Environmental Analysis

Background

Reliance Standard Life Insurance Company (RSLI) is a leading insurance carrier specializing in

innovative and flexible employee benefits solutions including disability income and group term life insurance,

a suite of voluntary (employee paid) coverage options and fully integrated absence management. Reliance

Standard markets these solutions through independent brokers and agents to employers of all sizes.

Reliance Standard Life Insurance Company provides insurance products and services in all states except

in the District of Columbia, Puerto Rico and the U.S. Virgin Islands.

Reliance Standard Life Insurance Company is a wholly owned subsidiary of Delphi Financial

Group, Inc. Delphi is an integrated employee benefit services company and a leader in managing all

aspects of employee absence to enhance the productivity of its clients and provides the related insurance

coverages: group life, long-term and short-term disability, excess workers' compensation for self-insured

employers, travel accident and dental. Delphi's asset accumulation business emphasizes individual fixed

annuity products. Delphi's common stock is listed on the New York Stock Exchange under the symbol DFG.

Remote Environment

In order for an insurance company to gain or maintain a sustainable competitive advantage, it must

be vigilant by watching for changes in the business environment. It must also be agile enough to alter its

strategies and plans when the need arises.

There are fundamental questions that all businesses must ask themselves to play a pro-active role

in the competitive environment. RSLI must be able to envision the opportunities that would result in

asking these fundamental questions:

Ð'* What to change?

Ð'* When to change?

Ð'* How to change?

For any high-paced performance organization, knowledge management is the central pillar in its

strategic plans. It is important to analyze the effect of various environmental factors and to see what trends

are likely to affect the group insurance industry in which RSLI operates:

Economic Forces: There are economic trends like gross domestic product, interest rates, money

supply, inflation rates, unemployment levels and disposable income all affect how employers and employees

purchase insurance products.

Technological Forces: The insurance industry is moving towards on-line capabilities for convenient

customer service. Policyholders and brokers need to be able to enroll, pay bills, make changes and view

benefits information via the internet with a security password.

Government Regulations: The political climate plays an important role in the insurance world

especially at the state level since insurance companies are regulated by the states in which they operate.

Factors such as political stability, worker safety laws, union laws and reserve requirements affect

the way business in conducted.

Societal Trends: The demographic factors play another important role in the group benefits market.

Age, occupations, education levels, income levels and area factors affect claims liability, pricing and

ultimately the cost of coverage to employees.

Industry Environment

Today's group benefits environment is extremely competitive and in economics parlance where

strong competition