Assurant 2011 Annual Report Download - page 14

ASSURANT, INC.2011 Form10-K6
PARTI
ITEM 1 Business
Lender-placed and voluntary manufactured housing
insurance
Manufactured housing insurance is o ered on a lender-placed and
voluntary basis. Lender-placed insurance is issued after an insurance
tracking process similar to that described above.  e tracking is performed
by Assurant Specialty Property using a proprietary insurance tracking
administration system, or by the lenders themselves. A number of
manufactured housing retailers in the U.S. use our proprietary premium
rating technology to assist them in selling property coverages at the
point of sale.
Other insurance
We believe there are opportunities to apply our lender-placed business
model to other products and services. We have developed products in
adjacent and emerging markets, such as the lender-placed  ood and
mandatory insurance rental markets. We also act as an administrator for
the U.S. Government under the voluntary National Flood Insurance
Program, for which we earn a fee for collecting premiums and processing
claims.  is business is 100% reinsured to the Federal Government.
Marketing and Distribution
Assurant Specialty Property establishes long-term relationships with
leading mortgage lenders and servicers.  e majority of our lender-placed
agreements are exclusive. Typically these agreements have terms of three to
 ve years and allow us to integrate our systems with those of our clients.
We o er our manufactured housing insurance programs primarily
through manufactured housing lenders and retailers, along with
independent specialty agents.  e independent specialty agents distribute
 ood products and miscellaneous specialty property products. Multi-
family housing products are distributed primarily through property
management companies and a nity marketing partners.
Underwriting and Risk Management
Our lender-placed homeowners insurance program and certain of our
manufactured home products are not underwritten on an individual
policy basis. Contracts with our clients require us to automatically issue
these policies when a borrower’s insurance coverage is not maintained.
 ese products are priced to factor in the lack of individual policy
underwriting. We monitor pricing adequacy based on a variety of
factors and adjust pricing as required, subject to regulatory constraints.
Because several of our product lines (such as homeowners, manufactured
home, and other property policies) are exposed to catastrophe risks,
we purchase reinsurance coverage to protect the capital of Assurant
Specialty Property and to mitigate earnings volatility. Our reinsurance
program generally incorporates a provision to allow the reinstatement
of coverage, which provides protection against the risk of multiple
catastrophes in a single year.
Assurant Health
For the Years Ended
December31,2011 December31,2010
Net earned premiums and other considerations:
Individual markets $ 1,286,236 $ 1,375,005
Group markets 473,653 489,117
Total net earned premiums before premium rebates 1,759,889 1,864,122
Premium rebates(1) (41,589) —
TOTAL $ 1,718,300 $ 1,864,122
Segment net income $ 40,886 $ 54,029
Loss ratio(2) 74.0% 69.9%
Expense ratio(3) 26.3% 29.7%
Combined ratio(4) 98.8% 98.1%
Equity(5) $ 405,199 $ 402,167
(1) As of January1,2011, the Company began accruing premium rebates to comply with the minimum medical loss ratio requirements under the Affordable Care Act.
(2) The loss ratio is equal to policyholder benefits divided by net earned premiums and other considerations.
(3) The expense ratio is equal to selling, underwriting and general expenses divided by net earned premiums and other considerations and fees and other income. (Fees and other income
are not included in the above table.)
(4) The combined ratio is equal to total benefits, losses and expenses divided by net earned premiums and other considerations and fees and other income. (Fees and other income are not
included in the above table.)
(5) Equity excludes accumulated other comprehensive income.
Product and Services
Assurant Health competes in the individual medical insurance market
by o ering medical insurance and short-term medical insurance to
individuals and families. Our products are o ered with di erent plan
options to meet a broad range of customer needs and levels of a ordability.
Assurant Health also o ers medical insurance to small employer groups.
 e Patient Protection and A ordable Care Act and the Health Care
and Education Reconciliation Act of 2010, and the rules and regulations
thereunder (together, “the A ordable Care Act”) were signed into law
in March2010 and represent signi cant changes to the current U.S.
health care system.  e legislation is far-reaching and is intended to
expand access to health insurance coverage over time.  e legislation