Assurant 2014 Annual Report Download - page 42

ASSURANT, INC. – 2014 Form 10-K28
PART I
ITEM 1A Risk Factors
The insurance industry can be cyclical, which
may affect our results.
Certain lines of insurance that we write can be cyclical.
Although no two cycles are the same, insurance industry
cycles have typically lasted for periods ranging from two to
ten years. In addition, the upheaval in the global economy
in recent years has been much more widespread and has
affected all the businesses in which we operate. We expect
to see continued cyclicality in some or all of our businesses
in the future, which may have a material adverse effect on
our results of operations and fi nancial condition.
Risks Related to Our Common Stock
Given the recent economic climate, our stock
may be subject to stock price and trading
volume volatility. The price of our common
stock could fl uctuate or decline signifi cantly and
you could lose all or part of your investment.
In recent years, the stock markets have experienced signifi cant
price and trading volume volatility. Company-specifi c issues
and market developments generally in the insurance industry
and in the regulatory environment may have caused this
volatility. Our stock price could materially fl uctuate or
decrease in response to a number of events and factors,
including but not limited to: quarterly variations in operating
results; operating and stock price performance of comparable
companies; changes in our fi nancial strength ratings; limitations
on premium levels or the ability to maintain or raise premiums
on existing policies; regulatory developments and negative
publicity relating to us or our competitors. In addition, broad
market and industry fl uctuations may materially and adversely
affect the trading price of our common stock, regardless of
our actual operating performance.
Applicable laws, our certifi cate of
incorporation and by-laws, and contract
provisions may discourage takeovers and
business combinations that some stockholders
might consider to be in their best interests.
State laws and our certifi cate of incorporation and by-laws
may delay, defer, prevent or render more diffi cult a takeover
attempt that our stockholders might consider in their best
interests. For example, Section 203 of the General Corporation
Law of the State of Delaware may limit the ability of an
“interested stockholder” to engage in business combinations
with us. An interested stockholder is defi ned to include
persons owning 15% or more of our outstanding voting stock.
These provisions may also make it diffi cult for stockholders
to replace or remove our directors, facilitating director
enhancement that may delay, defer or prevent a change in
control. Such provisions may prevent our stockholders from
receiving the benefi t from any premium to the market price of
our common stock offered by a bidder in a takeover context.
Even in the absence of a takeover attempt, the existence of
these provisions may adversely affect the prevailing market
price of our common stock if they are viewed as discouraging
future takeover attempts.
Our certifi cate of incorporation or by-laws also contain
provisions that permit our Board of Directors to issue one or
more series of preferred stock, prohibit stockholders from fi lling
vacancies on our Board of Directors, prohibit stockholders from
calling special meetings of stockholders and from taking action
by written consent, and impose advance notice requirements
for stockholder proposals and nominations of directors to be
considered at stockholder meetings.
Additionally, applicable state insurance laws may require prior
approval of an application to acquire control of a domestic
insurer. State statutes generally provide that control over a
domestic insurer is presumed to exist when any person directly
or indirectly owns, controls, has voting power over, or holds
proxies representing, 10% or more of the domestic insurer’s
voting securities. However, the State of Florida, in which
some of our insurance subsidiaries are domiciled, sets this
threshold at 5%. Because a person acquiring 5% or more of our
common stock would indirectly control the same percentage
of the stock of our Florida subsidiaries, the insurance change
of control laws of Florida would apply to such transaction and
at 10% the laws of many other states would likely apply to
such a transaction. Prior to granting such approval, a state
insurance commissioner will typically consider such factors
as the fi nancial strength of the applicant, the integrity of
the applicant’s board of directors and executive offi cers, the
applicant’s plans for the future operations of the domestic
insurer and any anti-competitive results that may arise from
the consummation of the acquisition of control.
We may also, under some circumstances involving a change of
control, be obligated to repay our outstanding indebtedness
under our revolving credit facility and other agreements.
We or any possible acquirer may not have available fi nancial
resources necessary to repay such indebtedness in those
circumstances, which may constitute an event of default
resulting in acceleration of indebtedness and potential
cross-default under other agreements. The threat of this
could have the effect of delaying or preventing transactions
involving a change of control, including transactions in which
our stockholders would receive a substantial premium for
their shares over then-current market prices, or which they
otherwise may deem to be in their best interests.