Protective Life Corporation (NYSE: PL) today reported results
for the third quarter of 2009. Net income for the third quarter of
2009 was $27.6 million, or $0.32 per average diluted share,
compared to a net loss of $100.0 million, or $1.41 per average
diluted share, in the third quarter of 2008. Operating income,
after-tax, for the third quarter of 2009 was $47.9 million, or
$0.55 per average diluted share, compared to $62.5 million, or
$0.88 per average diluted share, in the third quarter of 2008.
Net income for the nine months ended September 30, 2009 was
$140.5 million, or $1.77 per average diluted share, compared to a
net loss of $25.9 million, or $0.36 per average diluted share, in
the nine months ended September 30, 2008. Operating income, after
tax, for the nine months ended September 30, 2009 was $190.3
million, or $2.40 per average diluted share, compared to operating
income, after tax, of $183.2 million, or $2.57 per average diluted
share, in the nine months ended September 30, 2008.
Book value per share increased to $26.91 at quarter-end,
compared to $10.89 at December 31, 2008.
John D. Johns, Protective’s Chairman, President and Chief
Executive Officer commented:
“We continued to make good progress on many fronts during the
third quarter. Our book value per common share outstanding
increased to almost $27.00 per share at quarter-end, an increase of
147% from the low at year-end 2008. We continue to expand the
breadth and depth of our annuity distribution platform, and we saw
a strong increase in variable annuity sales and positive fund flows
in our major annuity product lines. We also made some good progress
in expanding our capacity to distribute universal life products.
Our universal life sales increased 33% over last year’s third
quarter in the face of some very difficult market conditions. Our
Asset Protection segment continued to perform in line with
expectations. Asset Protection sales were up about $10 million
during the quarter on a sequential basis. We also continued to
execute on our plan to grow our capital base and maintain solid
capital ratios. Just after the quarter closed, we successfully
refinanced surplus notes supporting one of our securitization
structures. We expect that the transaction will generate a
substantial increase in operating earnings in the fourth quarter
and will also further bolster our capital base and capital ratios
at year-end.
“Earnings in the quarter were negatively impacted by the
substantial amounts of excess liquidity that we continued to carry,
less favorable mortality, some consolidation and other unusual
expense items and impairments in the investment portfolio. We are
moving cautiously to deploy excess liquidity and expect earnings to
be impacted by lower yields on short term investments into next
year.”
Net income for the third quarter of 2009 included:
- Net realized investment losses,
after tax, of $20.3 million, or $0.23 per average diluted share,
compared to net realized investment losses, after tax, of $162.5
million, or $2.29 per average diluted share, in the third quarter
of 2008
- Pre-tax other-than-temporary
impairments of $31.0 million, or $0.23 per average diluted share,
are included in the $0.23 per share of net realized investment
losses in the third quarter of 2009
Operating income for the third quarter of 2009 included $4.6
million of net negative items, on a pre-tax basis:
Positive Items:
- Positive fair value changes of
$14.1 million on a portfolio of securities designated for
trading
- Positive prospective unlocking
of $10.1 million
Negative Items:
- Negative fair value changes of
$3.8 million in the Annuities segment
- Negative mortality variance to
plan in the Life Marketing and Acquisitions segments of $7.8
million
- Negative items of $17.2 million
primarily due to higher expenses and lower Corporate and Other
investment income
Business Segment Results
The table below sets forth business segment operating income
(loss) before income tax for the periods shown:
Operating Income (Loss) Before Income Tax ($ in thousands)
3Q2009
3Q2008 $ Chg
% Chg Life Marketing $ 26,544 $
52,222 $ (25,678 ) -49.2 % Acquisitions 33,061 33,021 40 0.1 %
Annuities 16,075 556 15,519 n/m Stable Value Products 14,339 28,184
(13,845 ) -49.1 % Asset Protection 5,731 8,186 (2,455 ) -30.0 %
Corporate & Other (22,826 ) (32,173 )
9,347 n/m
$ 72,924 $
89,996 $ (17,072 ) -19.0 %
In the Life Marketing and Asset Protection segments, pre-tax
operating income equals segment income before income tax for all
periods. In the Stable Value Products, Annuities, Acquisitions and
Corporate & Other segments, operating income (loss) excludes
realized investment gains (losses), periodic settlements on
derivatives, and related amortization of DAC and VOBA. A
reconciliation of operating income before income tax to income
before income tax is included below:
($ in thousands)
3Q2009 3Q2008
$ Chg
Operating income (loss) before income tax $
72,924 $ 89,996 $
(17,072
)
Realized investment gains (losses) Stable Value Products (4,949 )
4,984 (9,933
)
Annuities (482 ) (14,419 ) 13,937
Acquisitions 7,025 (40,002 ) 47,027
Corporate & Other (33,662 ) (199,289 ) 165,627
Less: Periodic settlements on derivatives Corporate & Other -
1,915 (1,915
)
Related amortization of deferred
policy acquisition costs, value of businesses acquired
Annuities 2,340 1,073 1,267
Acquisitions (3,120 ) (1,776 ) (1,344
)
Income (loss) before income
tax
$ 41,636 $ (159,942 )
$ 201,578
Income (loss) before income tax, unlike operating income (loss)
before income tax, does not exclude realized gains (losses), net of
the related amortization of DAC and VOBA, and participating income
from real estate ventures. Income before income tax for the
Acquisitions segment was $43.2 million for the third quarter of
2009 compared to a loss before income tax of $5.2 million for the
third quarter of 2008. Income before income tax for the Annuities
segment was $13.3 million for the third quarter of 2009 compared to
a loss before income tax of $14.9 million for the third quarter of
2008. Income before income tax for the Stable Value segment was
$9.4 million for the third quarter of 2009 compared to $33.2
million for the third quarter of 2008. Loss before income tax for
the Corporate & Other segment was $56.5 million for the third
quarter of 2009 compared to a loss before income tax of $233.4
million for the third quarter of 2008.
Sales
The Company uses sales statistics to measure the relative
progress of its marketing efforts. The Company derives these
statistics from various sales tracking and administrative systems
and not from its financial reporting systems or financial
statements. These statistics measure only one of many factors that
may affect future profitability of the business segments and
therefore, are not intended to be predictive of future
profitability.
The table below sets forth business segment sales for the
periods shown:
($ in millions)
3Q2009
3Q2008 $ Chg % Chg Life Marketing $ 41.9 $
35.4 $ 6.5 18.4 % Annuities 452.6 472.2 (19.6 ) -4.2 % Stable Value
Products - 685.0 (685.0 ) n/m Asset Protection 86.2 104.2 (18.0 )
-17.3 %
Review of Business Segment Results
Life Marketing
Life Marketing segment pre-tax operating income was $26.5
million in the third quarter of 2009 compared to $52.2 million in
the third quarter of 2008. The decrease was primarily due to
unfavorable mortality, lower investment income on the traditional
life block, and an elevated level of expenses. Negative traditional
life mortality of $4.9 million is included in the third quarter of
2009 results and is $7.9 million unfavorable to plan. Positive
prospective unlocking of $1.5 million was recorded in the third
quarter of 2009, compared to $8.8 million of positive prospective
unlocking recorded in the third quarter of 2008.
Sales were $41.9 million in the third quarter of 2009, an
increase of 18.5% compared to $35.4 million in the third quarter of
2008. Term insurance sales in the current quarter were $25.6
million compared to $23.0 million in the prior year’s quarter.
Universal life insurance sales (including variable universal life)
in the current quarter were $16.3 million compared to $12.3 million
in the third quarter of 2008.
Acquisitions
Acquisitions segment pre-tax operating income was $33.1 million
in the third quarter of 2009 compared to $33.0 million in the third
quarter of 2008, primarily due to lower operating expenses,
partially offset by expected runoff of the blocks of business.
Annuities
Annuities segment pre-tax operating income was $16.1 million in
the third quarter of 2009 compared to $556 thousand in the third
quarter of 2008. The current quarter included $3.8 million of
negative fair value changes, representing a positive variance of
$1.1 million compared to the prior year’s quarter. This variance
includes a $1.0 million favorable variance on embedded derivatives
associated with the variable annuity guaranteed minimum withdrawal
benefit (“GMWB”) rider and a $0.1 million favorable variance on the
equity indexed annuity product line, which is no longer marketed.
Positive prospective unlocking improved earnings by $6.9 million in
the current quarter. The segment experienced wider interest spreads
and continued growth in the single premium deferred annuity and
market value adjusted annuity lines during the third quarter.
Annuity account values were $9.9 billion as of September 30, 2009,
an increase of 20.6% over the prior year. Net cash flows for the
segment remained positive during the quarter.
Sales in the third quarter of 2009 were $452.6 million compared
to $472.2 million in the third quarter of 2008. The decrease was
primarily due to lower fixed annuity sales, partially offset by
record variable annuity sales. Variable annuity sales were $194.4
million in the third quarter of 2009, an increase of approximately
47%, compared to $132.4 million in the third quarter of 2008. Fixed
annuity sales were $258.1 million in the third quarter of 2009
compared to $339.8 million in the prior year’s quarter.
Stable Value
Products
Stable Value Products segment pre-tax operating income was $14.3
million in the third quarter of 2009 compared to $28.2 million in
the third quarter of 2008. The decrease was a result of a decline
in average account values and a decline in operating spreads.
Included in the operating income during the third quarter of 2008
was $3.0 million of other income resulting from the early
retirement of funding agreements. There were no early funding
agreement retirements in the third quarter of 2009. Excluding the
effect of this gain, the spread decreased 28 basis points to 140
basis points for the three months ended September 30, 2009,
compared to the prior year’s quarter. Deposit balances as of
September 30, 2009 were $3.9 billion.
There were no sales during the three months ended September 30,
2009 compared to $685.0 million in the previous year’s quarter.
Asset
Protection
Asset Protection segment pre-tax operating income was $5.7
million in the third quarter of 2009 compared to $8.2 million in
the third quarter of 2008. The decrease was primarily the result of
lower service contract income due to significantly lower sales
volume and modestly higher loss ratios.
Sales in the third quarter of 2009 were $86.2 million, down
$18.0 million, or 17.2%, compared to the third quarter of 2008,
driven by the negative impact in all product lines of lower volume
of automobile and marine units sold. Sales increased $10.0 million
in the third quarter of 2009, as compared to the second quarter of
2009. The segment benefitted in the current quarter from the
federal government’s “Cash for Clunkers” program.
Corporate &
Other
This segment consists primarily of net investment income on
capital, interest expense on debt, ancillary run-off lines of
business, and various items not associated with the other segments.
Corporate & Other segment pre-tax operating loss was $22.8
million in the third quarter of 2009 compared to a $32.2 million
loss in the third quarter of 2008. The improvement in the current
quarter was primarily due to mark-to-market adjustments on a
portfolio of securities designated for trading, with a market value
of approximately $322.4 million as of September 30, 2009. The
mark-to-market on this trading portfolio positively impacted income
by $14.1 million for the three months ended September 30, 2009, a
$37.6 million more favorable impact than in the prior year’s
quarter. Offsetting this positive mark-to-market change was lower
investment income resulting from reduced yields on a large balance
of cash and short-term investments and higher expenses.
Investments
- Total cash and investments were
$29.0 billion as of September 30, 2009. This includes $1.3 billion
of cash and short-term investments.
- Our net unrealized loss position
was $476.8 million, prior to tax and DAC offsets, an improvement of
$2.5 billion or approximately 83%, compared to December 31,
2008.
- During the third quarter of
2009, we recorded a $31.0 million pre-tax loss on credit related
other-than-temporary impairments.
- Problem loans and foreclosed
properties represented 0.7% of our commercial mortgage loan
portfolio as of September 30, 2009.
Net Realized Investment/Derivative Activity ($ per average
diluted share)
3Q 2009 3Q 2008
Impairments/Credit related losses $ (0.23 ) $ (1.84 ) Modco net
activity 0.05 (0.36 ) Net realized gains (excl. Modco) 0.03 (0.12 )
Interest rate related derivatives (0.06 ) (0.01 ) Credit default
swaps - (0.02 ) All other (0.02 ) 0.06
Total $ (0.23 ) $ (2.29
)
Operating income differs from the GAAP
measure, net income, in that it excludes realized investment gains
(losses) and related amortization. The tables below reconcile
operating income to net income:
Consolidated Results 3Q 2009 3Q
2008 ($ in thousands; net of income tax)
After-tax Operating Income $ 47,922 $ 62,452
Realized investment gains (losses)
and related amortization
Investments 88,002 (227,759 ) Derivatives (108,339 )
65,299
Net Income (loss)
$ 27,585 $ (100,008 )
($ per average diluted share; net of income tax)
3Q 2009 3Q 2008 After-tax Operating
Income $ 0.55 $ 0.88
Realized investment gains (losses)
and related amortization
Investments 1.01 (3.20 ) Derivatives (1.24 ) 0.91
Net Income (loss)
$ 0.32 $ (1.41 )
For information relating to non-GAAP measures (operating income,
share owners’ equity per share excluding other comprehensive income
(loss), operating return on average equity, and net income (loss)
return on average equity) in this press release, please refer to
the disclosure at the end of this press release. All per share
results used throughout this press release are presented on a
diluted basis, unless otherwise noted.
Rolling Twelve Months Ended September 30,
2009 2008 Operating Income Return on
Average Equity 9.8 % 9.9 % Net Income Return on Average
Equity 4.9 % 1.4 %
Operating income return on average equity and net
income return on average equity are measures used by management
to evaluate the Company’s performance. Operating income return on
average equity for the twelve months ended September 30, 2009 was
calculated by dividing operating income for this period by the
average ending balance of share owners’ equity (excluding
accumulated other comprehensive income (loss)) for the five most
recent quarters. Net income(loss) return on average equity for the
twelve months ended September 30, 2009, was calculated by dividing
net income (loss) for this period by the average ending balance of
share owners’ equity (excluding accumulated other comprehensive
income (loss)) for the five most recent quarters.
Reconciliation of Share Owners' Equity, Excluding Accumulated
Other Comprehensive Income (Loss) ($ in thousands)
As of
As of
September 30,
December 31,
2009 2008 Total share owners' equity $ 2,302,799 $
761,095 Less: Accumuluated other comprehensive income (loss)
(375,472 ) (1,667,056 )
Total share owners' equity
excluding accumulated other comprehensive income (loss)
$ 2,678,271 $ 2,428,151
Reconciliation of Share Owners' Equity per
Share, Excluding Accumulated Other Comprehensive Income
(Loss) per Share
($ per common share
outstanding)
As of
As of
September 30,
December 31,
2009 2008 Total share owners' equity $ 26.91 $ 10.89
Less: Accumulated other
comprehensive income (loss)
(4.39 ) (23.85 )
Total share owners' equity
excluding accumulated other comprehensive income (loss)
$ 31.30 $ 34.74
2009 Guidance
Due to current market conditions and the potential impact of
fair value accounting on reported results, Protective will not
provide 2009 earnings guidance, but will discuss the outlook for
the remainder of the year during its third quarter 2009 earnings
call as scheduled below.
Conference Call
There will be a conference call for management to discuss the
quarterly results with analysts and professional investors on
November 5, 2009 at 10:00 a.m. Eastern. Analysts and professional
investors may access this call by dialing 1-866-271-5140
(international callers 1-617-213-8893) and entering the conference
passcode: 86201587. A recording of the call will be available from
12:00 p.m. Eastern November 5, 2009 until midnight November 19,
2009. The recording may be accessed by calling 1-888-286-8010
(international callers 1-617-801-6888) and entering the passcode:
34039379.
The public may access a live webcast of the call, along with a
call presentation, on the Company’s website at
www.protective.com.
A recording of the webcast will also be available from
12:00 p.m. Eastern November 5, 2009 until midnight November
19, 2009.
Supplemental financial information is also available on the
Company’s website at www.protective.com in the Analyst/Investor
section under Financial Information/Quarterly & Other
Reports.
Information Relating to Non-GAAP Measures
Throughout this press release, GAAP refers to accounting
principles generally accepted in the United States of America.
Consolidated and segment operating income (loss) are defined as
income (loss) before income tax excluding net realized investment
gains (losses) net of the related amortization of deferred policy
acquisition costs (“DAC”),and value of businesses acquired
(“VOBA”), and participating income from real estate ventures.
Periodic settlements of derivatives associated with corporate debt
and certain investments and annuity products are included in
realized gains (losses) but are considered part of consolidated and
segment operating income because the derivatives are used to
mitigate risk in items affecting consolidated and segment operating
income (loss). Management believes that consolidated and segment
operating income (loss) provides relevant and useful information to
investors, as it represents the basis on which the performance of
the Company’s business is internally assessed. Although the items
excluded from consolidated and segment operating income (loss) may
be significant components in understanding and assessing the
Company’s overall financial performance, management believes that
consolidated and segment operating income (loss) enhances an
investor’s understanding of the Company’s results of operations by
highlighting the income (loss) attributable to the normal,
recurring operations of the Company’s business. As prescribed by
GAAP, certain investments are recorded at their market values with
the resulting unrealized gains (losses) affected by a related
adjustment to DAC and VOBA, net of income tax, reported as a
component of share owners’ equity. The market values of fixed
maturities increase or decrease as interest rates change. The
Company believes that an insurance company’s share owners’ equity
per share may be difficult to analyze without disclosing the
effects of recording accumulated other comprehensive income (loss),
including unrealized gains (losses) on investments.
Calculation of Operating Income
Return on Average Equity
Rolling Twelve Months Ended
September 30, 2009
$ in thousands
Twelve Three Months Ended Months
Ended NUMERATOR: 12/31/2008 3/31/2009
6/30/2009 9/30/2009 9/30/2009 Net
Income (Loss) $ (15,913 ) $ 22,135 $ 90,757 $ 27,585 $ 124,564
Net of:
Realized investment gains
(losses), net of income tax
Investments (60,407 ) (85,585 ) 82,439 87,495 23,942 Derivatives
(10,574 ) 47,675 (72,400 ) (108,339 ) (143,638 )
Related amortization of DAC and
VOBA, net of income tax
(632 ) (51 ) 612 507 436 Add back:
Derivative gains related to Corp.
debt and investments, net of income tax
1,020 1,455 756 -
3,231
Operating Income $ 56,720
$ 61,551 $ 80,862 $ 47,922
$
247,055 Share-Owners'
Accumulated Equity Excluding Other
Accumulated Other Share-Owners' Comprehensive
Comprehensive DENOMINATOR: Equity Income
(Loss) Income (Loss) September 30, 2008 $
1,524,655 $ (928,205 ) $ 2,452,860 December 31, 2008 761,095
(1,667,056 ) 2,428,151 March 31, 2009 783,178 (1,660,204 )
2,443,382 June 30, 2009 1,628,375 (1,031,719 ) 2,660,094 September
30, 2009 2,302,799 (375,472 ) 2,678,271 Total
$ 12,662,758 Average
$ 2,532,552
Operating Income Return on Average Equity 9.8
%
Calculation of Net Income
(Loss) Return on Average Equity
Rolling Twelve Months Ended
September 30, 2009
$ in thousands
Twelve Three Months Ended Months
Ended NUMERATOR: 12/31/2008 3/31/2009
6/30/2009 9/30/2009 9/30/2009 Net
Income (Loss) $ (15,913 ) $ 22,135 $ 90,757 $ 27,585
$ 124,564 Share-Owners'
Accumulated Equity Excluding Other
Accumulated Other Share-Owners' Comprehensive
Comprehensive DENOMINATOR: Equity Income
(Loss) Income (Loss) September 30, 2008 $
1,524,655 $ (928,205 ) $ 2,452,860 December 31, 2008 761,095
(1,667,056 ) 2,428,151 March 31, 2009 783,178 (1,660,204 )
2,443,382 June 30, 2009 1,628,375 (1,031,719 ) 2,660,094 September
30, 2009 2,298,695 (375,472 ) 2,678,271 Total
$ 12,662,758 Average
$ 2,532,552
Net Income (Loss) Return on Average Equity 4.9
%
Forward-Looking Statements
This release includes “forward-looking statements” which express
expectations of future events and/or results. All statements based
on future expectations rather than on historical facts are
forward-looking statements that involve a number of risks and
uncertainties, and the Company cannot give assurance that such
statements will prove to be correct. The factors which could affect
the Company’s future results include, but are not limited to,
general economic conditions and the following known risks and
uncertainties: the Company is exposed to the risks of natural
disasters, pandemics, malicious and terrorist acts that could
adversely affect the Company’s operations; the Company operates in
a mature, highly competitive industry, which could limit its
ability to gain or maintain its position in the industry and
negatively affect profitability; a ratings downgrade or other
negative action by a ratings organization could adversely affect
the Company; the Company’s policy claims fluctuate from period to
period resulting in earnings volatility; the Company’s results may
be negatively affected should actual experience differ from
management’s assumptions and estimates which by their nature are
imprecise and subject to changes and revision over time; the use of
reinsurance, and any change in the magnitude of reinsurance,
introduces variability in the Company’s statements of income; the
Company could be forced to sell investments at a loss to cover
policyholder withdrawals; interest rate fluctuations could
negatively affect the Company’s spread income or otherwise impact
its business, including, but not limited to, the volume of sales,
the profitability of products, investment performance, and asset
liability management; equity market volatility could negatively
impact the Company’s business, particularly with respect to the
Company’s variable products, including an increase in the rate of
amortization of DAC and estimated cost of providing minimum death
benefit and minimum withdrawal benefit guarantees relating to the
variable products; insurance companies are highly regulated and
subject to numerous legal restrictions and regulations, including,
but not limited to, restrictions relating to premium rates, reserve
requirements, marketing practices, advertising, privacy, policy
forms, reinsurance reserve requirements, acquisitions, and capital
adequacy, and the Company cannot predict whether or when regulatory
actions may be taken that could adversely affect the Company or its
operations; changes to tax law or interpretations of existing tax
law could adversely affect the Company, including, but not limited
to, the demand for and profitability of its insurance products and
the Company’s ability to compete with non-insurance products; the
Company may be required to establish a valuation allowance against
its deferred tax assets, which could materially adversely affect
the Company’s results of operations, financial condition and
capital position; financial services companies are frequently the
targets of litigation, including, but not limited to, class action
litigation, which could result in substantial judgments, and the
Company, like other financial services companies, in the ordinary
course of business is involved in litigation and arbitration;
publicly held companies in general and the financial services
industry in particular are sometimes the target of law enforcement
investigations and the focus of increased regulatory scrutiny; the
Company’s ability to maintain competitive unit costs is dependent
upon the level of new sales and persistency of existing business,
and a change in persistency may result in higher claims and/or
higher or more rapid amortization of deferred policy acquisition
costs and thus higher unit costs and lower reported earnings; the
Company’s investments, including, but not limited to, the Company’s
invested assets, derivative financial instruments and commercial
mortgage loan portfolio, are subject to market, credit, and
regulatory risks, and these risks could be heightened during
periods of extreme volatility or disruption in financial and credit
markets; the Company may not realize its anticipated financial
results from its acquisitions strategy, which is dependent on
factors such as the availability of suitable acquisitions, the
availability of capital to fund acquisitions and the realization of
assumptions relating to the acquisition; the Company is dependent
on the performance of others, including, but not limited to,
distributors, third-party administrators, fund managers, reinsurers
and other service providers, and, as with all financial services
companies, its ability to conduct business is dependent upon
consumer confidence in the industry and its products; the Company’s
reinsurers could fail to meet assumed obligations, increase rates,
or be subject to adverse developments that could affect the
Company, and the Company’s ability to compete is dependent on the
availability of reinsurance, which has become more costly and less
available in recent years, or other substitute capital market
solutions; the success of the Company’s captive reinsurance program
and related marketing efforts is dependent on a number of factors
outside the control of the Company, including, but not limited to,
continued access to capital markets, a favorable regulatory
environment, and the overall tax position of the Company; computer
viruses or network security breaches could affect the data
processing systems of the Company or its business partners, and
could damage the Company’s business and adversely affect its
financial condition and results of operations; the Company’s
ability to grow depends in large part upon the continued
availability of capital, which has been negatively impacted by
regulatory action and the volatility and disruption in the capital
and credit markets, and may be negatively impacted in the future by
an increase in guaranteed minimum death and withdrawal benefit
related policy liabilities in variable products resulting from
negative performance in the equity markets, and future marketing
plans are dependent on access to the capital markets through
securitization; new GAAP and statutory accounting rules or changes
to existing GAAP and statutory accounting rules could negatively
impact the Company; the Company’s risk management policies and
procedures may leave it exposed to unidentified or unanticipated
risk, which could negatively affect our business or result in
losses; capital and credit market volatility or disruption could
adversely impact the Company’s financial condition or results from
operations in several ways, including but not limited to the
following: causing market price and cash flow variability in the
Company’s fixed income portfolio, defaults on principal or interest
payments by issuers of the Company’s fixed income investments,
other than temporary impairments of the Company’s fixed income
investments; adversely impacting the Company’s ability to
efficiently access the capital markets to finance its reserve,
capital and liquidity needs; difficult conditions in the economy
generally, including severe or extended economic recession, could
adversely affect the Company’s business and results from
operations; there can be no assurance that the actions of the U.S.
Government or other governmental and regulatory bodies for the
purpose of stabilizing the financial markets will achieve their
intended effect; the Company may not be able to protect its
intellectual property and may be subject to infringement claims;
the Company could be adversely affected by an inability to access
its credit facility; the amount of statutory capital the Company
has and must hold to maintain its financial strength and credit
ratings and meet other requirements can vary significantly and is
sensitive to a number of factors; and the Company operates as a
holding company and depends on the ability of its subsidiaries to
transfer funds to it to meet its obligations and to pay dividends.
Please refer to Part I, Item 1A, Risk Factors and Cautionary
Factors that may Affect Future Results of the Company’s most recent
Form 10-K and Part II, Item 1A, Risk Factors, of the Company’s
subsequent quarterly reports on Form 10-Q for more
information about these factors.
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