Business Risks - The company's valuation of life insurance policies is uncertain, as many values are tied to actual maturity dates, which could adversely impact business performance [81]. - The company faces risks in accurately forecasting life expectancies, which may lead to lower returns on life settlement policies if people live longer than expected [90]. - The availability of life insurance policies for acquisition is limited, and failure to secure sufficient quality policies could materially affect the company's business [95]. - Increased competition from life insurance companies and brokers offering enhanced cash surrender values may adversely impact the company's ability to acquire policies [97]. - The company assumes credit risk associated with life insurance companies, which could affect the realization of full value from insurance payouts [84]. - The company may not realize anticipated benefits from recent acquisitions, which could negatively impact business results and stock value [84]. - The life settlement industry faces negative public perception and political opposition, which could adversely affect the Company's investments and liquidity [99]. - There is a risk of fraud in the origination and sale of life insurance policies, which could significantly impact the Company's returns and overall business [103]. - The Company may be subject to claims from life insurance companies and regulatory authorities, which could have a material adverse impact on its operations [104]. - Changes in legislation could classify life settlements as securities, leading to increased regulatory burdens and potential limitations on the Company's investment strategies [107]. - The Company may face challenges in liquidating life insurance policies due to market conditions and uncertainties surrounding their liquidation value [131]. - The Company may face litigation or claims related to acquisitions, which could adversely affect its business and financial results [174]. Regulatory and Compliance Risks - The company is subject to significant foreign currency risk due to operations conducted in currencies other than the U.S. dollar [84]. - The company's business may be affected by potential future regulations regarding life settlements, which could impose additional compliance burdens [82]. - The Company is subject to U.S. privacy laws, and non-compliance could result in fines, sanctions, and reputational harm [118]. - The Company collects nonpublic personal information (NPI) and protected health information (PHI), and must comply with regulations such as the Gramm-Leach Bliley Act (GLBA) and HIPAA [119][120]. - The SEC has recommended defining life settlements as securities, which could lead to significant regulatory changes affecting the Company's business model [109]. - The Company may need to register as an investment company under the Investment Company Act, which would require substantial changes to its business operations [113]. - The Company is subject to the EU General Data Protection Regulation (GDPR), and non-compliance could result in significant penalties affecting its financial condition [167]. - The Company's business is subject to increasing regulatory oversight outside the U.S., which could lead to higher compliance costs and impact its growth [169]. Financial Performance and Capital Structure - The Company has not paid cash dividends in the past and does not expect to do so in the foreseeable future, limiting returns to stock price increases [88]. - The company's stock price has been volatile and may continue to fluctuate widely due to various factors beyond its control [88]. - The Company may require additional financing to support its business, and failure to secure adequate funds could harm its growth opportunities [148]. - The company had outstanding indebtedness of approximately 100 million under its Senior Secured Credit Facility [193]. - The company has a committed Delayed Draw Facility with up to $50 million available to be drawn subject to certain conditions [193]. - The company may issue additional securities, which could result in substantial dilution to existing stockholders [181]. - The company expects to incur additional indebtedness in the future, which may affect its financial and operational flexibility [193]. Operational Risks - The Company relies on third-party data for tracking life settlement policies, and failures in these systems could lead to financial losses and operational disruptions [102]. - The Company must ensure timely premium payments on life insurance policies to avoid lapses, which would adversely affect its investments [127]. - The Company has policies in place to identify potential STOLI policies, but there is no guarantee that all such policies will be identified [125]. - The Company’s success is dependent on retaining experienced management and key employees, with competition for talent being intense [135]. - Integration of the acquired companies may lead to the loss of key employees and customers, as well as increased costs and delays in achieving anticipated synergies [161]. - Disruption to the Company's distribution channels may lead to a decline in assets under management (AUM), revenue, and earnings [170]. Market and Economic Risks - Pandemics, rising interest rates, and inflation may disrupt the Company's ability to originate life settlement policies, adversely impacting its financial position [142]. - The company's financial performance and stock price may be influenced by fluctuations in market conditions and investor sentiment [185]. - The company’s stock repurchase program may not enhance long-term stockholder value and could increase stock price volatility [176]. - The company has entered into lock-up agreements that restrict certain stockholders from selling shares until specific dates [179]. Internal Controls and Governance - The Company must maintain effective internal controls over financial reporting to prevent errors and ensure reliable financial reports [144]. - The Company has irrevocably elected to opt out of the extended transition period under the JOBS Act [360]. - As an emerging growth company, the Company will adopt new or revised accounting standards at the same time as public companies [361]. - Following the Business Combination, the Company will comply with new or revised accounting standards on the relevant dates required for non-emerging growth companies [361].
Abacus Life(ABL) - 2024 Q4 - Annual Report