Assurant 2010 Annual Report Download - page 15

9ASSURANT, INC.  2010 Form 10K
PART I
ITEM 1 Business
Underwriting and Risk Management
 e pricing of our products is based on the expected cost of benefi ts,
calculated using assumptions for mortality, morbidity, interest, expenses
and persistency, and other underwriting factors. Our block of business
is diversifi ed by industry and geographic location, which serves to
limit some of the risks associated with changing economic conditions.
Disability claims management focuses on helping claimants return to
work through a supportive network of services that may include physical
therapy, vocational rehabilitation, and workplace accommodation.
We employ or contract with a staff of doctors, nurses and vocational
rehabilitation specialists, and use a broad range of additional outside
medical and vocational experts to assist our claim specialists.
Ratings
Independent rating organizations periodically review the fi nancial
strength of insurers, including our insurance subsidiaries. Financial
strength ratings represent the opinions of rating agencies regarding
the ability of an insurance company to meet its fi nancial obligations
to policyholders and contractholders.  ese ratings are not applicable
to our common stock or debt securities. Ratings are an important
factor in establishing the competitive position of insurance companies.
Rating agencies also use an “outlook statement” of “positive”, “stable”,
“negative” or “developing” to indicate a medium- or long-term trend in
credit fundamentals which, if continued, may lead to a rating change.
A rating may have a stable outlook to indicate that the rating is not
expected to change; however, a stable rating does not preclude a rating
agency from changing a rating at any time, without notice.
Most of our active domestic operating insurance subsidiaries are rated
by the A.M. Best Company (“A.M. Best”). In addition, six of our
domestic operating insurance subsidiaries are also rated by Moody’s
Investor Services (“Moody’s”) and seven are rated by Standard & Poor’s
Inc., a division of McGraw Hill Companies, Inc. (“S&P”).
For further information on the risks of ratings downgrades, see
“Item 1A—Risk Factors—A.M. Best, Moody’s and S&P rate the
fi nancial strength of our insurance company subsidiaries.”
 e following table summarizes our outlook statement and fi nancial strength ratings as of December 31, 2010:
Outlook
A.M. Best (1) Moody’s (2) Standard & Poor’s (3)
Stable Stable (4)
COMPANY
American Bankers Insurance Company A A2 A-
American Bankers Life Assurance Company A- A3 A-
American Memorial Life Insurance Company A- N/A A-
American Reliable Insurance Company A N/A N/A
American Security Insurance Company A A2 A-
Assurant Life of Canada A- N/A N/A
Caribbean American Life Assurance Company A- N/A N/A
Caribbean American Property Insurance Company A N/A N/A
John Alden Life Insurance Company A- A3 BBB+
Reliable Lloyds A N/A N/A
Standard Guaranty Insurance Company A N/A N/A
Time Insurance Company A- A3 BBB+
UDC Dental California A- N/A N/A
Union Security Dental Care New Jersey A- N/A N/A
Union Security Insurance Company A- A3 A-
Union Security Life Insurance Company of New York A- N/A N/A
United Dental Care of Arizona A- N/A N/A
United Dental Care of Colorado A- N/A N/A
United Dental Care of Michigan NR-3 N/A N/A
United Dental Care of Missouri A- N/A N/A
United Dental Care of New Mexico A- N/A N/A
United Dental Care of Ohio NR-3 N/A N/A
United Dental Care of Texas A- N/A N/A
United Dental Care of Utah NR-3 N/A N/A
Voyager Indemnity Insurance Company A N/A N/A
(1) A.M. Best financial strength ratings range from “A++” (superior) to “S” (suspended). Ratings of A and A- fall under the “excellent” category, which is the second highest of ten ratings
categories. A rating of NR-3 indicates that the company is not rated because the rating procedure is inapplicable.
(2) Moody’s insurance financial strength ratings range from “Aaa” (exceptional) to “C” (extremely poor). A numeric modifier may be appended to ratings from “Aa” to “Caa” to indicate relative
position within a category, with 1 being the highest and 3 being the lowest. Ratings of A2 and A3 are considered “good” and fall within the third highest of the nine ratings categories.
(3) S&P’s insurer financial strength ratings range from “AAA” (extremely strong”) to “R” (under regulatory supervision). A “+” or “-” may be appended to ratings from categories AA to
CCC to indicate relative position within a category. Ratings of A- (“strong”) and BBB+(“adequate”) are within the third and fourth highest of the nine ratings categories, respectively.
(4) S & P has a stable outlook on all of the ratings of the Companies, except for John Alden Life Insurance Company and Time Insurance Company, which have a negative outlook.