Assurant 2014 Annual Report Download - page 62

48 ASSURANT, INC. – 2014 Form 10-K
PART II
ITEM 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations
Preneed face sales increased $144,181 or 17%, to $1,007,915
for Twelve Months 2013 from $863,734 for Twelve Months
2012. This increase was mostly attributable to growth from
our exclusive distribution partnership with SCI, the largest
funeral provider in North America.
Total Benefi ts, Losses and Expenses
Total benefi ts, losses and expenses increased $261,644, or
8%, to $3,369,763 for Twelve Months 2013 from $3,108,119
for Twelve Months 2012. Policyholder benefi ts increased
$55,371 due to unfavorable loss experience in our domestic
service contract business and an increase in Europe due to
policyholder benefi ts associated with the acquisition of LSG.
Selling, underwriting and general expenses increased $206,273.
Commissions, taxes, licenses and fees, of which amortization
of DAC is a component, increased $192,044 due to earnings in
our domestic service contract and international businesses.
General expenses increased $14,229 primarily due to increased
administration expenses directly related to growth in our
domestic mobile business, workforce restructuring charges,
primarily in our European operations and acquisition-related
expenses. These items were partially offset by expense
savings in our domestic credit and domestic service contract
businesses.
Assurant Specialty Property
Overview
The table below presents information regarding Assurant Specialty Property’s segment results of operations:
For the Years Ended December 31,
2014 2013 2012
Revenues:
Net earned premiums $ 2,506,097 $ 2,380,044 $ 2,054,041
Net investment income 101,908 98,935 103,327
Fees and other income 301,048 133,135 98,621
Total revenues 2,909,053 2,612,114 2,255,989
Benefi ts, losses and expenses:
Policyholder benefi ts 1,085,339 890,409 949,157
Selling, underwriting and general expenses 1,305,286 1,068,273 844,288
Total benefi ts, losses and expenses 2,390,625 1,958,682 1,793,445
Segment income before provision for income taxes 518,428 653,432 462,544
Provision for income taxes 176,671 229,846 157,593
SEGMENT NET INCOME $ 341,757 $ 423,586 $ 304,951
Net earned premiums:
Homeowners (lender-placed and voluntary) $ 1,743,965 $ 1,678,172 $ 1,418,061
Manufactured housing (lender-placed and voluntary) 237,576 226,058 207,675
Other(1) 524,556 475,814 428,305
TOTAL $ 2,506,097 $ 2,380,044 $ 2,054,041
Ratios:
Loss ratio(2) 43.3% 37.4% 46.2%
Expense ratio(3) 46.5% 42.5% 39.2%
Combined ratio(4) 85.2% 77.9% 83.3%
(1) This primarily includes lender-placed flood, miscellaneous specialty property and multi-family housing insurance products.
(2) The loss ratio is equal to policyholder benefits divided by net earned premiums.
(3) The expense ratio is equal to selling, underwriting and general expenses divided by net earned premiums and fees and other income.
(4) The combined ratio is equal to total benefits, losses and expenses divided by net earned premiums and fees and other income.
Regulatory Matters
In January 2015, the New York Department of Financial
Services (“NYDFS”) issued regulations regarding tracking
costs associated with lender placed insurance rates. We are
currently assessing the new regulations, however, at this
time we believe that they will not have a material fi nancial
impact on our lender-placed insurance business.
As previously disclosed, on March 21, 2013, the Company
and two of its wholly owned subsidiaries, American Security
Insurance Company (“ASIC”) and American Bankers Insurance
Company of Florida (“ABIC”), reached an agreement with
the NYDFS regarding the Company’s lender-placed insurance
business in the State of New York. Under the terms of the
agreement, and without admitting or denying any wrongdoing,