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Item 4. Controls and Procedures

2025-05-13 compared with 2024-11-12 · 40 added, 42 removed, 17 unchanged (83% 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

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.

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.

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 Exchange Act).

Based on that evaluation, management, including the Chief

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

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 the previously identified and unremediated material weakness in internal control over

financial reporting described below.

Remediation of Material Weakness in Internal Control Over Financial Reporting

9 unchanged sentences

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

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 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

relevant periodic reports for those periods, 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.

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 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.

As initially disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, we have previously 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, because of the actions taken by management in identifying, and the efforts that the Company has been taking to address and correct,

these deficiencies prior to the completion and filing of relevant periodic reports, 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.

Similarly, there were no changes to any of our historical financial statements.

The Company’s remediation efforts of the previously identified material weakness, which began in the quarter ended March 31, 2024, remained ongoing though the quarter ended March 31, 2025, and

through the date hereof.

The Company has made significant progress in its remediation efforts, and during the quarter ended March 31, 2025, management conducted a systematic review of the components of underwriting income for the Company’s Life

This review included independent calculations of actuarial values for these products using a comprehensive process that had been developed, tested, and implemented during the quarter ended December 31, 2024.

Based on this review,

management did not identify any material misstatement in the Company’s financial statements.

In furtherance of the remediation efforts, 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.

The Company’s whole life product has been implemented on the system, which was used to validate the actuarial values for this product as of

December 31,2024.

Implementation of the Company’s individual life products and its Medicare Supplement product began during the quarter ended March 31, 2025, and these system extensions are expected to be completed by June 30, 2025.

currently expects that extensions of this system to accommodate the other product lines the Company offers will be operational by September 30, 2025.

Full development and implementation of this system has required more time than previously

anticipated due to unforeseen complexities inherent in the actuarial software systems used to calculate and report the actuarial values.

These complexities have required additional effort to understand and to replicate in this system, and to

complete the remediation process.

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 September 30, 2024 that have materially

Other than the remediation efforts described above, there were no changes in the Company’s internal control over financial reporting during the quarter ended March 31, 2025 that have materially

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

Inherent Limitations on Effectiveness of Controls

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