Assurant 2011 Annual Report Download - page 56

ASSURANT, INC.2011 Form10-K48
PARTII
ITEM 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations
Assurant Employee Benefi ts
Overview
 e table below presents information regarding Assurant Employee Bene ts’ segment results of operations:
For the Years Ended December31,
2011 2010 2009
Revenues:
Net earned premiums and other considerations $ 1,064,023 $ 1,101,395 $ 1,052,137
Net investment income 129,640 132,388 133,365
Fees and other income 25,382 25,152 28,343
Total revenues 1,219,045 1,258,935 1,213,845
Bene ts, losses and expenses:
Policyholder bene ts 767,723 766,049 757,070
Selling, underwriting and general expenses 386,013 395,759 392,901
Total bene ts, losses and expenses 1,153,736 1,161,808 1,149,971
Segment income before provision for income tax 65,309 97,127 63,874
Provision for income taxes 22,196 33,589 21,718
SEGMENT NET INCOME $ 43,113 $ 63,538 $ 42,156
Net earned premiums and other considerations:
By major product groupings:
Group dental $ 417,145 $ 420,690 $ 425,288
Group disability single premiums for closed blocks(3) 4,936 — —
All other group disability 448,028 488,813 434,381
Group life 193,914 191,892 192,468
TOTAL $ 1,064,023 $ 1,101,395 $ 1,052,137
Ratios:
Loss ratio(1) 72.2% 69.6% 72.0%
Expense ratio(2) 35.4% 35.1% 36.4%
(1) The loss ratio is equal to policyholder benefits divided by net earned premiums and other considerations.
(2) The expense ratio is equal to selling, underwriting and general expenses divided by net earned premiums and other considerations and fees and other income.
(3) This represents single premium on closed blocks of group disability business. For closed blocks of business we receive a single, upfront premium and in turn we record a virtually equal
amount of claim reserves. We then manage the claims using our claim management practices.
Year Ended December 31, 2011 Compared to the Year
Ended December 31, 2010
Net Income
Segment net income decreased 32% to $43,113 for Twelve Months
2011 from $63,538 for Twelve Months 2010. Lower results were
primarily attributable to less favorable disability and life insurance loss
experience, partially o set by improved dental insurance experience.
Twelve Months 2011 results include a decrease in the reserve interest
discount rate primarily for new long-term disability claims as well as
a $6,630 (after-tax) overall loss and loss adjustment expense reserve
release (amounts are included in both policyholders bene ts and
selling, underwriting and general expenses) related to annual reserve
adequacy studies in Twelve Months 2011 compared to $1,829 (after-
tax) in Twelve Months 2010. Twelve Months 2010 general expenses
included restructuring costs of $4,349 (after-tax). Twelve Months 2011
had no restructuring costs.
Total Revenues
Total revenues decreased $39,890 to $1,219,045 for Twelve Months
Ended 2011 from $1,258,935 for Twelve Months Ended 2010. Excluding
single premiums, net earned premiums and other considerations
decreased $42,308.  e decrease in net earned premiums and other
considerations was primarily driven by the loss of policyholders as a
result of pricing actions on a block of assumed disability reinsurance
business.
Total Benefi ts, Losses and Expenses
Total bene ts, losses and expenses decreased $8,072 to $1,153,736
for Twelve Months 2011 from $1,161,808 for Twelve Months 2010.
During Twelve Months 2011 policyholder bene ts were reduced
$10,500 based on the results of our annual reserve adequacy studies
compared to $5,758 in Twelve Months 2010. Excluding the impact
of the reserve adequacy studies, the loss ratio increased to 73.1% from
70.1%, primarily driven by less favorable loss experience across our
disability and life insurance products.