Assurant 2015 Annual Report Download - page 18

ASSURANT, INC. – 2015 Form 10-K6
PART I
ITEM 1 Business
Assurant Specialty Property
For the Years Ended
December 31, 2015
December 31, 2014
Net earned premiums by major product grouping:
Homeowners (lender-placed and voluntary) $1,425,799 $ 1,743,965
Manufactured housing (lender-placed and voluntary) 165,657 237,576
Other(1) 453,245 524,556
TOTAL $ 2,044,701 $ 2,506,097
Fees and other income $ 405,545 $ 301,048
Segment net income $ 307,705 $ 341,757
Loss ratio(2) 38.6% 43�3%
Expense ratio(3) 52.7% 46.5%
Combined ratio(4) 84�9% 85�2%
Equity(5) $ 1,351,122 $ 1,264,216
(1) Other primarily includes multi-family housing, lender-placed flood, and miscellaneous insurance products.
(2) The loss ratio is equal to policyholder benefits divided by net earned premiums.
(3) The expense ratio is equal to selling, underwriting and general expenses divided by net earned premiums and fees and other income.
(4) The combined ratio is equal to total benefits, losses and expenses divided by net earned premiums and fees and other income.
(5) Equity excludes accumulated other comprehensive income.
Products and Services
Assurant Specialty Property targets protable growth in lender-
placed homeowners insurance, and adjacent niches such as
multi-family housing insurance; lender-placed and voluntary
ood insurance; home appraisal, inspection and preservation;
receivables management for property management companies;
and other property risk management services.
Lender-placed and voluntary homeowners
insurance
The largest product line within Assurant Specialty Property
is homeowners insurance, consisting principally of re and
dwelling hazard insurance offered through our lender-placed
program. The lender-placed program provides collateral
protection to lenders, mortgage servicers and investors in
mortgaged properties in the event that a homeowner does
not maintain insurance on a mortgaged dwelling. Lender-
placed insurance coverage is not limited to the outstanding
loan balance; it provides structural coverage, similar to that
of a standard homeowners policy. The amount of coverage is
often based on the last known insurance coverage under the
prior policy for the property and provides replacement cost
coverage on the property and thus ensures that a home can
be repaired or rebuilt in the event of damage. It protects both
the lender’s interest and the borrower’s interest and equity.
We also provide insurance on foreclosed properties managed
by our clients. This type of insurance is Real Estate Owned
(“REO”) insurance. The lender-placed homeowners and REO
markets experienced signicant growth in prior years as a
result of the housing crisis, but they are now declining.
In the majority of cases, we use a proprietary insurance-tracking
administration system linked with the administrative systems of
our clients to monitor clients’ mortgage portfolios to verify the
existence of insurance on each mortgaged property and identify
those that are uninsured. If there is a potential lapse in insurance
coverage, we begin a process of notication and outreach to both
the homeowner and the last-known insurance carrier or agent
through phone calls and written correspondence. This process
takes up to 90 days to complete. If coverage cannot be veried
at the end of this process, the mortgage servicer procures a
lender-placed policy for which the homeowner is responsible
for paying the related premiums� The percentage of insurance
policies placed to loans tracked represents our placement rates.
The homeowner is still encouraged, and always maintains the
option, to obtain or renew the insurance of his or her choice.
To meet the changing needs of the lending and housing
industries, Assurant Specialty Property has worked with
regulators to introduce a next generation lender-placed
homeowners product to address some of the unanticipated
issues that developed during the housing crisis. This product
combines exibility and best practices to address the concerns
of various parties. The product contains expanded geographic
ratings within each state to further differentiate rates for
properties more exposed to catastrophes from those where the
risk is lower, added premium rating exibility from deductible
options that can be modied based on factors such as coverage
amount and delinquency status, and continued enhancements
to our already extensive customer notication process to
make it more clear to borrowers when they have lender-
placed insurance�
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.