Assurant 2010 Annual Report Download - page 16

10 ASSURANT, INC.  2010 Form 10K
PART I
ITEM 1 Business
Enterprise Risk Management
As an insurer, we are exposed to a wide variety of fi nancial, operational
and other risks, as described in Item 1A, “Risk Factors.” Enterprise risk
management (“ERM”) is, therefore, a key component of our business
strategies, policies, and procedures. Our ERM process is an iterative
approach with the following key phases:
1. Risk identifi cation;
2. High-level estimation of risk likelihood and severity;
3. Risk prioritization at the business and enterprise levels;
4. Scenario analysis and quantitative impact modeling for key
enterprise risks;
5. Utilization of quantitative results and subject matter expert
opinion to help guide business strategy and decision making.
 rough our ERM process and our enterprise risk quantifi cation model
we monitor a variety of risk metrics on an ongoing basis, with a particular
focus on impact to net income (both GAAP and Statutory), company
value and the potential need for capital infusions to subsidiaries under
severe stress scenarios.
 e Company’s ERM activities are coordinated by an Enterprise
Risk Management Committee (“ERMC”), which includes managers
from across the Company with knowledge of the Company’s business
activities.  e ERMC develops risk assessment and risk management
policies and procedures. It facilitates the identifi cation, reporting
and prioritizing of risks faced by the company, and is responsible for
promoting a risk-aware culture throughout the organization.  e ERMC
also coordinates with each of the Company’s four Business Unit Risk
Committees (“BURCs”), which meet regularly and are responsible for
the identifi cation of signifi cant risks aff ecting their respective business
unit.  ose risks which meet our internally-defi ned escalation criteria,
including emerging risks, are then reported to the ERMC.
Our Board of Directors and senior management are responsible for
overseeing signifi cant enterprise risks.  e ERMC reports regularly to
the Chief Executive Offi cer and presents its work periodically to both
the Board of Directors and the Audit Committee.
 rough the use of regular committee meetings, business unit and
enterprise risk inventory templates, risk dashboards, hypothetical
scenario analysis, and quantitative modeling, the Company strives
to identify, track, quantify, communicate and manage our key risks
within prescribed tolerances.
Our ERM process continues to evolve, and, when appropriate, we
incorporate methodology changes, policy modifi cations and emerging
best practices on an ongoing basis.
Regulation
 e Company is subject to extensive federal, state and international
regulation and supervision in the jurisdictions where it does business.
Regulations vary from jurisdiction to jurisdiction.  e following is a
summary of signifi cant regulations that apply to our businesses and
is not intended to be a comprehensive review of every regulation to
which the Company is subject. For information on the risks associated
with regulations applicable to the Company, please see Item 1A, “Risk
Factors.”
U.S. Insurance Regulation
We are subject to the insurance holding company laws in the states
where our insurance companies are domiciled.  ese laws generally
require insurance companies within the insurance holding company
system to register with the insurance departments of their respective
states of domicile and to furnish reports to such insurance departments
regarding capital structure, ownership, fi nancial condition, general
business operations and intercompany transactions.  ese laws also
require that transactions between affi liated companies be fair and
equitable. In addition, certain intercompany transactions, changes of
control, certain dividend payments and transfers of assets between the
companies within the holding company system are subject to prior
notice to, or approval by, state regulatory authorities.
Like all U.S. insurance companies, our insurance subsidiaries are subject
to regulation and supervision in the jurisdictions in which they do
business. In general, this regulation is designed to protect the interests
of policyholders, and not necessarily the interests of shareholders and
other investors.
To that end, the laws of the various states and other jurisdictions
establish insurance departments with broad powers with respect to
such things as:
•licensing and authorizing companies and intermediaries (including
agents and brokers) to transact business;
•regulating capital, surplus and dividend requirements;
•regulating underwriting limitations;
• regulating companies’ ability to enter and exit markets or to provide,
terminate or cancel certain coverages;
• imposing statutory accounting and annual statement disclosure
requirements;
•approving policy forms and mandating certain insurance benefi ts;
• regulating premium rates, including the ability to disapprove or
reduce the premium rates companies may charge;
•regulating claims practices;
•regulating certain transactions between affi liates;
•regulating the content of disclosures to consumers;
•regulating the type, amounts and valuation of investments;
• mandating assessments or other surcharges for guaranty funds and
the ability to recover such assessments in the future through premium
increases; and
• regulating market conduct and sales practices of insurers and agents.