Assurant 2011 Annual Report Download - page 134

ASSURANT, INC.2011 Form10-KF-58
25 Commitments and Contingencies
One of the Company’s subsidiaries, American Reliable Insurance
Company (“ARIC”), participated in certain excess of loss reinsurance
programs in the London market and, as a result, reinsured certain
personal accident, ransom and kidnap insurance risks from 1995
to 1997. ARIC and a foreign a liate ceded a portion of these risks
to retrocessionaires. ARIC ceased reinsuring such business in 1997.
However, certain disputes arose regarding these programs.  e disputes
generally involved multiple layers of reinsurance, and allegations that the
reinsurance programs involved interrelated claims “spirals” devised to
disproportionately pass claims losses to higher-level reinsurance layers.
 e companies involved in these programs, including ARIC, have
resolved many of these disputes.  e disputes involving ARIC and an
a liate, Assurant General Insurance Limited (formerly Bankers Insurance
Company Limited) (“AGIL”), for the 1995 and 1996 program years,
were the subject of working group settlements negotiated with other
market participants. For the 1995 program year, the participants have
negotiated a  nal commutation agreement that extinguishes any future
liability between the participants. For the 1996 program year, four of
the  ve participants (representing approximately 95% of the exposure)
have negotiated a  nal commutation agreement that extinguishes any
future liability between the participants. For the 1997 program year
all disputes and litigation have been resolved, but some routine claims
activity continues with individual reinsureds.
On the basis of information currently available, the Company believes
that the existing loss accruals related to these programs are adequate.
However, the inherent uncertainty of resolving these matters, including
the uncertainty of estimating whether any settlements the Company
may enter into in the future would be on favorable terms, makes it
di cult to predict the outcomes.
In the course of implementing procedures for compliance with the
new mandatory reporting requirements under the Medicare, Medicaid,
and SCHIP Extension Act of 2007, Assurant Health identi ed a
possible ambiguity in the Medicare Secondary Payer Act and related
regulations about which the Company subsequently had a meeting
with representatives of the Centers for Medicare and Medicaid Services
(“CMS”). Assurant Health believes that its historical interpretation
and application of such laws and regulations is correct and requested
that CMS issue a written determination to that e ect. Subsequently,
CMS informed counsel for Assurant Health that it disagrees with some
of Assurant Health’s legal positions and requested another meeting to
discuss the matter further, but, as of this date, no such meeting has
been scheduled.  e Company does not believe that any loss relating
to this issue is probable, nor can the Company make any estimate of
any possible loss or range of possible loss associated with this issue.
On February7, 2012, the Company and two of its insurance company
subsidiaries (American Security Insurance Company and American
Bankers Insurance Company of Florida) received subpoenas from the
New York Department of Financial Services (the “NYDFS”) regarding
its lender-placed insurance business and related document retention
practices.
 e Company received the subpoenas as it was completing its production
of information concerning the lender-placed business requested by
the NYDFS in October 2011. Although the Company respectfully
disagrees with the NYDFS’s position concerning its document retention
practices, the Company has modi ed its practices in accordance with
such interpretation pending resolution of the matter.
 e Company is committed to cooperating fully and continuing to
work with the NYDFS to resolve this matter.