Assurant 2015 Annual Report Download - page 19

ASSURANT, INC. – 2015 Form 10-K 7
PART I
ITEM 1 Business
Other insurance and mortgage services
We have developed products and services in adjacent and
emerging markets, such as lender-placed and voluntary ood
insurance, multi-family housing insurance and mortgage
property risk management services. In 2013, we acquired
Field Asset Services (“FAS”), a company that leverages its
nationwide network of independent contractors to perform
property preservation, restoration and inspection services for
mortgage servicing clients and investors. In 2014, we acquired
StreetLinks, a leader in valuation solutions and technologies,
which is among the largest independent appraisal management
companies in the United States. Also, in 2014, we acquired
eMortgage Logic, a leading provider of property broker price
opinions assisting mortgage servicing clients with determining
property values. The acquisitions of FAS, Streetlinks and
eMortgage Logic comprise our Mortgage Solutions business.
We are also one of the largest administrators 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 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 ood products and miscellaneous
specialty property products. Multi-family housing products
are distributed primarily through property management
companies and afnity marketing partners.
Our property risk management services are provided directly
to mortgage lenders and servicers, typically under non-
exclusive arrangements.
On January 1, 2015, we sold our general agency business
and primary associated insurance carrier, American Reliable
Insurance Company (“ARIC”) to Global Indemnity Group, Inc.,
a subsidiary of Global Indemnity plc. The business offers
specialty personal lines and agricultural insurance through
general and independent agents�
As of December 31, 2015 no single Assurant Specialty Property
client accounted for 10% or more of our consolidated revenue.
However, Assurant Specialty Property is dependent on a
few clients, the loss of any one or more such clients could
have a material adverse effect on the Company’s results of
operations and cash ows.
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, 2015
December 31, 2014
Net earned premiums:
Individual $1,895,970 $ 1,544,968
Small employer group 327,726 400,484
TOTAL $ 2,223,696 $ 1,945,452
Fees and other income $ 54,622 $ 40,016
Segment net loss $ (367,907) $ (63,748)
Loss ratio(1) 103�5% 81�0%
Expense ratio(2) 23�2% 25�0%
Combined ratio(3) 124�2% 104�3%
Equity(4) $574,230 $ 443,385
(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.