Assurant 2007 Annual Report Download - page 23

Assurant Annual Report 19
Assurant Solutions
Assurant Solutions took important strategic steps and
made considerable progress in pursuit of its targeted
growth areas in 2007—international, extended service
contracts and preneed. Net earned premiums rose 7% to
$2.53 billion. Gross written premiums increased 22% year
over year for international and service contracts gained
16%. These advancements are being driven by continued
growth in our domestic and international service contract
business. In 2007, Solutions’ net operating income was
down 9% from the prior year to $143.9 million, resulting
in part from the loss of a debt deferment client and
higher domestic and international combined ratios.
We continue to extend our proven business model to
pursue long-term protable growth opportunities in select
markets internationally. In 2007, Solutions executed three
fold-in acquisitions that support and advance our long-
term growth strategy. Two of the acquisitions—Swansure
Group and Centrepoint Insurance—were made in the
UK to expand our distribution and geographic footprint,
to further our niche play of selling credit insurance
through mortgage intermediaries and to build scale for our
administrative servicing platform. In the United States,
we completed our acquisition of Mayower and extended
our exclusive partnership with Service Corporation
International through 2013, which greatly enhances the
prospects for our prefunded funeral insurance business.
We are also encouraged by what we see as continued
growth in warrantable goods in new specialty niches such
as motorcycles, RV, powersports and wireless electronics.
Assurant Health
In a very competitive marketplace, Assurant Health
sharpened its focus in 2007 to concentrate on individual
medical—our targeted growth driver for the business,
which saw a 7% increase in sales and a 6% rise in net
earned premiums. Net operating income for Health
was down 10% from 2006 to $151.7 million, and net
earned premiums were down 2% to $2.05 billion, largely
because of a decline in small group insurance. However,
we continue to deliver strong ROEs (36.7%) and maintain
excellent combined ratios (92% for 2007, an increase
of 60 basis points compared to 2006). As the health
insurance market continues to evolve toward a more
consumer-driven environment, we are well positioned
to compete long term based on our deep knowledge
of the healthcare marketplace and by leveraging our
advanced technology platforms.
Advantage Agent is a great example of Assurant Health’s
ability to adapt, respond and deliver to meet the needs
of an evolving marketplace. Being able to provide a
comprehensive portfolio of individual products and timely
answers at the ngertips of our agent partners helps to
create preference for the Assurant offering. By continuing
to nurture our relationships and reach customers through
a variety of distribution channels, we are condent of,
and committed to, protable growth over the long term.
Assurant Employee Benets
Assurant Employee Benets made a solid contribution
to prots in 2007, producing $87 million in net operating
income—an increase of 4% over the prior year. These
encouraging results were driven largely by favorable
overall loss experience, with especially strong performance
in group disability. For the year, net earned premiums
decreased 3% to $1.14 billion, due mainly to the continued
execution of our small case strategy and adherence to our
pricing discipline. In cases fewer than 500 lives—Assurant
Employee Benets’ targeted growth area—we generated
positive sales momentum during the year, achieving a
25% increase in the number of cases sold, including a 44%
increase in dental. The agreement we launched last year
with Aetna, tapping into their broad national dental PPO
network, contributed signicantly to our growth in dental
and improved our success rate in winning new business.
Letter to Shareholders