Assurant 2015 Annual Report Download - page 49

37ASSURANT, INC. – 2015 Form 10-K
PART II
ITEM 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations
Reserves
Reserves are established in accordance with GAAP using
generally accepted actuarial methods and reect judgments
about expected future claim payments� Calculations
incorporate assumptions about ination rates, the incidence
of incurred claims, the extent to which all claims have been
reported, future claims processing, lags and expenses and
future investment earnings, and numerous other factors�
While the methods of making such estimates and establishing
the related liabilities are periodically reviewed and updated,
the calculation of reserves is not an exact process�
Reserves do not represent precise calculations of expected
future claims, but instead represent our best estimates
at a point in time of the ultimate costs of settlement and
administration of a claim or group of claims, based upon
actuarial assumptions and projections using facts and
circumstances known at the time of calculation�
Many of the factors affecting reserve adequacy are not directly
quantiable and not all future events can be anticipated when
reserves are established. Reserve estimates are rened as
experience develops� Adjustments to reserves, both positive
and negative, are reected in the consolidated statement of
operations in the period in which such estimates are updated�
Because establishment of reserves is an inherently complex
process involving signicant judgment and estimates, there
can be no certainty that ultimate losses will not exceed
existing claim reserves� Future loss development could require
reserves to be increased, which could have a material adverse
effect on our earnings in the periods in which such increases
are made� See “Item 1A—Risk Factors—Risks related to our
Company—Our actual claims losses may exceed our reserves
for claims, and this may require us to establish additional
reserves that may materially affect our results of operations,
protability and capital” for more detail on this risk.
The following table provides reserve information for our major product lines for the years ended December 31, 2015 and 2014:
December 31, 2015 December 31, 2014
Future
Policy
Benets
and
Expenses
Unearned
Premiums
Claims and Benets
Payable Future
Policy
Benets
and
Expenses
Unearned
Premiums
Claims and Benets
Payable
Case
Reserves
Incurred
But Not
Reported
Reserves
Case
Reserves
Incurred
But Not
Reported
Reserves
Long Duration Contracts:
Preneed funeral life
insurance policies and
investment-type annuity
contracts $ 4,670,977 $ 134,534 $ 13,644 $ 6,324 $ 4,618,505 $ 4,872 $ 14,696 $ 6,456
Life insurance no longer
offered 407,360 427 2,360 1,070 418,672 570 2,272 1,301
Universal life and other
products no longer
offered 153,801 118 773 1,674 168,808 136 704 1,959
FFG, LTC and other
disposed businesses 4,129,233 47,132 973,614 103,652 4,153,741 46,585 881,514 97,524
Medical 68,353 742 1,465 2,321 87,563 7,254 1,959 7,886
All other 36,970 404 12,855 10,836 36,383 382 13,863 9,803
Short Duration Contracts:
Group term life — 2,431 166,920 30,857 — 2,905 169,006 28,786
Group disability — 1,984 1,092,841 100,155 — 1,564 1,127,068 107,961
Medical — 25,401 235,516 253,295 — 130,185 137,370 240,830
Dental — 4,244 1,587 16,454 — 4,013 2,251 17,037
Property and warranty — 2,223,589 182,095 507,310 — 2,386,719 130,517 546,979
Credit life and disability — 181,466 25,966 35,718 — 241,092 34,581 43,298
Extended service
contracts — 3,669,859 7,258 33,928 — 3,568,352 6,780 42,054
All other — 131,389 18,961 57,270 — 135,046 5,375 18,776
TOTAL $9,466,694 $6,423,720 $2,735,855 $1,160,864 $9,483,672 $6,529,675 $2,527,956 $1,170,650
For a description of our reserving methodology, see Note 13 to the Notes to the Consolidated Financial Statements included
elsewhere in this report�