Assurant 2015 Annual Report Download - page 23

ASSURANT, INC. – 2015 Form 10-K 11
PART I
ITEM 1 Business
Enterprise Risk Management
As an insurer, we are exposed to a wide variety of nancial,
operational and other risks, as described in Item 1A, “Risk
Factors.” Enterprise risk management (“ERM”) is, therefore,
a key component of our business strategies, policies, and
procedures. Our ERM process is an iterative approach with
the following key phases:
1� Risk identication;
2� High-level estimation of risk likelihood and severity;
3� Risk prioritization at the business and enterprise
levels;
4� Scenario analysis and detailed modeling of likelihood
and severity of key enterprise risks;
5� Use of quantitative results and subject matter expert
opinion to help guide business strategy and decision
making.
Through our ERM process and our enterprise risk quantication
model, we monitor a variety of risk metrics on an ongoing
basis, with a particular focus on impact to net income (both
GAAP and Statutory), company value and the potential need
for capital infusions to subsidiaries under severe stress
scenarios� The analysis of capital under stress scenarios
informs our capital management actions and helps ensure
our continued ability to pay policyholder benets.
The Company’s ERM activities are coordinated by an Enterprise
Risk Management Committee (“ERMC”), which includes
managers from across the Company with knowledge of the
Company’s business activities, including representation
from the Compliance, Actuarial, Information Technology,
Finance, Internal Audit and Asset Management departments.
The ERMC develops risk assessment and risk management
policies and procedures. It facilitates the identication,
reporting and prioritizing of risks faced by the Company, and
is responsible for promoting a risk-aware culture throughout
the organization. The ERMC also coordinates with each of the
Company’s Business Unit Risk Committees (“BURCs”), which
meet regularly and are responsible for the identication of
signicant risks affecting their respective business units.
Our Board of Directors and senior management are responsible
for overseeing signicant enterprise risks. The ERMC presents
its work periodically to the Board of Directors and its Finance
and Investment Committee.
Through the use of regular committee meetings, business
unit and enterprise risk inventory templates and dashboards,
hypothetical scenario analysis, and quantitative modeling,
the Company strives to identify, track, quantify, communicate
and manage our key risks in a manner consistent with our
risk appetite and high level strategy.
Our ERM process continues to evolve, and, when appropriate,
we incorporate methodology changes, policy modications
and emerging best practices on an ongoing basis�
Regulation
The Company is subject to extensive federal, state and
international regulation and supervision in the jurisdictions
where it does business. Regulations vary from jurisdiction
to jurisdiction. In 2015, the Company announced a strategic
realignment of its portfolio to focus on specialty housing
and lifestyle protection products and services. As a result
of the partial sale of Assurant Health and the runoff of
the remaining business and the impending sale of Assurant
Employee Benets, a number of regulations are or will soon
be no longer relevant for Assurant. The following is a summary
of signicant regulations that apply to our businesses, and
where applicable, our health business wind-down operations,
but is not intended to be a comprehensive review of every
regulation to which the Company is subject. For information
on the risks associated with regulations applicable to the
Company, please see Item 1A, “Risk Factors.”
U.S. Insurance Regulation
We are subject to the insurance holding company laws in
the states where our insurance companies are domiciled.
These laws generally require insurance companies within
the insurance holding company system to register with the
insurance departments of their respective states of domicile
and to furnish reports to such insurance departments regarding
capital structure, ownership, nancial condition, general
business operations and intercompany transactions. These laws
also require that transactions between afliated companies
be fair and equitable. In addition, certain intercompany
transactions, changes of control, certain dividend payments
and transfers of assets between the companies within the
holding company system are subject to prior notice to, or
approval by, state regulatory authorities.
Like all U.S. insurance companies, our insurance subsidiaries
are subject to regulation and supervision in the jurisdictions
where they do business. In general, these regulations are
designed to protect the interests of policyholders, and
not necessarily the interests of shareholders and other
investors. To that end, the laws of the various states and
other jurisdictions establish insurance departments with
broad powers with respect to such things as:
•licensing;
•capital, surplus and dividends;
• underwriting requirements and limitations (including, in
some cases, minimum or target loss ratios);
•entrance into and exit from states;