Assurant 2014 Annual Report Download - page 31

ASSURANT, INC. – 2014 Form 10-K 17
PART I
ITEM 1A Risk Factors
Recent reductions in Assurant Health’s commission
arrangements could jeopardize its relationships with brokers
and agents, and make it diffi cult to attract new ones, a
circumstance that could materially adversely affect Assurant
Health’s results of operations.
General economic, fi nancial market and
political conditions may materially adversely
affect our results of operations and fi nancial
condition. Particularly, diffi cult conditions
in fi nancial markets and the global economy
may negatively affect the results of all of our
business segments.
General economic, fi nancial market and political disruptions
could have a material adverse effect on our results of
operations and fi nancial condition. Limited availability of credit,
deteriorations of the global mortgage and real estate markets,
declines in consumer confi dence and consumer spending,
increases in prices or in the rate of infl ation, continuing high
unemployment, or disruptive geopolitical events could contribute
to increased volatility and diminished expectations for the
economy and the fi nancial markets, including the market for
our stock. These conditions could also affect all of our business
segments. Specifi cally, during periods of economic downturn:
• individuals and businesses may (i) choose not to purchase our
insurance products, warranties and other related products
and services, (ii) terminate existing policies or contracts
or permit them to lapse, (iii) choose to reduce the amount
of coverage they purchase, and (iv) in the case of business
customers of Assurant Health or Assurant Employee Benefi ts,
have fewer employees requiring insurance coverage due
to reductions in their staffi ng levels;
•
clients are more likely to experience fi nancial distress or
declare bankruptcy or liquidation which could have an
adverse impact on the remittance of premiums from such
clients as well as the collection of receivables from such
clients for items such as unearned premiums;
•
disability insurance claims and claims on other specialized
insurance products tend to rise;
•
there is a higher loss ratio on credit card and installment
loan insurance due to rising unemployment and disability
levels;
•there is an increased risk of fraudulent insurance claims;
•
insureds tend to increase their utilization of health and
dental benefi ts if they anticipate becoming unemployed
or losing benefi ts; and
•
substantial decreases in loan availability and origination
could reduce the demand for credit insurance that we write
or debt cancellation or debt deferment products that we
administer, and on the placement of hazard insurance under
our lender-placed insurance programs.
General infl ationary pressures may affect the costs of medical
and dental care, as well as repair and replacement costs on
our real and personal property lines, increasing the costs of
paying claims. Infl ationary pressures may also affect the costs
associated with our preneed insurance policies, particularly
those that are guaranteed to grow with the Consumer Price
Index (or “CPI”). Conversely, defl ationary pressures may
affect the pricing of our products.
Additionally, continued uncertainty surrounding the U.S.
Federal Reserve’s monetary policy could adversely affect
the U.S. and global economy.
Catastrophe losses, including man-made
catastrophe losses, could materially reduce
our profi tability and have a material adverse
effect on our results of operations and
fi nancial condition.
Our insurance operations expose us to claims arising out
of catastrophes, particularly in our homeowners, life and
other health insurance businesses. We have experienced,
and expect to experience, catastrophe losses that materially
reduce our profi tability or have a material adverse effect on
our results of operations and fi nancial condition. Catastrophes
can be caused by various natural events, including, but not
limited to, hurricanes, windstorms, earthquakes, hailstorms,
fl oods, severe winter weather, fi res, epidemics and the
long-term effects of climate change, or can be man-made
catastrophes, including terrorist attacks or accidents such
as airplane crashes. While the frequency and severity of
catastrophes are inherently unpredictable, increases in the
value and geographic concentration of insured property,
the geographic concentration of insured lives, and the
effects of infl ation could increase the severity of claims
from future catastrophes.
Catastrophe losses can vary widely and could signifi cantly
exceed our expectations. They may cause substantial volatility
in our fi nancial results for any fi scal quarter or year and could
materially reduce our profi tability or materially adversely
affect our fi nancial condition. Our ability to write new
business also could be affected.
Accounting rules do not permit insurers to reserve for such
catastrophic events before they occur. In addition, the
establishment of appropriate reserves, including reserves for
catastrophes, is an inherently uncertain and complex process.
The ultimate cost of losses may vary materially from recorded
reserves and such variance may have a material adverse
effect on our results of operations and fi nancial condition.
If the severity of an event were suffi ciently high (for example,
in the event of an extremely large catastrophe), it could
exceed our reinsurance coverage limits and could have a
material adverse effect on our results of operations and
fi nancial condition. We may also lose premium income due to
a large-scale business interruption caused by a catastrophe
combined with legislative or regulatory reactions to the event.