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OLDWICK, N.J.--([ BUSINESS WIRE ])--A.M. Best Co. has affirmed the financial strength ratings (FSR) and issuer credit ratings (ICR) of the property/casualty and life/health insurance subsidiaries of Assurant, Inc. (Assurant) (headquartered in New York, NY) (NYSE: AIZ). Additionally, A.M. Best has affirmed the ICR of abbba and debt ratings of Assurant. The outlook for all ratings is stable. (See link below for a detailed listing of the companies and ratings.)

"Risk Management and the Rating Process for Insurance Companies"

Assurantas ratings recognize the organizationas diverse business mix, established presence in numerous niche markets, strong operating results and solid overall capitalization. As of September 30, 2011, Assurantas unadjusted debt-to-capital and debt-to-tangible capital ratios were 16.2% and 19.3%, respectively, while maintaining a fixed charge coverage ratio that is well supportive of the ratings. Assurant also maintains a $500 million commercial paper program, which is 70% secured by a back-up credit facility. The organization also has no debt maturing until 2014, and it maintains solid liquidity.

The ratings for Assurant P&C Group, which includes seven member companies and comprises Assurantas property/casualty operations, reflect its established presence in various specialty markets, continued favorable underwriting and operating performance and solid risk-adjusted capitalization.

These positive rating attributes are derived from the groupas leadership position in the delivery of credit related insurance products, lender placed homeownersa insurance, manufactured housing insurance, vehicle service contracts and extended service contracts, as well as a vast customer base through its large number of distribution sources in North America. As a result of its diversified product and distribution platforms and technology focus, the group has delivered solid operating earnings over the last five years, despite periods of significant catastrophe losses and the adverse impact of poor macroeconomic conditions on revenue in recent years, particularly for the service contract business.

Somewhat offsetting these positive ratings factors are the property/casualty groupas natural catastrophe exposure, which has increased significantly over the past five years, primarily due to growth in Specialty Property (both organically and through acquisitions), and its continued use of third-party reinsurance. These factors, in conjunction with an increase in net retentions associated with its property catastrophe (CAT) treaty, exposes the groupas earnings to a greater degree of variability. These concerns are somewhat mitigated by its geographic spread of risk, managementas use of risk management tools (including tracking aggregation of risks) and product design.

As usage of many of the property/casualty products are driven by use of consumer credit, the group may be challenged to maintain current premium levels and also may continue to experience a worsening loss performance through higher utilization, given current economic pressures. A.M. Best will continue to monitor the effect of continued difficult macroeconomic conditions, including suppressed activity in the mortgage service industry, on the property/casualty groupas underwriting and operating profitability.

The affirmation of the ratings for Assurantas life/health operations, which comprise four distinct business unitsa"credit life, preneed, employee benefits and healtha"recognizes their good operating results and sound capitalization, as well as each operationas established presence in its specific target markets.

The ratings of Assurantas credit life companies (part of Assurantas Solutions segment) acknowledge their stable earnings and solid capitalization, despite historically sizeable dividends paid to Assurant. Overall, the companies continue to report declining premium levels due to economic pressures and the acceptance of competing non-insurance credit-related products (i.e., debt deferment) in the United States and Puerto Rico. However, A.M. Best recognizes that Assurant remains a very recognizable name in the North American and Puerto Rican credit insurance and related markets.

The ratings of Assurantas preneed companies acknowledge their consistent premium growth trends, good operating earnings and adequate risk-adjusted capital positions. These operations encompass one of the largest writers of preneed life insurance in the United States as well as the dominant writer in the Canadian preneed market. All of the groupas new domestic preneed business is tied to Service Corporation International (SCI), the largest funeral organization in North America, exposing the company to significant concentration risk. Additionally, the extended low interest rate environment will likely pose a challenge for companies marketing preneed and final expense products. Nevertheless, Assurantas preneed companies continue to refine their business strategy with innovative distribution tactics and product options, and sales and operating earnings continue to be favorable despite currently unfavorable macroeconomic factors.

The ratings of Assurantas employee benefits companies (known as AEB) reflect their established position as one of the U.S. largest writers of group dental, disability and group life insurance in the smaller case market (i.e., under 500 lives). Unlike some of its competitors, AEB has been offering products on a traditional (atrue groupa) and voluntary basis for many years. A.M. Best notes that the weakened U.S. economy continues to impact top line results across all domestic employee benefits companies and has facilitated a general shift from true group to voluntary. A.M. Best believes AEB has been successful in pivoting with the market in offering a wide array of voluntary and worksite (employee-paid) products. AEBas recent operating results have been impacted by some unfavorable experience in its group disability business, but dental loss ratios continue to improve due to recent rate actions.

Assurantas health companies have historically specialized in individual and small group major medical coverages. The health companiesa ratings reflect their solid stand-alone capitalization, recent organizational restructuring and improved operating results. Additionally, the strength and parental support of Assurant helps mitigate some of the challenges the health business faces regarding the current and future implementation of health care reform (HCR) mandates. In response to HCR, the group has implemented a revamped business strategy, which includes the marketing of innovative healthcare solutions for its individual and small group customer target market. To date, A.M. Best has observed some success in executing this new strategy while preserving its good distribution relationships. Additionally, Assurantas health operations continue to focus on business simplification programs and expense reductions to offset the impact of the imposed 80% minimum loss ratio.

Future positive rating actions may result from Assurantas continued strong operating performance, along with its strengthened risk-adjusted capitalization. However, negative rating actions could result if risk-adjusted capitalization deteriorates to a level that does not support the ratings or if operating performance falls markedly short of A.M. Bestas expectations. This includes the impact that the poor macroeconomic environment may have on Assurantas revenue, profitability and distribution partners.

For a complete listing of Assurant, Inc. and its subsidiariesa FSRs, ICRs and debt ratings, please visit [ www.ambest.com/press/121302assurant.pdf ].

The principal methodology used in determining these ratings is [ Bestas Credit Rating Methodology -- Global Life and Non-Life Insurance Edition ], which provides a comprehensive explanation of A.M. Bestas rating process and highlights the different rating criteria employed. Additional key criteria utilized include: aRisk Management and the Rating Process for Insurance Companiesa; aUnderstanding BCAR for Property/Casualty Insurersa; aUnderstanding BCAR for Life/Health Insurersa; aRating Health Insurance Companiesa; aThe Treatment of Terrorism Risk in the Rating Evaluationa; aRating Members of Insurance Groupsa; aA.M. Bestas Ratings & the Treatment of Debta; aUnderstanding Universal BCARa; aRating Natural Catastrophe Bondsa; and aNatural Catastrophe Stress Test Methodology.a Methodologies can be found at [ www.ambest.com/ratings/methodology ].

Founded in 1899, A.M. Best Company is the worldas oldest and most authoritative insurance rating and information source. For more information, visit[ www.ambest.com ].

Copyright 2011 by A.M. Best Company, Inc.ALL RIGHTS RESERVED.