Assurant 2012 Annual Report Download - page 16

ASSURANT, INC.2012 Form10-K8
PARTI
ITEM 1 Business
than one million health care providers and 7,500 hospitals nationwide.
Access to this network has enhanced the competitiveness of Assurant
Health for individuals, families, and small groups.
Marketing and Distribution
Our health insurance products are principally marketed through a
network of independent agents. We also market through a variety of
exclusive and non-exclusive national account relationships and direct
distribution channels. Since 2000, we have had an exclusive national
marketing agreement with a major mutual insurance company whose
captive agents market our individual health products.  is agreement
expires in September2018 and allows either company to exit the
agreement with six months notice. We provide many of our products
through a well-known association’s administrator under an agreement
that automatically renews annually.
Underwriting and Risk Management
Following the passage of the A ordable Care Act, many of the traditional
risk management techniques used to manage the risks of providing
health insurance have become less relevant.  e A ordable Care Act
places several constraints on underwriting and mandates minimum
levels of bene ts for most medical coverage. It also imposes minimum
loss ratio standards on many of our policies. Assurant Health has taken
steps to adjust its products, pricing and business practices to comply
with the new requirements.
Please see “Management’s Discussion and Analysis—Assurant Health”
and “Risk Factors—Risks Related to our Industry—Reform of the
health insurance industry could materially reduce the pro tability of
certain of our businesses” for further details.
Assurant Employee Benefi ts
For the Years Ended
December31, 2012 December31, 2011
Net Earned Premiums and Other Considerations:
Group disability(1) $ 409,757 $ 449,293
Group dental 394,413 412,339
Group life 188,246 193,914
Group vision and supplemental products 21,848 8,477
TOTAL $ 1,014,264 $ 1,064,023
Segment net income $ 58,059 $ 43,075
Loss ratio(2) 68.3% 72.2%
Expense ratio(3) 37.4% 35.4%
Equity(4) $ 578,757 $ 616,185
(1) Includes single premiums for closed blocks.
(2) The loss ratio is equal to policyholder benefits divided by net earned premiums and other considerations.
(3) 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.)
(4) Equity excludes accumulated other comprehensive income.
Products and Services
Assurant Employee Bene ts o ers group disability, dental, vision, life
and supplemental products as well as individual dental products.  e
group products are o 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”).
We focus on the needs of the small to mid-size employer. We believe
that our group risk selection expertise, administrative systems, and
strong relationships with brokers who work primarily with small
to mid-size businesses give us a competitive advantage versus other
carriers in this market.
Group Disability
Group disability insurance provides partial replacement of lost earnings
for insured employees who become disabled, as de 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 bene 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 bene ts.
Success in the group dental business is heavily dependent on a strong
provider network. Assurant Employee Bene ts owns and operates Dental
Health Alliance, L.L.C. (“DHA”), a leading dental Preferred Provider
Organization (“PPO”) network. An agreement with Aetna allows us
to use Aetna’s Dental Access ® network, which we believe increases
the attractiveness of our products in the marketplace. In 2012, we
announced a new network access agreement with United Concordia
Dental that provides Assurant members access to United Concordia’s
Advantage Plus network of providers in conjunction with the DHA
network, further increasing the overall network size and strength of
Assurant Employee Bene ts dental o ering.