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18.11. Model Risk

Certain policies require the use of quantitative valuation models as developed by third parties. As market dynamics shift over time (for example, due to changing market conditions and participants), a previously highly successful model often becomes outdated or inaccurate. As a result, the Manager may not recognize this and substantial losses may be incurred. There can be no assurance that the Manager or any of its affiliates will be successful in continuing to develop and maintain effective quantitative models.