Assurant 2013 Annual Report Download - page 19

ASSURANT, INC. – 2013 Form 10-K 7
PART I
ITEM 1 Business
Lender-placed and voluntary manufactured
housing insurance
Manufactured housing insurance is offered on a lender-placed
and voluntary basis. Lender-placed insurance is issued after
an insurance tracking process similar to that described above.
The tracking is performed by Assurant Specialty Property using
a proprietary insurance tracking administration system, or by
the lenders themselves. A number of manufactured housing
retailers in the U.S. use our proprietary premium rating
technology to assist them in selling property coverage at the
point of sale.
Other insurance
We believe there are opportunities to apply our specialty
insurance expertise to other products and services. We have
developed products and services in adjacent and emerging
markets, such as lender-placed fl ood insurance, multi-family
housing insurance and property preservation services. In
September 2013, we acquired Field Asset Services (“FAS”),
a company that provides property preservation, restoration
and inspection services. We believe this acquisition will allow
us to strengthen and diversify our property business. We also
act as an administrator for the U.S. Government under the
voluntary National Flood Insurance Program, for which we
earn a fee for collecting premiums and processing claims.
This business is 100% reinsured to the U.S. Government.
Marketing and Distribution
Assurant Specialty Property establishes long-term relationships
with leading mortgage lenders and servicers. The majority of
our lender-placed agreements are exclusive. Typically, these
agreements have terms of three to fi ve years and allow us
to integrate our systems with those of our clients.
We offer our manufactured housing insurance programs
primarily through manufactured housing lenders and retailers,
along with independent specialty agents. The independent
specialty agents distribute fl ood products and miscellaneous
specialty property products. Multi-family housing products
are distributed primarily through property management
companies and affi nity marketing partners.
Underwriting and Risk Management
Our lender-placed homeowners insurance program and
certain of our manufactured housing products are not
underwritten on an individual policy basis. Contracts with
our clients require us to issue these policies automatically
when a borrower’s insurance coverage is not maintained. These
products are priced to factor in the additional underwriting
risk from ensuring all client properties are provided continuous
insurance coverage. We monitor pricing adequacy based on
a variety of factors and adjust pricing as required, subject
to regulatory constraints.
Because several of our product lines (such as homeowners,
manufactured housing, and other property policies) are
exposed to catastrophe risks, we purchase reinsurance
coverage to protect the capital of Assurant Specialty Property
and to mitigate earnings volatility. Our reinsurance program
generally incorporates a provision to allow the reinstatement
of coverage, which provides protection against the risk of
multiple catastrophes in a single year.
Assurant Health
For the Years Ended
December 31, 2013
December 31, 2012
Net earned premiums:
Individual $ 1,174,141 $ 1,178,878
Small employer group 407,266 410,581
TOTAL $ 1,581,407 $ 1,589,459
Fees and other income $ 29,132 $ 30,518
Segment net income $ 5,857 $ 52,000
Loss ratio(1) 73.9% 73.9%
Expense ratio(2) 27.0% 26.0%
Combined ratio(3) 99.6% 98.5%
Equity(4) $ 295,206 $ 304,166
(1) The loss ratio is equal to policyholder benefits divided by net earned premiums.
(2) The expense ratio is equal to selling, underwriting and general expenses divided by net earned premiums and fees and other income.
(3) The combined ratio is equal to total benefits, losses and expenses divided by net earned premiums and fees and other income.
(4) Equity excludes accumulated other comprehensive income.