Assurant 2014 Annual Report Download - page 21

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ASSURANT, INC. – 2014 Form 10-K 7
PART I
ITEM 1 Business
Other insurance and mortgage services
We believe there are opportunities to apply our specialty
insurance expertise to other products and services. We have
developed products and services in adjacent and emerging
markets, such as lender-placed fl ood insurance, multi-family
housing insurance and mortgage property risk management
services. In 2013, we acquired Field Asset Services (“FAS”), a
company that leverages its nationwide network of independent
contractors to perform property preservation, restoration
and inspection services for mortgage servicing clients and
investors. In April 2014, we acquired StreetLinks, a leader
in valuation solutions and technologies, which is among the
largest independent appraisal management companies in the
United States. In September 2014, we acquired eMortgage
Logic, a leading provider of property broker price opinions
assisting mortgage servicing clients with determining property
values. The acquisitions of FAS, Streetlinks and eMortgage
Logic comprise our Mortgage Solutions business. We are also
one of the largest administrators for the U.S. Government
under the voluntary National Flood Insurance Program, for
which we earn a fee for collecting premiums and processing
claims. This business is 100% reinsured to the U.S. Government.
Marketing and Distribution
Assurant Specialty Property establishes long-term relationships
with leading mortgage lenders and servicers. The majority of
our lender-placed agreements are exclusive. Typically, these
agreements have terms of three to fi ve years and allow us
to integrate our systems with those of our clients.
We offer our manufactured housing insurance programs
primarily through manufactured housing lenders and retailers,
along with independent specialty agents. The independent
specialty agents distribute fl ood products and miscellaneous
specialty property products. Multi-family housing products
are distributed primarily through property management
companies and affi nity marketing partners.
Our property risk management services are provided directly
to mortgage lenders and servicers, typically under non-
exclusive arrangements.
On January 1, 2015, we sold our general agency business
and primary associated insurance carrier, American Reliable
Insurance Company (“ARIC”) to Global Indemnity Group, Inc.,
a subsidiary of Global Indemnity plc. The business offers
specialty personal lines and agricultural insurance through
general and independent agents.
Underwriting and Risk Management
Our lender-placed homeowners insurance program and certain
of our manufactured housing products are not underwritten
on an individual policy basis. Contracts with our clients
require us to issue these policies automatically when a
borrower’s insurance coverage is not maintained. These
products are priced to factor in the additional underwriting
risk from ensuring all client properties are provided continuous
insurance coverage. 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 housing, 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, 2014
December 31, 2013
Net earned premiums:
Individual $ 1,544,968 $ 1,174,141
Small employer group 400,484 407,266
TOTAL $ 1,945,452 $ 1,581,407
Fees and other income $ 40,016 $ 29,132
Segment net (loss) income $ (63,748) $ 5,857
Loss ratio(1) 81.0% 73.9%
Expense ratio(2) 25.0% 27.0%
Combined ratio(3) 104.3% 99.6%
Equity(4) $ 443,385 $ 295,206
(1) The loss ratio is equal to policyholder benefits divided by net earned premiums.
(2) The expense ratio is equal to selling, underwriting and general expenses divided by net earned premiums and fees and other income.
(3) The combined ratio is equal to total benefits, losses and expenses divided by net earned premiums and fees and other income.
(4) Equity excludes accumulated other comprehensive income.