35733--10/30/2006--FINANCIAL_INDUSTRIES

related topics

{loss, insurance, financial}

{regulation, change, law}

{condition, economic, financial}

{control, financial, internal}

{stock, price, operating}

{capital, credit, financial}

{system, service, information}

{regulation, government, change}

{debt, indebtedness, cash}

{competitive, industry, competition}

{provision, law, control}

{acquisition, growth, future}

{stock, price, share}

FIC is a holding company and relies on dividends from its insurance subsidiaries; state insurance laws may restrict the ability of these subsidiaries to pay dividends. FIC may not be able to compete with larger, more established insurance companies. In certain circumstances, regulatory authorities may place our insurance subsidiaries under regulatory control. Our insurance subsidiaries may be required to pay assessments to fund policyholder losses or liabilities; this may have a material adverse effect on our results of operations. Our insurance subsidiaries are subject to regulation by state insurance departments. The federal government may seek to regulate the insurance industry. Failure of the Company to be current in its SEC reports and the delisting of our common stock from Nasdaq may have adverse effects on the Company and its shareholders. As of December 31, 2004, we had material weaknesses in our internal controls, and our internal controls over financial reporting were not effective as of that date. If we fail to maintain an effective system of internal controls, we may not be able to provide timely and accurate financial statements. Changes to the Internal Revenue Code could have a material adverse effect on our results of operations. Interest rate volatility may adversely affect our profitability. The price of shares of our common stock can fluctuate as a result of a variety of factors, many of which are beyond our control. State insurance laws may discourage takeover attempts that could be beneficial to us and our shareholders. Our reserves established for future policy benefits and claims may prove inadequate, requiring us to increase liabilities. A downgrade in the financial strength ratings of our insurance subsidiaries may increase policy surrenders and withdrawals, reduce new sales and adversely affect relationships with our sales force. We may require additional capital in the future that may not be available or only available on unfavorable terms. Our policy claims fluctuate from period to period, and actual results could differ from our expectations. Our results may be negatively affected should actual experience differ from management s assumptions and estimates. Reinsurance may not be available or adequate to protect us against losses, and we are subject to the credit risk of reinsurers. General economic, financial market and political conditions may adversely affect our results of operations and financial condition. The failure to effectively maintain and modernize our information systems could adversely affect our business.

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35733--10/30/2006--FINANCIAL_INDUSTRIES_CORP