Assurant 2012 Annual Report Download - page 23

ASSURANT, INC.2012 Form10-K 15
PARTI
ITEM 1A Risk Factors
We have our own sales representatives whose distribution process varies
by segment. We depend in large part on our sales representatives to
develop and maintain client relationships. Our inability to attract and
retain e ective sales representatives could materially adversely a ect
our results of operations and  nancial condition.
General economic,  nancial market and political
conditions may materially adversely a ect
ourresults ofoperations and  nancial conditions.
Particularly, di cult conditions in  nancial markets
andtheglobal economy may negatively a ect the results
ofallofourbusiness segments.
General economic,  nancial market and political conditions may have
a material adverse e ect on our results of operations and  nancial
condition. Limited availability of credit, deteriorations of the global
mortgage and real estate markets, declines in consumer con dence
and consumer spending, increases in prices or in the rate of in ation,
continuing high unemployment, or disruptive geopolitical events could
contribute to increased volatility and diminished expectations for the
economy and the markets, including the market for our stock.  ese
conditions could also a ect all of our business segments. Speci cally,
during periods of economic downturn:
• individuals and businesses may (i)choose not to purchase our
insurance products, warranties and other related products and services,
(ii)terminate existing policies or contracts or permit them to lapse,
(iii)choose to reduce the amount of coverage they purchase, and
(iv)in the case of business customers of Assurant Health or Assurant
Employee Bene ts, have fewer employees requiring insurance coverage
due to reductions in their sta ng levels;
• clients are more likely to experience  nancial distress or declare
bankruptcy or liquidation which could have an adverse impact on the
remittance of premiums from such clients as well as the collection of
receivables from such clients for items such as unearned premiums;
• disability insurance claims and claims on other specialized insurance
products tend to rise;
• there is a higher loss ratio on credit card and installment loan insurance
due to rising unemployment and disability levels;
•there is an increased risk of fraudulent insurance claims;
• insureds tend to increase their utilization of health and dental bene ts
if they anticipate becoming unemployed or losing bene ts; and
• substantial decreases in loan availability and origination could reduce
the demand for credit insurance that we write or debt cancellation or
debt deferment products that we administer, and on the placement
of hazard insurance under our lender-placed insurance programs.
In recent years, the global recession and disruption of the  nancial
markets have heightened concerns over the sovereign debt crisis in
Europe, particularly with respect to capital markets access and the
solvency of certain European Union (“EU”) member states, including
Portugal, Ireland, Italy, Greece and Spain, and of  nancial institutions
that have signi cant direct or indirect exposure to debt issued by these
countries. Certain major rating agencies have downgraded the sovereign
debt of Greece, Portugal, Ireland, Italy and Spain.  e issues arising
out of the sovereign debt crisis may transcend Europe. In addition,
uncertainty has arisen with respect to the euro and membership of
the EU. Together, these issues could cause investors to lose con dence
in European  nancial institutions and the stability of EU member
economies, and likewise a ect U.S.  nancial institutions, the stability
of the global  nancial markets and any economic recovery. Additionally,
in the U.S., continued uncertainty surrounding the Federal Reserve’s
monetary policy and the ongoing debate over the U.S. federal debt
ceiling could adversely a ect the U.S. and/or global economy.
General in ationary pressures may a ect the costs of medical and dental
care, as well as repair and replacement costs on our real and personal
property lines, increasing the costs of paying claims. In ationary pressures
may also a ect the costs associated with our preneed insurance policies,
particularly those that are guaranteed to grow with the Consumer
Price Index (or“CPI”). Conversely, de ationary pressures may a ect
the pricing of our products.
Our earnings and book value per share could be materially
a ected by an impairment of goodwill or other intangible
assets.
Goodwill represented $640,714 of our $28,946,607 in total assets as
of December31, 2012. We review our goodwill annually in the fourth
quarter for impairment or more frequently if circumstances indicating
that the asset may be impaired exist. Such circumstances could include a
sustained signi cant decline in our share price, a decline in our actual or
expected future cash  ows or income, a signi cant adverse change in the
business climate, or slower growth rates, among others. Circumstances
such as those mentioned above could trigger an impairment of some or
all of the remaining goodwill on our balance sheet, which could have
a material adverse e ect on our pro tability and book value per share.
For more information on our annual goodwill impairment testing and
the goodwill of our segments, please see “Item7—MD&A—Critical
Factors A ecting Results—Value and Recoverability of Goodwill.” In
addition, other intangible assets collectively represented $262,994 of
our total assets as of December31, 2012, and an impairment of these
other intangible assets could have a material adverse e ect on our
pro tability and book value per share.
Competitive pressures or regulators could force us to reduce
our rates.
 e premiums we charge are subject to review by regulators. If they
consider our loss ratios to be too low, they could require us to reduce
our rates. In addition, competitive conditions may put pressure on our
rates. In either case, signi cant rate reductions could materially reduce
our pro tability. For more information about risks related to certain
matters, please see “Risks Related to our Industry—Our business is
subject to risks related to litigation and regulatory actions” contained
elsewhere in this section.
Catastrophe losses, including man-made catastrophe
losses, could materially reduce our pro tability and have
a material adverse e ect on our results of operations and
 nancial condition.
Our insurance operations expose us to claims arising out of catastrophes,
particularly in our homeowners, life and other personal lines of business.
We have experienced, and expect to experience, catastrophe losses that
materially reduce our pro tability or have a material adverse e ect on
our results of operations and  nancial condition. Catastrophes can