1. Timothy C. Pfeifer, FSA, MAAA Pfeifer Advisory LLC June 7, 2011

2. 2 Although industry weathered crisis well generally, focus now on capital more than profitability. Innovation took a backseat over the past few years, but is returning. Some carriers interested in acquisitions of blocks, not carriers. Impact of European accounting regime on U.S. carriers’ views of risk. Single most important driver of future product direction is interest rate levels. Other Themes – Speed to Market, Process versus Price, Market Demographics

3. 3 Rates Profitability Trend will be higher rates at most cells, as long as interest rates are low and before PBR Thin profit margins – conceded to be loss leader for many carriers; 6-7% IRRs Reinsurance Reserve Management Reserve Management Return to roots as mortality smoother, not capital/profit leverage Term UL approach will be short-lived; limited financing available Twenty-year Term will still be linchpin More Simplified Issue Higher Average Size

4. 4 Fastest growing life product will continue gathering market share New products will feature stronger death benefit guarantees and survivorship versions New carriers entering the business, and more to come Rainbow/look back versions popular Viability enhanced due to verdict on SEC Rule 151A and low interest rates Efforts to define illustration standards proceeding, albeit slowly

5. 5 Growth will be moderate, limited to a small number of carriers Annuity/LTC Combos will show very gradual sales traction, but long- term prognosis is strong True LTC benefits require all infrastructure and regulatory elements as ‘True’ LTC Distribution comfort levels and views toward LTC will be key hurdle – lack of re-commissions Resolution of some remaining tax issues will help success of rider

6. 6 Still will be dominant UL Interest rate rising helps (and PBR) Price trend is higher Still will be dominant UL Interest rate rising helps (and PBR) Price trend is higher No-Lapse UL Operating in a gray area Soft death benefit guarantees Higher interest rates needed Operating in a gray area Soft death benefit guarantees Higher interest rates needed Current Assumption UL Product in transaction Sales and market players dropping Indexed UL-type parameters needed. Product in transaction Sales and market players dropping Indexed UL-type parameters needed. Variable UL

7. Continued domination by mutual carriers Tough competitor as long as interest rates low Rebound and expansion of market Disclosure requirements create greater awareness Return of substandard charges, modal loads Income stream death benefits Charitable/College Funding Kickers 7 Whole Life Life Settlements Features

8. 8 Sales follow mid-term rates Steady drops over last year, recent climb Importance of IR Environment Lower minimum crediting European carriers re-assess Interest Index Linkages The Future Bonuses Fewer CD annuities Lower comp (spread) Market Value Adjustments Reaction Steps

9. Sales strengthening after 151 death Low volatilities/low interest rates favor FIAs Banks warming to FIAs GLWBs driving market, but underpriced? 9 New indices and approaches to crediting interest Some carriers to offer registered versions Average comp tracking lower Participation rates returning Recent Events Future Event s

10. 10 De-risking down to trickle ITM-ness dramatically reduced Asset Allocation = control device De-risking down to trickle ITM-ness dramatically reduced Asset Allocation = control device Lack of Scale led to departures Rating Agency focus New designs, fewer asset options Lack of Scale led to departures Rating Agency focus New designs, fewer asset options Market Still Led by GLBs and will continue Recent Events What’s Next? GLBs on Managed Accounts, Funds Reductions in 12 b-1 fees Gradual pick-up in A share sales

11. 11 Slow traction, success more likely for higher rated carriers Key is more comp and liquidity (MVA); until then, a few carriers dominate; impaired SPIAs Appeal in low rate environment; position as a portion of retirement solution :::::: Deferred Income Annuities Single Premium Immediate Annuities Indexed SPIAs All forms of income annuities likely to be impacted by new payout annuity mortality statistics.

12. Timothy C. Pfeifer, FSA, MAAA E-mail: tpfeifer@pfeiferadvisory.com www.pfeiferadvisory.com