EX-99.2 3 dex992.htm PRESENTATION ENTITLED "ASSURANT, INC. FINANCIAL SUPPLEMENT AS OF JUNE 30, 2006" Presentation entitled "Assurant, Inc. Financial Supplement as of June 30, 2006"

Exhibit 99.2

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Assurant, Inc. (AIZ)

Financial Supplement as of June 30, 2006


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ASSURANT, INC. AND SUBSIDIARIES

EARNINGS RELEASE SUPPLEMENT

AS OF JUNE 30, 2006

INDEX TO SUPPLEMENT

 

     Page:

REGULATION G – NON GAAP MEASURES

   1

SUMMARY FINANCIAL HIGHLIGHTS (unaudited)

   2

SEGMENTED BALANCE SHEETS (unaudited)

   4

RECONCILIATION OF NET OPERATING INCOME TO NET INCOME (unaudited)

   5

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (unaudited)

   6

CONDENSED SEGMENT STATEMENTS OF OPERATIONS (unaudited)

   7

INVESTMENTS (unaudited)

   14

INVESTMENT RESULTS BY ASSET CATEGORY & ANNUALIZED YIELDS (unaudited)

   15

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 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 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 over $20 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, posted on the Assurant website at www.assurant.com.


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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, 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 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) Book value per share excluding accumulated other comprehensive income (AOCI) has been included as a measure of stockholder value. 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.

 

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Assurant, Inc. and Subsidiaries

Summary Financial Highlights

(Unaudited)

 

     For the Three-Months Ended
June 30,
    For the Six-Months Ended
June 30,
 

($ in thousands, except per share amounts)

   2006    2005     2006     2005  

Net operating income (1)

   $ 149,659    $ 130,176     $ 313,478     $ 245,294  

Net realized gain (loss) from investments

     1,477      2,651       (1,417 )     2,971  

Excess of loss reinsurance program (1995-1997)

     —        (5,203 )     —         (5,203 )

Expenses directly related to the secondary public offering

     —        —         —         (1,040 )
                               

Net income before cumulative effect of change in accounting principle

     151,136      127,624       312,061       242,022  

Cumulative effect of change in accounting principle

     —        —         1,547       —    
                               

Net income

   $ 151,136    $ 127,624     $ 313,608     $ 242,022  
                               

Total revenues

   $ 1,949,090    $ 1,874,303     $ 3,878,872     $ 3,736,657  

PER SHARE AND SHARE DATA:

         

Basic earnings per share

         

Net operating income

   $ 1.16    $ 0.95     $ 2.43     $ 1.77  

Net income before cumulative effect of change in accounting principle

   $ 1.18    $ 0.93     $ 2.42     $ 1.74  

Net income

   $ 1.18    $ 0.93     $ 2.43     $ 1.74  

Weighted average of common shares outstanding - basic

     128,488,126      137,700,163       129,239,104       138,712,723  

Diluted earnings per share

         

Net operating income

   $ 1.15    $ 0.94     $ 2.39     $ 1.75  

Net income before cumulative effect of change in accounting principle

   $ 1.16    $ 0.92     $ 2.38     $ 1.73  

Net income

   $ 1.16    $ 0.92     $ 2.39     $ 1.73  

Weighted average of common shares outstanding - diluted

     130,327,634      139,019,388       131,197,145       140,030,049  

 

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Assurant, Inc. and Subsidiaries

Summary Financial Highlights (continued)

(Unaudited)

 

($ in thousands, except per share amounts)

  

As of

June 30,

2006

    As of
December 31,
2005
 

Total assets

   $ 24,532,416     $ 25,365,453  

Total stockholders’ equity

   $ 3,570,354     $ 3,699,559  

Total stockholders’ equity (excluding AOCI)

   $ 3,610,351     $ 3,480,060  

Basic book value per share

   $ 28.05     $ 28.33  

Basic book value per share (excluding AOCI) (2)

   $ 28.37     $ 26.65  

Shares outstanding for basic book value per share calculation

     127,278,688       130,591,834  

Diluted book value per share

   $ 27.64     $ 27.90  

Diluted book value per share (excluding AOCI) (2)

   $ 27.95     $ 26.25  

Shares outstanding for diluted book value per share calculation

     129,164,243       132,598,736  

Debt to total capital ratio (excluding AOCI)

     21.6 %     22.2 %

 

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Assurant, Inc. and Subsidiaries

Segmented Condensed Balance Sheets

At June 30, 2006 and December 31, 2005

(Unaudited)

 

     At June 30, 2006  
     Solutions    Specialty
Property
   Health    Employee
Benefits
   Corporate &
Other(1)
    Consolidated  
     ($ in thousands)  

Assets

                

Investments and cash and cash equivalents

   $ 7,013,492    $ 1,343,794    $ 1,271,404    $ 2,672,250    $ 658,471     $ 12,959,411  

Reinsurance recoverables

     761,097      326,745      6,500      22,574      2,832,653       3,949,569  

Deferred acquisition costs

     1,949,172      134,481      63,742      28,684      —         2,176,079  

Goodwill

     —        —        —        —        805,254       805,254  

Assets held in separate accounts

     245,266      —        —        —        3,008,573       3,253,839  

Other assets

     315,709      290,431      150,662      210,475      420,987       1,388,264  
                                            

Total assets

     10,284,736      2,095,451      1,492,308      2,933,983      7,725,938       24,532,416  
                                            

Liabilities

                

Policyholder benefits and claims payable

     4,287,182      289,031      602,449      1,939,924      3,114,634       10,233,220  

Unearned premiums

     3,133,267      725,602      129,410      14,232      47,125       4,049,636  

Debt

     —        —        —        —        971,731       971,731  

Mandatorily redeemable preferred stock

     —        —        —        —        23,160       23,160  

Liabilities related to separate accounts

     245,266      —        —        —        3,008,573       3,253,839  

Accounts payable and other liabilities

     967,174      407,111      250,766      276,146      529,279       2,430,476  
                                            

Total liabilities

     8,632,889      1,421,744      982,625      2,230,302      7,694,502       20,962,062  

Stockholders’ equity

                

Equity, excluding accumulated other comprehensive income

     1,651,847      673,707      509,683      703,681      71,433       3,610,351  

Accumulated other comprehensive income

     —        —        —        —        (39,997 )     (39,997 )
                                            

Total stockholders’ equity

     1,651,847      673,707      509,683      703,681      31,436       3,570,354  
                                            

Total liabilities and stockholders’ equity

   $ 10,284,736    $ 2,095,451    $ 1,492,308    $ 2,933,983    $ 7,725,938     $ 24,532,416  
                                            
     At December 31, 2005  
     Solutions    Specialty
Property
   Health    Employee
Benefits
   Corporate &
Other(1)
    Consolidated  
     ($ in thousands)  

Assets

                

Investments and cash and cash equivalents

   $ 6,962,324    $ 1,125,980    $ 1,246,798    $ 2,714,308    $ 1,321,982     $ 13,371,392  

Reinsurance recoverables

     812,466      816,533      5,527      23,193      2,790,091       4,447,810  

Deferred acquisition costs

     1,784,366      132,456      76,593      28,893      —         2,022,308  

Goodwill

     —        —        —        —        804,864       804,864  

Assets held in separate accounts

     246,859      —        —        —        3,225,576       3,472,435  

Other assets

     651,100      187,932      123,960      132,078      151,574       1,246,644  
                                            

Total assets

     10,457,115      2,262,901      1,452,878      2,898,472      8,294,087       25,365,453  
                                            

Liabilities

                

Policyholder benefits and claims payable

     4,241,237      670,999      603,807      1,926,396      3,097,638       10,540,077  

Unearned premiums

     2,970,104      700,183      121,959      12,481      46,887       3,851,614  

Debt

     —        —        —        —        971,690       971,690  

Mandatorily redeemable preferred stock

     —        —        —        —        24,160       24,160  

Liabilities related to separate accounts

     246,859      —        —        —        3,225,576       3,472,435  

Accounts payable and other liabilities

     1,422,739      367,316      247,548      349,347      418,968       2,805,918  
                                            

Total liabilities

     8,880,939      1,738,498      973,314      2,288,224      7,784,919       21,665,894  

Stockholders’ equity

                

Equity, excluding accumulated other comprehensive income

     1,576,176      524,403      479,564      610,248      289,669       3,480,060  

Accumulated other comprehensive income

     —        —        —        —        219,499       219,499  
                                            

Total stockholders’ equity

     1,576,176      524,403      479,564      610,248      509,168       3,699,559  
                                            

Total liabilities and stockholders’ equity

   $ 10,457,115    $ 2,262,901    $ 1,452,878    $ 2,898,472    $ 8,294,087     $ 25,365,453  
                                            

(1) Corporate and Other segment includes Accumulated Other Comprehensive Income, Reinsurance Recoverables related to the disposal of FFG and LTC businesses, goodwill, separate accounts related to the disposal of FFG business and all of Assurant, Inc.’s debt.

 

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Assurant, Inc. and Subsidiaries

Reconciliation of Net Operating Income to Net Income

(Unaudited)

 

     For the Three Months Ended     For the Six Months Ended  
     June 30,     March 31,     December 31,     September 30,     June 30,     March 31,     June 30,     June 30,  

($ in thousands, net of tax)

   2006     2006     2005     2005     2005     2005     2006     2005  

Assurant Solutions

   $ 37,148     $ 39,747     $ 35,382     $ 31,939     $ 42,392     $ 23,434     $ 76,895     $ 65,826  

Assurant Specialty Property

     59,276       64,444       39,037       31,685       34,213       38,292       123,720       72,505  

Assurant Health

     41,016       45,096       33,297       45,718       49,367       49,673       86,112       99,040  

Assurant Employee Benefits

     20,590       19,185       19,329       22,846       9,812       16,379       39,775       26,191  

Corporate and other

     (4,930 )     (439 )     20,701       (4,289 )     (3,314 )     (10,417 )     (5,369 )     (13,731 )

Amortization of deferred gain on disposal of businesses

     6,514       5,741       4,651       7,609       7,660       7,711       12,255       15,371  

Interest expense

     (9,955 )     (9,955 )     (9,955 )     (9,955 )     (9,954 )     (9,954 )     (19,910 )     (19,908 )
                                                                

Net operating income

     149,659       163,819       142,442       125,553       130,176       115,118       313,478       245,294  

Adjustments:

                

Net realized gain (loss) on investments

     1,477       (2,894 )     (5,396 )     9,794       2,651       320       (1,417 )     2,971  

Excess loss of reinsurance program (1995-1997)

     —         —         —         (35,060 )     (5,203 )     —         —         (5,203 )

Expenses directly related to the secondary public offering

     —         —         —         —         —         (1,040 )     —         (1,040 )
                                                                

Net income before cumulative effect of change in accounting principle

     151,136       160,925       137,046       100,287       127,624       114,398       312,061       242,022  

Cumulative effect of change in accounting principle

     —         1,547       —         —         —         —         1,547       —    
                                                                

Net income

   $ 151,136     $ 162,472     $ 137,046     $ 100,287     $ 127,624     $ 114,398     $ 313,608     $ 242,022  
                                                                

 

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Assurant, Inc. and Subsidiaries

Consolidated Condensed Statement of Operations

(Unaudited)

 

     For the Three Months Ended     For the Six Months Ended  
     June 30,     March 31,     December 31,     September 30,     June 30,     March 31,     June 30,     June 30,  

($ in thousands)

   2006     2006     2005     2005     2005     2005     2006     2005  

Revenues:

                

Net earned premiums and other considerations

   $ 1,685,322     $ 1,672,653     $ 1,644,477     $ 1,621,186     $ 1,623,239     $ 1,631,894     $ 3,357,975     $ 3,255,133  

Net investment income

     180,438       192,562       170,864       175,175       177,018       164,200       373,000       341,218  

Net realized (loss) gain on investments

     2,272       (4,452 )     (8,301 )     11,965       4,079       492       (2,180 )     4,571  

Amortization of deferred gain on disposal of businesses

     10,022       8,833       7,155       11,706       11,784       11,863       18,855       23,647  

Fees and other income

     71,036       60,186       67,382       59,409       58,183       53,905       131,222       112,088  
                                                                
     1,949,090       1,929,782       1,881,577       1,879,441       1,874,303       1,862,354       3,878,872       3,736,657  
                                                                

Benefits, losses and expenses:

                

Policyholder benefits

     874,204       889,679       869,678       970,596       924,011       943,524       1,763,883       1,867,535  

Selling, underwriting, general and administrative expenses

     827,408       782,432       847,172       752,156       746,879       726,793       1,609,840       1,473,672  

Interest expense

     15,315       15,315       15,315       15,315       15,314       15,314       30,630       30,628  
                                                                
     1,716,927       1,687,426       1,732,165       1,738,067       1,686,204       1,685,631       3,404,353       3,371,835  
                                                                

Income before income taxes and cumulative effect of change in accounting principle

     232,163       242,356       149,412       141,374       188,099       176,723       474,519       364,822  

Income taxes

     81,027       81,431       12,366       41,087       60,475       62,325       162,458       122,800  
                                                                

Net income before cumulative effect of change in accounting principle

     151,136       160,925       137,046       100,287       127,624       114,398       312,061       242,022  

Cumulative effect of change in accounting principle

     —         1,547       —         —         —         —         1,547       —    
                                                                

Net income

   $ 151,136     $ 162,472     $ 137,046     $ 100,287     $ 127,624     $ 114,398     $ 313,608     $ 242,022  
                                                                

Share repurchase program:

                

Shares repurchased

     2,140,000       1,416,800       2,014,468       3,910,926       2,797,500       710,000       3,556,800       3,507,500  

Average repurchase price per share

   $ 48.43     $ 45.17     $ 38.00     $ 37.38     $ 34.32     $ 34.16     $ 47.13     $ 34.29  

Repurchase price

   $ 103,630     $ 64,001     $ 76,551     $ 146,181     $ 96,006     $ 24,252     $ 167,631     $ 120,258  

AIZ Closing stock price (NYSE)

   $ 48.40     $ 49.25     $ 43.49     $ 38.06     $ 36.10     $ 33.70     $ 48.40     $ 36.10  

Investment yield (1)

     5.83 %     5.75 %     5.54 %     5.71 %     5.63 %     5.51 %     5.74 %     5.57 %

Real estate investment income (1)

   $ —       $ 14,735     $ —       $ 3,156     $ 9,409     $ —       $ 14,735     $ 9,409  

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

 

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Assurant Solutions

Condensed Statement of Operations

(Unaudited)

 

     For the Three Months Ended    For the Six Months Ended
     June 30,    March 31,    December 31,    September 30,    June 30,    March 31,    June 30,     June 30,

($ in thousands)

   2006    2006    2005    2005    2005    2005    2006     2005

Revenues:

                      

Net earned premiums and other considerations

   $ 592,182    $ 570,388    $ 573,880    $ 556,084    $ 554,829    $ 535,352    $ 1,162,570     $ 1,090,181

Net investment income

     98,951      97,082      93,192      92,070      100,107      86,196      196,033       186,303

Fees and other income

     39,525      34,170      41,004      32,063      30,574      29,089      73,695       59,663
                                                        
     730,658      701,640      708,076      680,217      685,510      650,637      1,432,298       1,336,147
                                                        

Benefits, losses and expenses:

                      

Policyholder benefits

     247,208      248,380      246,585      271,357      269,284      259,674      495,588       528,958

Selling, underwriting, general and administrative expenses

     424,429      394,878      406,259      360,947      353,299      357,000      819,307       710,299
                                                        
     671,637      643,258      652,844      632,304      622,583      616,674      1,314,895       1,239,257
                                                        

Income before income taxes

     59,021      58,382      55,232      47,913      62,927      33,963      117,403       96,890

Income taxes

     21,873      18,635      19,850      15,974      20,535      10,529      40,508       31,064
                                                        

Net operating income

   $ 37,148    $ 39,747    $ 35,382    $ 31,939    $ 42,392    $ 23,434    $ 76,895     $ 65,826
                                                        

Gross written premiums for selected product groupings:

                      

Domestic Credit

   $ 182,489    $ 168,927    $ 199,082    $ 182,999    $ 194,667    $ 190,718    $ 351,416     $ 385,385

International Credit

   $ 159,208    $ 161,024    $ 160,858    $ 166,413    $ 157,449    $ 162,747    $ 320,232     $ 320,196

Domestic extended service contracts

   $ 290,851    $ 285,504    $ 326,974    $ 298,969    $ 241,035    $ 253,249    $ 576,355     $ 494,284

International extended service contracts

   $ 71,330    $ 66,256    $ 86,674    $ 62,669    $ 50,593    $ 47,570    $ 137,586     $ 98,163

Preneed (Face Sales)

   $ 120,545    $ 123,688    $ 123,202    $ 141,786    $ 144,508    $ 133,019    $ 244,233     $ 277,527

Investment yield (1) *

     N/A      N/A      N/A      N/A      N/A      N/A      5.54 %     N/A

Real estate investment income (1)

   $ —      $ 2,506    $ —      $ —      $ 9,409    $ —      $ 2,506     $ 9,409

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

 

* Segment balance sheets as of March 31, 2006, September 30, 2005, June 30, 2005 and March 31, 2005 are not available. Therefore, investment yields are not available.

 

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Assurant Specialty Property

Condensed Statement of Operations

(Unaudited)

 

     For the Three Months Ended     For the Six Months Ended  
     June 30,     March 31,     December 31,     September 30,     June 30,     March 31,     June 30,     June 30,  

($ in thousands)

   2006     2006     2005     2005     2005     2005     2006     2005  

Revenues:

                

Net earned premiums and other considerations

   $ 290,972     $ 252,749     $ 230,684     $ 219,374     $ 207,696     $ 201,094     $ 543,721     $ 408,790  

Net investment income

     17,923       16,790       15,481       16,648       14,843       14,981       34,713       29,824  

Fees and other income

     13,587       9,458       9,948       9,850       10,168       8,193       23,045       18,361  
                                                                
     322,482       278,997       256,113       245,872       232,707       224,268       601,479       456,975  
                                                                

Benefits, losses and expenses:

                

Policyholder benefits

     110,474       70,459       77,762       96,707       72,294       70,744       180,933       143,038  

Selling, underwriting, general and administrative expenses

     122,369       109,089       118,811       100,838       108,230       95,120       231,458       203,350  
                                                                
     232,843       179,548       196,573       197,545       180,524       165,864       412,391       346,388  
                                                                

Income before income taxes

     89,639       99,449       59,540       48,327       52,183       58,404       189,088       110,587  

Income taxes

     30,363       35,005       20,503       16,642       17,970       20,112       65,368       38,082  
                                                                

Net operating income

   $ 59,276     $ 64,444     $ 39,037     $ 31,685     $ 34,213     $ 38,292     $ 123,720     $ 72,505  
                                                                

Net Earned Premiums for selected product groupings:

                

Homeowners (Creditor Placed & Voluntary)

   $ 178,363     $ 142,892     $ 118,070     $ 114,965     $ 107,219     $ 103,272     $ 321,255     $ 210,491  

Manufactured Housing (Creditor Placed & Voluntary)

     54,184       55,968       57,957       52,699       53,252       53,516       110,152       106,768  

Other

     58,425       53,889       54,657       51,710       47,225       44,306       112,314       91,531  
                                                                

Total

   $ 290,972     $ 252,749     $ 230,684     $ 219,374     $ 207,696     $ 201,094     $ 543,721     $ 408,790  
                                                                

Ratios:

                

Loss ratio (a)

     38.0 %     27.9 %     33.7 %     44.1 %     34.8 %     35.2 %     33.3 %     35.0 %

Expense ratio (b)

     40.2 %     41.6 %     49.4 %     44.0 %     49.7 %     45.4 %     40.8 %     47.6 %

Combined ratio (c)

     76.5 %     68.5 %     81.7 %     86.2 %     82.9 %     79.3 %     72.8 %     81.1 %

Investment yield (1)*

     N/A       N/A       N/A       N/A       N/A       N/A       5.62 %     N/A  

Real estate investment income (1)

   $ —       $ —       $ —       $ —       $ —       $ —       $ —       $ —    

(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.
(1) Investment yield excludes investment income from real estate partnerships.
* Segment balance sheets as of March 31, 2006, September 30, 2005, June 30, 2005 and March 31, 2005 are not available. Therefore, investment yields are not available.

 

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Assurant Health

Condensed Statement of Operations

(Unaudited)

 

     For the Three Months Ended    For the Six Months Ended
     June 30,    March 31,    December 31,    September 30,    June 30,    March 31,    June 30,    June 30,

($ in thousands)

   2006    2006    2005    2005    2005    2005    2006    2005

Revenues:

                       

Net earned premiums and other considerations

   $ 519,587    $ 523,405    $ 531,345    $ 538,800    $ 544,294    $ 549,526    $ 1,042,992    $ 1,093,820

Net investment income

     17,110      24,001      16,474      17,707      17,170      17,705      41,111      34,875

Fees and other income

     10,250      9,726      9,323      10,420      10,270      10,331      19,976      20,601
                                                       
     546,947      557,132      557,142      566,927      571,734      577,562      1,104,079      1,149,296
                                                       

Benefits, losses and expenses:

                       

Policyholder benefits

     321,322      325,401      329,793      336,362      333,101      345,368      646,723      678,469

Selling, underwriting, general and administrative expenses

     163,019      162,712      176,626      161,125      163,385      156,763      325,731      320,148
                                                       
     484,341      488,113      506,419      497,487      496,486      502,131      972,454      998,617
                                                       

Income before income taxes

     62,606      69,019      50,723      69,440      75,248      75,431      131,625      150,679

Income taxes

     21,590      23,923      17,426      23,722      25,881      25,758      45,513      51,639
                                                       

Net operating income

   $ 41,016    $ 45,096    $ 33,297    $ 45,718    $ 49,367    $ 49,673    $ 86,112    $ 99,040
                                                       

Net earned premiums and other considerations:

                       

Individual:

                       

Individual medical

   $ 300,267    $ 297,338    $ 295,322    $ 291,817    $ 290,047    $ 287,312    $ 597,605    $ 577,359

Short-term medical

     25,489      25,001      26,664      30,257      28,115      25,876      50,490      53,991
                                                       

Subtotal

     325,756      322,339      321,986      322,074      318,162      313,188      648,095      631,350

Small employer group

     193,831      201,066      209,359      216,726      226,132      236,338      394,897      462,470
                                                       

Total

   $ 519,587    $ 523,405    $ 531,345    $ 538,800    $ 544,294    $ 549,526    $ 1,042,992    $ 1,093,820
                                                       

 

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Assurant Health (continued)

Condensed Statement of Operations

(Unaudited)

 

     For the Three Months Ended     For the Six Months Ended  
     June 30,     March 31,     December 31,     September 30,     June 30,     March 31,     June 30,     June 30,  

($ in thousands)

   2006     2006     2005     2005     2005     2005     2006     2005  

Sales (Annualized issued premiums):

                

Individual:

                

Individual medical

   $ 76,616     $ 76,192     $ 71,745     $ 69,343     $ 68,137     $ 76,389     $ 152,808     $ 144,526  

Short-term medical

     28,128       30,248       24,747       34,889       31,566       28,716       58,376       60,282  
                                                                

Subtotal

     104,744       106,440       96,492       104,232       99,703       105,105       211,184       204,808  

Small employer group

     32,527       34,573       36,466       36,224       41,211       45,486       67,100       86,697  
                                                                

Total

   $ 137,271     $ 141,013     $ 132,958     $ 140,456     $ 140,914     $ 150,591     $ 278,284     $ 291,505  
                                                                

Membership by product line:

                

Individual:

                

Individual medical

     632       636       644       647       662       671       632       662  

Short-term medical

     105       100       102       122       129       116       105       129  
                                                                

Subtotal

     737       736       746       769       791       787       737       791  

Small employer group

     226       239       255       267       287       308       226       287  
                                                                

Total

     963       975       1,001       1,036       1,078       1,095       963       1,078  
                                                                

Ratios:

                

Loss ratio (a)

     61.8 %     62.2 %     62.1 %     62.4 %     61.2 %     62.8 %     62.0 %     62.0 %

Expense ratio (b)

     30.8 %     30.5 %     32.7 %     29.3 %     29.5 %     28.0 %     30.6 %     28.7 %

Combined ratio (c)

     91.4 %     91.6 %     93.7 %     90.6 %     89.5 %     89.7 %     91.5 %     89.6 %

Investment yield (1)

     5.83 %     5.70 %     5.57 %     5.48 %     5.23 %     5.44 %     5.76 %     5.42 %

Real estate investment income (1)

   $ —       $ 7,372     $ —       $ 596     $ —       $ —       $ 7,372     $ —    

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

 

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Assurant Employee Benefits

Condensed Statement of Operations

(Unaudited)

 

     For the Three Months Ended    For the Six Months Ended
     June 30,    March 31,    December 31,    September 30,    June 30,    March 31,    June 30,    June 30,

($ in thousands)

   2006    2006    2005    2005    2005    2005    2006    2005

Revenues:

                       

Net earned premiums and other considerations

   $ 282,581    $ 326,111    $ 308,568    $ 306,928    $ 316,420    $ 345,922    $ 608,692    $ 662,342

Net investment income

     38,744      40,839      38,754      41,878      38,274      37,983      79,583      76,257

Fees and other income

     7,547      6,832      6,056      6,976      6,993      6,189      14,379      13,182
                                                       
     328,872      373,782      353,378      355,782      361,687      390,094      702,654      751,781
                                                       

Benefits, losses and expenses:

                       

Policyholder benefits

     195,195      245,439      215,538      212,022      241,537      267,738      440,634      509,275

Selling, underwriting, general and administrative expenses

     101,827      99,114      108,095      108,403      105,027      97,017      200,941      202,044
                                                       
     297,022      344,553      323,633      320,425      346,564      364,755      641,575      711,319
                                                       

Income before income taxes

     31,850      29,229      29,745      35,357      15,123      25,339      61,079      40,462

Income taxes

     11,260      10,044      10,416      12,511      5,311      8,960      21,304      14,271
                                                       

Net operating income

   $ 20,590    $ 19,185    $ 19,329    $ 22,846    $ 9,812    $ 16,379    $ 39,775    $ 26,191
                                                       

Net earned premiums and other considerations by:

                       

Major product grouping:

                       

Group dental

   $ 108,010    $ 111,393    $ 121,444    $ 124,780    $ 128,323    $ 128,242    $ 219,403    $ 256,565

Group disability single premiums for closed blocks

     —        33,920      —        —        —        26,700      33,920      26,700

All other group disability

     119,847      121,586      123,390      118,595      123,078      124,777      241,433      247,855

Group life

     54,724      59,212      63,734      63,553      65,019      66,203      113,936      131,222
                                                       

Total

   $ 282,581    $ 326,111    $ 308,568    $ 306,928    $ 316,420    $ 345,922    $ 608,692    $ 662,342
                                                       

 

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Assurant Employee Benefits (continued)

Condensed Statement of Operations

(Unaudited)

 

     For the Three Months Ended     For the Six Months Ended  
     June 30,     March 31,     December 31,     September 30,     June 30,     March 31,     June 30,     June 30,  

($ in thousands)

   2006     2006     2005     2005     2005     2005     2006     2005  

Sales:

                

Group dental

   $ 12,843     $ 26,979     $ 17,316     $ 21,588     $ 18,187     $ 41,757     $ 39,822     $ 59,944  

Group disability

     10,022       13,633       9,722       12,649       14,864       25,420       23,655       40,284  

Group life

     5,344       6,681       6,702       5,883       10,898       18,561       12,025       29,459  
                                                                

Total

   $ 28,209     $ 47,293     $ 33,740     $ 40,120     $ 43,949     $ 85,738     $ 75,502     $ 129,687  
                                                                

Ratios:

                

Loss ratio (a)

     69.1 %     75.3 %     69.9 %     69.1 %     76.3 %     77.4 %     72.4 %     76.9 %

Expense ratio (b)

     35.1 %     29.8 %     34.4 %     34.5 %     32.5 %     27.6 %     32.3 %     29.9 %

Investment yield (1)

     6.17 %     6.47 %     6.15 %     6.29 %     6.14 %     6.12 %     6.33 %     6.17 %

Real estate investment income (1)

   $ —       $ —       $ —       $ 2,560     $ —       $ —       $ —       $ —    

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

 

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Assurant Corporate and Other

Condensed Statement of Operations

(Unaudited)

 

     For the Three Months Ended     For the Six Months Ended  
     June 30,     March 31,     December 31,     September 30,     June 30,     March 31,     June 30,     June 30,  

($ in thousands)

   2006     2006     2005     2005     2005     2005     2006     2005  

Revenues:

                

Net earned premiums and other considerations

   $ —       $ —       $ —       $ —       $ —       $ —       $ —       $ —    

Net investment income

     7,710       13,850       6,963       6,872       6,624       7,335       21,560       13,959  

Net realized (loss) gain on investments

     2,272       (4,452 )     (8,301 )     11,965       4,079       492       (2,180 )     4,571  

Amortization of deferred gain on disposal of businesses

     10,022       8,833       7,155       11,706       11,784       11,863       18,855       23,647  

Fees and other income

     127       —         1,051       100       178       103       127       281  
                                                                
     20,131       18,231       6,868       30,643       22,665       19,793       38,362       42,458  
                                                                

Benefits, losses and expenses:

                

Policyholder benefits

     5       —         —         54,148       7,795       —         5       7,795  

Selling, underwriting, general and administrative expenses

     15,764       16,639       37,381       20,843       16,938       20,893       32,403       37,831  

Interest expense

     15,315       15,315       15,315       15,315       15,314       15,314       30,630       30,628  
                                                                
     31,084       31,954       52,696       90,306       40,047       36,207       63,038       76,254  
                                                                

Loss before income taxes and cumulative effect of change in accounting principle

     (10,953 )     (13,723 )     (45,828 )     (59,663 )     (17,382 )     (16,414 )     (24,676 )     (33,796 )

Income taxes

     (4,059 )     (6,176 )     (55,829 )     (27,762 )     (9,222 )     (3,034 )     (10,235 )     (12,256 )
                                                                

Net operating (loss) income before cumulative effect of change in accounting principle

     (6,894 )     (7,547 )     10,001       (31,901 )     (8,160 )     (13,380 )     (14,441 )     (21,540 )

Cumulative effect of change in accounting principle

     —         1,547       —         —         —         —         1,547       —    
                                                                

Net operating (loss) income

   $ (6,894 )   $ (6,000 )   $ 10,001     $ (31,901 )   $ (8,160 )   $ (13,380 )   $ (12,894 )   $ (21,540 )
                                                                

Real estate investment income

   $ —       $ 4,857     $ —       $ —       $ —       $ —       $ 4,857     $ —    

Corporate and Other Reconciliation

                

Assurant Corporate and Other Segment Net Operating Income

   $ (6,894 )   $ (6,000 )   $ 10,001     $ (31,901 )   $ (8,160 )   $ (13,380 )   $ (12,894 )   $ (21,540 )

Adjustments, net of tax:

                

Amortization of deferred gain on disposal of businesses

     (6,514 )     (5,741 )     (4,651 )     (7,609 )     (7,660 )     (7,711 )     (12,255 )     (15,371 )

Interest expense

     9,955       9,955       9,955       9,955       9,954       9,954       19,910       19,908  

Net realized (gain) loss on investments

     (1,477 )     2,894       5,396       (9,794 )     (2,651 )     (320 )     1,417       (2,971 )

Excess loss of reinsurance program (1995-1997)

     —         —         —         35,060       5,203       —         —         5,203  

Expenses directly related to the secondary public offering

     —         —         —         —         —         1,040       —         1,040  

Cumulative effect of change in accounting principle

     —         (1,547 )     —         —         —         —         (1,547 )     —    

Corporate and other per Reconciliation of Net Operating

                
                                                                

Income to Net Income (page 5)

   $ (4,930 )   $ (439 )   $ 20,701     $ (4,289 )   $ (3,314 )   $ (10,417 )   $ (5,369 )   $ (13,731 )
                                                                

 

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Assurant, Inc. and Subsidiaries

Investments

(Unaudited)

 

($ in thousands)

  

As of

June 30,

2006

   

As of

December 31,

2005

 

Investments by Type

          

Fixed maturities: available-for-sale, at fair value

   $ 8,866,664      $ 8,961,778   

Equity Securities: available-for-sale

          

Preferred stocks

     729,225        691,523   

Common stocks

     1,157        1,578   

Commercial mortgage loans on real estate, at amortized cost

     1,252,612        1,212,006   

Policy loans

     59,149        61,043   

Cash and short-term investments

     902,649        1,283,043   

Collateral held under securities lending

     605,939        610,662   

Other investments

     542,016        549,759   
                  

Total

   $ 12,959,411      $ 13,371,392   
                  

Fixed Maturity Securities by Credit Quality (Fair Value)

          

Aaa / Aa / A

   $ 6,083,817    69 %   $ 6,211,058    69 %

Baa

     2,132,416    24 %     2,122,752    24 %

Ba

     547,588    6 %     515,740    6 %

B

     99,616    1 %     101,724    1 %

Caa and lower

     2,579    0 %     9,764    0 %

In or near default

     648    0 %     740    0 %
                          

Total

   $ 8,866,664    100 %   $ 8,961,778    100 %
                          

Fixed Maturity Securities by Issuer Type (Fair Value)

          

U.S government and government agencies and authorities

   $ 168,192    2 %   $ 207,711    2 %

State, municipalities and political subdivisions

     248,100    3 %     235,933    3 %

Foreign government

     450,694    5 %     589,353    6 %

Public utilities

     1,144,829    13 %     1,064,591    12 %

Mortgage backed securities

     1,320,761    15 %     1,492,684    17 %

All other corporate bonds

     5,534,088    62 %     5,371,506    60 %
                          

Total

   $ 8,866,664    100 %   $ 8,961,778    100 %
                          

 

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Assurant, Inc.

Investment Results by Asset Category and Annualized Yields

(Unaudited)

 

    For the Three Months Ended
June 30, 2006
    For the Three Months Ended
June 30, 2005
    For the Six Months Ended
June 30, 2006
    For the Six Months Ended
June 30, 2005
 
          Investment     Investment           Investment     Investment           Investment     Investment           Investment     Investment  

($ in thousands)

  Yield     Income     Gain (Loss)     Yield     Income     Gain (Loss)     Yield     Income     Gain (Loss)     Yield     Income     Gain (Loss)  

Fixed maturities: available-for-sale, at fair value

  5.76 %   $ 127,725     $ (258 )   5.71 %   $ 126,279     $ (3,628 )   5.78 %   $ 254,566     $ (2,875 )   5.76 %   $ 251,948     $ (3,342 )

Equity Securities: available-for-sale

  7.11 %     13,519       37     6.89 %     9,528       (1,168 )   6.81 %     25,302       (1,617 )   6.84 %     18,374       (890 )

Commercial mortgage loans on real estate, at amortized cost

  7.21 %     22,409       (84 )   7.40 %     19,866       (570 )   7.43 %     45,762       (209 )   7.34 %     39,623       (995 )

Policy loans

  9.78 %     1,457       —       5.24 %     839       —       7.75 %     2,330       —       6.03 %     1,944       —    

Cash and short-term investments

  4.59 %     10,417       7     2.52 %     5,264       (1 )   3.75 %     20,473       148     2.30 %     10,691       (3 )

Other investments

  8.10 %     11,119       2,570     15.74 %     21,572       9,446     13.59 %     37,084       2,373     11.20 %     30,978       9,801  
                                                                       

Total

      186,646     $ 2,272         183,348     $ 4,079         385,517     $ (2,180 )       353,558     $ 4,571  

Investment expenses

      (6,208 )         (6,330 )         (12,517 )         (12,340 )  
                                               

Net investment income

    $ 180,438         $ 177,018         $ 373,000         $ 341,218    
                                               

Gross investment gain

      $ 10,682         $ 20,262         $ 16,808         $ 28,429  

Gross investment loss

        (8,410 )         (15,968 )         (18,988 )         (23,643 )

Write-downs on available-for-sale securities

        —             (215 )         —             (215 )
                                               

Net investment gain

      $ 2,272         $ 4,079         $ (2,180 )       $ 4,571  
                                               

 

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