Assurant - 10-Q quarterly report FY2015 Q1

Assurant - 10-Q quarterly report FY2015 Q1

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q



x	Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended March 31, 2015



¨	Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from to

Assurant, Inc.

(Exact name of registrant as specified in its charter)



Delaware	001-31978	39-1126612
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

28 Liberty Street, 41st Floor

New York, New York 10005

(212) 859-7000

(Address, including zip code, and telephone number, including area code, of Registrant’s Principal Executive Offices)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES x NO ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). YES x NO ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES ¨ NO x

The number of shares of the registrant’s Common Stock outstanding at April 30, 2015 was 67,916,445.

ASSURANT, INC.

QUARTERLY REPORT ON FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2015

TABLE OF CONTENTS



Item Number		Page Number
	PART I FINANCIAL INFORMATION

1.	Financial Statements of Assurant, Inc.:

	Consolidated Balance Sheets (unaudited) at March 31, 2015 and December 31, 2014	2

	Consolidated Statements of Operations (unaudited) for the three months ended March 31, 2015 and 2014	3

	Consolidated Statements of Comprehensive Income (unaudited) for the three months ended March 31, 2015 and 2014	4

	Consolidated Statement of Changes in Stockholders’ Equity (unaudited) from December 31, 2014 through March 31, 2015	5

	Consolidated Statements of Cash Flows (unaudited) for the three months ended March 31, 2015 and 2014	6

	Notes to Consolidated Financial Statements (unaudited) for the three months ended March 31, 2015 and 2014	7

2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	36

3.	Quantitative and Qualitative Disclosures About Market Risk	57

4.	Controls and Procedures	57

	PART II OTHER INFORMATION

1.	Legal Proceedings	58

1A.	Risk Factors	58

2.	Unregistered Sales of Equity Securities and Use of Proceeds	60

6.	Exhibits	61

	Signatures	62

Amounts are presented in United States of America (“U.S.”) dollars and all amounts are in thousands, except number of shares and per share amounts.

Assurant, Inc.

Consolidated Balance Sheets (unaudited)

At March 31, 2015 and December 31, 2014



	March 31, 2015			December 31, 2014
	(in thousands except number of shares and per share amounts)
Assets
Investments:
Fixed maturity securities available for sale, at fair value (amortized cost - $10,019,473 in 2015 and $10,048,100 in 2014)	$	11,387,311		$	11,263,174
Equity securities available for sale, at fair value (cost - $456,697 in 2015 and $434,875 in 2014)	530,509			499,407
Commercial mortgage loans on real estate, at amortized cost	1,255,459			1,272,616
Policy loans	46,555			48,272
Short-term investments	247,525			345,246
Collateral held/pledged under securities agreements	93,242			95,985
Other investments	611,927			606,752
Total investments	14,172,528			14,131,452
Cash and cash equivalents	1,065,165			1,318,656
Premiums and accounts receivable, net	1,573,984			1,445,630
Reinsurance recoverables	7,205,284			7,254,585
Accrued investment income	144,591			138,868
Deferred acquisition costs	2,827,411			2,957,740
Property and equipment, at cost less accumulated depreciation	286,186			277,645
Tax receivable	—			15,132
Goodwill	828,564			841,239
Value of business acquired	43,457			45,462
Other intangible assets, net	331,338			381,960
Other assets	388,190			847,860
Assets held in separate accounts	1,933,658			1,906,237
Total assets	$	30,800,356		$	31,562,466
Liabilities
Future policy benefits and expenses	$	9,417,564		$	9,483,672
Unearned premiums	6,259,389			6,529,675
Claims and benefits payable	3,784,275			3,698,606
Commissions payable	451,238			487,322
Reinsurance balances payable	104,566			157,089
Funds held under reinsurance	87,146			75,161
Deferred gain on disposal of businesses	97,559			100,817
Obligation under securities agreements	93,241			95,986
Accounts payable and other liabilities	2,241,162			2,675,515
Tax payable	31,193			—
Debt	1,171,153			1,171,079
Liabilities related to separate accounts	1,933,658			1,906,237
Total liabilities	25,672,144			26,381,159
Commitments and contingencies (Note 14)
Stockholders’ equity
Common stock, par value $0.01 per share, 800,000,000 shares authorized, 68,270,067 and 69,299,559 shares outstanding at March 31, 2015 and December 31, 2014, respectively	1,493			1,490
Additional paid-in capital	3,135,397			3,131,274
Retained earnings	4,840,497			4,809,287
Accumulated other comprehensive income	548,997			555,767
Treasury stock, at cost; 80,632,242 and 79,338,142 shares at March 31, 2015 and December 31, 2014, respectively	(3,398,172		)	(3,316,511		)
Total stockholders’ equity	5,128,212			5,181,307
Total liabilities and stockholders’ equity	$	30,800,356		$	31,562,466

See the accompanying notes to the consolidated financial statements

Assurant, Inc.

Consolidated Statements of Operations (unaudited)

Three Months Ended March 31, 2015 and 2014



	Three Months Ended March 31,
	2015			2014
	(in thousands except number of shares and per share amounts)
Revenues
Net earned premiums	$	2,159,562		$	2,060,462
Net investment income	152,273			168,058
Net realized gains on investments, excluding other-than-temporary impairment losses	6,525			19,751
Total other-than-temporary impairment losses	(3,208		)	(29		)
Portion of net loss recognized in other comprehensive income, before taxes	638			29
Net other-than-temporary impairment losses recognized in earnings	(2,570		)	—
Amortization of deferred gain on disposal of businesses	3,258			3,660
Fees and other income	279,562			196,441
Total revenues	2,598,610			2,448,372
Benefits, losses and expenses
Policyholder benefits	1,210,727			1,008,032
Amortization of deferred acquisition costs and value of business acquired	369,003			344,782
Underwriting, general and administrative expenses	921,909			843,240
Interest expense	13,778			17,065
Total benefits, losses and expenses	2,515,417			2,213,119
Income before provision for income taxes	83,193			235,253
Provision for income taxes	33,149			98,008
Net income	$	50,044		$	137,245
Earnings Per Share
Basic	$	0.72		$	1.88
Diluted	$	0.71		$	1.86
Dividends per share	$	0.27		$	0.25
Share Data
Weighted average shares outstanding used in basic per share calculations	69,770,224			72,848,756
Plus: Dilutive securities	987,325			1,025,196
Weighted average shares used in diluted per share calculations	70,757,549			73,873,952

See the accompanying notes to the consolidated financial statements

Assurant, Inc.

Consolidated Statements of Comprehensive Income (unaudited)

Three Months Ended March 31, 2015 and 2014



	Three Months Ended March 31,
	2015			2014
	(in thousands)
Net income	$	50,044		$	137,245
Other comprehensive (loss) income:
Change in unrealized gains on securities, net of taxes of $(28,349) and $(86,876), respectively	57,459			171,033
Change in other-than-temporary impairment gains, net of taxes of $481 and $(883), respectively	(894		)	1,640
Change in foreign currency translation, net of taxes of $2,654 and $3,341, respectively	(65,951		)	(18,053		)
Amortization of pension and postretirement unrecognized net periodic benefit cost, net of taxes of $(1,409) and $(1,094), respectively	2,616			2,031
Total other comprehensive (loss) income	(6,770		)	156,651
Total comprehensive income	$	43,274		$	293,896

See the accompanying notes to the consolidated financial statements

Assurant, Inc.

Consolidated Statement of Stockholders’ Equity (unaudited)

From December 31, 2014 through March 31, 2015



	Common Stock		Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Income			Treasury Stock			Total
	(in thousands)
Balance at December 31, 2014	$	1,490	$	3,131,274		$	4,809,287		$	555,767		$	(3,316,511	)	$	5,181,307
Stock plan exercises	3		(3,326		)	—			—			—			(3,323		)
Stock plan compensation expense	—		5,890			—			—			—			5,890
Change in tax benefit from share-based payment arrangements	—		1,559			—			—			—			1,559
Dividends	—		—			(18,834		)	—			—			(18,834		)
Acquisition of common stock	—		—			—			—			(81,661		)	(81,661		)
Net income	—		—			50,044			—			—			50,044
Other comprehensive loss	—		—			—			(6,770		)	—			(6,770		)
Balance, March 31, 2015	$	1,493	$	3,135,397		$	4,840,497		$	548,997		$	(3,398,172	)	$	5,128,212

See the accompanying notes to the consolidated financial statements

Assurant, Inc.

Consolidated Statements of Cash Flows (unaudited)

Three Months Ended March 31, 2015 and 2014



	Three Months Ended March 31,
	2015			2014
	(in thousands)
Net cash (used in) provided by operating activities	$	(177,666	)	$	127,178
Investing activities
Sales of:
Fixed maturity securities available for sale	452,944			461,894
Equity securities available for sale	14,660			64,223
Other invested assets	6,685			22,764
Property and equipment and other	10			—
Subsidiary, net of cash transferred (3)	65,002			—
Maturities, calls, prepayments, and scheduled redemption of:
Fixed maturity securities available for sale	179,339			214,058
Commercial mortgage loans on real estate	45,887			50,498
Purchases of:
Fixed maturity securities available for sale	(708,069		)	(791,994		)
Equity securities available for sale	(37,886		)	(48,822		)
Commercial mortgage loans on real estate	(36,180		)	(23,050		)
Other invested assets	(5,303		)	(7,959		)
Property and equipment and other	(22,157		)	(13,105		)
Equity interest (1)	(457		)	(20,950		)
Change in short-term investments	95,250			(99,008		)
Change in policy loans	1,544			1,105
Change in collateral held/pledged under securities agreements	2,746			(791		)
Net cash provided by (used in) investing activities	54,015			(191,137		)
Financing activities
Repayment of debt	—			(467,330		)
Change in tax benefit from share-based payment arrangements	1,559			8,509
Acquisition of common stock	(84,329		)	(26,107		)
Dividends paid	(18,834		)	(18,180		)
Payment of contingent obligations (2)	—			(31,871		)
Change in obligation under securities agreements	(2,746		)	791
Net cash used in financing activities	(104,350		)	(534,188		)
Effect of exchange rate changes on cash and cash equivalents	(22,277		)	(13,125		)
Cash included in held for sale assets	(3,213		)	—
Change in cash and cash equivalents	(253,491		)	(611,272		)
Cash and cash equivalents at beginning of period	1,318,656			1,717,184
Cash and cash equivalents at end of period	$	1,065,165		$	1,105,912


(1)	Relates to the purchase of equity interest in Iké Asistencia.


(2)	Relates to the delayed and contingent liability payments established at the time of acquisition of Lifestyle Services Group.


(3)	Relates to the sale of American Reliable Insurance Company to Global Indemnity Group, Inc., in January 2015.

See the accompanying notes to the consolidated financial statements

Assurant, Inc.

Notes to Consolidated Financial Statements (unaudited)

Three Months Ended March, 2015 and 2014

(In thousands, except number of shares and per share amounts)

1. Nature of Operations

Assurant, Inc. (the “Company”) is a holding company whose subsidiaries provide specialty protection products and related services in North America, Latin America, Europe and other select worldwide markets.

The Company is traded on the New York Stock Exchange under the symbol "AIZ."

Through its operating subsidiaries, the Company provides mobile device protection products and services; debt protection administration; credit-related insurance; warranties and extended service products and related services for consumer electronics, appliances and vehicles; pre-funded funeral insurance; lender-placed homeowners insurance; property, appraisal, preservation and valuation services; flood insurance; renters insurance and related products; manufactured housing homeowners insurance; individual health and small employer group health insurance; group dental insurance; group disability insurance; and group life insurance.

2. Basis of Presentation

The accompanying unaudited interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information. Accordingly, these statements do not include all of the information and footnotes required by GAAP for complete financial statements.

The interim financial data as of March 31, 2015 and December 31, 2014 and for the three months ended March 31, 2015 and 2014 is unaudited; in the opinion of management, the interim data includes all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of the results for the interim periods. The unaudited interim consolidated financial statements include the accounts of the Company and all of its wholly owned subsidiaries. All inter-company transactions and balances are eliminated in consolidation.

The Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010, and the rules and regulations thereunder (together, the “Affordable Care Act”) introduced new and significant premium stabilization programs in 2014. These programs require the Company to record amounts to our consolidated financial statements based on assumptions and estimates that could materially change as experience develops.

Operating results for the three months ended March 31, 2015 are not necessarily indicative of the results that may be expected for the year ending December 31, 2015. The accompanying unaudited interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014.

3. Recent Accounting Pronouncements

Not Yet Adopted

In April 2015, the Financial Accounting Standards Board (“FASB”) issued amended guidance on presentation of debt issuance costs. This amended guidance requires that debt issuance costs be presented in the balance sheet as a direct deduction from the carrying amount of the debt liability, consistent with debt discounts or premiums. The recognition and measurement guidance for debt issuance costs is not affected by the amendments. The amended guidance is effective for interim and annual periods beginning after December 15, 2015. Therefore, the Company is required to adopt the guidance on January 1, 2016. Early adoption of the amended guidance is permitted for financial statements that have not been previously issued. An entity should apply the amended guidance on a retrospective basis, wherein the balance sheet of each individual period presented should be adjusted to reflect the period-specific effects of applying the new guidance. The Company does not expect the adoption of this presentation guidance to impact the Company’s financial position or results of operations.

Assurant, Inc.

Notes to Consolidated Financial Statements (unaudited)

Three Months Ended March, 2015 and 2014

(In thousands, except number of shares and per share amounts)

In February 2015, the FASB issued new consolidation guidance that affects reporting entities that are required to evaluate whether they should consolidate certain legal entities. All legal entities are subject to reevaluation under the revised consolidation model. The new guidance eliminates specialized guidance for limited partnerships and similar legal entities, and removes the indefinite deferral for certain investment funds. The new guidance is effective for interim and annual periods beginning after December 15, 2015. Therefore, the Company is required to adopt the guidance on January 1, 2016. Early adoption is permitted, including adoption in an interim period. The new guidance may be applied retrospectively or through a cumulative effect adjustment to retained earnings as of the beginning of the year of adoption. The Company is evaluating the requirements of this new consolidation guidance and the potential impact on the Company’s financial position and results of operations.

In May 2014, the FASB issued amended guidance on revenue recognition. The amended guidance affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets unless those contracts are within the scope of other standards. Insurance contracts are within the scope of other standards and therefore are specifically excluded from the scope of the amended revenue recognition guidance. The core principle of the amended guidance is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve the core principle, the entity applies a five step process outlined in the amended guidance. The amended guidance also includes a cohesive set of disclosure requirements. The amended guidance is effective for interim and annual periods beginning after December 15, 2016 and early adoption is not permitted. Therefore, the Company is required to adopt the guidance on January 1, 2017. An entity can choose to apply the amended guidance using either the full retrospective approach or a modified retrospective approach. The Company is evaluating the requirements of the revenue recognition guidance as it relates to its non-insurance contract revenue and the potential impact on the Company’s financial position and results of operations.

4. Dispositions

In January 2015, the Company completed the sale of its general agency business and primary insurance carrier, American Reliable Insurance Company (“ARIC”), to Global Indemnity Group, Inc., a subsidiary of Global Indemnity plc, for $117,860 in net cash consideration. The business was part of the Assurant Specialty Property segment and offers specialty personal lines and agricultural insurance through general and independent agents. The sale price was based on the GAAP book value of the business from June 30, 2014 adjusted as of January 1, 2015. In accordance with held for sale accounting, the Company recorded a loss of $21,526 for the period ended December 31, 2014. Upon final settlement, the Company recorded a gain of $5,284 for the quarter ended March 31, 2015, which is classified in underwriting, general and administrative expenses on the Consolidated Statements of Operations.

Assurant, Inc.

Notes to Consolidated Financial Statements (unaudited)

Three Months Ended March, 2015 and 2014

(In thousands, except number of shares and per share amounts)

5. Investments

The following tables show the cost or amortized cost, gross unrealized gains and losses, fair value and other-than-temporary impairment (“OTTI”) of our fixed maturity and equity securities as of the dates indicated:



	March 31, 2015
	Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		OTTI in AOCI (a)
Fixed maturity securities:
United States government and government agencies and authorities	$	179,565	$	6,068	$	(49	)	$	185,584	$	—
States, municipalities and political subdivisions	699,664		67,263		(483		)	766,444		—
Foreign governments	519,059		96,260		(1,327		)	613,992		—
Asset-backed	3,775		1,634		(116		)	5,293		1,526
Commercial mortgage-backed	34,375		1,043		—			35,418		—
Residential mortgage-backed	973,193		69,758		(479		)	1,042,472		16,117
Corporate	7,609,842		1,137,179		(8,913		)	8,738,108		21,897
Total fixed maturity securities	$	10,019,473	$	1,379,205	$	(11,367	)	$	11,387,311	$	39,540
Equity securities:
Common stocks	$	21,984	$	16,834	$	—		$	38,818	$	—
Non-redeemable preferred stocks	434,713		58,171		(1,193		)	491,691		—
Total equity securities	$	456,697	$	75,005	$	(1,193	)	$	530,509	$	—

	December 31, 2014
	Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		OTTI in AOCI (a)
Fixed maturity securities:
United States government and government agencies and authorities	$	172,070	$	5,201	$	(429	)	$	176,842	$	—
States, municipalities and political subdivisions	703,167		67,027		(353		)	769,841		—
Foreign governments	591,981		74,339		(1,457		)	664,863		—
Asset-backed	3,917		1,680		(78		)	5,519		1,570
Commercial mortgage-backed	44,907		1,109		—			46,016		—
Residential mortgage-backed	911,004		58,876		(1,154		)	968,726		17,732
Corporate	7,621,054		1,026,927		(16,614		)	8,631,367		21,612
Total fixed maturity securities	$	10,048,100	$	1,235,159	$	(20,085	)	$	11,263,174	$	40,914
Equity securities:
Common stocks	$	22,300	$	15,651	$	(1	)	$	37,950	$	—
Non-redeemable preferred stocks	412,575		50,975		(2,093		)	461,457		—
Total equity securities	$	434,875	$	66,626	$	(2,094	)	$	499,407	$	—


(a)	Represents the amount of OTTI recognized in accumulated other comprehensive income (“AOCI”). Amount includes unrealized gains and losses on impaired securities relating to changes in the value of such securities subsequent to the impairment measurement date.

Assurant, Inc.

Notes to Consolidated Financial Statements (unaudited)

Three Months Ended March, 2015 and 2014

(In thousands, except number of shares and per share amounts)

Our states, municipalities and political subdivisions holdings are highly diversified across the U.S. and Puerto Rico, with no individual state’s exposure (including both general obligation and revenue securities) exceeding 0.5% of the overall investment portfolio as of March 31, 2015 and December 31, 2014. At March 31, 2015 and December 31, 2014, the securities include general obligation and revenue bonds issued by states, cities, counties, school districts and similar issuers, including $326,676 and $270,107, respectively, of advance refunded or escrowed-to-maturity bonds (collectively referred to as “pre-refunded bonds”), which are bonds for which an irrevocable trust has been established to fund the remaining payments of principal and interest. As of March 31, 2015 and December 31, 2014, revenue bonds account for 51% of the holdings. Excluding pre-refunded revenue bonds, the activities supporting the income streams of the Company’s revenue bonds are across a broad range of sectors, primarily highway, water, airport and marina, higher education, specifically pledged tax revenues, and other miscellaneous sources such as bond banks, finance authorities and appropriations.

The Company’s investments in foreign government fixed maturity securities are held mainly in countries and currencies where the Company has policyholder liabilities, which allow the assets and liabilities to be more appropriately matched. At March 31, 2015, approximately 79%, 7% and 5% of the foreign government securities were held in the Canadian government/provincials and the governments of Brazil and Germany, respectively. At December 31, 2014, approximately 76%, 10% and 5% of the foreign government securities were held in the Canadian government/provincials and the governments of Brazil and Germany, respectively. No other country represented more than 2% and 3% of our foreign government securities as of March 31, 2015 and December 31, 2014, respectively.

The Company has European investment exposure in its corporate fixed maturity and equity securities of $1,065,643 with a net unrealized gain of $135,396 at March 31, 2015 and $1,060,655 with a net unrealized gain of $116,975 at December 31, 2014. Approximately 21% and 22% of the corporate European exposure is held in the financial industry at March 31, 2015 and December 31, 2014, respectively. Our largest European country exposure represented approximately 5% of the fair value of our corporate securities as of March 31, 2015 and December 31, 2014. Approximately 5% of the fair value of the corporate European securities are pound and euro-denominated and are not hedged to U.S. dollars, but held to support those foreign-denominated liabilities. Our international investments are managed as part of our overall portfolio with the same approach to risk management and focus on diversification.

The Company has exposure to the energy sector in its corporate fixed maturity securities of $1,000,301 with a net unrealized gain of $104,360 at March 31, 2015 and $992,012 with a net unrealized gain of $89,590 at December 31, 2014. Approximately 87% and 89% of the energy exposure is rated as investment grade as of March 31, 2015 and December 31, 2014, respectively.

The cost or amortized cost and fair value of fixed maturity securities at March 31, 2015 by contractual maturity are shown below. Expected maturities may differ from contractual maturities because issuers of the securities may have the right to call or prepay obligations with or without call or prepayment penalties.



	Cost or Amortized Cost		Fair Value
Due in one year or less	$	295,436	$	300,908
Due after one year through five years	2,193,375		2,327,168
Due after five years through ten years	2,410,792		2,575,843
Due after ten years	4,108,527		5,100,209
Total	9,008,130		10,304,128
Asset-backed	3,775		5,293
Commercial mortgage-backed	34,375		35,418
Residential mortgage-backed	973,193		1,042,472
Total	$	10,019,473	$	11,387,311

Assurant, Inc.

Notes to Consolidated Financial Statements (unaudited)

Three Months Ended March, 2015 and 2014

(In thousands, except number of shares and per share amounts)

The following table summarizes the proceeds from sales of available-for-sale securities and the gross realized gains and gross realized losses that have been included in earnings as a result of those sales.



	Three Months Ended March 31,
	2015		2014
Proceeds from sales	$	552,513	$	552,999
Gross realized gains	12,343		22,783
Gross realized losses	5,599		5,267

The following table sets forth the net realized gains, including OTTI, recognized in the statement of operations as follows:



	Three Months Ended March 31,
	2015			2014
Net realized gains related to sales and other:
Fixed maturity securities	$	5,513		$	15,190
Equity securities	874			5,124
Other investments	138			(563		)
Total net realized gains related to sales and other	6,525			19,751
Net realized losses related to other-than-temporary impairments:
Fixed maturity securities	(2,570		)	—
Total net realized losses related to other-than-temporary impairments	(2,570		)	—
Total net realized gains	$	3,955		$	19,751

Other-Than-Temporary Impairments

The Company follows the OTTI guidance, which requires entities to separate an OTTI of a debt security into two components when there are credit related losses associated with the impaired debt security for which the Company asserts that it does not have the intent to sell, and it is more likely than not that it will not be required to sell before recovery of its cost basis. Under the OTTI guidance, the amount of the OTTI related to a credit loss is recognized in earnings, and the amount of the OTTI related to other, non-credit factors (e.g., interest rates, market conditions, etc.) is recorded as a component of other comprehensive income. In instances where no credit loss exists but the Company intends to sell the security or it is more likely than not that the Company will have to sell the debt security prior to the anticipated recovery, the decline in market value below amortized cost is recognized as an OTTI in earnings. In periods after the recognition of an OTTI on debt securities, the Company accounts for such securities as if they had been purchased on the measurement date of the OTTI at an amortized cost basis equal to the previous amortized cost basis less the OTTI recognized in earnings. For debt securities for which OTTI was recognized in earnings, the difference between the new amortized cost basis and the cash flows expected to be collected will be accreted or amortized into net investment income.

For the three months ended March 31, 2015, the Company recorded $3,208 of OTTI, of which $2,570 was related to credit losses and recorded as net OTTI losses recognized in earnings, with the remaining $638 related to all other factors and recorded as an unrealized loss component of AOCI. For the three months ended March 31, 2014, the Company recorded $29 of OTTI, all of which was related to non-credit factors and recorded as an unrealized loss component of AOCI.

Assurant, Inc.

Notes to Consolidated Financial Statements (unaudited)

Three Months Ended March, 2015 and 2014

(In thousands, except number of shares and per share amounts)

The following table sets forth the amount of credit loss impairments recognized within the results of operations on fixed maturity securities held by the Company as of the dates indicated, for which a portion of the OTTI loss was recognized in AOCI, and the corresponding changes in such amounts.



	Three Months Ended March 31,
	2015			2014
Balance, January 1,	$	35,424		$	45,278
Additions for credit loss impairments recognized in the current period on securities not previously impaired	2,570			—
Reductions for increases in cash flows expected to be collected that are recognized over the remaining life of the security	(472		)	(482		)
Reductions for credit loss impairments previously recognized on securities which matured, paid down, prepaid or were sold during the period	(1,465		)	(495		)
Balance, March 31,	$	36,057		$	44,301

We regularly monitor our investment portfolio to ensure investments that may be other-than-temporarily impaired are timely identified, properly valued, and charged against earnings in the proper period. The determination that a security has incurred an other-than-temporary decline in value requires the judgment of management. Assessment factors include, but are not limited to, the length of time and the extent to which the market value has been less than cost, the financial condition and rating of the issuer, whether any collateral is held, the intent and ability of the Company to retain the investment for a period of time sufficient to allow for recovery for equity securities and the intent to sell or whether it is more likely than not that the Company will be required to sell for fixed maturity securities. Inherently, there are risks and uncertainties involved in making these judgments. Changes in circumstances and critical assumptions such as a continued weak economy, a more pronounced economic downturn or unforeseen events which affect one or more companies, industry sectors, or countries could result in additional impairments in future periods for other-than-temporary declines in value. Any equity security whose price decline is deemed other-than-temporary is written down to its then current market value with the amount of the impairment reported as a realized loss in that period. The impairment of a fixed maturity security that the Company has the intent to sell or that it is more likely than not that the Company will be required to sell is deemed other-than-temporary and is written down to its market value at the balance sheet date with the amount of the impairment reported as a realized loss in that period. For all other-than-temporarily impaired fixed maturity securities that do not meet either of these two criteria, the Company is required to analyze its ability to recover the amortized cost of the security by calculating the net present value of projected future cash flows. For these other-than-temporarily impaired fixed maturity securities, the net amount recognized in earnings is equal to the difference between the amortized cost of the fixed maturity security and its net present value.

The Company considers different factors to determine the amount of projected future cash flows and discounting methods for corporate debt and residential and commercial mortgage-backed or asset-backed securities. For corporate debt securities, the split between the credit and non-credit losses is driven principally by assumptions regarding the amount and timing of projected future cash flows. The net present value is calculated by discounting the Company’s best estimate of projected future cash flows at the effective interest rate implicit in the security at the date of acquisition. For residential and commercial mortgage-backed and asset-backed securities, cash flow estimates, including prepayment assumptions, are based on data from widely accepted third-party data sources or internal estimates. In addition to prepayment assumptions, cash flow estimates vary based on assumptions regarding the underlying collateral including default rates, recoveries and changes in value. The net present value is calculated by discounting the Company’s best estimate of projected future cash flows at the effective interest rate implicit in the fixed maturity security prior to impairment at the balance sheet date. The discounted cash flows become the new amortized cost basis of the fixed maturity security.

In periods subsequent to the recognition of an OTTI, the Company generally accretes the discount (or amortizes the reduced premium) into net investment income, up to the non-discounted amount of projected future cash flows, resulting from the reduction in cost basis, based upon the amount and timing of the expected future cash flows over the estimated period of cash flows.

The investment category and duration of the Company’s gross unrealized losses on fixed maturity securities and equity securities at March 31, 2015 and December 31, 2014 were as follows:

Assurant, Inc.

Notes to Consolidated Financial Statements (unaudited)

Three Months Ended March, 2015 and 2014

(In thousands, except number of shares and per share amounts)



	March 31, 2015
	Less than 12 months					12 Months or More					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
Fixed maturity securities:
United States Government and government agencies and authorities	$	11,159	$	(10	)	$	8,579	$	(39	)	$	19,738	$	(49	)
States, municipalities and political subdivisions	4,688		(20		)	2,870		(463		)	7,558		(483		)
Foreign governments	9,611		(176		)	26,279		(1,151		)	35,890		(1,327		)
Asset-backed	—		—			1,246		(116		)	1,246		(116		)
Residential mortgage-backed	45,587		(177		)	17,290		(302		)	62,877		(479		)
Corporate	402,717		(6,893		)	29,596		(2,020		)	432,313		(8,913		)
Total fixed maturity securities	$	473,762	$	(7,276	)	$	85,860	$	(4,091	)	$	559,622	$	(11,367	)
Equity securities:
Non-redeemable preferred stocks	$	28,234	$	(230	)	$	19,860	$	(963	)	$	48,094	$	(1,193	)



	December 31, 2014
	Less than 12 months					12 Months or More					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
Fixed maturity securities:
United States Government and government agencies and authorities	$	34,551	$	(188	)	$	21,488	$	(241	)	$	56,039	$	(429	)
States, municipalities and political subdivisions	3,050		(282		)	4,633		(71		)	7,683		(353		)
Foreign governments	19,886		(67		)	37,741		(1,390		)	57,627		(1,457		)
Asset-backed	—		—			1,348		(78		)	1,348		(78		)
Residential mortgage-backed	22,337		(71		)	61,682		(1,083		)	84,019		(1,154		)
Corporate	640,641		(13,132		)	113,918		(3,482		)	754,559		(16,614		)
Total fixed maturity securities	$	720,465	$	(13,740	)	$	240,810	$	(6,345	)	$	961,275	$	(20,085	)
Equity securities:
Common stock	$	—	$	—		$	196	$	(1	)	$	196	$	(1	)
Non-redeemable preferred stocks	8,844		(264		)	24,784		(1,829		)	33,628		(2,093		)
Total equity securities	$	8,844	$	(264	)	$	24,980	$	(1,830	)	$	33,824	$	(2,094	)

Assurant, Inc.

Notes to Consolidated Financial Statements (unaudited)

Three Months Ended March, 2015 and 2014

(In thousands, except number of shares and per share amounts)

Total gross unrealized losses represent approximately 2% of the aggregate fair value of the related securities at March 31, 2015 and December 31, 2014. Approximately 60% and 63% of these gross unrealized losses have been in a continuous loss position for less than twelve months at March 31, 2015 and December 31, 2014, respectively. The total gross unrealized losses are comprised of 238 and 385 individual securities at March 31, 2015 and December 31, 2014, respectively. In accordance with its policy described above, the Company concluded that for these securities an adjustment to its results of operations for other-than-temporary impairments of the gross unrealized losses was not warranted at March 31, 2015 and December 31, 2014. These conclusions were based on a detailed analysis of the underlying credit and expected cash flows of each security. As of March 31, 2015, the gross unrealized losses that have been in a continuous loss position for twelve months or more were concentrated in the Company’s foreign governments and corporate fixed maturity securities, and in non-redeemable preferred stocks. Within the Company’s corporate fixed maturity securities, the majority of the loss position relates to securities in the industrial sector. The industrial sector’s gross unrealized losses of twelve months or more were $1,795, or 89%, of the corporate fixed maturity securities total. The non-redeemable preferred stocks are perpetual preferred securities that have characteristics of both debt and equity securities. To evaluate these securities, we apply an impairment model similar to that used for our fixed maturity securities. As of March 31, 2015, the Company did not intend to sell these securities and it was not more likely than not that the Company would be required to sell them and no underlying cash flow issues were noted. Therefore, the Company did not recognize an OTTI on those perpetual preferred securities that had been in a continuous unrealized loss position for twelve months or more. As of March 31, 2015, the Company did not intend to sell the fixed maturity securities and it was not more likely than not that the Company would be required to sell the securities before the anticipated recovery of their amortized cost basis. The gross unrealized losses are primarily attributable to widening credit spreads associated with an underlying shift in overall credit risk premium.

The Company has entered into commercial mortgage loans, collateralized by the underlying real estate, on properties located throughout the U.S. and Canada. At March 31, 2015, approximately 39% of the outstanding principal balance of commercial mortgage loans was concentrated in the states of California, New York, and Utah. Although the Company has a diversified loan portfolio, an economic downturn could have an adverse impact on the ability of its debtors to repay their loans. The outstanding balance of commercial mortgage loans range in size from $50 to $15,091 at March 31, 2015 and from $77 to $15,190 at December 31, 2014.

Credit quality indicators for commercial mortgage loans are loan-to-value and debt-service coverage ratios. Loan-to-value and debt-service coverage ratios are measures commonly used to assess the credit quality of commercial mortgage loans. The loan-to-value ratio compares the principal amount of the loan to the fair value of the underlying property collateralizing the loan, and is commonly expressed as a percentage. The debt-service coverage ratio compares a property’s net operating income to its debt-service payments and is commonly expressed as a ratio. The loan-to-value and debt-service coverage ratios are generally updated annually in the third quarter.

Assurant, Inc.

Notes to Consolidated Financial Statements (unaudited)

Three Months Ended March, 2015 and 2014

(In thousands, except number of shares and per share amounts)

The following summarizes our loan-to-value and average debt-service coverage ratios as of the dates indicated:



	March 31, 2015
Loan-to-Value	Carrying Value			% of Gross Mortgage Loans		Debt-Service Coverage Ratio
70% and less	$	1,157,193		91.9	%	1.97
71 – 80%	67,900			5.4	%	1.26
81 – 95%	27,234			2.2	%	1.04
Greater than 95%	6,531			0.5	%	0.43
Gross commercial mortgage loans	1,258,858			100	%	1.91
Less valuation allowance	(3,399		)
Net commercial mortgage loans	$	1,255,459

	December 31, 2014
Loan-to-Value	Carrying Value			% of Gross Mortgage Loans		Debt-Service Coverage Ratio
70% and less	$	1,168,454		91.6	%	2.01
71 – 80%	73,762			5.8	%	1.26
81 – 95%	27,268			2.1	%	1.04
Greater than 95%	6,531			0.5	%	0.43
Gross commercial mortgage loans	1,276,015			100	%	1.94
Less valuation allowance	(3,399		)
Net commercial mortgage loans	$	1,272,616

All commercial mortgage loans that are individually impaired have an established mortgage loan valuation allowance for losses. Changing economic conditions affect our valuation of commercial mortgage loans. Changing vacancies and rents are incorporated into the discounted cash flow analysis that we perform for monitored loans and may contribute to the establishment of (or an increase or decrease in) a commercial mortgage loan valuation allowance for losses. In addition, we continue to monitor the entire commercial mortgage loan portfolio to identify risk. Areas of emphasis are properties that have exposure to specific geographic events, have deteriorating credits or have experienced a reduction in debt-service coverage ratio. Where warranted, we have established or increased a valuation allowance based upon this analysis.

Collateralized Transactions

The Company lends fixed maturity securities, primarily bonds issued by the U.S. government and government agencies and authorities, and U.S. corporations, to selected broker/dealers. All such loans are negotiated on an overnight basis; term loans are not permitted. The Company receives collateral, greater than or equal to 102% of the fair value of the securities lent, plus accrued interest, in the form of cash and cash equivalents held by a custodian bank for the benefit of the Company. The use of cash collateral received is unrestricted. The Company reinvests the cash collateral received, generally in investments of high credit quality that are designated as available-for-sale. The Company monitors the fair value of securities loaned and the collateral received, with additional collateral obtained, as necessary. The Company is subject to the risk of loss on the re-investment of cash collateral. The Company's investment portfolio is readily marketable and convertible to cash sufficient to provide for short term needs related to the securities lending transactions.

As of March 31, 2015 and December 31, 2014, our collateral held under securities lending agreements, of which its use is unrestricted, was $93,242 and $95,985, respectively, and is included in the consolidated balance sheets under the collateral held/pledged under securities agreements. Our liability to the borrower for collateral received was $93,241 and $95,986, respectively, and is included in the consolidated balance sheets under the obligation under securities agreements. The difference between the collateral held and obligations under securities lending is recorded as an unrealized gain (loss) and is included as part of AOCI. All securities were in an unrealized gain position as of March 31, 2015. All securities with unrealized losses have

Assurant, Inc.

Notes to Consolidated Financial Statements (unaudited)

Three Months Ended March, 2015 and 2014

(In thousands, except number of shares and per share amounts)

been in a continuous loss position for less than 12 months as of December 31, 2014. The Company includes the available-for-sale investments purchased with the cash collateral in its evaluation of other-than-temporary impairments.

As of March 31, 2015, 98% of the obligation under securities agreements is invested in corporate fixed maturities, money market funds and daily repurchase agreements with a remaining contractual maturity of one year or less.

Cash proceeds that the Company receives as collateral for the securities it lends and subsequent repayment of the cash are regarded by the Company as cash flows from financing activities, since the cash received is considered a borrowing. Since the Company reinvests the cash collateral generally in investments that are designated as available-for-sale, the reinvestment is presented as cash flows from investing activities.

6. Fair Value Disclosures

Fair Values, Inputs and Valuation Techniques for Financial Assets and Liabilities Disclosures

The fair value measurements and disclosures guidance defines fair value and establishes a framework for measuring fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In accordance with this guidance, the Company has categorized its recurring basis financial assets and liabilities into a three-level fair value hierarchy based on the priority of the inputs to the valuation technique.

The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the level in the fair value hierarchy within which the fair value measurement in its entirety falls has been determined based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and takes into account factors specific to the asset or liability.

The levels of the fair value hierarchy are described below:


•	Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company can access.

•

Level 2 inputs utilize other than quoted prices included in Level 1 that are observable for the asset, either directly or indirectly, for substantially the full term of the asset. Level 2 inputs include quoted prices for similar assets in active markets, quoted prices for identical or similar assets in markets that are not active and inputs other than quoted prices that are observable in the marketplace for the asset. The observable inputs are used in valuation models to calculate the fair value for the asset.


•	Level 3 inputs are unobservable but are significant to the fair value measurement for the asset, and include situations where there is little, if any, market activity for the asset. These inputs reflect management’s own assumptions about the assumptions a market participant would use in pricing the asset.

We review fair value hierarchy classifications on a quarterly basis. Changes in the observability of valuation inputs may result in a reclassification of levels for certain securities within the fair value hierarchy.

Assurant, Inc.

Notes to Consolidated Financial Statements (unaudited)

Three Months Ended March, 2015 and 2014

(In thousands, except number of shares and per share amounts)

The following tables present the Company’s fair value hierarchy for assets and liabilities measured at fair value on a recurring basis as of March 31, 2015 and December 31, 2014. The amounts presented below for Collateral held/pledged under securities agreements, Other investments, Cash equivalents, Other assets, Assets and Liabilities held in separate accounts and Other liabilities differ from the amounts presented in the consolidated balance sheets because only certain investments or certain assets and liabilities within these line items are measured at estimated fair value. Other investments are comprised of investments in the Assurant Investment Plan, American Security Insurance Company Investment Plan, Assurant Deferred Compensation Plan, a modified coinsurance arrangement and other derivatives. Other liabilities are comprised of investments in the Assurant Investment Plan and other derivatives. The fair value amount and the majority of the associated levels presented for Other investments and Assets and Liabilities held in separate accounts are received directly from third parties.



	March 31, 2015
	Total		Level 1			Level 2			Level 3
Financial Assets
Fixed maturity securities:
United States Government and government agencies and authorities	$	185,584	$	—		$	185,584		$	—
State, municipalities and political subdivisions	766,444		—			766,444			—
Foreign governments	613,992		937			613,055			—
Asset-backed	5,293		—			5,293			—
Commercial mortgage-backed	35,418		—			35,064			354
Residential mortgage-backed	1,042,472		—			1,042,472			—
Corporate	8,738,108		—			8,637,118			100,990
Equity securities:
Common stocks	38,818		38,135			683			—
Non-redeemable preferred stocks	491,691		—			489,631			2,060
Short-term investments	247,525		156,907		b	90,618		c	—
Collateral held/pledged under securities agreements	73,242		68,040		b	5,202		c	—
Other investments	277,948		71,306		a	204,182		c	2,460		d
Cash equivalents	596,285		594,880		b	1,405		c	—
Other assets	1,633		—			689		f	944		e
Assets held in separate accounts	1,882,913		1,717,771		a	165,142		c	—
Total financial assets	$	14,997,366	$	2,647,976		$	12,242,582		$	106,808

Financial Liabilities
Other liabilities	$	92,994	$	66,778	a	$	35	f	$	26,181	f
Liabilities related to separate accounts	1,882,913		1,717,771		a	165,142		c	—
Total financial liabilities	$	1,975,907	$	1,784,549		$	165,177		$	26,181

Assurant, Inc.

Notes to Consolidated Financial Statements (unaudited)

Three Months Ended March, 2015 and 2014

(In thousands, except number of shares and per share amounts)



	December 31, 2014
	Total		Level 1			Level 2			Level 3
Financial Assets
Fixed maturity securities:
United States Government and government agencies and authorities	$	176,842	$	—		$	176,842		$	—
State, municipalities and political subdivisions	769,841		—			769,841			—
Foreign governments	664,863		757			664,106			—
Asset-backed	5,519		—			5,519			—
Commercial mortgage-backed	46,016		—			45,613			403
Residential mortgage-backed	968,726		—			964,081			4,645
Corporate	8,631,367		—			8,527,092			104,275
Equity securities:
Common stocks	37,950		37,266			684			—
Non-redeemable preferred stocks	461,457		—			459,457			2,000
Short-term investments	345,246		266,980		b	78,266		c	—
Collateral held/pledged under securities agreements	74,985		67,783		b	7,202		c	—
Other investments	272,755		59,358		a	211,276		c	2,121		d
Cash equivalents	683,142		635,804		b	47,338		c	—
Other assets	1,674		—			867		f	807		e
Assets held in separate accounts	1,854,193		1,682,671		a	171,522		c	—
Total financial assets	$	14,994,576	$	2,750,619		$	12,129,706		$	114,251

Financial Liabilities
Other liabilities	$	84,660	$	59,358	a	$	69	f	$	25,233	f
Liabilities related to separate accounts	1,854,193		1,682,671		a	171,522		c	—
Total financial liabilities	$	1,938,853	$	1,742,029		$	171,591		$	25,233


a.	Mainly includes mutual funds.


b.	Mainly includes money market funds.


c.	Mainly includes fixed maturity securities.


d.	Mainly includes fixed maturity securities and other derivatives.


e.	Mainly includes the Consumer Price Index Cap Derivatives (“CPI Caps”).


f.	Mainly includes other derivatives.

There were no transfers between Level 1 and Level 2 financial assets during either period. However, there were transfers between Level 2 and Level 3 financial assets during the periods, which are reflected in the “Transfers in” and “Transfers out” columns below. Transfers between Level 2 and Level 3 most commonly occur from changes in the availability of observable market information and re-evaluation of the observability of pricing inputs. Any remaining unpriced securities are submitted to independent brokers who provide non-binding broker quotes or are priced by other qualified sources.

Assurant, Inc.

Notes to Consolidated Financial Statements (unaudited)

Three Months Ended March, 2015 and 2014

(In thousands, except number of shares and per share amounts)

The following tables summarize the change in balance sheet carrying value associated with Level 3 financial assets and liabilities carried at fair value during the three months ended March 31, 2015 and 2014:



	Three Months Ended March 31, 2015
	Balance, beginning of period			Total (losses) gains (realized/ unrealized) included in earnings (1)			Net unrealized gains (losses) included in other comprehensive income (2)			Sales			Transfers in (3)		Transfers out (3)			Balance, end of period
Financial Assets
Fixed Maturity Securities
Commercial mortgage-backed	$	403		$	—		$	(3	)	$	(46	)	$	—	$	—		$	354
Residential mortgage-backed	4,645			—			—			—			—		(4,645		)	—
Corporate	104,275			(8		)	880			(2,155		)	2,130		(4,132		)	100,990
Equity Securities
Non-redeemable preferred stocks	2,000			—			60			—			—		—			2,060
Other investments	2,121			128			(4		)	(21		)	236		—			2,460
Other assets	807			137			—			—			—		—			944
Financial Liabilities
Other liabilities	(25,233		)	(948		)	—			—			—		—			(26,181		)
Total level 3 assets and liabilities	$	89,018		$	(691	)	$	933		$	(2,222	)	$	2,366	$	(8,777	)	$	80,627



	Three Months Ended March 31, 2014
	Balance, beginning of period			Total (losses) gains (realized/ unrealized) included in earnings (1)			Net unrealized gains (losses) included in other comprehensive income (2)			Purchases			Sales			Transfers in (3)		Transfers out (3)			Balance, end of period
Financial Assets
Fixed Maturity Securities
States, municipalities and political subdivisions	$	22,657		$	—		$	—		$	—		$	—		$	—	$	(22,657	)	$	—
Foreign governments	16,857			(2		)	18			—			—			—		—			16,873
Commercial mortgage- backed	598			—			(5		)	—			(43		)	—		—			550
Residential mortgage- backed	4,167			—			—			—			—			—		(4,167		)	—
Corporate	115,344			98			3,206			—			(3,079		)	—		(7,356		)	108,213
Equity Securities
Non-redeemable preferred stocks	7,510			328			(294		)	—			(1,830		)	—		—			5,714
Other investments	4,171			(1,095		)	4			—			(20		)	—		—			3,060
Other assets	2,491			(191		)	—			—			—			—		—			2,300
Financial Liabilities
Other liabilities	(20,330		)	1,285			—			(4,000		)	—			—		—			(23,045		)
Total level 3 assets and liabilities	$	153,465		$	423		$	2,929		$	(4,000	)	$	(4,972	)	$	—	$	(34,180	)	$	113,665


(1)	Included as part of net realized gains on investments in the consolidated statement of operations.


(2)	Included as part of change in unrealized gains on securities in the consolidated statement of comprehensive income.


(3)	Transfers are primarily attributable to changes in the availability of observable market information and re-evaluation of the observability of pricing inputs.

Assurant, Inc.

Notes to Consolidated Financial Statements (unaudited)

Three Months Ended March, 2015 and 2014

(In thousands, except number of shares and per share amounts)

Three different valuation techniques can be used in determining fair value for financial assets and liabilities: the market, income or cost approaches. The three valuation techniques described in the fair value measurements and disclosures guidance are consistent with generally accepted valuation methodologies. The market approach valuation techniques use prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities. When possible, quoted prices (unadjusted) in active markets are used as of the period-end date (such as for mutual funds and money market funds). Otherwise, the Company uses valuation techniques consistent with the market approach including matrix pricing and comparables. Matrix pricing is a mathematical technique employed principally to value debt securities without relying exclusively on quoted prices for those securities but, rather, relying on the securities’ relationship to other benchmark quoted securities. Market approach valuation techniques often use market multiples derived from a set of comparables. Multiples might lie in ranges with a different multiple for each comparable. The selection of where within the range the appropriate multiple falls requires judgment, considering both qualitative and quantitative factors specific to the measurement.

Income approach valuation techniques convert future amounts, such as cash flows or earnings, to a single present amount, or a discounted amount. These techniques rely on current market expectations of future amounts as of the period-end date. Examples of income approach valuation techniques include present value techniques, option-pricing models, binomial or lattice models that incorporate present value techniques and the multi-period excess earnings method.

Cost approach valuation techniques are based upon the amount that would be required to replace the service capacity of an asset at the period-end date, or the current replacement cost. That is, from the perspective of a market participant (seller), the price that would be received for the asset is determined based on the cost to a market participant (buyer) to acquire or construct a substitute asset of comparable utility, adjusted for obsolescence.

While not all three approaches are applicable to all financial assets or liabilities, where appropriate, the Company may use one or more valuation techniques. For all the classes of financial assets and liabilities included in the above hierarchy, excluding the CPI Caps and certain privately placed corporate bonds, the Company generally uses the market valuation technique. For certain privately placed corporate bonds, the CPI Caps and certain derivatives, we generally use the income valuation technique. For the periods ended March 31, 2015 and December 31, 2014, the application of the valuation technique applied to the Company’s classes of financial assets and liabilities has been consistent.

Level 1 Securities

The Company’s investments and liabilities classified as Level 1 as of March 31, 2015 and December 31, 2014, consisted of mutual funds and money market funds, foreign government fixed maturities and common stocks that are publicly listed and/or actively traded in an established market.

Level 2 Securities

The Company values Level 2 securities using various observable market inputs obtained from a pricing service. The pricing service prepares estimates of fair value measurements for our Level 2 securities using proprietary valuation models based on techniques such as matrix pricing which include observable market inputs. The fair value measurements and disclosures guidance defines observable market inputs as the assumptions market participants would use in pricing the asset or liability developed on market data obtained from sources independent of the Company. The extent of the use of each observable market input for a security depends on the type of security and the market conditions at the balance sheet date. Depending on the security, the priority of the use of observable market inputs may change as some observable market inputs may not be relevant or additional inputs may be necessary. The Company uses the following observable market inputs (“standard inputs”), listed in the approximate order of priority, in the pricing evaluation of Level 2 securities: benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers and reference data including market research data. Further details for Level 2 investment types follow:

United States Government and government agencies and authorities: U.S. government and government agencies and authorities securities are priced by our pricing service utilizing standard inputs. Included in this category are U.S. Treasury securities which are priced using vendor trading platform data in addition to the standard inputs.

State, municipalities and political subdivisions: State, municipalities and political subdivisions securities are priced by our pricing service using material event notices and new issue data inputs in addition to the standard inputs.

Foreign governments: Foreign government securities are primarily fixed maturity securities denominated in Canadian dollars which are priced by our pricing service using standard inputs. The pricing service also evaluates each security based on relevant market information including relevant credit information, perceived market movements and sector news.

Commercial mortgage-backed, residential mortgage-backed and asset-backed: Commercial mortgage-backed, residential mortgage-backed and asset-backed securities are priced by our pricing service using monthly payment information and collateral

Assurant, Inc.

Notes to Consolidated Financial Statements (unaudited)

Three Months Ended March, 2015 and 2014

(In thousands, except number of shares and per share amounts)

performance information in addition to the standard inputs. Additionally, commercial mortgage-backed securities and asset-backed securities utilize new issue data while residential mortgage-backed securities utilize vendor trading platform data.

Corporate: Corporate securities are priced by our pricing service using standard inputs. Non-investment grade securities within this category are priced by our pricing service using observations of equity and credit default swap curves related to the issuer in addition to the standard inputs. Certain privately placed corporate bonds are priced by a non-pricing service source using a model with observable inputs including, but not limited to, the credit rating, credit spreads, sector add-ons, and issuer specific add-ons.

Non-redeemable preferred stocks: Non-redeemable preferred stocks are priced by our pricing service using observations of equity and credit default swap curves related to the issuer in addition to the standard inputs.

Short-term investments, collateral held/pledged under securities agreements, other investments, cash equivalents, and assets/liabilities held in separate accounts: To price the fixed maturity securities in these categories, the pricing service utilizes the standard inputs.

Valuation models used by the pricing service can change period to period, depending on the appropriate observable inputs that are available at the balance sheet date to price a security. When market observable inputs are unavailable to the pricing service, the remaining unpriced securities are submitted to independent brokers who provide non-binding broker quotes or are priced by other qualified sources. If the Company cannot corroborate the non-binding broker quotes with Level 2 inputs, these securities are categorized as Level 3 securities.

Level 3 Securities

The Company’s investments classified as Level 3 as of March 31, 2015 and December 31, 2014 consisted of fixed maturity and equity securities and derivatives. All of the Level 3 fixed maturity and equity securities are priced using non-binding broker quotes which cannot be corroborated with Level 2 inputs. Of our total Level 3 fixed maturity and equity securities, $62,605 and $63,614 were priced by a pricing service using single broker quotes due to insufficient information to provide an evaluated price as of March 31, 2015 and December 31, 2014, respectively. The single broker quotes are provided by market makers or broker-dealers who are recognized as market participants in the markets in which they are providing the quotes. The remaining $41,225 and $47,923 were priced internally using independent and non-binding broker quotes as of March 31, 2015 and December 31, 2014, respectively. The inputs factoring into the broker quotes include trades in the actual bond being priced, trades of comparable bonds, quality of the issuer, optionality, structure and liquidity. Significant changes in interest rates, issuer credit, liquidity, and overall market conditions would result in a significantly lower or higher broker quote. The prices received from both the pricing service and internally are reviewed for reasonableness by management and if necessary, management works with the pricing service or broker to further understand how they developed their price. Further details on Level 3 derivative investment types follow:

Other investments and other liabilities: The Company prices swaptions using a Black-Scholes pricing model incorporating third-party market data, including swap volatility data. The Company prices credit default swaps using non-binding quotes provided by market makers or broker-dealers who are recognized as market participants. Inputs factored into the non-binding quotes include trades in the actual credit default swap which is being priced, trades in comparable credit default swaps, quality of the issuer, structure and liquidity. The net option related to the investment in Iké is valued using an income approach; specifically, a Monte Carlo simulation option pricing model. The inputs to the model include, but are not limited to, the projected normalized earnings before interest, tax, depreciation, and amortization (EBITDA) and free cash flow for the underlying asset, the discount rate, and the volatility of and the correlation between the normalized EBITDA and the value of the underlying asset. Significant increases (decreases) in the projected normalized EBITDA relative to the value of the underlying asset in isolation would result in a significantly higher (lower) fair value.

Other assets: A non-pricing service source prices the CPI Cap derivatives using a model with inputs including, but not limited to, the time to expiration, the notional amount, the strike price, the forward rate, implied volatility and the discount rate.

Management evaluates the following factors in order to determine whether the market for a financial asset is inactive. The factors include, but are not limited to:


•	There are few recent transactions,


•	Little information is released publicly,


•	The available prices vary significantly over time or among market participants,


•	The prices are stale (i.e., not current), and


•	The magnitude of the bid-ask spread.

Assurant, Inc.

Notes to Consolidated Financial Statements (unaudited)

Three Months Ended March, 2015 and 2014

(In thousands, except number of shares and per share amounts)

Illiquidity did not have a material impact in the fair value determination of the Company’s financial assets.

The Company generally obtains one price for each financial asset. The Company performs a monthly analysis to assess if the evaluated prices represent a reasonable estimate of their fair value. This process involves quantitative and qualitative analysis and is overseen by investment and accounting professionals. Examples of procedures performed include, but are not limited to, initial and on-going review of pricing service methodologies, review of the prices received from the pricing service, review of pricing statistics and trends, and comparison of prices for certain securities with two different appropriate price sources for reasonableness. Following this analysis, the Company generally uses the best estimate of fair value based upon all available inputs. On infrequent occasions, a non-pricing service source may be more familiar with the market activity for a particular security than the pricing service. In these cases the price used is taken from the non-pricing service source. The pricing service provides information to indicate which securities were priced using market observable inputs so that the Company can properly categorize our financial assets in the fair value hierarchy.

For the net option, the Company performs a periodic analysis to assess if the evaluated price represents a reasonable estimate of the fair value for the financial liability. This process involves quantitative and qualitative analysis overseen by finance and accounting professionals. Examples of procedures performed include, but are not limited to, initial and on-going review of the pricing methodology and review of the projection for the underlying asset including the probability distribution of possible scenarios.

Disclosures for Non-Financial Assets Measured at Fair Value on a Non-Recurring Basis

The Company also measures the fair value of certain assets on a non-recurring basis, generally on an annual basis, or when events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. These assets include commercial mortgage loans, goodwill and finite-lived intangible assets.

The Company uses both the income and market valuation approaches to measure the fair value of its reporting units when required. Under the income approach, the Company determines the fair value of the reporting units considering distributable earnings, which are estimated from operating plans. The resulting cash flows are then discounted using a market participant weighted average cost of capital estimated for the reporting units. After discounting the future discrete earnings to their present value, the Company estimates the terminal value attributable to the years beyond the discrete operating plan period. The discounted terminal value is then added to the aggregate discounted distributable earnings from the discrete operating plan period to estimate the fair value of the reporting units. Under the market approach, the Company derives the fair value of the reporting units based on various financial multiples, including but not limited to: price to tangible book value of equity, price to estimated 2014 earnings and price to estimated 2015 earnings, which are estimated based on publicly available data related to comparable guideline companies. In addition, the Company also estimates financial multiples from publicly available purchase price data for acquisitions of companies operating in the insurance industry. The estimated fair value of the reporting units is more heavily weighted towards the income approach because in the current economic environment the earnings capacity of a business is generally considered the most important factor in the valuation of a business enterprise. This fair value determination was categorized as Level 3 (unobservable) in the fair value hierarchy.

Fair Value of Financial Instruments Disclosures

The financial instruments guidance requires disclosure of fair value information about financial instruments, for which it is practicable to estimate such fair value. Therefore, it requires fair value disclosure for financial instruments that are not recognized or are not carried at fair value in the consolidated balance sheets. However, this guidance excludes certain financial instruments, including those related to insurance contracts and those accounted for under the equity method and joint ventures guidance (such as real estate joint ventures).

For the financial instruments included within the following financial assets and financial liabilities, the carrying value in the consolidated balance sheets equals or approximates fair value. Please refer to the Fair Value Inputs and Valuation Techniques for Financial Assets and Liabilities Disclosures section above for more information on the financial instruments included within the following financial assets and financial liabilities and the methods and assumptions used to estimate fair value:


•	Cash and cash equivalents


•	Fixed maturity securities


•	Equity securities


•	Short-term investments


•	Collateral held/pledged under securities agreements


•	Other investments


•	Other assets

Assurant, Inc.

Notes to Consolidated Financial Statements (unaudited)

Three Months Ended March, 2015 and 2014

(In thousands, except number of shares and per share amounts)


•	Assets held in separate accounts


•	Other liabilities


•	Liabilities related to separate accounts

In estimating the fair value of the financial instruments that are not recognized or are not carried at fair value in the consolidated balance sheets, the Company used the following methods and assumptions:

Commercial mortgage loans: the fair values of mortgage loans are estimated using discounted cash flow models. The model inputs include mortgage amortization schedules and loan provisions, an internally developed credit spread based on the credit risk associated with the borrower and the U.S. Treasury spot curve. Mortgage loans with similar characteristics are aggregated for purposes of the calculations.

Policy loans: the carrying value of policy loans reported in the consolidated balance sheets approximates fair value.

Other investments: Other investments include Certified Capital Company tax credits, business debentures, credit tenant loans and social impact loans which are recorded at amortized cost. The carrying value reported for these investments approximates fair value. Due to the nature of these investments, there is a lack of liquidity in the primary market which results in the holdings being classified as Level 3.

Policy reserves under investment products: the fair values for the Company’s policy reserves under investment products are determined using discounted cash flow analysis. Key inputs to the valuation include projections of policy cash flows, reserve run-off, market yields and risk margins.

Funds held under reinsurance: the carrying value reported approximates fair value due to the short maturity of the instruments.

Debt: the fair value of debt is based upon matrix pricing performed by the pricing service utilizing the standard inputs.

Obligation under securities agreements: obligation under securities agreements is reported at the amount of cash received from the selected broker/dealers.

Assurant, Inc.

Notes to Consolidated Financial Statements (unaudited)

Three Months Ended March, 2015 and 2014

(In thousands, except number of shares and per share amounts)

The following tables disclose the carrying value, fair value amount and hierarchy level of the financial instruments that are not recognized or are not carried at fair value in the consolidated balance sheets:



	March 31, 2015
			Fair Value
	Carrying Value		Total		Level 1		Level 2		Level 3
Financial Assets
Commercial mortgage loans on real estate	$	1,255,459	$	1,412,568	$	—	$	—	$	1,412,568
Policy loans	46,555		46,555		46,555		—		—
Other investments	12,287		12,287		—		—		12,287
Total financial assets	$	1,314,301	$	1,471,410	$	46,555	$	—	$	1,424,855
Financial Liabilities
Policy reserves under investment products (Individual and group annuities, subject to discretionary withdrawal) (1)	$	710,825	$	742,479	$	—	$	—	$	742,479
Funds withheld under reinsurance	87,146		87,146		87,146		—		—
Debt	1,171,153		1,328,952		—		1,328,952		—
Obligations under securities agreements	93,241		93,241		93,241		—		—
Total financial liabilities	$	2,062,365	$	2,251,818	$	180,387	$	1,328,952	$	742,479

	December 31, 2014
			Fair Value
	Carrying Value		Total		Level 1		Level 2		Level 3
Financial Assets
Commercial mortgage loans on real estate	$	1,272,616	$	1,448,215	$	—	$	—	$	1,448,215
Policy loans	48,272		48,272		48,272		—		—
Other investments	10,896		10,896		—		—		10,896
Total financial assets	$	1,331,784	$	1,507,383	$	48,272	$	—	$	1,459,111
Financial Liabilities
Policy reserves under investment products (Individual and group annuities, subject to discretionary withdrawal) (1)	$	743,951	$	764,949	—		—		$	764,949
Funds withheld under reinsurance	75,161		75,161		75,161		—		—
Debt	1,171,079		1,296,139		—		1,296,139		—
Obligations under securities agreements	95,986		95,986		95,986		—		—
Total financial liabilities	$	2,086,177	$	2,232,235	$	171,147	$	1,296,139	$	764,949


(1)	Only the fair value of the Company’s policy reserves for investment-type contracts (those without significant mortality or morbidity risk) are reflected in the table above.

Reinsurance Recoverables Credit Disclosures

A key credit quality indicator for reinsurance is the A.M. Best financial strength ratings of the reinsurer. The A.M. Best ratings are an independent opinion of a reinsurer’s ability to meet ongoing obligations to policyholders. The A.M. Best ratings for new reinsurance agreements where there is material credit exposure are reviewed at the time of execution. The A.M. Best ratings for existing reinsurance agreements are reviewed on a periodic basis, at least annually. The A.M. Best ratings have not changed significantly since December 31, 2014.

An allowance for doubtful accounts for reinsurance recoverables is recorded on the basis of periodic evaluations of balances due from reinsurers (net of collateral), reinsurer solvency, management’s experience and current economic conditions. The

Assurant, Inc.

Notes to Consolidated Financial Statements (unaudited)

Three Months Ended March, 2015 and 2014

(In thousands, except number of shares and per share amounts)

Company carries an allowance for doubtful accounts for reinsurance recoverables of $12,510 and $10,820 as of March 31, 2015 and December 31, 2014, respectively.

7. Debt

On March 28, 2013, the Company issued two series of senior notes with an aggregate principal amount of $700,000 (the “2013 Senior Notes”). The Company received net proceeds of $698,093 representing the principal amount less the discount before offering expenses. The discount of $1,907 is being amortized over the life of the 2013 Senior Notes and is included as part of interest expense on the consolidated statements of operations. The first series is $350,000 in principal amount, bears interest at 2.50% per year and is payable in a single installment due March 15, 2018 and was issued at a 0.18% discount. The second series is $350,000 in principal amount, bears interest at 4.00% per year and is payable in a single installment due March 15, 2023 and was issued at a 0.37% discount. Interest on the 2013 Senior Notes is payable semi-annually on March 15 and September 15 of each year. The 2013 Senior Notes are unsecured obligations and rank equally with all of the Company’s other senior unsecured indebtedness. The Company may redeem each series of the 2013 Senior Notes in whole or in part at any time and from time to time before their maturity at the redemption price set forth in the Indenture. The 2013 Senior Notes are registered under the Securities Act of 1933, as amended.

The interest expense incurred related to the 2013 Senior Notes was $5,746 and $5,744 for the three months ended March 31, 2015 and 2014, respectively. There was $948 of accrued interest at both March 31, 2015 and 2014. The Company made interest payments on the 2013 Senior Notes of $11,375 on March 15, 2015 and 2014.

In February 2004, the Company issued two series of senior notes with an aggregate principal amount of $975,000 (the “2004 Senior Notes”). The Company received proceeds of $971,537 from this transaction, which represents the principal amount less the discount before offering expenses. The discount of $3,463 is being amortized over the life of the 2004 Senior Notes and is included as part of interest expense on the statements of operations. The first series was $500,000 in principal amount, issued at a 0.11% discount, bore interest at 5.63% per year and was repaid on February 18, 2014. The second series is $475,000 in principal amount, bears interest at 6.75% per year and is payable in a single installment due February 15, 2034 and was issued at a 0.61% discount. Interest on the 2004 Senior Notes is payable semi-annually on February 15 and August 15 of each year. The 2004 Senior Notes are unsecured obligations and rank equally with all of the Company’s other senior unsecured indebtedness. The 2004 Senior Notes are not redeemable prior to maturity. All of the holders of the 2004 Senior Notes exchanged their notes in May 2004 for new notes registered under the Securities Act of 1933, as amended.

The interest expense incurred related to the 2004 Senior Notes was $8,032 and $11,321 for the three months ended March 31, 2015 and 2014, respectively. There was $4,008 of accrued interest at both March 31, 2015 and 2014. The Company made interest payments on the 2004 Senior Notes of $16,031 and $30,094 on February 15, 2015 and 2014, respectively.

Credit Facility

The Company’s commercial paper program requires the Company to maintain liquidity facilities either in an available amount equal to any outstanding notes from the commercial paper program or in an amount sufficient to maintain the ratings assigned to the notes issued from the commercial paper program. The Company’s subsidiaries do not maintain commercial paper or other borrowing facilities. This program is currently backed up by a $400,000 senior revolving credit facility, of which $395,740 was available at March 31, 2015, due to $4,260 of outstanding letters of credit related to this program.

On September 16, 2014, the Company entered into a five-year unsecured $400,000 revolving credit agreement (the “2014 Credit Facility”) with a syndicate of banks arranged by JP Morgan Chase Bank, N.A. and Wells Fargo, N.A. The 2014 Credit Facility replaced the Company's prior four-year $350,000 revolving credit facility (the "2011 Credit Facility"), which was entered into on September 21, 2011 and was scheduled to expire in September 2015. The 2011 Credit Facility terminated upon the effectiveness of the 2014 Credit Facility. The 2014 Credit Facility provides for revolving loans and the issuance of multi-bank, syndicated letters of credit and/or letters of credit from a sole issuing bank in an aggregate amount of $400,000 and is available until September 2019, provided the Company is in compliance with all covenants. The 2014 Credit Facility has a sublimit for letters of credit issued thereunder of $50,000. The proceeds of these loans may be used for the Company’s commercial paper program or for general corporate purposes. The Company may increase the total amount available under the 2014 Credit Facility to $525,000 subject to certain conditions. No bank is obligated to provide commitments above their share of the $400,000 facility.

The Company did not use the commercial paper program during the three months ended March 31, 2015 and 2014 and there were no amounts relating to the commercial paper program outstanding at March 31, 2015 and December 31, 2014. The Company made no borrowings using the 2014 Credit Facility and no loans are outstanding at March 31, 2015.

Assurant, Inc.

Notes to Consolidated Financial Statements (unaudited)

Three Months Ended March, 2015 and 2014

(In thousands, except number of shares and per share amounts)

The 2014 Credit Facility contains restrictive covenants and requires that the Company maintain certain specified minimum ratios and thresholds. Among others, these covenants include maintaining a maximum debt to capitalization ratio and a minimum consolidated adjusted net worth. At March 31, 2015, the Company was in compliance with all covenants, minimum ratios and thresholds.

8. Accumulated Other Comprehensive Income

Certain amounts included in the consolidated statements of comprehensive income are net of reclassification adjustments. The following tables summarize those reclassification adjustments (net of taxes):



	Three Months Ended March 31, 2015
	Foreign currency translation adjustment			Unrealized gains on securities		OTTI			Pension under- funding			Accumulated other comprehensive income
Balance at December 31, 2014	$	(127,711	)	$	793,082	$	26,594		$	(136,198	)	$	555,767
Other comprehensive (loss) income before reclassifications	(65,951		)	53,523		777			—			(11,651		)
Amounts reclassified from accumulated other comprehensive income	—			3,936		(1,671		)	2,616			4,881
Net current-period other comprehensive (loss) income	(65,951		)	57,459		(894		)	2,616			(6,770		)
Balance at March 31, 2015	$	(193,662	)	$	850,541	$	25,700		$	(133,582	)	$	548,997

	Three Months Ended March 31, 2014
	Foreign currency translation adjustment			Unrealized gains on securities		OTTI			Pension under- funding			Accumulated other comprehensive income
Balance at December 31, 2013	$	(38,767	)	$	526,071	$	26,427		$	(86,901	)	$	426,830
Other comprehensive (loss) income before reclassifications	(18,053		)	160,022		1,640			—			143,609
Amounts reclassified from accumulated other comprehensive income	—			11,011		—			2,031			13,042
Net current-period other comprehensive (loss) income	(18,053		)	171,033		1,640			2,031			156,651
Balance at March 31, 2014	$	(56,820	)	$	697,104	$	28,067		$	(84,870	)	$	583,481

Assurant, Inc.

Notes to Consolidated Financial Statements (unaudited)

Three Months Ended March, 2015 and 2014

(In thousands, except number of shares and per share amounts)

The following tables summarize the reclassifications out of accumulated other comprehensive income for the three months ended March 31, 2015 and 2014:



Details about accumulated other comprehensive income components	Amount reclassified from accumulated other comprehensive income						Affected line item in the statement where net income is presented
	Three Months Ended March 31,
	2015			2014
Unrealized gains on securities	$	6,056		$	16,940		Net realized gains on investments, excluding other-than-temporary impairment losses
	(2,120		)	(5,929		)	Provision for income taxes
	$	3,936		$	11,011		Net of tax
OTTI	$	(2,570	)	$	—		Portion of net loss recognized in other comprehensive income, before taxes
	899			—			Provision for income taxes
	$	(1,671	)	$	—		Net of tax
Amortization of pension and postretirement unrecognized net periodic benefit cost:
Amortization of prior service cost	$	(25	)	$	(25	)	(1)
Amortization of net loss	4,050			3,150			(1)
	4,025			3,125			Total before tax
	(1,409		)	(1,094		)	Provision for income taxes
	$	2,616		$	2,031		Net of tax
Total reclassifications for the period	$	4,881		$	13,042		Net of tax


(1)	These accumulated other comprehensive income components are included in the computation of net periodic pension cost. See Note 12 - Retirement and Other Employee Benefits for additional information.

9. Stock Based Compensation

Long-Term Equity Incentive Plan

Under the Assurant, Inc. Long-Term Equity Incentive Plan (“ALTEIP”), as amended and restated in May 2010, the Company is authorized to issue up to 5,300,000 new shares of the Company's common stock to employees, officers and non-employee directors. Under the ALTEIP, the Company may grant awards based on shares of its common stock, including stock options, stock appreciation rights (“SARs”), restricted stock (including performance shares), unrestricted stock, restricted stock units (“RSUs”), performance share units (“PSUs”) and dividend equivalents. All share-based grants are awarded under the ALTEIP.

The Compensation Committee of the Board of Directors (the “Compensation Committee”) awards PSUs and RSUs annually. RSUs and PSUs are promises to issue actual shares of common stock at the end of a vesting period or performance period. The RSUs granted to employees under the ALTEIP were based on salary grade and performance and vest one-third each year over a three-year period. RSUs granted to non-employee directors also vest one-third each year over a three-year period, however, issuance of vested shares is deferred until separation from Board service. RSUs receive dividend equivalents in cash during the restricted period and do not have voting rights during the restricted period. PSUs accrue dividend equivalents during the performance period based on a target payout, and will be paid in cash at the end of the performance period based on the actual number of shares issued. The fair value of RSUs is estimated using the fair market value of a share of the Company’s common stock at the date of grant. The fair value of PSUs is estimated using the Monte Carlo simulation model and is described in further detail below.

Assurant, Inc.

Notes to Consolidated Financial Statements (unaudited)

Three Months Ended March, 2015 and 2014

(In thousands, except number of shares and per share amounts)

For the PSU portion of an award, the number of shares a participant will receive upon vesting is contingent upon the Company’s performance with respect to selected metrics, identified below, compared against a broad index of insurance companies and assigned a percentile ranking. These rankings are then averaged to determine the composite percentile ranking for the performance period. The payout levels can vary between 0% and 150% (maximum) of the target (100%) ALTEIP award amount based on the Company’s level of performance against the selected metrics.

PSU Performance Goals. The Compensation Committee established book value per share (“BVPS”) growth excluding AOCI, revenue growth and total stockholder return as the three performance measures for PSU awards. BVPS growth is defined as the year-over-year growth of the Company’s stockholders’ equity excluding AOCI divided by the number of fully diluted total shares outstanding at the end of the period. Revenue growth is defined as the year-over-year change in total revenues as disclosed in the Company’s annual statement of operations. Total stockholder return is defined as appreciation in Company stock plus dividend yield to stockholders. Payouts will be determined by measuring performance against the average performance of companies included in an insurance industry market index.

Since 2009, the Company has used the A.M. Best U.S. Insurance Index to measure its relative performance ranking. In 2014, A.M. Best stopped publishing this index. As of January 1, 2014, the Company is using the S&P Total Market Index to measure the Company’s performance for all new and outstanding PSU awards. Consistent with adjustments made to the A.M. Best U.S. Insurance Index, adjustments will be made to the S&P Total Market Index to exclude companies with revenues of less than $1,000,000 or that are not in the insurance or managed healthcare Global Industry Classification Standard codes. In addition, companies within the Company’s compensation peer group, but not otherwise in the S&P Total Market Index, will be included. The adjusted S&P Total Market Index is substantially similar in composition to the previous A.M. Best U.S. Insurance Index.

Under the ALTEIP, the Company’s Chief Executive Officer (“CEO”) is authorized by the Board of Directors to grant common stock, restricted stock and RSUs to employees other than the executive officers of the Company (as defined in Section 16 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)). The Board of Directors reviews and ratifies these grants quarterly. Restricted stock and RSUs granted under this program may have different vesting periods.

Restricted Stock Units

RSUs granted to employees and to non-employee directors were 286,358 and 288,806 for the three months ended March 31, 2015 and 2014, respectively. The compensation expense recorded related to RSUs was $4,508 and $4,829 for the three months ended March 31, 2015 and 2014, respectively. The related total income tax benefit was $1,578 and $1,685 for the three months ended March 31, 2015 and 2014, respectively. The weighted average grant date fair value for RSUs granted during the three months ended March 31, 2015 and 2014 was $62.18 and $65.05, respectively.

As of March 31, 2015, there was $27,006 of unrecognized compensation cost related to outstanding RSUs. That cost is expected to be recognized over a weighted-average period of 1.48 years. The total fair value of RSUs vested during the three months ended March 31, 2015 and 2014 was $19,437 and $28,208, respectively.

Performance Share Units

PSUs granted to employees were 357,224 and 381,111 for the three months ended March 31, 2015 and 2014, respectively. The compensation expense recorded related to PSUs was $1,066 and $3,453 for the three months ended March 31, 2015 and 2014, respectively. The related total income tax benefit was $373 and $1,202 for the three months ended March 31, 2015 and 2014, respectively. The weighted average grant date fair value for PSUs granted during the three months ended March 31, 2015 and 2014 was $61.82 and $64.93, respectively.

As of March 31, 2015, there was $34,975 of unrecognized compensation cost related to outstanding PSUs. That cost is expected to be recognized over a weighted-average period of 1.36 years.

The fair value of PSUs with market conditions was estimated on the date of grant using a Monte Carlo simulation model, which utilizes multiple variables that determine the probability of satisfying the market condition stipulated in the award. Expected volatilities for awards issued during the three months ended March 31, 2015 and 2014 were based on the historical stock prices of the Company’s stock and peer insurance group. The expected term for grants issued during the three months ended March 31, 2015 and 2014 was assumed to equal the average of the vesting period of the PSUs. The risk-free rate was based on the U.S. Treasury yield curve in effect at the time of grant.

Assurant, Inc.

Notes to Consolidated Financial Statements (unaudited)

Three Months Ended March, 2015 and 2014

(In thousands, except number of shares and per share amounts)

Employee Stock Purchase Plan

Under the Employee Stock Purchase Plan (“ESPP”), the Company is authorized to issue up to 5,000,000 new shares to employees who are participants in the ESPP. Eligible employees can purchase shares at a 10% discount applied to the lower of the closing price of the common stock on the first or last day of the offering period.

In January 2015, the Company issued 65,302 shares at a discounted price of $59.65 for the offering period of July 1, 2014 through December 31, 2014. In January 2014, the Company issued 75,709 shares at a discounted price of $46.36 for the offering period of July 1, 2013 through December 31, 2013.

The compensation expense recorded related to the ESPP was $316 and $292 for the three months ended March 31, 2015 and 2014, respectively.

The fair value of each award under the ESPP was estimated at the beginning of each offering period using the Black-Scholes option-pricing model. Expected volatilities are based on implied volatilities from traded options on the Company’s stock and the historical volatility of the Company’s stock. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant. The dividend yield is based on the current annualized dividend and share price as of the grant date.

10. Stock Repurchase

The following table shows the shares repurchased during the periods indicated:



Period in 2015	Number of Shares Repurchased	Average Price Paid Per Share		Total Number of Shares Repurchased as Part of Publicly Announced Programs
January	529,100	$	65.51	529,100
February	120,000	61.07		120,000
March	645,000	61.50		645,000
Total	1,294,100	$	63.10	1,294,100

On November 15, 2013, the Company’s Board of Directors authorized the Company to repurchase up to an additional $600,000 of its outstanding common stock, making the total remaining under the total repurchase authorization $752,436 as of that date.

As of December 31, 2014, there was $486,670 remaining under the total repurchase authorization. During the three months ended March 31, 2015, the Company repurchased 1,294,100 shares of the Company’s outstanding common stock at a cost of $81,635, exclusive of commissions, leaving $405,035 remaining under the total repurchase authorization at March 31, 2015.

The timing and the amount of future repurchases will depend on market conditions, the Company's financial condition, results of operations, liquidity and other factors.

Assurant, Inc.

Notes to Consolidated Financial Statements (unaudited)

Three Months Ended March, 2015 and 2014

(In thousands, except number of shares and per share amounts)

11. Earnings Per Common Share

The following table presents net income, the weighted average common shares used in calculating basic earnings per common share (“EPS”) and those used in calculating diluted EPS for each period presented below.



	Three Months Ended March 31,
	2015			2014
Numerator
Net income	$	50,044		$	137,245
Deduct dividends paid	(18,834		)	(18,180		)
Undistributed earnings	$	31,210		$	119,065
Denominator
Weighted average shares outstanding used in basic earnings per share	69,770,224			72,848,756
Incremental common shares from:
SARs	—			851
PSUs	987,325			1,024,345
ESPPs	—			—
Weighted average shares used in diluted earnings per share calculations	70,757,549			73,873,952
Earnings per common share - Basic
Distributed earnings	$	0.27		$	0.25
Undistributed earnings	0.45			1.63
Net income	$	0.72		$	1.88
Earnings per common share - Diluted
Distributed earnings	$	0.27		$	0.25
Undistributed earnings	0.44			1.61
Net income	$	0.71		$	1.86

There were no anti-dilutive SARs or PSUs outstanding that were not included in the computation of diluted EPS under the treasury stock method during the three months ended March 31, 2015 and 2014.

12. Retirement and Other Employee Benefits

The components of net periodic benefit cost for the Company’s qualified pension benefits plan, nonqualified pension benefits plan and retirement health benefits plan for the three months ended March 31, 2015 and 2014 were as follows:



	Qualified Pension Benefits						Nonqualified Pension Benefits (1)				Retirement Health Benefits
	For the Three Months Ended March 31,						For the Three Months Ended March 31,				For the Three Months Ended March 31,
	2015			2014			2015		2014		2015			2014
Service cost	$	9,750		$	8,200		$	1,125	$	1,000	$	625		$	600
Interest cost	9,050			9,150			1,350		1,500		950			975
Expected return on plan assets	(13,725		)	(12,350		)	—		—		(825		)	(775		)
Amortization of prior service cost	—			—			200		200		(225		)	(225		)
Amortization of net loss (gain)	3,325			2,275			725		925		—			(50		)
Curtailment/settlement charge	—			—			400		—		—			—
Net periodic benefit cost	$	8,400		$	7,275		$	3,800	$	3,625	$	525		$	525

Assurant, Inc.

Notes to Consolidated Financial Statements (unaudited)

Three Months Ended March, 2015 and 2014

(In thousands, except number of shares and per share amounts)


(1)	The Company’s nonqualified plan is unfunded.

Our qualified pension benefits plan (the “Plan”) was under-funded by $31,148 and $28,956 (based on the fair value of Plan assets compared to the projected benefit obligation) at March 31, 2015 and December 31, 2014, respectively. This equates to a 97% funded status at March 31, 2015 and December 31, 2014. During the first three months of 2015, $10,750 in cash was contributed to the Plan. Additional cash, up to $32,250, is expected to be contributed to the Plan over the remainder of 2015.

13. Segment Information

The Company has five reportable segments, which are defined based on the nature of the products and services offered: Assurant Solutions, Assurant Specialty Property, Assurant Health, Assurant Employee Benefits, and Corporate & Other. Assurant Solutions provides mobile device protection products and services; debt protection administration; credit-related insurance; warranties and extended service products and related services for consumer electronics, appliances and vehicles; and pre-funded funeral insurance. Assurant Specialty Property provides lender-placed homeowners insurance; property, appraisal, preservation and valuation services; flood insurance; renters insurance and related products; and manufactured housing homeowners insurance. Assurant Health provides individual health and small employer group health insurance. Assurant Employee Benefits primarily provides group dental insurance, group disability insurance and group life insurance. Corporate & Other includes activities of the holding company, financing and interest expenses, net realized gains (losses) on investments and interest income earned from short-term investments held. Corporate & Other also includes the amortization of deferred gains associated with the sales of Fortis Financial Group and Long-Term Care through reinsurance agreements. Beginning January 1, 2015, segment assets for Assurant Solutions and Assurant Specialty Property include their proportionate share of goodwill.

The Company evaluates performance of the operating segments based on segment income (loss) after-tax excluding realized gains (losses) on investments. The Company determines reportable segments in a manner consistent with the way the Chief Operating Decision Maker makes operating decisions and assesses performance.

Assurant, Inc.

Notes to Consolidated Financial Statements (unaudited)

Three Months Ended March, 2015 and 2014

(In thousands, except number of shares and per share amounts)

The following tables summarize selected financial information by segment:



	Three Months Ended March 31, 2015
	Solutions		Specialty Property		Health			Employee Benefits		Corporate & Other			Consolidated
Revenues
Net earned premiums	$	754,477	$	528,446	$	609,742		$	266,897	$	—		$	2,159,562
Net investment income	92,191		20,515		7,007			27,821		4,739			152,273
Net realized gains on investments	—		—		—			—		3,955			3,955
Amortization of deferred gain on disposal of businesses	—		—		—			—		3,258			3,258
Fees and other income	173,068		84,236		15,976			6,274		8			279,562
Total revenues	1,019,736		633,197		632,725			300,992		11,960			2,598,610
Benefits, losses and expenses
Policyholder benefits	215,548		204,603		604,763			185,813		—			1,210,727
Amortization of deferred acquisition costs and value of business acquired	265,032		92,069		4,273			7,629		—			369,003
Underwriting, general and administrative expenses	459,284		223,612		129,178			91,339		18,496			921,909
Interest expense	—		—		—			—		13,778			13,778
Total benefits, losses and expenses	939,864		520,284		738,214			284,781		32,274			2,515,417
Segment income (loss) before provision (benefit) for income tax	79,872		112,913		(105,489		)	16,211		(20,314		)	83,193
Provision (benefit) for income taxes	25,513		37,826		(21,520		)	6,063		(14,733		)	33,149
Segment income (loss) after tax	$	54,359	$	75,087	$	(83,969	)	$	10,148	$	(5,581	)
Net income													$	50,044
	As of March 31, 2015

Segment Assets (1):	$	14,410,503	$	3,916,044	$	1,183,956		$	2,255,984	$	9,033,869		$	30,800,356


(1)	As of December 31, 2014, all goodwill on Assurant's balance sheet was held in the Corporate & Other segment. Beginning January 1, 2015, goodwill is now included on the respective segment balance sheets.

Assurant, Inc.

Notes to Consolidated Financial Statements (unaudited)

Three Months Ended March, 2015 and 2014

(In thousands, except number of shares and per share amounts)



	Three Months Ended March 31, 2014
	Solutions		Specialty Property		Health			Employee Benefits		Corporate & Other			Consolidated
Revenues
Net earned premiums	$	752,667	$	623,372	$	422,764		$	261,659	$	—		$	2,060,462
Net investment income	94,685		27,875		8,861			31,395		5,242			168,058
Net realized gains on investments	—		—		—			—		19,751			19,751
Amortization of deferred gain on disposal of businesses	—		—		—			—		3,660			3,660
Fees and other income	141,354		40,759		8,211			6,034		83			196,441
Total revenues	988,706		692,006		439,836			299,088		28,736			2,448,372
Benefits, losses and expenses
Policyholder benefits	255,963		263,118		310,773			178,178		—			1,008,032
Amortization of deferred acquisition costs and value of business acquired	262,896		74,019		172			7,695		—			344,782
Underwriting, general and administrative expenses	395,400		207,451		121,232			91,237		27,920			843,240
Interest expense	—		—		—			—		17,065			17,065
Total benefits, losses and expenses	914,259		544,588		432,177			277,110		44,985			2,213,119
Segment income (loss) before provision (benefit) for income tax	74,447		147,418		7,659			21,978		(16,249		)	235,253
Provision (benefit) for income taxes	24,978		49,677		14,728			8,063		562			98,008
Segment income (loss) after tax	$	49,469	$	97,741	$	(7,069	)	$	13,915	$	(16,811	)
Net income													$	137,245
	As of December 31, 2014
Segment Assets:
Segment assets, excluding goodwill	$	14,260,609	$	4,010,393	$	1,210,615		$	2,242,145	$	8,997,465		$	30,721,227
Goodwill													841,239
Total assets													$	31,562,466

14. Commitments and Contingencies

In the normal course of business, letters of credit are issued primarily to support reinsurance arrangements in which the Company is the reinsurer. These letters of credit are supported by commitments under which the Company is required to indemnify the financial institution issuing the letter of credit if the letter of credit is drawn. The Company had $20,050 and $17,871 of letters of credit outstanding as of March 31, 2015 and December 31, 2014, respectively.

On January 16, 2015, the State of Indiana issued an examination warrant to the Company's subsidiary, American Security Insurance Company and initiated a multistate targeted market conduct examination regarding the Company’s lender-placed insurance products. At present, 42 states are participating in the examination. The Company continues to respond to and cooperate with the State of Indiana, the National Association of Insurance Commissioners (the "NAIC") and other regulators regarding its lender-placed insurance business.

In addition, as previously disclosed, the Company is involved in a variety of litigation relating to its current and past business operations and may from time to time become involved in other such actions. In particular, the Company is a defendant in class actions in a number of jurisdictions regarding its lender-placed insurance programs. These cases allege a variety of claims under a number of legal theories. The plaintiffs seek premium refunds and other relief. The Company continues to defend itself vigorously in these class actions. The Company has accrued an estimated loss for this litigation.

Assurant, Inc.

Notes to Consolidated Financial Statements (unaudited)

Three Months Ended March, 2015 and 2014

(In thousands, except number of shares and per share amounts)

We have participated and may participate in settlements on terms that we consider reasonable given the strength of our defenses and other factors. However, the possible loss or range of loss resulting from such litigation and regulatory proceedings, if any, in excess of the amounts accrued is inherently unpredictable and uncertain. Consequently, no estimate can be made of any possible loss or range of loss in excess of the accrual.

In July 2007 an Assurant subsidiary acquired Swansure Group, a privately held U.K. company, which owned D&D Homecare Limited (“D&D”). D&D was a packager of mortgages and certain insurance products, including Payment Protection Insurance (“PPI”) policies that, for a period of time, were underwritten by an Assurant subsidiary and sold by various alleged agents, including Carrington Carr Home Finance Limited (“CCHFL”), which is now in administration. In early 2014, as a result of consumer complaints alleging that CCHFL missold certain D&D-packaged PPI policies between August 8, 2003 and November 1, 2004, the U.K. Financial Ombudsman Service (“FOS”) requested that an Assurant subsidiary, Assurant Intermediary Limited (“AIL”), review complaints relating to CCHFL’s sale of such PPI policies. AIL is cooperating with the FOS. The possible loss or range of loss resulting from such litigation and regulatory proceedings, if any, in excess of the amounts accrued is inherently unpredictable and uncertain. Consequently, no estimate can be made of any possible loss or range of loss in excess of the accrual.

Although the Company cannot predict the outcome of any action, it is possible that such outcome could have a material adverse effect on the Company’s consolidated results of operations or cash flows for an individual reporting period. However, based on currently available information, management does not believe that the pending matters are likely to have a material adverse effect, individually or in the aggregate, on the Company’s financial condition.

15. Income Taxes

During the three months ended March 31, 2014, the Company increased its estimate of compensation expenses that are non-tax deductible under the Affordable Care Act. Due to this change in estimate, the Company recorded $5,749 of income tax expense in the Assurant Health segment, which increased the consolidated effective tax rate by 244 basis points.

16. Catastrophe Bond Program

On January 30, 2012, certain of the Companies’ subsidiaries (“the Subsidiaries”) entered into two reinsurance agreements with Ibis Re II Ltd. (“Ibis Re II”). Ibis Re II is an independent special purpose reinsurance company domiciled in the Cayman Islands. The Ibis Re II agreements provide up to $130,000 of reinsurance coverage for protection against losses over a three-year period from individual hurricane events in Hawaii, Puerto Rico, and along the Gulf and Eastern Coasts of the United States. Ibis Re II financed the property catastrophe reinsurance coverage by issuing $130,000 in catastrophe bonds to unrelated investors (the “Series 2012-1 Notes”). The agreements expired in February 2015.

On June 26, 2013, the Subsidiaries entered into three additional reinsurance agreements with Ibis Re II providing up to $185,000 of reinsurance coverage for protection against losses over a three-year period from individual hurricane events in Hawaii, Puerto Rico, and along the Gulf and Eastern Coasts of the United States. The agreements expire in June 2016. Ibis Re II financed the property catastrophe reinsurance coverage by issuing $185,000 in catastrophe bonds to unrelated investors (the “Series 2013-1 Notes”).

Upon expiration of the Series 2012-1 Notes, the remaining $185,000 of coverage represents approximately 14% of the expected first event coverage (net of reimbursements of the Florida Hurricane Catastrophe Fund) purchased by the Company in excess of the Company’s anticipated retention.

Under the terms of these reinsurance agreements, the Subsidiaries are obligated to pay annual reinsurance premiums to Ibis Re II for the reinsurance coverage. The reinsurance agreements with Ibis Re II use a dual trigger that is based upon an index created by applying predetermined percentages to insured industry losses in each state in the covered area as reported by an independent party and the Subsidiaries’ covered losses incurred. Reinsurance contracts that have a separate, pre-identified variable (e.g., a loss-based index) are accounted for as reinsurance if certain conditions are met. In the case of the reinsurance agreements with Ibis Re II, these conditions were met, thus the Company accounted for them as reinsurance in accordance with applicable accounting guidance for reinsurance contracts.

Amounts payable to the Subsidiaries under the reinsurance agreements will be determined by the index-based losses, which are designed to approximate the Subsidiaries’ actual losses from any covered event. The amount of actual losses and index losses from any covered event may differ. For each covered event, Ibis Re II pays the Subsidiaries the lesser of the covered index-based losses or the Subsidiaries’ actual losses. The principal amount of the catastrophe bonds will be reduced by

Assurant, Inc.

Notes to Consolidated Financial Statements (unaudited)

Three Months Ended March, 2015 and 2014

(In thousands, except number of shares and per share amounts)

any amounts paid to the Subsidiaries under the reinsurance agreements. The Subsidiaries have not incurred any losses subject to the reinsurance agreements since their inception.

As of March 31, 2015 and 2014, the Company had not ceded any losses to Ibis Re II.

As with any reinsurance agreement, there is credit risk associated with collecting amounts due from reinsurers. With regard to the Series 2013-1 Notes, the credit risk is mitigated by reinsurance trust accounts for each tranche within the Series. The reinsurance trust accounts have been funded by Ibis Re II with money market funds that invest solely in direct government obligations backed by the U.S. government with maturities of no more than 13 months. The money market funds must have a principal stability rating of at least AAA by Standard & Poor’s.

As a result of an evaluation of the reinsurance agreements with Ibis Re II, the Company concluded that Ibis Re II is a variable interest entity (“VIE”). However, while Ibis Re II is a VIE, the Company concluded that it does not have a significant variable interest in Ibis Re II as the variability in results, caused by the reinsurance agreements, is expected to be absorbed entirely by the bondholders and the Company is not entitled to any residual amounts. Accordingly, the Company is not the primary beneficiary of Ibis Re II and does not consolidate the entities in the Company’s financial statements.

17. Subsequent Events

On April 28, 2015, the Company announced that it is exploring the possible sale of the Assurant Health and Assurant Employee Benefits segments in order to realign its portfolio to focus on the specialty housing and lifestyle protection products and services offered through the Assurant Specialty Property and Assurant Solutions segments.

Absent a sale of Assurant Health, the Company plans to exit the health insurance market by 2016 and will not participate in the next Affordable Care Act open enrollment period.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

(Dollar amounts in thousands, except number of shares and per share amounts)

This Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) addresses the financial condition of Assurant, Inc. (which we refer to as “Assurant” or “the Company”) as of March 31, 2015, compared with December 31, 2014, and our results of operations for the three months ended March 31, 2015 and 2014. This discussion should be read in conjunction with our MD&A and annual audited consolidated financial statements as of December 31, 2014 included in our Annual Report on Form 10-K for the year ended December 31, 2014 filed with the U.S. Securities and Exchange Commission (the “SEC”) and the March 31, 2015 unaudited consolidated financial statements and related notes included elsewhere in this Form 10-Q. The 2014 Annual Report on Form 10-K, First Quarter 2015 Form 10-Q, and other documents related to the Company are available free of charge through the SEC website at www.sec.gov and through our website at www.assurant.com.

Some statements in this MD&A and elsewhere in this report, 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 use of words such as “will,” “may,” “anticipates,” “expects,” “estimates,” “projects,” “intends,” “plans,” “believes,” “targets,” “forecasts,” “potential,” “approximately,” or the negative version of those words and other words and terms with a similar meaning. Any forward-looking statements contained in this report are based upon our historical performance and on current plans, estimates and expectations. The inclusion of this forward-looking information should not be regarded as a representation by us or any other person that the future plans, estimates or expectations contemplated by us will be achieved. Our actual results might differ materially from those projected in the forward-looking statements. The Company undertakes no obligation to update or review any forward-looking statement, whether as a result of new information, future events or other developments.

In addition to the factors described under “Critical Factors Affecting Results,” the following risk factors could cause our actual results to differ materially from those currently estimated by management:


i.	actions by governmental agencies or government sponsored entities or other circumstances, including pending regulatory matters affecting our lender-placed insurance business, that could result in reductions of premium rates or increases in expenses, including claims, commissions, fines, penalties or other expenses;


ii.	inability to implement strategic plans for the Assurant Employee Benefits and Assurant Health segments;


iii.	loss of significant client relationships or business, distribution sources or contracts;


iv.	the effects of the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010 (the "Affordable Care Act"), and the rules and regulations thereunder, on our health and employee benefits businesses;


v.	potential variations between the final risk adjustment and reinsurance amounts, as determined by the U.S. Department of Health and Human Services under the Affordable Care Act, and the Company's estimate;


vi.	unfavorable outcomes in litigation and/or regulatory investigations that could negatively affect our results, business and reputation;


vii.	inability to execute strategic plans related to acquisitions, dispositions or new ventures;


viii.	current or new laws and regulations that could increase our costs and decrease our revenues;


ix.	significant competitive pressures in our businesses;


x.	failure to attract and retain sales representatives, key managers, agents or brokers;


xi.	losses due to natural or man-made catastrophes;


xii.	a decline in our credit or financial strength ratings (including the risk of ratings downgrades in the insurance industry);


xiii.	deterioration in the Company’s market capitalization compared to its book value that could result in an impairment of goodwill;


xiv.	risks related to our international operations, including fluctuations in exchange rates;


xv.	data breaches compromising client information and privacy;


xvi.	general global economic, financial market and political conditions (including difficult conditions in financial, capital, credit and currency markets, the global economic slowdown, fluctuations in interest rates or a prolonged period of low interest rates, monetary policies, unemployment and inflationary pressure);


xvii.	cyber security threats and cyber attacks;


xviii.	failure to effectively maintain and modernize our information systems;


xix.	failure to predict or manage benefits, claims and other costs;


xx.	uncertain tax positions and unexpected tax liabilities;


xxi.	inadequacy of reserves established for future claims;


xxii.	risks related to outsourcing activities;


xxiii.	unavailability, inadequacy and unaffordable pricing of reinsurance coverage;


xxiv.	diminished value of invested assets in our investment portfolio (due to, among other things, volatility in financial markets; the global economic slowdown; credit, currency and liquidity risk; other than temporary impairments and increases in interest rates);


xxv.	insolvency of third parties to whom we have sold or may sell businesses through reinsurance or modified co-insurance;


xxvi.	inability of reinsurers to meet their obligations;


xxvii.	credit risk of some of our agents in Assurant Specialty Property and Assurant Solutions;


xxviii.	inability of our subsidiaries to pay sufficient dividends;


xxix.	failure to provide for succession of senior management and key executives; and


xxx.	cyclicality of the insurance industry.

For a more detailed discussion of the risk factors that could affect our actual results, please refer to “Item 1A-Risk Factors” and “Item 7-MD&A Critical Factors Affecting Results” in our 2014 Annual Report on Form 10-K and “Item 1A-Risk Factors” in this Form 10-Q.

General

We report our results through five segments: Assurant Solutions, Assurant Specialty Property, Assurant Health, Assurant Employee Benefits, and Corporate and Other. The Corporate and Other segment includes activities of the holding company, financing and interest expenses, net realized gains (losses) on investments and investment income earned from short-term investments held. The Corporate and Other segment also includes the amortization of deferred gains associated with the sales of Fortis Financial Group and our Long Term Care business, through reinsurance agreements as described below.

The following discussion relates to the three months ended March 31, 2015 (“First Quarter 2015”) and the three months ended March 31, 2014 (“First Quarter 2014”).

Executive Summary

As previously announced, following a strategic review of its business portfolio, the Company will focus its resources on its niche housing and lifestyle protection offerings. As part of this strategy, Assurant is exploring strategic alternatives for its Assurant Employee Benefits and Assurant Health segments, including the sale of each. Absent a sale of the Assurant Health segment, the Company plans to begin the process in 2015 to exit the health insurance market. The Company expects to substantially complete its exit from the health insurance market in 2016. Proceeds from any transaction will provide additional financial flexibility to invest in areas targeted for growth and to return capital to shareholders.

Consolidated net income decreased 64%, to $50,044 in First Quarter 2015, compared with $137,245 of net income for First Quarter 2014. The decrease was primarily due to lower results in our Assurant Health and Assurant Specialty Property segments.

Assurant Solutions net income increased $4,890, or 10%, to $54,359 for First Quarter 2015 from $49,469 for First Quarter 2014. The increase was primarily driven by growth in mobile covered devices and related-service offerings. This was partially offset by integration expenses related to the recent acquisition of CWI Group ("CWI") and the unfavorable impact of changes in foreign exchange rates.

First Quarter 2015 net earned premiums and fees increased 4% compared with First Quarter 2014. The increase was driven by growth at a large domestic service contract client, our vehicle protection business and our mobile business. Net earned premiums were affected by foreign exchange volatility and lower production volumes at certain North American retailers. We expect these trends to persist for the remainder of 2015.

As previously disclosed, we will discontinue a tablet warranty program that accounted for approximately $100,000 of net earned premiums in 2014. Despite the loss of this program, full year 2015 total revenue and net income is expected to remain approximately level with full year 2014, driven by contributions from preneed and expansion of our integrated mobile offerings and vehicle service contracts.

Assurant Specialty Property net income decreased $22,654, or 23%, to $75,087 for First Quarter 2015 from $97,741 for First Quarter 2014, primarily due to lower results in our lender-placed homeowners insurance. Lower premium and placement rates were the primary drivers of the decline in lender-placed homeowners insurance. Better non-catastrophe loss experience partially offset these items as First Quarter 2015 had lower weather and fire-related claims compared to the First Quarter 2014.

Net earned premiums declined $94,926 primarily reflecting the sale of our general agency business and declines in our lender-placed homeowners insurance business. Our placement rate in First Quarter 2015 declined to 2.57% compared with 2.74% in First Quarter 2014, and loans tracked decreased more than 100,000 since December 31, 2014 due to attrition. We continue to expect ongoing loan transfers within the mortgage industry and our placement rates to gradually decline over time as the housing market stabilizes.

Overall, we expect full year 2015 net earned premiums and net income to decrease from 2014, reflecting lower placement and premium rates in lender-placed insurance business, the previously announced loss of client business and the divestiture of our general agency business. We expect contributions from multi-family housing and mortgage solutions combined with initiatives to lower lender-placed insurance expenses to partially offset the decline. Overall results to be affected by catastrophe losses.

Assurant Health's First Quarter 2015 net loss increased to $83,969 compared with a net loss of $7,069 in First Quarter 2014. The increase in the net loss was primarily due to a reduction in our estimated recoveries under the 2014 Affordable Care Act risk mitigation programs and elevated claims on 2015 policies. During First Quarter 2015, we refined our 2014 risk mitigation program estimates to reflect additional market data and claims development. Affordable Care Act policies comprised approximately 60% of total business in First Quarter 2015 compared to 18% in First Quarter 2014.

We expect Assurant Health’s full year 2015 net earned premiums and fees to increase compared to 2014 due to sales of individual major medical policies. We also expect overall results to be affected by elevated claims experience on Affordable Care Act qualified policies and estimated recoverables under Affordable Care Act risk mitigation programs. As mentioned above, we are exploring strategic alternatives including a sale of this business. Absent a sale, the Company will begin the process to exit the health insurance market which it expects will be substantially complete in 2016.

At Assurant Employee Benefits, First Quarter 2015 net income declined $3,767 to $10,148 from $13,915 in First Quarter 2014 primarily due to lower investment income from real estate joint venture partnerships and less favorable disability results. We expect full year 2015 net earned premiums and fees to increase compared to 2014 due to growth in voluntary products. We also expect continued expense management actions to offset expected lower net investment income. We continue to expect results to be affected by U.S. employment trends and capital market conditions. As mentioned above, we are exploring strategic alternatives, including a sale of this business.

Critical Factors Affecting Results and Liquidity

Our results depend on the appropriateness of our product pricing, underwriting and the accuracy of our methodology for the establishment of reserves for future policyholder benefits and claims, returns on and values of invested assets and our ability to manage our expenses. Factors affecting these items, including unemployment, difficult conditions in financial markets and the global economy, may have a material adverse effect on our results of operations or financial condition. For more

information on these factors, see “Item 1A—Risk Factors” and “Item 7—MD&A Critical Factors Affecting Results” in our 2014 Annual Report on Form 10-K and “Item 1A-Risk Factors” in this Form 10-Q.

Management believes the Company will have sufficient liquidity to satisfy its needs over the next twelve months including the ability to pay interest on our debt and dividends on our common stock.

For the three months ended March 31, 2015, net cash used in operating activities, including the effect of exchange rate changes on cash and cash equivalents, totaled $203,156; net cash provided by investing activities totaled $54,015 and net cash used in financing activities totaled $104,350. We had $1,065,165 in cash and cash equivalents as of March 31, 2015. Please see “—Liquidity and Capital Resources,” below for further details.

Critical Accounting Policies and Estimates

Our 2014 Annual Report on Form 10-K describes the accounting policies and estimates that are critical to the understanding of our results of operations, financial condition and liquidity. The accounting policies and estimation process described in the 2014 Annual Report on Form 10-K were consistently applied to the unaudited interim consolidated financial statements for First Quarter 2015.

The Affordable Care Act introduced new and significant premium stabilization programs in 2014. These programs required the Company to record amounts to our consolidated financial statements based on assumptions and estimates which could materially change as experience develops. Please refer to Assurant Health’s results of operations section further below in this Item 2 for details on these programs and the estimates recorded.

Assurant Consolidated

Overview

The table below presents information regarding our consolidated results of operations:



	For the Three Months Ended March 31,
	2015		2014
Revenues:
Net earned premiums	$	2,159,562	$	2,060,462
Net investment income	152,273		168,058
Net realized gains on investments	3,955		19,751
Amortization of deferred gain on disposal of businesses	3,258		3,660
Fees and other income	279,562		196,441
Total revenues	2,598,610		2,448,372
Benefits, losses and expenses:
Policyholder benefits	1,210,727		1,008,032
Selling, underwriting and general expenses (1)	1,290,912		1,188,022
Interest expense	13,778		17,065
Total benefits, losses and expenses	2,515,417		2,213,119
Income before provision for income taxes	83,193		235,253
Provision for income taxes	33,149		98,008
Net income	$	50,044	$	137,245

_____________________


(1)	Includes amortization of DAC and VOBA and underwriting, general and administrative expenses.

The following discussion provides a general overall analysis of how the consolidated results were affected by our four operating segments and our Corporate and Other segment for First Quarter 2015 and First Quarter 2014. Please see the discussion that follows, for each of these segments, for a more detailed analysis of the fluctuations.

For the Three Months Ended March 31, 2015 Compared to the Three Months Ended March 31, 2014

Net Income

Net income decreased $87,201, or 64%, to $50,044 for First Quarter 2015, compared with $137,245 for First Quarter 2014. The decrease was primarily due to a reduction in 2014 estimated recoveries from the Affordable Care Act risk mitigation programs and elevated claims on 2015 Affordable Care Act policies in our Assurant Health segment and the expected net income reduction in our lender-placed insurance business in our Assurant Specialty Property segment.

Assurant Solutions

Overview

The table below presents information regarding Assurant Solutions’ segment results of operations:



	For the Three Months Ended March 31,
	2015		2014
Revenues:
Net earned premiums	$	754,477	$	752,667
Net investment income	92,191		94,685
Fees and other income	173,068		141,354
Total revenues	1,019,736		988,706
Benefits, losses and expenses:
Policyholder benefits	215,548		255,963
Selling, underwriting and general expenses	724,316		658,296
Total benefits, losses and expenses	939,864		914,259
Segment income before provision for income taxes	79,872		74,447
Provision for income taxes	25,513		24,978
Segment net income	$	54,359	$	49,469
Net earned premiums:
Domestic:
Credit	$	35,856	$	42,958
Service contracts	399,114		374,828
Other (1)	30,328		13,376
Total Domestic	465,298		431,162
International:
Credit	64,982		83,937
Service contracts	199,604		213,854
Other (1)	10,353		7,735
Total International	274,939		305,526
Preneed	14,240		15,979
Total	$	754,477	$	752,667
Fees and other income:
Domestic:
Debt protection	$	4,394	$	7,184
Service contracts	111,690		87,823
Other (1)	2,501		3,105
Total Domestic	118,585		98,112
International	28,014		18,200
Preneed	26,469		25,042
Total	$	173,068	$	141,354



Gross written premiums (2):
Domestic:
Credit	$	62,233		$	88,994
Service contracts	871,313			644,079
Other (1)	20,750			21,478
Total Domestic	954,296			754,551
International:
Credit	187,558			228,367
Service contracts	173,015			221,378
Other (1)	20,181			12,908
Total International	380,754			462,653
Total	$	1,335,050		$	1,217,204
Preneed (face sales)	$	227,709		$	241,704
Combined ratios (3):
Domestic	90.0		%	93.7		%
International	105.9		%	101.7		%

_______________________


(1)	This includes emerging products and run-off product lines.


(2)	Gross written premiums does not necessarily translate to an equal amount of subsequent net earned premiums since Assurant Solutions reinsures a portion of its premiums to insurance subsidiaries of its clients.


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

For the Three Months Ended March 31, 2015 Compared to the Three Months Ended March 31, 2014

Net Income

Segment net income increased $4,890, or 10%, to $54,359 for First Quarter 2015 from $49,469 for First Quarter 2014. The increase was primarily driven by growth in mobile covered devices and related-service offerings. This was partially offset by integration expenses related to the recent acquisition of CWI and the unfavorable impact of changes in foreign exchange rates.

Total Revenues

Total revenues increased $31,030, or 3%, to $1,019,736 for First Quarter 2015 from $988,706 for First Quarter 2014. Net earned premiums increased slightly primarily due to growth at a large domestic service contract client and from our vehicle protection business offset by the unfavorable impact of changes in foreign exchange rates. Fees and other income increased primarily driven by growth in mobile programs and recent acquisitions. These increases were partially offset by the unfavorable impact of changes in foreign exchange rates.

Gross written premiums increased $117,846, or 10%, to $1,335,050 for First Quarter 2015 from $1,217,204 for First Quarter 2014. Gross written premiums from our domestic service contract business increased $227,234 primarily driven by growth in mobile subscribers. This increase was partially offset by the continued run-off of our domestic and European credit business and the unfavorable impact of changes in foreign exchange rates.

Preneed face sales decreased $13,995, or 6%, to $227,709 for First Quarter 2015 from $241,704 for First Quarter 2014. This decrease was mostly attributable to a change in product offerings and a client’s temporary operational change. On June 25, 2014, we extended our exclusive distribution partnership with Services Corporation International ("SCI"), for an additional 10 years, through September 29, 2024.

Total Benefits, Losses and Expenses

Total benefits, losses and expenses increased $25,605, or 3%, to $939,864 for First Quarter 2015 from $914,259 for First Quarter 2014. Policyholder benefits decreased $40,415, primarily driven by favorable loss experience in our domestic service contract business and mobile business in Europe. Partially offsetting these items is less favorable loss experience in Latin America. Selling, underwriting and general expenses increased $66,020, mostly related to growth in our domestic mobile business and the CWI acquisition.

Assurant Specialty Property

Overview

The table below presents information regarding Assurant Specialty Property’s segment results of operations:



	For the Three Months Ended March 31,
	2015			2014
Revenues:
Net earned premiums	$	528,446		$	623,372
Net investment income	20,515			27,875
Fees and other income	84,236			40,759
Total revenues	633,197			692,006
Benefits, losses and expenses:
Policyholder benefits	204,603			263,118
Selling, underwriting and general expenses	315,681			281,470
Total benefits, losses and expenses	520,284			544,588
Segment income before provision for income taxes	112,913			147,418
Provision for income taxes	37,826			49,677
Segment net income	$	75,087		$	97,741
Net earned premiums:
Homeowners (lender-placed and voluntary)	$	373,577		$	438,949
Manufactured housing (lender-placed and voluntary)	41,027			58,711
Other (1)	113,842			125,712
Total	$	528,446		$	623,372
Ratios:
Loss ratio (2)	38.7		%	42.2		%
Expense ratio (3)	51.5		%	42.4		%
Combined ratio (4)	84.9		%	82.0		%

_______________________


(1)	This primarily includes lender-placed flood, miscellaneous specialty property and multi-family housing insurance products.


(2)	The loss ratio is equal to policyholder benefits divided by net earned premiums.


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


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

Regulatory Matters

In January 2015, the New York Department of Financial Services ("NYDFS") issued regulations regarding tracking costs associated with lender-placed insurance rates. We are currently assessing the new regulations; however, at this time we believe that they will not have a material financial impact on our lender-placed insurance business.

Lender-placed insurance products accounted for 76% and 71% of net earned premiums for First Quarter 2015 and full year 2014, respectively. The approximate corresponding contributions to the segment net income in these periods were 80% and 73%, respectively. The portion of total segment net income attributable to lender-placed products may vary substantially over time depending on premium and placement rates, the frequency, severity and location of catastrophic losses, the cost of catastrophe reinsurance and reinstatement coverage, the variability of claim processing costs and client acquisition costs, and other factors.

For the Three Months Ended March 31, 2015 Compared to the Three Months Ended March 31, 2014

Net Income

Segment net income decreased $22,654, or 23%, to $75,087 for First Quarter 2015 from $97,741 for First Quarter 2014 primarily due to lower results in our lender-placed homeowners insurance business, partially offset by lower non-catastrophe loss experience.

Total Revenues

Total revenues decreased $58,809, or 8%, to $633,197 for First Quarter 2015 from $692,006 for First Quarter 2014. The decrease was primarily due to the divestiture of the general agency business and primary insurance carrier, American Reliable Insurance Company ("ARIC") effective January 1, 2015, combined with lower lender-placed homeowners insurance premiums. Decline in lender-placed homeowners insurance net earned premiums is primarily due to attrition in legacy subprime portfolios, lower premium and placement rates and client contract changes. Please see Note 4 to the Consolidated Financial Statements for further information on the ARIC divesture. These items were partially offset by additional fee income generated from the recent acquisitions in our mortgage solutions businesses.

Total Benefits, Losses and Expenses

Total benefits, losses and expenses decreased $24,304, or 4%, to $520,284 for First Quarter 2015 from $544,588 for First Quarter 2014. The loss ratio decreased 350 basis points due to favorable non-catastrophe losses from winter-weather and fire related claims, partially offset by lower premium rates from the implementation of the new lender-placed insurance product. First Quarter 2015 had reportable catastrophe losses of $5,219 compared to $7,836 of reportable catastrophe loss in First Quarter 2014. Reportable catastrophe losses include only individual catastrophic events that generated losses to the Company in excess of $5,000, pre-tax and net of reinsurance. The expense ratio increase of 910 basis points in First Quarter 2015 is mainly due to growth in our mortgage solutions businesses.

Assurant Health

Overview

The table below presents information regarding Assurant Health’s segment results of operations:



	For the Three Months Ended March 31,
	2015			2014
Revenues:
Net earned premiums	$	609,742		$	422,764
Net investment income	7,007			8,861
Fees and other income	15,976			8,211
Total revenues	632,725			439,836
Benefits, losses and expenses:
Policyholder benefits	604,763			310,773
Selling, underwriting and general expenses	133,451			121,404
Total benefits, losses and expenses	738,214			432,177
Segment (loss) income before (benefit) provision for income taxes	(105,489		)	7,659
(Benefit) provision for income taxes	(21,520		)	14,728
Segment net loss	$	(83,969	)	$	(7,069	)
Net earned premiums:
Individual	$	514,198		$	320,192
Small employer group	95,544			102,572
Total	$	609,742		$	422,764
Insured lives by product line:
Individual	838			783
Small employer group	143			121
Total	981			904
Ratios:
Loss ratio (1)	99.2		%	73.5		%
Expense ratio (2)	21.3		%	28.2		%
Combined ratio (3)	118.0		%	100.3		%

_______________________


(1)	The loss ratio is equal to policyholder benefits divided by net earned premiums.


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


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

The Affordable Care Act

Most provisions of the Affordable Care Act have now taken effect. Given the sweeping nature of the changes represented by the Affordable Care Act, our results of operations and financial position have been and will continue to be materially adversely affected. For more information, see Item 1A, "Risk Factors—Risk related to our industry—Reform of the health insurance industry could materially reduce the profitability of certain of our businesses or render them unprofitable" in our 2014 Annual Report on Form 10-K and “Item 1A-Risk Factors” in this Form 10-Q.

Because all individuals now have a guaranteed right to purchase health insurance policies, the Affordable Care Act introduced new and significant premium stabilization programs in 2014: reinsurance, risk adjustment, and risk corridor (together, the “3 Rs”). These programs, discussed in further detail below, are meant to mitigate the potential adverse impact to individual health insurers as a result of Affordable Care Act provisions that became effective January 1, 2014.

Reinsurance

This is a transitional program for 2014-2016, with decreasing benefit over the three years. All commercial individual and group medical health plans are required to contribute to the funding of the program. Only individual health plans that are in compliance with the essential health benefits of the Affordable Care Act are eligible to receive benefits from the program.

We are required to make contributions, which are recorded quarterly, based on both our Affordable Care Act and non-Affordable Care Act business. Contributions based on our non-Affordable Care Act business are included in selling, underwriting and general expenses and contributions based on our Affordable Care Act business are included as ceded premiums. Recoveries are recorded quarterly as ceded policyholder benefits and reflect the anticipated experience of our Affordable Care Act plans based on our analysis of current and historical claim data.

For the First Quarter 2015, we recorded reinsurance contributions of $2,311 and reinsurance recoveries of $18,363, in our consolidated statements of operations. As of March 31, 2015, we recorded reinsurance contributions payable of $3,583 and reinsurance recoverables of $295,344 on our consolidated balance sheets. Both contributions and recoveries for the 2014 program are scheduled to be settled in 2015 while contributions and recoveries for the 2015 program are scheduled to be settled in 2016. Included in the $18,363 of reinsurance recoveries is a $(38,035) change in our December 31, 2014 estimate pertaining to the 2014 program and $56,398 associated with the 2015 program.

Risk Adjustment

This is a permanent program to transfer funds between health insurers based on the average health risk scores of their Affordable Care Act insured populations. Insurers with below-average risk scores contribute into the pool. Insurers with above-average risk scores receive payments out of the pool.

Risk scores are evaluated at the state, market, and legal entity level for policies that comply with the Affordable Care Act. Risk adjustment amounts payable and receivable are reflected as adjustments to net earned premiums, and are recorded quarterly based on our current estimated loss experience of our Affordable Care Act business.

Based on the demographics of our Affordable Care Act population, extensive analytical evaluations, current and historical claim data as well as other internal and external data sources, external market studies and other published data, we believe that our average risk scores will be significantly higher than the industry averages.

For First Quarter 2015, we recorded net risk adjustment premiums of $49,822, in our consolidated statements of operations. As of March 31, 2015, we carried net risk adjustment receivables of $171,710 on our consolidated balance sheets. Risk transfer payments and receipts for the 2014 program are scheduled to be settled in 2015 while payments and receipts for the 2015 program are scheduled to be settled in 2016. Included in the $49,822 of net risk adjustment premiums is a $(14,472) change in our December 31, 2014 estimate pertaining to the 2014 program and $64,294 associated with the 2015 program.

Risk Corridor

This is a temporary risk-sharing program for 2014-2016. Based on ratios of allowable costs to target costs as defined by the Affordable Care Act, health insurers will make payments to the Department of Health and Human Services (“HHS”) or receive funds from HHS. Because Assurant Health did not participate in any public insurance marketplaces for 2014, risk corridors had no impact on our 2014 operations. Assurant Health began participating in the public insurance marketplaces for 2015, however no net recoverable has been recorded for First Quarter 2015 because payments from HHS under this program are uncertain.

Estimates of amounts receivable from these programs are subject to considerable uncertainty and actual amounts received may vary substantially from our estimates.

For the Three Months Ended March 31, 2015 Compared to the Three Months Ended March 31, 2014

Net Loss

Segment net loss increased $76,900, or 1,088%, to a net loss of $83,969 for First Quarter 2015 from net loss of $7,069 for First Quarter 2014. The increase was primarily attributable to a reduction in 2014 estimated recoveries from the Affordable Care Act risk mitigation programs due to more recent market data and additional claims development and elevated claims experience related to 2015 Affordable Care Act policies.

Total Revenues

Total revenues increased $192,889, or 44%, to $632,725 for First Quarter 2015 from $439,836 for First Quarter 2014. Net earned premiums from our individual medical business increased $194,006, or 61%, primarily due to growth in individual major medical product sales attributable to premium rate increases and our participation in the public insurance marketplaces in 2015.

Total Benefits, Losses and Expenses

Total benefits, losses and expenses increased $306,037, or 71%, to $738,214 for First Quarter 2015 from $432,177 for First Quarter 2014. Policyholder benefits increased $293,990, or 95%, primarily attributable to elevated 2015 Affordable Care Act claims and a reduction in the 2014 estimated recoveries from the Affordable Care Act risk mitigation programs due to more recent market data and additional claims development. Affordable Care Act policies now account for a larger share of our business than in First Quarter 2014. Selling, underwriting and general expenses increased $12,047 or 10%, due to higher commissions on increased premium volumes and health reform fees.

Assurant Employee Benefits

Overview

The table below presents information regarding Assurant Employee Benefits’ segment results of operations:



	For the Three Months Ended March 31,
	2015			2014
Revenues:
Net earned premiums	$	266,897		$	261,659
Net investment income	27,821			31,395
Fees and other income	6,274			6,034
Total revenues	300,992			299,088
Benefits, losses and expenses:
Policyholder benefits	185,813			178,178
Selling, underwriting and general expenses	98,968			98,932
Total benefits, losses and expenses	284,781			277,110
Segment income before provision for income taxes	16,211			21,978
Provision for income taxes	6,063			8,063
Segment net income	$	10,148		$	13,915
Net earned premiums:
Group dental	$	99,916		$	97,772
Group disability	99,745			102,511
Group life	51,336			49,946
Group supplemental and vision products	15,900			11,430
Total	$	266,897		$	261,659
Voluntary	$	119,051		$	107,690
Employer-paid and other	147,846			153,969
Total	$	266,897		$	261,659
Ratios:
Loss ratio (1)	69.6		%	68.1		%
Expense ratio (2)	36.2		%	37.0		%

_______________________


(1)	The loss ratio is equal to policyholder benefits divided by net earned premiums.


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

For the Three Months Ended March 31, 2015 Compared to the Three Months Ended March 31, 2014

Net Income

Segment net income decreased $3,767, or 27%, to $10,148 for First Quarter 2015 from $13,915 for First Quarter 2014. The decrease is primarily attributable to lower investment income from real estate joint venture partnerships and less favorable disability and life loss experience.

Total Revenues

Total revenues increased $1,904, or less than 1%, to $300,992 for First Quarter 2015 from $299,088 for First Quarter 2014. Net earned premiums increased $5,238, or 2% driven by voluntary products which increased $11,361, or 11%, partially offset by declines in employer paid products. Net investment income decreased $3,574, or 11%, primarily driven by a $3,137 decrease in income from real estate joint venture partnerships.

Total Benefits, Losses and Expenses

Total benefits, losses and expenses increased $7,671, or 3%, to $284,781 for First Quarter 2015 from $277,110 for First Quarter 2014. The loss ratio increased to 69.6% from 68.1% primarily driven by unfavorable disability and life loss experience. Selling, underwriting and general expenses remained relatively consistent.

Assurant Corporate & Other

The table below presents information regarding the Corporate & Other segment’s results of operations:



	For the Three Months Ended March 31,
	2015			2014
Revenues:
Net investment income	$	4,739		$	5,242
Net realized gains on investments	3,955			19,751
Amortization of deferred gain on disposal of businesses	3,258			3,660
Fees and other income	8			83
Total revenues	11,960			28,736
Benefits, losses and expenses:
Selling, underwriting and general expenses	18,496			27,920
Interest expense	13,778			17,065
Total benefits, losses and expenses	32,274			44,985
Segment loss before (benefit) provision for income taxes	(20,314		)	(16,249		)
(Benefit) provision for income taxes	(14,733		)	562
Segment net loss	$	(5,581	)	$	(16,811	)

For the Three Months Ended March 31, 2015 Compared to the Three Months Ended March 31, 2014

Net Loss

Segment results improved $11,230, or 67%, to a net loss of $5,581 for First Quarter 2015 compared with net loss of $16,811 for First Quarter 2014. The improvement is primarily due to lower employee-related benefit costs and a favorable change in tax liabilities. In addition, First Quarter 2015 includes a $3,434 (after-tax) gain on the ARIC sale. See Note 4 for further information.

Total Revenues

Total revenues decreased $16,776, or 58%, to $11,960 for First Quarter 2015 compared with $28,736 for First Quarter 2014. The decrease is primarily related to an $15,796 decrease in net realized gains on investments.

Total Benefits, Losses and Expenses

Total expenses decreased $12,711, or 28%, to $32,274 for First Quarter 2015 compared with $44,985 for First Quarter 2014. The decrease is primarily due to lower employee-related benefit costs and a gain on the ARIC sale mentioned above.

Investments

The Company had total investments of $14,172,528 and $14,131,452 as of March 31, 2015 and December 31, 2014, respectively. For more information on our investments see Note 5 to the Notes to Consolidated Financial Statements included elsewhere in this report.

The following table shows the credit quality of our fixed maturity securities portfolio as of the dates indicated:



	As of
Fixed Maturity Securities by Credit Quality (Fair Value)	March 31, 2015				December 31, 2014
Aaa / Aa / A	$	7,338,210	64.4	%	$	7,314,208	65.0	%
Baa	3,327,403		29.2	%	3,255,505		28.9	%
Ba	462,193		4.1	%	432,203		3.8	%
B and lower	259,505		2.3	%	261,258		2.3	%
Total	$	11,387,311	100.0	%	$	11,263,174	100.0	%

Major categories of net investment income were as follows:



	Three Months Ended March 31,
	2015			2014
Fixed maturity securities	$	123,491		$	130,445
Equity securities	7,211			6,634
Commercial mortgage loans on real estate	18,104			18,447
Policy loans	543			715
Short-term investments	419			564
Other investments	4,233			13,940
Cash and cash equivalents	4,081			3,905
Total investment income	158,082			174,650
Investment expenses	(5,809		)	(6,592		)
Net investment income	$	152,273		$	168,058

Net investment income decreased $15,785, or 9%, to $152,273 for First Quarter 2015 compared with $168,058 for First Quarter 2014. The decrease was primarily related to a $9,184 decrease in investment income from real estate joint venture partnerships. Excluding the investment income from real estate joint venture partnerships, net investment income decreased $6,601, primarily reflecting lower investment yields.

As of March 31, 2015, the Company owned $181,052 of securities guaranteed by financial guarantee insurance companies. Included in this amount was $171,775 of municipal securities, whose credit rating was A+ with the guarantee, but which would have had a rating of A without the guarantee.

The Company has exposure to sub-prime and related mortgages within our fixed maturity securities portfolio. At March 31, 2015, approximately 2% of our residential mortgage-backed holdings had exposure to sub-prime mortgage collateral. This represented less than 1% of the total fixed income portfolio and approximately 1% of the total unrealized gain position. Of the securities with sub-prime exposure, approximately 11% are rated as investment grade. All residential mortgage-backed securities, including those with sub-prime exposure, are reviewed as part of the ongoing other-than-temporary impairment monitoring process.

Collateralized Transactions

The Company engages in transactions in which fixed maturity securities, primarily bonds issued by the U.S. government and government agencies and authorities, and U.S. corporations, are loaned to selected broker/dealers. All loans are negotiated on an overnight basis; term loans are not permitted. Collateral, greater than or equal to 102% of the fair value of the securities lent, plus accrued interest, is received in the form of cash and cash equivalents held by a custodian bank for the benefit of the Company. The use of cash collateral received is unrestricted. The Company reinvests the cash collateral received, generally in investments of high credit quality that are designated as available-for-sale. The Company monitors the fair value of securities loaned and the collateral received, with additional collateral obtained, as necessary. The Company is subject to the risk of loss to the extent there is a loss on the re-investment of cash collateral. The Company's investment portfolio is readily marketable and convertible to cash to a degree sufficient to provide for short term needs related to the securities lending transactions.

As of March 31, 2015 and December 31, 2014, our collateral held under securities lending agreements, of which its use is unrestricted, was $93,242 and $95,985, respectively, and is included in the consolidated balance sheets under the collateral held/pledged under securities agreements. Our liability to the borrower for collateral received was $93,241 and $95,986, respectively, and is included in the consolidated balance sheets under obligation under securities agreements. The difference between the collateral held and obligations under securities lending is recorded as an unrealized gain (loss) and is included as part of AOCI. All securities with unrealized losses have been in a continuous loss position for less than 12 months as of March 31, 2015 and December 31, 2014, respectively. The Company includes the available-for-sale investments purchased with the cash collateral in its evaluation of other-than-temporary impairments.

As of March 31, 2015, 98% of the obligation under securities agreements is invested in corporate fixed maturities, money market funds, and daily repurchase agreements with a remaining contractual maturity of one year or less.

Liquidity and Capital Resources

Regulatory Requirements

Assurant, Inc. is a holding company and, as such, has limited direct operations of its own. Our holding company’s assets consist primarily of the capital stock of our subsidiaries. Accordingly, our holding company’s future cash flows depend upon the availability of dividends and other statutorily permissible payments from our subsidiaries, such as payments under our tax allocation agreement and under management agreements with our subsidiaries. The ability to pay such dividends and to make such other payments will be limited by applicable laws and regulations of the states in which our subsidiaries are domiciled, which subject our subsidiaries to significant regulatory restrictions. The dividend requirements and regulations vary from state to state and by type of insurance provided by the applicable subsidiary. These laws and regulations require, among other things, our insurance subsidiaries to maintain minimum solvency requirements and limit the amount of dividends they can pay to the holding company. For further information on pending amendments to state insurance holding company laws, including the NAIC’s “Solvency Modernization Initiative,” see “Item 1A—Risk Factors—Risks Related to Our Industry—Changes in regulation may reduce our profitability and limit our growth” in our 2014 Annual Report on Form 10-K and “Item 1A-Risk Factors” in this Form 10-Q. Along with solvency regulations, the primary driver in determining the capital used for subsidiary dividends is the level of capital needed to maintain desired financial strength ratings from A.M. Best.

Regulators or rating agencies could become more conservative in their methodology and criteria, increasing capital requirements for our insurance subsidiaries. This in turn, could negatively affect our capital resources. As a result of Assurant's April 29, 2015 announcement that we are exploring the disposition of the Assurant Employee Benefits and Assurant Health segments, A.M. Best downgraded the financial strength ratings of John Alden Insurance Company and Time Insurance Company from A- to B++, the outlook on these ratings remains stable. Assurant’s debt rating and other financial strength ratings were unchanged. Moody’s Investor Services (“Moody’s”) downgraded the financial strength ratings of John Alden Life Insurance Company and Time Insurance Company from Baa2 to Baa3, and revised the outlook from stable to developing. Moody’s affirmed the A3 rating of Union Security Insurance Company and revised the outlook from stable to developing. Moody’s affirmed the Senior Debt rating of Baa2 with a stable outlook for Assurant, Inc., as well as the financial strength ratings of A2 with a stable outlook for American Security Insurance Company and American Bankers Insurance Company of Florida, and A3 with a stable outlook for American Bankers Life Assurance Company of Florida. Standard and Poor’s (“S&P”) affirmed the BBB financial strength ratings of John Alden Life Insurance Company and Time Insurance Company. S&P also revised the outlook for these subsidiaries from stable to negative. In addition, S&P placed the A- financial strength rating of Union Security Insurance Company under Creditwatch Developing as a result of the announcement. At the same time, S&P affirmed the Senior Debt rating of BBB+ with a stable outlook for Assurant, Inc. as well as the financial strength ratings of A with a stable outlook for American Bankers Insurance Company of Florida, American Bankers Life Assurance Company of Florida, American Memorial Life Insurance Company and American Security Insurance Company. For further information on our ratings and the risks of ratings downgrades, see “Item 1—Business” and “Item 1A—Risk Factors—Risks Related to Our Company—A.M. Best, Moody’s and S&P rate the financial strength of our insurance company subsidiaries, and a decline in these ratings could affect our standing in the insurance industry and cause our sales and earnings to decrease” in our 2014 Annual Report on Form 10-K and “Item 1A-Risk Factors” in this Form 10-Q. For 2015, the maximum dividends our U.S. domiciled insurance subsidiaries could pay without prior regulatory approval is approximately $476,000.

Liquidity

As of March 31, 2015, we had $573,504 in holding company capital. We use the term “holding company capital” to represent the portion of cash and other liquid marketable securities held at Assurant, Inc., out of a total of $709,137, that we are not otherwise holding for a specific purpose as of the balance sheet date. We can use such capital for stock repurchases, stockholder dividends, acquisitions, and other corporate purposes. $250,000 of the $573,504 of holding company capital is intended to serve as a buffer against remote risks (such as large-scale hurricanes). Dividends or returns of capital, net of infusions, made to the holding company from its operating companies were $54,523 for First Quarter 2015. In 2014, dividends, net of infusions, made to the holding company from its operating companies were $453,485. We use these cash inflows primarily to pay expenses, to make interest payments on indebtedness, to make dividend payments to our stockholders, to fund acquisitions and to repurchase our shares.

In addition to paying expenses and making interest payments on indebtedness, our capital management strategy provides for several uses for the cash generated by our subsidiaries, including without limitation, returning capital to shareholders through share repurchases and dividends, investing in our businesses to support growth in targeted areas, and making prudent and opportunistic acquisitions. We made share repurchases and paid dividends to our stockholders of $100,495 and $295,765 during First Quarter 2015 and the year ended December 31, 2014, respectively. We expect 2015 net dividends from the operating segments to approximate their earnings subject to the growth of the businesses, rating agency and regulatory capital requirements and investment performance.

The primary sources of funds for our subsidiaries consist of premiums and fees collected, proceeds from the sales and maturity of investments and net investment income. We use cash primarily to pay insurance claims, agent commissions, operating expenses and taxes. We generally invest our subsidiaries’ excess funds to generate investment income.

We conduct periodic asset liability studies to measure the duration of our insurance liabilities, to develop optimal asset portfolio maturity structures for our significant lines of business and ultimately to assess whether cash flows are sufficient to meet cash needs. These studies are conducted in accordance with formal company-wide Asset Liability Management (“ALM”) guidelines.

To complete a study for a particular line of business, we develop models to project asset and liability cash flows and balance sheet items under a large, varied set of plausible economic scenarios. These models consider many factors including the current investment portfolio, the required capital for the related assets and liabilities, our tax position and projected cash flows from both existing and projected new business.

Alternative asset portfolio structures are analyzed for significant lines of business. An investment portfolio maturity structure is then selected from these profiles given our return hurdle and risk preference. Sensitivity testing of significant liability assumptions and new business projections is also performed.

Our liabilities generally have limited policyholder optionality, which means that the timing of payments is relatively insensitive to the interest rate environment. In addition, our investment portfolio is largely comprised of highly liquid fixed maturity securities with a sufficient component of such securities invested that are near maturity which may be sold with minimal risk of loss to meet cash needs. Therefore, we believe we have limited exposure to disintermediation risk.

Generally, our subsidiaries’ premiums, fees and investment income, along with planned asset sales and maturities, provide sufficient cash to pay claims and expenses. However, there may be instances when unexpected cash needs arise in excess of that available from usual operating sources. In such instances, we have several options to raise needed funds, including selling assets from the subsidiaries’ investment portfolios, using holding company cash (if available), issuing commercial paper, or drawing funds from our revolving credit facility. In addition, we have filed an automatically effective shelf registration statement on Form S-3 with the SEC. This registration statement allows us to issue equity, debt or other types of securities through one or more methods of distribution. The terms of any offering would be established at the time of the offering, subject to market conditions. If we decide to make an offering of securities, we will consider the nature of the cash requirement as well as the cost of capital in determining what type of securities we may offer.

We paid dividends of $0.27 per common share on March 9, 2015 to stockholders of record as of February 23, 2015. Any determination to pay future dividends will be at the discretion of our Board of Directors and will be dependent upon: our subsidiaries’ payment of dividends and/or other statutorily permissible payments to us; our results of operations and cash flows; our financial position and capital requirements; general business conditions; legal, tax, regulatory and contractual restrictions on the payment of dividends; and other factors our Board of Directors deems relevant.

On November 15, 2013, our Board of Directors authorized the Company to repurchase up to an additional $600,000 of its outstanding common stock. As of December 31, 2014, there was $486,670 remaining under the total repurchase authorization. During the three months ended March 31, 2015, we repurchased 1,294,100 shares of our outstanding common stock at a cost of $81,635, exclusive of commissions. As of March 31, 2015, $405,035 remained under the total repurchase authorization. The timing and the amount of future repurchases will depend on market conditions, our financial condition, results of operations, liquidity and other factors.

Management believes the Company will have sufficient liquidity to satisfy its needs over the next 12 months, including the ability to pay interest on our Senior Notes and dividends on our common shares.

Retirement and Other Employee Benefits

In prior years we established a funding policy in which service cost plus 15% of qualified plan deficit will be contributed annually. During First Quarter 2015, we contributed $10,750 in cash to the Plan. We expect to contribute additional cash to the Plan, up to $32,250, over the remainder of 2015.

Commercial Paper Program

Our commercial paper program requires us to maintain liquidity facilities either in an available amount equal to any outstanding notes from the program or in an amount sufficient to maintain the ratings assigned to the notes issued from the program. Our commercial paper is rated AMB-2 by A.M. Best, P-2 by Moody’s and A-2 by S&P. Our subsidiaries do not maintain commercial paper or other borrowing facilities. This program is currently backed up by a $400,000 senior revolving credit facility, of which $395,740 was available at March 31, 2015, due to $4,260 of outstanding letters of credit related to this program.

On September 16, 2014, we entered into a five-year unsecured $400,000 revolving credit agreement ("2014 Credit Facility") with a syndicate of banks arranged by JP Morgan Chase Bank, N.A. and Wells Fargo, N.A. The 2014 Credit Facility replaces our prior four-year $350,000 revolving credit facility ("2011 Credit Facility"), which was entered into on September 21, 2011 and was scheduled to expire in September 2015. The 2011 Credit Facility terminated upon the effectiveness of the 2014 Credit Facility. The 2014 Credit Facility provides for revolving loans and the issuance of multi-bank, syndicated letters of credit and/or letters of credit from a sole issuing bank in an aggregate amount of $400,000 and is available until September 2019, provided we are in compliance with all covenants. The 2014 Credit Facility has a sublimit for letters of credit issued thereunder of $50,000. The proceeds of these loans may be used for our commercial paper program or for general corporate purposes. The Company may increase the total amount available under the 2014 Credit Facility to $525,000 subject to certain conditions. No bank is obligated to provide commitments above their share of the $400,000 facility.

We did not use the commercial paper program during the three months ended March 31, 2015 or 2014, and there were no amounts relating to the commercial paper program outstanding at March 31, 2015 and December 31, 2014. The Company made no borrowings using the 2014 Credit Facility and no loans are outstanding at March 31, 2015.

The 2014 Credit Facility contains restrictive covenants and requires that the Company maintain certain specified minimum ratios and thresholds. Among others, these covenants include maintaining a maximum debt to capitalization ratio and a minimum consolidated adjusted net worth. At March 31, 2015, we were in compliance with all covenants, minimum ratios, and thresholds.

Senior Notes

On March 28, 2013, we issued two series of senior notes with an aggregate principal amount of $700,000 (the “2013 Senior Notes”). The first series is $350,000 in principal amount, bears interest at 2.50% per year and is payable in a single installment due March 15, 2018. The second series is $350,000 in principal amount, bears interest at 4.00% per year and is payable in a single installment due March 15, 2023.

The net proceeds from the sale of the 2013 Senior Notes was $698,093, which represents the principal amount less the discount before offering expenses. The Company used the net proceeds of the 2013 Senior Notes for general corporate purposes, including to repay $500,000 of debt that matured in February 2014.

Interest on our 2013 Senior Notes is payable semi-annually on March 15 and September 15 of each year. The interest expense incurred related to the 2013 Senior Notes was $5,746 and $5,744 for the three months ended March 31, 2015 and 2014, respectively. There was $948 of accrued interest at both March 31, 2015 and 2014. The 2013 Senior Notes are unsecured obligations and rank equally with all of the Company’s other senior unsecured indebtedness. The Company may redeem each series of the 2013 Senior Notes in whole or in part at any time and from time to time before their maturity at the redemption price set forth in the Indenture.

In addition, during 2014, we had two series of senior notes outstanding in an aggregate principal amount of $975,000 (the “2004 Senior Notes”). The first series was $500,000 in principal amount, bore interest at 5.63% per year and was repaid on February 18, 2014. The second series is $475,000 in principal amount, bears interest at 6.75% per year and is due February 15, 2034.

Interest on our 2004 Senior Notes is payable semi-annually on February 15 and August 15 of each year. The interest expense incurred related to the 2004 Senior Notes was $8,032 and $11,321 for the three months ended March 31, 2015 and 2014, respectively. There was $4,008 of accrued interest at both March 31, 2015 and 2014. The 2004 Senior Notes are unsecured obligations and rank equally with all of our other senior unsecured indebtedness. The 2004 Senior Notes are not redeemable prior to maturity.

Cash Flows

We monitor cash flows at the consolidated, holding company and subsidiary levels. Cash flow forecasts at the consolidated and subsidiary levels are provided on a monthly basis, and we use trend and variance analyses to project future cash needs, making adjustments to the forecasts when needed.

The table below shows our recent net cash flows:



	For the Three Months Ended March 31,
Net cash provided by (used in):	2015			2014
Operating activities (1)	$	(203,156	)	$	114,053
Investing activities	54,015			(191,137		)
Financing activities	(104,350		)	(534,188		)
Net change in cash	$	(253,491	)	$	(611,272	)

____________________


(1)	Includes effect of exchange rate changes on cash and cash equivalents.

We typically generate operating cash inflows from premiums collected from our insurance products and income received from our investments while outflows consist of policy acquisition costs, benefits paid, and operating expenses. These net cash flows are then invested to support the obligations of our insurance products and required capital supporting these products. Our cash flows from operating activities are affected by the timing of premiums, fees, and investment income received and expenses paid.

Net cash (used in) provided by operating activities was $(203,156) and $114,053 for First Quarter 2015 and First Quarter 2014, respectively. The cash used in operating activities was primarily due to timing of payments and by amounts yet to be recovered under the 3R's program. For more information on the 3R's, refer to Assurant Health's Results of Operations in this Item 2.

Net cash provided by (used in) investing activities was $54,015 and $(191,137) for First Quarter 2015 and First Quarter 2014, respectively. The cash provided by investing activities was primarily due to changes in our short-term investments and the sale of ARIC to Global Indeminity Group, Inc. during First Quarter 2015.

Net cash used in financing activities was $104,350 and $534,188 for First Quarter 2015 and First Quarter 2014, respectively. The cash used in financing activities was primarily due to the First Quarter 2014 repayment of $467,330 of senior debt, which represents $500,000 in principal less amounts repurchased in 2013.

The table below shows our cash outflows for interest and dividends for the periods indicated:



	For the Three Months Ended March 31,
	2015		2014
Interest paid on debt	$	27,406	$	41,469
Common stock dividends	18,834		18,180
Total	$	46,240	$	59,649

Letters of Credit

In the normal course of business, we issue letters of credit primarily to support reinsurance arrangements. These letters of credit are supported by commitments with financial institutions. We had $20,050 and $17,871 of letters of credit outstanding as of March 31, 2015 and December 31, 2014.

Recent Accounting Pronouncements

For a discussion of recent accounting pronouncements, see Note 3 to the Consolidated Financial Statements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Our 2014 Annual Report on Form 10-K described our Quantitative and Qualitative Disclosures About Market Risk. There were no material changes to the assumptions or risks during First Quarter 2015.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The Company’s Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of the Company’s disclosure controls and procedures pursuant to Rule 13a-15 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) as of March 31, 2015. They have concluded that the Company’s disclosure controls and procedures are effective, and provide reasonable assurance that information the Company is required to disclose in its reports under the Exchange Act is recorded, processed, summarized and reported accurately. They also have concluded that information that the Company is required to disclose is accumulated and communicated to the Company’s management as appropriate to allow timely decisions regarding required disclosure.

Internal Control over Financial Reporting

During the quarter ended March 31, 2015, we made no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II

OTHER INFORMATION

Item 1. Legal Proceedings.

The Company is involved in litigation in the ordinary course of business, both as a defendant and as a plaintiff, and may from time to time be subject to a variety of legal and regulatory actions relating to our current and past business operations. See Note 14 to the Notes to Consolidated Financial Statements for a description of certain matters, which is incorporated herein by reference. Although the Company cannot predict the outcome of litigation, regulatory examinations or investigations, it is possible that the outcome of such matters could have a material adverse effect on the Company’s consolidated results of operations or cash flows for an individual reporting period. However, based on currently available information, management does not believe that any pending matter is likely to have a material adverse effect, individually or in the aggregate, on the Company’s financial condition.

Item 1A. Risk Factors.

Certain factors may have a material adverse effect on our business, financial condition and results of operations and you should carefully consider them. It is not possible to predict or identify all such factors. For discussion of our potential risks or uncertainties, please refer to “Item 1A-Risk Factors” included in our 2014 Annual Report on Form 10-K. Except as set forth in the following updated risk factors, there have been no material changes to the risk factors disclosed in our 2014 Annual Report on Form 10-K.

A number of factors outside the Company's control could impair the Company's ability to implement its strategic plans for the Assurant Employee Benefits and Assurant Health segments.

The strategic alternatives we are exploring for the Assurant Employee Benefits and Assurant Health segments involve a number of challenges, uncertainties and risks including, but not limited to the possibility that we may be unable to: identify suitable buyers; negotiate a favorable price and acceptable terms and conditions for a disposition; obtain regulatory or other third party approvals; or effectively and economically separate operations and systems in connection with a disposition. In addition, we may incur undue expense or experience undesirable delays in the process. Our inability to execute these plans economically could materially adversely affect our results of operations, cash flows and financial condition.

Reform of the health insurance industry could materially reduce the profitability of certain of our businesses or render them unprofitable.

The Affordable Care Act and related reforms have made and will continue to make sweeping and fundamental changes to the U.S. health care system. For more information on the Affordable Care Act and its impact on our Assurant Health and Assurant Employee Benefits segments, please see Item 1, “Business - Regulation - Federal Regulation - Patient Protection and Affordable Care Act.”

Among other requirements, the Affordable Care Act requires that Assurant Health rebate to consumers the difference between its actual loss ratios and required minimum medical loss ratios (by state and legal entity) for certain products. Please see “Item 7 - Management’s Discussion & Analysis - Critical Accounting Estimates - Health Insurance Premium Rebate Liability” for more information about the minimum medical loss ratio and the Company’s rebate estimate calculations. In addition, the Affordable Care Act imposes limitations on the deductibility of compensation and certain other payments.

Although Assurant Health has made, and continues to make, significant changes to its operations and products to adapt to the new environment, this business continues to experience losses, which we have been and may continue to be unable to limit to the extent we would like. In addition, the results of our health insurance operations are heavily dependent on the ongoing implementation of the reinsurance, risk adjustment and risk corridors programs under the Affordable Care Act. These programs may not be effective in appropriately mitigating any adverse effects of the Affordable Care Act on the Company. Furthermore, the reinsurance and risk corridor programs may not be adequately funded by the United States Congress from time to time. Consequently, it may be difficult, in some circumstances, to capture, determine and deliver amounts payable to or receivable by us under these programs, which could have a material adverse effect on our results of operations.

In addition, some uncertainty remains surrounding the mechanics of inclusion of pediatric dental coverage in the package of essential health benefits; unfavorable resolution of this uncertainty could decrease revenues in our Assurant Employee Benefits business.

Any inability of our businesses to adapt to requirements of the Affordable Care Act and any significant continuing uncertainty with respect to its implementation could lead to a material reduction in their profitability.

Changes in regulation may reduce our profitability and limit our growth.

Legislation or other regulatory reform that increases the regulatory requirements imposed on us or that changes the way we are able to do business may significantly harm our business or results of operations in the future. If we were unable for any reason to comply with these requirements, it could result in substantial costs to us and may materially adversely affect our results of operations and financial condition.

In addition, new interpretations of existing laws, or new judicial decisions affecting the insurance industry, could adversely affect our business.

Legislative or regulatory changes that could significantly harm our subsidiaries and us include, but are not limited to:


•	imposed reductions on premium levels, limitations on the ability to raise premiums on existing policies, or new minimum loss ratios;


•	increases in minimum capital, reserves and other financial viability requirements;


•	enhanced or new regulatory requirements intended to prevent future financial crises or to otherwise ensure the stability of institutions;


•	new licensing requirements;


•	restrictions on the ability to offer certain types of insurance products or service contracts;


•	prohibitions or limitations on provider financial incentives and provider risk-sharing arrangements;


•	more stringent standards of review for claims denials or coverage determinations;


•	additional guaranteed-issue requirements restricting our ability to limit or deny coverage;


•	new benefit mandates;


•	increased regulation relating to lender-placed insurance;


•	limitations on the ability to manage health care and utilization due to direct access laws that allow insureds to seek services directly from specialty medical providers without referral by a primary care provider;


•	new or enhanced regulatory requirements that require insurers to pay claims on terms other than those mandated by underlying policy contracts; and


•	restriction of solicitation of insurance consumers by funeral board laws for prefunded funeral insurance coverage.

In recent years, significant attention has been focused on the procedures that life insurers follow to identify unreported death claims. In November 2011, the National Conference of Insurance Legislators (“NCOIL”) proposed a model rule that would govern unclaimed property policies for insurers and mandate the use of the U.S. Social Security Administration’s Death Master File (the “Death Master File”) to identify deceased policyholders and beneficiaries. Certain state insurance regulators have also focused on this issue. For example, the NYDFS issued a letter requiring life insurers doing business in New York to use data from the Death Master File to search proactively for deceased policyholders and to pay claims without the receipt of a valid claim by or on behalf of a beneficiary. The Company evaluated the impact of the NCOIL model rule and established reserves for additional claim liabilities in certain of its businesses. It is possible that existing reserves may be inadequate and need to be increased and/or that the Company may be required to establish reserves for businesses the Company does not currently believe are subject to the NCOIL model rule or any similar regulatory requirement. In addition, it is possible that these regulators or regulators in other states may adopt regulations similar to the NCOIL model rule or to the requirements imposed by the NYDFS.

In addition, regulators in certain states have hired third party auditors to audit the unclaimed property records of insurance companies operating in those states. Among other companies, the Company is currently subject to these audits in a number of states and has been responding to information requests from these auditors.

Proposals are currently pending to amend state insurance holding company laws to increase the scope of insurance holding company regulation. These include the NAIC “Solvency Modernization Initiative” focuses on capital requirements, and the Solvency II Directive, which was adopted in the European Union on November 25, 2009 and is expected to become effective in 2016. The Solvency II Directive reforms the insurance industry’s solvency framework, including, among other items, minimum capital and solvency requirements.

Various state and federal regulatory authorities have taken actions with respect to our lender-placed insurance business. On January 16, 2015, the State of Indiana issued an examination warrant to the Company's subsidiary, American Security Insurance Company, and initiated a multistate targeted market conduct examination regarding the Company's lender-placed insurance products. At present, 42 states are participating in the examination. The Company is cooperating with the investigation and responding to requests for information and documents.

We cannot predict the full effect of these or any other regulatory initiatives on the Company at this time, but they could have a material adverse effect on the Company’s results of operations, cash flows and financial condition.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Repurchase of Equity Securities:



Period in 2015	Total Number of Shares Repurchased	Average Price Paid Per Share		Total Number of Shares Repurchased as Part of Publicly Announced Programs (1)	Approximate Dollar Value of Shares that May Yet be Repurchased Under the Programs (1)
January 1-31	529,100	$	65.51	529,100	$	452,018
February 1-28	120,000	61.07		120,000	444,691
March 1-31	645,000	61.50		645,000	405,035
Total	1,294,100	$	63.10	1,294,100	$	405,035


(1)	Shares purchased pursuant to the November 15, 2013 publicly announced share repurchase authorization of up to $600,000 of outstanding common stock.

Item 6. Exhibits.

Pursuant to the rules and regulations of the SEC, the Company has filed or incorporated by reference certain agreements as exhibits to this quarterly report on Form 10-Q. These agreements may contain representations and warranties by the parties. These representations and warranties have been made solely for the benefit of the other party or parties to such agreements and (i) may have been qualified by disclosures made to such other party or parties, (ii) were made only as of the date of such agreements or such other date(s) as may be specified in such agreements and are subject to more recent developments, which may not be fully reflected in the Company’s public disclosure, (iii) may reflect the allocation of risk among the parties to such agreements and (iv) may apply materiality standards different from what may be viewed as material to investors. Accordingly, these representations and warranties may not describe the Company’s actual state of affairs at the date hereof and should not be relied upon.

The following exhibits either (a) are filed with this report or (b) have previously been filed with the SEC and are incorporated herein by reference to those prior filings. Exhibits are available upon request at the investor relations section of our website at www.assurant.com. Our website is not a part of this report and is not incorporated by reference in this report.



10.1		Amendment No. 1, dated March 5, 2015, to the Credit Agreement, dated as of September 16, 2014, among Assurant, Inc., the lenders party thereto, JP Morgan Chase Bank, N.A., as administrative agent, and Wells Fargo Bank, National Association, as syndication agent.

12.1		Computation of Ratio of Consolidated Earnings to Fixed Charges.

31.1		Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer.

31.2		Rule 13a-14(a)/15d-14(a) Certification of Principal Financial Officer.

32.1		Certification of Chief Executive Officer of Assurant, Inc. pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2		Certification of Chief Financial Officer of Assurant, Inc. pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101		The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2015, formatted in XBRL (Extensible Business Reporting Language): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Operations, (iii) the Consolidated Statements of Comprehensive Income, (iv) the Consolidated Statement of Changes in Stockholders’ Equity, (v) the Consolidated Statements of Cash Flows, and (vi) Notes to Consolidated Financial Statements.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.




	ASSURANT, INC.

Date: May 6, 2015	By:	/s/ ALAN B. COLBERG
	Name:	Alan B. Colberg
	Title:	President, Chief Executive Officer and Director

Date: May 6, 2015	By:	/s/ CHRISTOPHER J. PAGANO
	Name:	Christopher J. Pagano
	Title:	Executive Vice President, Chief Financial Officer and Treasurer

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