Exhibit 99.2
Assurant Inc. (AIZ)
Financial Supplement as of March 31, 2004
ASSURANT, INC. AND SUBSIDIARIES
EARNINGS RELEASE SUPPLEMENT
AS OF MARCH 31, 2004
INDEX TO SUPPLEMENT
| Page: | ||||
| REGULATION G – NON GAAP MEASURES | 1 | |||
| SUMMARY FINANCIAL HIGHLIGHTS (unaudited) | 2 | |||
| CONSOLIDATED CONDENSED BALANCE SHEETS (unaudited) | 4 | |||
| RECONCILIATION OF NET OPERATING INCOME TO NET INCOME (unaudited) | 5 | |||
| CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS (unaudited) | 6 | |||
| CONDENSED SEGMENT STATEMENTS OF OPERATIONS (unaudited) | 7 | |||
| INVESTMENTS (unaudited) | 12 | |||
| INVESTMENT RESULTS BY ASSET CATEGORY & ANNUALIZED YIELDS (unaudited) | 13 | |||
About Assurant:
Assurant is a premier provider of specialized insurance products and related services in North America and selected other markets. The four key business segments – Assurant Employee Benefits; Assurant Health, Assurant Preneed; and Assurant Solutions – have partnered with clients who are leaders in their industries and have built leadership positions in a number of specialty insurance markets in the U.S. and selected international markets. The Assurant business segments provide creditor-placed homeowners insurance; manufactured housing homeowners insurance; debt protection administration; credit insurance; warranties and extended services contracts; individual health and small employer group health insurance; group dental insurance; group disability insurance; group life insurance; and pre-funded funeral insurance.
The company, which is traded on the New York Stock Exchange under the symbol AIZ, has approximately $24 billion in assets and $7 billion in annual revenue. Assurant has more than 12,000 employees and is headquartered in New York’s financial district.
Safe Harbor Statement:
Some of the statements included in this statistical supplement, particularly those anticipating future financial performance, business prospects, growth and operating strategies and similar matters, are forward-looking statements that involve a number of risks and uncertainties. For those statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. For a discussion of the factors that could affect our actual results please refer to the risk factors identified from time to time in our SEC reports, which can be accessed on the Assurant website at www.assurant.com.
Regulation G – Non GAAP Measures
Assurant uses the following non-GAAP financial measures to analyze the company’s operating performance for the periods presented in the press release. 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, before the after-tax effect of net realized gains (losses) on investments and the after-tax effect of other 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 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.
(2) Pro forma earnings per share has been included as a measure of operating performance. In February 2004, Assurant completed a significant capital restructuring in conjunction with its initial public offering of common stock. The restructuring included: a stock split and conversion of class B and C shares resulting in total outstanding shares of 109,222,276; the issuance of 32,976,854 shares of common stock to Fortis in exchange for a capital contribution of $725.5 million; and the issuance of 68,976 shares of common stock to certain officers and directors of the company pursuant to specific restricted stock grants (9,546 vested shares and 59,430 unvested shares), resulting in total outstanding shares of 142,208,676. These transactions occurred subsequent to the December 31, 2003 balance sheet, but management believes that this adjusted measure provides a better indication of operating performance than the corresponding GAAP measure, earnings per share.
(3) Book value per share excluding accumulated other comprehensive income (AOCI) has been included as a measure of stockholder value. Book value per share excluding AOCI, equals stockholders’ equity, less the after-tax effect of unrealized gains/(losses) on investments, foreign currency translation and pension underfunding, divided by common shares outstanding. The company believes book value per share excluding AOCI provides investors a better measure of stockholder value than book value per share because it excludes the effect of unrealized gains (losses) on investments and foreign currency translation, which tend to be highly variable from period to period.
(4) Pro Forma book value per share and Pro Forma book value per share excluding accumulated other comprehensive income (AOCI) have been included as measures of stockholder value. In February 2004, Assurant completed a significant capital restructuring in conjunction with its initial public offering of common stock. The restructuring included: a stock split and conversion of class B and C shares resulting in total outstanding shares of 109,222,276; the issuance of 32,976,854 shares of common stock to Fortis in exchange for a capital contribution of $725.5 million; and the issuance of 68,976 shares of common stock to certain officers and directors of the company pursuant to specific restricted stock grants (9,546 vested shares and 59,430 unvested shares), resulting in total outstanding shares of 142,208,676. These transactions occurred subsequent to the December 31, 2003 balance sheet, but management believes that these adjusted measures provide a better indication of stockholder value than the corresponding GAAP measure, book value per share.
1
Assurant, Inc. and Subsidiaries
Summary Financial Highlights
(Unaudited)
| For the Three Months Ended | For the Year Ended | |||||||||||||||||||
| March 31, | December 31, | |||||||||||||||||||
| ($ in thousands, except per share amounts) | 2004 | 2003 | 2003 | 2002 | 2001 | |||||||||||||||
Net operating income (1) | $ | 87,466 | $ | 76,473 | $ | 329,159 | $ | 327,013 | $ | 132,854 | ||||||||||
| Net realized gains (losses) from investments | 9,246 | (3,236 | ) | 1,214 | (76,942 | ) | (77,360 | ) | ||||||||||||
| Gain on disposal of business | — | — | — | 9,669 | 42,559 | |||||||||||||||
| Expenses directly related to the initial public offering | (2,334 | ) | — | (10,937 | ) | — | — | |||||||||||||
| Interest premium on redemption of preferred securities of subsidiary trusts | — | — | (133,784 | ) | — | — | ||||||||||||||
Net income (loss) before cumulative effect of change in accounting principle | $ | 94,378 | $ | 73,237 | $ | 185,652 | $ | 259,740 | $ | 98,053 | ||||||||||
| Cumulative effect of change in accounting principle | — | — | — | (1,260,939 | ) | — | ||||||||||||||
Net income (loss) | $ | 94,378 | $ | 73,237 | $ | 185,652 | $ | (1,001,199 | ) | $ | 98,053 | |||||||||
Total revenues | $ | 1,857,560 | $ | 1,731,740 | $ | 7,066,213 | $ | 6,532,200 | $ | 6,186,874 | ||||||||||
PER SHARE AND SHARE DATA: | ||||||||||||||||||||
| Basic and diluted earnings (loss) per share | ||||||||||||||||||||
| Net income (loss) | $ | 0.73 | $ | 0.67 | $ | 1.70 | $ | (9.17 | ) | $ | 0.90 | |||||||||
| Net income (loss) before cumulative effect of change in accounting principle | $ | 0.73 | $ | 0.67 | $ | 1.70 | $ | 2.38 | $ | 0.90 | ||||||||||
| Net operating income | $ | 0.68 | $ | 0.70 | $ | 3.01 | $ | 2.99 | $ | 1.22 | ||||||||||
| Weighted average of common shares outstanding | 129,521,599 | 109,222,276 | 109,222,276 | 109,222,276 | 109,222,276 | |||||||||||||||
| Pro forma basic and diluted earnings (loss) per share (2) | ||||||||||||||||||||
| Net income (loss) | $ | 0.66 | $ | 0.51 | $ | 1.31 | $ | (7.04 | ) | $ | 0.69 | |||||||||
| Net income (loss) before cumulative effect of change in accounting principle | $ | 0.66 | $ | 0.51 | $ | 1.31 | $ | 1.83 | $ | 0.69 | ||||||||||
| Net operating income | $ | 0.62 | $ | 0.54 | $ | 2.31 | $ | 2.30 | $ | 0.93 | ||||||||||
| Common shares outstanding | 142,208,676 | 109,222,276 | 109,222,276 | 109,222,276 | 109,222,276 | |||||||||||||||
| Shares issued in exchange for capital contribution | — | 32,976,854 | 32,976,854 | 32,976,854 | 32,976,854 | |||||||||||||||
| Vested shares issued pursuant to restricted stock grants | — | 9,546 | 9,546 | 9,546 | 9,546 | |||||||||||||||
| Pro forma common shares outstanding | 142,208,676 | 142,208,676 | 142,208,676 | 142,208,676 | 142,208,676 | |||||||||||||||
Page 2
Assurant, Inc. and Subsidiaries
Summary Financial Highlights (continued)
(Unaudited)
| As of | As of | |||||||||||
| March 31, | December 31, | |||||||||||
| ($ in thousands, except per share amounts) | 2004 | 2003 | 2002 | |||||||||
Total assets | $ | 23,704,277 | $ | 23,728,319 | $ | 22,279,055 | ||||||
Total stockholders’ equity | $ | 3,549,457 | $ | 2,632,103 | $ | 2,555,059 | ||||||
| Capital contribution from Fortis | — | 725,500 | 725,500 | |||||||||
Pro forma stockholders’ equity (4) | $ | 3,549,457 | $ | 3,357,603 | $ | 3,280,559 | ||||||
Total stockholders’ equity (excluding AOCI) (3) | $ | 3,133,697 | $ | 2,313,576 | $ | 2,310,074 | ||||||
| Capital contribution from Fortis | — | 725,500 | 725,500 | |||||||||
Pro forma stockholders’ equity (excluding AOCI) (4) | $ | 3,133,697 | $ | 3,039,076 | $ | 3,035,574 | ||||||
| Basic and diluted book value per share | $ | 24.96 | $ | 24.10 | $ | 23.39 | ||||||
| Pro forma book value per share (4) | $ | 24.96 | $ | 23.61 | $ | 23.07 | ||||||
| Basic and diluted book value per share (excluding AOCI) (3) | $ | 22.04 | $ | 21.18 | $ | 21.15 | ||||||
| Pro forma book value per share (excluding AOCI) (4) | $ | 22.04 | $ | 21.37 | $ | 21.35 | ||||||
Page 3
Assurant, Inc. and Subsidiaries
Consolidated Condensed Balance Sheets
(Unaudited)
| As of | As of | |||||||||||
| March 31, | December 31, | |||||||||||
| ($ in thousands) | 2004 | 2003 | 2002 | |||||||||
Assets | ||||||||||||
| Investments and cash and cash equivalents | $ | 11,944,214 | $ | 11,881,802 | $ | 10,694,772 | ||||||
| Reinsurance recoverables | 4,352,318 | 4,445,265 | 4,649,909 | |||||||||
| Deferred acquisition costs and value of business acquired | 1,672,685 | 1,585,610 | 1,528,839 | |||||||||
| Goodwill | 828,445 | 828,523 | 834,138 | |||||||||
| Assets held in separate accounts | 3,794,806 | 3,805,058 | 3,411,616 | |||||||||
| Other assets | 1,111,809 | 1,182,061 | 1,159,781 | |||||||||
| Total assets | 23,704,277 | 23,728,319 | 22,279,055 | |||||||||
Liabilities | ||||||||||||
| Future policy benefits and expenses | 6,162,963 | 6,235,140 | 5,806,847 | |||||||||
| Unearned premiums | 3,170,594 | 3,133,847 | 3,207,636 | |||||||||
| Claims and benefits payable | 3,503,805 | 3,512,809 | 3,374,140 | |||||||||
| Deferred gain on disposal of businesses | 372,855 | 387,353 | 462,470 | |||||||||
| Debt | 971,576 | 1,750,000 | — | |||||||||
| Mandatorily redeemable preferred securities of subsidiary trusts | — | 196,224 | 1,446,074 | |||||||||
| Mandatorily redeemable preferred stock | 24,160 | 24,160 | 24,660 | |||||||||
| Liabilities related to separate accounts | 3,794,806 | 3,805,058 | 3,411,616 | |||||||||
| Accounts payable and other liabilities | 2,154,061 | 2,051,615 | 1,990,553 | |||||||||
| Total liabilities | 20,154,820 | 21,096,216 | 19,723,996 | |||||||||
Stockholders’ equity | ||||||||||||
| Equity, excluding accumulated other comprehensive income | 3,133,697 | 2,313,576 | 2,310,074 | |||||||||
| Accumulated other comprehensive income | 415,760 | 318,527 | 244,985 | |||||||||
| Total stockholders’ equity | 3,549,457 | 2,632,103 | 2,555,059 | |||||||||
| Total liabilities and stockholders’ equity | $ | 23,704,277 | $ | 23,728,319 | $ | 22,279,055 | ||||||
Page 4
Assurant, Inc. and Subsidiaries
Reconciliation of Net Operating Income to Net Income
(Unaudited)
| For the Three Months Ended | For the Year Ended | |||||||||||||||||||||||||||||||
| March 31, | December 31, | September 30, | June 30, | March 31, | December 31, | December 31, | December 31, | |||||||||||||||||||||||||
| ($ in thousands, net of tax) | 2004 | 2003 | 2003 | 2003 | 2003 | 2003 | 2002 | 2001 | ||||||||||||||||||||||||
| Assurant Solutions | $ | 40,053 | $ | 33,085 | $ | 31,424 | $ | 34,057 | $ | 34,613 | $ | 133,189 | $ | 132,155 | $ | 98,187 | ||||||||||||||||
| Assurant Health | 36,708 | 28,421 | 30,626 | 30,424 | 31,542 | 121,013 | 94,446 | 70,621 | ||||||||||||||||||||||||
| Assurant Employee Benefits | 13,250 | 12,938 | 22,091 | 18,400 | 8,138 | 61,567 | 57,117 | 41,244 | ||||||||||||||||||||||||
| Assurant Preneed | 6,456 | 8,159 | 8,857 | 9,874 | 9,132 | 36,022 | 49,658 | 54,277 | ||||||||||||||||||||||||
| Corporate and Other | (10,412 | ) | (1,150 | ) | 9,980 | (1,414 | ) | (242 | ) | 7,174 | 18,723 | (89,826 | ) | |||||||||||||||||||
| Amortization of deferred gain on disposal of business | 9,423 | 10,427 | 11,389 | 10,013 | 12,550 | 44,380 | 51,871 | 44,392 | ||||||||||||||||||||||||
| Interest expense and distributions on preferred securities of subsidiary trusts | (8,012 | ) | (17,081 | ) | (19,037 | ) | (18,808 | ) | (19,260 | ) | (74,186 | ) | (76,957 | ) | (86,041 | ) | ||||||||||||||||
| Net operating income (loss) | 87,466 | 74,799 | 95,331 | 82,556 | 76,473 | 329,159 | 327,013 | 132,854 | ||||||||||||||||||||||||
| Adjustments: | ||||||||||||||||||||||||||||||||
| Net realized gains (losses) on investments | 9,246 | (8,411 | ) | 4,767 | 8,094 | (3,236 | ) | 1,214 | (76,942 | ) | (77,360 | ) | ||||||||||||||||||||
| Gain on sale of disposal of business | — | — | — | — | — | — | 9,669 | 42,559 | ||||||||||||||||||||||||
| Expenses directly related to the initial public offering | (2,334 | ) | (10,237 | ) | (700 | ) | — | — | (10,937 | ) | — | — | ||||||||||||||||||||
| Interest premium on redemption of preferred securities of subsidiary trusts | — | (133,784 | ) | — | — | — | (133,784 | ) | — | — | ||||||||||||||||||||||
| Net income (loss) before cumulative effect of change in accounting principle | 94,378 | (77,633 | ) | 99,398 | 90,650 | 73,237 | 185,652 | 259,740 | 98,053 | |||||||||||||||||||||||
| Cumulative effect of change in accounting principle | — | — | — | — | — | — | (1,260,939 | ) | — | |||||||||||||||||||||||
| Net income (loss) after cumulative effect of change in accounting principle | $ | 94,378 | $ | (77,633 | ) | $ | 99,398 | $ | 90,650 | $ | 73,237 | $ | 185,652 | $ | (1,001,199 | ) | $ | 98,053 | ||||||||||||||
Page 5
Assurant, Inc. and Subsidiaries
Consolidated Condensed Statement of Operations
(Unaudited)
| For the Three Months Ended | For the Year Ended | |||||||||||||||||||||||||||||||
| March 31, | December 31, | September 30, | June 30, | March 31, | December 31, | December 31, | December 31, | |||||||||||||||||||||||||
| ($ in thousands) | 2004 | 2003 | 2003 | 2003 | 2003 | 2003 | 2002 | 2001 | ||||||||||||||||||||||||
Revenues: | ||||||||||||||||||||||||||||||||
| Net earned premiums and other considerations | $ | 1,625,238 | $ | 1,623,269 | $ | 1,546,474 | $ | 1,484,066 | $ | 1,502,963 | $ | 6,156,772 | $ | 5,681,596 | $ | 5,242,185 | ||||||||||||||||
| Net investment income | 153,824 | 150,705 | 150,723 | 154,364 | 151,521 | 607,313 | 631,828 | 711,782 | ||||||||||||||||||||||||
| Net realized gains (losses) on investments | 14,224 | (12,940 | ) | 7,334 | 12,452 | (4,978 | ) | 1,868 | (118,372 | ) | (119,016 | ) | ||||||||||||||||||||
| Amortization of deferred gain on disposal of businesses | 14,497 | 16,042 | 17,522 | 15,405 | 19,308 | 68,277 | 79,801 | 68,296 | ||||||||||||||||||||||||
| Gain on disposal of business | — | — | — | — | — | — | 10,672 | 61,688 | ||||||||||||||||||||||||
| Fees and other income | 49,777 | 59,219 | 53,524 | 56,314 | 62,926 | 231,983 | 246,675 | 221,939 | ||||||||||||||||||||||||
| 1,857,560 | 1,836,295 | 1,775,577 | 1,722,601 | 1,731,740 | 7,066,213 | 6,532,200 | 6,186,874 | |||||||||||||||||||||||||
Benefits, losses and expenses: | ||||||||||||||||||||||||||||||||
| Policyholder benefits | 968,965 | 998,394 | 882,365 | 888,241 | 888,763 | 3,657,763 | 3,435,175 | 3,240,091 | ||||||||||||||||||||||||
| Selling, underwriting, general and administrative expenses | 733,508 | 740,192 | 718,148 | 667,819 | 702,979 | 2,829,138 | 2,608,232 | 2,495,468 | ||||||||||||||||||||||||
| Amortization of goodwill | — | — | — | — | — | — | — | 113,300 | ||||||||||||||||||||||||
| Interest expense and distributions on preferred securities of subsidiary trusts | 12,326 | 26,279 | 29,288 | 28,935 | 29,631 | 114,133 | 118,396 | 132,371 | ||||||||||||||||||||||||
| Interest premium on redemption of preferred securities of subsidiary trusts | — | 205,822 | — | — | — | 205,822 | — | — | ||||||||||||||||||||||||
| 1,714,799 | 1,970,687 | 1,629,801 | 1,584,995 | 1,621,373 | 6,806,856 | 6,161,803 | 5,981,230 | |||||||||||||||||||||||||
| Income (loss) before income taxes | 142,761 | (134,392 | ) | 145,776 | 137,606 | 110,367 | 259,357 | 370,397 | 205,644 | |||||||||||||||||||||||
| Income tax expense (benefit) | 48,383 | (56,759 | ) | 46,378 | 46,956 | 37,130 | 73,705 | 110,657 | 107,591 | |||||||||||||||||||||||
| Net income (loss) before cumulative effect of change in accounting principle | 94,378 | (77,633 | ) | 99,398 | 90,650 | 73,237 | 185,652 | 259,740 | 98,053 | |||||||||||||||||||||||
| Cumulative effect of change in accounting principle | — | — | — | — | — | — | (1,260,939 | ) | — | |||||||||||||||||||||||
| Net income (loss) | $ | 94,378 | $ | (77,633 | ) | $ | 99,398 | $ | 90,650 | $ | 73,237 | $ | 185,652 | $ | (1,001,199 | ) | $ | 98,053 | ||||||||||||||
Page 6
Assurant Solutions
Condensed Statement of Operations
(Unaudited)
| For the Three Months Ended | For the Year Ended | |||||||||||||||||||||||||||||||
| March 31, | December 31, | September 30, | June 30, | March 31, | December 31, | December 31, | December 31, | |||||||||||||||||||||||||
| ($ in thousands) | 2004 | 2003 | 2003 | 2003 | 2003 | 2003 | 2002 | 2001 | ||||||||||||||||||||||||
Revenues: | ||||||||||||||||||||||||||||||||
| Net earned premiums and other considerations | $ | 623,065 | $ | 624,999 | $ | 612,882 | $ | 552,403 | $ | 571,531 | $ | 2,361,815 | $ | 2,077,277 | $ | 1,906,426 | ||||||||||||||||
| Net investment income | 44,759 | 44,658 | 46,315 | 45,387 | 50,490 | 186,850 | 205,037 | 218,213 | ||||||||||||||||||||||||
| Fees and other income | 26,859 | 30,091 | 31,218 | 30,774 | 37,399 | 129,482 | 118,949 | 97,685 | ||||||||||||||||||||||||
| 694,683 | 699,748 | 690,415 | 628,564 | 659,420 | 2,678,147 | 2,401,263 | 2,222,324 | |||||||||||||||||||||||||
Benefits, losses and expenses: | ||||||||||||||||||||||||||||||||
| Policyholder benefits | 231,576 | 267,081 | 221,755 | 213,280 | 197,113 | 899,229 | 755,140 | 639,905 | ||||||||||||||||||||||||
| Selling, underwriting, general and administrative expenses | 404,202 | 390,087 | 424,307 | 364,783 | 411,023 | 1,590,200 | 1,449,186 | 1,444,323 | ||||||||||||||||||||||||
| 635,778 | 657,168 | 646,062 | 578,063 | 608,136 | 2,489,429 | 2,204,326 | 2,084,228 | |||||||||||||||||||||||||
| Income (loss) before income taxes | 58,905 | 42,580 | 44,353 | 50,501 | 51,284 | 188,718 | 196,937 | 138,096 | ||||||||||||||||||||||||
| Income tax expense (benefit) | 18,852 | 9,495 | 12,929 | 16,434 | 16,671 | 55,529 | 64,782 | 39,909 | ||||||||||||||||||||||||
| Net operating income (loss) | $ | 40,053 | $ | 33,085 | $ | 31,424 | $ | 34,067 | $ | 34,613 | $ | 133,189 | $ | 132,155 | $ | 98,187 | ||||||||||||||||
Net earned premiums and other considerations by major product groupings: | ||||||||||||||||||||||||||||||||
(amounts in millions) | ||||||||||||||||||||||||||||||||
| Special Property Solutions | $ | 183 | $ | 206 | $ | 185 | $ | 172 | $ | 172 | $ | 733 | $ | 552 | $ | 452 | ||||||||||||||||
| Consumer Protection Solutions | 440 | 419 | 428 | 380 | 400 | 1,629 | 1,525 | 1,454 | ||||||||||||||||||||||||
| Total | $ | 623 | $ | 625 | $ | 613 | $ | 552 | $ | 572 | $ | 2,362 | $ | 2,077 | $ | 1,906 | ||||||||||||||||
Page 7
Assurant Health
Condensed Statement of Operations
(Unaudited)
| For the Three Months Ended | For the Year Ended | |||||||||||||||||||||||||||||||
| March 31, | December 31, | September 30, | June 30, | March 31, | December 31, | December 31, | December 31, | |||||||||||||||||||||||||
| ($ in thousands) | 2004 | 2003 | 2003 | 2003 | 2003 | 2003 | 2002 | 2001 | ||||||||||||||||||||||||
Revenues: | ||||||||||||||||||||||||||||||||
| Net earned premiums and other considerations | $ | 550,947 | $ | 533,711 | $ | 506,702 | $ | 491,690 | $ | 477,145 | $ | 2,009,248 | $ | 1,833,656 | $ | 1,837,839 | ||||||||||||||||
| Net investment income | 16,947 | 12,970 | 11,460 | 12,406 | 12,594 | 49,430 | 55,268 | 58,073 | ||||||||||||||||||||||||
| Fees and other income | 9,355 | 8,524 | 8,590 | 7,904 | 7,237 | 32,255 | 22,716 | 14,229 | ||||||||||||||||||||||||
| 577,249 | 555,205 | 526,752 | 512,000 | 496,976 | 2,090,933 | 1,911,640 | 1,910,141 | |||||||||||||||||||||||||
Benefits, losses and expenses: | ||||||||||||||||||||||||||||||||
| Policyholder benefits | 356,115 | 351,843 | 334,681 | 317,609 | 312,913 | 1,317,046 | 1,222,049 | 1,306,477 | ||||||||||||||||||||||||
| Selling, underwriting, general and administrative expenses | 165,401 | 160,703 | 145,677 | 146,848 | 136,055 | 589,283 | 546,086 | 495,495 | ||||||||||||||||||||||||
| 521,516 | 512,546 | 480,358 | 464,457 | 448,968 | 1,906,329 | 1,768,135 | 1,801,972 | |||||||||||||||||||||||||
| Income (loss) before income taxes | 55,733 | 42,659 | 46,394 | 47,543 | 48,008 | 184,604 | 143,505 | 108,169 | ||||||||||||||||||||||||
| Income tax expense (benefit) | 19,025 | 14,238 | 15,768 | 17,119 | 16,466 | 63,591 | 49,059 | 37,548 | ||||||||||||||||||||||||
| Net operating income (loss) | $ | 36,708 | $ | 28,421 | $ | 30,626 | $ | 30,424 | $ | 31,542 | $ | 121,013 | $ | 94,446 | $ | 70,621 | ||||||||||||||||
| Loss ratio (a) | 64.6 | % | 65.9 | % | 66.1 | % | 64.6 | % | 65.6 | % | 65.5 | % | 66.6 | % | 71.1 | % | ||||||||||||||||
| Expense ratio (b) | 29.5 | % | 29.6 | % | 28.3 | % | 29.4 | % | 28.1 | % | 28.9 | % | 29.4 | % | 26.8 | % | ||||||||||||||||
| Combined ratio (c) | 93.1 | % | 94.5 | % | 93.2 | % | 93.0 | % | 92.7 | % | 93.4 | % | 95.2 | % | 97.3 | % | ||||||||||||||||
Membership by product line (in thousands): | ||||||||||||||||||||||||||||||||
| Individual | 786 | 761 | 755 | 715 | 685 | 761 | 670 | 600 | ||||||||||||||||||||||||
| Small employer group | 375 | 376 | 365 | 360 | 355 | 376 | 355 | 420 | ||||||||||||||||||||||||
| Total | 1,161 | 1,137 | 1,120 | 1,075 | 1,040 | 1,137 | 1,025 | 1,020 | ||||||||||||||||||||||||
Net earned premiums and other considerations: | ||||||||||||||||||||||||||||||||
(amounts in millions) | ||||||||||||||||||||||||||||||||
| Individual | $ | 292 | $ | 281 | $ | 262 | $ | 252 | $ | 242 | $ | 1,036 | $ | 880 | $ | 738 | ||||||||||||||||
| Small employer group | 259 | 253 | 245 | 240 | 235 | 973 | 954 | 1,100 | ||||||||||||||||||||||||
| Total | $ | 551 | $ | 534 | $ | 507 | $ | 492 | $ | 477 | $ | 2,009 | $ | 1,834 | $ | 1,838 | ||||||||||||||||
| (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 and general 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. | |||
Page 8
Assurant Employee Benefits
Condensed Statement of Operations
(Unaudited)
| For the Three Months Ended | For the Year Ended | |||||||||||||||||||||||||||||||
| March 31, | December 31, | September 30, | June 30, | March 31, | December 31, | December 31, | December 31, | |||||||||||||||||||||||||
| ($ in thousands) | 2004 | 2003 | 2003 | 2003 | 2003 | 2003 | 2002 | 2001 | ||||||||||||||||||||||||
Revenues: | ||||||||||||||||||||||||||||||||
| Net earned premiums and other considerations | $ | 318,044 | $ | 336,134 | $ | 297,258 | $ | 302,759 | $ | 320,279 | $ | 1,256,430 | $ | 1,232,942 | $ | 933,594 | ||||||||||||||||
| Net investment income | 35,722 | 35,527 | 34,512 | 35,397 | 34,520 | 139,956 | 147,722 | 144,378 | ||||||||||||||||||||||||
| Fees and other income | 10,384 | 16,898 | 3,832 | 16,290 | 16,773 | 53,793 | 74,324 | 39,568 | ||||||||||||||||||||||||
| 364,150 | 388,559 | 335,602 | 354,446 | 371,572 | 1,450,179 | 1,454,988 | 1,117,540 | |||||||||||||||||||||||||
Benefits, losses and expenses: | ||||||||||||||||||||||||||||||||
| Policyholder benefits | 244,326 | 253,265 | 196,910 | 223,261 | 247,512 | 920,948 | 944,593 | 737,802 | ||||||||||||||||||||||||
| Selling, underwriting, general and administrative expenses | 99,345 | 114,069 | 104,707 | 102,877 | 111,539 | 433,192 | 422,230 | 316,310 | ||||||||||||||||||||||||
| 343,671 | 367,334 | 301,617 | 326,138 | 359,051 | 1,354,140 | 1,366,823 | 1,054,112 | |||||||||||||||||||||||||
| Income (loss) before income taxes | 20,479 | 21,225 | 33,985 | 28,308 | 12,521 | 96,039 | 88,165 | 63,428 | ||||||||||||||||||||||||
| Income tax expense (benefit) | 7,229 | 8,287 | 11,894 | 9,908 | 4,383 | 34,472 | 31,048 | 22,184 | ||||||||||||||||||||||||
| Net operating income (loss) | $ | 13,250 | $ | 12,938 | $ | 22,091 | $ | 18,400 | $ | 8,138 | $ | 61,567 | $ | 57,117 | $ | 41,244 | ||||||||||||||||
| Loss ratio (a) | 76.8 | % | 75.3 | % | 66.2 | % | 73.7 | % | 77.3 | % | 73.3 | % | 76.6 | % | 79.0 | % | ||||||||||||||||
| Expense ratio (b) | 30.2 | % | 32.3 | % | 34.8 | % | 32.2 | % | 33.1 | % | 33.1 | % | 32.3 | % | 32.5 | % | ||||||||||||||||
| Premium persistency ratio (c) | 79.9 | % | 79.9 | % | 84.3 | % | ||||||||||||||||||||||||||
Net earned premiums and other considerations by major product groupings: | ||||||||||||||||||||||||||||||||
(amounts in millions) | ||||||||||||||||||||||||||||||||
| Group dental | $ | 131 | $ | 135 | $ | 132 | $ | 134 | $ | 137 | $ | 538 | $ | 554 | $ | 255 | ||||||||||||||||
| Group disability | 124 | 140 | 102 | 101 | 118 | 461 | 400 | 398 | ||||||||||||||||||||||||
| Group life | 63 | 61 | 63 | 68 | 65 | 257 | 279 | 281 | ||||||||||||||||||||||||
| Total | $ | 318 | $ | 336 | $ | 297 | $ | 303 | $ | 320 | $ | 1,256 | $ | 1,233 | $ | 934 | ||||||||||||||||
| (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 and general expenses divided by net earned premiums and other considerations and fees and other income. | |||
| (c) | The premium persistency ratio is equal to the rate at which existing business for all issue years at the beginning of the period remains in force at the end of the period. The calculation for the year ended December 31, 2002 excludes DBD. Quarterly values of this ratio are not appropriate for the business segment. | |||
Page 9
Assurant Preneed
Condensed Statement of Operations
(Unaudited)
| For the Three Months Ended | For the Year Ended | |||||||||||||||||||||||||||||||
| March 31, | December 31, | September 30, | June 30, | March 31, | December 31, | December 31, | December 31, | |||||||||||||||||||||||||
| ($ in thousands) | 2004 | 2003 | 2003 | 2003 | 2003 | 2003 | 2002 | 2001 | ||||||||||||||||||||||||
Revenues: | ||||||||||||||||||||||||||||||||
| Net earned premiums and other considerations | $ | 133,182 | $ | 128,425 | $ | 129,632 | $ | 137,214 | $ | 134,008 | $ | 529,279 | $ | 537,721 | $ | 506,716 | ||||||||||||||||
| Net investment income | 50,177 | 48,363 | 46,371 | 48,380 | 45,110 | 188,224 | 183,634 | 179,093 | ||||||||||||||||||||||||
| Fees and other income | 2,041 | 1,660 | 1,167 | 1,243 | 1,245 | 5,315 | 5,123 | 3,336 | ||||||||||||||||||||||||
| 185,400 | 178,448 | 177,170 | 186,837 | 180,363 | 722,818 | 726,478 | 689,145 | |||||||||||||||||||||||||
Benefits, losses and expenses: | ||||||||||||||||||||||||||||||||
| Policyholder benefits | 136,948 | 126,205 | 129,019 | 134,091 | 131,225 | 520,540 | 513,393 | 485,902 | ||||||||||||||||||||||||
| Selling, underwriting, general and administrative expenses | 38,513 | 39,495 | 34,721 | 37,657 | 35,069 | 146,942 | 136,484 | 119,706 | ||||||||||||||||||||||||
| 175,461 | 165,700 | 163,740 | 171,748 | 166,294 | 667,482 | 649,877 | 605,608 | |||||||||||||||||||||||||
| Income (loss) before income taxes | 9,939 | 12,748 | 13,430 | 15,089 | 14,069 | 55,336 | 76,601 | 83,537 | ||||||||||||||||||||||||
| Income tax expense (benefit) | 3,483 | 4,589 | 4,573 | 5,215 | 4,937 | 19,314 | 26,943 | 29,260 | ||||||||||||||||||||||||
| Net operating income (loss) | $ | 6,456 | $ | 8,159 | $ | 8,857 | $ | 9,874 | $ | 9,132 | $ | 36,022 | $ | 49,658 | $ | 54,277 | ||||||||||||||||
Net earned premiums and other considerations by channel: | ||||||||||||||||||||||||||||||||
(amounts in millions) | ||||||||||||||||||||||||||||||||
| AMLIC | $ | 72 | $ | 67 | $ | 69 | $ | 75 | $ | 72 | $ | 283 | $ | 293 | $ | 278 | ||||||||||||||||
| Independent | 61 | 61 | 61 | 62 | 62 | 246 | 245 | 229 | ||||||||||||||||||||||||
| Total | $ | 133 | $ | 128 | $ | 130 | $ | 137 | $ | 134 | $ | 529 | $ | 538 | $ | 507 | ||||||||||||||||
Page10
Assurant Corporate and Other
Condensed Statement of Operations
(Unaudited)
| For the Three Months Ended | For the Year Ended | |||||||||||||||||||||||||||||||
| March 31, | December 31, | September 30, | June 30, | March 31, | December 31, | December 31, | December 31, | |||||||||||||||||||||||||
| ($ in thousands) | 2004 | 2003 | 2003 | 2003 | 2003 | 2003 | 2002 | 2001 | ||||||||||||||||||||||||
Revenues: | ||||||||||||||||||||||||||||||||
| Net earned premiums and other considerations | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 57,610 | ||||||||||||||||
| Net investment income | 6,219 | 9,187 | 12,065 | 12,794 | 8,807 | 42,853 | 40,167 | 112,025 | ||||||||||||||||||||||||
| Net realized gains (losses) on investments | 14,224 | (12,940 | ) | 7,334 | 12,452 | (4,978 | ) | 1,868 | (118,372 | ) | (119,016 | ) | ||||||||||||||||||||
| Amortization of deferred gain on disposal of businesses | 14,497 | 16,042 | 17,522 | 15,405 | 19,308 | 68,277 | 79,801 | 68,296 | ||||||||||||||||||||||||
| Gain on disposal of business | — | — | — | — | — | — | 10,672 | 61,688 | ||||||||||||||||||||||||
| Fees and other income | 1,138 | 2,046 | 8,717 | 103 | 272 | 11,138 | 25,563 | 67,121 | ||||||||||||||||||||||||
| 36,078 | 14,335 | 45,638 | 40,754 | 23,409 | 124,136 | 37,831 | 247,724 | |||||||||||||||||||||||||
Benefits, losses and expenses: | ||||||||||||||||||||||||||||||||
| Policyholder benefits | — | — | — | — | — | — | — | 70,005 | ||||||||||||||||||||||||
| Selling, underwriting, general and administrative expenses | 26,047 | 35,838 | 8,736 | 15,654 | 9,293 | 69,521 | 54,246 | 119,634 | ||||||||||||||||||||||||
| Interest expense and distributions on preferred securities of subsidiary trusts | 12,326 | 26,279 | 29,288 | 28,935 | 29,631 | 114,133 | 118,396 | 132,371 | ||||||||||||||||||||||||
| Interest premium on redemption of preferred securities of subsidiary trusts | — | 205,822 | — | — | — | 205,822 | — | — | ||||||||||||||||||||||||
| 38,373 | 267,939 | 38,024 | 44,589 | 38,924 | 389,476 | 172,642 | 322,010 | |||||||||||||||||||||||||
| Income (loss) before income taxes | (2,295 | ) | (253,604 | ) | 7,614 | (3,835 | ) | (15,515 | ) | (265,340 | ) | (134,811 | ) | (74,286 | ) | |||||||||||||||||
| Income tax expense (benefit) | (206 | ) | (93,368 | ) | 1,214 | (1,720 | ) | (5,327 | ) | (99,201 | ) | (61,175 | ) | (21,310 | ) | |||||||||||||||||
| Net operating income (loss) | $ | (2,089 | ) | $ | (160,236 | ) | $ | 6,400 | $ | (2,115 | ) | $ | (10,188 | ) | $ | (166,139 | ) | $ | (73,636 | ) | $ | (52,976 | ) | |||||||||
Page11
Assurant, Inc. and Subsidiaries
Investments
(Unaudited)
| As of | As of | |||||||||||||||
| March 31, | December 31, | |||||||||||||||
| ($ in thousands) | 2004 | 2003 | ||||||||||||||
Investments by Type | ||||||||||||||||
| Fixed maturities: available-for-sale, at fair value | $ | 8,884,270 | $ | 8,728,838 | ||||||||||||
| Equity Securities: available-for-sale | ||||||||||||||||
| Preferred stocks | 526,280 | 452,373 | ||||||||||||||
| Common stocks | 4,920 | 4,067 | ||||||||||||||
| Commercial mortgage loans on real estate, at amortized cost | 975,802 | 932,791 | ||||||||||||||
| Policy loans | 68,535 | 68,185 | ||||||||||||||
| Cash and short-term investments | 978,830 | 1,234,075 | ||||||||||||||
| Other investments | 505,577 | 461,473 | ||||||||||||||
Total | $ | 11,944,214 | $ | 11,881,802 | ||||||||||||
Fixed Maturity Securities by Credit Quality (Fair Value) | ||||||||||||||||
| Aaa / Aa / A | $ | 6,007,320 | 68 | % | $ | 6,074,426 | 70 | % | ||||||||
| Baa | 2,318,740 | 26 | % | 2,110,009 | 24 | % | ||||||||||
| Ba | 403,256 | 5 | % | 360,991 | 4 | % | ||||||||||
| B | 111,486 | 1 | % | 135,415 | 2 | % | ||||||||||
| Caa and lower | 40,000 | 0 | % | 39,884 | 0 | % | ||||||||||
| In or near default | 3,468 | 0 | % | 8,113 | 0 | % | ||||||||||
Total | $ | 8,884,270 | 100 | % | $ | 8,728,838 | 100 | % | ||||||||
Fixed Maturity Securities by Issuer Type (Fair Value) | ||||||||||||||||
| U.S government and government agencies and authorities | $ | 1,601,767 | 18 | % | $ | 1,681,746 | 19 | % | ||||||||
| State, municipalities and political subdivisions | 203,130 | 2 | % | 203,679 | 2 | % | ||||||||||
| Foreign government | 331,316 | 4 | % | 317,748 | 4 | % | ||||||||||
| Public utilities | 992,809 | 11 | % | 984,141 | 11 | % | ||||||||||
| All other corporate bonds | 5,755,248 | 65 | % | 5,541,524 | 64 | % | ||||||||||
Total | $ | 8,884,270 | 100 | % | $ | 8,728,838 | 100 | % | ||||||||
Page12
Assurant, Inc.
Investment Results by Asset Category and Annualized Yields
(Unaudited)
| For the Three Months Ended March 31, 2004 | For the Three Months Ended March 31, 2003 | |||||||||||||||||||||||
| Investment | Investment | Investment | Investment | |||||||||||||||||||||
| ($ in thousands) | Yield | Income | Gain (Loss) | Yield | Income | Gain (Loss) | ||||||||||||||||||
| Fixed maturities: available-for-sale, at fair value | 5.79 | % | $ | 119,251 | $ | 13,902 | 6.30 | % | $ | 122,456 | $ | (4,881 | ) | |||||||||||
| Equity Securities: available-for-sale | 7.00 | % | 8,254 | 680 | 6.06 | % | 4,987 | (272 | ) | |||||||||||||||
| Commercial mortgage loans on real estate, at amortized cost | 8.06 | % | 19,219 | (88 | ) | 8.94 | % | 18,998 | 146 | |||||||||||||||
| Policy loans | 5.68 | % | 970 | — | 5.10 | % | 888 | — | ||||||||||||||||
| Cash and short-term investments | 0.80 | % | 2,212 | 7 | 1.02 | % | 2,917 | 10 | ||||||||||||||||
| Other investments | 8.17 | % | 9,714 | (277 | ) | 13.84 | % | 6,586 | 19 | |||||||||||||||
| Total | 159,620 | $ | 14,224 | 156,832 | $ | (4,978 | ) | |||||||||||||||||
| Investment expenses | (5,796 | ) | (5,311 | ) | ||||||||||||||||||||
| Net investment income | $ | 153,824 | $ | 151,521 | ||||||||||||||||||||
| Gross investment gain | $ | 19,418 | $ | 24,123 | ||||||||||||||||||||
| Gross investment loss | (4,377 | ) | (17,484 | ) | ||||||||||||||||||||
| Write-downs on available-for-sale securities | (817 | ) | (11,617 | ) | ||||||||||||||||||||
| Net investment gain (loss) | $ | 14,224 | $ | (4,978 | ) | |||||||||||||||||||
Page13