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• | FGL’s and Front Street’s ability to maintain competitive policy expense costs; |
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• | adverse consequences if the independent contractor status of FGL’s independent insurance marketing organizations (“IMOs”) is successfully challenged; |
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• | FGL’s ability to attract and retain national marketing organizations and independent agents; |
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• | the potential adverse tax consequences to FGL if FGL generates passive income in excess of operating expenses; |
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• | the significant operating and financial restrictions contained in FGL’s debt agreements, which may prevent FGL from capitalizing on business opportunities; |
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• | the impact on FGL and Front Street of non-performance of loans originated by Salus; and |
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• | the ability to maintain or obtain approval of the Iowa Insurance Division (“IID”) and other regulatory authorities as required for FGL’s operations and those of its insurance subsidiaries. |
Salus
Salus’ actual results or other outcomes may differ materially from those expressed or implied by the forward-looking statements contained herein due to a variety of important factors, including, without limitation, the following:
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• | Salus’ ability to recover amounts that are contractually owed to it and its ability to adequately address the various risks it faces in executing its business strategy; |
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• | Salus’ ability to orderly and efficiently wind-down its business and to address the variety of risks associated with such a process, including litigation risk, regulatory compliance and retention of employees, management, agents and advisors required for such wind-down; and |
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• | Salus’ ability to address a variety of other risks associated with its business, including the risk of fraud or theft, operational errors and systems malfunctions. |
See Note 13, Commitments and Contingencies, to the Company’s Condensed Consolidated Financial Statements included in Part I - Item 1. Financial Statements.
Information about our risk factors is contained in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended
September 30, 2016. With the exception of the change in risk factors discussed below, we believe that at March 31, 2017, there has been no material changes to this information.
Spectrum Brands faces risks related to the impact on foreign trade agreements and relations from the current administration.
Recent changes in the United States federal government have caused uncertainty about the future of trade partnerships and treaties, such as the North American Free Trade Agreement (“NAFTA”). The current administration has expressed its desire to modify NAFTA and has already taken action against the Trans Pacific Partnership Agreement (“TPPA”), which have the ability to impact Spectrum Brands’ business on a macro level in terms of demand for American built products, as well as affect Spectrum Brands’ ability to leverage lower cost facilities in territories outside of the U.S. The current administration has also indicated that imports from China and Mexico, as well as other countries with which the U.S. runs a trade deficit, may be subject to an import tax. Spectrum Brands sources many products for certain segments of Spectrum Brands from Mexico, China and other Asian countries. Media and political reactions in the affected countries could potentially impact the ability of Spectrum Brands’ operations in those countries. Foreign countries may impose additional burdens on U.S. companies through the use of local regulations, tariffs or other requirements which could increase Spectrum Brands’ operating costs in those foreign jurisdictions. It remains unclear what additional actions, if any, the current administration will take. If the United States were to materially modify NAFTA or other international trade agreements to which it is a party, or if tariffs were raised on the foreign-sourced goods that Spectrum Brands sells, such goods may no longer be available at a commercially attractive price, which in turn could have a material adverse effect on Spectrum Brands’ business, financial condition and results of operations.
Spectrum Brands faces risks relating to the United Kingdom’s 2016 referendum, which called for its exit from the European Union.
The announcement of the referendum regarding the United Kingdom’s (“UK”) membership in the European Union (“EU”) on June 23, 2016 (referred to as “Brexit”), advising for the exit of the UK from the EU, and subsequent notification of intention to withdraw given on March 29, 2017, has adversely impacted global markets and foreign currencies. In particular, the value of the Pound Sterling has sharply declined as compared to the US Dollar and other currencies. This volatility in foreign currencies is
