Innovat ive people .

Innovat ive benef i ts .

2 0 0 9 F I N A N C I A L R E P O RT

If not the most challenging of our 100-plus years in business, 2009 was certainly among the more challenging years we, at Reliance Standard have encountered in modern times. And we were not alone.

The year was a difficult one for the economy at large, the financial markets and the insurance industry. Before we look at our own performance and accomplishments, let’s place them in context:

UnemploymentUnemployment in the U.S. more than doubled in the two years ending December 31, 2009, to 10%. As our core group benefits business is driven by payroll, continued high unemployment directly translates into increased challenges collecting new and in force premium. Conventional wisdom says that unemployment is one of the last economic factors to correct in an economic recovery, which means even as the economy turns, we are destined to be behind the broader market curve.

Healthcare reformThis legislative initiative and Presidential mandate had consumers, insurers, providers and lawmakers frenzied and polarized throughout 2009. Our core group benefits business is impacted significantly by healthcare insurance premiums, both employer-paid and employee-paid. For many families, access to benefits like life and disability insurance is very clearly tied to how much money is left after the medical benefits are paid for. With everyone waiting to see what will be the impact of the new legislation, the market for employer paid, contributory and voluntary benefits remains equally unsettled.

The ratings environmentIn the post-AIG crisis era, the major ratings agencies continued to look hard overall at insurance carriers and the industry at large. Many large and worthy competitors were downgraded by one or more agency in 2009, and the life and health insurer market retained its negative outlook according to A.M. Best, Moody’s and others. Here at Reliance Standard, we maintained our Excellent (“A”) rating from A.M. Best (affirmed December 2009) and “Strong” ratings from Moody’s (A3, affirmed June 2009) and Standard & Poor’s (A, affirmed November 2009). In April 2009, Fitch elected to downgrade our rating to A-, from A, an action we were disappointed in and disagreed with.

Our competitive setIn the conflicted 2009 marketplace, many competitors were torn between grabbing market share and holding the line on margins. A two-year look-back at sales production among our closest competitors shows almost uniform flip-flopping: insurers on the low production end in 2007 seemed to surge; insurers who had performed well were in full retreat. In short, while Reliance Standard held the line on the underwriting practice that has been our hallmark and increased quote volume, other benefits carriers seemed to do whatever was necessary at the moment to attract new business—often at any cost. Years from now, when the economic cycle has returned to its peak, many people will be debating the financial and operational decisions made by many insurance companies in the heat of 2009.

How we didWhile we fell short of our production goal for core benefits lines, there were more than a few high points to our 2009 sales performance. These included:

n Quote activity remained relatively strong in the small to medium size case market. Market forces drove down both case count and case size, but our fundamental behaviors were positive and steady.

n Annuity premium met its goal, bringing in $248 million in deposits, a testament to a strong, proven and growing sales distribution network and a nervous market conducive to safe retirement savings.

n Limited Benefit Medical premium exceeded goal, and the $20 million mark.

n Our Integrated Employee Benefits and Leave Management programs for large policyholders exceeded premium and fee income goals for 2009, topping $64 million.

n Our SmartChoice portfolio of benefits for small groups had a high-water mark year in both case count and sales production, reflecting strong relationship-building among managing general agent organizations nationwide.

Committed to becoming the preeminent source of quality benefits programs, leave management and productivity services in the market.

More than just numbersSome of the most solid gains Reliance Standard achieved in 2009 can’t be measured in premium—yet.

In 2009 we launched our integrated online billing, administration and enrollment platform, which we believe meets or exceeds any competing system in the market. With the new system launch, administrators can view, modify and pay group policy bills; make adjustments and see them real-time; look up important enrollment, financial and claims information; and even enroll employees online. Development and rollout represented a monumental effort, but these efforts have begun to pay off: Today more than one out of three policyholders receives and manages their monthly statement online. In months and years to follow, this technology and service enhancement will both empower our customers—including their employees—and drive real efficiencies for our clients and ourselves.

We also introduced ourselves to the large-case and national consultant markets as a new and better kind of health and productivity management (HPM) provider. After two years of research and planning, Reliance Standard, our sister company Matrix Absence Management and wellness/disease management company AllOne Health joined to launch RelianceONE™, an evolved approach to helping employers achieve maximum return on their largest investment—their work force. A natural extension of the high quality, integrated leave and disability management that has become a core competency, RelianceONE resolves many of the holes left by medical carrier-sponsored HPM: It includes all employees regardless of location and health plan participation; improves the employee experience through reduced touch points and fully integrated care management; and quantifies for the first time positive trends in expense, absence and productivity as more employees become engaged in the program.

Finally, in 2009 we took the opportunity to build our strategic investment in Voluntary (employee paid) benefits. As recent as a year ago, we were recognized by Eastbridge Consulting as being among the fastest growing group-platform voluntary carriers. Then, in 2009, we expanded our specialized service teams to include a field-deployed group of Voluntary specialists whose role is to positively impact enrollment participation through thoughtful strategy and flawless execution. We also redesigned our entire Voluntary communications platform and marketing tools library, improving message delivery and decision support over prior years. Our goal is to accelerate our growth as a group Voluntary carrier, capitalizing on market trends, quality products and superior service.

The year aheadThere is no surefire way to see the future. And hindsight, as they say, is 20-20. If that’s true, I can say that Reliance Standard performed solidly in a tumultuous, uncertain market in 2009. Did we hit all our paces? No, but I dare say it was far from “business as usual” for most everyone in our market space. Did we hold fast to the practices and beliefs that have made us successful and profitable in good times and bad? Yes. And did we venture out of our comfort zone to invest in our future, and that of our clients? Absolutely.

All in all, I think I speak for everyone at Reliance Standard in saying that we’re not sorry to see 2009 end. But that has only a little to do with the difficulties of the year, and more to do with our commitment to building on past successes and current efforts—to continue our journey to be the preeminent source of quality benefits programs, leave management and productivity services in the market.

As always, I invite your questions and your partnership.

Lawrence E. DaurellePresident & Chief Executive Officer

Innovat ive people .

Innovat ive benef i ts .

Short Term Disability (STD)n Maximum weekly benefit up to $2,309 per weekn Benefit percentages up to 70%n Benefit duration up to 52 weeksn Claim services only option availablen Partial and residual benefit availablen Maternity coverage

Long Term Disability (LTD)n No earnings testn Extended disability benefitn Professional Social Security advocacyn Maximum monthly benefits up to $24,000n Benefit percentage of 40% up to 66 q%n Elimination periods from 30 days up to 5 years

(maximum period can vary by state)n Elimination period interruption provisionn “Own Occupation” definition of disability from 12 - 60 months,

or long termn Partial and residual benefit availablen Rate guarantees up to 3 yearsn RSL LeaveManager™

– Provides companies with 50 to 2,000 lives a secure web-based system to record, administer and report types of employee absences, whether government mandated or employer authorized

– Helps maintain compliance with Federal FMLA and Department of Labor wage and hour regulations

– Reduces leave and absence administrative time– Improves productivity– Reduces costs due to unscheduled absences

Group Term Life/Accidental Death & Dismemberment (AD&D)n Dependent life availablen Accelerated death benefitn Smoke-free & wellness program discountsn FMLA availablen Waiver of premium (with critical illness benefit in most states)n Conversion featuren Bereavement counseling available with policyn Flexible benefit schedules of flat or multiples of salary

Dentaln Choose from a wide variety of full-service plan designsn Maximum RewardsSM option can increase annual maximums

with carryovern Participating Provider Organization plansn Voluntary/Pretax plansn Plans may cover Type 1/Preventive, Type 2/Basic and Type 3/Major

procedures, or Type 1 and Type 2 only, Type 1 onlyn Cost Containment, Small Group, High/Low, Buy-Up and Administrative

Services Only plansn Orthodontia benefits available

Eye Caren Basic Vision, maximum covered expense/defined benefit

reimbursement plan with optional networkn Sharper Vision features the VSP networkn TrueView Vision® features the EyeMed networkn Materials-Only or Materials-Optional plansn Exam Plus benefit, VSP eye exam plus VSP discounts available

with most dental plansn LASIK AdvanceSM available with most dental plans

Group Insurance ProductsAre available to groups with 10 or more lives, unless otherwise specified.

Reliance Standard is among the top 50 performing Life and Health insurance companies in the US, according to The Ward Group (2009).

RelianceONE™

RelianceONE is a strategic initiative of Reliance Standard and AllOne HealthSM, created to improve the health of employees and the corporate bottom line through integrated workforce health and productivity management (HPM) services. Services include wellness, disease management and employee assistance programs, disability and absence management services. Because RelianceONE is not limited to specific physicians or health plans, all employees—regardless of where they live, their health insurance plan or whether they are currently sick or well—can become and stay healthy, engaged and productive.

Voluntary Term Life Insurancen Coverage from $10,000 to $500,000 for employees and spousesn Guaranteed Issue amounts for employees and often for spouses, too.n Dependent child(ren) coverage (Guaranteed Issue)n Employees can elect spouse-only coveragen Accelerated death benefit includedn Waiver of premium includedn Portability and conversion includedn Tobacco User/Non-Tobacco User rates availablen Five-year age-banded ratesn Individual policies issued in some states

Voluntary AD&Dn Benefits to $500,000n Standard rating to age 75n Seat Belt/Air Bag Benefit available up to $100,000 maximum n Guaranteed Coverage (no individual underwriting)n Spouse and dependent child(ren) coverage availablen Conversion privilege

Voluntary Disability Insurancen Benefits up to 60% of salaryn Available in flat dollar amount, percentage of salary, or incrementsn Maximum short term benefits up to $1,250 per weekn Maximum long term benefits up to $5,000 per monthn Elimination periods of 7, 14, 30, 60, 90 or 180 daysn Benefit durations up to Social Security Normal Retirement Agen Partial and residual availablen Rate guarantees up to two yearsn Additional Provisions included on Long Term Plansn Elimination period interruption provisionn FMLA and Military Leave of Absencen Conversion Privilegen Survivor Benefitn Specific Indemnity Benefit

Voluntary Products100% employee-paid insurance plans offered at affordable rates and paid through convenient payroll deduction.

Integrated Employee Benefits

Absence Solutions®This proprietary integrated disability service combines single source claims management and return-to-work services with flexible, high-quality disability and/or workers’ compensation insurance products. The integrated approach is proven to lower premiums, but also addresses the larger problems associated with loss of productivity.

Reliance Standard’s Voluntary lines of coverage accounted for more attention, activity and resources in 2009, a trend likely to continue in 2010 and beyond.

RSL SmartChoice® Small Group Insurance ProductsAre available to groups with 2 to 19 lives, unless otherwise specified. We offer comprehensive, flexible plan designs, which can be also offered as stand-alone products. Our Small Group Package incorporates LTD, Life/AD&D, STD and Dental/Eye Care.

RSL SmartChoice LTDn $7,500 Monthly Maximum Benefitn Benefit percentage of 60%n 60, 90 and 180 day Elimination Periodsn “Own Occupation” Definition of Disability—36 monthsn Pre-existing Condition Benefit (30% to $3,750 up to 12 months)n Rehabilitation and Survivor Benefits

RSL SmartChoice Life/AD&Dn Guaranteed Issue of $50,000 for Groups of 2 to 5 Livesn Guaranteed Issue of up to $75,000 for Groups of 6 to 9 Livesn Guaranteed Issue of up to $100,000 for Groups of 10 to 19 Livesn Maximum Benefit of $200,000n All plans offer an equal amount of Life/AD&D

RSL SmartChoice STDn Weekly Maximum Benefit of $1,000n Benefit options offered include 50%, 60%, 66-2/3%, 70% or flat

amount of coverage for alln Pre-existing Condition Benefit

RSL SmartChoice Dental/Eye Caren 3 comprehensive dental plansn PPO dental optionn Adult and child orthodontia optionn Eye care option

RSL BasicCare™ Limited Benefit Medical ProductsExclusively for employees who do not have access to traditional health insurance, RSL BasicCare™ is available to both part-time and full-time employees in various occupations.

n RSL BasicCare Medical—Basic, Open, Ultra, Gap and Indemnity plan designs

n RSL BasicCare Dental—available for employees and dependents with an annual maximum of $1,000 per person

n RSL BasicCare Term Life—offers a $10,000 Employee Life Benefit and matching Accidental Death Benefit. Dependent coverage available

n RSL BasicCare STD (Employee Only)—provides a weekly benefit of 50% of base pay up to a maximum of $125 for up to 26 weeks

Business Travel Accidentn For groups of 5 or more livesn Business only or Business and Pleasure coverage availablen Company-owned/Leased Aircraft coverage and Piloting coverage available

RSL AdvantEDGE®RSL AdvantEDGE Insured Medical Reimbursement Plans are designed to reimburse key employees for medical expenses not typically covered by the company’s basic health plan. The benefits of RSL AdvantEDGE make this supplemental insurance a valuable addition to any corporation’s benefit package.

Expanded coverage includes:n Prescription drugsn Private-duty nursingn Hospital expensesn Medical transportationn Home health caren And more

Online Billing, Enrollment & Benefits Administration

Reliance Standard offers integrated billing, enrollment, administration and reporting via a new enhanced portal on reliancestandard.com. On the site, policyholders can:

n Add/delete/modify coverage with real-time calculations

n View claims, premium and EOI current activity and history

n Pay bills onlinen Allow employees to enroll

and manage elections online, including EOI

Value Added Servicesn Employee Assistance Programn Bereavement Counselingn Travel Assistancen Identity Theft Recovery Services

Consolidated Balance Sheets (Dollars in Millions) (GAAP Basis)

December 31 2009 2008

Assets

Invested Assets $3,647 $2,997

Other Assets 759 743

Total Assets $4,406 $3,740

Liabilities

Policy Liabilities and Accruals $3,067 $2,868

Liabilities Related to Investing Activities 55 55

Other Liabilities 411 245

Total Liabilities $3,533 $3,168

Equity $572 $695

Total Liabilities and Equity $4,406 $3,740

Notice to the Broker: This brochure has been developed to illustrate and highlight products offered by Reliance Standard Life Insurance Company (RSL) and is not a contract. All of the information contained in this brochure is subject to the group insurance policy provisions and may be subject to change. For cost and further detail of any of the coverages, including exclusions, any reductions or limitations, and the terms under which the policy may be continued in force or discontinued, contact your sales office. This brochure is intended for use by agents and brokers only and is not intended for distribution to the general public.

Insurance products and services are provided through Reliance Standard Life Insurance Company in all states (except New York), the District of Columbia, Puerto Rico and the U.S. Virgin Islands. In New York, insurance products and services are provided through First Reliance Standard Life Insurance Company, home office: New York. Product availability and features may vary by state.

Reliance Standard Life Insurance Company and Subsidiary

0

200

400

600

800

1000

1200

0

200

400

600

800

1000

1200

0

200

400

600

800

1000

2001

456387

523

594

717

823

963

1045 1034

460392

529599

722

830

968

1051 1038

2002 2003 2004 2005 2006 2007 2008 2009

G R O U P P R E M I U M S

2001 2002 2003 2004 2005 2006 2007 2008 2009

P R E M I U M & F E E I N C O M E

2001

369423

501

576628

710 695

572

873

2002 2003 2004 2005 2006 2007 2008 2009

E Q U I T Y

Regional Sales Office Directory

Atlanta800-535-6018

Boston800-527-1753

Charlotte800-833-1207

Chicago800-922-0509

Cincinnati800-884-1447

Dallas800-261-0269

Denver800-251-1090

Ft. Lauderdale877-268-7606

Hartford800-613-7600

Houston800-392-5882

Kansas City888-857-4801

Los Angeles877-269-9717

Memphis866-369-9960

Michigan800-526-4402

Nashville866-917-1127

New York800-882-8700

No. California 800-843-9851

Orange County800-762-3059

Orlando800-221-2693

Philadelphia800-321-2347

Phoenix800-992-4775

Pittsburgh800-441-9157

Portland888-246-0847

Salt Lake City866-752-8116

Seattle800-336-3792

St. Louis800-445-4662

Tampa866-915-3288

Twin Cities800-346-0410

Washington800-345-5225

Wisconsin877-328-5285

Administrative OfficeReliance StandardLife Insurance Company2001 Market Street, Suite 1500Philadelphia, PA 19103800-351-7500

First Reliance Standard Life Insurance Company590 Madison Avenue, 29th FloorNew York, NY 10022800-882-8700

Affiliate OfficesSafety NationalCasualty Corporation2043 Woodland ParkwaySt. Louis, MO 63146888-995-5300

Matrix Absence Management 5225 Hellyer Avenue, Suite 210San Jose, CA 95138800-980-1006

www.RelianceStandard.com

RS-2128 (4/10) Home Office, Chicago, IL