materially affect, the Company’s internal control over financial reporting.

Other than the remediation efforts described above, there were no changes in the Company’s internal control over financial reporting during the quarter ended September 30, 2024 that have materially

affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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