What changed in this filing

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Item 1A. Risk Factors

2024-12-17 compared with 2023-12-22 · 632 added, 307 removed, 847 unchanged (53% of the section changed)

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time to time, capital markets may experience periods of disruption and instability.

capital markets have experienced extreme

volatility and disruption following the global outbreak of coronavirus (“COVID-19”) that began in December 2019.

the COVID-19 pandemic has generally subsided, the U.S.

economy, as well as other major economies, may experience a recession, and we

anticipate our businesses would be materially and adversely affected by a prolonged recession in the United States and other major markets.

Disruptions in the capital markets have increased the spread between the yields realized on risk-free and higher risk securities, resulting

in illiquidity in parts of the capital markets.

Any future outbreaks could have an adverse impact on the ability of lenders to originate

loans, the volume and type of loans originated, the ability of borrowers to make payments and the volume and type of amendments and waivers

granted to borrowers and remedial actions taken in the event of a borrower default, each of which could negatively impact the amount

and quality of loans available for investment by the Company and returns to the Company, among other things.

Pandemics and other future

market disruptions and/or illiquidity could have an adverse effect on our business, financial condition, results of operations and cash

Unfavorable economic conditions also could increase our funding costs, limit our access to the capital markets or result in a

decision by lenders not to extend credit to us.

These events could limit our investment originations, limit our ability to grow and have

a material negative impact on our operating results and the fair values of our debt and equity investments.

We may have to access, if

available, alternative markets for debt and equity capital, and a severe disruption in the global financial markets, deterioration in

credit and financing conditions or uncertainty regarding U.S.

economy, as well as other major economies,

may experience a recession, and we anticipate our businesses would be materially and adversely affected by a prolonged recession in the

United States and other major markets.

Disruptions in the capital markets have increased the spread between the yields realized on risk-free

and higher risk securities, resulting in illiquidity in parts of the capital markets.

Any recession or future significant market events

or disruptions (e.g.

pandemics, war, natural disasters or terrorist activities) could have an adverse impact on the ability of lenders

to originate loans, the volume and type of loans originated, the ability of borrowers to make payments and the volume and type of amendments

and waivers granted to borrowers and remedial actions taken in the event of a borrower default, each of which could negatively impact

the amount and quality of loans available for investment by the Company and returns to the Company, among other things.

Recession, pandemics

and other future market disruptions and/or illiquidity could have an adverse effect on our business, financial condition, results of

operations and cash flows.

Unfavorable economic conditions also could increase our funding costs, limit our access to the capital markets

or result in a decision by lenders not to extend credit to us.

These events could limit our investment originations, limit our ability

to grow and have a material negative impact on our operating results and the fair values of our debt and equity investments.

to access, if available, alternative markets for debt and equity capital, and a severe disruption in the global financial markets, deterioration

in credit and financing conditions or uncertainty regarding U.S.

government spending and deficit levels or other global economic conditions

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and could continue to adversely affect operating results for us and for our portfolio companies.

February 2022, Russia launched a large-scale invasion of Ukraine.

The extent and duration of Russian military action in the Ukraine,

resulting sanctions and resulting future market disruptions, including declines in stock markets in Russia and elsewhere and the value

of the ruble against the U.S.

dollar, are impossible to predict, but have been and could continue to be significant.

Any such disruptions

caused by Russian military or other actions (including cyberattacks and espionage) or resulting from actual or threatened responses to

such actions have caused and could continue to cause disruptions to portfolio companies located in Europe or that have substantial business

relationships with European or Russian companies.

The recent outbreak of

hostilities in the Middle East could also escalate to nearby areas.

large-scale invasion of Ukraine by Russia in February 2022 resulted in sanctions and market disruptions, including declines in regional

and global stock markets, unusual volatility in global commodity markets and significant devaluations of Russian currency.

and duration of the military action are impossible to predict but could be significant.

Market disruption caused by the Russian military

action, and any counter measures or responses thereto (including international sanctions, a downgrade in a country’s credit rating,

purchasing and financing restrictions, boycotts, tariffs, changes in consumer or purchaser preferences, cyberattacks and espionage) could

continue to have severe adverse impacts on regional and/or global securities and commodities markets, including markets for oil and natural

These impacts may include reduced market liquidity, distress in credit markets, further disruption of global supply chains, increased

risk of inflation, and limited access to investments in certain international markets and/or issuers.

In addition, the current conflict

in the Middle East and terrorist acts may cause significant volatility in the markets and/or market disruptions.

extent and duration of these military actions, conflicts and resulting market disruptions are impossible to predict, but have been and

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companies, and may also increase the risk of default on our portfolio company loans.

2023, the Federal Reserve raised short-term interest rates and has indicated additional interest rate increases may come.

Changing interest

rates may have unpredictable effects on markets, may result in heightened market volatility and may detract from our performance to the

extent we are exposed to such interest rates and/or volatility.

In periods of rising interest rates, such as the current interest rate

environment, to the extent we borrow money subject to a floating interest rate, our cost of funds would increase, which could reduce

our net investment income.

Further, rising interest rates could also adversely affect our performance if such increases cause our borrowing

costs to rise at a rate in excess of the rate that our investments yield.

Further, rising interest rates could also adversely affect

our performance if we hold investments with floating interest rates, subject to specified minimum interest rates (such as a SOFR floor),

while at the same time engaging in borrowings subject to floating interest rates not subject to such minimums.

In such a scenario, rising

interest rates may increase our interest expense, even though our interest income from investments is not increasing in a corresponding

manner as a result of such minimum interest rates.

general interest rates continue to rise, there is a risk that the portfolio companies in which we hold floating rate securities will

be unable to pay escalating interest amounts, which could result in a default under their loan documents with us.

Rising interest rates

could also cause portfolio companies to shift cash from other productive uses to the payment of interest, which may have a material adverse

effect on their business and operations and could, over time, lead to increased defaults.

In addition, rising interest rates may increase

pressure on us to provide fixed rate loans to our portfolio companies, which could adversely affect our net investment income, as increases

in our cost of borrowed funds would not be accompanied by increased interest income from such fixed-rate investments.

2023, the Federal Reserve raised short-term interest rates.

Additional interest rate increases may come.

Changing interest rates may

have unpredictable effects on markets, may result in heightened market volatility and may detract from our performance to the extent

we are exposed to such interest rates and/or volatility.

In periods of rising interest rates, such as the current interest rate environment,

to the extent we borrow money subject to a floating interest rate, our cost of funds would increase, which could reduce our net investment

Further, rising interest rates could also adversely affect our performance if such increases cause our borrowing costs to rise

at a rate in excess of the rate that our investments yield.

Further, rising interest rates could also adversely affect our performance

if we hold investments with floating interest rates, subject to specified minimum interest rates (such as a SOFR floor), while at the

same time engaging in borrowings subject to floating interest rates not subject to such minimums.

In such a scenario, rising interest

rates may increase our interest expense, even though our interest income from investments is not increasing in a corresponding manner

as a result of such minimum interest rates.

general interest rates rise, there is a risk that the portfolio companies in which we hold floating rate securities will be unable to

pay escalating interest amounts, which could result in a default under their loan documents with us.

Rising interest rates could also

cause portfolio companies to shift cash from other productive uses to the payment of interest, which may have a material adverse effect

on their business and operations and could, over time, lead to increased defaults.

In addition, rising interest rates may increase pressure

on us to provide fixed rate loans to our portfolio companies, which could adversely affect our net investment income, as increases in

our cost of borrowed funds would not be accompanied by increased interest income from such fixed-rate investments.

downgrades of the U.S.

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Related to Our Business

have internalized our operating structure, including our management and investment functions, with the expectation that we will be able

to operate more efficiently with lower costs, but this may not be the case.

November 18, 2020, the board of directors approved adoption of an internalized management structure, which we have operated under effective

January 1, 2021.

There can be no assurances that internalizing our management structure will be and remain beneficial to us and our stockholders,

as we may incur the costs and experience the risks discussed below, and we may not be able to effectively replicate the services previously

provided to us by our former investment adviser and administrator.

a result of our internalized operating structure, including our internalized management and investment functions, we may incur significant

costs and face significant risks associated with being self-managed, including adverse effects on our business and financial condition.

January 1, 2021, we operate under an internalized operating structure, including our management and investment functions.

no assurances that our internalized operating structure will be beneficial to us and our stockholders, as we may not be able to effectively

replicate the services previously provided to us by our former investment adviser and administrator.

we no longer bear the costs of the various fees and expenses we previously paid under the investment management and administration agreements

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legal, accounting and other governance expenses and costs and expenses related to managing our portfolio.

Certain of these costs may

be greater during the early stages of the transition process.

We also incur the compensation and benefits costs of our officers and other

employees and consultants.

In addition, we may be subject to potential liabilities commonly faced by employers, such as workers disability

and compensation claims, potential labor disputes and other employee-related liabilities and grievances.

may also experience operational disruptions resulting from the transition from external to internal management, and we could fail to

effectively manage our internalization over the longer term, all of which could adversely affect our performance.

the expenses we incur as an internally-managed company are higher than the expenses we would have paid and/or reimbursed under the externally-managed

structure, our earnings per share may be lower and our share value could suffer.

We also incur the compensation

and benefits costs of our officers and other employees and consultants.

In addition, we may be subject to potential liabilities commonly

faced by employers, such as workers disability and compensation claims, potential labor disputes and other employee-related liabilities

and grievances.

of these factors could have a material adverse effect on our results of operations, financial condition, and ability to pay distributions.

an internally managed BDC, we are dependent upon our management team and other professionals, and if we are not able to hire and retain

qualified personnel, we will not realize the anticipated benefits of the internalization.

qualified personnel, we will not realize the benefits of an internally managed BDC.

ability to achieve our investment objectives and to make distributions to our stockholders depends upon the performance of our management

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we are unable to attract and retain highly talented professionals for the internal management of our Company, we will not realize the

anticipated benefits of the internalization, and the results of our operation could deteriorate.

benefits of an internally managed BDC, and the results of our operation could deteriorate.

may suffer credit and capital losses.

debt in the form of secured loans to corporate and asset-based borrowers is highly speculative and involves a high degree of risk of

credit loss, and therefore an investment in our securities may not be suitable for someone with a low tolerance for risk.

are likely to increase during an economic recession, such as the economic recession or downturn that the United States and many other

countries have recently experienced or are experiencing.

private debt and private equity investments is highly speculative and involves a high degree of risk of credit and capital loss, and

therefore an investment in our securities may not be suitable for someone with a low tolerance for risk.

These risks are likely to increase

during an economic recession, such as the economic recession or downturn that the United States and many other countries have recently

experienced or are experiencing.

we use borrowed funds to make investments or fund our business operations, we are exposed to risks typically associated with leverage

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(“Woodforest”), Valley National Bank, and Axiom Bank,

(collectively, the “Lenders”).

our common stock may be

exposed to an increased risk of loss because a decrease in the value of our investments may have a greater negative impact on the

value of our common stock than if we did not use leverage;

if we do not appropriately

match the assets and liabilities of our business, adverse changes in interest rates could reduce or eliminate the incremental income

we make with the proceeds of any leverage;

our ability to pay distributions

on our common stock may be restricted if our asset coverage ratio with respect to each of our outstanding senior securities representing

indebtedness and our outstanding preferred shares, as defined by the 1940 Act, is not at least 200% and any amounts used to service

indebtedness or preferred stock would not be available for such distributions;

any credit facility to

which we became a party may be subject to periodic renewal by our lenders, whose continued participation cannot be guaranteed;

any credit facility to

which we became a party may contain covenants restricting our operating flexibility;

we, and indirectly our

stockholders, bear the cost of issuing and paying interest or dividends on such securities;

any convertible or exchangeable

securities that we issue may have rights, preferences and privileges more favorable than those of our common shares.

(collectively, the “Lenders”), which was amended on February 21, 2024 to increase the principal amount of loan available

under the Credit Facility by $12.5 million to $62.5 million.

On August 5, 2024 (the “Second Amendment Effective Date”), in

order to increase the size of the Credit Facility, the parties to the Credit Facility amended the Credit Facility, effective as of the

Second Amendment Effective Date (the “Second Amendment”).

The Second Amendment increased the principal amount of loan available

under the Credit Facility by $25 million to $87.5 million.

All other material terms of the Credit Facility remain unchanged.

common stock may be exposed to an increased risk of loss because a decrease in the value of our investments may have a greater negative

impact on the value of our common stock than if we did not use leverage;

we do not appropriately match the assets and liabilities of our business, adverse changes in interest rates could reduce or eliminate

the incremental income we make with the proceeds of any leverage;

ability to pay distributions on our common stock may be restricted if our asset coverage ratio with respect to each of our outstanding

senior securities representing indebtedness and our outstanding preferred shares, as defined by the 1940 Act, is not at least 200%

and any amounts used to service indebtedness or preferred stock would not be available for such distributions;

credit facility to which we became a party may be subject to periodic renewal by our lenders, whose continued participation cannot

be guaranteed;

credit facility to which we became a party may contain covenants restricting our operating flexibility;

and indirectly our stockholders, bear the cost of issuing and paying interest or dividends on such securities;

convertible or exchangeable securities that we issue may have rights, preferences and privileges more favorable than those of our

common shares.

the provisions of the 1940 Act, we are permitted, as a BDC, to issue debt securities or preferred stock and/or borrow money from banks

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- Financial Condition, Liquidity and Capital Resources.”

As of September 30, 2023, the Company’s

asset coverage was 270.7% after giving effect to leverage and therefore the Company’s asset coverage is above 200%, the minimum

asset coverage requirement under the 1940 Act.

of September 30, 2024, the Company’s asset coverage was 216.8% after giving effect to leverage and therefore the Company’s

asset coverage is above 200%, the minimum asset coverage requirement under the 1940 Act.

lack of liquidity in our investments may adversely affect our business.

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(Note our significant investment in our affiliate FlexFIN – see Risks Related to our Investments).

We are exposed to risks associated with changes in interest rates.

are exposed to risks associated with changes in interest rates.

rate fluctuations may have a substantial negative impact on our investments, the value of our common stock and our rate of return on

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companies bore interest at U.S dollar London Interbank Overnight (USD LIBOR) rates.

ICE Benchmark Administration, the authorized and

regulated administrator of LIBOR, ended publication of the one-week and two-month USD LIBOR tenors on December 31, 2021, and ended publication

of the remaining USD LIBOR tenors on June 30, 2023.

The Adjustable Interest Rate (LIBOR) Act (the “LIBOR Act”) was enacted

in March 2022 to permit financing agreements that contain a LIBOR-based benchmark without adequate “fallback provisions”

to be automatically replaced by a benchmark recommended by the Federal Reserve.

In January 2023, the Federal Reserve adopted a final

rule implementing the LIBOR Act that, among other things, identifies the applicable SOFR-based benchmark replacements under the LIBOR

SOFR is considered to be a risk-free rate, and USD LIBOR was a risk

weighted rate.

Thus, SOFR tends to be a lower rate than USD LIBOR, because SOFR does not contain a risk component.

This difference may

negatively impact our net interest margin of our investments.

Also, the use of SOFR based rates is relatively new, and experience with

SOFR based rate loans is limited.

There could be unanticipated difficulties or disruptions with the calculation and publication of SOFR

This could result in increased borrowing costs for the Company or could adversely impact the interest income we receive from

our portfolio companies or the market value of the financial obligations that are due to us from our portfolio companies.

is considered to be a risk-free rate, and USD LIBOR was a risk weighted rate.

Thus, SOFR tends to be a lower rate than USD LIBOR, because

SOFR does not contain a risk component.

This difference may negatively impact our net interest margin of our investments.

Also, the use

of SOFR based rates is relatively new, and experience with SOFR based rate loans is limited.

There could be unanticipated difficulties

or disruptions with the calculation and publication of SOFR based rates.

This could result in increased borrowing costs for the Company

or could adversely impact the interest income we receive from our portfolio companies or the market value of the financial obligations

that are due to us from our portfolio companies.

we use debt to finance various investments, changes in interest rates will affect our cost of capital and net investment income.

Because we borrow money to make investments, our

net investment income will depend, in part, upon the difference between the rate at which we borrow funds and the rate at which we invest

As a result, we can offer no assurance that a significant change in market interest rates will not have a material adverse

effect on our net investment income in the event we use our existing debt to finance our investments.

In periods of rising interest rates,

such as the current period we are in, our cost of funds will increase to the extent we access any credit facility with a floating interest

rate, which could reduce our net investment income to the extent any debt investments have fixed interest rates.

We expect that our long-term

fixed-rate investments will be financed primarily with issuances of equity and long-term debt securities.

We may use interest rate risk

management techniques in an effort to limit our exposure to interest rate fluctuations.

Such techniques may include various interest rate

hedging activities to the extent permitted by the 1940 Act.

You should also be aware that, to the extent we

make floating debt investments, a rise in the general level of interest rates typically leads to higher interest rates applicable to our

debt investments.

we borrow money to make certain investments, our net investment income will depend, in part, upon the difference between the rate at

which we borrow funds and the rate at which we invest those funds.

As a result, we can offer no assurance that a significant change in

market interest rates will not have a material adverse effect on our net investment income in the event we use our existing debt to finance

our investments.

In periods of rising interest rates, such as the current period we are in, our cost of funds will increase to the extent

we access any credit facility with a floating interest rate, which could reduce our net investment income to the extent any debt investments

have fixed interest rates.

We expect that our long-term fixed-rate investments will be financed primarily with issuances of equity and

long-term debt securities.

We may use interest rate risk management techniques in an effort to limit our exposure to interest rate fluctuations.

Such techniques may include various interest rate hedging activities to the extent permitted by the 1940 Act.

should also be aware that, to the extent we make floating debt investments, a rise in the general level of interest rates typically leads

to higher interest rates applicable to our debt investments.

our investments are not managed effectively, we may be unable to achieve our investment objective.

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may not be able to pay distributions to our shareholders.

We cannot assure that we will achieve investment

results that will allow us to pay cash distributions.

Our ability to pay distributions might be adversely affected by, among other things,

the impact of one or more of the risk factors described herein.

In addition, the inability to satisfy the asset coverage test applicable

to us as a BDC could limit our ability to pay distributions.

As of September 30, 2023, the Company’s asset coverage was 270.7% after

giving effect to leverage and therefore the Company’s asset coverage is above 200%, the minimum asset coverage requirement under

the 1940 Act.

All distributions will be paid at the discretion of our board of directors and will depend on our earnings, our financial

condition, maintenance of our RIC tax treatment, compliance with applicable BDC regulations, and such other factors as our board of directors

may deem relevant from time to time.

We cannot assure you that we will pay distributions to our stockholders in the future.

cannot assure that we will achieve investment results that will allow us to pay cash distributions.

Our ability to pay distributions

might be adversely affected by, among other things, the impact of one or more of the risk factors described herein.

In addition, the

inability to satisfy the asset coverage test applicable to us as a BDC could limit our ability to pay distributions.

As of September

30, 2024, the Company’s asset coverage was 216.8% after giving effect to leverage and therefore the Company’s asset coverage

is above 200%, the minimum asset coverage requirement under the 1940 Act.

All distributions will be paid at the discretion of our board

of directors and will depend on our earnings, our financial condition, maintenance of our RIC tax treatment, compliance with applicable

BDC regulations, and such other factors as our board of directors may deem relevant from time to time.

We cannot assure you that we will

pay distributions to our stockholders in the future.

highly competitive market in which we operate may limit our investment opportunities.

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board of directors may change our investment objective, operating policies and strategies without prior notice or stockholder approval.

board of directors has the authority to modify or waive certain of our operating policies and strategies without prior notice and without

stockholder approval.

However, absent stockholder approval, we may not change the nature of our business so as to cease to be, or withdraw

our election as, a BDC.

We cannot predict the effect any changes to our current operating policies and strategies would have on our business,

operating results or value of our stock.

Nevertheless, the effects could adversely affect our business and impact our ability to make

distributions and cause you to lose all or part of your investment.

board of directors has the authority to modify or waive certain of our operating policies and strategies (including our investment objective)

without prior notice and without stockholder approval.

However, absent stockholder approval, we may not change the nature of our business

so as to cease to be, or withdraw our election as, a BDC.

We cannot predict the effect any changes to our current operating policies

and strategies would have on our business, operating results or value of our stock.

Nevertheless, the effects could adversely affect

our business and impact our ability to make distributions and cause you to lose all or part of your investment.

we borrow money, the potential for loss on amounts invested in us will be magnified and may increase the risk of investing in us.

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There could be:

sudden electrical or telecommunications outages;

natural disasters such as earthquakes, tornadoes and

disease pandemics (including the COVID-19 outbreak);

events arising from local or larger scale political

or social matters, including terrorist acts;

electrical or telecommunications outages;

disasters such as earthquakes, tornadoes and hurricanes;

pandemics (such as the COVID-19 outbreak);

arising from local or larger scale political or social matters, including terrorist acts;

cyber-attacks.

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planning could impair our ability to conduct business effectively.

occurrence of a disaster, such as a cyber-attack against us or against a third-party that has access to our data or networks, a natural

catastrophe, an industrial accident, failure of our disaster recovery systems, or consequential employee error, could have an adverse

effect on our ability to communicate or conduct business, negatively impacting our operations and financial condition.

This adverse effect

can become particularly acute if those events affect our electronic data processing, transmission, storage, and retrieval systems, or

impact the availability, integrity, or confidentiality of our data.

occurrence of a disaster, such as a cyber-attack against us, certain of our portfolio companies, or against a third-party that has

access to our data or networks, a natural catastrophe, an industrial accident, failure of our disaster recovery systems, or

consequential employee error, could have an adverse effect on our ability to communicate or conduct business (including the business of certain portfolio companies), negatively impacting

our operations and financial condition.

This adverse effect can become particularly acute if those events affect our electronic data

processing, transmission, storage, and retrieval systems, or impact the availability, integrity, or confidentiality of our

depend heavily upon computer systems to perform necessary business functions.

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loss, reputational damage, and increased costs associated with mitigation of damages and remediation.

parties with which we do business may also be sources of cybersecurity or other technological risks.

We outsource certain functions and

these relationships allow for the storage and processing of our information, as well as customer, counterparty, employee and borrower

Cybersecurity failures or breaches our service providers (including, but not limited to, accountants, custodians, transfer

agents and administrators), and the issuers of securities in which we invest, also have the ability to cause disruptions and impact business

operations, potentially resulting in financial losses, interference with our ability to calculate its net asset value, impediments to

trading, the inability of our stockholders to transact business, violations of applicable privacy and other laws, regulatory fines, penalties,

reputation damages, reimbursement of other compensation costs, or additional compliance costs.

While we engage in actions to reduce our

exposure resulting from outsourcing, ongoing threats may result in unauthorized access, loss, exposure or destruction of data, or other

cybersecurity incidents, with increased costs and other consequences, including those described above.

In addition, substantial costs

may be incurred in order to prevent any cyber incidents in the future.

parties with which we do business and certain of our portfolio companies may also be sources of cybersecurity or other technological

We outsource certain functions and these relationships allow for the storage and processing of our information, as well as

customer, counterparty, employee and borrower information.

Cybersecurity failures or breaches our service providers (including, but

not limited to, accountants, custodians, transfer agents and administrators), and the issuers of securities in which we invest, also

have the ability to cause disruptions and impact business operations, potentially resulting in financial losses, interference with

our ability to calculate its net asset value, impediments to trading, the inability of our stockholders to transact business,

violations of applicable privacy and other laws, regulatory fines, penalties, reputation damages, reimbursement of other

compensation costs, or additional compliance costs.

While we engage in actions to reduce our exposure resulting from outsourcing,

ongoing threats may result in unauthorized access, loss, exposure or destruction of data, or other cybersecurity incidents, with

increased costs and other consequences, including those described above.

In addition, substantial costs may be incurred in order to

prevent any cyber incidents in the future.

and information security laws and regulation changes, and compliance with those changes, may result in cost increases due to system changes

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securities of portfolio companies.

Our goal is ultimately to dispose of such equity interests and realize gains upon our disposition

of such interests.

However, the equity interests we receive may not appreciate in value and, in fact, may decline in value.

we may not be able to realize gains from our equity interests, and any gains that we do realize on the disposition of any equity interests

may not be sufficient to offset any other losses we experience.

Our equity investments may not appreciate in value and, in fact, may decline significantly in value.

Accordingly, we may not be able to realize gains from our equity interests, and any gains that we do realize on the disposition of any

equity interests may not be sufficient to offset any other losses we experience.

investments are very risky and highly speculative.

We have invested

primarily in senior secured first lien term loans and senior secured second lien term loans issued by private companies.

Secured Loans There is a risk that the collateral securing our loans may decrease in value over time, may be difficult to sell in

a timely manner, may be difficult to appraise and may fluctuate in value based upon the success of the business and market conditions,

have invested materially in senior secured first lien term loans and senior secured second lien term loans issued by private companies.

Secured Loans There is a risk that the collateral securing our loans may decrease in value over time, may be difficult to sell

in a timely manner, may be difficult to appraise and may fluctuate in value based upon the success of the business and market conditions,

including as a result of the inability of the portfolio company to raise additional capital, and, in some circumstances, our lien could

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loan’s terms, or at all, or that we will be able to collect on the loan should we be forced to enforce our remedies.

Investments When we invest in senior secured first lien term loans or senior secured second lien term loans, we may receive warrants

or other equity securities as well.

Investments When we invest in senior secured first lien term loans or senior secured second lien term loans, we may receive

warrants or other equity securities as well.

In addition, we may invest directly in the equity securities of portfolio companies.

or equity interests we receive may not appreciate in value and, in fact, may decline in value.

Accordingly, we may not be able to realize

gains from our warrants or equity interests, and any gains that we do realize on the disposition of any warrants or equity interests

may not be sufficient to offset any other losses we experience.

warrants or equity interests we receive may not appreciate in value and, in fact, may decline in value.

Accordingly, we may not be able

to realize gains from our warrants or equity interests, and any gains that we do realize on the disposition of any warrants or equity

interests may not be sufficient to offset any other losses we experience.

addition, investing in private companies involves a number of significant risks.

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in these types of companies.

have invested primarily in secured debt issued by our portfolio companies.

In the case of our senior secured first lien term loans, the

portfolio companies usually have, or may be permitted to incur, other debt that ranks equally with the debt securities in which we invest.

With respect to our senior secured second lien term loans, the portfolio companies usually have, or may be permitted to incur, other

debt that ranks above or equally with the debt securities in which we invest.

have invested in secured debt issued by our portfolio companies.

In the case of our senior secured first lien term loans, the portfolio

companies usually have, or may be permitted to incur, other debt that ranks equally with the debt securities in which we invest.

respect to our senior secured second lien term loans, the portfolio companies usually have, or may be permitted to incur, other debt

that ranks above or equally with the debt securities in which we invest.

In the case of debt ranking above the senior secured second

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investments in foreign securities may involve significant risks in addition to the risks inherent in U.S.

investment strategy contemplates that a portion of our investments may be in securities of foreign companies.

Investing in foreign companies

may expose us to additional risks not typically associated with investing in U.S.

These risks include changes in exchange

control regulations, political and social instability, expropriation, imposition of foreign taxes, less liquid markets and less available

information than is generally the case in the United States, higher transaction costs, less government supervision of exchanges, brokers

and issuers, less developed bankruptcy laws, difficulty in enforcing contractual obligations, lack of uniform accounting and auditing

standards and greater price volatility.

portion of our investments may be in securities of foreign companies.

Investing in foreign companies may expose us to additional risks

not typically associated with investing in U.S.

These risks include changes in exchange control regulations, political and

social instability, expropriation, imposition of foreign taxes, less liquid markets and less available information than is generally

the case in the United States, higher transaction costs, less government supervision of exchanges, brokers and issuers, less developed

bankruptcy laws, difficulty in enforcing contractual obligations, lack of uniform accounting and auditing standards and greater price

it is anticipated that most of our investments will be denominated in U.S.

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Business sector, which includes our investment in an asset-based lending

Companies in the same sector or industry may be similarly affected by economic, regulatory, political or market events or conditions,

which may make the Company more vulnerable to unfavorable developments in that sector or industry than companies that invest more broadly.

Generally, the more broadly the Company invests, the more it spreads risk and potentially reduces the risks of loss and volatility.

business and the insurance sector.

Companies in the same sector or industry may be similarly affected by economic, regulatory, political

or market events or conditions, which may make the Company more vulnerable to unfavorable developments in that sector or industry than

companies that invest more broadly.

Generally, the more broadly the Company invests, the more it spreads risk and potentially reduces

the risks of loss and volatility.

of September 30, 2024, investments in our affiliate’s asset-based lending business constituted 12.1% of our total assets.

under Item 1A for risk factors related to our investment in that business.

See “Subsequent Events” for a discussion of our

investment in an insurance business.

Related to Our Operations as a BDC and a RIC

1 unchanged sentence

adverse impact on our liquidity, financial condition and results of operations.

Our business requires a substantial amount of

capital to operate and grow.

We may acquire additional capital from the issuance of senior securities (including debt and preferred stock),

the issuance of additional shares of our common stock or from securitization transactions.

However, we may not be able to raise additional

capital in the future on favorable terms or at all.

Additionally, we may only issue senior securities up to the maximum amount permitted

by the 1940 Act.

The 1940 Act permits us to issue senior securities only in amounts such that our asset coverage, as defined in the 1940

Act, equals at least 200% (or 150% if, pursuant to the 1940 Act, certain requirements are met) after such issuance or incurrence.

assets decline in value and we fail to satisfy this test, we may be required to liquidate a portion of our investments and repay a portion

of our indebtedness at a time when such sales or repayment may be disadvantageous, which could have a material adverse impact on our liquidity,

financial condition and results of operations.

As of September 30, 2023, the Company’s asset coverage was 270.7% after giving effect

to leverage and therefore the Company’s asset coverage is above 200%, the minimum asset coverage requirement under the 1940 Act.

business requires a substantial amount of capital to operate and grow.

We may acquire additional capital from the issuance of senior

securities (including debt and preferred stock), the issuance of additional shares of our common stock or from securitization transactions.

However, we may not be able to raise additional capital in the future on favorable terms or at all.

Additionally, we may only issue senior

securities up to the maximum amount permitted by the 1940 Act.

The 1940 Act permits us to issue senior securities only in amounts such

that our asset coverage, as defined in the 1940 Act, equals at least 200% (or 150% if, pursuant to the 1940 Act, certain requirements

are met) after such issuance or incurrence.

If our assets decline in value and we fail to satisfy this test, we may be required to liquidate

a portion of our investments and repay a portion of our indebtedness at a time when such sales or repayment may be disadvantageous, which

could have a material adverse impact on our liquidity, financial condition and results of operations.

As of September 30, 2024, the Company’s

asset coverage was 216.8% after giving effect to leverage and therefore the Company’s asset coverage is above 200%, the minimum

asset coverage requirement under the 1940 Act.

in the laws or regulations governing our business, or changes in the interpretations thereof, and any failure by us to comply with these

44 unchanged sentences

results of operations.

have internalized our operating structure, including our management and investment functions; as a result, we may incur significant

costs and face significant risks associated with being self-managed, including adverse effects on our business and financial condition.

January 1, 2021, we operate under an internalized operating structure, including our management and investment functions.

no assurances that internalizing our operating structure will be beneficial to us and our stockholders, as we may incur the costs and

risks discussed below and may not be able to effectively replicate or improve upon the services previously provided to us by our former

investment adviser and administrator, MCC Advisors.

we will no longer bear the costs of the various fees and expenses we previously paid to MCC Advisors under the Investment Advisory Agreement,

our direct expenses will generally include general and administrative costs, including legal, accounting, and other expenses related

to corporate governance, SEC reporting and compliance, as well as costs and expenses related to making and managing our investments.

We will also now incur the compensation and benefits costs of our officers and other employees and consultants, and, subject to adherence

to applicable law, we may issue equity or other incentive-based awards to our officers, employees and consultants, which awards may decrease

net income and funds from our operations and may dilute our stockholders.

We may also be subject to potential liabilities commonly faced

by employers, such as workers disability and compensation claims, potential labor disputes and other employee-related liabilities and

addition, if the expenses we assume as a result of our internalization are higher than the expenses we would have paid and/or reimbursed

to MCC Advisors, our earnings per share may be lower as a result of our internalization than they otherwise would have been, potentially

decreasing the amount of funds available to distribute to our stockholders and the value of our shares.

an inability to effectively manage our internalization could result in our incurring excess costs and operating inefficiencies, and may

divert our management’s attention from managing our investments.

of these factors could have a material adverse effect on our results of operations, financial condition, and ability to pay distributions.

impact of financial reform legislation on us is uncertain.

Dodd-Frank Reform Act became effective on July 21, 2010.

Many provisions of the Dodd-Frank Reform Act have delayed effective dates or

have required extensive rulemaking by regulatory authorities.

The upcoming presidential and congressional elections may cause uncertainty

regarding the implementation of the Dodd-Frank Reform Act and other financial reform rulemaking.

Given the uncertainty associated with

the manner in which and whether the provisions of the Dodd-Frank Act will be implemented, repealed, amended, or replaced, the full impact

such requirements will have on our business, results of operations or financial condition is unclear.

The changes resulting from the

Dodd-Frank Act or any changes to the regulations already implemented thereunder may require us to invest significant management attention

and resources to evaluate and make necessary changes in order to comply with new statutory and regulatory requirements.

Failure to comply

with any such laws, regulations or principles, or changes thereto, may negatively impact our business, results of operations or financial

While we cannot predict what effect any changes in the laws or regulations or their interpretations would have on us as a

result of recent financial reform legislation, these changes could be materially adverse to us and our stockholders.

cannot predict how tax reform legislation will affect us, our investments, or our stockholders, and any such legislation could adversely

62 unchanged sentences

distribution, income source and asset diversification requirements.

The annual distribution

requirement for a RIC is satisfied if we timely distribute to our stockholders on an annual basis at least 90% of our net ordinary

income and realized short-term capital gains in excess of realized net long-term capital losses.

Depending on the level of taxable

income earned in a tax year, we may choose to carry forward taxable income in excess of current year distributions into the next

year and pay a 4% U.S.

annual distribution requirement for a RIC is satisfied if we timely distribute to our stockholders on an annual basis at least 90%

of our net ordinary income and realized short-term capital gains in excess of realized net long-term capital losses.

the level of taxable income earned in a tax year, we may choose to carry forward taxable income in excess of current year distributions

into the next year and pay a 4% U.S.

federal excise tax on such income.

Any such carryover taxable income must be distributed through a dividend

declared prior to filing the final tax return related to the year that generated such taxable income.

The source of income requirement

is satisfied if we obtain at least 90% of our gross income for each taxable year from dividends, interest, payments with respect

to certain securities loans, gains from the sale or other disposition of stock or other securities or foreign currencies or other

income derived with respect to our business of investing in such stock, securities or currencies and net income derived from an interest

in a “qualified publicly traded partnership” (as defined in the Code).

The asset diversification

requirement is satisfied if we meet certain asset diversification requirements at the end of each quarter of our taxable year.

satisfy this requirement, at least 50% of the value of our assets must consist of cash, cash equivalents, U.S Government securities,

securities of other RICs, and other securities if such other securities of any one issuer do not represent more than 5% of the value

of our assets or more than 10% of the outstanding voting securities of the issuer (which for these purposes includes the equity securities

of a “qualified publicly traded partnership”).

In addition, no more than 25% of the value of our assets can be invested

in the securities, other than U.S Government securities or securities of other RICs, (1) of one issuer (2) of two or more issuers

that are controlled, as determined under applicable tax rules, by us and that are engaged in the same or similar or related trades

or businesses or (3) of one or more “qualified publicly traded partnerships”.

Any such carryover taxable income must be distributed through

a dividend declared prior to filing the final tax return related to the year that generated such taxable income.

source of income requirement is satisfied if we obtain at least 90% of our gross income for each taxable year from dividends, interest,

payments with respect to certain securities loans, gains from the sale or other disposition of stock or other securities or foreign

currencies or other income derived with respect to our business of investing in such stock, securities or currencies and net income

derived from an interest in a “qualified publicly traded partnership” (as defined in the Code).

asset diversification requirement is satisfied if we meet certain asset diversification requirements at the end of each quarter of

our taxable year.

To satisfy this requirement, at least 50% of the value of our assets must consist of cash, cash equivalents, U.S

Government securities, securities of other RICs, and other securities if such other securities of any one issuer do not represent

more than 5% of the value of our assets or more than 10% of the outstanding voting securities of the issuer (which for these purposes

includes the equity securities of a “qualified publicly traded partnership”).

In addition, no more than 25% of the value

of our assets can be invested in the securities, other than U.S Government securities or securities of other RICs, (1) of one issuer

(2) of two or more issuers that are controlled, as determined under applicable tax rules, by us and that are engaged in the same

or similar or related trades or businesses or (3) of one or more “qualified publicly traded partnerships”.

we fail to qualify for RIC tax treatment for any reason or are subject to corporate-level U.S.

24 unchanged sentences

These factors

significant volatility

in the market price and trading volume of securities of business development companies or other companies in our sector, which are

not necessarily related to the operating performance of the companies;

changes in regulatory policies,

accounting pronouncements or tax guidelines, particularly with respect to BDCs or RICs;

loss of our qualification

as a RIC or BDC;

changes in earnings or variations in operating results;

changes in the value of our portfolio of investments;

changes in accounting guidelines governing valuation

of our investments;

any shortfall in revenue or net income or any increase

in losses from levels expected by investors or securities analysts;

departure of our key personnel;

operating performance of

companies comparable to us;

general economic trends

and other external factors;

loss of a major funding

volatility in the market price and trading volume of securities of business development companies or other companies in our sector,

which are not necessarily related to the operating performance of the companies;

in regulatory policies, accounting pronouncements or tax guidelines, particularly with respect to BDCs or RICs;

of our qualification as a RIC or BDC;

in earnings or variations in operating results;

in the value of our portfolio of investments;

in accounting guidelines governing valuation of our investments;

shortfall in revenue or net income or any increase in losses from levels expected by investors or securities analysts;

of our key personnel;

performance of companies comparable to us;

economic trends and other external factors;

of a major funding source.

provisions of the Delaware General Corporation Law and our certificate of incorporation and bylaws could deter takeover attempts and

106 unchanged sentences

litigation and stockholder activism.

Unresolved Staff Comments

do not own any real estate or other physical properties materially important to our operation.

We have entered into a 5-year operating

lease for our headquarters at 445 Park Avenue, 10th Floor, New York, NY 10022.

Risks of the Insurance Business

Risks Related to Life Insurance

Actual claims and benefits payments may differ from actuarial

assumptions and may adversely affect NSG’s financial results, capitalization and financial condition.

Due to the nature of the underlying risks and the uncertainty associated

with the determination of liabilities for future policy benefits and claims, NSG cannot precisely determine the amounts which it will

ultimately pay to settle these liabilities.

Because of the inability to determine with precision the amounts required to settle future

policy benefits and claims, NSG must rely on actuarial assumptions.

Liabilities for future policy benefits and claims are established

based on actuarial estimates of how much NSG will need to pay for future benefits and claims.

NSG’s earnings significantly depend

upon the extent to which its actual claims experience and benefit payments on its products are consistent with such assumptions.

NSG makes assumptions regarding policyholder behavior, including

with respect to guaranteed options, but those assumptions may be incorrect.

NSG makes assumptions regarding policyholder behavior at the time of

pricing, including regarding the selection and utilization of the guaranteed options inherent within certain of its products.

increase in the valuation of liabilities for future benefit payments could result to the extent that emerging and actual experience deviates

from policyholder option utilization assumptions.

These assumptions are based in part on expected persistency of the products, which change

the probability that a policy or contract will remain in force from one period to the next.

Persistency could be adversely affected by

a number of factors, including adverse economic conditions, as well as by developments affecting policyholder perception of NSG and perceptions

arising from any potential adverse publicity or negative rating agency actions.

If NSG’s actual claims experience differs from the assumptions

used to establish reserves for its liabilities, NSG may be required to increase its reserves.

NSG evaluates its liabilities regularly based on accounting requirements

(which change from time to time), the assumptions and models used to establish the liabilities, as well as actual experience.

amounts actually paid may vary materially from the estimated amounts, particularly when those payments may not occur until well into the

To the extent that actual claims and benefits experience differs from the underlying assumptions used in establishing such liabilities,

NSG could be required to increase its reserves for liabilities.

An increase in reserves required for any of the above reasons, individually

or in the aggregate, could have a material adverse effect on NSG’s financial condition and results of operations and its profitability

measures, as well as materially impact its capitalization, statutory free cash flow and liquidity.

This could impact NSG’s risk-based

capital ratios and its financial strength ratings, which are necessary to support its product sales, and, in certain circumstances, ultimately

impact its solvency.

See also “NSG’s actual claims losses may exceed reserves for claims and it may be required to establish

additional reserves, which in turn may adversely impact its results of operations and financial condition” below.

Pricing accuracy depends on accurate morbidity and mortality

estimates, but the data on which such estimates are based may be insufficient, incorrect or incomplete .

In order to price products accurately, NSG must develop and apply appropriate

morbidity and mortality estimates, closely monitor and timely recognize changes in trends, and project both severity and frequency of

losses with reasonable accuracy to cover these risks.

Pricing adequacy is necessary to generate sufficient premiums to cover NSG’s

cost of sales, costs of operations (including payment of policy benefits) and to earn a profit.

Pricing adequacy is subject to a number

of risks and uncertainties, including, without limitation:

availability of sufficient reliable data;

incorrect or incomplete analysis

of available data;

uncertainties inherent in estimates and assumptions;

selection and application of appropriate rating formulae or other

pricing methodologies;

adoption of successful pricing strategies;

prediction of policyholder life expectancy and retention;

or unanticipated events, legislation, regulatory action or court decisions;

and unexpected changes in interests rates or inflation.

risks may result in NSG’s pricing being based on outdated, inadequate, or inaccurate data, or inappropriate analyses, assumptions,

or methodologies, and may cause NSG to estimate incorrectly future changes in the frequency or severity of claims.

As a result, NSG could

underprice risks, which would negatively affect NSG’s margins, or it could overprice risks, which could reduce NSG’s volume

and competitiveness.

Public health crises, extreme mortality events or similar occurrences

may adversely impact NSG’s business, financial condition, or results of operations.

NSG’s life insurance operations are exposed to the risk of catastrophic

mortality, such as a pandemic or other event that causes a large number of deaths, and the likelihood, timing and severity of such events

cannot be predicted.

Economic uncertainty resulting from a public health crisis or similar event could impact sales of certain of NSG’s

products, and NSG may decide or otherwise be required to provide relief to customers adversely affected by such an event.

the impact of climate change could cause changes in the frequency or severity of outbreaks of certain diseases.

Circumstances resulting

from a public health crisis or similar event could affect the incidence of claims, utilization of benefits, lapses or surrenders of policies

and payments on insurance premiums, any of which could impact the revenues and expenses associated with NSG’s products.

be certain that the liabilities it has established for claims arising from a catastrophe will be adequate to cover actual claim liabilities.

Conversely, improvements in medical care and other developments which positively affect life expectancy can cause NSG’s assumptions

with respect to longevity, which it uses when it prices its products, to become incorrect and, accordingly, can adversely affect its financial

condition and results of operations.

Liquidity may be adversely affected by policyholder withdrawals

and surrenders or if holders of whole life policies elect to receive lump sum distributions at greater-than-anticipated levels .

NSG’s insurance business is exposed to the risk of unanticipated

or extraordinary early policyholder withdrawals or surrenders.

Early withdrawal and surrender levels may differ from anticipated levels

for a variety of reasons, including changes in economic conditions, changes in policyholder behavior or financial needs or increases in

surrenders among policies that are no longer subject to surrender charges.

In addition, NSG faces potential liquidity risks if policyholders

with mature policies elect to receive lump sum distributions at greater levels than anticipated.

If NSG experiences unanticipated early

withdrawal or surrender activity or greater than expected lump sum distributions of endowment maturities and lacks sufficient cash flow

from its insurance operations to support payment of these benefits, NSG may have to sell its investments in order to meet cash needs or

be forced to obtain third-party financing.

The availability of such financing will depend on a variety of factors, such as market conditions,

the availability of credit in general or more specifically in the insurance industry, the strength or weakness of the capital markets,

NSG’s credit capacity, and the perception of NSG’s long- or short-term financial prospects.

If NSG is forced to sell its investments

on unfavorable terms or obtain financing with unfavorable terms, it could have an adverse effect on NSG’s liquidity, results of

operations and financial condition.

Changes in surrender activity may also result in remeasurement gains

or losses which could increase volatility in NSG’s results of operations.

Risks Related to Property & Casualty Insurance

If NSG is unable to accurately assess its underwriting risk,

its financial condition and results of operations could be adversely affected .

NSG’s underwriting success depends on its ability to accurately

assess the risks associated with the business it writes and retains.

NSG relies on the experience of its underwriting staff in assessing

those risks, and on information provided by insureds or their representatives when underwriting insurance policies.

While NSG may make

inquiries to validate or supplement the information provided, it may make underwriting decisions based on incorrect or incomplete information.

A misunderstanding of the nature or extent of the risks may cause NSG to fail to establish appropriate premium rates which could adversely

affect its financial results.

The usefulness of models as a tool to evaluate risk is subject

to a high degree of uncertainty which could result in actual losses that are materially different from NSG’s estimates and could

have a significant adverse impact on NSG’s financial results.

NSG’s approach to risk management relies on subjective variables

that entail significant uncertainties, and small changes in assumptions which depend heavily on judgment and foresight can have a significant

impact on the modeled outputs.

For example, NSG relies on catastrophe modeling results in its decision-making regarding the upper limits

of its catastrophe reinsurance protection.

These models simulate loss estimates based on a set of assumptions that impact loss potential,

and may not produce accurate predictions.

Models used to assess risk are subject to a high degree of uncertainty.

These uncertainties

can include, among other things, that they may not address all possible hazards, may not reflect the true frequency of events, may not

accurately reflect a risk’s vulnerability or susceptibility to damage for a given event, may not accurately represent loss potential

to insurance or reinsurance contract coverage limits and other contract terms and may not accurately reflect judicial, political or regulatory

NSG’s losses and loss expense reserves may be inadequate

to cover its actual losses, which could have a material adverse effect on its financial conditions, results of operations and cash flows .

NSG maintains losses and loss expense reserves based on its estimate

of the ultimate payment of all claims that have been or could be incurred in the future, and the related costs of adjusting those claims.

However, reserves do not represent an exact calculation of liability, but rather an estimate of what NSG expects settlement and administration

claims will cost, and its actual liability may be greater or less than the estimate.

These variables are affected by both internal and external events that

could increase NSG’s exposure to losses and there is no precise method for evaluating the impact of any specific factor on the adequacy

of loss reserves.

Uncertainties may result from factors including, but not limited to, the emergence of new information after there has

been time to appreciate the full extent of covered losses;

new theories of liability that are enforced retroactively by courts;

in the number and severity of claims;

increases in costs (such as medical, legal or supply chain costs) to remedy covered losses;

the risk of unanticipated assessments from state underwriting associations or windstorm pools related to losses in excess of the associations

or pool’s ability to pay.

Unexpected changes in the interpretation of NSG’s coverage

or provisions, including loss limitations and exclusions, in its policies could have a material adverse effect on NSG’s financial

condition and results of operations.

There can be no assurances that loss limitations or exclusions in NSG’s

policies will be enforceable in the manner intended.

As industry practices as well as legal, judicial, social, and other conditions change,

unexpected and unintended issues related to claims and coverage may emerge.

While these limitations and exclusions help NSG to assess

and mitigate its loss exposure, it is possible that a court or regulatory authority could nullify or void a limitation or exclusion, or

that legislation could be enacted modifying or barring the use of such limitations or exclusions.

In addition, court decisions could read

policy exclusions narrowly so as to expand coverage.

This could adversely affect NSG’s business by broadening coverage beyond its

underwriting intent or by increasing the frequency or severity of claims, and could result in higher than anticipated losses.

instances, these changes may not become apparent until after insurance contracts are issued, and the full extent of liability under such

contracts may not be known for many years after a contract is issued.

NSG’s failure to accurately and timely pay claims could

materially and adversely affect its business .

Many factors could affect NSG’s ability to accurately and timely

pay claims, including the training and experience of its claims representatives, the effectiveness of management, and its ability to develop

or select and implement appropriate procedures and systems to support its claims functions, among other factors.

NSG’s failure to

accurately and timely pay claims could lead to regulatory action or litigation, undermine its reputation, and adversely affect its business,

financial condition, results of operations and prospects.

The property and casualty insurance business is historically

cyclical in nature, which may affect NSG’s financial performance, cause its operating results to vary from quarter to quarter and

may not be indicative of future performance.

The supply of property and casualty insurance is related to prevailing

prices, the level of insured losses and the level of capital available to the industry that, in turn, may fluctuate in response to changes

in rates of return on investments being earned in the insurance industry.

As a result, the property and casualty insurance business historically

has been a cyclical industry characterized by periods of intense price competition due to excessive underwriting capacity as well as periods

when shortages of capacity increased premium levels.

In addition, demand for property and casualty insurance depends on numerous factors,

including the frequency and severity of catastrophic events, levels of capacity, the introduction of new capital providers and general

economic conditions.

All of these factors fluctuate and may contribute to price declines in the insurance industry generally.

NSG’s operating results are subject to fluctuation.

If actual renewals do not meet expectations or if NSG chooses not to

write renewals because of pricing conditions, its written premium in future years and its future operations would be materially adversely

Risks Related to the Insurance Business Generally

Competition for business in the insurance industry is intense .

NSG faces competition from specialty insurance companies, standard

insurance companies and underwriting agencies.

Competition among insurance companies is based on a number of factors, including reputation,

name recognition, credit ratings, financial strength ratings, relationships with distribution partners, terms and conditions of products

offered, and speed of claims payment.

In recent years, the insurance industry has undergone increasing consolidation, which may further

increase competition.

In addition, some of NSG’s competitors are larger and have greater financial, marketing, and other resources

than NSG has, and are able to absorb large losses more easily.

NSG’s competitors may also offer more competitive pricing, a broader

range of products and have greater claims-paying ability.

NSG may not be able to continue to compete successfully in the insurance markets.

Increased competition in these markets could result in a change in the supply and demand for insurance, affect NSG’s ability to

price its products at risk-adequate

Because NSG’s business depends on insurance retail agents

and brokers, NSG is exposed to certain risks arising out of its reliance on these distribution channels .

NSG’s products are distributed through independent retail agents

Retail agents and brokers generally own the renewal rights, making NSG’s business model dependent on its relationships

with, and the success of, the retail agents and brokers with whom it does business.

NSG relies on a core number of brokers that account

for a substantial number of policies, and its relationships with its brokers and retail agents may be discontinued at any time.

or more such distributors were to terminate its relationship with NSG or reduce the amount of sales it produces, NSG’s results of

operations could be adversely affected.

Even if the relationships do continue, they may not be on terms that are profitable for NSG.

deterioration in the relationships with distributors or failure to provide competitive compensation could lead these distributors to place

more premium with other carriers and less premium with NSG.

Also, NSG’s distributors may in any event choose to concentrate their

efforts in selling their firm’s own products or NSG’s other competitors’ products instead of NSG’s.

NSG could also be adversely affected by consolidation in its distribution

sales channels.

Consolidation could result in loss of market access.

NSG could also be negatively affected due to loss of talent as the

people most knowledgeable about NSG’s products and with whom NSG has developed strong working relationships exit the business following

an acquisition, or, increases in its commission costs as larger distributors acquire more negotiating leverage over their fees.

Certain premiums from policyholders, where the business is produced

by brokers, are collected directly by the brokers and remitted to NSG, and NSG could be adversely affected if the brokers collect premiums

but do not remit them to NSG.

Despite the premiums not being paid to NSG, NSG may be required under applicable law to provide the coverage

set forth in the policy.

Consequently, NSG assumes a degree of credit risk associated with the brokers with which it works.

if NSG is limited in its ability to cancel policies for non-payment, its underwriting profits may decline and its financial condition

and results of operations could be materially and adversely affected.

Insurance companies are subject to extensive regulation, which

varies from jurisdiction to jurisdiction and may change from time to time .

NSG is subject to extensive regulation which may adversely affect its

ability to achieve its business objectives, and noncompliance with these regulations could subject NSG to penalties, including fines and

suspensions, which may adversely affect its financial condition and results of operations.

Applicable laws and rules are subject to change

by legislation or administrative or judicial interpretation, and changes in regulation could limit NSG’s discretion or make it more

expensive to conduct business.

In addition, state insurance regulators have broad discretion to deny

or revoke licenses for various reasons, including the violation of regulations.

In some instances, where there is uncertainty as to applicability,

NSG follows practices based on its interpretations of regulations or practices that it believes generally to be followed by the industry

which may turn out to be different from the interpretations of regulatory authorities.

If NSG does not have the requisite licenses and

approvals or does not comply with applicable regulatory requirements, state insurance regulators could preclude or temporarily suspend

it from carrying on some or all of its activities in their state or could otherwise penalize NSG.

This could adversely affect NSG’s

ability to operate its business.

Further, changes in the level of regulation of the insurance industry or changes in laws or regulations

themselves or interpretations by regulatory authorities could interfere with NSG’s operations and require it to bear additional

costs of compliance, which could adversely affect its ability to operate its business.

Also, because its products are sold through independent agents, NSG

has less control over how products are sold, including with respect to legal compliance.

While NSG expects its agents to comply with their

contractual obligations and applicable law, NSG has limited control over how such agents conduct their business.

If violations are attributed

to NSG, NSG could incur significant fines, and if attributed to its agents, may cause the agents to stop selling NSG’s products.

NSG may be unable to purchase reinsurance in amounts desired

on acceptable terms, and reinsurers may default or fail to perform .

NSG purchases reinsurance from third parties to limit its risk on individual

policies, and in the case of property insurance, limit its risk in the event of a catastrophe in various geographic areas (including,

without limitation, the risk of hurricanes and tornado activity in the states in which it operates).

If NSG is unable to renew expiring

reinsurance contracts or enter into new reinsurance arrangements on acceptable terms, NSG’s loss exposure could increase, which

would increase potential losses related to such loss events.

If NSG is unwilling to bear an increase in loss exposure, it may need to

reduce the level of its underwriting commitments which could materially adversely affect its business, financial condition and results

of operations.

In addition, reinsurers may exclude certain coverages from, or alter terms in, the reinsurance contracts NSG enters into

NSG, like other insurance companies, could write insurance policies which to some extent do not have the benefit of reinsurance

protection, but these gaps in reinsurance protection expose NSG to greater risk and greater potential losses.

Although reinsurance makes the reinsurer liable to NSG to the extent

the risk is transferred or ceded to the reinsurer, it does not relieve NSG (the ceding insurer) of its primary liability to policyholders.

Reinsurers may not pay claims NSG incurs on a timely basis, or they may not pay some or all of these claims.

Any disputes with reinsurers

regarding coverage under reinsurance contracts could be time consuming, costly, and uncertain of success.

In addition, NSG’s reinsurance

may be concentrated among a few reinsurance carriers, meaning that if one or more of these reinsurers do not renew, default on payment

of claims, or become insolvent, NSG could incur increased net losses and its financial condition could be adversely affected.

A downgrade or potential downgrade in NSG’s financial strength

rating could adversely affect its business .

Participants in the insurance industry use ratings from independent

ratings agencies as an important means of assessing the financial strength and quality of insurers.

Downgrades in NSG’s financial

strength rating could cause NSG’s partners to choose more highly rated competitors;

increase the cost or reduce the availability

of reinsurance;

limit or prevent the ability to write or renew insurance contracts;

limit access to capital markets;

increase costs of

reduce new sales of insurance products;

increase regulatory scrutiny;

provide termination rights to reinsurers;

require reduced

pricing to remain competitive;

and increase the number or amount of policy surrenders and withdrawals by contract holders and policyholders,

among other consequences.

Performance of NSG’s investment portfolio is subject to

a variety of investment risks that could adversely affect its financial results .

NSG’s results of operations depend, in part, on the performance

of its investment portfolio, and its investments are subject to general economic conditions and market risks as well as risks inherent

to specific securities.

NSG’s primary market risk exposures are to changes in interest rates and equity prices.

Should interest

rates decline, a low interest rate environment would place pressure on NSG’s net investment income.

Increases in interest rates

could cause the values of NSG’s fixed income securities portfolios to decline, with the magnitude of the decline depending on the

duration of securities included in its portfolio and the amount by which interest rates increase.

During periods of market disruption, including periods of significantly

rising or high interest rates, rapidly widening credit spreads or illiquidity, it may be difficult to value certain of NSG’s securities

if trading becomes less frequent or market data becomes less observable.

In addition, in times of financial market disruption, certain

asset classes that were in active markets with significant observable data may become illiquid.

In those cases, the valuation process

includes inputs that are less observable and require more subjectivity and management judgment.

If NSG is forced to sell certain of its

investments during periods of market volatility or disruption, market prices may be lower than their carrying.

This could result in realized

losses, which could have a material adverse effect on NSG’s financial condition and results of operations.

It could also affect

financial ratios, brining NSG out of compliance with its credit instruments and rating agency capital adequacy measures.

NSG’s debt investments are subject to the risk that investments

may default or become impaired due to deterioration in the financial condition of the issuer, or due to deterioration in the financial

condition of an insurer that guarantees the issuer’s payments.

Downgrades in the credit ratings of fixed maturity securities (where

rated) could also have a significant negative effect on the market valuation of such securities.

Mortgage loans are subject to a variety

of risks relating to the supply and demand of leasable commercial space, creditworthiness of tenants and partners, capital markets volatility,

interest rate fluctuations and issuer defaults, among others.

NSG’s actual claims losses may exceed reserves for claims

and it may be required to establish additional reserves, which in turn may adversely impact its results of operations and financial condition .

NSG maintains reserves to cover its estimated exposure for claims relating

to its issued insurance policies.

Reserves do not represent an exact calculation of exposure, but instead represent NSG’s best estimates

using actuarial and statistical procedures.

Reserve estimates are refined as experience develops.

Because establishing reserves is an

inherently uncertain process involving estimates of future losses, future developments may require NSG to increase policy benefit reserves,

which would restrict its use of cash that might otherwise be used for other purposes, negatively affecting its results of operations,

and limit the dividends and distributions that it is able to make to the Company.

NSG is subject to minimum capital and surplus requirements, and

failure to meeting these requirements could subject it to regulatory action or other restrictions.

NSG is subject to minimum capital and surplus requirements.

to satisfy these requirements could result in regulatory action, prevent NSG from selling new business or require guarantees, all of which

could have a material and adverse impact on NSG’s competitiveness, operational flexibility, financial condition and results of operations.

Failure to satisfy these requirements could also preclude NSG from making dividends and distributions to the Company.

A decline in NSG’s risk-based capital (“RBC”)

ratio could result in in increased scrutiny by insurance regulators and rating agencies and could have a material adverse effect on its

financial condition and results of operations .

The NAIC has established model regulations that provide minimum capitalization

requirements based on RBC formulas for insurance companies.

A failure to meet these requirements could subject NSG to increased scrutiny

or corrective action imposed by insurance regulators, including limitations on its ability to write additional business, increased regulatory

supervision, or seizure or liquidation.

A decline in RBC ratio, whether or not it results in a failure to meet applicable RBC requirements,

could limit NSG’s ability to make distributions, could result in a loss of customers or new business or result in a downgrade of

NSG’s financial strength rating.

Employees of NSG or its third-party service providers may take

excessive risks which could negatively affect NSG’s financial condition and business .

The individuals who conduct NSG’s business, including its management

personnel, sales intermediaries, investment professions, and other employees, as well as employees of various third-party service providers,

make decision that could expose NSG to risk.

These include decisions such as setting underwriting guidelines and standards, product design

and pricing, determining what assets to purchase for investment and when to sell them, which business opportunities to pursue, among other

Such individuals may take excessive risks regardless of the structure of NSG’s risk management framework or its compensation

program and practices, which may not effectively deter excessive risk-taking or misconduct.

Similarly, NSG’s controls and procedures

may not be effective.

If NSG’s employees and the employees of third-party service providers take excessive risks, it could suffer

material losses in its investment portfolio, be subject to regulatory sanctions and experience harm to its reputation.

Difficult conditions in the capital markets and the U.S.

generally could materially adversely affect NSG’s business and results of operations .

The business and results of operations of domestic insurance companies

generally are materially affected by conditions in the capital markets and the U.S.

economy generally.

An economic downturn may be characterized

by increases in inflation, higher unemployment, lower family income, lower corporate earnings, lower business investment or lower consumer

As a result, the demand for insurance products and their utilization could be adversely affected, as customers are unwilling

or unable to purchase policies, choose to defer paying insurance premiums or stop paying insurance premiums altogether, surrender their

life insurance policies for their cash value or otherwise seek to utilize the cash benefits of their policies or file property and casualty

claims at elevated rates.

Depending on their level of occurrence, these customer actions could materially adversely affect NSG’s

business and results of operations.

Climate change could have a material adverse effect on NSG’s

Climate change could have a significant impact

on longer-term natural weather trends, potentially impacting both NSG’s property and casualty insurance business and its life insurance

Rising temperatures and changes in weather patterns could impact storm frequency and severity and thereby negatively affect

claims experience, reinsurance costs and product pricing in NSG’s property and casualty insurance business.

Climate change may also

impact life expectancies, influencing mortality assumptions used in pricing and reserve calculations in its insurance business.

of the unpredictability of the long-term effects of climate change, NSG may be unable to accurately factor these effects into its assumptions

and models, and its business could suffer as a result.

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-K

Item 1A. Risk Factors