Assurant 2013 Annual Report Download - page 34

ASSURANT, INC. – 2013 Form 10-K22
PART I
ITEM 1A Risk Factors
Unanticipated changes in tax provisions,
changes in tax laws or exposure to additional
income tax liabilities could materially and
adversely affect our results.
In accordance with applicable income tax guidance, the
Company must determine whether its ability to realize the
value of its deferred tax asset is “more likely than not.”
Under the income tax guidance, a deferred tax asset should
be reduced by a valuation allowance if, based on the weight
of all available evidence, it is more likely than not that some
portion of the deferred tax asset will not be realized. The
realization of deferred tax assets depends upon the existence
of suffi cient taxable income of the same character during
the carryback or carryforward periods.
In determining the appropriate valuation allowance, management
made certain judgments relating to recoverability of deferred
tax assets, use of tax loss and tax credit carryforwards, levels
of expected future taxable income and available tax planning
strategies. The assumptions in making these judgments are
updated periodically on the basis of current business conditions
affecting the Company and overall economic conditions. These
management judgments are therefore subject to change due
to factors that include, but are not limited to, changes in
our ability to realize suffi cient taxable income of the same
character in the same jurisdiction or in our ability to execute
other tax planning strategies. Management will continue to
assess and determine the need for, and the amount of, the
valuation allowance in subsequent periods. Any change in
the valuation allowance could have a material impact on our
results of operations and fi nancial condition.
Changes in tax laws could increase our corporate taxes or
reduce our deferred tax assets. Certain proposed changes
could have the effect of increasing our effective tax rate
by reducing deductions or increasing income inclusions.
Conversely, other changes, such as lowering the corporate
tax rate, could reduce the value of our deferred tax assets.
Failure to protect our clients’ confi dential
information and privacy could harm our
reputation, cause us to lose customers,
reduce our profi tability and subject us to
fi nes, litigation and penalties, and the costs
of compliance with privacy and security laws
could adversely affect our business.
Our businesses are subject to a variety of privacy regulations
and confi dentiality obligations. If we do not comply with
state and federal privacy and security laws and regulations,
or contractual provisions, requiring us to protect confi dential
information and provide notice to individuals whose
information is improperly disclosed, we could experience
adverse consequences, including loss of customers and related
revenue, regulatory problems (including fi nes and penalties),
harm to our reputation and civil litigation, which could
adversely affect our business and results of operations. As
have other entities in the insurance industry, we have incurred
and will continue to incur substantial costs in complying with
the requirements of applicable privacy and security laws.
For more information on the privacy and security laws that
apply to us, please see Item 1, “Business—Regulation.”
The failure to effectively maintain and
modernize our information systems could
adversely affect our business.
Our business is dependent upon our ability to maintain
the effectiveness of existing technology systems, enhance
technology to support the Company’s business in an
effi cient and cost-effective manner, and keep current with
technological advances, evolving industry and regulatory
standards and customer needs. In addition, our ability
to keep our systems integrated with those of our clients
is critical to the success of our business. If we do not
effectively maintain our systems and update them to address
technological advancements, our relationships and ability to
do business with our clients may be adversely affected. We
could also experience other adverse consequences, including
unfavorable underwriting and reserving decisions, internal
control defi ciencies and security breaches resulting in loss
of data. System development projects may be more costly
or time-consuming than anticipated and may not deliver
the expected benefi ts upon completion.
Failure to successfully manage outsourcing
activities could adversely affect our business.
As we continue to improve operating effi ciencies across the
business, we have outsourced and may outsource selected
functions to third parties. We take steps to monitor and
regulate the performance of these independent third parties
to whom the Company has outsourced these functions. If
these third parties fail to satisfy their obligations to the
Company as a result of their performance, changes in their
operations, fi nancial condition or other matters beyond our
control, the Company’s operations, information, service
standards and data could be compromised. In addition, to
the extent the Company outsources selected services or
functions to third parties outside the U.S., the Company
is exposed to the risks that accompany operations in a
foreign jurisdiction, including international economic
and political conditions, foreign laws and fl uctuations in
currency values and, potentially, increased risk of data
breaches. For more information on the risks associated
with outsourcing to international third parties, please see
Item 1A, “Risk Factors—Risks Related to Our Company—We
face risks associated with our international operations.” If
third party providers do not perform as anticipated, we may
not fully realize the anticipated economic and other benefi ts
of this outsourcing, which could adversely affect our results
of operations and fi nancial condition.
System security risks, data protection breaches
and cyber-attacks could adversely affect our
business and results of operations.
Our information technology systems are vulnerable to threats
from computer viruses, natural disasters, unauthorized