NEW YORK, June 18 /PRNewswire-FirstCall/ -- Assurant, Inc. ("Assurant")
(NYSE: AIZ), a premier provider of specialized insurance and insurance-related
products and services, today announced that it has finalized the structure of
its 2008 property catastrophe ("CAT") reinsurance program, effective for both
January 1 and June 1, 2008.
"We are pleased with the breadth of our catastrophe reinsurance program,"
said Gene Mergelmeyer, president and chief executive officer of Assurant
Specialty Property. "We were able to secure higher levels of coverage to
support our significant growth, while maintaining storm deductibles comparable
to last year and under more favorable pricing. This year, we also initiated a
deliberate long term strategy to secure a small portion of our per occurrence
CAT reinsurance coverage on a two-year term basis to help ensure capacity and
level pricing over time."
In structuring the property catastrophe reinsurance program, Assurant
applies a disciplined risk management process including utilizing multiple
catastrophe models to evaluate the estimated loss potential from various
perils, analyzing the geographic spread of risk and quantifying the
reinsurance cost relative to the coverage provided, as well as the credit
quality, financial strength and claims paying ability of the reinsurers.
Assurant utilizes CAT reinsurance primarily for its Assurant Specialty
Property business to protect the company's capital base from catastrophe risk
for our customers and to lessen the variable effect of catastrophes on
earnings for shareholders.
Effective for both January 1 and June 1, 2008, Assurant has placed its
property CAT reinsurance program with over 40 highly rated reinsurers. There
are three parts of the reinsurance program:
First, the Florida Hurricane Catastrophe Fund ("FHCF"), including the
Temporary Increase in Coverage Limit ("TICL"), provides Florida-specific
coverage. For Florida hurricanes, the FHCF/TICL program is utilized before
Assurant's per occurrence property CAT reinsurance program. Retentions and
limits are estimated based on the individual Assurant legal entities that
participate in the FHCF/TICL program. In aggregate, the 2008 coverage
provides for a $639 million catastrophic occurrence with a $515 million limit
after a combined retention of $124 million.
Second, Assurant purchased per occurrence CAT reinsurance coverage for a
$770 million catastrophic occurrence with a $675.25 million limit in excess of
a $94.75 million retention. Included in this cover is an automatic
reinstatement for a second occurrence under terms similar to the first
occurrence. The majority of the program has been placed with a one year term,
and a small portion has been placed with a two year term.
Third, the company has placed aggregate hurricane coverage as protection
for multiple storms with a limit of $90 million in excess of $80 million
retention. Losses in excess of $10 million per occurrence are eligible and no
one event can contribute more than $40 million.
A comparison of the reinsurance retentions, limits and premiums for the
prior and current programs is outlined below (1):
2008 2007
($ in millions)
Florida Hurricane Catastrophe Funds
(FHCF and TICL)
Retention 124 106
Limit 515 501
Per Occurrence CAT Reinsurance Program
Retention 94.75 90
Limit 675.25 460
Aggregate Catastrophe Reinsurance Program
Retention 80 90
Limit 90 90
Minimum per occurrence eligibility 10 5
Maximum per occurrence eligibility 40 45
Premiums
Reinsurance premium expense 129 134
Base pretax 2008 reinsurance premiums, which are a reduction to net earned
premiums, are estimated to be $129 million in 2008, compared with $134 million
in 2007. Base reinsurance premiums could vary if premium growth varies
significantly from estimates. It is important to note that the expected
reinsurance premiums do not include reinstatement premiums, which may be
contractually required as a result of the actual frequency and severity of the
2008 catastrophes covered by the reinsurance program.
Assurant is a premier provider of specialized insurance products and
related services in North America and selected international markets. Its four
key businesses-Assurant Employee Benefits, Assurant Health, Assurant Solutions
and Assurant Specialty Property-have partnered with clients who are leaders in
their industries and have built leadership positions in a number of specialty
insurance market segments worldwide.
Assurant, a Fortune 500 company and a member of the S&P 500, is traded on
the New York Stock Exchange under the symbol AIZ. Assurant has more than $25
billion in assets and $7 billion in annual revenue. The Assurant Web site is
www.assurant.com.
Safe Harbor Statement: Some of the statements included in this press
release, particularly those anticipating future financial performance, are
forward-looking statements that involve a number of risks and uncertainties.
Our actual results might differ materially from those projected in the
forward-looking statements. For a discussion of the factors that could affect
our actual results please refer to the risk factors identified from time to
time in our SEC reports, including but not limited to, our 2007 Form 10-K as
filed with the SEC on March 3, 2008.
(1) 2008 retention, limits, and reinsurance premiums are estimated and can
change with growth of the business. 2007 estimates have been updated to
reflect actual amounts. 2007 program also included a retention reduction
program described in further detail in Assurant's June 6, 2007 press release
entitled "Assurant Secures Property Catastrophe Reinsurance Coverage".
SOURCE Assurant, Inc.
Press, Drew Guthrie, Manager, Communications and Media Relations,
+1-212-859-7002, Fax: 212-859-5893, drew.guthrie@assurant.com; or Investor
Relations, Melissa Kivett, Senior Vice President, Investor Relations,
+1-212-859-7029, Fax: 212-859-5893, melissa.kivett@assurant.com, or John Egan,
Vice President, Investor Relations, +1-212-859-7197, Fax: 212-859-5893,
john.egan@assurant.com, all of Assurant, Inc.
