Assurant 2012 Annual Report Download - page 56

ASSURANT, INC.2012 Form10-K48
PARTII
ITEM 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations
Assurant Employee Benefi ts
Overview
 e table below presents information regarding Assurant Employee Bene ts’ segment results of operations:
For the Years Ended December31,
2012 2011 2010
Revenues:
Net earned premiums and other considerations $ 1,014,264 $ 1,064,023 $ 1,101,395
Net investment income 128,485 129,640 132,388
Fees and other income 28,468 25,382 25,152
Total revenues 1,171,217 1,219,045 1,258,935
Bene ts, losses and expenses:
Policyholder bene ts 693,067 767,723 766,050
Selling, underwriting and general expenses 390,042 386,072 395,737
Total bene ts, losses and expenses 1,083,109 1,153,795 1,161,787
Segment income before provision for income taxes 88,108 65,250 97,148
Provision for income taxes 30,049 22,175 33,596
SEGMENT NET INCOME $ 58,059 $ 43,075 $ 63,552
Net earned premiums and other considerations:
By major product grouping:
Group dental $ 394,413 $ 412,339 $ 420,439
Group disability(3) 409,757 449,293 488,411
Group life 188,246 193,914 191,892
Group vision and supplemental products 21,848 8,477 653
TOTAL $ 1,014,264 $ 1,064,023 $ 1,101,395
Ratios:
Loss ratio(1) 68.3% 72.2% 69.6%
Expense ratio(2) 37.4% 35.4% 35.1%
(1) The loss ratio is equal to policyholder benefits divided by net earned premiums and other considerations.
(2) The expense ratio is equal to selling, underwriting and general expenses divided by net earned premiums and other considerations and fees and other income.
(3) 2011 includes $4,936 of single premium on closed blocks of business. For closed blocks of business we receive a single, upfront premium and in turn we record a virtually equal amount
of claim reserves. We then manage the claims using our claim management practices.
Year Ended December 31, 2012 Compared to the Year
Ended December 31, 2011
Net Income
Segment net income increased $14,984, or 35%, to $58,059 for Twelve
Months 2012 from $43,075 for Twelve Months 2011. Results for Twelve
Months 2012 were driven primarily by favorable loss experience across
most major product lines.
Total Revenues
Total revenues decreased 4% to $1,171,217 for Twelve Months 2012
from $1,219,045 for Twelve Months 2011. Excluding $4,936 of single
premium transactions in Twelve Months 2011, Twelve Months 2012
net earned premiums decreased $44,823 or 4%.  e decrease in net
earned premiums was primarily driven by the loss of two assumed
disability clients which decreased net earned premiums $36,161.
Total Benefi ts, Losses and Expenses
Total bene ts, losses and expenses decreased 6% to $1,083,109 for
Twelve Months 2012 from $1,153,795 for Twelve Months 2011.
During Twelve Months 2012 policyholder bene ts were reduced
$5,061 based on the results of our annual reserve adequacy studies
compared to $10,500 in Twelve Months 2011. Excluding the impact of
the annual reserve adequacy studies, the loss ratio decreased to 68.8%
from 73.1%, primarily driven by favorable disability, life and dental
loss experience.  e expense ratio increased to 37.4% from 35.4%
primarily as a result of decreased net earned premiums.
Year Ended December 31, 2011 Compared to the Year
Ended December 31, 2010
Net Income
Segment net income decreased 32% to $43,075 for Twelve Months
2011 from $63,552 for Twelve Months 2010. Lower results were
primarily attributable to less favorable disability and life insurance loss
experience, partially o set by improved dental insurance experience.
Twelve Months 2011 results include a decrease in the reserve interest
discount rate primarily for new long-term disability claims as well as