Overview -- AMLIC and ABLAC are integral components of Assurant Solutions, and Assurant Solutions is core to the Assurant group, so we now consider AMLIC and ABLAC core as well. -- We are revising our outlooks on AMLIC and ABLAC to positive from stable. -- We expect Assurant's consolidated earnings to remain strong despite the slow economic recovery. Rating Action On Dec. 11, 2012, Standard & Poor's Ratings Services revised its outlooks on American Memorial Life Insurance Co. (AMLIC) and American Bankers Life Assurance Co. of FL (ABLAC) to positive from stable. At the same time, we affirmed our 'A-' long-term counterparty credit ratings on both entities. Rationale Because we consider AMLIC and ABLAC to be core components of Assurant Solutions, which in turn is core to the Assurant group, we now consider AMLIC and ABLAC to be core to the group as well. AMLIC is the primary legal entity through which Assurant sells its pre-need insurance products in the U.S., and the pre-need segment accounts for more than 30% of Assurant Solutions' earnings. Assurant sells life and health credit insurance through ABLAC, which is the primary entity for selling these products in Canada. Assurant is targeting both the pre-need and Canadian credit insurance markets for growth. Besides Assurant Solutions, we consider the Assurant Specialty Property segment to be core to the group. Specialty Property is the most profitable unit within the company, with pretax net income of $460 million (65% of consolidated pretax net income) and return on revenues (ROR) of 22% for 2011 and has grown considerably in the past five years, mainly in its lender-placed homeowners' book as a result of record-setting placement rate on delinquent loans and foreclosures during the height of the financial crisis. However, the lender-placed homeowners' market is highly exposed to litigation and insurance regulatory risks. This risk has intensified recently, leading to discussions and proceedings with regulators, which we believe will have an impact on Specialty Property's financial performance. Outlook The positive outlook on AMLIC and ABLAC reflects our expectations that Assurant's consolidated earnings will remain strong despite the slow economic recovery. We could raise the ratings by one notch during the next 12 months if the company maintains its diversified earnings profile and strong relationship with its distribution partners, and further enhances its international presence while continuing to generate overall strong operating results. This would include generally accepted accounting principles EBIT--excluding realized gains and losses--in excess of $650 million and an ROR of at least 8% in 2013 for Assurant Inc. At the same time, we expect the consolidated group to maintain EBIT fixed-charge coverage of more than 5x. Financial leverage likely will remain moderate at less than 30%, and consolidated capitalization will likely stay strong and redundant at the 'A' rating level. Within Assurant Solutions (including pre-need), we expect a pretax return on revenue of about 6.5%-7.5% in 2012 and 2013. We expect Assurant Special Property's combined ratio to remain very strong at about 85-88% with ROR of 16-18% in 2012, which is mostly driven by growth in tracked loans and partially offset by losses from Super Storm Sandy. We expect Specialty Property's healthy margins to contract beginning in 2013 due to regulatory changes that will likely lead to rate reductions in its lender-placed business. As a result, we expect a combined ratio of 80%-85% and ROR of 18%-22% in 2013, absent any significant catastrophes. This level of performance is not inconsistent with a higher rating for the group. The ratings on Assurant would come under pressure if the company materially underperforms our operating performance expectations, if consolidated capitalization falls short of the rating level, or if the company experiences legal or regulatory issues that could materially impair its competitive positions and operating performance. Related Criteria And Research Group Methodology, April 22, 2009 Ratings List Ratings Affirmed; Outlook Action To From American Memorial Life Insurance Co. American Bankers Life Assurance Co. of FL Counterparty Credit Rating Local Currency A-/Positive/-- A-/Stable/-- Financial Strength Rating Local Currency A-/Positive/-- A-/Stable/-- Ratings Affirmed American Bankers Insurance Co. of FL American Security Insurance Co. Counterparty Credit Rating Local Currency A-/Positive/-- Financial Strength Rating Local Currency A-/Positive/-- Assurant Inc. Counterparty Credit Rating Local Currency BBB/Positive/A-2 Senior Unsecured BBB Commercial Paper A-2 John Alden Life Insurance Co. Time Insurance Co. Counterparty Credit Rating Local Currency BBB/Stable/-- Financial Strength Rating Local Currency BBB/Stable/-- Union Security Insurance Co. Counterparty Credit Rating Local Currency A-/Stable/-- Financial Strength Rating Local Currency A-/Stable/-- Complete ratings information is available to subscribers of RatingsDirect on the Global Credit Portal at www.globalcreditportal.com. All ratings affected by this rating action can be found on Standard & Poor's public Web site at www.standardandpoors.com. Use the Ratings search box located in the left column.