Assurant 2014 Annual Report Download - page 61

47ASSURANT, INC. – 2014 Form 10-K
PART II
ITEM 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations
Year Ended December 31, 2014 Compared
to the Year Ended December 31, 2013
Net Income
Segment net income increased $93,796, or 75%, to $218,948
for Twelve Months 2014 from $125,152 for Twelve Months
2013. The increase was primarily driven by improved results
in our domestic mobile business, refl ecting growth in mobile
subscribers, contributions from ongoing client marketing
programs, continued favorable loss experience and expense
savings in our domestic credit and domestic service contract
businesses.
Total Revenues
Total revenues increased $618,987, or 17%, to $4,179,360
for Twelve Months 2014 from $3,560,373 for Twelve Months
2013. The increase was primarily driven by higher net earned
premiums in our domestic and international service contract
businesses. The increase in domestic service contract business
refl ects continued growth in mobile subscribers, growth at a
large client due to increased subscribers and price increases
as well as higher contributions from vehicle service contracts
due to increased sales from new and existing dealers. The
increase in international service contracts is due to growth
in mobile subscribers. Fees and other income increased
$267,482 primarily driven by mobile client marketing programs
and from the Lifestyle Service Group (“LSG”) acquisition in
October 2013.
Gross written premiums increased $910,407, or 21%, to
$5,286,422 for Twelve Months 2014 from $4,376,015 for Twelve
Months 2013. Gross written premiums from our domestic
service contract business increased $1,022,366 primarily driven
by growth in mobile subscribers. Gross written premiums
from our international service contract business increased
$45,653 primarily due to growth in the number of global
mobile subscribers, the LSG acquisition and new and existing
clients in Latin America. This increase was partially offset
by the unfavorable impact of changes in foreign exchange
rates, primarily in Latin America and Canada.
Preneed face sales decreased $38,131, or 4%, to $969,784
for Twelve Months 2014 from $1,007,915 for Twelve Months
2013. This decrease was mostly attributable to a change in
product offerings and a client’s temporary operational change.
On June 25, 2014, we extended our exclusive distribution
partnership with SCI, for an additional 10 years, through
September 29, 2024.
Total Benefi ts, Losses and Expenses
Total benefi ts, losses and expenses increased $487,764, or
14%, to $3,857,527 for Twelve Months 2014 from $3,369,763
for Twelve Months 2013. Policyholder benefi ts increased
$131,965 primarily related to the LSG acquisition partially
offset by favorable loss experience in our domestic mobile
business. Selling, underwriting and general expenses increased
$355,799. Commissions, taxes, licenses and fees, of which
amortization of DAC is a component, increased $82,828
due to higher net earned premiums in our domestic service
contract and domestic mobile business. General expenses
increased $272,971 primarily due to increased administration
expenses directly related to growth in our domestic mobile
business and expenses related to the LSG acquisition. These
items were partially offset by expense savings in our domestic
credit and domestic service contract businesses.
Year Ended December 31, 2013 Compared
to the Year Ended December 31, 2012
Net Income
Segment net income increased $1,399, or 1%, to $125,152
for Twelve Months 2013 from $123,753 for Twelve Months
2012. Twelve Months 2012 included a $20,373 (after-tax)
intangible asset impairment charge in our U.K. business
and a workforce restructuring charge of $7,724 (after-
tax). Twelve Months 2013 included $15,554 (after-tax) of
workforce restructuring charges, primarily in our European
operations (in connection with our recent acquisition of LSG,
a mobile phone insurance provider business based in the
U.K.), and in our domestic credit insurance and extended
protection businesses. Excluding these items, segment net
income for Twelve Months 2013 decreased due to unfavorable
domestic mobile underwriting experience. Preneed income
also declined due to lower investment yields and higher
mortality experience.
Total Revenues
Total revenues increased $270,400, or 8%, to $3,560,373 for
Twelve Months 2013 from $3,289,973 for Twelve Months 2012
mainly due to a $204,538 increase in net earned premiums.
Domestic net earned premiums increased primarily due to
service contract growth from an existing service contract
client as well as additional vehicle service contract clients,
excluding $17,123 from a one-time assumption of a block
of business in 2012. This was partially offset by a previously
disclosed loss of a mobile client. International net earned
premiums increased mostly due to service contract growth
in Latin America and Europe, including the acquisition of
LSG, partially offset by the unfavorable impact of changes
in foreign exchange rates. Fees and other income increased
$86,298 driven primarily by new domestic mobile programs
introduced during the year and the acquisition of LSG.
Gross written premiums increased $303,404, or 7%, to
$4,376,015 for Twelve Months 2013 from $4,072,611 for
Twelve Months 2012. Gross written premiums from our
domestic service contract business increased $290,583. Gross
written premiums from our international service contract
business increased $58,142 primarily due to growth in Latin
America from new and existing clients and growth in Europe
from the acquisition of LSG and from existing clients. This
increase was partially offset by the unfavorable impact of
changes in foreign exchange rates.