Assurant 2012 Annual Report Download - page 18

ASSURANT, INC.2012 Form10-K10
PARTI
ITEM 1 Business
Outlook
A.M.Best(1) Moody’s(2) Standard&Poor’s(3)
Stable (4) (5)
Time Insurance Company A- A3 BBB
UDC Dental California A- N/A N/A
Union Security Dental Care New Jersey A- N/A N/A
Union Security Insurance Company A- A3 A-
Union Security Life Insurance Company of New York A- N/A N/A
United Dental Care of Arizona A- N/A N/A
United Dental Care of Colorado A- N/A N/A
United Dental Care of Michigan NR N/A N/A
United Dental Care of Missouri A- N/A N/A
United Dental Care of New Mexico A- N/A N/A
United Dental Care of Ohio NR N/A N/A
United Dental Care of Texas A- N/A N/A
United Dental Care of Utah NR N/A N/A
Voyager Indemnity Insurance Company A N/A N/A
(1) A.M. Best financial strength ratings range from “A++” (superior) to “S” (suspended). Ratings of A and A- fall under the “excellent” category, which is the second highest of ten ratings categories.
(2) Moody’s insurance financial strength ratings range from “Aaa” (exceptional) to “C” (extremely poor). A numeric modifier may be appended to ratings from “Aa” to “Caa” to indicate relative
position within a category, with 1 being the highest and 3 being the lowest. Ratings of A2 and A3 are considered “good” and fall within the third highest of the nine ratings categories.
(3) S&P’s insurer financial strength ratings range from “AAA” (extremely strong) to “R” (under regulatory supervision). A “+” or “-” may be appended to ratings from categories AA to CCC to
indicate relative position within a category. Ratings of A- (strong) and BBB+ (adequate) are within the third and fourth highest of the nine ratings categories, respectively.
(4) Moody’s has a stable outlook on all of the ratings of the above entities, except for John Alden Life Insurance Company and Time Insurance Company, which have a negative outlook.
(5) S&P has a positive outlook on all of the ratings of the above entities, except for John Alden Life Insurance Company, Time Insurance Company and Union Security Insurance Company, which
have a stable outlook.
Enterprise Risk Management
As an insurer, we are exposed to a wide variety of  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 identi cation;
2. High-level estimation of risk likelihood and severity;
3. Risk prioritization at the business and enterprise levels;
4. Scenario analysis and detailed modeling of likelihood and
severity 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 quanti 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, including representation from Legal, Compliance, Actuarial,
Audit, Finance, and Asset Management.  e ERMC develops risk
assessment and risk management policies and procedures. It facilitates
the identi 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 identi cation of signi cant
risks a ecting their respective business units.  ose risks which meet
our internally-de ned escalation criteria, including emerging risks, are
then reported to the ERMC.
Our Board of Directors and senior management are responsible for
overseeing signi cant enterprise risks.  e ERMC reports regularly to
the Chief Executive O cer and presents its work periodically to both
the Board of Directors and the Finance and Investment Committee.
 rough the use of regular committee meetings, business unit and
enterprise risk inventory templates, business unit monthly risk reports,
an enterprise risk dashboard, 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 modi 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 signi 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.”