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Competition / Competitors The Company competes with the over 2,000 life insurance companies in the United States, as well as certain banks, securities brokerage firms, investment advisors and other financial intermediaries marketing insurance products, annuities, mutual funds and other retirement-oriented investments. Some of these companies have greater financial resources and currently have higher financial strength and claims-paying ability ratings from major rating agencies than the Company. National banks, in particular, may become more significant competitors in the future for insurers who sell annuities, including the Company, as a result of recent court decisions and regulatory actions discussed under "-- Insurance Regulation -- Regulation at Federal Level". Although the effect of these recent developments on the Company and its competitors is uncertain, both the persistency of the Company's existing products and the Company's ability to sell products could be materially impacted in the future. Also, several proposals to repeal or modify the Glass-Steagall Act and the Bank Holding Company Act have been made by members of Congress and the Executive Branch. Certain of these proposals would repeal or modify the current restrictions that prevent banks from being affiliated with insurance companies. None of these proposals has yet been enacted, and it is not possible to predict whether any of these proposals will be enacted or, if enacted, their potential effect on the Company or its competitors. The fundamental competitive factors affecting the sale of the Company's products are price, the levels of commissions, charges and other expenses, financial strength and claims-paying ability ratings, distribution capabilities, reputation, quality of service, visibility in the marketplace and range of products. For variable life insurance and annuity products, additional competitive factors include mutual fund options, product design and investment performance ratings. The Company's ability to compete is affected in part by its ability to provide competitive products and quality service to the consumer, wholesalers, general agents, licensed insurance agents and broker-dealers. Management believes that its alternative and competing distribution systems provide the Company with a competitive advantage in penetrating and communicating with its growing target markets. The Company also competes for distributors of its products such as banks, broker-dealers and wholesalers. Management believes the principal bases upon which insurance and financial services companies compete for distribution channels are the services provided to, and the relationships developed with, broker-dealers, wholesalers and other distributors, as well as compensation and the variety and quality of products. Since the Company does not have a career agency force, it must compete with other insurers and financial services providers to attract and maintain productive independent distributors to sell its products. Moreover, the Company does not have exclusive agency agreements with many of its distributors and believes that certain of them sell products similar to those marketed by the Company for other insurance companies. In addition, the investment performance of investment managers chosen by the Company to manage the assets related to its products may vary and non- competitive investment performance could adversely affect the Company's ability to market its products.