Assurant 2014 Annual Report Download - page 51

37ASSURANT, INC. – 2014 Form 10-K
PART II
ITEM 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations
Reserves
Reserves are established in accordance with GAAP using
generally accepted actuarial methods and refl ect judgments
about expected future claim payments. Calculations
incorporate assumptions about infl ation rates, the incidence
of incurred claims, the extent to which all claims have been
reported, future claims processing, lags and expenses and
future investment earnings, and numerous other factors.
While the methods of making such estimates and establishing
the related liabilities are periodically reviewed and updated,
the calculation of reserves is not an exact process.
Reserves do not represent precise calculations of expected
future claims, but instead represent our best estimates
at a point in time of the ultimate costs of settlement and
administration of a claim or group of claims, based upon
actuarial assumptions and projections using facts and
circumstances known at the time of calculation.
Many of the factors affecting reserve adequacy are not directly
quantifi able and not all future events can be anticipated when
reserves are established. Reserve estimates are refi ned as
experience develops. Adjustments to reserves, both positive
and negative, are refl ected in the consolidated statement of
operations in the period in which such estimates are updated.
Because establishment of reserves is an inherently complex
process involving signifi cant judgment and estimates, there can
be no certainty that ultimate losses will not exceed existing
claim reserves. Future loss development could require reserves
to be increased, which could have a material adverse effect
on our earnings in the periods in which such increases are
made. See “Item 1A — Risk Factors — Risks related to our
Company — Our actual claims losses may exceed our reserves
for claims, and this may require us to establish additional
reserves that may materially affect our results of operations,
profi tability and capital” for more detail on this risk.
The following table provides reserve information for our major product lines for the years ended December 31, 2014
and 2013:
December 31, 2014 December 31, 2013
Future
Policy
Benefi ts and
Expenses
Unearned
Premiums
Claims and Benefi ts
Payable Future
Policy
Benefi ts
and
Expenses
Unearned
Premiums
Claims and Benefi ts
Payable
Case
Reserves
Incurred
But Not
Reported
Reserves
Case
Reserves
Incurred
But Not
Reported
Reserves
Long Duration Contracts:
Preneed funeral life
insurance policies and
investment-type annuity
contracts $ 4,618,505 $ 4,872 $ 14,696 $ 6,456 $ 4,453,154 $ 185,863 $ 14,236 $ 5,901
Life insurance no longer
offered 418,672 570 2,272 1,301 432,075 565 2,200 2,690
Universal life and other
products no longer
offered 168,808 136 704 1,959 189,319 125 735 3,110
FFG, LTC and other
disposed businesses 4,153,741 46,585 881,514 97,524 3,440,947 34,158 740,704 75,195
Medical 87,563 7,254 1,959 7,886 94,436 10,454 3,840 9,799
All other 36,383 382 13,863 9,803 36,641 475 14,943 8,422
Short Duration Contracts:
Group term life — 2,905 169,006 28,786 — 4,135 169,972 29,799
Group disability — 1,564 1,127,068 107,961 — 2,537 1,156,693 115,158
Medical — 130,185 137,370 240,830 — 125,817 68,869 153,313
Dental — 4,013 2,251 17,037 — 5,140 2,402 17,461
Property and warranty — 2,386,719 130,517 546,979 — 2,514,356 201,336 437,888
Credit life and disability — 241,092 34,581 43,298 — 314,420 39,419 52,096
Extended service
contracts — 3,568,352 6,780 42,054 — 3,331,936 6,622 36,790
All other — 135,046 5,375 18,776 — 132,691 3,203 16,575
TOTAL $9,483,672 $6,529,675 $2,527,956 $ 1,170,650 $ 8,646,572 $ 6,662,672 $2,425,174 $ 964,197
For a description of our reserving methodology, see Note 13 to the Consolidated Financial Statements included elsewhere
in this report.