Primerica 2010 Annual Report - Direct Selling News

Terrorist Financing Act and its accompanyingregulations, which require us to develop andimplement money laundering policies andprocedures relating to customerindemnification, reporting and recordkeeping,develop and maintain ongoing trainingprograms for employees, perform a riskassessment on our business and clients andinstitute and document a review of our antimoneylaundering program at least once everytwo years. We are also required to followcertain economic and trade sanctions andlegislation that prohibit us from, among otherthings, engaging in transactions with, andproviding services to, persons on lists createdunder various federal statutes and regulationsand blocked persons and foreign countries andterritories subject to Canadian sanctionsadministered by Foreign Affairs andInternational Trade Canada and theDepartment of Public Safety Canada.Changes in, or violations of, any of these lawsor regulations may require additionalcompliance procedures, or result inenforcement proceedings, sanctions orpenalties, which could have a material adverseeffect on our business, financial condition andresults of operations.Litigation and regulatory investigationsand actions may result in financiallosses and harm our reputation.We face a risk of litigation and regulatoryinvestigations and actions in the ordinarycourse of operating our businesses. From timeto time, we are subject to private litigation andregulatory investigations as a result of salesrepresentative misconduct. See “— RisksRelated to Our Distribution Structure — Our orour sales representatives’ violation of ornon-compliance with laws and regulations andthe related claims and proceedings couldexpose us to material liabilities.” In addition, wemay become subject to lawsuits alleging,among other things, issues relating to sales orunderwriting practices, payment of impropersales commissions, claims payments andpayment procedures, product design, productdisclosure, administration, additional premiumcharges for premiums paid on a periodic basis,denial or delay of benefits, recommendingunsuitable sales of products to clients and ourpricing structures. Life insurance companieshave historically been subject to substantiallitigation resulting from policy disputes andother matters. For example, they have facedextensive claims alleging improper lifeinsurance sales practices. If we become subjectto similar litigation, any judgment or settlementof such claims could have a material adverseeffect on our business, financial condition andresults of operations.In addition, we are subject to litigation arisingout of our general business activities. Forexample, we have a large sales force, and wecould face claims by some of our salesrepresentatives arising out of their relationshipwith us, including claims involving contractterminations, commission disputes, transfers ofsales representatives from one salesorganization to another, agreements amongsales representatives or between us and a salesrepresentative or any of our other dealingswith, or policies regarding, salesrepresentatives. We are also subject to variousregulatory inquiries, such as informationrequests, subpoenas and books and recordexaminations, from state, provincial and federalregulators and other authorities. A substantiallegal liability or a significant regulatory actionagainst us could have a material adverse effecton our business, financial condition and resultsof operations.Moreover, even if we ultimately prevail in anysuch litigation, regulatory action orinvestigation, we could suffer significantreputational harm, which could have a materialadverse effect on our business, financialcondition and results of operations. In addition,increased regulatory scrutiny and any resultinginvestigations or proceedings could result innew legal precedents and industry-wideregulations or practices that could materiallyadversely affect our business, financialcondition and results of operations.Primerica 2010 Annual Report 53