Assurant 2015 Annual Report Download - page 59

47ASSURANT, INC. – 2015 Form 10-K
PART II
ITEM 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations
contract and domestic mobile business� General expenses
increased $272,971 primarily due to increased administration
expenses directly related to growth in our domestic mobile
business and expenses related to the LSG acquisition� These
items were partially offset by expense savings in our domestic
credit and domestic service contract businesses�
Assurant Specialty Property
Overview
The table below presents information regarding Assurant Specialty Property’s segment results of operations:
For the Years Ended December 31,
2015 2014 2013
Revenues:
Net earned premiums $ 2,044,701 $ 2,506,097 $ 2,380,044
Net investment income 92,859 101,908 98,935
Fees and other income 405,545 301,048 133,135
Total revenues 2,543,105 2,909,053 2,612,114
Benets, losses and expenses:
Policyholder benets 788,549 1,085,339 890,409
Selling, underwriting and general expenses 1,290,937 1,305,286 1,068,273
Total benets, losses and expenses 2,079,486 2,390,625 1,958,682
Segment income before provision for income taxes 463,619 518,428 653,432
Provision for income taxes 155,914 176,671 229,846
SEGMENT NET INCOME $ 307,705 $ 341,757 $ 423,586
Net earned premiums:
Homeowners (lender-placed and voluntary) $ 1,425,799 $ 1,743,965 $ 1,678,172
Manufactured housing (lender-placed and voluntary) 165,657 237,576 226,058
Other(1) 453,245 524,556 475,814
TOTAL $ 2,044,701 $ 2,506,097 $ 2,380,044
Ratios:
Loss ratio(2) 38�6% 43�3% 37�4%
Expense ratio(3) 52�7% 46�5% 42�5%
Combined ratio(4) 84�9% 85�2% 77�9%
(1) This primarily includes lender-placed flood, miscellaneous specialty property and multi-family housing 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.
Regulatory Matters
In January 2015, NYDFS issued regulations regarding tracking
costs associated with lender placed insurance rates� The
Company reached an agreement with the NYDFS to le
for a 6�2% reduction in lender-placed hazard insurance
rates in New York. The rates have been led and approved,
and were effective for new and renewing policies starting
February 1, 2016�
Lender-placed insurance products accounted for 73% and 71%
of net earned premiums for Twelve Months 2015 and Twelve
Months 2014, respectively� The approximate corresponding
contributions to the segment net income in these periods
were 78% and 73%, respectively� The portion of total segment
net income attributable to lender-placed products may vary
substantially over time depending on the frequency, severity
and location of catastrophic losses, the cost of catastrophe
reinsurance and reinstatement coverage, the variability of
claim processing costs and client acquisition costs, and other
factors� In addition, we expect placement rates for these
products to decline�
Year Ended December 31, 2015 Compared
to the Year Ended December 31, 2014
Net Income
Segment net income decreased $34,052, or 10%, to $307,705
for Twelve Months 2015 from $341,757 for Twelve Months 2014�
The decrease is primarily due to the ongoing normalization in
our lender-placed homeowners insurance business, previously
disclosed loss of client business, and increased legal expenses,
partially offset by more favorable non-catastrophe loss
experience and lower catastrophe reinsurance costs� The
divestiture of American Reliable Insurance Company (“ARIC”)
also contributed to the decrease in net income�