Assurant 2010 Annual Report Download - page 14

8ASSURANT, INC.  2010 Form 10K
PART I
ITEM 1 Business
Assurant Employee Benefi ts
For the Years Ended
December 31, 2010 December 31, 2009
Net Earned Premiums and Other Considerations:
Group dental $ 420,690 $ 425,288
Group disability 488,813 434,381
Group life 191,892 192,468
TOTAL $ 1,101,395 $ 1,052,137
Segment net income $ 63,538 $ 42,156
Loss ratio (1) 69.6 % 72.0 %
Expense ratio (2) 35.1 % 36.4 %
Equity (3) $ 582,574 $ 537,041
(1) The loss ratio is equal to policyholder benefits divided by net earned premiums and other considerations.
(2) The expense ratio is equal to selling, underwriting and general expenses divided by net earned premiums and other considerations and fees and other income. (Fees and other income
are not included in the above table)
(3) Equity excludes accumulated other comprehensive income.
Products and Services
We focus on the needs of businesses with fewer than 500 employees.
We believe that our small group risk selection expertise, administrative
systems, and strong relationships with brokers who work primarily with
small businesses give us a competitive advantage versus other carriers.
We off er group disability, dental, vision, life and supplemental worksite
products as well as individual dental products.  e group products are
off ered with funding options ranging from fully employer-paid to fully
employee-paid (voluntary). In addition, we reinsure disability and life
products through our wholly owned subsidiary, Disability Reinsurance
Management Services, Inc. (“DRMS”).
Group Disability
Group disability insurance provides partial replacement of lost earnings
for insured employees who become disabled, as defi ned by their plan
provisions. Our products include both short- and long-term disability
coverage options. We also reinsure disability policies written by other
carriers through our DRMS subsidiary.
Group Dental
Dental benefi t plans provide funding for necessary or elective dental
care. Customers may select a traditional indemnity arrangement, a PPO
arrangement, or a prepaid or managed care arrangement. Coverage is
subject to deductibles, coinsurance and annual or lifetime maximums.
In a prepaid plan, members must use participating dentists in order
to receive benefi ts.
Success in the group dental business is heavily dependent on a strong
provider network. Assurant Employee Benefi ts owns and operates Dental
Health Alliance, L.L.C., a leading dental PPO network. We also have
an agreement with Aetna, extending through 2012, that allows us to
use Aetna’s Dental Access ® network, which we believe increases the
attractiveness of our products in the marketplace.
Group Vision
Fully-insured vision coverage is off ered through our agreement with
Vision Service Plan, Inc. (“VSP”), a leading national supplier of vision
insurance. Our plans cover eye exams, glasses, and contact lenses and
are usually sold in combination with one or more of our other products.
Group Life
Group term life insurance provided through the workplace provides
benefi ts in the event of death. We also provide accidental death and
dismemberment (“AD&D”) insurance. Insurance consists primarily of
renewable term life insurance with the amount of coverage provided
being either a fl at amount, a multiple of the employee’s earnings, or a
combination of the two. We also reinsure life policies written by other
carriers through DRMS.
Supplemental Worksite Products
In addition to the traditional voluntary products, we provide group
critical illness, cancer, accident, and gap insurance.  ese products are
generally paid for by the employee through payroll deduction, and the
employee is enrolled in the coverage(s) at the worksite.
Marketing and Distribution
Our products and services are distributed through a group sales
force located in 34 offi ces near major metropolitan areas. Our sales
representatives distribute our products and services through independent
brokers and employee-benefi ts advisors. Daily account management is
provided through the local sales offi ces, further supported by regional
sales support centers and a home offi ce customer service department.
Compensation of brokers in some cases includes an annual performance
incentive, based on volume and retention of business.
DRMS provides turnkey group disability and life insurance solutions to
insurance carriers that want to supplement their core product off erings.
Our services include product development, state insurance regulatory
fi lings, underwriting, claims management, and other functions typically
performed by an insurer’s back offi ce. Assurant Employee Benefi ts
reinsures the risks written by DRMS’ clients, with the clients generally
retaining shares ranging from 10% to 60% of the risk.