Assurant 2014 Annual Report Download - page 25

ASSURANT, INC. – 2014 Form 10-K 11
PART I
ITEM 1 Business
Outlook
A.M. Best(1) Moody’s(2) Standard & Poor’s(3)
Stable Stable Stable
Union Security Insurance Company A - A3 A-
Union Security Life Insurance Company of New York A- N/A N/A
United Dental Care of Arizona A- N/A N/A
United Dental Care of Colorado A- N/A N/A
United Dental Care of Michigan NR N/A N/A
United Dental Care of Missouri A- N/A N/A
United Dental Care of New Mexico A- N/A N/A
United Dental Care of Ohio NR N/A N/A
United Dental Care of Texas A- N/A N/A
United Dental Care of Utah NR N/A N/A
Voyager Indemnity Insurance Company A N/A N/A
(1) A.M. Best financial strength ratings range from “A++” (superior) to “S” (suspended). Ratings of A and A- fall under the “excellent” category, which is
the second highest of ten ratings categories.
(2) Moody’s insurance financial strength ratings range from “Aaa” (exceptional) to “C” (extremely poor). A numeric modifier may be appended to ratings
from “Aa” to “Caa” to indicate relative position within a category, with 1 being the highest and 3 being the lowest. Ratings of A2 and A3 are considered
“good” and fall within the third highest of the nine ratings categories.
(3) S&P’s insurer financial strength ratings range from “AAA” (extremely strong) to “R” (under regulatory supervision). A “+” or “-” may be appended to
ratings from categories AA to CCC to indicate relative position within a category. Ratings of A- (strong) and BBB+ (adequate) are within the third and
fourth highest of the nine ratings categories, respectively.
Enterprise Risk Management
As an insurer, we are exposed to a wide variety of fi nancial,
operational and other risks, as described in Item 1A, “Risk
Factors.” Enterprise risk management (“ERM”) is, therefore,
a key component of our business strategies, policies, and
procedures. Our ERM process is an iterative approach with
the following key phases:
1. Risk identifi cation;
2. High-level estimation of risk likelihood and severity;
3. Risk prioritization at the business and enterprise
levels;
4. Scenario analysis and detailed modeling of likelihood
and severity for key enterprise risks;
5. Utilization of quantitative results and subject matter
expert opinion to help guide business strategy and
decision making.
Through our ERM process and our enterprise risk quantifi cation
model we monitor a variety of risk metrics on an ongoing basis,
with a particular focus on impact to net income (both GAAP
and Statutory), company value and the potential need for
capital infusions to subsidiaries under severe stress scenarios.
The Company’s ERM activities are coordinated by an Enterprise
Risk Management Committee (“ERMC”), which includes
managers from across the Company with knowledge of the
Company’s business activities, including representation
from the Legal, Compliance, Actuarial, Audit, Information
Technology, Finance, and Asset Management Departments.
The ERMC develops risk assessment and risk management
policies and procedures. It facilitates the identifi cation,
reporting and prioritizing of risks faced by the Company, and
is responsible for promoting a risk-aware culture throughout
the organization. The ERMC also coordinates with each of the
Company’s four Business Unit Risk Committees (“BURCs”),
which meet regularly and are responsible for the identifi cation
of signifi cant risks affecting their respective business units.
Our Board of Directors and senior management are responsible
for overseeing signifi cant enterprise risks. The ERMC reports
regularly to the Chief Executive Offi cer and presents its work
periodically to both the Board of Directors and its Finance
and Investment Committee.
Through the use of regular committee meetings, business
unit and enterprise risk inventory templates and dashboards,
hypothetical scenario analysis, and quantitative modeling,
the Company strives to identify, track, quantify, communicate
and manage our key risks in a manner consistent with our
risk appetite and high level strategy.
Our ERM process continues to evolve, and, when appropriate,
we incorporate methodology changes, policy modifi cations
and emerging best practices on an ongoing basis.
Regulation
The Company is subject to extensive federal, state and
international regulation and supervision in the jurisdictions
where it does business. Regulations vary from jurisdiction
to jurisdiction. The following is a summary of signifi cant
regulations that apply to our businesses and is not intended to
be a comprehensive review of every regulation to which the
Company is subject. For information on the risks associated
with regulations applicable to the Company, please see
Item 1A, “Risk Factors.”