Exhibit 99.2

Assurant, Inc. (AIZ)

Financial Supplement as of September 30, 2010

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ASSURANT, INC.

FINANCIAL SUPPLEMENT

(UNAUDITED)

AS OF SEPTEMBER 30, 2010

 

		Page:
INDEX TO SUPPLEMENT
SAFE HARBOR STATEMENT			1
REGULATION G - NON GAAP FINANCIAL MEASURES			1
SUMMARY FINANCIAL HIGHLIGHTS			2
SEGMENTED CONDENSED BALANCE SHEETS			4
RECONCILIATION OF NET OPERATING INCOME TO NET INCOME			5
CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS AND SELECTED DATA			6
CONDENSED SEGMENT STATEMENTS OF OPERATIONS AND SELECTED DATA			8
INVESTMENTS			16
INVESTMENT RESULTS BY ASSET CATEGORY & ANNUALIZED YIELDS			18
SUMMARY OF NET OPERATING INCOME DISCLOSED ITEMS			19
RATINGS SUMMARY			20
EXHIBIT I - COMMERCIAL MORTGAGE LOANS SUMMARY			21
EXHIBIT II - TOP 10 FOREIGN GOVERNMENT EXPOSURES			22

 

CONTACT INFORMATION
Corporate Headquarters Address:		Investor Inquiries:
One Chase Manhattan Plaza		Melissa Kivett		Brian Koppy
New York, New York 10005		Senior Vice President		Vice President
212-859-7000		Investor Relations		Investor Relations
		212-859-7029		212-859-7197
Website Address:		melissa.kivett@assurant.com		brian.koppy@assurant.com
www.assurant.com

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About Assurant:

Assurant is a premier provider of specialized insurance products and related services in North America and select worldwide markets. The four key businesses – Assurant Solutions; Assurant Specialty Property; Assurant Health; and Assurant Employee Benefits – have partnered with clients who are leaders in their industries and have built leadership positions in a number of specialty insurance market segments in the U.S. and selected international markets. The Assurant business units provide debt protection administration; credit-related insurance; warranties and service contracts; pre-funded funeral insurance; creditor-placed homeowners insurance; manufactured housing homeowners insurance; individual health and small employer group health insurance; group dental insurance; group disability insurance; and group life insurance.

Assurant, a Fortune 500 company and a member of the S&P 500, is traded on the New York Stock Exchange under the symbol AIZ. Assurant has approximately $27 billion in assets and $8 billion in annual revenue. Assurant has approximately 14,500 employees worldwide and is headquartered in New York’s financial district. www.assurant.com.

Safe Harbor Statement:

Some of the statements included in this financial supplement and its exhibits, particularly those anticipating future financial performance, business prospects, growth and operating strategies and similar matters, are forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. You can identify these statements by the fact that they may use words such as “will,” “anticipate,” “expect,” “estimate,” “project,” “intend,” “plan,” “believe,” “target,” “forecast,” or the negative versions of those words and terms with a similar meaning. Our actual results may differ materially from those projected in the forward-looking statements. The Company undertakes no obligation to update any forward-looking statements in this financial supplement or its exhibits as a result of new information or future events or developments.

The following risk factors could cause our actual results to differ materially from those currently estimated by management: (i) the effects of the Patient Protection and Affordable Care Act and the rules and regulations thereunder on our health and employee benefits businesses; (ii) factors, including the effects of health care reform and the relationship between the Company’s market capitalization and its book value, that could result in a material impairment of goodwill on the company’s balance sheet; (iii) loss of significant client relationships, distribution sources and contracts; (iv) failure to attract and retain sales representatives; (v) losses due to natural and man-made catastrophes; (vi) a decline in our credit or financial strength ratings (including the risk of ratings downgrades in the insurance industry); (vii) unfavorable outcomes in litigation and/or regulatory investigations that could negatively affect our business and reputation; (viii) current or new laws and regulations that could increase our costs and/or decrease our revenues; (ix) general global economic, financial market and political conditions (including difficult conditions in financial, capital and credit markets, the global economic slowdown, fluctuations in interest rates, mortgage rates, monetary policies, unemployment and inflationary pressure); (x) inadequacy of reserves established for future claims losses; (xi) failure to predict or manage benefits, claims and other costs; (xii) increases or decreases in tax valuation allowances; (xiii) fluctuations in exchange rates and other risks related to our international operations; (xiv) unavailability, inadequacy and unaffordable pricing of reinsurance coverage; (xv) diminished value of invested assets in our investment portfolio (due to, among other things, volatility in financial markets, the global economic slowdown, credit and liquidity risk, other than temporary impairments and inability to target an appropriate overall risk level); (xvi) insolvency of third parties to whom we have sold or may sell businesses through reinsurance or modified co-insurance; (xvii) inability of reinsurers to meet their obligations; (xviii) credit risk of some of our agents in Assurant Specialty Property and Assurant Solutions; (xix) failure to effectively maintain and modernize our information systems; (xx) failure to protect client information and privacy; (xxi) failure to find and integrate suitable acquisitions and new insurance ventures; (xxii) inability of our subsidiaries to pay sufficient dividends; (xxiii) failure to provide for succession of senior management and key executives; and (xxiv) significant competitive pressures in our businesses and cyclicality of the insurance industry. For a detailed discussion of the risk factors that could affect our actual results, please refer to the risk factors identified in our SEC reports, including, but not limited to, our 2009 Annual Report on Form 10-K and upcoming September 30, 2010 Form 10-Q, as filed with the SEC.

Regulation G – Non GAAP Financial Measures

Assurant uses the following non-GAAP financial measures to analyze the Company’s operating performance for the periods presented in this financial supplement. Because Assurant’s calculation of these measures may differ from similar measures used by other companies, investors should be careful when comparing Assurant’s non-GAAP financial measures to those of other companies.

(1) Assurant uses net operating income as an important measure of the Company’s operating performance. Net operating income equals net income, excluding net realized gains (losses) on investments and unusual and/or infrequent items. The Company believes net operating income provides investors a valuable measure of the performance of the Company’s ongoing business, because it excludes both the effect of net realized gains (losses) on investments that tend to be highly variable from period to period, and those events that are unusual and/or unlikely to recur. Please refer to page 5 for a reconciliation of net operating income to net income.

(2) Assurant uses annualized operating ROE as an important measure of the Company’s operating performance. Annualized operating ROE equals net operating income for the periods presented divided by average stockholders’ equity for the year to date period, excluding accumulated other comprehensive income ("AOCI"), and then the return is annualized, if necessary. The Company believes annualized operating ROE provides investors a valuable measure of the performance of the Company’s ongoing business, because it excludes the effect of net realized gains (losses) on investments that tend to be highly variable and those events that are unusual and/or unlikely to recur. The comparable GAAP measure would be annualized GAAP return on equity, defined as the annualized return of net income divided by average stockholders’ equity for the period. Consolidated GAAP ROE for the three months ended September 30, 2010 and 2009 was 10.9% and 12.5%, respectively, and for the nine months ended September 30, 2010 and 2009 was 12.1% and 13.0%, respectively. Segment ROEs are measured consistently with GAAP. Please refer to page 6 for the reconciliation of annualized operating ROE to annualized GAAP return on average equity.

(3) Assurant uses book value per diluted share excluding AOCI as an important measure of the Company’s stockholder value. Book value per diluted share excluding AOCI equals total stockholders’ equity excluding AOCI divided by diluted shares outstanding. The company believes book value per diluted share excluding AOCI provides investors a valuable measure of stockholder value because it excludes the effect of unrealized gains (losses) on investments which tend to be highly variable from period to period and other comprehensive income items. The comparable GAAP measure would be book value per diluted share defined as total stockholders’ equity divided by diluted shares outstanding. Book value per diluted share was $49.41 as of September 30, 2010, as shown in the reconciliation below.

 

		As of September 30, 2010
Book value per diluted share (excluding AOCI)		$	44.67
Change due to effect of including AOCI			4.74
Book value per diluted share		$	49.41

 

1

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Assurant, Inc.

Summary Financial Highlights

(Unaudited)

 

		2010				2009				Nine Months
($ in thousands, except number of shares and per share amounts)		3Q				3Q				2010				2009
Net operating income (1)		$	137,742			$	126,228			$	444,284			$	363,304
Net realized gains (losses) on investments			3,928				12,913				19,284				(27,277	)
Change in tax valuation allowance			—				7,043				—				(936	)
Legal settlement and related expenses			—				(1,454	)			—				83,542
Net income		$	141,670			$	144,730			$	463,568			$	418,633
Total revenues		$	2,113,971			$	2,156,873			$	6,422,121			$	6,518,359
PER SHARE AND SHARE DATA:
Basic earnings per common share
Net operating income		$	1.28			$	1.07			$	3.96			$	3.07
Net income		$	1.31			$	1.22			$	4.13			$	3.54
Weighted average common shares outstanding - basic			107,806,207				118,184,367				112,137,558				118,187,358
Diluted earnings per common share
Net operating income		$	1.27			$	1.07			$	3.94			$	3.07
Net income		$	1.30			$	1.22			$	4.11			$	3.54
Weighted average common shares outstanding - diluted			108,584,282				118,291,841				112,791,123				118,261,464

 

(1)	See Footnote (1) in Regulation G - Non GAAP Financial Measures on page 1.

 

2

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Assurant, Inc.

Summary Financial Highlights (continued)

(Unaudited)

 

($ in thousands, except number of shares and per share amounts)		2010												2009
		3Q				2Q				1Q				4Q				3Q				2Q				1Q
Total assets		$	26,845,334			$	26,115,330			$	26,238,814			$	25,860,667			$	25,665,578			$	24,822,474			$	23,820,644
Total stockholders’ equity		$	5,366,541			$	5,038,168			$	4,973,585			$	4,853,249			$	4,903,449			$	4,364,577			$	3,670,322
Total stockholders’ equity (excluding AOCI)		$	4,851,870			$	4,760,017			$	4,819,547			$	4,787,324			$	4,781,088			$	4,676,177			$	4,452,650
Basic book value per share		$	49.87			$	46.35			$	43.36			$	41.27			$	41.71			$	36.83			$	30.99
Basic book value per share (excluding AOCI)		$	45.08			$	43.79			$	42.02			$	40.71			$	40.66			$	39.46			$	37.60
Shares outstanding for basic book value per share calculation			107,617,921				108,703,559				114,705,703				117,591,250				117,572,997				118,494,717				118,432,367
Diluted book value per share		$	49.41			$	45.95			$	43.16			$	41.03			$	41.61			$	36.76			$	30.98
Diluted book value per share (excluding AOCI) (1)		$	44.67			$	43.42			$	41.82			$	40.47			$	40.57			$	39.38			$	37.58
Shares outstanding for diluted book value per share calculation			108,612,511				109,635,918				115,243,238				118,293,293				117,854,377				118,736,239				118,477,818
Debt to total capital ratio (excluding AOCI)			16.8	%			17.1	%			16.9	%			17.0	%			17.0	%			17.3	%			18.0	%

 

(1)	See Footnote (3) in Regulation G - Non GAAP Financial Measures on page 1.

 

3

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Assurant, Inc.

Segmented Condensed Balance Sheets

(Unaudited)

 

			At September 30, 2010
		Solutions				Specialty Property				Health				Employee Benefits				Corporate & Other(1)				Consolidated
		($ in thousands)
Assets
Investments and cash and cash equivalents		$	7,292,988			$	2,303,560			$	992,666			$	2,311,412			$	2,167,807			$	15,068,433
Reinsurance recoverables			629,700				439,739				7,610				13,414				3,840,688				4,931,151
Deferred acquisition costs			2,199,340				204,820				5,017				23,813								2,432,990
Goodwill			—				—				—				—				926,195				926,195
Assets held in separate accounts			220,140				—				—				—				1,670,081				1,890,221
Other assets			736,964				401,399				59,291				191,291				207,399				1,596,344
Total assets		$	11,079,132			$	3,349,518			$	1,064,584			$	2,539,930			$	8,812,170			$	26,845,334
Liabilities
Policyholder benefits and claims payable		$	4,877,989			$	375,668			$	451,839			$	1,697,677			$	4,041,997			$	11,445,170
Unearned premiums			3,447,463				1,337,699				125,321				10,876				43,309				4,964,668
Debt			—				—				—								972,137				972,137
Mandatorily redeemable preferred stock			—				—				—				—				8,160				8,160
Liabilities related to separate accounts			220,140				—				—				—				1,670,081				1,890,221
Deferred gain on disposal of businesses			—				—				—				—				146,770				146,770
Accounts payable and other liabilities			1,032,050				382,914				116,185				234,929				285,589				2,051,667
Total liabilities			9,577,642				2,096,281				693,345				1,943,482				7,168,043				21,478,793
Stockholders’ equity
Equity, excluding accumulated other comprehensive income			1,501,490				1,253,237				371,239				596,448				1,129,456				4,851,870
Accumulated other comprehensive income			—				—				—				—				514,671				514,671
Total stockholders’ equity			1,501,490				1,253,237				371,239				596,448				1,644,127				5,366,541
Total liabilities and stockholders’ equity		$	11,079,132			$	3,349,518			$	1,064,584			$	2,539,930			$	8,812,170			$	26,845,334
		At December 31, 2009
		Solutions				Specialty Property				Health				Employee Benefits				Corporate & Other(1)				Consolidated
		($ in thousands)
Assets
Investments and cash and cash equivalents		$	7,393,989			$	2,287,688			$	954,132			$	2,343,922			$	1,496,653			$	14,476,384
Reinsurance recoverables			689,800				333,389				7,251				21,589				3,179,705				4,231,734
Deferred acquisition costs			2,257,568				214,300				8,338				24,448				—				2,504,654
Goodwill			—				—				—				—				926,398				926,398
Assets held in separate accounts			219,166				—				—				—				1,753,166				1,972,332
Other assets			546,271				355,240				108,846				131,708				607,100				1,749,165
Total assets		$	11,106,794			$	3,190,617			$	1,078,567			$	2,521,667			$	7,963,022			$	25,860,667
Liabilities
Policyholder benefits and claims payable		$	4,772,514			$	345,109			$	491,899			$	1,718,623			$	3,387,815			$	10,715,960
Unearned premiums			3,655,942				1,315,881				124,515				15,721				41,505				5,153,564
Debt			—				—				—				—				972,058				972,058
Mandatorily redeemable preferred stock			—				—				—				—				8,160				8,160
Liabilities related to separate accounts			219,166				—				—				—				1,753,166				1,972,332
Deferred gain on disposal of businesses			—				—				—				—				164,899				164,899
Accounts payable and other liabilities			805,355				344,829				152,947				250,282				467,032				2,020,445
Total liabilities			9,452,977				2,005,819				769,361				1,984,626				6,794,635				21,007,418
Stockholders’ equity
Equity, excluding accumulated other comprehensive income			1,653,817				1,184,798				309,206				537,041				1,102,462				4,787,324
Accumulated other comprehensive income			—				—				—				—				65,925				65,925
Total stockholders’ equity			1,653,817				1,184,798				309,206				537,041				1,168,387				4,853,249
Total liabilities and stockholders’ equity		$	11,106,794			$	3,190,617			$	1,078,567			$	2,521,667			$	7,963,022			$	25,860,667

 

(1)	Corporate & Other includes all accumulated other comprehensive income/loss and goodwill as well as reinsurance recoverables and separate accounts related to the sale of businesses by reinsurance.

 

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Assurant, Inc.

Reconciliation of Net Operating Income to Net Income

(Unaudited)

 

		2010												2009																Nine Months
($ in thousands, net of tax)		3Q				2Q				1Q				4Q				3Q				2Q				1Q				2010				2009
Assurant Solutions		$	32,333			$	30,323			$	28,866			$	30,203			$	31,644			$	27,894			$	30,311			$	91,522			$	89,849
Assurant Specialty Property			106,653				103,717				118,478				106,944				103,157				91,228				104,668				328,848				299,053
Assurant Health			5,340				25,300				8,369				(29,715	)			(4,847	)			(10,330	)			14,672				39,009				(505	)
Assurant Employee Benefits			16,932				12,393				16,467				11,556				11,450				12,128				7,022				45,792				30,600
Corporate and other			(17,577	)			(13,568	)			(11,962	)			(8,938	)			(9,743	)			(16,157	)			(13,442	)			(43,107	)			(39,342	)
Amortization of deferred gains on disposal of businesses			3,916				3,916				3,953				1,370				4,421				4,388				4,421				11,785				13,230
Interest expense			(9,855	)			(9,855	)			(9,855	)			(9,854	)			(9,854	)			(9,854	)			(9,873	)			(29,565	)			(29,581	)
Net operating income			137,742				152,226				154,316				101,566				126,228				99,297				137,779				444,284				363,304
Adjustments:
Net realized gains (losses) on investments			3,928				12,449				2,907				(7,561	)			12,913				(3,992	)			(36,198	)			19,284				(27,277	)
Change in tax valuation allowance			—				—				—				936				7,043				13,021				(21,000	)			—				(936	)
Legal settlement and related expenses			—				—				—				—				(1,454	)			84,996				—				—				83,542
Goodwill impairment			—				—				—				(83,000	)			—				—				—				—				—
Net income		$	141,670			$	164,675			$	157,223			$	11,941			$	144,730			$	193,322			$	80,581			$	463,568			$	418,633

 

5

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Assurant, Inc.

Consolidated Condensed Statements of Operations

(Unaudited)

 

($ in thousands, except per share data)		2010												2009																Nine Months
		3Q				2Q				1Q				4Q				3Q				2Q				1Q				2010				2009
Revenues:
Net earned premiums and other considerations		$	1,832,514			$	1,849,895			$	1,906,643			$	1,925,492			$	1,874,398			$	1,875,866			$	1,874,579			$	5,589,052			$	5,624,843
Net investment income			176,170				175,196				174,014				172,503				172,924				174,932				178,479				525,380				526,335
Net realized gains (losses) on investments			6,043				19,152				4,473				(11,632	)			19,866				(6,142	)			(55,689	)			29,668				(41,965	)
Amortization of deferred gains on disposal of businesses			6,024				6,024				6,081				2,107				6,802				6,750				6,802				18,129				20,354
Fees and other income			93,220				90,027				76,645				93,672				82,883				222,203				83,706				259,892				388,792
			2,113,971				2,140,294				2,167,856				2,182,142				2,156,873				2,273,609				2,087,877				6,422,121				6,518,359
Benefits, losses and expenses:
Policyholder benefits			913,253				905,316				927,996				977,093				941,145				989,402				960,342				2,746,565				2,890,889
Selling, underwriting, general and administrative expenses			958,824				966,361				976,333				1,045,734				991,502				987,529				954,479				2,901,518				2,933,510
Goodwill impairment			—				—				—				83,000				—				—				—				—				—
Interest expense			15,162				15,161				15,161				15,160				15,160				15,160				15,189				45,484				45,509
			1,887,239				1,886,838				1,919,490				2,120,987				1,947,807				1,992,091				1,930,010				5,693,567				5,869,908
Income before provision for income taxes			226,732				253,456				248,366				61,155				209,066				281,518				157,867				728,554				648,451
Provision for income taxes			85,062				88,781				91,143				49,214				64,336				88,196				77,286				264,986				229,818
Net income		$	141,670			$	164,675			$	157,223			$	11,941			$	144,730			$	193,322			$	80,581			$	463,568			$	418,633
Diluted per share data:
Net operating income per diluted share		$	1.27			$	1.35			$	1.32			$	0.86			$	1.07			$	0.84			$	1.17			$	3.94			$	3.07
Book value per diluted share (excluding AOCI)		$	44.67			$	43.42			$	41.82			$	40.47			$	40.57			$	39.38			$	37.58			$	44.67			$	40.57
Computation of return on average equity measures:
Numerator:
Net operating income		$	137,742			$	152,226			$	154,316			$	101,566			$	126,228			$	99,297			$	137,779			$	444,284			$	363,304
Net income			141,670				164,675				157,223				11,941				144,730				193,322				80,581				463,568				418,633
Denominator:
Average equity, excluding AOCI		$	4,805,944			$	4,789,782			$	4,803,435				4,784,207				4,728,633				4,564,413				4,416,551				4,819,598				4,580,770
Add: Average AOCI			396,411				216,095				109,982				94,143				(94,620	)			(546,964	)			(726,637	)			290,298				(274,293	)
Average equity, including AOCI		$	5,202,355			$	5,005,877			$	4,913,417			$	4,878,350			$	4,634,013			$	4,017,449			$	3,689,914			$	5,109,896			$	4,306,477
Annualized operating return on average equity (excluding AOCI) (1)			11.5	%			12.7	%			12.9	%			8.5	%			10.7	%			8.7	%			12.5	%			12.3	%			10.6	%
Annualized GAAP return on average equity			10.9	%			13.2	%			12.8	%			1.0	%			12.5	%			19.2	%			8.7	%			12.1	%			13.0	%
Annualized operating return on average equity (excluding AOCI) (1)			11.5	%			12.7	%			12.9	%			8.5	%			10.7	%			8.7	%			12.5	%			12.3	%			10.6	%
Net realized gains (losses) on investments			0.3	%			1.1	%			0.2	%			-0.6	%			1.1	%			-0.3	%			-3.3	%			0.5	%			-0.8	%
Change in tax valuation allowance			—				—				—				0.1	%			0.6	%			1.1	%			-1.9	%			—				—
Legal settlement and related expenses			—				—				—				—				-0.1	%			7.4	%			—				—				2.4	%
Goodwill impairment			—				—				—				-6.8	%			—				—				—				—				—
Change due to effect of including AOCI			-0.9	%			-0.6	%			-0.3	%			-0.2	%			0.2	%			2.3	%			1.4	%			-0.7	%			0.8	%
Annualized GAAP return on average equity			10.9	%			13.2	%			12.8	%			1.0	%			12.5	%			19.2	%			8.7	%			12.1	%			13.0	%

 

(1)	See Footnote (2) Regulation G - Non GAAP Financial Measures on page 1.

 

6

---

 

Assurant, Inc.

Consolidated Condensed Statements of Operations (continued)

(Unaudited)

 

($ in thousands, except per share data and closing stock price)		2010												2009																Nine Months
		3Q				2Q				1Q				4Q				3Q				2Q				1Q				2010				2009
Share repurchases:
Shares repurchased			1,237,000				6,066,216				3,426,469				—				1,122,050				—				—				10,729,685				1,122,050
Average repurchase price per share		$	36.27			$	35.46			$	31.86			$	—			$	28.47			$	—			$	—			$	34.41			$	28.47
Total cost of share repurchase		$	44,866			$	215,110			$	109,184			$	—			$	31,948			$	—			$	—			$	369,160			$	31,948
AIZ Closing stock price (NYSE)		$	40.70			$	34.70			$	34.38			$	29.48			$	32.06			$	24.09			$	21.78			$	40.70			$	32.06
Investment yield (2)			5.05	%			5.02	%			4.98	%			4.96	%			5.08	%			5.23	%			5.32	%			5.01	%			5.19	%

 

(2)	Investment yield excludes investment (loss) income from real estate joint venture partnerships.

 

7

---

 

Assurant Solutions

Condensed Statements of Operations

(Unaudited)

 

		2010												2009																Nine Months
($ in thousands)		3Q				2Q				1Q				4Q				3Q				2Q				1Q				2010				2009
Revenues:
Net earned premiums and other considerations		$	611,264			$	629,682			$	645,364			$	690,150			$	669,344			$	666,935			$	644,612			$	1,886,310			$	1,980,891
Net investment income			99,084				98,956				98,453				98,447				97,681				97,106				97,995				296,493				292,782
Fees and other income			59,090				54,580				45,712				62,466				50,093				51,960				52,031				159,382				154,084
			769,438				783,218				789,529				851,063				817,118				816,001				794,638				2,342,185				2,427,757
Benefits, losses and expenses:
Policyholder benefits			223,597				228,776				227,631				246,871				248,933				261,325				272,022				680,004				782,280
Selling, underwriting, general and administrative expenses			496,032				503,172				511,090				550,139				520,217				509,388				475,604				1,510,294				1,505,209
			719,629				731,948				738,721				797,010				769,150				770,713				747,626				2,190,298				2,287,489
Income before provision for income taxes			49,809				51,270				50,808				54,053				47,968				45,288				47,012				151,887				140,268
Provision for income taxes			17,476				20,947				21,942				23,850				16,324				17,394				16,701				60,365				50,419
Net operating income		$	32,333			$	30,323			$	28,866			$	30,203			$	31,644			$	27,894			$	30,311			$	91,522			$	89,849
Net earned premiums and other considerations:
Domestic:
Credit		$	46,791			$	47,343			$	50,928			$	53,050			$	59,562			$	62,740			$	65,941			$	145,062			$	188,243
Service contracts			313,861				336,043				339,096				362,404				348,258				354,783				346,508				989,000				1,049,549
Other			11,677				12,723				12,213				23,835				24,471				22,054				14,579				36,613				61,104
Total Domestic			372,329				396,109				402,237				439,289				432,291				439,577				427,028				1,170,675				1,298,896
International:
Credit			87,901				83,360				86,739				85,711				80,743				79,835				74,173				258,000				234,751
Service contracts			116,049				109,275				117,189				122,053				108,458				97,280				87,903				342,513				293,641
Other			4,217				5,261				4,106				3,939				4,025				4,107				3,660				13,584				11,792
Total International			208,167				197,896				208,034				211,703				193,226				181,222				165,736				614,097				540,184
Preneed:
Domestic and international			25,439				27,112				29,045				33,374				37,123				39,229				44,486				81,596				120,838
Domestic independent runoff			5,329				8,565				6,048				5,784				6,704				6,907				7,362				19,942				20,973
Total Preneed			30,768				35,677				35,093				39,158				43,827				46,136				51,848				101,538				141,811
Total		$	611,264			$	629,682			$	645,364			$	690,150			$	669,344			$	666,935			$	644,612			$	1,886,310			$	1,980,891
Fees and other income:
Domestic:
Debt protection		$	7,541			$	8,434			$	9,636			$	10,014			$	10,541			$	10,232			$	9,271			$	25,611			$	30,044
Service contracts			29,216				27,509				23,156				28,249				23,384				23,068				27,709				79,881				74,161
Other			2,127				2,108				2,555				4,551				4,443				5,593				3,947				6,790				13,983
Total Domestic			38,884				38,051				35,347				42,814				38,368				38,893				40,927				112,282				118,188
International			7,561				6,920				6,395				6,928				7,400				7,330				6,072				20,876				20,802
Preneed			12,645				9,609				3,970				12,724				4,325				5,737				5,032				26,224				15,094
Total		$	59,090			$	54,580			$	45,712			$	62,466			$	50,093			$	51,960			$	52,031			$	159,382			$	154,084

 

8

---

 

Assurant Solutions

Condensed Statements of Operations (continued)

(Unaudited)

 

		2010												2009																Nine Months
($ in thousands)		3Q				2Q				1Q				4Q				3Q				2Q				1Q				2010				2009
Gross written premiums:
Domestic:
Credit		$	109,389			$	107,259			$	103,870			$	120,139			$	134,597			$	136,450			$	135,346			$	320,518			$	406,393
Service contracts			272,044				291,426				277,729				261,165				259,316				245,306				246,883				841,199				751,505
Other			17,014				15,293				14,918				18,842				14,210				43,985				15,074				47,225				73,269
Total Domestic			398,447				413,978				396,517				400,146				408,123				425,741				397,303				1,208,942				1,231,167
International:
Credit			238,510				240,348				246,532				252,660				221,581				197,605				171,379				725,390				590,565
Service contracts			129,984				110,116				121,292				139,144				118,256				98,494				107,070				361,392				323,820
Other			5,159				6,330				5,216				6,794				7,652				6,734				5,387				16,705				19,773
Total International			373,653				356,794				373,040				398,598				347,489				302,833				283,836				1,103,487				934,158
Total		$	772,100			$	770,772			$	769,557			$	798,744			$	755,612			$	728,574			$	681,139			$	2,312,429			$	2,165,325
Foreign currency translation (FX) impact (1):
Gross written premiums:
Including FX impact			2.18	%			5.79	%			12.98	%			-5.04	%			-16.29	%			-19.05	%			-23.85	%			6.79	%			-19.72	%
FX impact			2.05	%			4.37	%			6.23	%			3.24	%			-3.12	%			-5.03	%			-6.83	%			4.15	%			-4.99	%
Excluding FX impact			0.13	%			1.42	%			6.75	%			-8.28	%			-13.17	%			-14.02	%			-17.02	%			2.64	%			-14.73	%
Net earned premiums:
Including FX impact			-8.68	%			-5.59	%			0.12	%			-4.43	%			-5.34	%			-4.81	%			-5.69	%			-4.77	%			-5.28	%
FX impact			0.90	%			2.25	%			3.32	%			1.63	%			-2.64	%			-3.76	%			-5.37	%			2.14	%			-3.91	%
Excluding FX impact			-9.58	%			-7.84	%			-3.20	%			-6.06	%			-2.70	%			-1.05	%			-0.32	%			-6.91	%			-1.37	%
Net operating income:
Including FX impact			2.17	%			8.71	%			-4.77	%			154.14	%			55.21	%			-13.79	%			-36.26	%			1.86	%			-10.42	%
FX impact			4.28	%			5.57	%			5.02	%			4.79	%			-8.34	%			3.32	%			-0.51	%			4.93	%			-0.87	%
Excluding FX impact			-2.11	%			3.14	%			-9.79	%			149.35	%			63.55	%			-17.11	%			-35.75	%			-3.07	%			-9.55	%
Combined ratios (a):
Domestic			99.8	%			97.8	%			96.2	%			94.6	%			98.2	%			97.6	%			98.3	%			97.9	%			98.1	%
International			104.1	%			107.3	%			107.8	%			114.5	%			108.8	%			111.6	%			107.3	%			106.3	%			109.3	%
Investment yield (2)			5.55	%			5.47	%			5.41	%			5.40	%			5.36	%			5.41	%			5.45	%			5.48	%			5.39	%

 

(a)	The combined ratio is equal to total benefits, losses and expenses divided by net earned premiums and other considerations and fees and other income excluding the preneed business.

(1)	Total Solutions percentage growth from year-ago period due to conversion of income statement transactions at weighted average foreign currency exchange rates.

(2)	Investment yield excludes investment income (loss) from real estate joint venture partnerships.

 

9

---

 

Assurant Solutions - Preneed

Condensed Statements of Operations

(Unaudited)

 

		2010												2009																Nine Months
($ in thousands)		3Q				2Q				1Q				4Q				3Q				2Q				1Q				2010				2009
Revenues:
Net earned premiums and other considerations		$	30,768			$	35,678			$	35,093			$	39,158			$	43,827			$	46,136			$	51,848			$	101,539			$	141,811
Net investment income			61,585				61,103				60,873				59,553				58,655				56,923				57,299				183,561				172,877
Fees and other income:
Change in value of CPI Caps) (1)			(585	)			(916	)			(4,424	)			5,086				(656	)			(35	)			1,779				(5,925	)			1,088
Other			13,231				10,526				8,394				7,638				4,981				5,772				3,253				32,151				14,006
Total fees and other income			12,646				9,610				3,970				12,724				4,325				5,737				5,032				26,226				15,094
			104,999				106,391				99,936				111,435				106,807				108,796				114,179				311,326				329,782
Benefits, losses and expenses:
Policyholder benefits			60,450				65,132				65,199				66,532				67,055				70,929				78,392				190,781				216,376
Selling, underwriting, general and administrative expenses			24,413				22,545				21,687				23,880				21,468				22,457				24,655				68,645				68,580
			84,863				87,677				86,886				90,412				88,523				93,386				103,047				259,426				284,956
Income before provision for income taxes			20,136				18,714				13,050				21,023				18,284				15,410				11,132				51,900				44,826
Income before provision for income taxes excluding CPI Cap			20,721				19,630				17,474				15,937				18,940				15,445				9,353				57,825				43,738
Provision for income taxes			6,907				6,895				4,657				7,162				6,524				5,338				3,834				18,459				15,696
Net operating income		$	13,229			$	11,819			$	8,393			$	13,861			$	11,760			$	10,072			$	7,298			$	33,441			$	29,130
Face sales		$	211,834			$	216,681			$	151,074			$	145,678			$	137,301			$	126,263			$	103,124			$	579,589			$	366,688
CPI Cap value		$	7,030			$	7,615			$	8,531			$	12,955			$	7,869			$	8,525			$	8,560			$	7,030			$	7,869
Preneed yield (2)			5.85	%			5.85	%			5.91	%			5.87	%			5.89	%			5.83	%			5.94	%			5.86	%			5.88	%
Preneed average invested assets		$	4,207,980			$	4,178,346			$	4,118,775			$	4,055,563			$	3,996,330			$	3,907,868			$	3,861,302			$	4,173,332			$	3,928,816

 

(1)

The Company utilizes derivative instruments, Consumer Price Index Caps ("CPI Caps"), in managing the pre-arranged funeral business exposure to inflation risk on certain policies. The CPI Caps do not qualify under GAAP as effective hedges; therefore, they are marked-to-market on a quarterly basis and the accumulated gain or loss is recognized in the statement of operations in fees and other income.

(2)	Investment yield excludes investment income (loss) from real estate joint venture partnerships.

 

10

---

 

Assurant Specialty Property

Condensed Statements of Operations

(Unaudited)

 

		2010												2009																Nine Months
($ in thousands)		3Q				2Q				1Q				4Q				3Q				2Q				1Q				2010				2009
Revenues:
Net earned premiums and other considerations		$	481,108			$	477,122			$	508,822			$	497,200			$	478,701			$	477,838			$	493,790			$	1,467,052			$	1,450,329
Net investment income			27,064				27,022				26,921				26,031				26,550				28,320				29,436				81,007				84,306
Fees and other income			18,544				18,848				13,100				14,824				15,100				13,642				13,324				50,492				42,066
			526,716				522,992				548,843				538,055				520,351				519,800				536,550				1,598,551				1,576,701
Benefits, losses and expenses:
Policyholder benefits			165,977				175,206				162,533				162,139				156,076				178,167				167,800				503,716				502,043
Selling, underwriting, general and administrative expenses			197,992				189,846				207,017				212,203				206,992				203,416				209,917				594,855				620,325
			363,969				365,052				369,550				374,342				363,068				381,583				377,717				1,098,571				1,122,368
Income before provision for income taxes			162,747				157,940				179,293				163,713				157,283				138,217				158,833				499,980				454,333
Provision for income taxes			56,094				54,223				60,815				56,769				54,126				46,989				54,165				171,132				155,280
Net operating income		$	106,653			$	103,717			$	118,478			$	106,944			$	103,157			$	91,228			$	104,668			$	328,848			$	299,053
Net earned premiums:
Homeowners (Creditor-Placed & Voluntary)		$	330,375			$	325,735			$	354,409			$	351,178			$	333,068			$	336,338			$	348,447			$	1,010,519			$	1,017,853
Manufactured Housing (Creditor-Placed & Voluntary)			54,120				53,686				57,500				54,609				54,347				55,128				55,876				165,306				165,351
Other			96,613				97,701				96,913				91,413				91,286				86,372				89,467				291,227				267,125
Total		$	481,108			$	477,122			$	508,822			$	497,200			$	478,701			$	477,838			$	493,790			$	1,467,052			$	1,450,329
Gross earned premiums:
Homeowners (Creditor-Placed & Voluntary)		$	463,138			$	446,650			$	463,570			$	460,289			$	427,030			$	430,568			$	437,391			$	1,373,358			$	1,294,989
Manufactured Housing (Creditor-Placed & Voluntary)			76,132				76,688				79,693				76,339				76,448				77,083				77,484				232,513				231,015
Other			162,359				160,897				155,471				150,695				150,604				147,449				151,429				478,727				449,482
Total		$	701,629			$	684,235			$	698,734			$	687,323			$	654,082			$	655,100			$	666,304			$	2,084,598			$	1,975,486
Gross written premiums:
Homeowners (Creditor-Placed & Voluntary)		$	482,756			$	435,403			$	440,073			$	533,454			$	437,835			$	437,271			$	412,706			$	1,358,232			$	1,287,812
Manufactured Housing (Creditor-Placed & Voluntary)			76,008				74,219				80,040				76,441				75,935				77,969				69,852				230,267				223,756
Other			165,518				195,609				156,853				157,209				167,968				154,864				131,701				517,980				454,533
Total		$	724,282			$	705,231			$	676,966			$	767,104			$	681,738			$	670,104			$	614,259			$	2,106,479			$	1,966,101
Reconciliation of gross earned premiums to net earned premiums:
Gross earned premiums		$	701,629			$	684,235			$	698,734			$	687,323			$	654,082			$	655,100			$	666,304			$	2,084,598			$	1,975,486
Ceded catastrophe reinsurance and reinstatements			(49,905	)			(47,735	)			(45,129	)			(46,945	)			(48,794	)			(44,688	)			(42,994	)			(142,769	)			(136,476	)
Ceded to clients including U.S. Government			(170,616	)			(159,378	)			(144,783	)			(143,178	)			(126,587	)			(132,574	)			(129,520	)			(474,777	)			(388,681	)
Net earned premiums		$	481,108			$	477,122			$	508,822			$	497,200			$	478,701			$	477,838			$	493,790			$	1,467,052			$	1,450,329

 

11

---

 

Assurant Specialty Property (continued)

Condensed Statements of Operations

(Unaudited)

 

		2010												2009																Nine Months
($ in thousands)		3Q				2Q				1Q				4Q				3Q				2Q				1Q				2010				2009
Creditor-Placed Homeowners Insurance (1):
Loans tracked (in millions):
Prime			25.4				25.6				25.6				25.6				25.7				25.4				25.7				25.4				25.7
Sub-prime			3.5				3.6				3.6				3.9				3.8				3.6				3.8				3.5				3.8
Total			28.9				29.2				29.2				29.5				29.5				29.0				29.5				28.9				29.5
Average placement rates (2):
Prime			1.38	%			1.32	%			1.28	%			1.24	%			1.18	%			1.18	%			1.13	%			1.38	%			1.18	%
Sub-prime			9.54	%			9.54	%			9.54	%			9.51	%			9.51	%			9.39	%			9.14	%			9.54	%			9.51	%
Average insured value (AIV):
Creditor-placed		$	180			$	179			$	179			$	177			$	174			$	172			$	168			$	180			$	174
Real estate owned		$	232			$	234			$	228			$	227			$	226			$	228			$	228			$	232			$	226
Percent of creditor-placed premiums from real estate owned policies:
% of gross earned premiums			12	%			12	%			12	%			12	%			14	%			16	%			20	%			12	%			17	%
% of gross written premiums			7	%			12	%			12	%			9	%			12	%			12	%			20	%			10	%			15	%
Geographical spread of exposure (3):
U.S. Region:
Middle U.S.			15.0	%			15.1	%			15.2	%			15.9	%			16.2	%			16.3	%			16.5	%			15.0	%			16.2	%
Northeastern coastal			17.0	%			16.6	%			16.1	%			15.9	%			15.2	%			14.7	%			14.2	%			17.0	%			15.2	%
Northern inland			3.7	%			3.6	%			3.7	%			3.7	%			3.8	%			3.8	%			3.8	%			3.7	%			3.8	%
Southern inland			8.9	%			8.9	%			9.4	%			9.9	%			9.8	%			9.7	%			9.5	%			8.9	%			9.8	%
Southern and Hawaii coastal			23.9	%			24.0	%			23.3	%			22.4	%			21.9	%			21.5	%			20.8	%			23.9	%			21.9	%
West			31.5	%			31.8	%			32.3	%			32.2	%			33.1	%			34.0	%			35.2	%			31.5	%			33.1	%
Total			100.0	%			100.0	%			100.0	%			100.0	%			100.0	%			100.0	%			100.0	%			100.0	%			100.0	%
Ratios:
Loss ratio (a)			34.5	%			36.7	%			31.9	%			32.6	%			32.6	%			37.3	%			34.0	%			34.3	%			34.6	%
Expense ratio (b)			39.6	%			38.3	%			39.7	%			41.4	%			41.9	%			41.4	%			41.4	%			39.2	%			41.6	%
Combined ratio (c)			72.8	%			73.6	%			70.8	%			73.1	%			73.5	%			77.6	%			74.5	%			72.4	%			75.2	%
Investment yield (4)			4.52	%			4.39	%			4.56	%			4.42	%			4.46	%			4.77	%			4.87	%			4.54	%			4.68	%

 

(a)	The loss ratio is equal to policyholder benefits divided by net earned premiums and other considerations.

(b)	The expense ratio is equal to selling, underwriting, general and administrative expenses divided by net earned premiums and other considerations and fees and other income.

(c)	The combined ratio is equal to total benefits, losses and expenses divided by net earned premiums and other considerations and fees and other income.

(1)	Estimates based on client information and classification.

(2)	Does not include real estate owned policies.

(3)	Geographical spread of exposure is based on the Company’s assessment of total insured value for all of Assurant Specialty Property.

(4)	Investment yield excludes investment income (loss) from real estate joint venture partnerships.

 

12

---

 

Assurant Health

Condensed Statements of Operations

(Unaudited)

 

		2010												2009																Nine Months
($ in thousands)		3Q				2Q				1Q				4Q				3Q				2Q				1Q				2010				2009
Revenues:
Net earned premiums and other considerations		$	467,726			$	467,705			$	467,442			$	468,002			$	470,385			$	468,895			$	472,346			$	1,402,873			$	1,411,626
Net investment income			11,985				12,078				11,565				11,338				11,770				12,073				12,477				35,628				36,320
Fees and other income			10,027				10,248				10,408				9,978				10,140				9,847				9,914				30,683				29,901
			489,738				490,031				489,415				489,318				492,295				490,815				494,737				1,469,184				1,477,847
Benefits, losses and expenses:
Policyholder benefits			334,216				312,767				333,640				377,155				353,412				357,644				321,960				980,623				1,033,016
Selling, underwriting, general and administrative expenses			145,694				138,801				143,119				157,826				147,475				149,157				150,240				427,614				446,872
			479,910				451,568				476,759				534,981				500,887				506,801				472,200				1,408,237				1,479,888
Income (loss) before provision (benefit) for income taxes			9,828				38,463				12,656				(45,663	)			(8,592	)			(15,986	)			22,537				60,947				(2,041	)
Provision (benefit) for income taxes			4,488				13,163				4,287				(15,948	)			(3,745	)			(5,656	)			7,865				21,938				(1,536	)
Net operating income (loss)		$	5,340			$	25,300			$	8,369			$	(29,715	)		$	(4,847	)		$	(10,330	)		$	14,672			$	39,009			$	(505	)
Net earned premiums and other considerations:
Individual:
Individual medical		$	323,871			$	324,079			$	321,783			$	319,215			$	317,820			$	316,093			$	317,070			$	969,733			$	950,983
Short-term medical			22,131				21,434				22,118				24,308				27,278				26,604				26,048				65,683				79,930
Subtotal			346,002				345,513				343,901				343,523				345,098				342,697				343,118				1,035,416				1,030,913
Small employer group			121,724				122,192				123,541				124,479				125,287				126,198				129,228				367,457				380,713
Total		$	467,726			$	467,705			$	467,442			$	468,002			$	470,385			$	468,895			$	472,346			$	1,402,873			$	1,411,626
Sales (annualized issued premiums):
Individual:
Individual medical		$	59,421			$	83,696			$	94,249			$	92,068			$	91,434			$	84,707			$	88,769			$	237,366			$	264,910
Short-term medical			27,152				26,262				28,314				27,870				34,296				34,509				37,199				81,728				106,004
Subtotal			86,573				109,958				122,563				119,938				125,730				119,216				125,968				319,094				370,914
Small employer group			30,157				30,445				35,705				33,701				31,588				37,708				29,978				96,307				99,274
Total		$	116,730			$	140,403			$	158,268			$	153,639			$	157,318			$	156,924			$	155,946			$	415,401			$	470,188
Membership by product line (in thousands):
Individual:
Individual medical			538				558				564				568				568				570				572				538				568
Short-term medical			70				73				71				78				91				95				94				70				91
Subtotal			608				631				635				646				659				665				666				608				659
Small employer group			113				116				118				121				122				123				123				113				122
Total			721				747				753				767				781				788				789				721				781
Ratios:
Loss ratio (a)			71.5	%			66.9	%			71.4	%			80.6	%			75.1	%			76.3	%			68.2	%			69.9	%			73.2	%
Expense ratio (b)			30.5	%			29.0	%			30.0	%			33.0	%			30.7	%			31.2	%			31.2	%			29.8	%			31.0	%
Combined ratio (c)			100.5	%			94.5	%			99.8	%			111.9	%			104.2	%			105.9	%			97.9	%			98.2	%			102.7	%
Investment yield (1)			4.99	%			5.01	%			4.82	%			4.82	%			5.24	%			5.45	%			5.59	%			4.93	%			5.40	%

 

(a)	The loss ratio is equal to policyholder benefits divided by net earned premiums and other considerations.

(b)	The expense ratio is equal to selling, underwriting, general and administrative expenses divided by net earned premiums and other considerations and fees and other income.

(c)	The combined ratio is equal to total benefits, losses and expenses divided by net earned premiums and other considerations and fees and other income.

(1)	Investment yield excludes investment (loss) income from real estate joint venture partnerships.

 

13

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Assurant Employee Benefits

Condensed Statements of Operations

(Unaudited)

 

		2010												2009																Nine Months
($ in thousands)		3Q				2Q				1Q				4Q				3Q				2Q				1Q				2010				2009
Revenues:
Net earned premiums and other considerations		$	272,416			$	275,386			$	285,015			$	270,140			$	255,968			$	262,198			$	263,831			$	832,817			$	781,997
Net investment income			33,599				32,599				32,810				32,703				33,039				33,466				34,157				99,008				100,662
Fees and other income			5,528				6,252				7,311				6,578				7,467				7,540				6,758				19,091				21,765
			311,543				314,237				325,136				309,421				296,474				303,204				304,746				950,916				904,424
Benefits, losses and expenses:
Policyholder benefits			189,463				190,555				204,242				188,940				182,632				186,770				198,728				584,260				568,130
Selling, underwriting, general and administrative expenses			96,162				104,667				95,922				103,092				96,529				97,993				95,287				296,751				289,809
			285,625				295,222				300,164				292,032				279,161				284,763				294,015				881,011				857,939
Income before provision for income taxes			25,918				19,015				24,972				17,389				17,313				18,441				10,731				69,905				46,485
Provision for income taxes			8,986				6,622				8,505				5,833				5,863				6,313				3,709				24,113				15,885
Net operating income		$	16,932			$	12,393			$	16,467			$	11,556			$	11,450			$	12,128			$	7,022			$	45,792			$	30,600
Net earned premiums and other considerations:
Group dental		$	103,786			$	104,778			$	107,581			$	108,910			$	105,507			$	105,306			$	105,565			$	316,145			$	316,378
All other group disability			120,562				121,880				129,927				112,722				103,460				108,495				109,704				372,369				321,659
Group life			48,068				48,728				47,507				48,508				47,001				48,397				48,562				144,303				143,960
Total		$	272,416			$	275,386			$	285,015			$	270,140			$	255,968			$	262,198			$	263,831			$	832,817			$	781,997
Sales (1):
Group dental		$	15,897			$	12,842			$	33,549			$	14,354			$	21,202			$	16,904			$	31,573			$	62,288			$	69,679
Group disability			7,734				7,257				13,516				6,351				10,587				8,207				14,172				28,507				32,966
Group life			6,418				5,188				8,517				4,509				6,547				5,086				9,859				20,123				21,492
Total		$	30,049			$	25,287			$	55,582			$	25,214			$	38,336			$	30,197			$	55,604			$	110,918			$	124,137
Loss ratio (a)			69.5	%			69.2	%			71.7	%			69.9	%			71.3	%			71.2	%			75.3	%			70.2	%			72.7	%
Expense ratio (b)			34.6	%			37.2	%			32.8	%			37.3	%			36.6	%			36.3	%			35.2	%			34.8	%			36.1	%
Investment yield (2)			5.83	%			5.78	%			5.77	%			5.79	%			5.88	%			5.86	%			5.98	%			5.80	%			5.92	%

 

(a)	The loss ratio is equal to policyholder benefits divided by net earned premiums and other considerations.

(b)	The expense ratio is equal to selling, underwriting, general and administrative expenses divided by net earned premiums and other considerations and fees and other income.

(1)	Sales do not include any sales from assumed business, only direct.

(2)	Investment yield excludes investment (loss) income from real estate joint venture partnerships.

 

14

---

 

Assurant Corporate and Other

Condensed Statements of Operations

(Unaudited)

 

		2010												2009																Nine Months
($ in thousands)		3Q				2Q				1Q				4Q				3Q				2Q				1Q				2010				2009
Revenues:
Net earned premiums and other considerations		$	—			$	—			$	—			$	—			$	—			$	—			$	—			$	—			$	—
Net investment income			4,438				4,541				4,265				3,984				3,884				3,967				4,414				13,244				12,265
Net realized gains (losses) on investments			6,043				19,152				4,473				(11,632	)			19,866				(6,142	)			(55,689	)			29,668				(41,965	)
Amortization of deferred gains on disposal of businesses			6,024				6,024				6,081				2,107				6,802				6,750				6,802				18,129				20,354
Fees and other income			31				99				114				(174	)			83				139,214				1,679				244				140,976
			16,536				29,816				14,933				(5,715	)			30,635				143,789				(42,794	)			61,285				131,630
Benefits, losses and expenses:
Policyholder benefits			—				(1,988	)			(50	)			1,988				92				5,496				(168	)			(2,038	)			5,420
Selling, underwriting, general and administrative expenses			22,944				29,875				19,185				22,474				20,289				27,575				23,431				72,004				71,295
Interest expense			15,162				15,161				15,161				15,160				15,160				15,160				15,189				45,484				45,509
			38,106				43,048				34,296				39,622				35,541				48,231				38,452				115,450				122,224
(Loss) income before (benefit) provision for income taxes			(21,570	)			(13,232	)			(19,363	)			(45,337	)			(4,906	)			95,558				(81,246	)			(54,165	)			9,406
(Benefit) provision for income taxes			(1,982	)			(6,174	)			(4,406	)			(21,290	)			(8,232	)			23,156				(5,154	)			(12,562	)			9,770
Net (loss) income		$	(19,588	)		$	(7,058	)		$	(14,957	)		$	(24,047	)		$	3,326			$	72,402			$	(76,092	)		$	(41,603	)		$	(364	)
Corporate and Other Reconciliation
Assurant Corporate and Other Segment Net (loss) income		$	(19,588	)		$	(7,058	)		$	(14,957	)		$	(24,047	)		$	3,326			$	72,402			$	(76,092	)		$	(41,603	)		$	(364	)
Adjustments, net of tax:
Amortization of deferred gains on disposal of businesses			(3,916	)			(3,916	)			(3,953	)			(1,370	)			(4,421	)			(4,388	)			(4,421	)			(11,785	)			(13,230	)
Interest expense			9,855				9,855				9,855				9,854				9,854				9,854				9,873				29,565				29,581
Net realized (gains) losses on investments			(3,928	)			(12,449	)			(2,907	)			7,561				(12,913	)			3,992				36,198				(19,284	)			27,277
Change in tax valuation allowance			—				—				—				(936	)			(7,043	)			(13,021	)			21,000				—				936
Legal settlement and related expenses			—				—				—				—				1,454				(84,996	)			—				—				(83,542	)
Corporate and other line item result (1)		$	(17,577	)		$	(13,568	)		$	(11,962	)		$	(8,938	)		$	(9,743	)		$	(16,157	)		$	(13,442	)		$	(43,107	)		$	(39,342	)

 

(1)	Reconciles to Corporate and other result per Reconciliation of Net Operating Income to Net Income (Loss) on page 5.

 

15

---

 

Assurant, Inc.

Investments

(Unaudited)

 

($ in thousands)		At September 30, 2010								At December 31, 2009
Investments by type
Fixed maturity securities available for sale, at fair value		$	10,823,195				71.8	%		$	9,966,772				68.9	%
Equity securities available for sale, at fair value
Preferred stock			491,034				3.3	%			508,458				3.5	%
Common stock			5,068				—				4,529				—
Commercial mortgage whole loans on real estate, at amortized cost			1,355,871				9.0	%			1,428,027				9.9	%
Policy loans			56,685				0.4	%			56,407				0.4	%
Short-term investments			452,008				3.0	%			453,469				3.1	%
Collateral held under securities lending			134,348				0.9	%			218,129				1.5	%
Other investments			581,917				3.8	%			522,041				3.6	%
Total investments			13,900,126				92.2	%			13,157,832				90.9	%
Cash and cash equivalents			1,168,307				7.8	%			1,318,552				9.1	%
Total investments and cash and cash equivalents		$	15,068,433				100.0	%		$	14,476,384				100.0	%
Fixed Maturity Securities by Credit Quality (Fair Value)
Aaa / Aa / A		$	6,619,971				61.1	%		$	6,152,842				61.8	%
Baa			3,309,157				30.6	%			2,953,964				29.6	%
Ba			658,234				6.1	%			647,321				6.5	%
B and lower			235,833				2.2	%			212,645				2.1	%
Total		$	10,823,195				100.0	%		$	9,966,772				100.0	%

 

16

---

 

Assurant, Inc.

Investments (continued)

(Unaudited)

 

		At September 30, 2010																At December 31, 2009
($ in thousands)		Book Value				Fair Value				% of Fair Value				Net Unrealized Gain				Book Value				Fair Value				% of Fair Value				Net Unrealized Gain (Loss)
Fixed Maturity Securities by Issuer Type:
Government:
U.S. Government and government agencies		$	168,795			$	177,390				1.6	%		$	8,595			$	115,268			$	120,330				1.2	%		$	5,062
State, municipalities and political subdivisions			831,906				911,042				8.4	%			79,136				873,548				910,068				9.1	%		$	36,520
Foreign governments			602,062				643,028				5.9	%			40,966				545,166				558,463				5.6	%		$	13,297
Corporate (1):
Canadian Municipals			79,464				87,509				0.8	%			8,045				67,603				68,841				0.7	%			1,238
Consumer cyclical			1,046,106				1,161,538				10.7	%			115,432				975,965				1,014,735				10.2	%			38,770
Consumer non-cyclical			335,384				379,932				3.5	%			44,548				306,841				322,638				3.2	%			15,797
Energy			704,320				788,353				7.3	%			84,033				751,097				790,437				7.9	%			39,340
Financials			2,028,558				2,155,681				19.9	%			127,123				2,088,433				2,075,697				20.8	%			(12,736	)
Health care			393,341				438,869				4.1	%			45,528				416,581				431,155				4.3	%			14,574
Industrials			891,077				987,506				9.1	%			96,429				874,504				899,217				9.0	%			24,713
Materials			308,000				329,836				3.1	%			21,836				287,338				292,502				2.9	%			5,164
Technology			164,455				183,218				1.7	%			18,763				150,542				156,272				1.6	%			5,730
Telecommunications			488,207				545,592				5.1	%			57,385				474,025				502,267				5.0	%			28,242
Utilities			904,604				1,023,553				9.5	%			118,949				856,645				894,794				9.0	%			38,149
Other corporate			—				—				0.0	%			—				349				357				0.0	%			8
Asset-backed securities			43,817				46,756				0.4	%			2,939				51,834				53,963				0.5	%			2,129
Commercial mortgage-backed securities			107,215				113,373				1.0	%			6,158				159,780				159,907				1.6	%			127
Residential mortgage-backed securities (RMBS):
Agency			784,056				825,225				7.6	%			41,169				663,407				690,632				6.9	%			27,225
Alt-A			—				—				0.0	%			—				—				—				0.0	%			—
Subprime			14,198				17,601				0.2	%			3,403				17,739				17,307				0.3	%			(432	)
Other			3,778				3,836				0.1	%			58				4,227				4,064				0.1	%			(163	)
Collaterized debt obligations:
Credit backed			2,741				3,357				0.0	%			616				3,191				3,126				0.1	%			(65	)
RMBS backed			—				—				0.0	%			—				—				—				0.0	%			—
Total fixed maturity securities		$	9,902,084			$	10,823,195				100.0	%		$	921,111			$	9,684,083			$	9,966,772				100.0	%		$	282,689

 

(1)	Industry classifications are based on a combination of published index classifications as well as Assurant's view of underlying issuer risk. These resulting classifications are then mapped to the Global Industry Classification Standard (GICS®).

 

17

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Assurant, Inc.

Investment Results by Asset Category and Annualized Yields

(Unaudited)

 

		Quarter Ended September 30 2010												Quarter Ended September 30 2009
($ in thousands)		Yield				Investment Income				Net realized gain (loss)				Yield				Investment Income				Net realized gain (loss)
Fixed maturity securities, available for sale			5.76	%		$	143,412			$	13,895				5.82	%		$	139,803			$	18,659
Equity securities, available for sale			7.01	%			8,350				2,057				7.43	%			9,683				825
Commercial mortgage whole loans on real estate			6.26	%			21,381				(9,000	)			6.30	%			22,983				—
Policy loans			6.28	%			886				—				6.09	%			860				—
Cash and short-term investments			0.82	%			3,116				4				0.86	%			3,247				94
Other investments*			3.62	%			5,254				(913	)			2.41	%			3,192				288
Total							182,399			$	6,043								179,768			$	19,866
Investment expenses							(6,229	)											(6,844	)
Net investment income						$	176,170											$	172,924
Gross realized gains										$	19,093											$	25,458
Gross realized losses											(11,813	)											(2,950	)
Other-than-temporary impairments on available for sale securities											(1,237	)											(2,642	)
Net realized gains (losses) on investments										$	6,043											$	19,866
		Nine Months Ended September 30 2010												Nine Months Ended September 30 2009
		Yield				Investment Income				Net realized gain (loss)				Yield				Investment Income				Net realized gain (loss)
Fixed maturity securities, available for sale			5.78	%		$	429,949			$	37,035				5.91	%		$	418,343			$	(80	)
Equity securities, available for sale			7.00	%			25,901				4,487				7.30	%			29,069				(35,570	)
Commercial mortgage whole loans on real estate			6.23	%			64,990				(15,772	)			6.31	%			70,085				(5,306	)
Policy loans			5.53	%			2,340				—				5.71	%			2,451				—
Cash and short-term investments			0.67	%			7,710				11				1.20	%			13,665				147
Other investments*			3.27	%			13,778				3,907				3.44	%			13,202				(1,156	)
Total							544,668			$	29,668								546,815			$	(41,965	)
Investment expenses							(19,288	)											(20,480	)
Net investment income						$	525,380											$	526,335
Gross realized gains										$	57,317											$	40,804
Gross realized losses											(23,612	)											(50,374	)
Other-than-temporary impairments on available for sale securities											(4,037	)											(32,395	)
Net realized losses on investments										$	29,668											$	(41,965	)

 

*	Consists primarily of investments in joint venture partnerships, invested assets associated with a modified coinsurance agreement, and invested assets associated with deferred compensation plans.

 

18

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Assurant, Inc.

Summary of Net Operating Income ⁽¹⁾ Disclosed Items

Income / (Expense) Items

(Unaudited)

 

						2010																								2009
($ in millions, after-tax)						3Q								2Q								1Q								4Q								3Q								2Q								1Q
						$				Diluted EPS				$				Diluted EPS				$				Diluted EPS				$				Diluted EPS				$				Diluted EPS				$				Diluted EPS				$				Diluted EPS
Assurant Solutions:
Restructuring costs			(d	)			—				—				—				—				—				—				(8.4	)			(0.07	)			—				—				(2.4	)			(0.02	)			—				—
Change in various tax liabilities/receivables			(e	)			—				—				—				—				(2.8	)			(0.02	)			—				—				—				—				—				—				—				—
Assurant Specialty Property:
Catastrophe losses, net of reinsurance			(c	)			—				—				(5.0	)			(0.04	)			—				—				—				—				—				—				—				—				—				—
Restructuring costs			(d	)			—				—				—				—				—				—				—				—				—				—				(2.5	)			(0.02	)			—				—
Subrogation reimbursement			(c	)			—				—				—				—				—				—				—				—				5.9				0.05				—				—				—				—
Unearned premium reserve review adjustment (2)			(a	)			—				—				—				—				7.6				0.06				—				—				—				—				—				—				—				—
Assurant Health:
Reserve strengthening			(c	)			—				—				—				—				—				—				—				—				—				—				(9.0	)			(0.08	)			—				—
Litigation reserve			(c	)			—				—				17.4				0.15				—				—				(24.0	)			(0.20	)			(8.1	)			(0.07	)			—				—				—				—
Restructuring costs			(d	)			(5.0	)			(0.05	)			—				—				—				—				(2.9	)			(0.02	)			—				—				—				—				—				—
H1N1 related medical expenses			(c	)			—				—				—				—				—				—				(2.5	)			(0.02	)			—				—				—				—				—				—
Assurant Employee Benefits:
Reserve adequacy study adjustment			(c	)			—				—				—				—				—				—				2.1				0.02				—				—				—				—				—				—
Restructuring costs			(d	)			—				—				(4.4	)			(0.04	)			—				—				(1.0	)			(0.01	)			—				—				(1.5	)			(0.01	)			—				—
Assurant Corporate and Other:
Expenses related to SEC investigation (3)			(d	)			—				—				—				—				—				—				(3.5	)			(0.03	)			—				—				—				—				—				—
Change in various tax liabilities/receivables			(e	)			—				—				—				—				—				—				4.5				0.04				—				—				—				—				—				—
Compensation expense			(d	)			—				—				—				—				—				—				—				—				—				—				—				—				(4.6	)			(0.04	)
Restructuring costs			(d	)			—				—				(2.9	)			(0.03	)			—				—				—				—				—				—				—				—				—				—

Statement of Operations line impact:

 

(a)	Net earned premiums and other considerations

(b)	Fees and other income

(c)	Policyholder benefits

(d)	Selling, underwriting, general and administrative expenses

(e)	Provision for income taxes

(1)	See Footnote (1) Regulation G - Non GAAP Financial Measures on page 1.

(2)	In the first quarter 2010, the $7.6 million represents the net impact on net operating income. It increased net earned premiums by $13.6 million pre-tax.

(3)	This item includes both SEC investigation-related expenses and reimbursements received related to SEC expenses covered under Director & Officer insurance.

 

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Assurant, Inc.

Ratings Summary

(Unaudited)

 

As of September 30, 2010

A.M. Best

Moody’s

Standard & Poor’s

Outlook

Stable

Stable

Negative

Company

American Bankers Insurance Company

A

A2

A-

American Bankers Insurance Company (CAB)

A

N/A

N/A

American Bankers Life Assurance Company

A-

A3

A-

American Bankers Life Assurance Company (CAB)

A-

N/A

N/A

American Memorial Life Insurance Company

A-

N/A

A-

American Reliable Insurance Company

A

N/A

N/A

American Security Insurance Company

A

A2

A-

Assurant Life of Canada

A-

N/A

N/A

Caribbean American Life Assurance Company

A-

N/A

N/A

Caribbean American Property Insurance Company

A

N/A

N/A

John Alden Life Insurance Company

A-

A3

BBB+

Reliable Lloyds

A

N/A

N/A

Standard Guaranty Insurance Company

A

N/A

N/A

Time Insurance Company

A-

A3

BBB+

UDC Dental California

A-

N/A

N/A

Union Security Dental Care New Jersey

A-

N/A

N/A

Union Security Insurance Company

A-

A3

A-

Union Security Life Insurance Company of New York

A-

N/A

N/A

United Dental Care of Arizona

A-

N/A

N/A

United Dental Care of Colorado

A-

N/A

N/A

United Dental Care of Michigan

NR-3

N/A

N/A

United Dental Care of Missouri

A-

N/A

N/A

United Dental Care of New Mexico

A-

N/A

N/A

United Dental Care of Ohio

NR-3

N/A

N/A

United Dental Care of Texas

A-

N/A

N/A

United Dental Care of Utah

NR-3

N/A

N/A

Voyager Indemnity Insurance Company

A

N/A

N/A

Commercial Paper

AMB-2

P-2

A-2

Senior Debt

bbb

Baa2

BBB

 

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Exhibit I

Assurant, Inc.

Commercial Mortgage Loans Summary ⁽¹⁾

(Unaudited)

 

		As of September 30, 2010
($ in thousands)		Book Value				% of Total
Summary of Commercial Mortgage Loans
Geographic Region
Pacific		$	478,472				34	%
Middle Atlantic			240,694				17	%
New England			167,600				12	%
South Atlantic			162,020				12	%
Mountain			151,499				11	%
West South Central			80,450				6	%
West North Central			42,206				3	%
East South Central			23,904				2	%
Canada			24,956				2	%
East North Central			15,971				1	%
Allowance for loan losses			(31,901	)			—
Total		$	1,355,871				100	%
Property Type
Retail		$	449,846				33	%
Office			459,648				33	%
Industrial			362,758				26	%
Other			57,492				4	%
Apartments			58,028				4	%
Allowance for loan losses			(31,901	)			—
Total		$	1,355,871				100	%
Loan Size
Under $3 million		$	559,489				40	%
$3 million but less than $6 million			439,065				32	%
$6 million but less than $9 million			226,299				16	%
$9 million but less than $12 million			69,660				5	%
$12 million and over			93,259				7	%
Allowance for loan losses			(31,901	)			—
Total		$	1,355,871				100	%

Commercial Mortgage Loan Information by Vintage

As of September 30, 2010

 

Loan year		Book value				Delinquent loan  balance				Number of loans (whole number)				Number of delinquent loans				Average balance per loan				Book value weighted average loan-to-value (2)
2004 and prior		$	515,205				—				260				—			$	1,982				43.89	%
2005			237,412				—				69				—				3,441				64.22	%
2006			158,176				—				60				—				2,636				62.30	%
2007			281,896				—				89				—				3,167				76.65	%
2008			151,563				—				42				—				3,609				68.68	%
2009			18,032				—				3				—				6,011				63.20	%
2010			25,488				—				8				—				3,186				46.53	%
Allowance for loan losses			(31,901)				—				N/A				—				N/A				N/A
Total		$	1,355,871				—				531				—			$	2,553				59.13	%

 

(1)	We originate fixed rate mortgage loans on commercial real estate. We are the sole lender and generally hold these loans to maturity. We do not typically securitize or otherwise sell these loans.

(2)	Based on property appraisals as of September 30, 2010.

 

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Exhibit II

Assurant, Inc. and Subsidiaries

Top 10 Foreign Government Exposures

(unaudited)

 

		As of September 30, 2010
($ in thousands)		Fixed Maturity Securities
Issuer		Fair Value				Book Value				Unrealized Gain/Loss
Province of Ontario		$	124,706			$	112,124			$	12,582
Province of Quebec			77,171				69,636				7,535
Government of Brazil			75,889				75,822				67
Province of British Columbia			74,816				70,188				4,628
United Kingdom of Great Britain			37,696				35,745				1,951
Corp Andina de Fomento			33,538				31,042				2,496
Province of Manitoba			29,106				27,181				1,925
KFW			27,742				27,715				27
Canada Housting Trust			25,015				24,428				587
United Mexican States			22,402				17,792				4,610
Other			114,947				110,389				4,558
		$	643,028			$	602,062			$	40,966

 

22