Primerica 2010 Annual Report - Direct Selling News

Other Risks Related to Our BusinessA further delay in the recovery of theUnited States’ and Canadian economiescould materially adversely affect ourbusiness, financial condition and resultsof operations.Our business, financial condition and results ofoperations have been materially adverselyaffected by the economic downturn in theUnited States and Canada and the slowrecovery that has occurred since the last half of2009. During this period, we have observedincreased volatility in the availability and costof credit, shrinking mortgage markets,fluctuating equity values and falling consumerconfidence and general instability of financialand other institutions. This economic downturn,which has been characterized by higherunemployment, lower family income, lowervaluation of retirement savings accounts, lowercorporate earnings, lower business investmentand lower consumer spending, has adverselyaffected the demand for the term lifeinsurance, investment and other financialproducts that we sell. A continuation of theseeffects could severely affect new sales andcause clients to liquidate mutual funds andother investments sold by our salesrepresentatives. This could cause a decrease inthe asset value of client accounts, reduce ourtrailing commission revenues and result inother-than-temporary-impairments in ourinvested asset portfolio. In addition, we mayexperience an elevated incidence of lapses orsurrenders of insurance policies, and some ofour policyholders may choose to defer payinginsurance premiums or stop paying insurancepremiums altogether. Continuing volatility inequity markets or downturns could discouragepurchases of the investment products that wesell for third parties. Moreover, if the economicrecovery in the United States and Canada isdelayed further, it will likely have an adverseeffect on our business, including our ability torecruit and retain sales representatives. Ifcredit markets remain tight for a prolongedperiod, our liquidity will be more limited than itotherwise would have been, and our business,financial condition and results of operationsmay be materially adversely affected.We are subject to various federal lawsand regulations in the United Statesand Canada, changes in which orviolations of which may require us toalter our business practices and couldmaterially adversely affect ourbusiness, financial condition and resultsof operations.In the United States, we are subject to the Rightto Financial Privacy Act and its implementingregulation, Regulation S-P, the Fair CreditReporting Act, the Gramm-Leach-Bliley Act, theMcCarran-Ferguson Act, the Foreign CorruptPractices Act, the Sarbanes-Oxley Act, theTelemarketing and Consumer Fraud and AbusePrevention Act, the Telephone ConsumerProtection Act, the FTC Act, the Unfair TradePractices Act, the Electronic Funds TransferAct, the Bank Holding Company ActAmendments of 1970 and anti-tyingrestrictions. We are also subject to anti-moneylaundering laws and regulations, including theBank Secrecy Act, as amended by the PatriotAct, which requires us to develop andimplement customer identification and riskbasedanti-money laundering programs, reportsuspicious activity and maintain certainrecords. We are also required to follow certaineconomic and trade sanctions programs thatare administered by the Office of Foreign AssetControl that prohibit or restrict transactionswith suspected countries, their governments,and in certain circumstances, their nationals.In Canada, we are subject to provincial andterritorial consumer protection legislation thatpertains to unfair and misleading businesspractices, provincial and territorial creditreporting legislation that providesrequirements in respect of obtaining creditbureau reports and providing notices of decline,the Personal Information Protection andElectronic Documents Act, the Competition Act,the Corruption of Foreign Public Officials Act,the Telecommunications Act and certainCanadian Radio-television andTelecommunications Commission TelecomDecisions in respect of unsolicitedtelecommunications. We are also subject to theProceeds of Crime (Money Laundering) and52 Freedom Lives Here