Assurant 2013 Annual Report Download - page 67

ASSURANT, INC. – 2013 Form 10-K 55
PART II
ITEM 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations
Total Revenues
Total revenues increased $36,313, to $106,806 for Twelve
Months 2012 compared with $70,493 for Twelve Months 2011.
This increase is primarily due to a $31,773 increase in net
realized gains on investments.
Total Benefi ts, Losses and Expenses
Total benefi ts, losses and expenses increased $1,475 to
$170,668 for Twelve Months 2012 compared with $169,193
for Twelve Months 2011. The increase is primarily due to
increased employee related benefi ts and new business
investments for areas targeted for growth partially offset by
decreased policyholder benefi ts incurred of $7,535 associated
with discontinued businesses.
Investments
The Company had total investments of $14,244,015 and $14,976,318 as of December 31, 2013 and December 31, 2012,
respectively. For more information on our investments see Note 4 to the Consolidated Financial Statements included
elsewhere in this report.
The following table shows the credit quality of our fi xed maturity securities portfolio as of the dates indicated:
Fixed Maturity Securities by Credit Quality (Fair Value)
As of
December 31, 2013 December 31, 2012
Aaa / Aa / A $ 7,214,256 63.9% $ 7,704,911 63.2%
Baa 3,316,035 29.4% 3,730,850 30.7%
Ba 523,175 4.6% 472,773 3.9%
B and lower 238,409 2.1% 263,104 2.2%
TOTAL $ 11,291,875 100.0 % $ 12,171,638 100.0%
Major categories of net investment income were as follows:
Years Ended December 31,
2013
2012 2011
Fixed maturity securities $ 530,144 $ 553,668 $ 565,486
Equity securities 27,013 24,771 29,645
Commercial mortgage loans on real estate 76,665 79,108 80,903
Policy loans 3,426 3,204 3,102
Short-term investments 2,156 4,889 5,351
Other investments 20,573 54,581 21,326
Cash and cash equivalents 14,679 15,323 7,838
Total investment income 674,656 735,544 713,651
Investment expenses (24,360) (22,416) (24,119)
NET INVESTMENT INCOME $ 650,296 $ 713,128 $ 689,532
Net investment income decreased $62,832, or 8.8%, to
$650,296 for 2013 from $713,128 for 2012. The decrease is
primarily due to $29,549 less investment income from real
estate joint venture partnerships. Excluding the investment
income from real estate joint venture partnerships, net
investment income decreased $33,283, primarily refl ecting
lower investment yields.
Net investment income increased $23,596, or 3%, to $713,128
for 2012 from $689,532 for 2011. The increase is primarily
due to $28,974 of higher investment income from real estate
joint venture partnerships. Excluding the net investment
income from real estate joint venture partnerships, net
investment income decreased $5,378, primarily refl ecting
lower investment yields.
The net unrealized gain position decreased to $812,388 as of
December 31, 2013, compared to $1,496,027 as of December 31,
2012 primarily due to increasing U.S. Treasury yields.
As of December 31, 2013, the Company owned $194,789
of securities guaranteed by fi nancial guarantee insurance
companies. Included in this amount was $181,938 of municipal
securities, with a credit rating of A+ both with and without
the guarantee.
Our states, municipalities and political subdivisions holdings
are highly diversifi ed across the U.S. and Puerto Rico, with no
individual state’s exposure (including both general obligation
and revenue securities) exceeding 0.5% of the overall
investment portfolio as of December 31, 2013 and 2012. At
December 31, 2013 and 2012, the securities include general
obligation and revenue bonds issued by states, cities, counties,
school districts and similar issuers, including $234,640 and
$168,705, respectively, of advance refunded or escrowed-
to-maturity bonds (collectively referred to as “pre-refunded
bonds”), which are bonds for which an irrevocable trust has
been established to fund the remaining payments of principal
and interest. As of December 31, 2013 and 2012, revenue bonds