Sundance Strategies (OTCBB:SUND) releases the following update
to shareholders:
We are excited about the many great things that have been
happening with Sundance Strategies over the past several months.
For those of you who have been with Sundance for a while, we
believe you will be impressed with the execution of our business
plan and the developments of the last year.
Because interest from investors is expanding our shareholder
base, however, there are a great many of you who are still
traveling up the learning curve on just what it is Sundance does
and how the Company does it.
The Opportunity
As people’s lives change, their need for life insurance changes.
Young people need very little, families with kids and mortgages
need a lot more. As people enter their golden years, their
financial responsibilities tend to lessen, and many find that they
are over-insured. Until recently, there were just two options: take
the cash surrender value, if there is any in the policy (that is
hand the policy back for a fraction of its face value), or continue
to pay increasing premiums for more insurance than you need. In
both cases, it’s better for the insurer than for the
policyholder.
A third option has recently emerged, though, called a life
settlement. In a life settlement, the policyholder sells their
policy to a third-party who will collect the benefit in the future.
The insurance company receives all future premiums from that third
party, and the original policyholder gets more money than he or she
would have by surrendering the policy back to the insurance
company.
Life settlement is an option in 42 of the 50 states, and the
total face value of in force life insurance policies in the US is
approximately $19 trillion. As a comparison, in 2013, America’s GDP
was $15.7 trillion. The market for life settlement policies is
currently $109 billion and expectations are that it will rise to
more than $150 billion in 2021, when 55 million adults will be 65
or older.
The Sundance Model
The increase in demand to buy policies creates a challenge for
those in the life settlement business, namely how to get the
capital necessary to purchase more and more policies while at the
same time making the premium payments necessary to keep the
policies in force. Sundance Strategies has a solution.
It is important to understand that Sundance is not in the
business of purchasing policies from seniors that are looking to
generate cash and get out of paying the premiums. Policies are
purchased from other life settlement firms and hedge funds,
selecting only those policies and portfolios that meet our rigid
investment criteria. The other firms get an infusion of cash to,
and we get a financially valuable asset that will pay a defined
benefit in the future.
A pool of policies are bundled together and are refinanced with
a Senior Secured Lender that pays all of the expenses and future
premiums. This reduces the risk for Sundance as these policies are
carried to maturity with the carrying costs included in the
financing.
When enough of these refinanced policies are in our control, we
will bundle these policies together and endeavor to issue a
corporate bond backed by the cash flow expected from the policies
as the insurer pays out benefits. Bond investors get a very safe
stream of income, and we recycle our cash to continue the process
all over.
Two intertwined issues arise here that pose challenges to
Sundance. First, we don’t know exactly when we will receive payment
on the net insurance benefits we hold. Second, the pool of net
insurance benefits we hold are unlikely to ever have a sufficient
number of policies to rely on the “Law of Big Numbers” that makes
actuarial science work. Combined, these could result in a very
lumpy cash-flow that could undermine the entire investment
premise.
Sundance Strategies has overcome these intertwined issues by way
of a reinsurance program with a major, US-based, A-rated reinsurer.
This reinsurance provides up to 75% of projected benefits in any
year where actual benefit payment experience varies from
statistical expectations. We call this insurance Mortality
Re-Insurance (MRI).
For example, if $10 million of benefits were expected based on
actuarial models, but only $5 million were actually paid under the
terms of the relevant policies, then the MRI reinsurer would
provide an additional $2.5 million to help smooth out the payment
obligations. The $5 million that did not come in that year is
certain to be paid out in the future – the reinsurance simply
provides greater certainty about when moneys are paid and how
much.
Net Insurance Benefit
A key component to understanding our business is the concept of
Net Insurance Benefit [NIB]. NIB is simply the remaining cash
available for Sundance when the policy face value has been paid to
us after a policy matures, less the total of all premium payments,
financing costs, MRI and expenses have been subtracted from that
face amount.
Year in Review
Over the past year Sundance has accomplished the following.
- Closed the initial $4 million private
placement in April, 2013.
- Announced the closing of the 2nd
private placement of $15 million in November, 2013, of which
$11,792,500 was received from paid subscriptions; and announced on
July 16, 2014, $3,300,000 in a new subscription receivable, which
is due and payable on August 15, 2014.
- Acquired $219 million in Face Death
Benefit that has been fully processed into Sundance’s NIB structure
with approximately $300 million of additional Face Death Benefit
under contract and in the NIB structure process.
- Sundance is working diligently to build
the strength of our shares by actively promoting our company to the
Investment Community.
- The Company is reviewing several
portfolios with hundreds of millions in Face Value Death Benefit. A
portion of these portfolios that fit within our company business
model may be acquired at some point in the near future.
- Along with these important
accomplishments we have surrounded ourselves with quality people
with Life Settlements experience to help us move the business
forward.
In addition, Sundance has had initial discussions with major
stock exchanges regarding the possible up-listing of our stock
which we are working to qualify for by the end of this calendar
year.
We invite you to visit our website www.sundancestrategies.com to
view all of our current documentation including our investor
presentation, current filings and whiteboard presentation.
We are very excited about our business model and our go forward
plans. Thank you for your trust and investment. If you have any
questions or concerns please feel free to contact us.
Thank you,
Randy Pearson, Presidentrandy@sundancestrategies.com(801)
705-8968
Matt Pearson, Chief Operations
Officermatt@sundancestrategies.com(801) 705-8968
Disclaimer
This press release contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. In some cases, you can identify forward-looking statements
by the following words: “anticipate,” “believe,” “continue,”
“could,” “estimate,” “expect,” “intend,” “may,” “ongoing,” “plan,”
“potential,” “predict,” “project,” “should,” “will,” “would,” or
the negative of these terms or other comparable terminology,
although not all forward-looking statements contain these words.
Forward-looking statements are not a guarantee of future
performance or results, and will not necessarily be accurate
indications of the times at, or by, which such performance or
results will be achieved. Forward-looking statements are based on
information available at the time the statements are made and
involve known and unknown risks, uncertainties and other factors
that may cause our results, levels of activity, performance or
achievements to be materially different from the information
expressed or implied by the forward-looking statements in this
press release. This press release should be considered in light of
all filings of the Company that are contained in the Edgar Archives
of the Securities and Exchange Commission at www.sec.gov.
Sundance StrategiesRandy Pearson,
Presidentrandy@sundancestrategies.com(801) 705-8968Matt Pearson,
Chief Operations Officermatt@sundancestrategies.com(801)
705-8968
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