Assurant 2012 Annual Report Download - page 49

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ASSURANT, INC.2012 Form10-K 41
PARTII
ITEM 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations
Recent Accounting Pronouncements—Not Yet Adopted
In July2011, the Financial Accounting Standards Board (“FASB”) issued
amendments to the other expenses guidance to address how health
insurers should recognize and classify in their income statements fees
mandated by the A ordable Care Act.  e A ordable Care Act imposes
an annual fee on health insurers for each calendar year beginning on or
after January1, 2014.  e amendments specify that the liability for the
fee should be estimated and recorded in full once the entity provides
qualifying health insurance in the applicable calendar year in which the
fee is payable with a corresponding deferred cost that is amortized to
expense ratably over the calendar year during which it is payable.  e
guidance is e ective for calendar years beginning after December31,
2013, when the fee initially becomes e ective. erefore, the Company
is required to adopt this guidance on January1, 2014.  e Company
is currently evaluating the requirements of the amendments and the
potential impact on the Company’s  nancial position and results of
operations.
Results of Operations
Assurant Consolidated
Overview
e table below presents information regarding our consolidated results of operations:
For the Years Ended December31,
2012 2011 2010
Revenues:
Net earned premiums and other considerations $ 7,236,984 $ 7,125,368 $ 7,403,039
Net investment income 713,128 689,532 703,190
Net realized gains on investments 64,353 32,580 48,403
Amortization of deferred gains on disposal of businesses 18,413 20,461 10,406
Fees and other income 475,392 404,863 362,684
Total revenues 8,508,270 8,272,804 8,527,722
Bene ts, losses and expenses:
Policyholder bene ts 3,655,404 3,749,734 3,635,999
Selling, underwriting and general expenses(1) 4,034,809 3,756,583 3,918,191
Interest expense 60,306 60,360 60,646
Total bene ts, losses and expenses 7,750,519 7,566,677 7,614,836
Segment income before provision for income taxes and goodwill impairment 757,751 706,127 912,886
Provision for income taxes 274,046 167,171 327,898
Segment income before goodwill impairment 483,705 538,956 584,988
Goodwill impairment 0 0 306,381
NET INCOME $ 483,705 $ 538,956 $ 278,607
(1) Includes amortization of DAC and VOBA and underwriting, general and administrative expenses.
Year Ended December 31, 2012 Compared to the Year
Ended December 31, 2011
Net income decreased $55,251, or 10%, to $483,705 for Twelve
Months 2012 from $538,956 for Twelve Months 2011.  e decrease is
primarily due to an $80,000 release of a capital loss valuation allowance
related to deferred tax assets during Twelve Months 2011. Partially
o setting this item was improved net income in our Assurant Health
and Assurant Employee Bene ts segments and an increase of $20,652
(after-tax) in net realized gains on investments. Twelve Months 2012
includes $162,634 (after-tax) of Assurant Specialty Property reportable
catastrophe losses, primarily due to Superstorm Sandy, compared to
$102,469 (after-tax) of reportable catastrophe losses in Twelve Months
2011. Higher catastrophe losses in Twelve Months 2012 were o set by
growth in lender-placed homeowners net earned premiums and lower
non-catastrophe losses.
Year Ended December 31, 2011 Compared to the Year
Ended December 31, 2010
Net income increased $260,349, or 93%, to $538,956 for Twelve
Months 2011 from $278,607 for Twelve Months 2010. Twelve Months
2010 included a $306,381 non-cash goodwill impairment charge.
Absent this charge, net income decreased $46,032 or 8%.  e decline
is primarily attributable to decreased net income in our Assurant
Specialty Property segment mainly due to an increase in reportable
catastrophe losses of $87,673 (after-tax) in Twelve Months 2011 and
declines in net income at our Assurant Health and Assurant Employee
Bene ts segments. Partially o setting these items was improved net
income in our Assurant Solutions segment and an $80,000 release of
a capital loss valuation allowance related to deferred tax assets during
Twelve Months 2011.