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ASSURANT, INC.2012 Form10-K 47
PARTII
ITEM 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations
e Aff ordable Care Act
Some provisions of the A ordable Care Act have taken e ect already,
and other provisions will become e ective at various dates before the
end of 2014. In December2010, HHS issued a number of interim  nal
regulations with respect to the A ordable Care Act. In December2011,
HHS issued its  nal regulation regarding the MLR. In November2012,
HHS issued proposed regulations for 2014 regarding the risk adjustment,
reinsurance, and risk corridors programs; cost-sharing reductions;
user fees for the federally-facilitated Exchange; advance payments of
the premium tax credit, a federally-facilitated Small Business Health
Option Program; and the medical loss ratio program. HHS has also
issued various technical corrections and FAQ’s. For more information,
see Item1A, “Risk Factors—Risk related to our industry—Reform of
the health care industry could materially reduce the pro tability of
certain of our businesses” in this report.
Year Ended December 31, 2012 Compared to the Year
Ended December 31, 2011
Net Income
Segment net income increased $11,114 or 27% to $52,000 for Twelve
Months 2012 from $40,886 for Twelve Months 2011.  e increase was
primarily attributable to $13,856 (after-tax) of additional investment
income from a real estate joint venture partnership and lower expenses
associated with organizational and operational expense reduction
initiatives. Partially o setting these items were policy lapses and lower
sales of new policies. Twelve Months 2011 results included a $4,780
(after-tax) reimbursement from a pharmacy services provider.
Total Revenues
Total revenues decreased $114,561, or 6%, to $1,684,285 for Twelve
Months 2012 from $1,798,846 for Twelve Months 2011. Net earned
premiums and other considerations from our individual markets
business decreased $72,569, or 6%, due to a decline in traditional
major medical policies, partially o set by increased sales of lower
priced supplemental and a ordable choice products and premium
rate increases. Net earned premiums and other considerations from
our small employer group business decreased $56,272, or 12%, due to
lower sales, partially o set by premium rate increases. Partially o setting
these declines was increased net investment income of $18,397, due
to income from a real estate joint venture partnership.
Total Benefi ts, Losses and Expenses
Total bene ts, losses and expenses decreased $136,528, or 8%, to
$1,595,178 for Twelve Months 2012 from $1,731,706 for Twelve
Months 2011. Policyholder bene ts decreased $96,952, or 8%, and
the bene t loss ratio decreased to 73.9% from 74.0%.  e decrease in
policyholder bene ts was primarily attributable to a decline in business
volume, partially o set by higher loss experience.  e slight decrease
in the bene t loss ratio re ects a growing proportion of business with
lower loss ratios, partially o set by higher loss experience on traditional
major medical policies. Selling, underwriting and general expenses
decreased $39,576, or 9%, primarily due to reduced employee-related
expenses, lower technology and service provider costs, and reduced
commissions due to lower sales of traditional major medical policies.
Year Ended December 31, 2011 Compared to the Year
Ended December 31, 2010
Net Income
Segment net income decreased $13,988, or 25%, to $40,886 for Twelve
Months 2011 from $54,874 for Twelve Months 2010.  e decrease
was partly attributable to accrued premium rebates of $27,033 (after-
tax) associated with the MLR requirement included in the A ordable
Care Act for our comprehensive health coverage business. Twelve
Months 2011 results include $12,900 (after-tax) of favorable reserve
development relative to 2010 year-end reserves, a $4,780 (after-tax)
reimbursement from a pharmacy services provider related to prior year
activity, reduced expenses associated with organizational and operational
expense initiatives, and lower commissions due to agent compensation
changes and lower sales of new policies. Twelve Months 2010 results
included restructuring charges of $8,721 (after-tax) and a $17,421
(after-tax) bene t from a reserve release related to a legal settlement.
Total Revenues
Total revenues decreased $153,949, or 8%, to $1,798,846 for Twelve
Months 2011 from $1,952,795 for Twelve Months 2010. Net earned
premiums and other considerations from our individual markets
business decreased $123,558, or 9%, due to a decline in traditional
individual medical product sales, caused by the transition to supplemental
and a ordable choice products and changes in agent commissions,
resulting from the A ordable Care Act.  ese decreases were partially
o set by premium rate increases and increased sales of supplemental
and a ordable choice products. Net earned premiums and other
considerations before rebates from our small employer group business
decreased $15,464, or 3%, due to lower sales and a continued high
level of policy lapses, partially o set by premium rate increases. Twelve
Months 2011 included a premium rebate accrual of $41,589 associated
with the MLR requirement included in the A ordable Care Act for
our comprehensive health coverage business.  ere was no premium
rebate accrual in Twelve Months 2010 as the MLR requirement was
not yet in e ect.
Total Benefi ts, Losses and Expenses
Total bene ts, losses and expenses decreased $134,982, or 7%, to
$1,731,706 for Twelve Months 2011 from $1,866,688 for Twelve
Months 2010. Policyholder bene ts decreased $31,869, or 2%, however,
the bene t loss ratio increased to 74.0% from 69.9%.  e decrease in
policyholder bene ts was primarily attributable to favorable reserve
development relative to 2010 year-end reserves, a decline in business
volume, partially o set by a $26,802 bene t from a reserve release
related to a legal settlement in Twelve Months 2010.  e increase in
the bene t loss ratio was primarily attributable to the inclusion of
premium rebates in net earned premiums and other considerations, and
a disproportionate decline in bene ts in relation to the decrease in net
earned premiums and other considerations. Selling, underwriting and
general expenses decreased $103,113, or 18%, primarily due to reduced
employee-related and advertising expenses and reduced commissions
due to agent compensation changes and lower sales of new policies.