Assurant 2014 Annual Report Download - page 24

ASSURANT, INC. – 2014 Form 10-K10
PART I
ITEM 1 Business
Marketing and Distribution
Our products and services are distributed through a group sales
force located in 32 offi ces near major metropolitan areas.
Our sales representatives distribute our products and services
through independent brokers and employee-benefi ts advisors.
Daily account management is provided through local sales
offi ces, further supported by regional sales support centers
and a home offi ce customer service department. Broker
compensation in some cases includes an annual performance
incentive, based on volume and retention of business.
DRMS provides turnkey group disability and life insurance
solutions to insurance carriers that want to supplement
their core product offerings. Our services include product
development, state insurance regulatory fi lings, underwriting,
claims management, and other functions typically performed by
an insurer’s back offi ce. Assurant Employee Benefi ts reinsures
the risks written by DRMS’ clients, with the clients generally
retaining shares that vary by contract.
Underwriting and Risk Management
The 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.
These 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—Risks Related to our Company—A.M.
Best, Moody’s and S&P rate the fi nancial strength of our
insurance company subsidiaries, and a decline in these ratings
could affect our standing in the insurance industry and cause
our sales and earnings to decrease.”
The following table summarizes our fi nancial strength ratings and outlook of our domestic operating insurance subsidiaries
as of December 31, 2014:
Outlook
A.M. Best(1) Moody’s(2) Standard & Poor’s(3)
Stable Stable Stable
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 - Baa2 BBB
Reliable Lloyds A N/A N/A
Standard Guaranty Insurance Company A N/A N/A
Time Insurance Company A - Baa2 BBB
UDC Dental California A - N/A N/A
Union Security Dental Care New Jersey A - N/A N/A