Assurant 2010 Annual Report Download - page 28

22 ASSURANT, INC.  2010 Form 10K
PART I
ITEM 1A Risk Factors
 e insurance industry can be cyclical, which may aff ect
our results.
Certain lines of insurance that we write can be cyclical. Although no
two cycles are the same, insurance industry cycles have typically lasted
for periods ranging from two to ten years. In addition, the upheaval
in the global economy during 2008 and 2009 has been much more
widespread and has aff ected all the businesses in which we operate.
We expect to see continued cyclicality in some or all of our businesses
in the future, which may have a material adverse eff ect on our results
of operations and fi nancial condition.
Risks Related to Our Common Stock
Given the recent economic climate, our stock may be
subject to stock price and trading volume volatility.
 e price of our common stock could fl uctuate or decline
signifi cantly and you could lose all or part of your
investment.
In recent years, the stock markets have experienced signifi cant price
and trading volume volatility. Company-specifi c issues and market
developments generally in the insurance industry and in the regulatory
environment may have caused this volatility. Our stock price could
materially fl uctuate or decrease in response to a number of events and
factors, including but not limited to: quarterly variations in operating
results; operating and stock price performance of comparable companies;
changes in our fi nancial strength ratings; limitations on premium
levels or the ability to maintain or raise premiums on existing policies;
regulatory developments and negative publicity relating to us or our
competitors. In addition, broad market and industry fl uctuations may
materially and adversely aff ect the trading price of our common stock,
regardless of our actual operating performance.
Applicable laws, our certifi cate of incorporation and
by-laws, and contract provisions may discourage
takeovers and business combinations that some
stockholders might consider to be in their best interests.
State laws and our certifi cate of incorporation and by-laws may delay,
defer, prevent or render more diffi cult a takeover attempt that our
stockholders might consider in their best interests. For example,
Section 203 of the General Corporation Law of the State of Delaware
may limit the ability of an “interested stockholder” to engage in
business combinations with us. An interested stockholder is defi ned
to include persons owning 15% or more of our outstanding voting
stock.  ese provisions may also make it diffi cult for stockholders to
replace or remove our directors, facilitating director enhancement
that may delay, defer or prevent a change in control. Such provisions
may prevent our stockholders from receiving the benefi t from any
premium to the market price of our common stock off ered by a bidder
in a takeover context. Even in the absence of a takeover attempt, the
existence of these provisions may adversely aff ect the prevailing market
price of our common stock if they are viewed as discouraging future
takeover attempts.
Our certifi cate of incorporation or by-laws also contain provisions that
permit our Board of Directors to issue one or more series of preferred
stock, prohibit stockholders from fi lling vacancies on our Board of
Directors, prohibit stockholders from calling special meetings of
stockholders and from taking action by written consent, and impose
advance notice requirements for stockholder proposals and nominations
of directors to be considered at stockholder meetings.
Additionally, applicable state insurance laws may require prior approval
of an application to acquire control of a domestic insurer. State statutes
generally provide that control over a domestic insurer is presumed to
exist when any person directly or indirectly owns, controls, has voting
power over, or holds proxies representing, 10% or more of the domestic
insurer’s voting securities. However, the State of Florida, in which some
of our insurance subsidiaries are domiciled, sets this threshold at 5%.
Because a person acquiring 5% or more of our common stock would
indirectly control the same percentage of the stock of our Florida
subsidiaries, the insurance change of control laws of Florida would apply
to such transaction and at 10% the laws of many other states would
likely apply to such a transaction. Prior to granting such approval, a
state insurance commissioner will typically consider such factors as the
fi nancial strength of the applicant, the integrity of the applicant’s board
of directors and executive offi cers, the applicant’s plans for the future
operations of the domestic insurer and any anti-competitive results
that may arise from the consummation of the acquisition of control.
We may also, under some circumstances involving a change of control,
be obligated to repay our outstanding indebtedness under our revolving
credit facility and other agreements. We or any possible acquirer
may not have available fi nancial resources necessary to repay such
indebtedness in those circumstances, which may constitute an event
of default resulting in acceleration of indebtedness and potential
cross-default under other agreements.  e threat of this could have
the eff ect of delaying or preventing transactions involving a change
of control, including transactions in which our stockholders would
receive a substantial premium for their shares over then-current market
prices, or which they otherwise may deem to be in their best interests.