Assurant 2012 Annual Report Download - page 33

ASSURANT, INC.2012 Form10-K 25
PARTI
ITEM 1A Risk Factors
and is expected to become e ective in the coming years, reforms the
insurance industry’s solvency framework, including minimum capital
and solvency requirements, governance requirements, risk management
and public reporting standards.
We cannot predict the e ect of these or any other regulatory initiatives
on the Company at this time, but it is possible that they could have
a material adverse e ect on the Company’s results of operations and
 nancial condition.
 e insurance and related businesses in which we operate
may be subject to periodic negative publicity, which may
negatively a ect our  nancial results.
We communicate with and distribute our products and services ultimately
to individual consumers.  ere may be a perception that some of these
purchasers may be unsophisticated and in need of consumer protection.
Accordingly, from time to time, consumer advocacy groups or the media
may focus attention on our products and services, thereby subjecting us
to negative publicity.
We may also be negatively a ected if another company in one of our
industries or in a related industry engages in practices resulting in
increased public attention to our businesses. Negative publicity may
also result from judicial inquiries, unfavorable outcomes in lawsuits,
or regulatory or governmental action with respect to our products,
services and industry commercial practices. Negative publicity may
cause increased regulation and legislative scrutiny of industry practices
as well as increased litigation or enforcement action by civil and criminal
authorities. Additionally, negative publicity may increase our costs of
doing business and adversely a ect our pro tability by impeding our
ability to market our products and services, constraining our ability
to price our products appropriately for the risks we are assuming,
requiring us to change the products and services we o er, or increasing
the regulatory burdens under which we operate.
 e insurance industry can be cyclical, which may a ect
our results.
Certain lines of insurance that we write can be cyclical. Although no
two cycles are the same, insurance industry cycles have typically lasted
for periods ranging from two to ten years. In addition, the upheaval in
the global economy in recent years has been much more widespread
and has a ected all the businesses in which we operate. We expect to
see continued cyclicality in some or all of our businesses in the future,
which may have a material adverse e ect on our results of operations
and  nancial condition.
Risks Related to Our Common Stock
Given the recent economic climate, our stock may besubject
to stock price and trading volume volatility.  e price of our
common stock could  uctuate or decline signi cantly and
you could lose all or part of your investment.
In recent years, the stock markets have experienced signi cant price
and trading volume volatility. Company-speci c issues and market
developments generally in the insurance industry and in the regulatory
environment may have caused this volatility. Our stock price could
materially  uctuate or decrease in response to a number of events and
factors, including but not limited to: quarterly variations in operating
results; operating and stock price performance of comparable companies;
changes in our  nancial strength ratings; limitations on premium
levels or the ability to maintain or raise premiums on existing policies;
regulatory developments and negative publicity relating to us or our
competitors. In addition, broad market and industry  uctuations may
materially and adversely a ect the trading price of our common stock,
regardless of our actual operating performance.
Applicable laws, our certi cate of incorporation
and by-laws, and contract provisions may discourage
takeovers and business combinations that some stockholders
might consider to be in their best interests.
State laws and our certi cate of incorporation and by-laws may delay, defer,
prevent or render more di cult a takeover attempt that our stockholders
might consider in their best interests. For example, Section203 of the
General Corporation Law of the State of Delaware may limit the ability of
an “interested stockholder” to engage in business combinations with us. An
interested stockholder is de ned to include persons owning 15% or more
of our outstanding voting stock.  ese provisions may also make it di cult
for stockholders to replace or remove our directors, facilitating director
enhancement that may delay, defer or prevent a change in control. Such
provisions may prevent our stockholders from receiving the bene t from any
premium to the market price of our common stock o ered by a bidder in
a takeover context. Even in the absence of a takeover attempt, the existence
of these provisions may adversely a ect the prevailing market price of our
common stock if they are viewed as discouraging future takeover attempts.
Our certi cate of incorporation or by-laws also contain provisions that
permit our Board of Directors to issue one or more series of preferred stock,
prohibit stockholders from  lling vacancies on our Board of Directors,
prohibit stockholders from calling special meetings of stockholders and from
taking action by written consent, and impose advance notice requirements
for stockholder proposals and nominations of directors to be considered
at stockholder meetings.
Additionally, applicable state insurance laws may require prior approval of an
application to acquire control of a domestic insurer. State statutes generally
provide that control over a domestic insurer is presumed to exist when any
person directly or indirectly owns, controls, has voting power over, or holds
proxies representing, 10% or more of the domestic insurer’s voting securities.
However, the State of Florida, in which some of our insurance subsidiaries
are domiciled, sets this threshold at 5%. Because a person acquiring 5% or
more of our common stock would indirectly control the same percentage of
the stock of our Florida subsidiaries, the insurance change of control laws
of Florida would apply to such transaction and at 10% the laws of many
other states would likely apply to such a transaction. Prior to granting such
approval, a state insurance commissioner will typically consider such factors
as the  nancial strength of the applicant, the integrity of the applicant’s
board of directors and executive o cers, the applicant’s plans for the future
operations of the domestic insurer and any anti-competitive results that may
arise from the consummation of the acquisition of control.