Edgar Filing: ASSURANT INC

ASSURANT, INC.

As filed with the Securities and Exchange Commission on October 24, 2003.

Registration No. 333-

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form S-1

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

Assurant, Inc. *

(Exact name of Registrant as specified in its charter)


Delaware	6321	39-1126612
(State or other jurisdiction of incorporation or organization)	(Primary Standard Industrial Classification Code Number)	(I.R.S. Employer Identification No.)

One Chase Manhattan Plaza, 41st Floor

New York, NY 10005

Telephone: (212) 859-7000

(Address, including zip code, and telephone number,

including area code, of Registrant’s principal executive offices)

Katherine Greenzang, Esq.

Senior Vice President, General Counsel and Secretary

Assurant, Inc.

One Chase Manhattan Plaza, 41st Floor

New York, NY 10005

Telephone: (212) 859-7021

Facsimile: (212) 859-7034

(Name, address, including zip code, and telephone number,

including area code, of agent for service)

Copies to:


Gary I. Horowitz, Esq. Simpson Thacher & Bartlett LLP 425 Lexington Avenue New York, NY 10017-3954 Telephone: (212) 455-7113 Facsimile: (212) 455-2502		Susan J. Sutherland, Esq. Skadden, Arps, Slate, Meagher & Flom LLP Four Times Square New York, NY 10036 Telephone: (212) 735-2388 Facsimile: (917) 777-2388

Approximate date of commencement of the proposed sale of the securities to the public: As soon as practicable after the Registration Statement becomes effective.

If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. o

If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If delivery of the prospectus is expected to be made pursuant to Rule 434, check the following box. o

CALCULATION OF REGISTRATION FEE






Title of Each Class of	Proposed Maximum Aggregate	Amount of
Securities to be Registered	Offering Price(1)(2)	Registration Fee


Common Stock, par value $.01 per share	$1,000,000,000	$80,900


(1)	Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(o) under the Securities Act of 1933, as amended.

(2)	Includes shares subject to the underwriters’ over-allotment option.

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

*Prior to the effectiveness of this Registration Statement and in connection with the reorganization for the purpose of reincorporation as described in this Registration Statement, Assurant, Inc., a Delaware corporation, will become the successor to the business and operations of Fortis, Inc., a Nevada corporation.

The information in this prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

PROSPECTUS (Subject to Completion)

Issued , 2004

Shares

Assurant, Inc.

Common Stock

Fortis Insurance N.V., the selling stockholder in this offering, is offering shares of our common stock in an underwritten initial public offering. This is our initial public offering and no public market currently exists for our common stock. We will not receive any of the proceeds from the sale of shares by the selling stockholder. We anticipate that the initial public offering price of our common stock will be between $ and $ per share.

Fortis N.V. and Fortis SA/NV, through their affiliates, including their wholly owned subsidiary, Fortis Insurance N.V., currently indirectly own 100% of our outstanding common stock. After the offering, Fortis Insurance N.V. will own approximately % of our common stock.

We intend to apply to list our common stock on the New York Stock Exchange under the symbol “AIZ.”

Investing in our common stock involves risks. See “Risk Factors” beginning on page 10.

PRICE $ A SHARE

Underwriting

Discounts and

Proceeds to Selling

Price to Public

Commissions

Stockholder

Per Share

Total

The selling stockholder has granted the underwriters the right to purchase up to an additional shares to cover over-allotments.

The Securities and Exchange Commission and state securities regulators have not approved or disapproved these securities, or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

The underwriters expect to deliver the shares to purchasers on , 2004.

MORGAN STANLEY


CREDIT SUISSE FIRST BOSTON	MERRILL LYNCH & CO.

, 2004

TABLE OF CONTENTS


	Page

Prospectus Summary		1
Risk Factors		10
Forward-Looking Statements		30
Use of Proceeds		31
Dividend Policy		31
Corporate Structure and Reorganization		32
Capitalization		33
Selected Consolidated Financial Information		34
Management’s Discussion and Analysis of Financial Condition and Results of Operations		37
Business		80
Regulation		115
Management		125
Principal and Selling Stockholders		146
Certain Relationships and Related Transactions		148
Certain United States Tax Consequences to Non-U.S. Holders		151
Description of Share Capital		153
Description of Other Securities		160
Shares Eligible for Future Sale		163
Underwriting		164
Legal Matters		167
Experts		167
Where You Can Find More Information		167
Index to Consolidated Financial Statements		F-1
Glossary of Selected Insurance and Reinsurance Terms		G-1

Until , 2004, which is the 25th day after the date of this prospectus, all dealers that buy, sell or trade our common stock, whether or not participating in this offering, may be required to deliver a prospectus. This delivery requirement is in addition to the dealers’ obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

You should rely only on the information contained in this prospectus. We have not, and the underwriters have not, authorized any other person to provide you with information that is different from that contained in this prospectus. We are offering to sell and seeking offers to buy these securities only in jurisdictions where offers and sales are permitted. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of common stock.

The states in which our insurance subsidiaries are domiciled have enacted laws which require regulatory approval for the acquisition of “control” of insurance companies. Under these laws, there exists a presumption of “control” when an acquiring party acquires 10% or more (5% or more, in the case of Florida) of the voting securities of an insurance company or of a company which itself controls an insurance company. Therefore, any person acquiring 10% or more (5% or more, in the case of Florida) of our common stock would need the prior approval of the state insurance regulators of these states, or a determination from such regulators that “control” has not been acquired.

In this prospectus, references to the “Company,” “Assurant,” “we,” “us” or “our” refer to (1) Fortis, Inc., a Nevada corporation, and its subsidiaries, and (2) Assurant, Inc., a Delaware corporation, and its subsidiaries after the consummation of the reorganization for the purpose of reincorporation as described under “Corporate Structure and Reorganization.” Unless we specifically state otherwise or the context suggests otherwise, the information in this prospectus assumes that the reorganization as described under “Corporate Structure and Reorganization” has occurred. Unless the context otherwise requires, references to (1) “Assurant, Inc.” refer solely to Assurant, Inc., a Delaware corporation, and not to any of its subsidiaries, (2) “Fortis, Inc.” refer solely to Fortis, Inc., a Nevada corporation, and not to any of its subsidiaries, and (3) “Fortis” refer collectively to Fortis N.V., a public company with limited liability incorporated as naamloze

vennootschap under Dutch law, and Fortis SA/NV, a public company with limited liability incorporated as société anonyme/ naamloze vennootschap under Belgian law, the ultimate parent companies of Fortis Insurance N.V., the selling stockholder in this offering. Unless otherwise stated, all figures assume no exercise of the underwriters’ over-allotment option. All share amounts contained in this prospectus will be adjusted to reflect changes that will take place in connection with the merger for the purpose of reincorporation. For your convenience, we have provided a glossary, beginning on page G-1, of selected insurance and reinsurance terms and have printed these terms in bold-faced type the first time they are used in this prospectus.

PROSPECTUS SUMMARY

This summary highlights information contained elsewhere in this prospectus and may not contain all of the information that may be important to you. Although this summary highlights important information about us and what we believe to be the key aspects of this offering, you should read this summary together with the more detailed information and our financial statements and the notes to those financial statements appearing elsewhere in this prospectus. You should read this entire prospectus carefully, including the “Risk Factors” and “Forward-Looking Statements” sections before making an investment decision.

OUR COMPANY

Overview

We pursue a differentiated strategy of building leading positions in specialized market segments for insurance products and related services in North America and selected other markets. We provide creditor-placed homeowners insurance, manufactured housing homeowners insurance, debt protection administration, credit insurance, warranties and extended service contracts, individual health and small employer group health insurance, group dental insurance, group disability insurance, group life insurance and pre-funded funeral insurance. The markets we target are generally complex, have a relatively limited number of competitors and, we believe, offer attractive profit opportunities. In these markets, we leverage the experience of our management team and apply our expertise in risk management, underwriting and business-to-business management, as well as our technological capabilities in complex administration and systems. Through these activities, we seek to generate above-average returns by building on specialized market knowledge, well-established distribution relationships and economies of scale.

As a result of our strategy, we are a leader in many of our chosen markets and products. We have leadership positions or are partnered with clients who are leaders in creditor-placed homeowners insurance, manufactured housing homeowners insurance and debt protection administration. We are also a leading writer of group dental plans measured by the number of master contracts in force, and the largest writer of pre-funded funeral insurance measured by face amount of new policies sold. We believe that our leadership positions give us a sustainable competitive advantage in our chosen markets.

We currently have four decentralized operating business segments to ensure focus on critical activities close to our target markets and customers, while simultaneously providing centralized support in key functions. Our four operating business segments are: Assurant Solutions, Assurant Health, Assurant Employee Benefits and Assurant PreNeed. Each operating business segment has its own experienced management team with the autonomy to make decisions on key operating matters. These managers are eligible to receive incentive-based compensation based in part on operating business segment performance and in part on company-wide performance, thereby encouraging strong business performance and cooperation across all our businesses. At the operating business segment level, we stress disciplined underwriting, careful analysis and constant improvement and product redesign. At the corporate level, we provide support services, including investment, asset/liability matching and capital management, leadership development, information technology support and other administrative and finance functions, enabling the operating business segments to focus on their target markets and distribution relationships while enjoying the economies of scale realized by operating these businesses together. Also, our overall strategy and financial objectives are set and continuously monitored at the corporate level to ensure that our capital resources are being properly allocated.

Our Assurant Solutions segment provides specialty property solutions and consumer protection solutions. Specialty property solutions primarily include creditor-placed homeowners insurance (including tracking services) and manufactured housing homeowners insurance. Consumer protection solutions primarily include debt protection administration, credit insurance and warranties and extended service contracts. Our Assurant Health segment provides individual health insurance, including short-term and student health insurance, and small employer group health insurance. Most of the health insurance products we sell are preferred provider organization (PPO) plans. In Assurant Employee Benefits, we provide employer- and employee-paid group dental insurance, as well as group disability insurance and group life insurance. In Assurant PreNeed, we

provide pre-funded funeral insurance, which provides whole life insurance death benefits or annuity benefits used to fund costs incurred in connection with pre-arranged funerals.

We have created strong relationships with our distributors and clients in each of the niche markets we serve. In Assurant Solutions, we have strong long-term relationships in the United States with six of the ten largest mortgage lenders and servicers, four of the seven largest manufactured housing builders, four of the six largest general purpose credit card issuers and six of the ten largest consumer electronics and appliances retailers. In Assurant Health, we have exclusive distribution relationships with leading insurance companies, through which we gain access to a broad distribution network and a significant number of potential customers, as well as relationships with independent brokers. In Assurant Employee Benefits, we distribute our products primarily through our sales representatives who work through independent employee benefits advisors, including brokers and other intermediaries. In Assurant PreNeed, we have an exclusive distribution relationship with Service Corporation International (SCI), the largest funeral provider in North America, as well as relationships with approximately 2,000 funeral homes.

Competitive Strengths

We believe our competitive strengths include:


	•	Leadership Positions in Specialized Markets. We are a market leader in many of our chosen markets, and we believe that our leadership positions provide us with the opportunity to generate high returns in these niche markets.

	•	Strong Relationships with Key Clients and Distributors. As a result of our expertise in business-to-business management, we have created strong relationships with our distributors and clients in each of the niche markets we serve. We believe these relationships enable us to market our products and services to our customers in an effective and efficient manner that would be difficult for our competitors to replicate.

	•	History of Product Innovation and Ability to Adapt to Changing Market Conditions. We are able to adapt quickly to changing market conditions by tailoring our product and service offerings to the specific needs of our clients. By understanding the dynamics of our core markets, we design innovative products and services to seek to sustain profitable growth and market leading positions.

	•	Disciplined Approach to Underwriting and Risk Management. We focus on generating profitability through careful analysis of risks, drawing on our experience in core specialized markets and continually seeking to improve and redesign our product offerings based on our underwriting experience. In addition, we closely monitor regulatory and market developments and adapt our approach as we deem necessary to achieve our underwriting and risk management goals.

	•	Prudent Capital Management. We focus on generating above-average returns on a risk-adjusted basis from our operating activities. We believe we have benefited from having the discipline and flexibility to deploy capital opportunistically and prudently to maximize returns to our stockholders. We invest capital in our business segments when we identify attractive profit opportunities in our target markets and also take a disciplined approach towards withdrawing capital when businesses are no longer anticipated to meet our expectations.


	•	Diverse Business Mix and Superior Financial Strength. We have four operating business segments, which are generally not affected in the same way by economic and operating trends. Our domestic operating subsidiaries have financial strength ratings of A (“Excellent”) or A- (“Excellent”) from A.M. Best Company (A.M. Best), and two of our domestic operating subsidiaries have financial strength ratings of A2 (“Good”) and A3 (“Good”), respectively, from Moody’s Investor Services (Moody’s). We believe our solid capital base and overall financial strength allow us to distinguish ourselves from our competitors and continue to enable us to attract clients that are seeking long-term financial stability.

	•	Experienced Management Team with Proven Track Record and Entrepreneurial Culture. We have a talented and experienced management team both at the corporate level and at each of our business segments. Our management team has successfully managed our business and executed our specialized niche strategy through numerous business cycles and political and regulatory challenges.

Growth Strategy

Our objective is to achieve superior financial performance by enhancing our leading positions in our specialized niche insurance and related businesses. We intend to achieve this objective by continuing to execute the following strategies in pursuit of profitable growth:


	•	Enhance Market Position in Our Business Lines. We have been selective in developing our product and service offerings and will continue to focus on providing products and services to those markets that we believe offer attractive growth opportunities. We will also seek to continue penetrating our target markets and expand our market positions by developing and introducing new products and services that are tailored to the specific needs of our clients.

	•	Develop New Distribution Channels and Strategic Alliances. Our strong, multi-channel distribution network comprised of leading market participants has been critical to our market penetration and growth. We will continue to be selective in developing new distribution channels as we seek to expand our market share, enter new geographic markets and develop new niche businesses.

	•	Deploy Capital and Resources to Maintain Flexibility and Establish or Enhance Market Leading Positions. We seek to deploy our capital and resources in a manner that provides us with the flexibility to grow internally through product development, new distribution relationships and investments in technology, as well as to pursue acquisitions. As we expand through internal growth and acquisitions, we intend to leverage our expertise in risk management, underwriting and business-to-business management, as well as our technological capabilities in running complex administration systems and support services.

	•	Maintain Disciplined Pricing Approach. We intend to maintain our disciplined pricing approach by seeking to focus on profitable products and markets and by pursuing a flexible approach to product design. We will continue to pursue pricing strategies and adjust our mix of businesses by geography and by product so that we can maintain attractive pricing and margins.

	•	Continue to Manage Capital Prudently. We intend to manage our capital prudently relative to our risk exposure to maximize profitability and long-term growth in stockholder value. Our capital management strategy is to maintain financial strength through conservative and disciplined risk management practices. We will also maintain our conservative investment portfolio management philosophy and properly manage our invested assets in order to match the duration of our insurance product liabilities.

Risks Relating to Our Company

As part of your evaluation of our Company, you should take into account the risks associated with our business. These risks include:


	•	Reliance on Relationships with Significant Clients, Distribution Partners and Other Parties. If our significant clients, distribution partners and other parties with which we do business decline to renew or seek to terminate our relationships or contractual arrangements, our results of operations and financial condition could be materially adversely affected. We are also subject to the risk that these parties may face financial difficulties, reputational issues or problems with respect to their own products and services, which may lead to decreased sales of products and services.

	•	Failure to Attract and Retain Sales Representatives or Develop and Maintain Distribution Sources. An interruption in, or changes to, our relationships with various third-party distributors or our inability to respond to regulatory changes could impair our ability to compete and market our insurance products and services and materially adversely affect our results of operations and financial condition.

	•	Effect of General Economic, Financial Market and Political Conditions. Our results of operations and financial condition may be materially adversely affected by general economic, financial market and political conditions, including insurance industry cycles, levels of employment, levels of consumer lending, levels of inflation and movements of the financial markets, as well as fluctuations in interest rates, monetary policy, demographics, and legislative and competitive factors.

	•	Failure to Accurately Predict Benefits and Other Costs and Claims. We may be unable to accurately predict benefits, claims and other costs or to manage such costs through our loss limitation methods, which could have a material adverse effect on our results of operations and financial condition if claims substantially exceed our expectations.

	•	Changes in Regulation. 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.

For more information about these and other risks, see “Risk Factors” beginning on page 10. You should carefully consider these risk factors together with all the other information included in this prospectus.

OUR CORPORATE STRUCTURE AND REORGANIZATION

Assurant, Inc. is a Delaware corporation and is currently a wholly owned subsidiary of Fortis, Inc. Assurant, Inc. has had no operations and nominal financial activity and will be used solely for the purpose of the reincorporation of Fortis, Inc., which is organized as a Nevada corporation and of which 100% of the outstanding common stock is currently indirectly owned by Fortis N.V. and Fortis SA/NV. Prior to the closing of this offering, we will effectuate a merger of Fortis, Inc. with and into Assurant, Inc. for the purpose of reincorporating Fortis, Inc. in Delaware. As a result of the reorganization, Assurant, Inc. will be domiciled in Delaware and will be the successor to the business, operations and obligations of Fortis, Inc. After the reorganization, our Company will use the name Assurant, Inc. The ongoing operations of Assurant, Inc. will be comprised of the existing operations of Fortis, Inc. and its subsidiaries. Our existing Class A Common Stock will become Common Stock of Assurant, Inc. in connection with the merger.

Assurant, Inc. was incorporated in October 2003. Fortis, Inc. was incorporated in April 1969. Our principal executive offices are located at One Chase Manhattan Plaza, 41st Floor, New York, New York 10005. Our telephone number is 212-859-7000.

OUR RELATIONSHIP WITH FORTIS

Fortis currently indirectly owns 100% of our outstanding common stock. Upon completion of this offering, Fortis will own % of our outstanding common stock, or % if the underwriters exercise their over-allotment option in full. Fortis will have the right to nominate designees to our board of directors and, subject to limited exceptions, our board of directors will nominate those designees as follows: (i) so long as Fortis owns at least 50% of our outstanding common stock, five designees and (ii) so long as Fortis owns less than 50% but at least 10% of our outstanding common stock, two designees. In addition, as long as Fortis holds 50% or more of our outstanding common stock, certain significant corporate actions may only be taken with the approval of a supermajority of our directors, which will require approval of two or more Fortis directors. In addition, we may have conflicts of interest with Fortis that may be resolved in a manner that is unfavorable to us. See “Risk Factors— Risks Related to Our Relationship with and Separation from Fortis,” “Description of Share Capital— Anti-takeover Effects of Certain Provisions of the Certificate of Incorporation, By-Laws and Delaware General Corporation Law— Certificate of Incorporation and By-Laws” and “—Shareholders’ Agreement” and “Certain Relationships and Related Transactions— Shareholders’ Agreement” and “—Cooperation Agreement.”

Fortis has advised us that it intends to divest its ownership interest in our Company completely over a period of time. However, Fortis is not subject to any contractual obligation to sell any additional shares of our common stock and may not sell or otherwise dispose of any shares for a period of 180 days after the date of this prospectus without the prior written consent of Morgan Stanley & Co. Incorporated on behalf of the underwriters. See “Certain Relationships and Related Transactions,” “Description of Share Capital—Shareholders Agreement” and “—Registration Rights,” “Shares Eligible For Future Sale” and “Underwriting.”

THE OFFERING


Common stock offered by the selling stockholder		shares

Common stock to be outstanding after this offering		shares

Over-allotment option		shares to be offered by the selling stockholder if the underwriters exercise the over-allotment option in full.

Use of proceeds		We will not receive any of the proceeds from the sale of shares by the selling stockholder. The selling stockholder will receive all net proceeds from the sale of the shares of our common stock in this offering.

Dividend policy		Our board of directors does not currently intend to authorize the payment of a dividend on our Common Stock. Any determination to pay 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, any legal, tax, regulatory and contractual restrictions on the payment of dividends and any other factors our board of directors deems relevant.

Proposed New York Stock Exchange symbol		AIZ

The number of shares of common stock shown to be outstanding after the offering is based upon 8,300,002 shares of common stock outstanding as of June 30, 2003.

SUMMARY CONSOLIDATED FINANCIAL INFORMATION

The following table sets forth our summary historical consolidated financial information for the periods ended and as of the dates indicated. Assurant, Inc. is a Delaware corporation and is currently a wholly owned subsidiary of Fortis, Inc. Assurant, Inc. has had no operations and nominal financial activity and will be used solely for the purpose of the reincorporation of Fortis, Inc., which is organized as a Nevada corporation and of which 100% of the outstanding common stock is currently indirectly owned by Fortis N.V. and Fortis SA/NV. Prior to the closing of this offering, we will effectuate a merger of Fortis, Inc. with and into Assurant, Inc. for the purpose of reincorporating Fortis, Inc. in Delaware. As a result of the reorganization, Assurant, Inc. will be domiciled in Delaware and will be the successor to the business, operations and obligations of Fortis, Inc. In connection with the reorganization, our Company will use the name Assurant, Inc. The ongoing operations of Assurant, Inc. will effectively be comprised of the existing operations of Fortis, Inc. and its subsidiaries.

The summary consolidated statement of operations data for each of the three years ended December 31, 2002 are derived from the audited consolidated financial statements of Fortis, Inc. and its consolidated subsidiaries included elsewhere in this prospectus, which have been prepared in accordance with generally accepted accounting principles in the United States (GAAP). The summary consolidated statement of operations data for the six months ended June 30, 2003 and June 30, 2002 and the summary consolidated balance sheet data as of June 30, 2003 are derived from the unaudited interim financial statements of Fortis, Inc. and its consolidated subsidiaries included elsewhere in this prospectus. The unaudited interim financial statements have been prepared on the same basis as the audited consolidated financial statements of Fortis, Inc. and in our opinion, include all adjustments consisting only of normal recurring adjustments, that we consider necessary for a fair statement of our results of operations and financial condition for these periods and as of such dates. These historical results are not necessarily indicative of expected results for any future period. The results for the six months ended June 30, 2003 are not necessarily indicative of results to be expected for the full year. You should read the following summary consolidated financial information together with the other information contained in this prospectus, including “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and related notes included elsewhere in this prospectus.



			For the
			Six Months Ended					For the
			June 30,					Year Ended December 31,

			2003		2002			2002			2001			2000


			(in thousands, except share amounts and per share data)
Summary Consolidated Statement of Operations Data:
*Revenues*
Net earned premiums and other considerations			$	2,987,029	$	2,787,519		$	5,681,596		$	5,242,185		$	5,144,375
Net investment income				305,885		310,539			631,828			711,782			690,732
Net realized gains (losses) on investments				7,474		(49,204	)		(118,372	)		(119,016	)		(44,977	)
Amortization of deferred gain on disposal of businesses				34,873		40,030			79,801			68,296			10,284
Gain on disposal of businesses				—		10,672			10,672			61,688			11,994
Fees and other income				119,881		125,435			246,675			221,939			399,571

		Total revenues		3,455,142		3,224,991			6,532,200			6,186,874			6,211,979
*Benefits, losses and expenses*
Policyholder benefits				1,774,243		1,678,871			3,429,145			3,238,925			3,208,054
Amortization of deferred acquisition costs and value of businesses acquired				580,240		443,221			876,185			875,703			766,904
Underwriting, general and administrative expenses				794,120		842,390			1,738,077			1,620,931			1,801,196
Amortization of goodwill				—		—			—			113,300			106,773
Interest expense				—		—			—			14,001			24,726
Distributions on preferred securities of subsidiary trusts				58,566		58,716			118,396			118,370			110,142

		Total benefits, losses and expenses		3,207,169		3,023,198			6,161,803			5,981,230			6,017,795
		Income before income taxes		247,973		201,793			370,397			205,644			194,184
Income taxes				84,086		60,126			110,657			107,591			104,500

		Net income before cumulative effect of change in accounting principle	$	163,887	$	141,667		$	259,740		$	98,053		$	89,684
Cumulative effect of change in accounting principle				—		(1,260,939	)		(1,260,939	)		—			—

		Net income (loss)	$	163,887	$	(1,119,272	)	$	(1,001,199	)	$	98,053		$	89,684

Per Share Data:
Net income (loss) per share			$	19.75	$	(134.85	)	$	(120.63	)	$	11.81		$	10.93
Weighted average of basic and diluted shares of common stock outstanding				8,300,002		8,300,002			8,300,002			8,300,002			8,208,335
Dividends per share:
	Class A Common Stock(1)		$	17.98	$	—		$	—		$	8.65		$	—
	Class B Common Stock(2)			37.15		36.52			74.69			75.44			37.66
	Class C Common Stock(3)			38.13		37.50			76.68			77.45			38.65


	As of
	June 30, 2003

	(in thousands, except
	share amounts and
	per share data)
Summary Consolidated Balance Sheet Data:
Cash and cash equivalents and investments	$	11,138,227
Total assets		22,738,162
Policy liabilities(4)		12,632,311
Debt		—
Mandatorily redeemable preferred securities of subsidiary trusts(5)		1,446,074
Mandatorily redeemable preferred stock		24,160
Total stockholders’ equity	$	2,778,890

Per Share Data:
Total stockholders’ equity per share(6)	$	334.81


(1)	For each of the periods and dates presented, 7,750,000 shares of our Class A Common Stock were issued and outstanding; these shares are held by Fortis Insurance N.V., Fortis (US) Funding Partners I LP and Fortis (US) Funding Partners II LP. Our existing Class A Common Stock will become Common Stock of Assurant, Inc. in connection with the merger of Fortis, Inc. with and into Assurant, Inc.
(2)	For each of the periods and dates presented, 150,001 shares of our Class B Common Stock were issued and outstanding, which were issued as a stock dividend; these shares are held by Fortis (US) Funding Partners I LP. See “Description of Share Capital — Class B and Class C Common Stock” for information relating to the issuance and ownership of these shares.
(3)	For each of the periods and dates presented, 400,001 shares of our Class C Common Stock were issued and outstanding, which were issued as a stock dividend; these shares are held by Fortis (US) Funding Partners II LP. See “Description of Share Capital — Class B and Class C Common Stock” for information relating to the issuance and ownership of these shares.
(4)	Policy liabilities include future policy benefits and expenses, unearned premiums and claims and benefits payable.
(5)	The proceeds from the sale of each of these securities were used by the applicable subsidiary trusts to purchase our subordinated debentures, which are eliminated upon consolidation. See “Description of Other Securities.”
(6)	Based on total stockholders’ equity divided by 8,300,002 shares issued and outstanding.

RISK FACTORS

An investment in our common stock involves a number of risks. You should carefully consider the following information about these risks, together with the other information contained in this prospectus, before investing in our common stock. The risks described below may not be the only risks we face. Additional risks of which we are not yet aware or that we currently think are immaterial may also impair our business, results of operations or financial condition. Any of the events or circumstances described as risks below could result in a significant or material adverse effect on our business, results of operations or financial condition and a corresponding decline in the market price of our common stock.

Risks Related to Our Company

Our profitability may decline if we are unable to maintain our relationships with significant clients, distribution partners and other parties important to the success of our business.

Our relationships and contractual arrangements with significant clients, distribution partners and other parties with which we do business are important to the success of our business segments. Many of these arrangements are exclusive. For example, in Assurant Solutions, we have exclusive relationships with several mortgage lenders and servicers, retailers, credit card issuers and other financial institutions through which we distribute our products. In Assurant Health, we have exclusive distribution relationships for our individual health insurance products with Insurance Placement Services, Inc. (IPSI), a wholly owned subsidiary of State Farm Mutual Automobile Insurance Company (State Farm), United Services Automobile Association (USAA) and Mutual of Omaha, as well as a relationship with Health Advocates Alliance, the association through which we provide many of our individual health insurance products. We also maintain contractual relationships with several separate networks of health and dental care providers, each referred to as a PPO, through which we obtain discounts. In Assurant PreNeed, we have an exclusive distribution relationship with SCI. Many of these arrangements have one to five-year terms. If these parties decline to renew or seek to terminate these arrangements, our results of operations and financial condition could be materially adversely affected. In addition, we are subject to the risk that these parties may face financial difficulties, reputational issues or problems with respect to their own products and services, which may lead to decreased sales of our products and services. Moreover, if one or more of our clients or distribution partners consolidate or partner with other companies, we may lose business or suffer decreased revenues. A loss of the discount arrangements with PPOs could also lead to higher medical or dental costs and/or a loss of members to other medical or dental plans.

Sales of our products and services may be reduced if we are unable to attract and retain sales representatives or develop and maintain distribution sources.

We distribute our insurance products and services through a variety of distribution channels, including our employed sales representatives, independent employee benefits specialists, brokers, managing general agents, independent life agents, financial institutions, independent funeral directors, association groups and other third-party marketing organizations. Our relationships with these various distributors are significant both for our revenues and profits. In Assurant Solutions and Assurant PreNeed, we depend in large part on sales representatives to develop and maintain client relationships. In Assurant Health, we depend in large part on the services of independent agents and brokers and on associations, including Health Advocates Alliance, in the marketing of our products. In Assurant Employee Benefits, we depend on our sales representatives to form relationships with the independent agents and brokers who act as advisors to our customers and market and distribute our products with our sales representatives. Independent agents and brokers are typically not exclusively dedicated to our Company and usually also market products of our competitors. Strong competition exists among insurers to employ effective sales representatives and form relationships with agents and brokers of demonstrated ability. We compete with other insurers for sales representatives, agents and brokers primarily on the basis of our financial position, support services, compensation and product features. In addition, where we rely on independent agents and brokers to distribute products for us, we face continued competition from our competitors’ products. Moreover, our ability to market our products and services depends on our ability to tailor our channels of distribution to comply with changes in the regulatory

environment. Recently, the marketing of health insurance through association groups has come under increased scrutiny. An interruption in, or changes to, our relationships with various third-party distributors or our inability to respond to regulatory changes could impair our ability to compete and market our insurance products and services and materially adversely affect our results of operations and financial condition.

General economic, financial market and political conditions may adversely affect our results of operations and financial condition.

Our results of operations and financial condition may be materially adversely affected from time to time by general economic, financial market and political conditions. These conditions include economic cycles such as insurance industry cycles, levels of employment, levels of consumer lending, levels of inflation and movements of the financial markets. Fluctuations in interest rates, monetary policy, demographics, and legislative and competitive factors also influence our performance. During periods of economic downturn:


	•	individuals and businesses may choose not to purchase our insurance products and other related products and services, may terminate existing policies or contracts or permit them to lapse, may choose to reduce the amount of coverage purchased or, in Assurant Employee Benefits and in small group employer health insurance in Assurant Health, may have fewer employees requiring insurance coverage due to rising unemployment levels;

	•	new disability insurance claims and claims on other specialized insurance products tend to rise;

	•	there is a higher loss ratio on credit card and installment loan insurance due to rising unemployment levels; and

	•	insureds tend to increase their utilization of health and dental benefits if they anticipate becoming unemployed or losing benefits.

In addition, general inflationary pressures may affect the costs of medical and dental care, as well as repair and replacement costs on our real and personal property lines, increasing the costs of paying claims. Inflationary pressures may also affect the costs associated with our pre-funded funeral insurance policies, particularly those that are guaranteed to grow with the Consumer Price Index.

Our actual claims losses may exceed our reserves for claims, which may require us to establish additional reserves that may materially reduce our earnings, profitability and capital.

We maintain reserves to cover our estimated ultimate exposure for claims and claim adjustment expenses with respect to reported and unreported claims incurred but not reported as of the end of each accounting period. Reserves, whether calculated under GAAP or statutory accounting principles (SAP), do not represent an exact calculation of exposure, but instead represent our best estimates, generally involving actuarial projections at a given time, of what we expect the ultimate settlement and administration of a claim or group of claims will cost based on our assessment of facts and circumstances then known. The adequacy of reserves will be impacted by future trends in claims severity, frequency, judicial theories of liability and other factors. These variables are affected by both external and internal events, such as changes in the economic cycle, changes in the social perception of the value of work, emerging medical perceptions regarding physiological or psychological causes of disability, emerging health issues and new methods of treatment or accommodation, inflation, judicial trends, legislative changes and claims handling procedures. Many of these items are not directly quantifiable, particularly on a prospective basis. Reserve estimates are refined as experience develops. Adjustments to reserves, both positive and negative, are reflected in the statement of operations of the period in which such estimates are updated. Because establishment of reserves is an inherently uncertain process involving estimates of future losses, there can be no certainty that ultimate losses will not exceed existing claims reserves. Future loss development could require reserves to be increased, which could have a material adverse effect on our earnings in the periods in which such increases are made.

We may be unable to accurately predict benefits, claims and other costs or to manage such costs through our loss limitation methods, which could have a material adverse effect on our results of operations and financial condition.

Our profitability depends in large part on accurately predicting benefits, claims and other costs, including medical and dental costs, and predictions regarding the frequency and magnitude of claims on our disability and property coverages. It also depends on our ability to manage future benefit and other costs through product design, underwriting criteria, utilization review or claims management and, in health and dental insurance, negotiation of favorable provider contracts. The aging of the population and other demographic characteristics and advances in medical technology continue to contribute to rising health care costs. Changes in health and dental care practices, inflation, new technologies, the cost of prescription drugs, clusters of high cost cases, changes in the regulatory environment, economic factors, the occurrence of catastrophes and numerous other factors affecting the cost of health and dental care and the frequency and severity of claims in all our business segments may adversely affect our ability to predict and manage costs and claims, as well as our business, results of operations and financial condition. The judicial and regulatory environments, changes in the composition of the kinds of work available in the economy, market conditions and numerous other factors may also materially adversely affect our ability to manage claim costs. As a result of one or more of these factors or other factors, claims could substantially exceed our expectations, which could have a material adverse effect on our results of operations and financial condition.

As industry practices and legal, judicial, social and other environmental conditions change, unexpected and unintended issues relating to claims and coverage may emerge. These issues could materially adversely affect our results of operations and financial condition by either extending coverage beyond our underwriting intent or by increasing the number or size of claims or both. We may be limited in our ability to respond to such changes, by insurance regulations, existing contract terms, contract filing requirements, market conditions or other factors.

Our investment portfolio is subject to several risks that may diminish the value of our invested assets and affect our sales and profitability.

Our investment portfolio may suffer reduced returns or losses that could reduce our profitability.

Investment returns are an important part of our overall profitability and significant fluctuations in the fixed income market could impair our profitability, financial condition and/or cash flows. Our investments are subject to market-wide risks and fluctuations, as well as to risks inherent in particular securities. In particular, volatility of claims may force us to liquidate securities prior to maturity, which may cause us to incur capital losses. If we do not structure our investment portfolio so that it is appropriately matched with our insurance liabilities, we may be forced to liquidate investments prior to maturity at a significant loss to cover such liabilities. For the six month period ended June 30, 2003, our net investment income was $306 million and our net realized gains on investments were $7 million, which collectively accounted for approximately 9% of our total revenues during such period. For the year ended December 31, 2002, our net investment income was $632 million and our net realized losses on investments were $118 million, which collectively accounted for approximately 8% of our total revenues during such period.

The performance of our investment portfolio is subject to fluctuations due to changes in interest rates and market conditions.

Changes in interest rates can negatively affect the performance of some of our investments. Interest rate volatility can reduce unrealized gains or create unrealized losses in our portfolios. Interest rates are highly sensitive to many factors, including governmental monetary policies, domestic and international economic and political conditions and other factors beyond our control. Fluctuations in interest rates affect our returns on, and the market value of, fixed maturity and short-term investments, which comprised $9,212 million, or 86%, of the fair value of our total investments as of June 30, 2003 and $8,719 million, or 87%, as of December 31, 2002.

The fair market value of the fixed maturity securities in our portfolio and the investment income from these securities fluctuate depending on general economic and market conditions. The fair market value

generally increases or decreases in an inverse relationship with fluctuations in interest rates, while net investment income realized by us from future investments in fixed maturity securities will generally increase or decrease with interest rates. In addition, actual net investment income and/or cash flows from investments that carry prepayment risk, such as mortgage-backed and other asset-backed securities, may differ from those anticipated at the time of investment as a result of interest rate fluctuations. In periods of declining interest rates, mortgage prepayments generally increase and mortgage-backed securities, commercial mortgage obligations and bonds in our investment portfolio are more likely to be prepaid or redeemed as borrowers seek to borrow at lower interest rates, and we may be required to reinvest those funds in lower interest-bearing investments. As of June 30, 2003, mortgage-backed and other asset-backed securities represented approximately $2,100 million, or 20%, of the fair value of our total investments.

Because substantially all of our fixed maturity securities are classified as available for sale, changes in the market value of these securities are reflected in our balance sheet. Similar treatment is not available for liabilities. Therefore, interest rate fluctuations affect the value of our investments and could materially adversely affect our results of operations and financial condition.

We employ asset/ liability matching strategies to reduce the adverse effects of interest rate volatility and to ensure that cash flows are available to pay claims as they become due. Our asset/ liability matching strategies include:


	•	asset/liability duration management;

	•	structuring our bond and commercial mortgage loan portfolios to limit the effects of prepayments; and

	•	consistent monitoring of, and appropriate changes to, the pricing of our products.

However, these strategies may fail to eliminate or reduce the adverse effects of interest rate volatility, and no assurances can be given that significant fluctuations in the level of interest rates will not have a material adverse effect on our results of operations and financial condition.

In addition, Assurant PreNeed generally writes whole life insurance policies with increasing death benefits and obtains much of its profits through interest rate spreads. Interest rate spreads refer to the difference between the death benefit growth rates on pre-funded funeral insurance policies and the investment returns generated on the assets we hold related to those policies. As of June 30, 2003, approximately 70% of Assurant PreNeed’s in force insurance policy reserves related to policies that provide for death benefit growth, some of which provide for minimum death benefit growth pegged to changes in the Consumer Price Index. In extended periods of declining interest rates or high inflation, there may be compression in the spread between Assurant PreNeed’s death benefit growth rates and its investment earnings. As a result, declining interest rates or high inflation rates may have a material adverse effect on our results of operations and our overall financial condition.

Assurant Employee Benefits calculates reserves for long-term disability and life waiver of premium claims using net present value calculations based on current interest rates at the time claims are funded and expectations regarding future interest rates. If interest rates decline, reserves for open and/or new claims would need to be calculated using lower discount rates thereby increasing the net present value of those claims and the required reserves. Depending on the magnitude of the decline, this could have a material adverse effect on our results of operations and financial condition. In addition, investment income may be lower than that assumed in setting premium rates.

Our investment portfolio is subject to credit risk.

We are subject to credit risk in our investment portfolio, primarily from our investments in corporate bonds and preferred stocks. Defaults by third parties in the payment or performance of their obligations could reduce our investment income and realized investment gains or result in investment losses. Further, the value of any particular fixed maturity security is subject to impairment based on the creditworthiness of a given issuer. As of June 30, 2003, we held $8,766 million of fixed maturity securities, or 82% of the fair value of our total invested assets at such date. Our fixed maturity portfolio also includes below investment grade securities, which comprised 6% of the fair value of our total fixed maturity securities at June 30, 2003 and December 31,

2002. These investments generally provide higher expected returns but present greater risk and can be less liquid than investment grade securities. A significant increase in defaults and impairments on our fixed maturity securities portfolio could materially adversely affect our results of operations and financial condition. Other than temporary impairment losses on our available for sale securities totaled $13 million for the six months ended June 30, 2003 and $85 million for the year ended December 31, 2002.

As of June 30, 2003, less than 1% of the fair value of our total investments was invested in common stock; however, we have had higher percentages in the past and may make more such investments in the future. Investments in common stock generally provide higher expected total returns, but present greater risk to preservation of principal than our fixed income investments.

In addition, while currently we do not utilize derivative instruments to hedge or manage our interest rate or equity risk, we may do so in the future. Derivative instruments generally present greater risk than fixed income investments or equity investments because of their greater sensitivity to market fluctuations. Effective as of July 1, 2003, we utilize derivative instruments in managing Assurant PreNeed’s exposure to inflation risk. While these instruments seek to protect a portion of Assurant PreNeed’s existing business that is tied to the Consumer Price Index, a sharp increase in inflation could have a material adverse effect on our results of operations and financial condition.

Our commercial mortgage loans and real estate investments subject us to liquidity risk.

As of June 30, 2003, commercial mortgage loans on real estate investments represented approximately 8% of the fair value of our total investments. These types of investments are relatively illiquid, thus increasing our liquidity risk. In addition, if we require extremely large amounts of cash on short notice, we may have difficulty selling these investments at attractive prices, in a timely manner, or both.

The risk parameters of our investment portfolio may not target an appropriate level of risk, thereby reducing our profitability and diminishing our ability to compete and grow.

We seek to earn returns on our investments to enhance our ability to offer competitive rates and prices to our customers. Accordingly, our investment decisions and objectives are a function of the underlying risks and product profiles of each of our business segments. However, we may not succeed in targeting an appropriate overall risk level for our investment portfolio. As a result, the return on our investments may be insufficient to meet our profit targets over the long-term, thereby reducing our profitability. If in response we choose to increase our product prices to maintain profitability, we may diminish our ability to compete and grow.

Catastrophe losses, including man-made catastrophe losses, could materially reduce our profitability and have a material adverse effect on our results of operations and financial condition.

Our insurance operations expose us to claims arising out of catastrophes, particularly in our homeowners, life and other personal business lines. We have experienced, and expect in the future to experience, catastrophe losses that may materially reduce our profitability or have a material adverse effect on our results of operations and financial condition. Catastrophes can be caused by various natural events, including hurricanes, windstorms, earthquakes, hailstorms, severe winter weather, fires and epidemics, or can be man-made catastrophes, including terrorist attacks or accidents such as airplane crashes. The frequency and severity of catastrophes are inherently unpredictable. Catastrophe losses can vary widely and could significantly exceed our recent historic results. It is possible that both the frequency and severity of man-made catastrophes will increase and that we will not be able to implement exclusions from coverage in our policies or obtain reinsurance for such catastrophes.

The extent of losses from a catastrophe is a function of both the total amount of insured exposure in the area affected by the event and the severity of the event. Most of our catastrophe claims in the past have related to homeowners and other personal lines coverages, which for the six months ended June 30, 2003 represented approximately 23% of our net earned premiums and other considerations in our Assurant Solutions segment. In addition, as of June 30, 2003, approximately 27% of the insurance in force in our homeowners and other personal lines related to properties located in California, Florida and Texas. As a result of our creditor-placed homeowners insurance product, our concentration in these areas may increase in the future. This is because in

our creditor-placed homeowners insurance line, we agree to provide homeowners insurance coverage automatically. If other insurers withdraw coverage in these or other states, this may lead to adverse selection and increased utilization of our creditor-placed homeowners insurance in these areas.

Claims resulting from natural or man-made catastrophes could cause substantial volatility in our financial results for any fiscal quarter or year and could materially reduce our profitability or harm our financial condition. Our ability to write new business also could be affected. Increases in the value and geographic concentration of insured property and the effects of inflation could increase the severity of claims from catastrophes in the future.

In addition, our group life and health insurance operations could be materially impacted by man-made catastrophes such as terrorist attacks or by an epidemic that causes a widespread increase in mortality, morbidity or disability rates or that causes an increase in the need for medical care. For example, the influenza epidemic of 1918 caused several million deaths. Losses due to man-made catastrophes would not generally be covered by reinsurance and could have a material adverse effect on our results of operations and financial condition. In addition, in Assurant PreNeed the average age of policyholders is in excess of 70 years. This group is more susceptible to epidemics than the overall population, and an epidemic resulting in a higher incidence of mortality could have a material adverse effect on our results of operations and financial condition.

Our ability to manage these risks depends in part on our successful utilization of catastrophic property and life reinsurance to limit the size of property and life losses from a single event or multiple events, and life and disability reinsurance to limit the size of life or disability insurance exposure on an individual insured life. It also depends in part on state regulation that may prohibit us from excluding such risks or from withdrawing from or increasing premium rates in catastrophe-prone areas. As discussed further below, catastrophe reinsurance for our group insurance lines is not currently widely available. This means that the occurrence of a significant catastrophe could materially reduce our profitability and have a material adverse effect on our results of operations and financial condition.

Reinsurance may not be available or adequate to protect us against losses, and we are subject to the credit risk of reinsurers.

As part of our overall risk and capacity management strategy, we purchase reinsurance for certain risks underwritten by our various business segments. Market conditions beyond our control determine the availability and cost of the reinsurance protection we purchase. For example, subsequent to the terrorist assaults of September 11, 2001, reinsurance for man-made catastrophes became generally unavailable due to capacity constraints and, to the limited extent available, much more expensive. The high cost of reinsurance or lack of affordable coverage could adversely affect our results. If we fail to obtain sufficient reinsurance, it could adversely affect our ability to write future business.

As part of our business, we have reinsured certain life, property and casualty and health risks to reinsurers. Although the reinsurer is liable to us to the extent of the ceded reinsurance, we remain liable as the direct insurer on all risks reinsured. As a result, ceded reinsurance arrangements do not eliminate our obligation to pay claims. We are subject to credit risk with respect to our ability to recover amounts due from reinsurers. Our reinsurers may not pay the reinsurance recoverables that they owe to us or they may not pay such recoverables on a timely basis. A reinsurer’s insolvency, underwriting results or investment returns may affect its ability to fulfill reinsurance obligations.

Our reinsurance facilities are generally subject to annual renewal. We may not be able to maintain our current reinsurance facilities and, even where highly desirable or necessary, we may not be able to obtain other reinsurance facilities in adequate amounts and at favorable rates. If we are unable to renew our expiring facilities or to obtain new reinsurance facilities, either our net exposures would increase or, if we are unwilling to bear an increase in net exposures, we may have to reduce the level of our underwriting commitments. Either of these potential developments could materially adversely affect our results of operations and financial condition.

We have sold businesses through reinsurance that could again become our direct financial and administrative responsibility if the purchasing companies were to become insolvent.

We have sold businesses through reinsurance ceded to third parties, such as our 2001 sale of the insurance operations of our Fortis Financial Group (FFG) division to The Hartford Financial Services Group Inc. (The Hartford). The assets backing the liabilities on these businesses are held in a trust, and the separate accounts relating to the FFG business are still reflected on our balance sheet. However, we would be responsible for administering this business in the event of a default by the reinsurer. We do not have the administrative systems and capabilities to process this business today. Accordingly, we would need to obtain those capabilities in the event of an insolvency of one or more of the reinsurers of these businesses. We might be forced to obtain such capabilities on unfavorable terms, with a resulting material adverse effect on our results of operations and financial condition. In addition, under the reinsurance agreement, The Hartford is obligated to contribute funds to increase the value of the separate accounts relating to the business sold if such value declines. If The Hartford fails to fulfill these obligations, we will be obligated to make these payments.

We are exposed to the credit risk of our agents in Assurant PreNeed and our clients in Assurant Solutions.

We advance agents’ commissions as part of our pre-funded funeral insurance product offerings. These advances are a percentage of the total face amount of coverage as opposed to a percentage of the first-year premium paid, a formula that is more common in other life insurance markets. There is a one-year payback provision against the agency if death or lapse occurs within the first policy year. There is a very large producer within Assurant PreNeed and if it were unable to fulfill its payback obligations, it could have an adverse effect on our results of operations and financial condition. In addition, we are subject to the credit risk of the parties with which we contract in Assurant Solutions. If these parties fail to remit payments owed to us or pass on payments they collect on our behalf, it could have an adverse effect on our results of operations. For example, the affiliate of a client with whom we do business has declared bankruptcy. In the event that this client’s reinsurer does not honor its claims obligation, we would be liable for making payment, which we estimate to be approximately $16 million, net of offsetting collateral.

The financial strength of our insurance company subsidiaries is rated by A.M. Best and Moody’s, and a decline in these ratings could affect our standing in the insurance industry and cause our sales and earnings to decrease.

Ratings have become an increasingly important factor in establishing the competitive position of insurance companies. All of our domestic operating subsidiaries are rated by A.M. Best and two of our domestic operating subsidiaries, Fortis Benefits Insurance Company (which entity’s name will be changed subsequent to the offering contemplated by this prospectus) and John Alden Life Insurance Company (John Alden), are rated by Moody’s. The ratings reflect A.M. Best’s and Moody’s opinions of our subsidiaries’ financial strength, operating performance, strategic position and ability to meet their obligations to policyholders. The ratings are not evaluations directed to investors and are not recommendations to buy, sell or hold our securities. These ratings are subject to periodic review by A.M. Best and Moody’s, and we cannot assure you that we will be able to retain these ratings.

As of September 25, 2003, most of our domestic operating subsidiaries had A.M. Best financial strength ratings of A (“Excellent”), which is the second highest of ten ratings categories and the highest within the category based on modifiers (i.e., A and A- are “Excellent”). As of that same date, our other domestic operating subsidiaries had A.M. Best financial strength ratings of A-(“Excellent”), which is the second highest of ten ratings categories and the lowest within the category based on modifiers.

The Moody’s financial strength rating as of September 25, 2003 was A2 (“Good”) for Fortis Benefits Insurance Company, which is the third highest of nine ratings categories and mid-range within the category based on modifiers (i.e., A1, A2 and A3 are “Good”), and A3 (“Good”) for John Alden, which is the third highest of nine ratings categories and the lowest within the category based on modifiers.

Rating agencies review their ratings periodically and our current ratings may not be maintained in the future. If our ratings are reduced from their current levels by A.M. Best or Moody’s, or placed under

surveillance or review with possible negative implications, our competitive position in the respective insurance industry segments could suffer and it could be more difficult for us to market our products. Due to the competitive environment in the insurance industry, which may adversely affect our revenues, the inherent uncertainty in determining reserves for future claims, which may cause us to increase our reserves for claims, the outcome of pending litigation and regulatory investigations, which may adversely affect our financial position and reputation, and possible changes in the methodology or criteria applied by the rating agencies, rating agencies may take action to lower our ratings in the future. As customers and their advisors place importance on our financial strength ratings, we may lose customers and compete less successfully if we are downgraded. In addition, ratings impact our ability to attract investment capital on favorable terms. If our financial strength ratings are reduced from their current levels by A.M. Best or Moody’s, our cost of borrowing would likely increase, our sales and earnings could decrease and our results of operations and financial condition could be materially adversely affected.

The failure to effectively maintain and modernize our information systems could adversely affect our business.

Our business is dependent upon our ability to keep up to date with technological advances. This is particularly important in Assurant Solutions, where our systems, including our ability to keep our systems fully integrated with those of our distribution partners, are critical to the operation of our business. Our failure to update our systems to reflect technological advancements may adversely affect our relationships and ability to do business with our client partners.

In addition, our business depends significantly on effective information systems, and we have many different information systems for our various businesses. We must commit significant resources to maintain and enhance our existing information systems and develop new information systems in order to keep pace with continuing changes in information processing technology, evolving industry and regulatory standards and changing customer preferences. As a result of our acquisition activities, we have acquired additional information systems. Our failure to maintain effective and efficient information systems, or our failure to efficiently and effectively consolidate our information systems to eliminate redundant or obsolete applications, could have a material adverse effect on our results of operations and financial condition. If we do not maintain adequate systems we could experience adverse consequences, including:


	•	inadequate information on which to base pricing, underwriting and reserving decisions;

	•	the loss of existing customers;

	•	difficulty in attracting new customers;

	•	customer, provider and agent disputes;

	•	regulatory problems, such as failure to meet prompt payment obligations;

	•	litigation exposure; or

	•	increases in administrative expenses.

Our management information, internal control and financial reporting systems may need further enhancements and development to satisfy the financial and other reporting requirements of being a public company.

Failure to properly maintain the integrity of our proprietary information and information systems as well as to protect our clients’ confidential information and privacy could result in the loss of customers, reduction to our profitability and/ or subject us to fines and penalties.

Our business depends in part on our ability to maintain, or access through outsourcing arrangements with third parties, information systems and to ensure the continued integrity of our proprietary information. A number of our businesses are subject to privacy regulations and to confidentiality obligations. For example, the collection and use of patient data in our Assurant Health segment is the subject of national and state legislation, including the Health Insurance Portability and Accountability Act of 1996 (HIPAA), and certain

of the activities conducted by our Assurant Solutions segment are subject to the privacy regulations of the Gramm-Leach-Bliley Act. We also have contractual obligations to protect certain confidential information we obtain from our existing vendors and clients. These obligations generally include protecting such confidential information in the same manner and to the same extent as we protect our own confidential and proprietary information. In addition, we must develop, implement and maintain a comprehensive written information security program with appropriate administrative, technical and physical safeguards to protect such confidential information. If we do not properly comply with privacy regulations and protect confidential information we could experience adverse consequences, including regulatory problems, loss of reputation and client litigation.

See “Risks Related to Our Industry—Cost of compliance with privacy laws could adversely affect our business and results of operations.”

We may not find suitable acquisition candidates or new insurance ventures and even if we do, we may not successfully integrate any such acquired companies or successfully invest in such ventures.

From time to time, we evaluate possible acquisition transactions and the start-up of complementary businesses, and at any given time, we may be engaged in discussions with respect to possible acquisitions and new ventures. We cannot assure you that we will be able to identify suitable acquisition transactions or insurance ventures, that such transactions will be financed and completed on acceptable terms or that our future acquisitions or ventures will be successful. The process of integrating any companies we do acquire or investing in new ventures could have a material adverse effect on our results of operations and financial condition.

In addition, implementation of an acquisition strategy entails a number of risks, including, among other things, inaccurate assessment of undisclosed liabilities, difficulties in realizing projected efficiencies, synergies and cost savings, failure to achieve anticipated revenues, earnings or cash flow, and increase in our indebtedness and a limitation in our ability to access additional capital when needed. Our failure to adequately address these acquisition risks could materially adversely affect our results of operations and financial condition.

The inability of our subsidiaries to pay dividends to us in sufficient amounts could harm our ability to meet our obligations and pay future stockholder dividends.

As a holding company whose principal assets are the capital stock of our subsidiaries, we rely primarily on dividends and other statutorily permissible payments from our subsidiaries to meet our obligations for payment of interest and principal on outstanding debt obligations, dividends to stockholders (including any dividends on our common stock) and corporate expenses. The ability of our subsidiaries to pay dividends and to make such other payments in the future will depend on their statutory surplus, future statutory earnings and regulatory restrictions. Except to the extent that we are a creditor with recognized claims against our subsidiaries, claims of the subsidiaries’ creditors, including policyholders, have priority with respect to the assets and earnings of the subsidiaries over the claims of our creditors. If any of our subsidiaries should become insolvent, liquidate or otherwise reorganize, our creditors and stockholders will have no right to proceed against the assets of that subsidiary or to cause the liquidation, bankruptcy or winding-up of the subsidiary under applicable liquidation, bankruptcy or winding-up laws. The applicable insurance laws of the jurisdiction where each of our insurance subsidiaries is domiciled would govern any proceedings relating to that subsidiary. The insurance authority of that jurisdiction would act as a liquidator or rehabilitator for the subsidiary. Both creditors and policyholders of the subsidiary would be entitled to payment in full from the subsidiary’s assets before we, as a stockholder, would be entitled to receive any distribution from the subsidiary.

The payment of dividends to us by any of our operating subsidiaries in excess of a certain amount (i.e., extraordinary dividends) must be approved by the subsidiary’s domiciliary state department of insurance. Ordinary dividends, for which no regulatory approval is generally required, are limited to amounts determined by formula, which varies by state. The formula for the majority of the states in which our subsidiaries are domiciled is the lesser of (i) 10% of the statutory surplus as of the end of the prior year or (ii) the prior year’s statutory net income. In some states, the formula is the greater amount of clauses (i) and (ii). Some states, however, have an additional stipulation that dividends may only be paid out of earned surplus. In addition, we

have entered into an agreement with the Florida Insurance Department pursuant to which, until August of 2004, two of our subsidiaries have agreed to limit the amount of ordinary dividends they would pay to us to an amount no greater than 50% of the amount otherwise permitted under Florida law. Likewise, one of our subsidiaries, First Fortis Life Insurance Company (which entity’s name will be changed subsequent to the offering contemplated by this prospectus), has entered into an agreement with the New York Insurance Department pursuant to which it has agreed not to pay any ordinary dividends to us until fiscal year 2004. See “Regulation—United States—State Regulation—Insurance Regulation Concerning Dividends.” If insurance regulators determine that payment of an ordinary dividend or any other payments by our insurance subsidiaries to us (such as payments under a tax sharing agreement or payments for employee or other services) would be adverse to policyholders or creditors, the regulators may block such payments that would otherwise be permitted without prior approval. No assurance can be given that there will not be further regulatory actions restricting the ability of our insurance subsidiaries to pay dividends. Based on the dividend restrictions under applicable laws and regulations, the maximum amount of dividends that our subsidiaries could pay to us in 2003 without regulatory approval is approximately $290 million, of which approximately $19 million had been paid as of June 30, 2003. We expect that as a result of statutory accounting for our sold businesses, the maximum amount of dividends our subsidiaries will be able to pay to us will be significantly lower in 2004. If the ability of insurance subsidiaries to pay dividends or make other payments to us is materially restricted by regulatory requirements, it could adversely affect our ability to pay any dividends on our common stock and/ or service our debt and pay our other corporate expenses.

Risks Related to Our Industry

We face significant competitive pressures in our businesses, which may reduce premium rates and prevent us from pricing our products at rates that will allow us to be profitable.

In each of our lines of business, we compete with other insurance companies or service providers, depending on the line and product, although we have no single competitor who competes against us in all of the business lines in which we operate. Competition in our businesses is based on many factors, including quality of service, product features, price, scope of distribution, scale, financial strength ratings and name recognition. We compete, and will continue to compete, for customers and distributors with many insurance companies and other financial services companies. We compete not only for business and individual customers, employer and other group customers, but also for agents and distribution partners. Some of our competitors may offer a broader array of products than our specific subsidiaries with which they compete in particular markets, may have a greater diversity of distribution resources, may have better brand recognition, may from time to time have more competitive pricing, may have lower cost structures or, with respect to insurers, may have higher financial strength or claims paying ratings. Some may also have greater financial resources with which to compete. As a result of judicial developments and changes enacted by the Office of the Comptroller of the Currency, financial institutions are now able to offer a substitute product similar to credit insurance as part of their basic loan agreement with customers without being subject to insurance regulations. Also, as a result of the Gramm-Leach-Bliley Act, which was enacted in November 1999, financial institutions are now able to affiliate with other insurance companies to offer services similar to our own. This has resulted in new competitors with significant financial resources entering some of our markets. Moreover, some of our competitors may have a lower target for returns on capital allocated to their business than we do, which may lead them to price their products and services lower than we do. In addition, from time to time, companies enter and exit the markets in which we operate, thereby increasing competition at times when there are new entrants. For example, several large insurance companies have recently entered the market for individual health insurance products. We may lose business to competitors offering competitive products at lower prices, or for other reasons, which could materially adversely affect our results of operations and financial condition.

In certain markets, we compete with organizations that have a substantial market share. In addition, with regard to Assurant Health, organizations with sizable market share or provider-owned plans may be able to obtain favorable financial arrangements from health care providers that are not available to us. Without our own similar arrangements, we may not be able to compete effectively in such markets.

New competition could also cause the supply of insurance to change, which could affect our ability to price our products at attractive rates and thereby adversely affect our underwriting results. Although there are some impediments facing potential competitors who wish to enter the markets we serve, the entry of new competitors into our markets can occur, affording our customers significant flexibility in moving to other insurance providers.

The insurance industry is cyclical, which may impact our results.

The insurance industry is cyclical. The segments of the insurance markets in which we operate tend not to be correlated to each other, with each segment having its own cyclicality. Periods of intense price competition due to excessive underwriting capacity, periods when shortages of underwriting capacity permit more favorable rate levels, consequent fluctuations in underwriting results and the occurrence of other losses characterize the conditions in these markets. Historically, insurers have experienced significant fluctuations in operating results due to volatile and sometimes unpredictable developments, many of which are beyond the direct control of the insurer, including competition, frequency of occurrence or severity of catastrophic events, levels of capacity, general economic conditions and other factors. This may cause a decline in revenue at times in the cycle if we choose not to reduce our product prices in order to maintain our market position, because of the adverse effect on profitability of such a price reduction. We can be expected therefore to experience the effects of such cyclicality and changes in customer expectations of appropriate premium levels, the frequency or severity of claims or other loss events or other factors affecting the insurance industry that generally could have a material adverse effect on our results of operations and financial condition.

The insurance and related businesses in which we operate may be subject to periodic negative publicity, which may negatively impact our financial results.

The nature of the market for the insurance and related products and services we provide is that we interface with and distribute our products and services ultimately to individual consumers. There may be a perception that these purchasers may be unsophisticated and in need of consumer protection. Accordingly, from time to time, consumer advocate groups or the media may focus attention on our products and services, thereby subjecting our industries to periodic negative publicity. We may also be negatively impacted if another company in one of our industries engages in practices resulting in increased public attention to our businesses. Negative publicity may result in increased regulation and legislative scrutiny of industry practices as well as increased litigation, which may further increase our costs of doing business and adversely affect our profitability by impeding our ability to market our products and services, requiring us to change our products or services or increasing the regulatory burdens under which we operate.

Our business is subject to risks related to litigation and regulatory actions.

In addition to the occasional employment-related litigation to which all businesses are subject, we are a defendant in actions arising out of, and are involved in various regulatory investigations and examinations relating to, our insurance and other related business operations. We may from time to time be subject to a variety of legal and regulatory actions relating to our current and past business operations, including, but not limited to:


	•	disputes over coverage or claims adjudication;

	•	disputes regarding sales practices, disclosures, premium refunds, licensing, regulatory compliance and compensation arrangements;

	•	disputes with our agents, producers or network providers over compensation and termination of contracts and related claims;

	•	disputes concerning past premiums charged by companies acquired by us for coverage that may have been based on factors such as race;

	•	disputes relating to customers regarding the ratio of premiums to benefits in our various business segments;


	•	disputes alleging packaging of credit insurance products with other products provided by financial institutions;

	•	disputes relating to certain excess of loss programs in the London market;

	•	disputes with taxing authorities regarding our tax liabilities; and

	•	disputes relating to certain businesses acquired or disposed of by us.

In addition, plaintiffs continue to bring new types of legal claims against insurance and related companies. Current and future court decisions and legislative activity may increase our exposure to these types of claims. Multiparty or class action claims may present additional exposure to substantial economic, non-economic or punitive damage awards. The loss of even one of these claims, if it resulted in a significant damage award or a judicial ruling that was otherwise detrimental, could have a material adverse effect on our results of operations and financial condition. This risk of potential liability may make reasonable settlements of claims more difficult to obtain. We cannot determine with any certainty what new theories of recovery may evolve or what their impact may be on our businesses. We believe we have made adequate reserves in our financial statements against all litigation known to us, but we cannot be certain our estimates of probable outcomes of such litigation will prove to be accurate.

There are various governmental and administrative investigations and proceedings pending against us. For example, an indictment has been issued in Minnesota alleging that one of our subsidiaries and two corporate officers of Assurant Solutions each violated the Minnesota Fair Campaign Practices Act. The outcome of these investigations and proceedings cannot be predicted, and no assurances can be given that such investigations or proceedings or any litigation would not materially adversely affect our results of operations and financial condition. In addition, if we were to experience difficulties with our relationship with a regulatory body in a given jurisdiction, it could have a material adverse effect on our ability to do business in that jurisdiction. See “Business—Legal Proceedings.”

We are subject to extensive governmental regulation, which increases our costs and could restrict the conduct of our business.

Our operating subsidiaries are subject to extensive regulation and supervision in the jurisdictions in which they do business. Such regulation is generally designed to protect the interests of policyholders, as opposed to stockholders and other investors. To that end, the laws of the various states establish insurance departments with broad powers with respect to such things as:


	•	licensing companies to transact business;

	•	authorizing lines of business;

	•	mandating capital and surplus requirements;

	•	regulating underwriting limitations;

	•	imposing dividend limitations;

	•	regulating changes in control;

	•	licensing agents and distributors of insurance products;

	•	placing limitations on the minimum and maximum size of life insurance contracts;

	•	restricting companies’ ability to enter and exit markets;

	•	admitting statutory assets;

	•	mandating certain insurance benefits;

	•	restricting companies’ ability to terminate or cancel coverage;

	•	requiring companies to provide certain types of coverage;


	•	regulating premium rates, including the ability to increase premium rates;

	•	approving policy forms;

	•	regulating trade and claims practices;

	•	imposing privacy requirements;

	•	establishing reserve requirements and solvency standards;

	•	restricting certain transactions between affiliates;

	•	regulating the content of disclosures to debtors in the credit insurance area;

	•	regulating the type, amounts and valuation of investments;

	•	mandating assessments or other surcharges for guaranty funds;

	•	regulating market conduct and sales practices of insurers and agents; and

	•	restricting contact with consumers, such as the recently created national “do not call” list, and imposing consumer protection measures.

Assurant Health is also required by some jurisdictions to provide coverage to persons who would not otherwise be considered eligible by insurers. Each of these jurisdictions dictates the types of insurance and the level of coverage that must be provided to such involuntary risks. Our share of these involuntary risks is mandatory and generally a function of our respective share of the voluntary market by line of insurance in each jurisdiction. Assurant Health is exposed to some risk of losses in connection with mandated participation in such schemes in those jurisdictions in which they are still effective. In addition, HIPAA imposed insurance reform provisions as well as requirements relating to the privacy of individuals. HIPAA requires certain guaranteed issuance and renewability of health insurance coverage for individuals and small groups (generally 50 or fewer employees) and limits exclusions based on pre-existing conditions. Most of the insurance reform provisions of HIPAA became effective for plan years beginning July 1, 1997. See also “Risks Related to Our Industry—Costs of compliance with privacy laws could adversely affect our business and results of operations.”

If regulatory requirements impede our ability to raise premium rates, utilize new policy forms or terminate, deny or cancel coverage in any of our businesses, our results of operations and financial condition could be materially adversely affected. The capacity for an insurance company’s growth in premiums is in part a function of its statutory surplus. Maintaining appropriate levels of statutory surplus, as measured by statutory accounting practices and procedures, is considered important by insurance regulatory authorities and the private agencies that rate insurers’ claims-paying abilities and financial strength. Failure to maintain certain levels of statutory surplus could result in increased regulatory scrutiny and enforcement, action by regulatory authorities or a downgrade by rating agencies.

We may be unable to maintain all required licenses and approvals and our business may not fully comply with the wide variety of applicable laws and regulations or the relevant authority’s interpretation of the laws and regulations. Also, some regulatory authorities have relatively broad discretion to grant, renew or revoke licenses and approvals. If we do not have the requisite licenses and approvals or do not comply with applicable regulatory requirements, the insurance regulatory authorities could preclude or temporarily suspend us from carrying on some or all of our activities or monetarily penalize us. That type of action could materially adversely affect our results of operations and financial condition. See “Regulation.”

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

authority to impose monetary penalties and other sanctions on health and dental plans engaging in certain “unfair payment practices.” If we were to be 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.

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


	•	legislation that holds insurance companies or managed care companies liable for adverse consequences of medical or dental decisions;

	•	limitations on premium levels or the ability to raise premiums on existing policies;

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

	•	impositions of fines, taxes or other penalties for improper licensing, the failure to “promptly” pay claims, however defined, or other regulatory violations;

	•	increased licensing requirements;

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

	•	imposition of more stringent standards of review of our coverage determinations;

	•	new benefit mandates;

	•	increased regulation relating to the use of associations and trusts in the sale of individual health insurance;

	•	limitations on our ability to build appropriate provider networks and, as a result, manage health care and utilization due to “any willing provider” legislation, which requires us to take any provider willing to accept our reimbursement;

	•	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; and

	•	restriction of solicitation of pre-funded funeral insurance consumers by funeral board laws.

State legislatures regularly enact laws that alter and, in many cases, increase state authority to regulate insurance companies and insurance holding companies. Further, state insurance regulators regularly reinterpret existing laws and regulations and the National Association of Insurance Commissioners (NAIC) regularly undertakes regulatory projects, all of which can affect our operations. In recent years, the state insurance regulatory framework has come under increased federal scrutiny and some state legislatures have considered or enacted laws that may alter or increase state authority to regulate insurance companies and insurance holding companies. Further, the NAIC and state insurance regulators are re-examining existing laws and regulations, specifically focusing on modifications to holding company regulations, interpretations of existing laws and the development of new laws.

Although the U.S. federal government does not directly regulate the insurance business, changes in federal legislation and administrative policies in several areas, including changes in the Gramm-Leach-Bliley Act, financial services regulation and federal taxation, could significantly harm the insurance industry and us. Federal legislation and administrative policies in areas such as employee benefit plan regulation, financial services regulation and federal taxation can reduce our profitability. In addition, state legislatures and the U.S. Congress continue to focus on health care issues. The U.S. Congress is considering Patients’ Bill of Rights legislation, which, if adopted, would permit health plans to be sued in state court for coverage determinations and could fundamentally alter the treatment of coverage decisions under Employee Retirement Income Security Act of 1974, as amended (ERISA). There recently have been legislative attempts to limit ERISA’s preemptive effect on state laws. For example, the U.S. Congress has, from time to time, considered legislation relating to changes in ERISA to permit application of state law remedies, such as

consequential and punitive damages, in lawsuits for wrongful denial of benefits, which, if adopted, could increase our liability for damages in future litigation. Additionally, new interpretations of existing laws and the passage of new legislation may harm our ability to sell new policies and increase our claims exposure on policies we issued previously.

A number of legislative proposals have been made at the federal level over the past several years that could impose added burdens on Assurant Health. These proposals would, among other things, mandate benefits with respect to certain diseases or medical procedures, require plans to offer an independent external review of certain coverage decisions and establish a national health insurance program. Any of these proposals, if implemented, could adversely affect our results of operations or financial condition. Federal changes in Medicare and Medicaid that reduce provider reimbursements could have negative implications for the private sector due to cost shifting. When the government reduces reimbursement rates for Medicare and Medicaid, providers often try to recover shortfalls by raising the prices charged to privately insured customers. State small employer group and individual health insurance market reforms to increase access and affordability could also reduce profitability by precluding us from appropriately pricing for risk in our individual and small employer group health insurance policies.

In addition, the U.S. Congress and some federal agencies from time to time investigate the current condition of insurance regulation in the United States to determine whether to impose federal regulation or to allow an optional federal incorporation, similar to banks. Bills have been introduced in the U.S. Congress from time to time that would provide for a federal scheme of chartering insurance companies or an optional federal charter for insurance companies. Meanwhile, the federal government has granted charters in years past to insurance-like organizations that are not subject to state insurance regulations, such as risk retention groups. See “Regulation—United States—Federal Regulation—Legislative Developments.” Thus, it is hard to predict the likelihood of a federal chartering scheme and its impact on the industry or on us.

We cannot predict with certainty the effect any proposed or future legislation, regulations or NAIC initiatives may have on the conduct of our business. In addition, the insurance laws or regulations adopted or amended from time to time may be more restrictive or may result in materially higher costs than current requirements. See “Regulation.”

Costs of compliance with privacy laws could adversely affect our business and results of operations.

The privacy of individuals has been the subject of recent state and federal legislation. State privacy laws, particularly those with “opt-in” clauses, can affect the pre-funded funeral insurance business. These laws make it harder to share information for marketing purposes, such as generating new sales leads. Similarly, the recently created “do not call” list would restrict our ability to contact customers and, in Assurant Solutions, has lowered our expectations for growth in our direct-marketed consumer credit insurance products in the United States.

HIPAA and the implementing regulations that have thus far been adopted impose new obligations for issuers of health and dental insurance coverage and health and dental benefit plan sponsors. HIPAA also establishes new requirements for maintaining the confidentiality and security of individually identifiable health information and new standards for electronic health care transactions. The Department of Health and Human Services promulgated final HIPAA regulations in 2002. The privacy regulations required compliance by April 2003, the electronic transactions regulations by October 2003 and the security regulations by April 2005. As have other entities in the health care industry, we have incurred substantial costs in meeting the requirements of these HIPAA regulations and expect to continue to incur costs to achieve and to maintain compliance. We have been working diligently to comply with these regulations in the time periods required. However, there can be no assurances that we will achieve such compliance with all of the required transactions or that other entities with which we interact will take appropriate action to meet the compliance deadlines. Moreover, as a consequence of these new standards for electronic transactions, we may see an increase in the number of health care transactions that are submitted to us in paper format, which could increase our costs to process medical claims.

HIPAA is far-reaching and complex and proper interpretation and practice under the law continue to evolve. Consequently, our efforts to measure, monitor and adjust our business practices to comply with HIPAA are ongoing. Failure to comply could result in regulatory fines and civil lawsuits. Knowing and intentional violations of these rules may also result in federal criminal penalties.

In addition, the Gramm-Leach-Bliley Act requires that we deliver a notice regarding our privacy policy both at the delivery of the insurance policy and annually thereafter. Certain exceptions are allowed for sharing of information under joint marketing agreements. However, certain state laws may require individuals to opt in to information sharing instead of being immediately included. This could significantly increase costs of doing business. Additionally, when final U.S. Treasury Department regulations are promulgated in connection with the USA PATRIOT Act, we will likely have to expend additional resources to tailor our existing anti-fraud efforts to the new rules.

Risks Related to Our Relationship with and Separation from Fortis

Fortis will continue to have representation on our board of directors and influence our affairs for as long as it remains a significant stockholder.

After the completion of this offering, Fortis, through Fortis Insurance N.V., its wholly owned subsidiary, will own in excess of % of the voting power of our outstanding common stock, or % if the underwriters exercise their over-allotment option in full. As a result, for as long as Fortis continues to own shares of common stock representing more than 50% of the voting power of our outstanding common stock and, in some cases more than one-third of our outstanding common stock, it will be able to determine the outcome of corporate actions requiring stockholder approval. Fortis may have interests that differ from yours and may vote in a way with which you disagree and which may be adverse to your interests.

Prior to the consummation of this offering, we expect to enter into a shareholders’ agreement with Fortis pursuant to which Fortis will have the right to nominate designees to our board of directors and, subject to limited exceptions, our board of directors will nominate those designees as follows: (i) so long as Fortis owns at least 50% of our outstanding common stock, five designees and (ii) so long as Fortis owns less than 50% but at least 10% of our outstanding common stock, two designees. In addition, the shareholders’ agreement is also expected to provide that as long as Fortis owns at least 50% of our common stock, certain significant corporate actions may only be taken with the approval of a supermajority of our directors, which will require approval of two or more Fortis directors. These actions include:


	•	a recapitalization or reorganization;

	•	voluntary bankruptcy or liquidation;

	•	acquisitions and dispositions in excess of $500 million;

	•	issuing debt to the extent all outstanding debt would exceed $1.5 billion; and

	•	equity offerings representing more than 10% of our outstanding common stock or that would reduce Fortis’ interest in our Company below 50%.

In addition, although Fortis has advised us that it intends to divest all of its shares of our common stock over a period of time, Fortis is under no obligation to do so. Subject to the terms of the lock-up agreement, Fortis has the sole discretion to determine the timing of any such divestiture. See “Certain Relationships and Related Transactions,” “Description of Share Capital—Shareholders Agreement” and “—Registration Rights,” “Shares Eligible for Future Sale” and “Underwriting” for additional information on lock-up agreements and related party transactions between our Company and Fortis.

Because Fortis will control us, conflicts of interest between Fortis and us could be resolved in a manner unfavorable to us.

Various conflicts of interest between Fortis and us could arise which may be resolved in a manner that is unfavorable to us, including, but not limited to, the following areas:

Cross-Directorships and Stock Ownership. Service as a director or officer of both our Company and Fortis or ownership interests of directors or officers of our Company in the stock of Fortis could create or appear to create potential conflicts of interest when directors and officers are faced with decisions that could have different implications for the two companies. Our directors who are also directors or officers of Fortis will have obligations to both companies and may have conflicts of interest with respect to matters potentially or actually involving or affecting us. For example, these decisions could relate to:


	•	disagreement over the desirability of a potential acquisition or disposition opportunity;

	•	corporate finance decisions;

	•	employee retention or recruiting; or

	•	our dividend policy.

Allocation of Business Opportunities. There may be business opportunities that are suitable for both Fortis and us. So long as Fortis controls us, it will be able to make decisions regarding the allocation of such opportunities that may be unfavorable to us.

The loss of the Fortis name in Assurant Health, Assurant Employee Benefits and Assurant PreNeed may affect our profitability.

In connection with our separation from Fortis, we will change our name and the names of our business units to Assurant, Inc. and other Assurant names and launch a re-branding initiative pursuant to which we will change our brand name and most of the trademarks and trade names under which we conduct our business. The transition to our new name in each of our business segments and subsidiaries will occur rapidly in the case of some products and business segments and over specified periods in the case of other products and business segments. Under the terms of a license from Fortis, we will have only a limited amount of time to continue to use the Fortis name. Assurant Health, Assurant Employee Benefits and Assurant PreNeed have expended substantial resources to establish the Fortis name and reputation in the health, employee benefits and pre-funded funeral insurance marketplace, particularly among brokers and consultants acting as advisors in the health and benefits market and with funeral directors in the pre-funded funeral market. The impact of the change in trademarks and trade names and other changes (including, without limitation, the name change) on our business and operations cannot be fully predicted, and the lack of an established brand image for the Assurant name in the health, benefits and pre-funded funeral insurance marketplace may cause a disruption in sales and persistency and thus affect profitability. Any such disruption could also cause rating agencies to lower our financial strength and other ratings in the future. In addition, the costs of effecting the name change and branding initiative will be substantial and are currently estimated to be approximately $10 million. In certain states we may be required to notify policyholders of our name change and in certain instances new certificates may need to be issued. This might result in increased lapses of our insurance policies.

Because Fortis operates U.S. branch offices, we are subject to regulation and oversight by the Federal Reserve Board under the U.S. Bank Holding Company Act (BHCA).

Fortis Bank SA/ NV (Fortis Bank), which is a subsidiary of Fortis, obtained approval in 2002 from state banking authorities and the Federal Reserve Board to establish branch offices in Connecticut and New York. By virtue of the opening of these offices, the U.S. operations of Fortis, including our operations, became subject to the nonbanking prohibitions of Section 4 of the BHCA. In order to continue to operate its U.S. nonbanking operations, including the insurance activities conducted by our subsidiaries, Fortis notified the Federal Reserve Board of its election to be a financial holding company for purposes of the BHCA and the Federal Reserve Board’s implementing regulations in Regulation Y. Pursuant to Fortis’ status as a financial holding company, Fortis and its subsidiaries, including our subsidiaries, are permitted to engage in nonbanking

activities in the United States that are “financial in nature” or “incidental to a financial activity” as defined in Section 4(k) of the BHCA and in Regulation Y. In particular, Fortis’ status as a financial holding company permits Fortis to engage in the United States in both banking activities through the U.S. branches of Fortis Bank and insurance activities through our subsidiaries. Activities that are “financial in nature” include, among other things, insuring, guaranteeing or indemnifying against loss, harm, damage, illness, disability or death, or providing and issuing annuities, and acting as principal, agent or broker for purposes of the foregoing.

Fortis will continue to qualify as a financial holding company so long as Fortis Bank remains “well capitalized” and “well managed” as those terms are defined in Regulation Y. Generally, Fortis Bank will be considered “well capitalized” if it maintains tier 1 and total risk-based capital ratios of at least 6% and 10%, respectively, and will be considered “well managed” if it has received at least a satisfactory composite rating of its U.S. branch operations at its most recent examination. As a general matter, as long as Fortis owns more than 5% of any class of our voting shares, the BHCA does not permit us to engage in nonfinancial activities such as manufacturing, distribution of goods and real estate development. If the Federal Reserve Board were to determine that any of our existing activities were not insurance activities or not otherwise financial in nature or not incidental to such activities, or if Fortis lost and was unable to regain its financial holding company status, we could be required to restructure our operations or divest some of these operations, which could result in increased costs and reduced profitability.

Risks Related to Our Common Stock and This Offering

Applicable laws and our certificate of incorporation and by-laws may discourage takeovers and business combinations that our stockholders might consider in their best interests.

State laws and our certificate of incorporation and by-laws may delay, defer, prevent or render more difficult a takeover attempt that our stockholders might consider in their best interests. For instance, they may prevent our stockholders from receiving the benefit from any premium to the market price of our common stock offered by a bidder in a takeover context. Even in the absence of a takeover attempt, the existence of these provisions may adversely affect the prevailing market price of our common stock if they are viewed as discouraging takeover attempts in the future.

State laws and our certificate of incorporation and by-laws may also make it difficult for stockholders to replace or remove our directors. These provisions may facilitate directors entrenchment which may delay, defer or prevent a change in our control, which may not be in the best interests of our stockholders.

The following provisions that will be included in our certificate of incorporation and by-laws have anti-takeover effects and may delay, defer or prevent a takeover attempt that our stockholders might consider in their best interests. In particular, our certificate of incorporation and by-laws will:


	•	permit our board of directors to issue one or more series of preferred stock;

	•	divide our board of directors into three classes;

	•	limit the ability of stockholders to remove directors;

	•	except for Fortis, prohibit stockholders from filling vacancies on our board of directors;

	•	prohibit stockholders from calling special meetings of stockholders;

	•	impose advance notice requirements for stockholder proposals and nominations of directors to be considered at stockholder meetings;

	•	require the approval of at least two-thirds of our outstanding common stock to approve mergers and consolidations or the sale of all or substantially all of our assets; and


	•	require the approval by the holders of at least two-thirds of our outstanding common stock for the amendment of our by-laws and provisions of our certificate of incorporation governing:

• the classified board;

• the approval of mergers; and

• the liability of directors.

In addition, Section 203 of the General Corporation Law of the State of Delaware may limit the ability of an “interested stockholder” to engage in business combinations with us. An interested stockholder is defined to include persons owning 15% or more of our outstanding voting stock. See “Description of Share Capital” for additional information on the anti-takeover measures applicable to us.

Applicable insurance laws may make it difficult to effect a change of control of our Company.

Before a person can acquire control of a U.S. insurance company, prior written approval must be obtained from the insurance commissioner of the state where the domestic insurer is domiciled. Generally, state statutes provide that control over a domestic insurer is presumed to exist if any person, directly or indirectly, owns, controls, holds with the power to vote, or holds proxies representing, 10% or more of the voting securities of the domestic insurer. However, the State of Florida, in which certain of our insurance subsidiaries are domiciled, defines control as 5% or more. Because a person acquiring 5% or more of shares of our common stock would indirectly control the same percentage of the stock of our Florida subsidiaries, the insurance change of control laws of Florida would apply to such transaction and at 10%, the laws of many other states would likely apply to such a transaction. Prior to granting approval of an application to acquire control of a domestic insurer, a state insurance commissioner will typically consider such factors as the financial strength of the applicant, the integrity of the applicant’s board of directors and executive officers, the applicant’s plans for the future operations of the domestic insurer and any anti-competitive results that may arise from the consummation of the acquisition of control.

We do not currently intend to pay dividends on our Common Stock in the foreseeable future.

Our board of directors does not currently intend to pay dividends to holders of our Common Stock. It is uncertain when, if ever, we will declare dividends to our stockholders. Our ability to pay dividends is limited by our Class B and Class C Common Stock and our Series B and Series C Preferred Stock, which restrict our ability to pay dividends on our Common Stock if dividends on those shares are not paid. In addition, the terms of certain of our securities prohibit us from paying dividends on our Common Stock if we elect to defer payments on such securities. See “Dividend Policy,” “Description of Share Capital” and “Description of Other Securities.” You should not rely on an investment in our Company if you require dividend income. In the foreseeable future, the only possible return on an investment in us would come from the appreciation of our common stock.

Our stock and the stocks of other companies in the insurance industry are subject to stock price and trading volume volatility.

From time to time, the stock price and the number of shares traded of companies in the insurance industry experience periods of significant volatility. Company-specific issues and developments generally in the insurance industry and in the regulatory environment may cause this volatility. Our stock price may fluctuate in response to a number of events and factors, including:


	•	quarterly variations in operating results;

	•	natural disasters and terrorist attacks;

	•	changes in financial estimates and recommendations by securities analysts;

	•	operating and stock price performance of other companies that investors may deem comparable;

	•	press releases or publicity relating to us or our competitors or relating to trends in our markets;

	•	regulatory changes;


	•	sales of stock by insiders; and

	•	changes in our financial strength ratings.

You may be unable to resell your shares of our common stock at or above the initial public offering price.

In addition, broad market and industry fluctuations may adversely affect the trading price of our common stock, regardless of our actual operating performance.

There may not be an active trading market for shares of our common stock, which may cause our common stock to trade at a discount and make it difficult to sell the shares you purchase.

Prior to this offering, there has been no public trading market for shares of our common stock. It is possible that, after this offering, an active trading market will not develop or continue. The initial public offering price per share of our common stock will be determined by agreement among us, Fortis and the representative of the underwriters, and may not be indicative of the price at which the shares of our common stock will trade in the public market after this offering.

Sales of a substantial number of shares of our common stock following this offering may adversely affect the market price of our common stock and the issuance of additional shares will dilute all other stockholdings.

Sales of a substantial number of shares of our common stock in the public market or otherwise following this offering, or the perception that such sales could occur, could adversely affect the market price of our common stock. After completion of this offering, Fortis, through Fortis Insurance N.V., will own shares of our common stock, assuming there is no exercise of the underwriters’ over-allotment option, and has advised us that it intends to divest all of its shares of our common stock over a period of time, subject to the lock-up agreement referred to below. In addition, concurrently with the offering contemplated by this prospectus, we will grant Fortis Insurance N.V. and its affiliates certain demand and piggyback registration rights with respect to all of the shares of our common stock owned by them. Pursuant to this agreement, after completion of this offering and subject to the lock-up agreement, Fortis will have the right to require us to register its shares of our common stock under the Securities Act of 1933, as amended (Securities Act) for sale into the public markets.

After completion of this offering, there will be shares of our common stock outstanding. Of our outstanding shares, the shares of common stock sold in this offering will be freely tradable in the public market, except for any shares sold to our “affiliates,” as that term is defined in Rule 144 under the Securities Act, and any other shares purchased through the directed share program, which will also be subject to 180-day lock-up agreements and certain National Association of Securities Dealers (NASD) restrictions. In addition, our certificate of incorporation permits the issuance of up to 80 million shares of common stock. After this offering, we will have an aggregate of shares of our common stock authorized but unissued. Thus, we have the ability to issue substantial amounts of common stock in the future, which would dilute the percentage ownership held by the investors who purchase our shares in this offering. See “Shares Eligible for Future Sale” for further information regarding circumstances under which additional shares of our common stock may be sold.

We, each of our directors and executive officers, Fortis N.V., Fortis SA/ NV and Fortis Insurance N.V. have agreed, with limited exceptions, that we and they will not, without the prior written consent of Morgan Stanley & Co. Incorporated on behalf of the underwriters, during the period ending 180 days after the date of this prospectus, directly or indirectly, offer to sell, sell or otherwise dispose of any of shares of our common stock or file a registration statement with the Securities and Exchange Commission (SEC) relating to the offering of any shares of our common stock.

Subject to the exercise of any future issued and outstanding options, if any, shares registered under a registration statement on Form S-8 to be filed by us will be available for sale into the public markets after the expiration of the lock-up agreements.

FORWARD-LOOKING STATEMENTS

Some of the statements under “Prospectus Summary,” “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Business” and elsewhere in this prospectus may contain forward-looking statements which reflect our current views with respect to, among other things, future events and financial performance. You can identify these forward-looking statements by the use of forward-looking words such as “outlook,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “should,” “seeks,” “approximately,” “predicts,” “intends,” “plans,” “estimates,” “anticipates” or the negative version of those words or other comparable words. Any forward-looking statements contained in this prospectus 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, the underwriters or any other person that the future plans, estimates or expectations contemplated by us will be achieved. Such forward-looking statements are subject to various risks and uncertainties. Accordingly, there are or will be important factors that could cause our actual results to differ materially from those indicated in these statements. We believe that these factors include but are not limited to those described under “Risk Factors.” These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this prospectus. We undertake no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise.

If one or more of these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual results may vary materially from what we projected. Any forward-looking statements you read in this prospectus reflect our current views with respect to future events and are subject to these and other risks, uncertainties and assumptions relating to our operations, results of operations, financial condition, growth strategy and liquidity. You should specifically consider the factors identified in this prospectus that could cause actual results to differ before making an investment decision.

USE OF PROCEEDS

We will not receive any of the proceeds from the sale of shares of our common stock by the selling stockholder. The selling stockholder will receive all net proceeds from the sale of the shares of our common stock in this offering.

DIVIDEND POLICY

Our board of directors does not currently intend to pay dividends to holders of our Common Stock. Any determination to pay 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, any legal, tax, regulatory and contractual restrictions on the payment of dividends and any other factors our board of directors deems relevant.

We are a holding company and, therefore, our ability to pay dividends, service our debt and meet our other obligations depends primarily on the ability of our insurance subsidiaries to pay dividends and make other statutorily permissible payments to us. Our insurance subsidiaries are subject to significant regulatory and contractual restrictions limiting their ability to declare and pay dividends. See “Risk Factors—Risks Relating to Our Company—The inability of our subsidiaries to pay dividends to us in sufficient amounts could harm our ability to meet our obligations and pay future stockholder dividends” and “Risk Factors — Risks Related to Our Common Stock and This Offering — We do not currently intend to pay dividends on our Common Stock in the foreseeable future.” For the calendar year 2003, the maximum amount of dividends that our subsidiaries could pay to us under applicable laws and regulations without prior regulatory approval is approximately $290 million, of which approximately $19 million had been paid as of June 30, 2003. We expect that as a result of statutory accounting for our businesses sold, the maximum amount of dividends our subsidiaries will be able to pay to us will be significantly lower in 2004. In addition, we have entered into an agreement with the Florida Insurance Department pursuant to which two of our subsidiaries, American Bankers Insurance Company and American Bankers Life Assurance Company, have agreed to limit the amount of ordinary dividends they would pay to us to an amount no greater than 50% of the amount otherwise permitted under Florida law. This agreement expires in August 2004. One of our subsidiaries, First Fortis Life Insurance Company, has also entered into an agreement with the New York Insurance Department pursuant to which First Fortis Life Insurance Company has agreed not to pay any ordinary dividends to us until fiscal year 2004. For more information regarding restrictions on the payment of dividends by us and our insurance subsidiaries, including pursuant to the terms of our Series B and Series C Preferred Stock, our Class B and Class C Common Stock and certain of our other securities, see “Regulation— United States— State Regulation— Insurance Regulation Concerning Dividends” and “—Statutory Accounting Practices (SAP),” “Description of Share Capital” and “Description of Other Securities.”

On May 27, 2003, we paid the holders of our Class A Common Stock a cash dividend in the aggregate amount of $139 million. Our Class A Common Stock will become Common Stock of Assurant, Inc. in connection with the closing of this offering. We also paid dividends on our Class A Common Stock totaling $67 million in 2001.

On September 2, 2003 and March 3, 2003, we paid the holders of our Class B Common Stock cash dividends totaling $5.6 million on each such date. We also paid dividends on our Class B Common Stock totaling $11 million in each of 2002 and 2001. On September 2, 2003 and March 3, 2003, we paid the holders of our Class C Common Stock cash dividends totaling $15.4 million and $15.3 million, respectively. We also paid dividends on our Class C Common Stock totaling $31 million in each of 2002 and 2001.

CORPORATE STRUCTURE AND REORGANIZATION

Assurant, Inc. is a Delaware corporation and is currently a wholly owned subsidiary of Fortis, Inc. Assurant, Inc. has had no operations and nominal financial activity and will be used solely for the purpose of the reincorporation of Fortis, Inc., which is organized as a Nevada corporation and of which 100% of the outstanding common stock is currently indirectly owned by Fortis N.V. and Fortis SA/NV. Prior to the closing of this offering, we will effectuate a merger of Fortis, Inc. with and into Assurant, Inc. for the purpose of reincorporating Fortis, Inc. in Delaware. As a result of the reorganization, Assurant, Inc. will be domiciled in Delaware and will be the successor to the business, operations and obligations of Fortis, Inc. In connection with the reorganization, our Company will use the name Assurant, Inc. The ongoing operations of Assurant, Inc. will effectively be comprised of the existing operations of Fortis, Inc. and its subsidiaries. Our Class A Common Stock will become Common Stock of Assurant, Inc. in connection with the merger.

In connection with our separation from Fortis, we will change our name and the names of our business segments and operating subsidiaries to include the name “Assurant,” and we will cease using the Fortis name after a transition period. Under the terms of a license from Fortis, we will have only a limited amount of time to continue to use the Fortis name. We will launch a re-branding initiative pursuant to which we will change our brand name and most of our trademarks and trade names under which we conduct our business.

CAPITALIZATION

The following table sets forth our consolidated capitalization as of June 30, 2003. We will not receive any proceeds from the sale of shares in this offering by the selling stockholder.

You should read this table in conjunction with “Selected Consolidated Financial Information” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and related notes that are included elsewhere in this prospectus. See also “Certain Relationships and Related Transactions,” “Description of Share Capital” and “Description of Other Securities.”


			As of June 30, 2003

			(unaudited)
			(in thousands,
			except share numbers)
Debt Outstanding:
	Long-term senior debt		$	—
Mandatorily redeemable preferred securities of subsidiary trusts(1)(2):
	2000 trust capital securities			550,000
	1999 trust capital securities			699,850
	1997 capital securities			196,224

		Total mandatorily redeemable preferred securities of subsidiary trusts		1,446,074

Mandatorily redeemable preferred stock, par value $1.00 per share(1) (20,000,000 shares authorized; 19,160 shares of Series B Preferred Stock and 5,000 shares of Series C Preferred Stock issued and outstanding)				24,160

Stockholders’ Equity:
	Common stock, par value $.10 per share (80,000,000 shares of common stock authorized):
		Class A (7,750,000 shares issued and outstanding)(3)		775
		Class B (150,001 shares issued and outstanding)		15
		Class C (400,001 shares issued and outstanding)		40
	Additional paid-in capital			2,064,025
	Retained earnings			248,456
	Accumulated other comprehensive income			465,579

		Total stockholders’ equity		2,778,890

Total Capitalization			$	4,249,124


(1)	These securities will be reclassified as debt upon adoption by the Company in the third quarter of 2003 of Financial Accounting Standards No. 150, Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity.

(2)	The proceeds from the sale of preferred securities by each of the subsidiary trusts were used by the applicable trusts to purchase our subordinated debentures, which are eliminated upon consolidation. See “Description of Other Securities.”

(3)	Our Class A Common Stock will become Common Stock, par value $.01 per share, of Assurant, Inc. in connection with the merger.

SELECTED CONSOLIDATED FINANCIAL INFORMATION

The following table sets forth our selected historical consolidated financial information for the periods ended and as of the dates indicated. Assurant, Inc. is a Delaware corporation and is currently a wholly owned subsidiary of Fortis, Inc. Assurant, Inc. has had no operations and nominal financial activity and will be used solely for the purpose of the reincorporation of Fortis, Inc., which is organized as a Nevada corporation and of which 100% of the outstanding common stock is currently indirectly owned by Fortis N.V. and Fortis SA/NV. Prior to the closing of this offering, we will effectuate a merger of Fortis, Inc. with and into Assurant, Inc. for the purpose of reincorporating Fortis, Inc. in Delaware. As a result of the reorganization, Assurant, Inc. will be domiciled in Delaware and will be the successor to the business, operations and obligations of Fortis, Inc. In connection with the reorganization, our Company will use the name Assurant, Inc. The ongoing operations of Assurant, Inc. will effectively be comprised of the existing operations of Fortis, Inc. and its subsidiaries.

The selected consolidated statement of operations data for each of the five years ended December 31, 2002 and the selected consolidated balance sheet data as of December 31, 2002, 2001, 2000, 1999 and 1998 are derived from the audited consolidated financial statements of Fortis, Inc. and its subsidiaries, which have been prepared in accordance with GAAP. The audited consolidated financial statements of Fortis, Inc. and its subsidiaries for the three years in the period ended December 31, 2002 and as of December 31, 2002 and 2001 have been included elsewhere in this prospectus. The selected consolidated statement of operations data for the six months ended June 30, 2003 and the selected consolidated balance sheet data as of June 30, 2003 are derived from the unaudited interim financial statements of Fortis, Inc. and its subsidiaries included elsewhere in this prospectus. The unaudited interim financial statements have been prepared on the same basis as the audited consolidated financial statements of Fortis, Inc. and in our opinion, include all adjustments consisting only of normal recurring adjustments, that we consider necessary for a fair statement of our results of operations and financial condition for these periods and as of such dates. These historical results are not necessarily indicative of expected results for any future period. The results for the six months ended June 30, 2003 are not necessarily indicative of results to be expected for the full year. You should read the following selected consolidated financial information together with the other information contained in this prospectus, including “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and related notes included elsewhere in this prospectus.



			For the
			Six Months Ended
			June 30,					For the Year Ended December 31,

			2003		2002			2002			2001			2000			1999		1998


			(in thousands, except share amounts and per share data)

Selected Consolidated Statement of Operations Data:
*Revenues*
Net earned premiums and other considerations			$	2,987,029	$	2,787,519		$	5,681,596		$	5,242,185		$	5,144,375		$	4,508,795	$	3,056,550
Net investment income				305,885		310,539			631,828			711,782			690,732			590,487		491,947
Net realized gains (losses) on investments				7,474		(49,204	)		(118,372	)		(119,016	)		(44,977	)		13,616		88,185
Amortization of deferred gain on disposal of businesses				34,873		40,030			79,801			68,296			10,284			—		—
Gain on disposal of businesses				—		10,672			10,672			61,688			11,994			—		—
Fees and other income				119,881		125,435			246,675			221,939			399,571			357,878		307,780

		Total revenues		3,455,142		3,224,991			6,532,200			6,186,874			6,211,979			5,470,776		3,944,462
*Benefits, losses and expenses*
Policyholder benefits				1,774,243		1,678,871			3,429,145			3,238,925			3,208,054			3,061,488		2,223,113
Amortization of deferred acquisition costs and value of businesses acquired				580,240		443,221			876,185			875,703			766,904			494,000		213,817
Underwriting, general and administrative expenses				794,120		842,390			1,738,077			1,620,931			1,801,196			1,649,811		1,270,854
Amortization of goodwill				—		—			—			113,300			106,773			57,717		12,836
Interest expense				—		—			—			14,001			24,726			39,893		33,831
Distributions on preferred securities of subsidiary trusts				58,566		58,716			118,396			118,370			110,142			53,824		16,713

		Total benefits, losses and expenses		3,207,169		3,023,198			6,161,803			5,981,230			6,017,795			5,356,733		3,771,164
		Income before income taxes		247,973		201,793			370,397			205,644			194,184			114,043		173,298
Income taxes				84,086		60,126			110,657			107,591			104,500			57,657		63,939

		Net income before cumulative effect of change in accounting principle	$	163,887	$	141,667		$	259,740		$	98,053		$	89,684		$	56,386	$	109,359
Cumulative effect of change in accounting principle				—		(1,260,939	)		(1,260,939	)		—			—			—		—
Effect of discontinued operations				—		—			—			—			—			—		(13,979	)

		Net income (loss)	$	163,887	$	(1,119,272	)	$	(1,001,199	)	$	98,053		$	89,684		$	56,386	$	95,380

Per Share Data:
Net income (loss) per share			$	19.75	$	(134.85	)	$	(120.63	)	$	11.81		$	10.93		$	9.17	$	19.08
Weighted average of basic and diluted shares of common stock outstanding				8,300,002		8,300,002			8,300,002			8,300,002			8,208,335			6,145,883		5,000,000
	Dividends per share:
	Class A Common Stock(1)		$	17.98	$	—		$	—		$	8.65		$	—		$	—	$	—
	Class B Common Stock(2)			37.15		36.52			74.69			75.44			37.66			—		—
	Class C Common Stock(3)			38.13		37.50			76.68			77.45			38.65			—		—



	As of		As of December 31,
	June 30,
	2003		2002		2001		2000		1999		1998


	(in thousands, except share amounts and per share data)

Selected Consolidated Balance Sheet Data:
Cash and cash equivalents and investments	$	11,138,227	$	10,578,415	$	10,159,809	$	10,750,554	$	10,110,136	$	8,027,307
Total assets		22,738,162		22,218,009		24,449,877		24,115,139		22,216,730		14,577,790
Policy liabilities(4)		12,632,311		12,388,623		12,064,643		11,534,891		10,336,265		7,316,949
Debt		—		—		—		238,983		1,007,243		650,000
Mandatorily redeemable preferred securities of subsidiary trusts(5)		1,446,074		1,446,074		1,446,074		1,449,738		899,850		200,000
Mandatorily redeemable preferred stock		24,160		24,660		25,160		25,160		22,160		32,160
Total stockholders’ equity		2,778,890		2,555,059		3,452,405		3,367,713		3,164,297		1,765,568
Per Share Data:
Total stockholders’ equity per share(6)	$	334.81	$	307.84	$	415.95	$	410.28	$	514.86	$	353.11


(1)	For each of the periods (other than the year ended December 31, 1998) and dates (other than December 31, 1998) presented, 7,750,000 shares of our Class A Common Stock were issued and outstanding; these shares are held by Fortis Insurance N.V., Fortis (US) Funding Partners I LP and Fortis (US) Funding Partners II LP. For the year ended December 31, 1998 and as of December 31, 1998, 5,000,000 shares of our Class A Common Stock were issued and outstanding. See “Description of Share Capital — Class B and Class C Common Stock.” Our existing Class A Common Stock will become Common Stock of Assurant, Inc. in connection with the merger of Fortis, Inc. with and into Assurant, Inc.
(2)	For each of the periods (other than the years ended December 31, 1999 and December 31, 1998) and dates (other than December 31, 1999 and December 31, 1998) presented, 150,001 shares of our Class B Common Stock were issued and outstanding; these shares are held by Fortis (US) Funding Partners I LP. No shares of our Class B Common Stock were issued and outstanding for the years ended December 31, 1999 and December 31, 1998 or as of December 31, 1999 and December 31, 1998. See “Description of Share Capital — Class B and Class C Common Stock.”
(3)	For each of the periods (other than the years ended December 31, 1999 and December 31, 1998) and dates (other than December 31, 1999 and December 31, 1998) presented, 400,001 shares of our Class C Common Stock were issued and outstanding; these shares are held by Fortis (US) Funding Partners II LP. No shares of our Class C Common Stock were issued and outstanding for the years ended December 31, 1999 and December 31, 1998 or as of December 31, 1999 and December 31, 1998.
(4)	Policy liabilities include future policy benefits and expenses, unearned premiums and claims and benefits payable.
(5)	The proceeds from the sale of each of these securities were used by the applicable subsidiary trusts to purchase our subordinated debentures, which are eliminated upon consolidation. See “Description of Other Securities.”
(6)	Based on total stockholders’ equity divided by basic shares issued and outstanding.

MANAGEMENT’S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and accompanying notes which appear elsewhere in this prospectus. It contains forward-looking statements that involve risks and uncertainties. Please see “Forward-Looking Statements” for more information. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those discussed below and elsewhere in this prospectus, particularly under the headings “Risk Factors” and “Forward-Looking Statements.”

General

We report our results through five segments: Assurant Solutions, Assurant Health, Assurant Employee Benefits, Assurant PreNeed and Corporate and Other. The Corporate and Other segment includes activities of the holding company, financing expenses, realized gains (losses) on investments and interest income not allocated to other segments. The Corporate and Other segment also includes (i) the results of operations of FFG, a business we sold on April 2, 2001, and (ii) long-term care (LTC), a business we sold on March 1, 2000, for the periods prior to their disposition, and amortization of deferred gains associated with the portions of the sales of FFG and LTC sold through reinsurance agreements as described below.

Critical Factors Affecting Results

Our profitability depends on the adequacy of our product pricing, underwriting and the accuracy of our methodology for the establishment of reserves for future policyholder benefits and claims, returns on invested assets and our ability to manage our expenses. As such, factors affecting these items may have a material adverse effect on our results of operations or financial condition.


	*Revenues*

We derive our revenues primarily from the sale of our insurance policies and, to a lesser extent, fee income by providing administrative services to certain clients. Sales of insurance policies are recognized in revenue as earned premiums while sales of administrative services are recognized as fee income. In late 2000, the majority of our credit insurance clients began a transition from the purchase of our credit insurance products from which we earned premium revenue to debt protection administration programs, from which we earn fee income.

Our premium and fee income is supplemented by income earned from our investment portfolio. We recognize revenue from interest payments, dividends and sales of investments. Our investment portfolio is currently primarily invested in fixed maturity securities. Both investment income and realized capital gains on these investments can be significantly impacted by changes in interest rates.

Interest rate volatility can reduce unrealized gains or create unrealized losses in our portfolios. Interest rates are highly sensitive to many factors, including governmental monetary policies, domestic and international economic and political conditions and other factors beyond our control. Fluctuations in interest rates affect our returns on, and the market value of, fixed maturity and short-term investments.


	*Expenses*

Our expenses primarily consist of policyholder benefits, underwriting, general and administrative expenses, and distributions on preferred securities of subsidiary trusts.

Selling, underwriting and general expenses consist primarily of commissions, premium taxes, licenses, fees, amortization of deferred acquisition costs (DAC) and value of businesses acquired (VOBA) and general operating expenses. For a description of DAC and VOBA, see Notes 2, 17 and 18 of the Notes to Consolidated Financial Statements included elsewhere in this prospectus.

Our profitability depends in large part on accurately predicting benefits, claims and other costs, including medical and dental costs. It also depends on our ability to manage future benefit and other costs through product design, underwriting criteria, utilization review or claims management and, in health and dental insurance, negotiation of favorable provider contracts. Changes in the composition of the kinds of work available in the economy, market conditions and numerous other factors may also materially adversely affect our ability to manage claim costs. As a result of one or more of these factors or other factors, claims could substantially exceed our expectations, which could have a material adverse effect on our business, results of operations and financial condition.

Regulation

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. For example, some states have imposed new time limits for the payment of uncontested covered claims and require health care and dental service plans to pay interest on uncontested claims not paid promptly within the required time period. Some states have also granted their insurance regulatory agencies additional authority to impose monetary penalties and other sanctions on health and dental plans engaging in certain “unfair payment practices.” If we were to be 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.

For other factors affecting our results of operations or financial condition, see “Risk Factors.”

Acquisitions and Dispositions of Businesses

Our results of operations were affected by the following transactions:

On October 10, 2002, we sold the Peer Review and Analysis division (PRA) of CORE, Inc. (CORE) to MCMC, LLC, an independent provider of medical analysis services. No gain or loss was recognized on the sale of PRA.

On June 28, 2002, we sold our 50% ownership in Neighborhood Health Partnership (NHP) to NHP Holding LLC. We recorded a pre-tax gain on sale of $11 million, which was included in the Corporate and Other segment.

On December 31, 2001, we acquired Protective Life Corporation’s Dental Benefits Division (DBD), including the acquisition through reinsurance of Protective’s indemnity dental, life and disability business and its prepaid dental subsidiaries. Total revenues of $305 million and income after tax of $15 million were generated by the DBD operations for the year ended December 31, 2002. DBD is included in the Assurant Employee Benefits segment.

On July 12, 2001, we acquired CORE, a national provider of employee absence management services. Total revenues of $31 million and income after tax of $0.7 million were generated by the CORE operations from July 12, 2001 through December 31, 2001, as compared to total revenues of $66 million and income after tax of $3 million in 2002. CORE is included in the Assurant Employee Benefits segment.

On April 2, 2001, we sold our FFG business to The Hartford primarily through a reinsurance arrangement. Total revenues of $146 million and income after tax of $8 million were generated by the FFG operations for the three months ended March 31, 2001, compared to total revenues of $679 million and income after tax of $75 million during 2000. FFG included certain individual life insurance policies, annuities and mutual fund operations. The sale of the mutual fund operations resulted in $62 million of pre-tax gains. The sale via reinsurance of the individual life insurance policies and annuities resulted in $558 million of pre-tax gains, which were deferred upon closing and are being amortized over the remaining life of the contracts. All activities related to FFG are included in the Corporate and Other segment. See “— Critical Accounting Policies.”

Prior to April 2, 2001, FFG had issued variable insurance products that are required to be registered as securities under the Securities Act. These registered insurance contracts, which are no longer being sold, have been 100% reinsured with The Hartford through modified coinsurance agreements. The Hartford administers this closed block of business pursuant to a third party administration agreement. Since this block of business was sold through modified coinsurance agreements, separate account assets and separate account liabilities associated with these products continue to be reflected in our financial statements. See the line items entitled “Assets held in separate accounts” and “Liabilities related to separate accounts” in our consolidated balance sheets. The liabilities created by these variable insurance policies are tied to the performance of underlying investments held in separate accounts of the insurance company that originally issued such policies. While we own the separate account assets, the laws governing separate accounts provide that the income, gains and losses from assets in the separate account are credited to or charged against the separate account without regard to other income, gains or losses of the insurer. Further, the laws provide that the separate account will not be charged with liabilities arising out of any other business the insurer may conduct. The result of this structure is that the assets held in the separate account correspond to and are equal to the liabilities created by the variable insurance contracts. At June 30, 2003, we had separate account assets and liabilities of $3,531 million compared to $4,809 million on April 2, 2001, the date of the FFG sale.

On October 1, 2000, we acquired American Memorial Life Insurance Company (AMLIC), a provider of pre-funded funeral insurance products, from SCI. Total revenues of $76 million and income after tax of $6 million were generated by AMLIC from October 1, 2000 through December 31, 2000, as compared to total revenues of $343 million and income after tax of $26 million in 2001. AMLIC is included in the Assurant PreNeed segment.

On May 11, 2000, we sold Associated California State Insurance Agencies, Inc. and Ardiel Insurance Services, Inc. (together, ACSIA), our wholly owned subsidiaries, to Conseco Corporation. ACSIA is a distributor of long-term care insurance. We recorded $12 million of pre-tax gains on the sale. Total revenues of $7 million and a loss after tax of $1 million were generated by ACSIA from January 1, 2000 through May 11, 2000. All activities related to ACSIA are included in the Corporate and Other segment.

On March 1, 2000, we sold our LTC insurance business to John Hancock. The business was sold via a 100% coinsurance agreement whereby we ceded to John Hancock substantially all assets and liabilities related to our LTC business. The transaction resulted in an after-tax deferred gain of approximately $34 million, which is being amortized over the remaining lives of the related contracts. Total revenues of $26 million and income after tax of $0 were generated by our LTC business from January 1, 2000 through March 1, 2000. All activities related to LTC are included in the Corporate and Other segment. See “— Critical Factors Affecting Results — Acquisitions and Dispositions of Businesses.”

Comparing our results from period to period requires taking into account these acquisitions and dispositions. For a more detailed description of these acquisitions and dispositions, see Notes 3 and 4 of the Notes to Consolidated Financial Statements included elsewhere in this prospectus.

Critical Accounting Policies

There are certain accounting policies that we consider to be critical due to the amount of judgment and uncertainty inherent in the application of those policies. In calculating financial statement estimates, the use of different assumptions could produce materially different estimates. In addition, if factors such as those described above or in “Risk Factors” cause actual events to differ from the assumptions used in applying the accounting policies and calculating financial estimates, there could be a material adverse effect on our results of operations, financial condition and liquidity.

We believe the following critical accounting policies require significant estimates which, if such estimates are not materially correct, could affect the preparation of our consolidated financial statements.

Premiums


	Short Duration Contracts

Our short duration contracts are those on which we recognize revenue on a pro rata basis over the contract term. Our short duration contracts primarily include group term life, group disability, medical and dental, property, credit insurance, warranties and extended service contracts.


	Long Duration Contracts

Currently, our long duration contracts being sold are pre-funded life insurance and annuities. Revenue is recognized on the life insurance contracts when due over the premium paying period. For annuity contracts, revenues consist of charges assessed against policy balances.

For universal life insurance and annuity contracts, no longer offered, revenues also consist of charges assessed against policy balances.

For the FFG and LTC businesses previously sold, all revenue is ceded to The Hartford and John Hancock, respectively.


	Reinsurance Assumed

Reinsurance premiums assumed are estimated based on information received from ceding companies and any subsequent differences arising on such estimates are recorded in the period in which they are determined.

Fee Income

We derive income from fees received from providing administration services. Fee income is earned when services are performed.

Reserves

Reserves are established according to generally accepted actuarial principles and are based on a number of factors. These factors include experience derived from historical claim payments and actuarial assumptions to arrive at loss development factors. Such assumptions and other factors include trends, the incidence of incurred claims, the extent to which all claims have been reported and internal claims processing charges. The process used in computing reserves cannot be exact, particularly for liability coverages, since actual claim costs are dependent upon such complex factors as inflation, changes in doctrines of legal liability and damage awards. The methods of making such estimates and establishing the related liabilities are periodically reviewed and updated.

Reserves, whether calculated under GAAP or statutory accounting principles, do not represent an exact calculation of exposure, but instead represent our best estimates, generally involving actuarial projections at a given time, of what we expect the ultimate settlement and administration of a claim or group of claims will cost based on our assessment of facts and circumstances then known. The adequacy of reserves will be impacted by future trends in claims severity, frequency, judicial theories of liability and other factors. These variables are affected by both external and internal events, such as changes in the economic cycle, changes in the social perception of the value of work, emerging medical perceptions regarding physiological or psychological causes of disability, emerging health issues and new methods of treatment or accommodation, inflation, judicial trends, legislative changes and claims handling procedures. Many of these items are not directly quantifiable, particularly on a prospective basis. Reserve estimates are refined as experience develops. Adjustments to reserves, both positive and negative, are reflected in the statement of operations of the period in which such estimates are updated. Because establishment of reserves is an inherently uncertain process involving estimates of future losses, there can be no certainty that ultimate losses will not exceed existing claims reserves. Future loss development could require reserves to be increased, which could have a material adverse effect on our earnings in the periods in which such increases are made.


	Short Duration Contracts

For short duration contracts, claims and benefits payable reserves are recorded when insured events occur. The liability is based on the expected ultimate cost of settling the claims. The claims and benefits payable reserves include (1) case base reserves for known but unpaid claims as of the balance sheet date; (2) incurred but not reported (IBNR) reserves for claims where the insured event has occurred but has not been reported to us as of the balance sheet date; and (3) loss adjustment expense reserves for the expected handling costs of settling the claims.

For group disability, the case base reserves and the IBNR are recorded at an amount equal to the net present value of the expected claims future payments. Group long-term disability reserves are discounted to the valuation date at the valuation interest rate. The valuation interest rate is determined by taking into consideration actual and expected earned rates on our asset portfolio, with adjustments for investment expenses and provisions for adverse deviation.

Unearned premium reserves are maintained for the portion of the premiums on short duration contracts that is related to the unexpired period of the policy.

We have exposure to asbestos, environmental and other general liability claims arising from our participation in various reinsurance pools from 1971 through 1983. This exposure arose from a short duration contract that we discontinued writing many years ago. We carried case reserves for these liabilities as recommended by the various pool managers and bulk reserves for IBNR of $40 million (before reinsurance) and $39 million (after reinsurance) in the aggregate at December 31, 2002. It is not possible to make a reasonable actuarial estimate of the ultimate liabilities due to the general lack of sufficiently detailed data, reporting delays, and absence of a generally accepted actuarial methodology for those exposures. There are

significant unresolved industry legal issues, including such items as whether coverage exists and what constitutes an occurrence. In addition, the determination of ultimate damages and the final allocation of losses to financially responsible parties are highly uncertain. Accordingly, any estimation of these liabilities is subject to greater than normal variation and uncertainty.


	Long Duration Contracts

Future policy benefits and expense reserves on LTC, life insurance policies and annuity contracts that are no longer offered, individual medical and the traditional life insurance contracts within FFG are recorded at the present value of future benefits to be paid to policyholders and related expenses less the present value of the future net premiums. These amounts are estimated and include assumptions as to the expected investment yield, inflation, mortality, morbidity and withdrawal rates as well as other assumptions that are based on our experience. These assumptions reflect anticipated trends and include provisions for possible unfavorable deviations.

Future policy benefits and expense reserves for pre-funded funeral annuities, universal life insurance policies and annuity contracts that are no longer offered, and the variable life insurance and annuity contracts in FFG consist of policy account balances before applicable surrender charges and certain deferred policy initiation fees that are being recognized in income over the terms of the policies. Policy benefits charged to expense during the period include amounts paid in excess of policy account balances and interest credited to policy account balances.

The benefit liability for pre-funded funeral life insurance contracts includes the amount of gross premium that is received in excess of the net premium and accounted for as unearned premium revenue.

See “— Reserves” below.

Deferred Acquisition Costs (DAC)

The costs of acquiring new business that vary with and are primarily related to the production of new business have been deferred to the extent that such costs are deemed recoverable from future premiums or gross profits. Acquisition costs primarily consist of commissions, policy issuance expenses, premium tax and certain direct marketing expenses.

A premium deficiency is recognized immediately by a charge to the statement of operations as a reduction of DAC to the extent that future policy premiums, including anticipation of interest income, are not adequate to recover all DAC and related claims, benefits and expenses.


	Short Duration Contracts

DAC relating to property contracts, warranty and extended service contracts and single premium credit insurance contracts are amortized over the term of the contracts in relation to premiums earned.

Acquisition costs relating to monthly pay credit insurance business consist mainly of direct marketing costs and are deferred and amortized over the estimated average terms of the underlying contracts.

Acquisition costs on small group medical, group term life and group disability consist primarily of commissions to agents and brokers, which are level, and compensation to representatives, which is spread out and is not front-end loaded. These costs do not vary with the production of new business. As a result, these costs are not deferred but rather are recorded in the statement of operations in the period in which they are incurred.


	Long Duration Contracts

Acquisition costs for pre-funded funeral life insurance policies and life insurance policies no longer offered are deferred and amortized in proportion to anticipated premiums over the premium-paying period.

For pre-funded funeral annuity contracts and universal life insurance policies and annuity contracts that are no longer offered, DAC is amortized in proportion to the present value of estimated gross margins or profits from investment, mortality, expense margins and surrender charges over the estimated life of the policy or contract. The assumptions used for the estimates are consistent with those used in computing the policy or contract liabilities.

Acquisition costs relating to individual medical contracts are deferred and amortized over the estimated average terms of the underlying contracts.

Acquisition costs on the FFG and LTC disposed businesses were written off when the businesses were sold.

Investments

We regularly monitor our investment portfolio to ensure that investments that may be other than temporarily impaired are identified in a timely fashion and properly valued and that any impairments are charged against earnings in the proper period. Our methodology to identify potential impairments requires professional judgment.

Pursuant to our impairment process, each month the portfolio holdings are screened for securities whose market price is equal to 85% or less of their original purchase price. Management then makes their assessment as to which of these securities are other than temporarily impaired. Assessment factors include, but are not limited to, the financial condition and rating of the issuer, any collateral held and the length of time the market value of the security has been below cost. Each month the watchlist is discussed at a meeting attended by members of our investment, accounting and finance departments. Each quarter any security whose price decrease is deemed to have been other than temporarily impaired is written down to its then current market level, with the amount of the writedown reflected in our statement of operations for that quarter. Previously impaired issues are also monitored monthly, with additional writedowns taken quarterly if necessary.

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 writedowns in future periods for impairments that are deemed to be other than temporary. See also “Investments” in Note 2 of the Notes to Consolidated Financial Statements included elsewhere in this prospectus.


	*Reinsurance*

Reinsurance recoverables include amounts related to paid benefits and estimated amounts related to unpaid policy and contract claims, future policyholder benefits and policyholder contract deposits. The cost of reinsurance is accounted for over the terms of the underlying reinsured policies using assumptions consistent with those used to account for the policies. Amounts recoverable from reinsurers are estimated in a manner consistent with claim and claim adjustment expense reserves or future policy benefits reserves and are reported in our consolidated balance sheets. The cost of reinsurance related to long duration contracts is accounted for over the life of the underlying reinsured policies. The ceding of insurance does not discharge our primary liability to our insureds. An estimated allowance for doubtful accounts is recorded on the basis of periodic evaluations of balances due from reinsurers, reinsurer solvency, management’s experience and current economic conditions.


	*Other Accounting Policies*

For a description of other accounting policies applicable to the periods covered by this prospectus, see Note 2 of the Notes to Consolidated Financial Statements included elsewhere in this prospectus.


	*New Accounting Standard*

On January 1, 2002, we adopted Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets (FAS 142). As of our adoption of FAS 142, we ceased amortizing goodwill. In addition, we were required to subject our goodwill to an initial impairment test. As a result of FAS 142, we are required to conduct impairment testing on an annual basis and between annual tests if an event occurs or circumstances change indicating a possible goodwill impairment. In the absence of an impairment event, our net income will be higher as a result of not having to amortize goodwill.

As a result of this initial impairment test, we recognized a non-cash goodwill impairment charge of $1,261 million. The impairment charge was recorded as a cumulative effect of a change in accounting principle as of January 1, 2002. The impairment charge had no impact on cash flows or the statutory-basis capital and surplus of our insurance subsidiaries. We also performed a January 1, 2003 impairment test during the six months ended June 30, 2003 and concluded that goodwill was not further impaired.

See “New Accounting Pronouncements” in Note 2 of the Notes to Consolidated Financial Statements included elsewhere in this prospectus for a description of additional new accounting standards that are applicable to us.

Results of Operations


	*Consolidated Overview*

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



			For the
			Six Months						For the
			Ended June 30,						Year Ended December 31,

			2003			2002			2002			2001			2000


			(in millions)
Revenues:
	Net earned premiums and other considerations		$	2,987		$	2,788		$	5,681		$	5,242		$	5,144
	Net investment income			306			310			632			712			691
	Net realized gains (losses) on investments			7			(49	)		(118	)		(119	)		(45	)
	Amortization of deferred gain on disposal of businesses			35			40			80			68			10
	Gain on disposal of businesses			—			11			11			62			12
	Fees and other income			120			125			246			222			400

		Total revenues		3,455			3,225			6,532			6,187			6,212

Benefits, losses and expenses:
	Policyholder benefits			(1,774	)		(1,679	)		(3,429	)		(3,239	)		(3,208	)
	Selling, underwriting and general expenses(1)			(1,374	)		(1,285	)		(2,615	)		(2,497	)		(2,568	)
	Amortization of goodwill			—			—			—			(113	)		(107	)
	Interest expense			—			—			—			(14	)		(25	)
	Distributions on preferred securities of subsidiary trusts			(59	)		(59	)		(118	)		(118	)		(110	)

		Total benefits, losses and expenses		(3,207	)		(3,023	)		(6,162	)		(5,981	)		(6,018	)

Income before income taxes				248			202			370			206			194
	Income taxes			(84	)		(60	)		(110	)		(108	)		(104	)

Net income before cumulative effect of change in accounting principle				164			142			260			98			90

Cumulative effect of change in accounting principle				—			(1,261	)		(1,261	)		—			—

Net income (loss)			$	164		$	(1,119	)	$	(1,001	)	$	98		$	90


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

Note:

The table above includes amortization of goodwill in 2001 and 2000 and the cumulative effect of change in accounting principle in 2002 and for the six months ended June 30, 2002. These items are only included in this Consolidated Overview. As a result, the tables presented under the segment discussions do not total to the same amounts shown on this consolidated overview table. See Note 19 of the Notes to Consolidated Financial Statements included elsewhere in this prospectus.


	Six Months Ended June 30, 2003 Compared to Six Months Ended June 30, 2002


	Total Revenues

Total revenues increased by $230 million, or 7%, from $3,225 million for the six month period ended June 30, 2002, to $3,455 million for the six months ended June 30, 2003.

Net earned premiums and other considerations increased by $199 million, or 7%, from $2,788 million for the six month period ended June 30, 2002, to $2,987 million for the six month period ended June 30, 2003, largely as a result of increases in net earned premiums from Assurant Solutions and Assurant Health. Net

earned premiums and other considerations increased by $129 million, or 13%, in Assurant Solutions and net earned premiums and other considerations also increased by $65 million, or 7%, in Assurant Health.

Net investment income decreased by $4 million, or 1%, from $310 million for the six months ended June 30, 2002, to $306 million for the six months ended June 30, 2003. The decrease was primarily due to a decrease in achieved investment yields, driven by the lower interest rate environment. The yield on average invested assets was 5.94% (annualized) for the six months ended June 30, 2003, as compared to 6.31% (annualized) for the six months ended June 30, 2002.

Net realized gains on investments increased by $56 million from net realized losses on investments of $49 million for the six months ended June 30, 2002, to net realized gains of $7 million for the six months ended June 30, 2003. Net realized losses on investments are comprised of both other-than-temporary impairments and realized capital gains/losses on sales of securities. For the six months ended June 30, 2003, we had other-than-temporary impairments of $16 million, as compared to $38 million for the six months ended June 30, 2002. There were no individual impairments in excess of $10 million for the six months ended June 30, 2003. Impairments of available for sale securities in excess of $10 million during the six months ended June 30, 2002 consisted of a $12 million writedown of fixed maturity investments in AT&T Canada Inc. (AT&T Canada) and an $11 million writedown of fixed maturity investments in MCI WorldCom Inc. (MCI WorldCom). Excluding the effect of other than temporary impairments, we recorded an increase in net realized gains of $31 million in the Corporate and Other segment.

Amortization of deferred gain on disposal of businesses decreased by $5 million, or 13%, from $40 million for the six months ended June 30, 2002, to $35 million for the six months ended June 30, 2003. The decrease was consistent with the run-off of the business ceded to The Hartford and John Hancock.

Gain on disposal of businesses decreased by $11 million, or 100%, from $11 million for the six months ended June 30, 2002 to $0 for the six months ended June 30, 2003. On June 28, 2002, we sold our investment in NHP, which resulted in pre-tax gains of $11 million for the six months ended June 30, 2002.

Fees and other income decreased by $5 million, or 4%, from $125 million for the six months ended June 30, 2002 to $120 million for the six months ended June 30, 2003.


	Total Benefits, Losses and Expenses

Total benefits, losses and expenses increased by $184 million, or 6%, from $3,023 million for the six months ended June 30, 2002 to $3,207 million for the six months ended June 30, 2003.

Policyholder benefits increased by $95 million, or 6%, from $1,679 million for the six months ended June 30, 2002, to $1,774 million for the six months ended June 30, 2003. The increase was primarily due to a $64 million increase in the Assurant Solutions segment and a $28 million increase in Assurant Health.

Selling, underwriting and general expenses primarily consist of commissions, premium taxes, licenses, fees, amortization of DAC and VOBA and general operating expenses. These expenses increased by $89 million, or 7%, from $1,285 million for the six months ended June 30, 2002, to $1,374 million for the six months ended June 30, 2003. The Assurant Solutions and Assurant Health segments together contributed $84 million of this increase primarily due to additional commission costs as a result of growth in their businesses, partially offset by a $3 million decrease at Assurant Employee Benefit’s CORE line of business.

Distributions on preferred securities of subsidiary trusts during the six months ended June 30, 2003 remained unchanged from the six months ended June 30, 2002 at $59 million.


	Net Income

Net income increased $1,283 million from a loss of $1,119 million for the six months ended June 30, 2002, to a profit of $164 million for the six months ended June 30, 2003.

Income taxes increased by $24 million, or 40%, from $60 million for the six months ended June 30, 2002, to $84 million for the six months ended June 30, 2003. The effective tax rate for the six months ended June 30,

2002 was 29.7% compared to 33.9% for the six months ended June 30, 2003. The change in the effective rate is principally due to the release of approximately $6 million in the six months ended June 30, 2002 of previously provided tax accruals which were no longer considered necessary based on the resolution of certain domestic tax matters.

A cumulative effect (expense) of changes in accounting principles of $1,261 million was recognized for the six months ended June 30, 2002, as compared to $0 recognized for the six months ended June 30, 2003. Effective January 1, 2002, we adopted FAS 142, pursuant to which we ceased amortization of goodwill. See “—New Accounting Standard” and Note 2 of the Notes to Consolidated Financial Statements included elsewhere in this prospectus for a discussion of this new accounting standard.


	Year Ended December 31, 2002 Compared to December 31, 2001


	Total Revenues

Total revenues increased by $345 million, or 6%, from $6,187 million in 2001 to $6,532 million in 2002.

Net earned premiums and other considerations increased by $439 million, or 8%, from $5,242 million in 2001 to $5,681 million in 2002. Excluding the effect of the various acquisitions and dispositions described above, net earned premiums and other considerations increased mainly due to strong growth in Assurant Solutions primarily as a result of growth in new business and in Assurant PreNeed primarily due to an increase in the average size of policies sold by the AMLIC division.

Net investment income decreased by $80 million, or 11%, from $712 million in 2001 to $632 million in 2002. The decrease was primarily due to a decrease in achieved investment yields, driven by the lower interest rate environment and a decrease in average invested assets of $290 million. The yield on average invested assets was 6.27% for the year ended December 31, 2002 as compared to 6.86% for the year ended December 31, 2001. This reflected lower yields on fixed maturity securities and commercial mortgages.

Net realized losses on investments decreased by $1 million, or 1%, from $119 million in 2001 to $118 million in 2002. In 2002, we had other-than-temporary impairments of $85 million, as compared to $78 million in 2001. Impairments of available for sale securities in excess of $10 million in 2002 consisted of an $18 million writedown of fixed maturity investments in NRG Energy Inc. (NRG Energy), a $12 million writedown of fixed maturity investments in AT&T Canada and an $11 million writedown of fixed maturity investments in MCI WorldCom. Impairments of available for sale securities in excess of $10 million in 2001 consisted of a $22 million writedown of fixed maturity investments in Enron Corp. (Enron).

Amortization of deferred gain on disposal of businesses increased by $12 million, or 18%, from $68 million in 2001 to $80 million in 2002. The increase was primarily due to a full year of amortization of the deferred gain on the sale of FFG as compared to nine months in 2001. This deferred gain on sale is discussed in more detail under “—Corporate and Other” below.

Gain on disposal of businesses decreased by $51 million, or 82%, from $62 million in 2001 to $11 million in 2002. The $62 million reflects the gain on the sale of FFG’s mutual fund operations. The $11 million reflected the pre-tax gain on the sale of NHP.

Fees and other income increased by $24 million, or 11%, from $222 million in 2001 to $246 million in 2002. The increase was primarily due to a full year of fee income from CORE and an increase in fee income from the Assurant Solutions segment, mainly from their credit insurance business transitioning to debt protection administration. In late 2000, the majority of Assurant Solutions’ credit insurance clients began a transition from use of our credit insurance products to debt protection administration programs, from which we earn fee income rather than net earned premiums and where margins are lower than in the traditional credit insurance programs. However, because debt protection administration is not an insurance product, certain costs such as regulatory costs and cost of capital are expected to be eliminated as the transition from credit insurance to debt protection administration services continues. The fees from debt protection administration did not fully compensate for the decrease in credit insurance premiums. See “Business—Operating Business Segments—Assurant Solutions—Consumer Protection Solutions.” The increases

were partially offset by a $42 million, or 63%, decrease from the Corporate and Other segment due to the sale of FFG (partially through reinsurance), which had $65 million of fee income (generated from mutual fund operations included in such sale) in the first quarter of 2001.


	Total Benefits, Losses and Expenses

Total benefits, losses and expenses increased by $181 million, or 3%, from $5,981 million in 2001 to $6,162 million in 2002.

Policyholder benefits increased by $190 million, or 6%, from $3,239 million in 2001 to $3,429 million in 2002. The increase was primarily due to the effects of the acquisitions and dispositions described above. The increases were also partially offset by a $84 million, or 6%, decrease from the Assurant Health segment, primarily due to higher mix of individual health insurance business, which generally has a lower expected loss ratio relative to small employer group business, disciplined pricing and product design changes.

Selling, underwriting and general expenses increased by $118 million, or 5%, from $2,497 million in 2001 to $2,615 million in 2002. The Assurant Employee Benefits segment contributed $106 million of this increase, primarily due to the DBD and CORE acquisitions. This increase was offset by a $65 million decrease in the Corporate and Other segment due to the sale of FFG. The Assurant Health segment increased by $50 million, primarily due to an increase in the amortization of DAC and due to costs associated with higher employee compensation and investments in technology. Also, the Assurant PreNeed segment increased by $22 million, primarily due to increase in amortization of DAC and VOBA as a result of an increase in sales of single pay policies and increases in general expenses.

Amortization of goodwill was $0 in 2002 compared to $113 million in 2001, as a result of our adoption of FAS 142 as described above.

Interest expense decreased from $14 million in 2001 to $0 in 2002. In April 2001, we used a portion of the FFG sale proceeds to repay $225 million of outstanding debt owed to Fortis Finance N.V. (Fortis Finance), a wholly owned subsidiary of Fortis.

Distributions on preferred securities of subsidiary trusts in 2002 remained unchanged from 2001 at $118 million.


	Net Income

Net income decreased by $1,099 million from a profit of $98 million in 2001 to a loss of $1,001 million in 2002.

Income taxes increased by $2 million, or 2%, from $108 million in 2001 to $110 million in 2002. The effective tax rate for 2002 was 29.7% compared to 52.4% in 2001. The change in the effective tax rate primarily related to the elimination of amortization of goodwill in 2002.

When we adopted FAS 142 in 2002, we recognized a cumulative effect (expense) of change in accounting principle of $1,261 million in 2002 as compared to $0 recognized in 2001.


	Year Ended December 31, 2001 Compared to December 31, 2000


	Total Revenues

Total revenues decreased by $25 million, or 0.4%, from $6,212 million in 2000 to $6,187 million in 2001.

Net earned premiums and other considerations increased by $98 million, or 2%, from $5,144 million in 2000 to $5,242 million in 2001. Excluding the $71 million increase as a result of the acquisitions and dispositions described above, net earned premiums and other considerations increased by $27 million due to a $126 million increase at Assurant Solutions and a $23 million increase in 2001 in dental products issued by Assurant Employee Benefits. Offsetting these increases was a $129 million decrease in 2001 in net earned premiums and other considerations in Assurant Health due to declining membership in its small employer group health insurance product line.

Net investment income increased by $21 million, or 3%, from $691 million in 2000 to $712 million in 2001. The increase was primarily due to an increase in investment yields in 2001. The yield on average invested assets and cash was 6.86% for the year ended December 31, 2001, compared to 6.55% for the year ended December 31, 2000. This reflected higher yields on fixed maturity securities and commercial mortgage loans due in part to a higher interest rate environment.

Net realized losses on investments increased by $74 million, or 164%, from $45 million in 2000 to $119 million in 2001. In 2001, we had other-than-temporary impairments on fixed maturity securities of $78 million, as compared to $5 million in 2000. Impairments of available for sale securities in excess of $10 million in 2001 consisted of a $22 million writedown of fixed maturity investments in Enron.

Amortization of deferred gains on disposal of businesses increased by $58 million, from $10 million in 2000 to $68 million in 2001, mainly due to the recognition of nine months of amortization of the FFG deferred gain compared to $0 in 2000.

Gain on disposal of business increased by $50 million from $12 million in 2000 to $62 million in 2001. The increase was due to $62 million of gains recognized on the sale of FFG’s mutual fund management operations in 2001, as compared to $12 million of gains recognized on the sale of ACSIA in 2000.

Fees and other income decreased by $178 million, or 45%, from $400 million in 2000 to $222 million in 2001. Excluding the $211 million decrease as a result of the acquisitions and dispositions described above, fees and other income increased by $36 million largely as a result of increased fees generated by our mortgage servicing business and fees from administering debt protection programs in Assurant Solutions.


	Total Benefits, Losses and Expenses

Total benefits, losses and expenses decreased by $37 million, or 1.6%, from $6,018 million in 2000 to $5,981 million in 2001.

Policyholder benefits increased by $31 million, or 1%, from $3,208 million in 2000 to $3,239 million in 2001. Excluding the $10 million decrease as a result of the acquisitions and dispositions described above, policyholder benefits increased by $41 million due to a $115 million increase at Assurant Solutions as a result of growth in its business. Assurant Employee Benefits contributed an additional increase of $36 million due to corresponding growth in its dental and disability product businesses. Offsetting these increases was a $192 million decrease in Assurant Health as a result of improved loss experience and decreases in its small employer group health insurance business.

Selling, underwriting and general expenses decreased by $71 million, or 3%, from $2,568 million in 2000 to $2,497 million in 2001. Excluding the $159 million decrease as a result of the acquisitions and dispositions described above, selling, underwriting and general expenses increased by $88 million, mainly due to a $140 million increase at Assurant Solutions attributable to additional commission expenses associated with growth in sales of its warranty and extended service contract products. The Corporate and Other segment offset the increase by $43 million, primarily due to two months of selling, underwriting and general expenses in 2000 associated with our LTC operations which were sold to John Hancock on March 1, 2000.

Amortization of goodwill increased by $6 million, or 6%, from $107 million in 2000 to $113 million in 2001.

Interest expense decreased by $11 million, or 44%, from $25 million in 2000 to $14 million in 2001 mainly due to less debt outstanding during 2001 compared to 2000. In April 2001, we used a portion of the FFG sale proceeds to repay $225 million of debt owed to Fortis Finance.

Distributions on preferred securities of subsidiary trusts increased by $8 million, or 7%, from $110 million in 2000 to $118 million in 2001, mainly due to twelve months of interest related to trust originated preferred securities, which were issued in March 2000.


	Net Income

Net income increased by $8 million, or 9%, from $90 million in 2000 to $98 million in 2001.

Income taxes increased by $4 million, or 4%, from $104 million in 2000 to $108 million in 2001. The increase was consistent with the 6% increase in income before income taxes.


	*Assurant Solutions*


	Overview

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



			For the
			Six Months
			Ended						For the
			June 30,						Year Ended December 31,

			2003			2002			2002			2001			2000


			(in millions)
Revenues:
	Net earned premiums and other considerations		$	1,124		$	995		$	2,077		$	1,906		$	1,780
	Net investment income			96			101			205			218			212
	Fees and other income			68			57			119			98			68

		Total revenues		1,288			1,153			2,401			2,222			2,060

Benefits, losses and expenses:
	Policyholder benefits			(410	)		(346	)		(755	)		(640	)		(525	)
	Selling, underwriting and general expenses			(776	)		(710	)		(1,449	)		(1,444	)		(1,304	)

		Total benefits, losses and expenses		(1,186	)		(1,056	)		(2,204	)		(2,084	)		(1,829	)

Segment income before income tax				102			97			197			138			231
	Income taxes			(33	)		(32	)		(65	)		(40	)		(76	)

Segment income after tax			$	69		$	65		$	132		$	98		$	155

Net earned premiums and other considerations by major product groupings:
	Specialty Property Solutions(1)			342			255			552			452			413
	Consumer Protection Solutions(2)			782			740			1,525			1,454			1,367

		Total	$	1,124		$	995		$	2,077		$	1,906		$	1,780


(1)	“Specialty Property Solutions” includes a variety of specialized property insurance programs that are coupled with unique administrative capabilities.
(2)	“Consumer Protection Solutions” includes an array of debt protection administration services, credit insurance programs and warranties and extended service contracts.


	Six Months Ended June 30, 2003 Compared to Six Months Ended June 30, 2002


	Total Revenues

Total revenues increased by $135 million, or 12%, from $1,153 million for the six months ended June 30, 2002, to $1,288 million for the six months ended June 30, 2003.

Net earned premiums and other considerations increased by $129 million, or 13%, from $995 million for the six months ended June 30, 2002, to $1,124 million for the six months ended June 30, 2003. This increase was primarily due to $87 million of additional net earned premiums and other considerations attributable to our specialty property solutions products, including approximately $60 million from our creditor-placed and voluntary homeowners insurance and manufactured housing homeowners insurance lines from new clients and

increased sales through growth in existing clients. Consumer protection solutions also contributed $42 million in net earned premiums and other considerations primarily from growth in our warranty and extended service contracts business.

Net investment income decreased by $5 million, or 5%, from $101 million for the six months ended June 30, 2002, to $96 million for the six months ended June 30, 2003. The average portfolio yield dropped 32 basis points from 6.04% (annualized) for the six months ended June 30, 2002, to 5.72% (annualized) for the six months ended June 30, 2003 due to the lower interest rate environment. The average invested assets remained relatively flat.

Fees and other income increased by $11 million, or 19%, from $57 million for the six months ended June 30, 2002, to $68 million for the six months ended June 30, 2003, mainly from the continuing transition of our credit insurance business to our debt protection administration business.


	Total Benefits, Losses and Expenses

Total benefits, losses and expenses increased by $130 million, or 12%, from $1,056 million for the six months ended June 30, 2002 to $1,186 million for the six months ended June 30, 2003.

Policyholder benefits increased by $64 million, or 19%, from $346 million for the six months ended June 30, 2002, to $410 million for the six months ended June 30, 2003. This increase was due in part to $41 million in growth in our creditor-placed and voluntary homeowners insurance and our manufactured housing homeowners insurance lines. Our consumer protection solutions products also contributed $19 million, primarily related to the increase in business in our extended service and warranty products business.

Selling, underwriting and general expenses increased by $66 million, or 9%, from $710 million for the six months ended June 30, 2002, to $776 million for the six months ended June 30, 2003. Commissions, taxes, licenses and fees increased by $52 million primarily due to $38 million of growth in our extended service and warranty products and $11 million in growth in our manufactured housing homeowners insurance and creditor-placed and voluntary homeowners insurance lines. General expenses increased by $14 million, primarily from start up costs related to new clients in the creditor-placed homeowners insurance area.


	Segment Income After Tax

Segment income after tax increased by $4 million, or 6%, from $65 million for the six months ended June 30, 2002, to $69 million for the six months ended June 30, 2003. Excluding the decrease in investment income of $3 million after-tax, the segment income after tax increased by $7 million, or 11%.

Income taxes increased by $1 million, or 3%, from $32 million for the six months ended June 30, 2002, to $33 million for the six months ended June 30, 2003. This increase was due primarily to the increase in segment income before income tax of $5 million.


	Year Ended December 31, 2002 Compared to December 31, 2001


	Total Revenues

Total revenues increased by $179 million, or 8%, from $2,222 million in 2001 to $2,401 million in 2002.

Net earned premiums and other considerations increased by $171 million, or 9%, from $1,906 million in 2001 to $2,077 million in 2002. The increase was primarily due to approximately $100 million of additional net earned premiums from our specialty property solutions products, including approximately $86 million from the growth of our creditor-placed and voluntary homeowners insurance, flood insurance and manufactured housing related property coverages. Consumer protection solutions contributed an additional $71 million to the increase in net earned premiums due to the growth of $56 million attributable to our warranty and extended service contracts business and $58 million from an accidental death and dismemberment product, which we started selling in 2001 and stopped selling in 2002. These increases were partly offset by the decrease in credit insurance products of approximately $60 million as the transition from credit insurance products to debt protection administration programs continued and fees from debt protection administration programs did not

fully compensate for the decrease in credit insurance premiums. See “Business—Operating Business Segments— Assurant Solutions—Consumer Protection Solutions”.

Net investment income decreased by $13 million, or 6%, from $218 million in 2001 to $205 million in 2002. The average portfolio yield dropped 39 basis points from 6.51% in 2001 to 6.12% in 2002 due to the lower interest rate environment. This decrease was partially offset by the reinvestment of tax advantaged investments, such as preferred stock, low-income housing tax credit investments and tax-exempt municipal bonds, into higher yield taxable investments. Average invested assets remained relatively flat.

Fees and other income increased by $21 million, or 21%, from $98 million in 2001 to $119 million in 2002, including $13 million in additional fee income resulting from our credit insurance business transitioning to debt protection administration services.


	Total Benefits, Losses and Expenses

Total benefits, losses and expenses increased by $120 million, or 6%, from $2,084 million in 2001 to $2,204 million in 2002.

Policyholder benefits increased by $115 million, or 18%, from $640 million in 2001 to $755 million in 2002. Consumer protection solutions benefits contributed $98 million of this increase due to approximately $52 million from the warranty and extended service contracts business and $58 million from an accidental death and disability product. The increase was partly offset by the decrease in benefits in credit insurance products of approximately $14 million, which related to the decrease in premiums resulting from the transition to debt protection administration products. The growth of our specialty property solutions product lines also contributed a further $17 million to the increase in policyholder benefits in 2002, including approximately $10 million of losses related to Hurricane Lili and Arizona wildfires.

Selling, underwriting and general expenses increased by $5 million, or less than 1%, from $1,444 million in 2001 to $1,449 million in 2002. Commissions, taxes, licenses and fees contributed $22 million to the increase. The increase was primarily in our specialty property solutions business from the growth in the creditor-placed homeowners and manufactured housing homeowners insurance products. This increase was offset by a decrease in general expenses of $16 million in the six months ended June 30, 2003, primarily due to a non-recurring cost incurred in 2001.


	Segment Income After Tax

As a result of the foregoing, segment income after tax increased by $34 million, or 35%, from $98 million in 2001 to $132 million in 2002.

Income taxes increased $25 million, or 62%, from $40 million in 2001 to $65 million in 2002. The increase was primarily due to a 43% increase in segment income before income tax. The majority of the remaining increase was due to an increase in our effective tax rate primarily due to our decision to reduce our ownership of tax-advantaged investments.


	Year Ended December 31, 2001 Compared to December 31, 2000


	Total Revenues

Total revenues increased by $162 million, or 8%, from $2,060 million in 2000 to $2,222 million in 2001.

Net earned premiums and other considerations increased by $126 million, or 7%, from $1,780 million in 2000 to $1,906 million in 2001. The increase was primarily due to $87 million of additional earned premiums in our consumer protection solutions products, including approximately $120 million from our extended service and warranty contract products mainly resulting from the addition of a new client in late 2000. This increase was largely offset by a $68 million decrease in our credit insurance products as result of the transition from use of our credit insurance products to debt protection administration programs.

Net earned premiums in our specialty property solutions business increased by $39 million from 2000 to 2001, primarily from new business growth in our creditor-placed homeowners insurance and manufactured housing homeowners insurance product lines.

Net investment income increased by $6 million, or 3%, from $212 million in 2000 to $218 million in 2001. The average portfolio yield dropped 18 basis points from 6.69% in 2000 to 6.51% in 2001 due to the lower interest rate environment. Average invested assets increased by approximately 6% in 2001.

Fees and other income increased by $30 million, or 44%, from $68 million in 2000 to $98 million in 2001. The increase was primarily due to an increase of $6 million in administrative services fees in the mortgage services area and $9 million due to growth in the warranty and extended service contracts business. An additional $8 million increase was recorded as a result of customers transitioning to our debt protection administration services.


	Total Benefits, Losses and Expenses

Total benefits, losses and expenses increased by $255 million, or 14%, from $1,829 million in 2000 to $2,084 million in 2001.

Policyholder benefits increased by $115 million, or 22%, from $525 million in 2000 to $640 million in 2001. Consumer protection solutions benefits increased by $87 million primarily related to the growth in our extended service and warranty contract products. Specialty property solutions benefits increased by $27 million in 2001 primarily due to new clients and growth in business at existing clients in the creditor-placed homeowners insurance and manufactured housing homeowners insurance product lines.

Selling, underwriting and general expenses increased by $140 million, or 11%, from $1,304 million in 2000 to $1,444 million in 2001. Commissions, taxes, licenses and fees increased by $67 million, or 8%. The increase was attributable to $59 million of commissions from growth in the warranty and extended service contracts business, offset by a decrease of approximately $14 million in commissions payable on distribution of credit insurance products due to the decrease in net earned premiums in this product line. General expenses increased $72 million, or 15%, from 2000 to 2001. In 2001, we made a strategic decision to exit certain lines of business that were determined not to be core products. Additionally, we decided to close two separate sites to eliminate duplicate costs and consolidate them in our home office with existing staff. We incurred non-recurring expenses of $37 million in 2001, including $14 million in employee separation costs related to these decisions. Furthermore, our expenses increased by $22 million in 2001 due to additional costs related to growth in our creditor-placed homeowners insurance business.


	Segment Income After Tax

Segment income after tax decreased by $57 million, or 37%, from $155 million in 2000 to $98 million in 2001. Assurant Solutions overall results in 2001 were affected by our decision to exit certain lines of business and close separate sites and also by the increase in expenses related to the growth in the creditor-placed homeowners insurance product. The majority of the remaining decrease was attributable to the transition from credit insurance to debt protection administration services.

Income taxes decreased by $36 million, or 47%, from $76 million in 2000 to $40 million in 2001. The decrease was due primarily to the decrease in segment income before income tax of $93 million in 2001.

Assurant Health


	Overview

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



			For the
			Six Months
			Ended						For the
			June 30,						Year Ended December 31,

			2003			2002			2002			2001			2000


			(in millions except membership data)
Revenues:
	Net earned premiums and other considerations		$	969		$	904		$	1,834		$	1,838		$	1,967
	Net investment income			25			28			55			58			58
	Fees and other income			15			10			23			14			11

		Total revenues		1,009			942			1,912			1,910			2,036

Benefits, losses and expenses:
	Policyholder benefits			(630	)		(602	)		(1,222	)		(1,306	)		(1,498	)
	Selling, underwriting and general expenses			(283	)		(265	)		(546	)		(496	)		(471	)

		Total benefits, losses and expenses		(913	)		(867	)		(1,768	)		(1,802	)		(1,969	)

Segment income before income tax				96			75			144			108			67
	Income taxes			(34	)		(26	)		(49	)		(37	)		(23	)

Segment income after tax			$	62		$	49		$	95		$	71		$	44

Loss ratio(1)				65.0	%		66.6	%		66.6	%		71.1	%		76.2	%
Expense ratio(2)				28.8	%		29.0	%		29.4	%		26.8	%		23.8	%
Combined ratio(3)				92.8	%		94.9	%		95.2	%		97.3	%		99.5	%
Membership by product line (in thousands):
	Individual			715			650			670			600			500
	Small employer group			360			375			355			420			585

		Total		1,075			1,025			1,025			1,020			1,085


(1)	The loss ratio is equal to policyholder benefits divided by net earned premiums and other considerations.
(2)	The expense ratio is equal to selling, underwriting and general expenses divided by net earned premiums and other considerations and fees and other income.
(3)	The combined ratio is equal to total benefits, losses and expenses divided by net earned premiums and other considerations and fees and other income.


	Six Months Ended June 30, 2003 Compared to Six Months Ended June 30, 2002


	Total Revenues

Total revenues increased by $67 million, or 7%, from $942 million for the six months ended June 30, 2002 to $1,009 million for the six months ended June 30, 2003.

Net earned premiums and other considerations increased by $65 million, or 7%, from $904 million for the six months ended June 30, 2002, to $969 million for the six months ended June 30, 2003. An increase of $74 million in the net earned premiums attributable to our individual health insurance products in the six months ended June 30, 2003 was offset by a decrease of $9 million attributable to our small employer group health insurance products in the six months ended June 30, 2003. Net earned premiums attributable to our individual health insurance business increased due to membership growth, premium rate increases and favorable lapse experience on renewal business. Net earned premiums attributable to our small employer group health insurance business decreased due to declining membership largely, we believe, as employers reduced the number of their employees. We instituted premium rate increases in selected markets to

sufficiently price for the underlying medical costs of existing business and for anticipated future medical trends.

Net investment income decreased by $3 million, or 11%, from $28 million for the six months ended June 30, 2002, to $25 million for the six months ended June 30, 2003. There was a 70 basis point decrease in yield on the investment portfolio from 6.60% (annualized) for the six months ended June 30, 2002, to 5.90% (annualized) for the six months ended June 30, 2003, due to the lower interest rate environment. Offsetting the decrease in yield was a 3% increase in average invested assets for the six months ended June 30, 2003, over the comparable period in 2002.

Fees and other income increased by $5 million, or 50%, from $10 million for the six months ended June 30, 2002, to $15 million for the six months ended June 30, 2003, due to additional insurance policy fees and higher fee-based product sales in our individual health insurance business, such as sales of our non-insurance health access discount cards.


	Total Benefits, Losses and Expenses

Total benefits, losses and expenses increased by $46 million, or 5%, from $867 million for the six months ended June 30, 2002, to $913 million for the six months ended June 30, 2003.

Policyholder benefits increased by $28 million, or 5%, from $602 million for the six months ended June 30, 2002 to $630 million for the six months ended June 30, 2003. This increase was consistent with the increase in earned premiums. The loss ratio improved 160 basis points from 66.6% for the six months ended June 30, 2002, to 65.0% for the six months ended June 30, 2003, due to our risk management activities.

Selling, underwriting and general expenses increased by $18 million, or 7%, from $265 million for the six months ended June 30, 2002, to $283 million for the six months ended June 30, 2003. Commissions decreased by $8 million reflecting a higher mix of first year individual health insurance business, for which policy acquisition costs are deferred and amortized in subsequent years. Amortization of DAC increased by $14 million in the six months ended June 30, 2003, due to higher sales of individual health insurance products beginning in 2000. General expenses increased by $12 million due to higher employee compensation and additional spending to improve claims experience. The expense ratio improved 20 basis points from 29.0% for the six months ended June 30, 2002, to 28.8% for the six months ended June 30, 2003.


	Segment Income After Tax

Segment income after tax increased by $13 million, or 27%, from $49 million for the six months ended June 30, 2002, to $62 million for the six months ended June 30, 2003.

Income taxes increased by $8 million, or 31%, from $26 million for the six months ended June 30, 2002, to $34 million for the six months ended June 30, 2003. The increase was consistent with the 28% increase in segment income before income tax during the six months ended June 30, 2003.


	Year Ended December 31, 2002 Compared to December 31, 2001


	Total Revenues

Total revenues remained virtually unchanged from 2001 to 2002, at $1,910 million in 2001 as compared to $1,912 million in 2002.

Net earned premiums and other considerations also remained stable from 2001 to 2002, at $1,838 million in 2001 as compared to $1,834 in 2002, with an increase of $142 million in 2002 in the net earned premiums attributable to our individual health insurance products being offset by a decrease of $146 million during such year in net earned premiums attributable to our small employer group health insurance products. Net earned premiums attributable to our individual health insurance business increased due to membership growth, premium rate increases and favorable lapse experience on renewal business. Net earned premiums attributable to our small employer group health insurance business decreased due to declining membership, partially offset by small employer group premium rate increases that we instituted in selected markets to adequately price for the underlying medical costs of existing business and for anticipated future medical trends.

Net investment income decreased by $3 million, or 5%, from $58 million in 2001 to $55 million in 2002. There was a 90 basis point decrease in yield on the investment portfolio from 7.4% in 2001 to 6.5% in 2002 mainly due to the lower interest rate environment. Partially offset by the decrease in yield was a 7% increase in average invested assets in 2002.

Fees and other income increased by $9 million, or 64%, from $14 million in 2001 to $23 million in 2002 due to additional insurance policy fees and higher fee-based product sales in our individual health insurance business.


	Total Benefits, Losses and Expenses

Total benefits, losses and expenses decreased by $34 million, or 2%, from $1,802 million in 2001 to $1,768 million in 2002.

Policyholder benefits decreased by $84 million, or 6%, from $1,306 million in 2001 to $1,222 million in 2002. This decrease was principally due to a higher mix of individual health insurance business which had a lower loss ratio relative to small employer group health insurance business, primarily due to disciplined pricing and product design changes. The loss ratio improved 450 basis points from 71.1% in 2001 to 66.6% in 2002 due to the higher mix of individual health insurance business, increased premium rates and product design changes.

Selling, underwriting and general expenses increased by $50 million, or 10%, from $496 million in 2001 to $546 million in 2002. Taxes, licenses and fees increased by $5 million in 2002, or 13%, due to a change in the mix of business by state and legal entity, and the loss of favorable consolidated premium tax return benefits triggered by the disposition of FFG. The amortization of DAC increased by $21 million in 2002, or 49%, due to higher sales of individual health insurance products beginning in 2000. General expenses increased by $34 million in 2002, or 13%, due to investments in technology, higher employee compensation and additional spending to achieve loss ratio improvements. Partially offsetting these increases was a $10 million, or 7%, decrease in commissions due to a higher mix of first year individual health insurance business. Individual health insurance policy acquisition costs are deferred and amortized in subsequent years.

The expense ratio increased by 260 basis points from 26.8% in 2001 to 29.4% in 2002. This increase was primarily attributable to the higher commissions on the mix of business in individual health insurance, investments in technology, higher employee compensation and additional spending to achieve loss ratio improvements.


	Segment Income After Tax

Segment income after tax increased by $24 million, or 34%, from $71 million in 2001 to $95 million in 2002.

Income taxes increased by $12 million, or 32%, from $37 million in 2001 to $49 million in 2002. The increase was consistent with the 33% increase in segment income before income tax in 2002.


	Year Ended December 31, 2001 Compared to December 31, 2000


	Total Revenues

Total revenues decreased by $126 million, or 6%, from $2,036 million in 2000 to $1,910 million in 2001.

Net earned premiums and other considerations decreased by $129 million, or 7%, from $1,967 million in 2000 to $1,838 million in 2001. A decrease of $248 million in 2001 in the net earned premiums attributable to our small employer group health insurance products was partially offset by an increase of $119 million in net earned premiums attributable to our individual health insurance products in 2001. Net earned premiums for small employer group health insurance products decreased due to declining membership that resulted primarily from premium increases required to restore profitability to the block of business. Net earned premiums attributable to our individual health insurance business increased due to premium rate increases and membership growth.

Net investment income remained unchanged at $58 million in 2001. A 40 basis point increase in yield on the investment portfolio from 7.00% in 2000 to 7.40% in 2001 offset a 5% decrease in average invested assets in 2001.

Fees and other income increased by $3 million, or 27%, from $11 million in 2000 to $14 million in 2001.


	Total Benefits, Losses and Expenses

Total benefits, losses and expenses decreased by $167 million, or 8%, from $1,969 million in 2000 to $1,802 million in 2001.

Policyholder benefits decreased by $192 million, or 13%, from $1,498 million in 2000 to $1,306 million in 2001. This decrease was due to a reduction in persons insured, an increasing mix of individual health insurance business and improved small employer group health insurance loss experience. The loss ratio improved 510 basis points from 76.2% in 2000 to 71.1% in 2001 due to increased premium rates, product design changes and the increased mix of individual health insurance business.

Selling, underwriting and general expenses increased by $25 million, or 5%, from $471 million in 2000 to $496 million in 2001. The increase was driven by an increase in general expenses of $35 million, primarily due to additional spending to achieve loss ratio improvements, investments in technology and higher employee compensation. Offsetting this increase was a decrease in commissions, taxes, licenses and fees of $15 million in 2001, principally due to the decrease in small employer group health insurance products sold.

The expense ratio increased 290 basis points from 23.8% in 2000 to 26.8% in 2001 due to investments in technology and additional spending to achieve loss ratio improvements.


	Segment Income After Tax

Segment income after tax increased by $27 million, or 61%, from $44 million in 2000 to $71 million in 2001.

Income taxes increased by $14 million, or 61%, from $23 million in 2000 to $37 million in 2001. The increase was consistent with the 61% increase in segment income before income tax in 2001.

Assurant Employee Benefits


	Overview

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



			For the
			Six Months
			Ended						For the
			June 30,						Year Ended December 31,

			2003			2002			2002			2001			2000


			(in millions)
Revenues:
	Net earned premiums and other considerations		$	623		$	621		$	1,233		$	934		$	903
	Net investment income			70			72			148			144			136
	Fees and other income			33			37			74			39			8

		Total revenues		726			730			1,455			1,117			1,047

Benefits, losses and expenses:
	Policyholder benefits			(471	)		(481	)		(945	)		(738	)		(702	)
	Selling, underwriting and general expenses			(214	)		(217	)		(422	)		(316	)		(280	)

		Total benefits, losses and expenses		(685	)		(698	)		(1,367	)		(1,054	)		(982	)

Segment income before income tax				41			32			88			63			65
	Income taxes			(14	)		(11	)		(31	)		(22	)		(23	)

Segment income after tax			$	27		$	21		$	57		$	41		$	42

Loss ratio(1)				75.6	%		77.5	%		76.6	%		79.0	%		77.7	%
Expense ratio(2)				32.6	%		33.0	%		32.3	%		32.5	%		30.7	%
Premium persistency ratio(3)				88.5	%		89.6	%		79.9	%		84.3	%		88.5	%
Net earned premiums and other considerations by major product groupings:
	Group dental		$	273		$	280		$	553		$	257		$	234
	Group disability			218			199			400			398			387
	Group life			132			142			280			279			282

		Total	$	623		$	621		$	1,233		$	934		$	903


(1)	The loss ratio is equal to policyholder benefits divided by net earned premiums and other considerations.
(2)	The expense ratio is equal to selling, underwriting and general expenses divided by net earned premiums and other considerations and fees and other income.
(3)	The premium persistency ratio is equal to the year-to-date (not annualized) rate at which existing business for all issue years at the beginning of the period remains in force at the end of the period. Persistency is typically higher mid-year than at year-end. The calculations for the year ended December 31, 2002 and the six months ended June 30, 2002 exclude DBD.

We acquired DBD on December 31, 2001 and CORE on July 12, 2001; therefore, the results of DBD and CORE are included in our Assurant Employee Benefits segment financial results beginning in 2002 and July 2001, respectively.


	Six Months Ended June 30, 2003 Compared to Six Months Ended June 30, 2002


	Total Revenues

Total revenues increased by $6 million, or 0.8%, from $730 million for the six months ended June 30, 2002, to $726 million for the six months ended June 30, 2003.

Net earned premiums and other considerations increased by $2 million, or 0.3%, from $621 million for the six months ended June 30, 2002, to $623 million for the six months ended June 30, 2003. The increase was primarily due to $19 million of growth in the six months ended June 30, 2003 in group disability premiums driven by reinsurance assumed in our Disability Reinsurance Management Services, Inc. (DRMS) pool as described in “Business — Operating Business Segments — Assurant Employee Benefits”. This was partially offset by a decline in group life premiums of $10 million in the six months ended June 30, 2003, due to our non-renewal of certain unprofitable business and less new business due to continued pricing discipline. In addition, group dental premiums declined by $7 million in the six months ended June 30, 2003 due to the non-renewal of a large account. This resulted in an aggregate premium persistency of 88.5% for the six months ended June 30, 2003, compared to 89.6% for the six months ended June 30, 2002. Premium persistency measures the proportionate premium levels remaining after year-to-date lapse activity. The premium persistency ratio encompasses the effects of rate increases, plan design changes and benefit volume changes.

Net investment income decreased by $2 million, or 3%, from $72 million for the six months ended June 30, 2002, to $70 million for the six months ended June 30, 2003. Investment yields decreased from 6.94% (annualized) for the six months ended June 30, 2002, to 6.44% (annualized) for the six months ended June 30, 2003, due to declining yields on new investments. Average invested assets increased by 7% between reporting periods, driven by the increase in disability revenues.

Fees and other income decreased by $4 million, or 11%, from $37 million for the six months ended June 30, 2002, to $33 million for the six months ended June 30, 2003. The decrease was primarily due to lower fee revenue from CORE. The fee revenues for CORE were $32 million for the six months ended June 30, 2002 versus $28 million for the same period in 2003.


	Total Benefits, Losses and Expenses

Total benefits, losses and expenses decreased by $13 million, or 2%, from $698 million for the six months ended June 30, 2002 to $685 million for the six months ended June 30, 2003.

Policyholder benefits decreased by $10 million, or 2%, from $481 million for the six months ended June 30, 2002, to $471 million for the six months ended June 30, 2003. This was driven by favorable development in group disability claims and lower claims activity due to a reduction in group life and dental earned premiums.

The loss ratio improved by 190 basis points from 77.5% for the six months ended June 30, 2002 to 75.6% for the six months ended June 30, 2003. This was driven by favorable group disability experience.

Selling, underwriting and general expenses decreased by $3 million, or 1%, from $217 million for the six months ended June 30, 2002, to $214 million for the six months ended June 30, 2003. General expenses decreased by $2 million in the six months ended June 30, 2003, from the six months ended June 30, 2002, due to decreased spending in the CORE line of business.

The expense ratio decreased by 40 basis points from 33.0% for the six months ended June 30, 2002 to 32.6% for the six months ended June 30, 2003. This was driven by decreased spending at CORE, as well as a slight reduction in commissions.


	Segment Income After Tax

Segment income after tax increased by $6 million, or 29%, from $21 million for the six months ended June 30, 2002, to $27 million for the six months ended June 30, 2003.

Income taxes increased by $3 million, or 27%, from $11 million for the six months ended June 30, 2002, to $14 million for the six months ended June 30, 2003. The increase was consistent with the 28% increase in segment income before income tax.


	Year Ended December 31, 2002 Compared to Year Ended December 31, 2001


	Total Revenues

Total revenues increased by $338 million, or 30%, from $1,117 million in 2001 to $1,455 million in 2002, substantially all of which was attributable to the acquisition of DBD.

Net earned premiums and other considerations increased by $299 million, or 32%, from $934 million in 2001 to $1,233 million in 2002. Excluding the $299 million increase in net earned premiums due to the acquisition of DBD, net earned premiums were unchanged at $934 million from 2001 to 2002, primarily because new business was offset by non-renewal of certain unprofitable business. An additional contributing factor was increased pressure on ancillary employee benefits provided by employer groups due to increased medical costs. Premium persistency (excluding the DBD acquisition) decreased by 440 basis points from 84.3% for 2001 to 79.9% for 2002 because of disciplined underwriting and reduced employment in renewed groups.

Net investment income increased by $4 million from $144 million in 2001 to $148 million in 2002. The DBD acquisition contributed an increase of $4 million to investment income in 2002. This increase was offset in part by a decrease of $1 million as a result of a decrease in investment yields by 54 basis points from 7.53% in 2001 to 6.99% in 2002 due to the lower interest rate environment.

Fees and other income increased by $35 million, or 90%, from $39 million in 2001 to $74 million in 2002 primarily due to a full year of fee revenue from CORE, which was acquired on July 12, 2001. CORE fee revenue was $66 million in 2002, as compared to the half-year of revenue recorded in 2001 of $31 million.


	Total Benefits, Losses and Expenses

Total benefits, losses and expenses increased by $313 million, or 30%, from $1,054 million in 2001 to $1,367 million in 2002.

Policyholder benefits increased by $207 million, or 28%, from $738 million in 2001 to $945 million in 2002. Excluding the $197 million increase related to the acquisition of DBD, policyholder benefits increased by $10 million, or 1%, driven by growth in group dental premiums. Our loss ratio improved 240 basis points from 79.0% in 2001 to 76.6% in 2002. Excluding the effect of the DBD acquisition, the loss ratio in 2002 was 80.1%, which was higher than in 2001 due to slight deterioration in group dental and group life experience.

Selling, underwriting and general expenses increased by $106 million, or 34%, from $316 million in 2001 to $422 million in 2002 primarily due to the DBD and CORE acquisitions. The expense ratio was virtually unchanged between 2001 and 2002.


	Segment Income After Tax

Segment income after tax increased by $16 million, or 39%, from $41 million in 2001 to $57 million in 2002.

Income taxes increased by $9 million, or 41%, from $22 million in 2001 to $31 million in 2002. The increase was consistent with the 40% increase in segment income before income tax.


	Year Ended December 31, 2001 Compared to December 31, 2000


	Total Revenues

Total revenues increased by $70 million, or 6%, from $1,047 million in 2000 to $1,117 million in 2001.

Net earned premiums and other considerations increased by $31 million, or 3%, from $903 million in 2000 to $934 million in 2001. Net earned premiums attributable to dental products increased $23 million in 2001 primarily due to increased sales of recently developed products with PPOs and lower-cost plan options. Group disability products contributed a further $11 million increase in 2001 to net earned premiums while net earned premiums attributable to our group life products decreased by $3 million in 2001. The stable premium

level from 2000 to 2001 was primarily due to non-renewal of certain unprofitable business. This led to an aggregate premium persistency of 84.3% for 2001, which was 420 basis points below the prior year.

Net investment income increased by $8 million, or 6%, from $136 million in 2000 to $144 million in 2001. Invested assets increased by 6% and investment yields increased by eight basis points from 7.45% in 2000 to 7.53% in 2001.

Fees and other income increased by $31 million from $8 million in 2000 to $39 million in 2001 mainly due to fee income earned by CORE in 2001.


	Total Benefits, Losses and Expenses

Total benefits, losses and expenses increased by $72 million, or 7%, from $982 million in 2000 to $1,054 million in 2001.

Policyholder benefits increased by $36 million, or 5%, from $702 million in 2000 to $738 million in 2001. The increase resulted from revenue growth in the dental and disability product lines, as well as unfavorable group life mortality experience compared to 2000, when we experienced positive mortality results. The loss ratio increased 130 basis points from 77.7% in 2000 to 79.0% in 2001. The increased loss ratio was primarily due to unfavorable group life mortality experience as compared to 2000, as explained above.

Selling, underwriting and general expenses increased by $36 million, or 13%, from $280 million in 2000 to $316 million in 2001. The increase was primarily due to the acquisition of CORE, which contributed $31 million to such expenses.

The expense ratio increased 180 basis points from 30.7% in 2000 to 32.5% in 2001. Excluding the effect of the CORE acquisition, the expense ratio was virtually unchanged between 2000 and 2001.


	Segment Income After Tax

Segment income after tax decreased by $1 million, or 2%, from $42 million in 2000 to $41 million in 2001.

Income taxes also decreased by $1 million or 4%, from $23 million in 2000 to $22 million in 2001, which was consistent with the decrease in segment income before income tax in 2001.

Assurant PreNeed


	Overview

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



			For the
			Six Months						For the
			Ended						Year Ended
			June 30,						December 31,

			2003			2002			2002			2001			2000


			(in millions)
Revenues:
	Net earned premiums and other considerations		$	271		$	268		$	538		$	507		$	277
	Net investment income			93			93			184			179			128
	Fees and other income			3			3			5			3			2

		Total revenues		367			364			727			689			407

Benefits, losses and expenses:
	Policyholder benefits			(263	)		(250	)		(507	)		(485	)		(279	)
	Selling, underwriting and general expenses			(75	)		(73	)		(143	)		(121	)		(76	)

		Total benefits, losses and expenses		(338	)		(323	)		(650	)		(606	)		(355	)

Segment income before income tax				29			41			77			83			52
	Income taxes			(10	)		(15	)		(27	)		(29	)		(18	)

Segment income after tax			$	19		$	26		$	50		$	54		$	34

Net earned premiums and other considerations by channel:
	AMLIC		$	147		$	152		$	306		$	278		$	60
	Independent			124			116			232			229			217

		Total	$	271		$	268		$	538		$	507		$	277

We acquired AMLIC on October 1, 2000, and therefore the results of AMLIC are included in our Assurant PreNeed segment financial results beginning October 1, 2000.


	Six Months Ended June 30, 2003 Compared to Six Months Ended June 30, 2002


	Total Revenues

Total revenues increased by $3 million, or 0.8%, from $364 million for the six months ended June 30, 2002, to $367 million for the six months ended June 30, 2003.

Net earned premiums and other considerations increased by $3 million, or 1%, from $268 million for the six months ended June 30, 2002, to $271 million for the six months ended June 30, 2003. Net earned premiums in our independent channel increased by $8 million in the six months ended June 30, 2003 due to the shift towards more single premium business. This increase was partially offset by a decrease in the six months ended June 30, 2003 of $5 million of net earned premiums in our AMLIC channel due to a decline of 26% in new sales from SCI, AMLIC’s principal customer.

Net investment income of $93 million remained the same for the six months ended June 30, 2003, compared to the six months ended June 30, 2002. A 9% increase in average invested assets was offset by a 50 basis point decrease in the annualized investment yield of 7.14% at June 30, 2002, to 6.64% at June 30, 2003. This rate decline reduced net investment income by $7 million for the six months ended June 30, 2003, over 2002 levels. This decline in yields was due to the lower interest rate environment and the restructuring of the portfolio in 2002 to improve credit quality.


	Total Benefits, Losses and Expenses

Total benefits, losses and expenses increased by $15 million, or 5%, from $323 million for the six months ended June 30, 2002, to $338 million for the six months ended June 30, 2003.

Policyholder benefits increased by $13 million, or 5%, from $250 million for the six months ended June 30, 2002, to $263 million for the six months ended June 30, 2003. This was due to the normal growth in the inforce block of business.

Selling, underwriting and general expenses increased by $2 million, or 3%, from $73 million for the six months ended June 30, 2002, to $75 million for the six months ended June 30, 2003. Amortization of DAC and VOBA increased by $6 million in the six months ended June 30, 2003, principally due to a larger in force block of business and the increased sales of single pay policies versus plans paid over a three-, five- or ten-year period. The acquisition costs on single pay plans are amortized in the year of issue, causing the increase in expense levels in the six months ended June 30, 2003 over the comparable period in 2002. Offsetting this increase was a decrease of $6 million in commission, taxes, licenses and fees during the six months ended June 30, 2003, due to the drop in new sales. General expenses increased by $3 million during the six months ended June 30, 2003, from the comparable period in 2002.


	Segment Income After Tax

Segment income after tax decreased by $7 million, or 27%, from $26 million for the six months ended June 30, 2002, to $19 million for the six months ended June 30, 2003. This was caused primarily by smaller spreads between our investment yields and rates we credited on pre-funded funeral insurance policies. In extended periods of declining interest rates or high inflation, the profits on pre-funded funeral insurance policies are reduced as a result of the lower spread between investment income earned and the fixed benefits credited to our policyholders. As of June 30, 2003, approximately 70% of Assurant PreNeed’s in force insurance policy reserves related to policies that provide for death benefit growth, some of which provide for minimum death benefit growth pegged to changes in the Consumer Price Index.

Income taxes decreased by $5 million, or 33%, from $15 million for the six months ended June 30, 2002 to $10 million for the six months ended June 30, 2003, largely consistent with the 29% decrease in segment income before income tax.


	Year Ended December 31, 2002 Compared to December 31, 2001


	Total Revenues

Total revenues increased by $38 million, or 6%, from $689 million in 2001 to $727 million in 2002.

Net earned premiums and other considerations increased by $31 million, or 6%, from $507 million in 2001 to $538 million in 2002. The increase was primarily driven by a $28 million increase in net earned premiums in 2002 in our AMLIC channel due to an increase in the average size of the policies sold. Policy size increased due to a change in packaging of funerals sold by SCI.

Net investment income increased by $5 million, or 3%, from $179 million in 2001 to $184 million in 2002. An 8% increase in average invested assets in 2002 resulting from the growth in inforce policies resulted in $14 million of additional investment income in 2002. Offsetting the increase in invested assets was a 36 basis point decrease in yield on the investment portfolio from 7.29% in 2001 to 6.93% in 2002 due to the lower interest rate environment and restructuring of the investment portfolio to enhance credit quality. The decline in yields reduced investment income by $9 million in 2002.

Fees and other income increased by $2 million, or 66%, from $3 million in 2001 to $5 million in 2002.


	Total Benefits, Losses and Expenses

Total benefits, losses and expenses increased by $44 million, or 7%, from $606 million in 2001 to $650 million in 2002.

Policyholder benefits increased by $22 million, or 5%, from $485 million in 2001 to $507 million in 2002. The increase in policyholder benefits was consistent with the increase in business written, partially offset by other factors. A portion of our pre-funded funeral insurance policies uses a Consumer Price Index rate as a growth rate credited on policies. The Consumer Price Index rate decreased from 3.36% in 2001 to 1.97% in 2002. This reduced policyholder benefits by $6 million in 2002. In addition, benefit expense increased by $3 million from 2001 to 2002 related to higher customer utilization of an early pay off feature that allows conversion from limited pay policies to single pay policies.

Selling, underwriting and general expenses increased by $22 million or 18% from $121 million in 2001 to $143 million in 2002. The primary reason for the increase was an increase in amortization of DAC and VOBA of $13 million in 2002, as a result of the increased sales of single pay policies versus plans paid over a three-, five- and ten-year period. The acquisition costs on single pay policies are amortized in the year of issue, thus causing the increase in expense levels in 2002 over 2001. All other expenses increased by $6 million in 2002 from 2001 due primarily to the increase in premiums.


	Segment Income After Tax

Segment income after tax decreased $4 million, or 7%, from $54 million in 2001 to $50 million in 2002. This was caused primarily by smaller spreads between our investment yields and rates we credited to our policyholders. Also, profits were lower due to higher utilization of the early pay off feature described above and higher mortality, offset by the lower Consumer Price Index credited growth.

Income taxes decreased by $2 million, or 7%, from $29 million in 2001 to $27 million in 2002 which was largely consistent with the 7% decrease in segment income before income tax in 2002.


	Year Ended December 31, 2001 Compared to December 31, 2000


	Total Revenues

Total revenues increased by $282 million, or 69%, from $407 million in 2000 to $689 million in 2001.

Net earned premiums and other considerations increased by $230 million, or 83%, from $277 million in 2000 to $507 million. Excluding the increase to net earned premiums of $218 million due to the acquisition of AMLIC, net earned premiums increased by $13 million primarily due to growth in our independent channel’s inforce block of business and to increased sales from the signing of new large third-party marketing distributors. In late 2000, we began pursuing large third-party marketers as an additional source of distribution, diversifying our traditional channels of captive field representatives and independent agents specializing in pre-funded funeral insurance products.

Investment income increased by $51 million, or 40%, from $128 million in 2000 to $179 million in 2001. Excluding the net increase to investment income of $47 million due to the acquisition of AMLIC, investment income increased by $4 million. This was primarily due to an increase in yield on the investment portfolio from 7.27% in 2000 to 7.36% in 2001 with the balance of the increase due to growth in assets.


	Total Benefits, Losses and Expenses

Total benefits, losses and expenses increased by $251 million, or 71%, from $355 million in 2000 to $606 million in 2001.

Policyholder benefits increased by $206 million, or 74%, from $279 million in 2000 to $485 million in 2001. Excluding the increase to policyholder benefits of $196 million as a result of the acquisition of AMLIC, the policyholder benefits in our independent channel increased by $10 million in 2001, or 4%, consistent with the 6% increase in net earned premiums in 2001.

Selling, underwriting and general expenses increased by $45 million, or 59%, from $76 million in 2000 to $121 million in 2001. The increase was primarily due to the acquisition of AMLIC.


	Segment Income After Tax

Segment income after tax increased by $20 million, or 59%, from $34 million in 2000 to $54 million in 2001. Increases of $20 million after tax contribution was due to the AMLIC acquisition.

Income taxes increased by $11 million, or 61%, from $18 million in 2000 to $29 million in 2001. The increase in income tax expense was consistent with the 62% increase in segment income before income tax in 2001.

Corporate and Other


	Overview

The Corporate and Other segment includes activities of the holding company, financing expenses, realized gains (losses) on investments and interest income not allocated to other segments. The Corporate and Other segment also includes (i) the results of operations of FFG (a business we sold on April 2, 2001) and (ii) LTC (a business we sold on March 1, 2000), for the periods prior to their disposition, and amortization of deferred gains associated with the portions of the sales of FFG and LTC sold through reinsurance agreements as described above. The table below presents information regarding our Corporate and Other segment’s results of operations:



			For the
			Six Months						For the
			Ended						Year Ended
			June 30,						December 31,

			2003			2002			2002			2001			2000


			(in millions)
Revenues:
	Net earned premiums and other considerations		$	—		$	—		$	—		$	58		$	217
	Net investment income			22			16			40			112			157
	Net realized gains (losses) on investments			7			(49	)		(118	)		(119	)		(45	)
	Amortization of deferred gain on disposal of businesses			35			40			80			68			10
	Gain on disposal of businesses			—			11			11			62			12
	Fees and other income			1			19			25			67			311

		Total revenues		65			37			38			248			662

Benefits, losses and expenses:
	Policyholder benefits			—			—			—			(70	)		(204	)
	Selling, underwriting and general expenses			(25	)		(21	)		(55	)		(120	)		(437	)
	Interest expense			—			—			—			(14	)		(25	)
	Distributions on preferred securities of subsidiary trusts			(59	)		(59	)		(118	)		(118	)		(110	)

		Total benefits, losses and expenses		(84	)		(80	)		(173	)		(322	)		(776	)

Segment income before income tax				(19	)		(43	)		(135	)		(74	)		(114	)
	Income taxes			7			23			61			21			36

Segment income after tax			$	(12	)	$	(20	)	$	(74	)	$	(53	)	$	(78	)

As of June 30, 2003, we had approximately $434 million (pre-tax) of deferred gains that had not yet been amortized. We expect that we will be amortizing deferred gains from dispositions through 2031. The deferred gains are being amortized in a pattern consistent with the expected future reduction of the inforce blocks of business ceded to The Hartford and John Hancock. This reduction is expected to be more rapid in the first few years after sale and to be slower as the liabilities in the block decrease.

The Corporate and Other segment’s financial results were most affected by the April 2, 2001 sale of FFG. Below are the results of FFG that have been included in the Corporate and Other segment from January 1, 2001 through March 31, 2001, and for 2000:



			For the Year
			Ended
			December 31,

			2001			2000


			(in millions)
Revenues:
	Net earned premiums		$	49		$	196
	Net investment income			32			179
	Fees and other income			65			304

		Total revenues		146			679

Benefits, losses and expenses:
	Policyholder benefits			(48	)		(211	)
	Selling, underwriting and general expenses			(86	)		(360	)

		Total benefits, losses and expenses		(134	)		(571	)

Reportable income results before income tax				12			108
	Income taxes			(4	)		(33	)

Reportable income results after tax			$	8		$	75

Six Months Ended June 30, 2003 Compared to Six Months Ended June 30, 2002


	Total Revenues

Total revenues increased by $28 million, or 76%, from $37 million for the six months ended June 30, 2002, to $65 million for the six months ended June 30, 2003.

Net investment income increased by $6 million, or 38%, from $16 million for the six months ended June 30, 2002, to $22 million for the six months ended June 30, 2003.

Net realized gains on investments improved by $56 million from net realized losses on investments of $49 million for the six months ended June 30, 2002, to net realized gains on investments of $7 million for the six months ended June 30, 2003. Net realized losses on investments are comprised of both other-than-temporary impairments and sales of securities. For the six months ended June 30, 2003, we had other-than-temporary impairments of $16 million, as compared to $38 million for the six months ended June 30, 2002. There were no individual impairments in excess of $10 million for the six months ended June 30, 2003. Impairments of available for sale securities in excess of $10 million for the six months ended June 30, 2002 consisted of a $12 million writedown of fixed maturity investments in AT&T Canada and an $11 million writedown of fixed maturity investments in MCI WorldCom.

Amortization of deferred gain on disposal of businesses decreased by $5 million, or 13%, from $40 million for the six months ended June 30, 2002, to $35 million for the six months ended June 30, 2003. This decrease was consistent with the run-off of the business ceded to The Hartford and John Hancock.

Gains on disposal of businesses decreased by $11 million, or 100%, from $11 million for the six months ended June 30, 2002, to $0 for the six months ended June 30, 2003. On June 28, 2002, we sold our investment in NHP, which resulted in pre-tax gains of $11 million in the six months ended June 30, 2002.

Fees and other income decreased by $18 million, or 95%, from $19 million for the six months ended June 30, 2002 to $1 million for the six months ended June 30, 2003. Fees and other income for the six months ended June 30, 2002 included approximately $14 million of income associated with a settlement true-up of a

1999 sale of a small block of business to a third party and reversal of bad debt allowances due to successful collection of receivables that had been previously written off.


	Total Benefits, Losses and Expenses

Total benefits, losses and expenses increased by $4 million, or 5%, from $80 million for the six months ended June 30, 2002, to $84 million for the six months ended June 30, 2003.

Selling, underwriting and general expenses increased by $4 million, or 19%, from $21 million for the six months ended June 30, 2002, to $25 million for the six months ended June 30, 2003 mainly due to higher corporate expenses.

Distributions on preferred securities of subsidiary trusts during the six months ended June 30, 2003 remained unchanged from the comparable period in 2002 at $59 million.


	Segment Loss After Tax

Segment loss after tax improved by $8 million, or 40%, from a loss of $20 million for the six months ended June 30, 2002, to a loss of $12 million for the six months ended June 30, 2003.

Income taxes decreased by $16 million from an income tax benefit of $23 million for the six months ended June 30, 2002, to an income tax benefit of $7 million for the six months ended June 30, 2003. During the six months ended June 30, 2002, we recognized the release of approximately $6 million of previously provided tax accruals which were no longer considered necessary based on the resolution of certain domestic tax matters.

Year Ended December 31, 2002 Compared to December 31, 2001


	Total Revenues

Total revenues decreased by $210 million, or 85%, from $248 million in 2001 to $38 million in 2002.

Net earned premiums and other considerations decreased by $58 million, or 100%, from $58 million in 2001 to $0 million in 2002 due to the sale of FFG.

Net investment income decreased by $72 million, or 64%, from $112 million in 2001 to $40 million in 2002. Excluding the $32 million reduction in investment income from the sale of FFG, net investment income decreased in 2002 as a result of a decrease in invested assets because we paid down debt and acquired CORE and DBD.

Net realized losses on investments decreased by $1 million from $119 million from 2001 to $118 million in 2002. In 2002, we had other-than-temporary impairments of $85 million, as compared to $78 million in 2001. Impairments of available for sale securities in excess of $10 million in 2002 consisted of an $18 million writedown of fixed maturity investments in NRG Energy, a $12 million writedown of fixed maturity investments in AT&T Canada and an $11 million writedown of fixed maturity investments in MCI WorldCom. Impairments of available for sale securities in excess of $10 million in 2001 consisted of a $22 million writedown of fixed maturity investments in Enron.

Amortization of deferred gain on disposal of businesses increased by $12 million, or 18%, from $68 million in 2001 to $80 million in 2002, mainly due a to full year of amortization of the deferred gain on the sale of FFG as compared to nine months in 2001.

Gains on disposal of businesses decreased by $51 million, or 82%, from $62 million in 2001 to $11 million in 2002. This decrease was due to the sale of FFG’s mutual fund operations. Also, on June 28, 2002, we sold our investment in NHP, which resulted in pre-tax gains of $11 million in 2002.

Fees and other income decreased by $42 million, or 63%, from $67 million in 2001 to $25 million in 2002. Excluding the $65 million reduction in other income due to the sale of FFG, fees and other income increased by $23 million in 2002 mainly due to approximately $15 million of income associated with a settlement true-

up of a 1999 sale of a small block of business to a third party and reversal of bad debt allowances due to successful collection of receivables that had been previously written off.


	Total Benefits, Losses and Expenses

Total benefits, losses and expenses decreased by $149 million, or 46%, from $322 million in 2001 to $173 million in 2002.

Policyholder benefits decreased by $70 million, or 100%, from $70 million in 2001 to $0 in 2002. The decrease was entirely due to the sale of FFG.

Interest expense decreased from $14 million in 2001 to $0 in 2002. We used a portion of the FFG sale proceeds to repay $225 million of debt owed to Fortis Finance.

Selling, underwriting and general expenses decreased by $65 million, or 54%, from $120 million in 2001 to $55 million in 2002. Excluding the $67 million reduction in selling, underwriting and general expenses due to the sale of FFG, these expenses increased by $2 million from 2001 to 2002 due to increased corporate overhead costs.

Distributions on preferred securities of subsidiary trusts in 2002 remained unchanged from 2001 at $118 million.


	Segment Loss After Tax

Segment loss after tax increased by $21 million, or 40%, from a $53 million loss in 2001 to a $74 million loss in 2002, primarily due to the sale of FFG.

Income taxes increased by $40 million, or 190%, from $21 million in 2001 to $61 million in 2002. Excluding the $4 million reduction in income tax expenses due to the sale of FFG, income tax benefit increased by $44 million in 2002. The change in the income tax benefit was largely consistent with the increase in segment losses before income tax. In 2002, we also recognized the release of approximately $13 million of previously provided tax accruals, which were no longer considered necessary based on the resolution of certain domestic tax matters.


	Year Ended December 31, 2001 Compared to December 31, 2000


	Total Revenues

Total revenues decreased by $414 million, or 63%, from $662 million in 2000 to $248 million in 2001.

Net earned premiums and other considerations decreased by $159 million, or 73%, from $217 million in 2000 to $58 million in 2001. The decrease was primarily due to the sale of FFG.

Net investment income decreased by $45 million, or 29%, from $157 million in 2000 to $112 million in 2001. Excluding the net decrease to investment income of $147 million due to the sale of FFG, net investment income increased by $102 million.

Net realized losses on investments increased by $74 million, or 164%, from $45 million in 2000 to $119 million in 2001. In 2001, we had other-than-temporary impairments on fixed maturity securities of $78 million, as compared to $5 million in 2000. There were no impairments in excess of $10 million in 2000. Impairments of available for sale securities in excess of $10 million in 2001 consisted of a $22 million writedown of fixed maturity investments in Enron.

Amortization of deferred gain on disposal of businesses increased by $58 million from $10 million in 2000 to $68 million in 2001, due primarily to the recognition of nine months of amortization of the FFG deferred gain as compared to $0 in 2000.

Gains on disposal of businesses increased by $50 million from $12 million in 2000 to $62 million in 2001. The increase was due to $62 million of gains recognized on the sale of FFG’s mutual fund management operations in 2001, as compared to $12 million of gains recognized on the sale of ACSIA in 2000.

Fees and other income decreased by $244 million, or 78%, from $311 million in 2000 to $67 million in 2001. Excluding the net decrease in fees and other income of $239 million in 2001 due to the sale of FFG, fees and other income decreased by $5 million in 2001.


	Total Benefits, Losses and Expenses

Total benefits, losses and expenses decreased by $454 million, or 59%, from $776 million in 2000 to $322 million in 2001.

Policyholder benefits decreased by $134 million, or 66%, from $204 million in 2000 to $70 million in 2001. The decrease was primarily due to the sale of FFG.

Selling, underwriting and general expenses decreased by $317 million, or 73%, from $437 million in 2000 to $120 million in 2001. Excluding the net decrease of $274 million in 2001 due to the sale of FFG, these expenses decreased by $43 million primarily due to two months of selling, underwriting and general expenses in 2000 associated with LTC operations sold to John Hancock on March 1, 2000.

Interest expense decreased by $11 million, or 44%, from $25 million in 2000 to $14 million in 2001. This decrease was mainly due to the repayment of $225 million of debt in April 2000 owed to Fortis Finance.

Distributions on preferred securities of subsidiary trusts increased by $8 million, or 7%, from $110 million in 2000 to $118 million in 2001. The increase was primarily due to the reflection of twelve months of distributions related to the trust capital securities.


	Segment Loss After Tax

Segment loss after tax improved by $25 million from a $78 million loss in 2000 to a $53 million loss in 2001.

Income taxes decreased $15 million from a benefit of $36 million in 2000 to a benefit of $21 million in 2001. Excluding the net $29 million reduction in income tax expense due to the sale of FFG, income tax increased by $20 million. This increase was largely consistent with the increase in pre-tax gains on disposal of businesses in 2001.

Investments

The following table shows the carrying value of our investments by type of security as of the dates indicated:



		As of				As of				As of
		June 30,				December 31,				December 31,
		2003				2002				2001



		(in millions)
Fixed maturities		$	8,766	82	%	$	8,036	80	%	$	7,630	79	%
Equity securities			446	4			272	3			247	3
Commercial mortgage loans on real estate			870	8			842	8			869	9
Policy loans			70	1			69	1			68	1
Short-term investments			447	4			684	7			627	7
Other investments			136	1			126	1			159	1

	Total investments	$	10,735	100	%	$	10,029	100	%	$	9,601	100	%

Of our fixed maturity securities shown above, 71% and 75% were invested in securities rated “A” or better, as of June 30, 2003 and December 31, 2002, respectively. As interest rates decrease, the market value of fixed maturity securities increases.

The following table provides the cumulative net unrealized gains (pre-tax) on fixed maturity securities and equity securities as of the dates indicated:


		As of		As of		As of
		June 30, 2003		December 31, 2002		December 31, 2001


		(in millions)
Fixed maturities:
	Amortized cost	$	8,066	$	7,631	$	7,471
	Net unrealized gains		700		405		159

	Fair value	$	8,766	$	8,036	$	7,630

Equities:
	Cost	$	422	$	265	$	243
	Net unrealized gains		24		7		4

	Fair value	$	446	$	272	$	247

Net unrealized gains on fixed maturity securities increased by $295 million, or 73%, from December 31, 2002 to June 30, 2003. The increase in net unrealized gains was primarily due to decreases in market interest rates. Yields on 10-year U.S. Treasury bonds decreased by 31 basis points from 3.82% at December 31, 2002 to 3.51% at June 30, 2003.

Net unrealized gains on fixed maturity securities increased by $246 million, or 155%, from December 31, 2001 to December 31, 2002. Again, this reflected the impact of decreasing market interest rates. Yields on 10-year U.S. Treasury bonds decreased by 121 basis points from 5.03% at December 31, 2001 to 3.82% at December 31, 2002.

Net unrealized gains on equity securities increased by $17 million, or 237%, from December 31, 2002 to June 30, 2003 and by $3 million, or 75%, from December 31, 2001 to December 31, 2002.

Reserves

The following table presents reserve information as of the dates indicated:


		As of		As of		As of
		June 30,		December 31,		December 31,
		2003		2002		2001


		(in millions)
Future policy benefits and expenses		$	5,850	$	5,637	$	5,392
Unearned premiums			3,141		3,208		3,267
Claims and benefits payable			3,641		3,544		3,405

	Total policy liabilities	$	12,632	$	12,389	$	12,064

Future policy benefits and expenses increased by $213 million, or 4%, from December 31, 2002 to June 30, 2003 and by $245 million, or 5%, from December 31, 2001 to December 31, 2002. The main contributing factor to these increases was growth in underlying business.

Unearned premiums decreased by $67 million, or 2%, from December 31, 2002 to June 30, 2003 and by $59 million, or 2%, from December 31, 2001 to December 31, 2002.

Claims and benefits payable increased by $97 million, or 3%, from December 31, 2002 to June 30, 2003 and increased by $139 million, or 4%, from December 31, 2001 to December 31, 2002. The main contributing factor to these increases was growth in underlying business.

The following table provides reserve information by our major lines of business for the years ended December 31, 2002 and 2001 as of:



			December 31, 2002						December 31, 2001

			Future						Future
			policy				Claims and		policy				Claims and
			benefits and		Unearned		benefits		benefits and		Unearned		benefits
			expenses		premiums		payable		expenses		premiums		payable


			(in millions)
Long Duration Contracts:
	Pre-funded funeral life insurance policies and annuity contracts		$	1,991	$	3	$	15	$	1,764	$	2	$	12
	Life insurance no longer offered			693		1		5		704		1		5
	Universal life and annuities no longer offered			334		10		12		359		1		20
	FFG and LTC disposed businesses			2,619		48		139		2,565		46		120
Short Duration Contracts:
	Group term life			—		11		457		—		15		438
	Group disability			—		4		1,299		—		4		1,204
	Medical and dental			—		126		583		—		108		559
	Property			—		739		232		—		603		332
	Credit			—		1,387		414		—		1,708		432
	Warranties and extended service contracts			—		830		30		—		722		27
	All other			—		49		358		—		57		256

		Total policy liabilities	$	5,637	$	3,208	$	3,544	$	5,392	$	3,267	$	3,405

For a description of our reserving methodology, see Note 14 of the Notes to Consolidated Financial Statements included elsewhere in this prospectus.

Reinsurance

The following table sets forth our reinsurance recoverables as of the dates indicated:

As of

June 30,

December 31,

2003

2002

2001

(in millions)

Reinsurance recoverables

4,578

4,650

4,752

Reinsurance recoverables decreased by $72 million, or 2%, from December 31, 2002 to June 30, 2003 and by $102 million, or 2%, from December 31, 2001 to December 31, 2002. We have used reinsurance to exit certain businesses, such as the dispositions of FFG and LTC. The reinsurance recoverables relating to these dispositions amounted to $2,378 million at December 31, 2002 and $2,294 million at December 31, 2001.

In the ordinary course of business, we are involved in both the assumption and cession of reinsurance with non-affiliated companies. The following table provides details of the reinsurance recoverables balance for the years ended December 31:


		2002		2001


		(in millions)
Ceded future policyholder benefits and expense		$	2,452	$	2,348
Ceded unearned premium			1,247		1,496
Ceded claims and benefits payable			757		738
Ceded paid losses			194		170

	Total	$	4,650	$	4,752

We utilize ceded reinsurance for loss protection and capital management, business dispositions and, in the Assurant Solutions segment, for client risk and profit sharing.

Loss Protection and Capital Management

As part of our overall risk and capacity management strategy, we purchase reinsurance for certain risks underwritten by our various business segments, including significant individual or catastrophic claims, and to free up capital to enable us to write additional business.

For those product lines where there is exposure to catastrophes, we closely monitor and manage the aggregate risk exposure by geographic area, and we have entered into reinsurance treaties to manage exposure to these types of events.

Under indemnity reinsurance transactions in which we are the ceding insurer, we remain liable for policy claims if the assuming company fails to meet its obligations. To limit this risk, we have control procedures to evaluate the financial condition of reinsurers and to monitor the concentration of credit risk to minimize this exposure. The selection of reinsurance companies is based on criteria related to solvency and reliability and, to a lesser degree, diversification as well as developing strong relationships with our reinsurance partners for the sharing of risks.

Business Dispositions

We have used reinsurance to exit certain businesses, such as the dispositions of FFG and LTC. Reinsurance was used in these cases to facilitate the transactions because the businesses shared legal entities with business segments that we retained. Assets backing liabilities ceded relating to these businesses are held in trusts, and the separate accounts relating to FFG are still reflected in our balance sheet.

The reinsurance recoverable from The Hartford was $1,680 million and $1,748 million as of December 31, 2002 and 2001, respectively. The reinsurance recoverable from John Hancock was $693 million and $546 million as of December 31, 2002 and 2001, respectively. We would be responsible to administer this business in the event of a default by reinsurers. In addition, under the reinsurance agreement, The Hartford is obligated to contribute funds to increase the value of the separate accounts relating to the business sold if such value declines. If The Hartford fails to fulfill these obligations, we will be obligated to make these payments.

Assurant Solutions Segment Client Risk and Profit Sharing

The Assurant Solutions segment writes business produced by its clients, such as mortgage lenders and servicers and financial institutions, and reinsures all or a portion of such business to insurance subsidiaries of the clients. Such arrangements allow significant flexibility in structuring the sharing of risks and profits on the underlying business.

A substantial portion of Assurant Solutions’ reinsurance activities are related to agreements to reinsure premiums and risk related to business generated by certain clients to the clients’ captive insurance companies or to reinsurance subsidiaries in which the clients have an ownership interest. Through these arrangements,

our insurance subsidiaries share some of the premiums and risk related to client-generated business with these clients. When the reinsurance companies are not authorized to do business in our insurance subsidiary’s domiciliary state, our insurance subsidiary obtains collateral, such as a trust or a letter of credit, from the reinsurance company or its affiliate in an amount equal to the outstanding reserves to obtain full financial credit in the domiciliary state for the reinsurance. Our reinsurance agreements do not relieve us from our direct obligation to our insured. Thus, a credit exposure exists to the extent that any reinsurer is unable to meet the obligations assumed in the reinsurance agreements. To minimize our exposure to reinsurance insolvencies, we evaluate the financial condition of our reinsurers and hold substantial collateral (in the form of funds, trusts and letters of credit) as security under the reinsurance agreements. See “—Quantitative and Qualitative Disclosures about Market Risk—Credit Risk.”

Liquidity and Capital Resources

Assurant, Inc. is a holding company, and as such, has limited direct operations of its own. Our holding company assets consist primarily of the capital stock of our subsidiaries. Accordingly, our 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 these subsidiaries can pay to the holding company. Solvency regulations, capital requirements and rating agencies are some of the factors used in determining the amount of capital used for dividends. For 2003, the maximum amount of distributions our subsidiaries could pay under applicable laws and regulations without prior regulatory approval is $290 million. As a result of statutory accounting for our sales of businesses, we believe that our maximum will be significantly lower for 2004. For a discussion of the various restrictions on our ability and the ability of our subsidiaries to pay dividends, please see “Regulation” and “Description of Share Capital.”

Dividends and other interest income paid by our subsidiaries totaled $18.5 million for the six months ended June 30, 2003, $15 million for the six months ended June 30, 2002, $186.5 million for the year ended December 31, 2002 and $615.4 million for the year ended December 31, 2001. Figures for 2001 were higher due to a gain on the sale of FFG. We used these cash inflows primarily to pay expenses, to make interest payments on indebtedness and, historically, to make dividend payments to our stockholders.

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

Historically, Fortis has maintained a $1 billion commercial paper facility that we have been able to access for up to $750 million. We use commercial paper to cover any cash shortfalls, which may occur from time to time. We had no commercial paper borrowings during the first six months of 2003 or during the year ended December 31, 2002. In 2001, $235 million in commercial paper was issued and redeemed. There was no outstanding commercial paper at year-end 2001. In connection with our separation from Fortis, we will no longer have access to this facility. Our subsidiaries do not maintain commercial paper or other borrowing facilities at the subsidiary level.

Our qualified pension plan was under-funded by $95 million at December 31, 2002. In 2003, we made contributions to the pension fund of $19 million in April and $39.6 million in September. In accordance with ERISA, there is no expected minimum funding requirement for 2004 or 2005. Our nonqualified plans, which are unfunded, had a projected benefit obligation of $64 million at December 31, 2002. The expected company payments to retirees under these plans are approximately $4 million per year in 2004 and 2005. Also, our post-retirement plans (other than pension), which are unfunded, had an accumulated post-retirement benefit

obligation of $46 million at December 31, 2002. In September 2003, we contributed $5.9 million towards pre-funding these benefits. In addition, the expected company payments to retirees and dependents under the postretirement plan are approximately $1.5 million per year in 2004 and 2005. See Note 16 of the Notes to Consolidated Financial Statements included elsewhere in this prospectus.

We estimate that our capital expenditures in connection with our name change and rebranding initiative will be approximately $10 million, which we will expense in 2004. We are not currently planning to make any other significant capital expenditures in 2004 or 2005.

We anticipate that we will pay to participants in the Fortis Appreciation Incentive Rights Plan (to be renamed the Assurant Appreciation Incentive Rights Plan) an aggregate of approximately $22 million in connection with the cash-out of all outstanding Fortis, Inc. incentive rights. Approximately $11 million of this cash-out was accrued at June 30, 2003. The balance, or approximately $11 million, will be accrued in the fourth quarter of 2003. See “Management — Management Compensation and Incentive Plans — Assurant Appreciation Incentive Rights Plan.”

In management’s opinion, our subsidiaries’ cash flow from operations together with our income and gains from our investment portfolio will provide sufficient liquidity to meet our needs in the ordinary course of business.

Cash Flows

We monitor cash flows at both the consolidated 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
		Six Months						For the
		Ended						Year Ended
		June 30,						December 31,

Net cash provided by (used in):		2003			2002			2002			2001			2000


		(in millions)
	Operating activities	$	402		$	(197	)	$	395		$	536		$	533
	Investing activities		(387	)		(22	)		(361	)		(175	)		(28	)
	Financing activities		(161	)		(21	)		(43	)		(380	)		(429	)

Net change in cash		$	(146	)	$	(240	)	$	(9	)	$	(19	)	$	76

Cash Flows for the Six Months Ended June 30, 2003 and June 30, 2002. The key changes of the net cash outflow of $146 million for the six months ended June 30, 2003 were net purchases of fixed maturity securities of $1,021 million and dividends paid of $160 million, as compared to net purchases of fixed maturity securities of $565 million and dividends paid of $20 million for the six months ended June 30, 2002.

Cash Flows for the Years Ended December 31, 2002, 2001 and 2000. The key changes of the net cash outflow of $9 million for the year ended December 31, 2002 were net purchases of fixed maturity securities of $1,153 million and maturities of these securities of $861 million. Key changes of the net cash outflow of $19 million for the year ended December 31, 2001 were the sale of FFG for $396 million in cash and changes in our revenues and expenses from operating activities as described above. Key changes of the net cash inflow of $76 million for the year ended December 31, 2000 were $550 million of proceeds received from the issuance of the 2000 trust capital securities and changes in our revenues and expenses from operating activities as described above.

At June 30, 2003, we had total debt outstanding of $1,470 million, as compared to $1,471 million at December 31, 2002, $1,471 million at December 31, 2001 and $1,475 million at December 31, 2000. This debt consists of trust capital securities, which we classify as mandatorily redeemable preferred securities of

subsidiary trusts, and a small amount of mandatorily redeemable preferred stock. See “Description of Share Capital” and “Description of Other Securities” for a description of the terms of these securities.

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


		For the
		Six Months		For the Year Ended
		Ended		December 31,
		June 30,
Security		2003		2002	2001	2000


		(in thousands)
Mandatorily redeemable preferred securities of subsidiary trusts and interest paid		$	58,430	$117,114	$133,667	$112,816
Mandatorily redeemable preferred stock dividends			516	1,052	1,053	947
Class A common stock dividends			139,000	—	67,000	—
Class B & C common stock dividends			21,134	41,876	42,298	21,111

	Total	$	219,080	$160,042	$244,018	$134,874

See “Capitalization.”

Commitments and Contingencies

We have obligations and commitments to third parties as a result of our operations. These obligations and commitments are detailed in the table below by maturity date as of the dates indicated:



		As of December 31,

		2003		2004		2005		2006		2007		Thereafter


		(in millions)
Contractual obligations:

Mandatorily redeemable preferred securities of subsidiary trusts		$	—	$	—	$	150	$	—	$	—	$	1,296
Mandatorily redeemable preferred stock			—		—		—		—		—		24
Operating leases			40		35		32		27		23		53

Commitments:

Investment purchases
Outstanding:
	—unsettled trades		24		—		—		—		—		—
	—commercial mortgage loans on real estate		29		—		—		—		—		—
	—other investments		4		—		—		2		30		—
Total obligations and commitments		$	97	$	35	$	182	$	29	$	53	$	1,373


	*Letters of Credit*

In the normal course of business, letters of credit are issued primarily to support reinsurance arrangements. These letters of credit are supported by commitments with financial institutions. We had approximately $120 million and $109 million of letters of credit outstanding as of June 30, 2003 and December 31, 2002, respectively.

Additionally, as of June 30, 2003, we had an unused $50 million letter of credit facility.

Quantitative and Qualitative Disclosures about Market Risk

As a provider of insurance products, effective risk management is fundamental to our ability to protect both our customers’ and stockholders’ interests. We are exposed to potential loss from various market risks, in particular interest rate risk and credit risk. Additionally we are exposed to inflation risk and to a small extent to foreign currency risk.

Interest rate risk is the possibility the fair value of liabilities will change more or less than the market value of investments in response to changes in interest rates, including changes in the slope or shape of the yield curve and changes in spreads due to credit risks and other factors.

Credit risk is the possibility that counterparties may not be able to meet payment obligations when they become due. We assume counterparty credit risk in many forms. A counterparty is any person or entity from which cash or other forms of consideration are expected to extinguish a liability or obligation to us. Primarily, our credit risk exposure is concentrated in our fixed income investment portfolio and, to a lesser extent, in our reinsurance recoverables.

Inflation risk is the possibility that a change in domestic price levels produces an adverse effect on earnings. This typically happens when only one of invested assets or liabilities is indexed to inflation.

Foreign exchange risk is the possibility that changes in exchange rates produce an adverse effect on earnings and equity when measured in domestic currency. This risk is largest when assets backing liabilities payable in one currency are invested in financial instruments of another currency. Our general principle is to invest in assets that match the currency in which we expect the liabilities to be paid.


	*Interest Rate Risk*

Interest rate risk arises as we invest substantial funds in interest-sensitive fixed income assets, such as fixed maturity investments, mortgage-backed and asset-backed securities and commercial mortgage loans, primarily in the United States and Canada. There are two forms of interest rate risk—price risk and reinvestment risk. Price risk occurs when fluctuations in interest rates have a direct impact on the market valuation of these investments. As interest rates rise, the market value of these investments falls, and conversely, as interest rates fall, the market value of these investments rises. Reinvestment risk occurs when fluctuations in interest rates have a direct impact on expected cash flows from mortgage-backed and asset-backed securities. As interest rates fall, an increase in prepayments on these assets results in earlier than expected receipt of cash flows forcing us to reinvest the proceeds in an unfavorable lower interest rate environment, and conversely as interest rates rise, a decrease in prepayments on these assets results in later than expected receipt of cash flows forcing us to forgo reinvesting in a favorable higher interest rate environment. As of June 30, 2003, we held $9,771 million at fair market value, or 89.6%, of our total invested assets, in fixed maturity securities, including mortgage-backed and asset-backed securities, and commercial mortgage loans as compared to $9,005 million at fair market value, or 88.3%, at December 31, 2002.

We expect to manage interest rate risk by selecting investments with characteristics such as duration, yield, currency and liquidity tailored to the anticipated cash outflow characteristics of our insurance and reinsurance liabilities.

Our group long-term disability reserves are also sensitive to interest rates. Group long-term disability reserves are discounted to the valuation date at the valuation interest rate. The valuation interest rate is determined by taking into consideration actual and expected earned rates on our asset portfolio, with adjustments for investment expenses and provisions for adverse deviation.

The interest rate sensitivity of our fixed income assets is assessed using hypothetical test scenarios that assume several positive and negative parallel shifts of the underlying yield curves. We have assumed that both the United States and Canadian yield curves have a 100% correlation and, therefore, move together. The individual securities are repriced under each scenario using a valuation model. For investments such as

mortgage-backed and asset-backed securities, a prepayment model was used in conjunction with a valuation model. The following table summarizes the results of this analysis for fixed income assets such as fixed maturity, mortgage-backed and asset-backed securities and commercial mortgage loans held in our investment portfolio:

Interest Rate Movement Analysis

of Market Value of Fixed Income Investment Portfolio

As of December 31, 2002





	-100			-50			0			50			100


	(in millions)
Total market value	$	9,692		$	9,433		$	9,185		$	8,939		$	8,699
% Change in market value from base case		5.5	%		2.7	%		0.0	%		(2.7	)%		(5.3	)%
$ Change in market value from base case	$	507		$	248		$	—		$	(246	)	$	(486	)


	*Credit Risk*

We have exposure to credit risk primarily as a holder of fixed income securities and by entering into reinsurance cessions.

Our risk management strategy and investment policy is to invest in debt instruments of high credit quality issuers and to limit the amount of credit exposure with respect to any one issuer. We attempt to limit our credit exposure by imposing fixed maturity portfolio limits on individual issuers based upon credit quality. Currently our portfolio limits are 1.5% for issuers rated AA-and above, 1% for issuers rated A- to A+, 0.75% for issuers rated BBB- to BBB+ and 0.375% for issuers rated BB- to BB+. These portfolio limits are further reduced for certain issuers with whom we have credit exposure on reinsurance agreements. We use the lower of Moody’s or Standard & Poor’s ratings to determine an issuer’s rating. See “Business—Investments.”

The following table presents our fixed maturity investment portfolio by ratings of the nationally recognized securities rating organizations as of December 31, 2002:


				Percentage of
Rating		Fair Value		Total

		(in millions)
Aaa/Aa/ A		$	6,013		75	%
Baa		$	1,526		19	%
Ba		$	338		4	%
B and lower		$	159		2	%

	Total	$	8,036		100	%

We are also exposed to the credit risk of our reinsurers. When we reinsure, we are still liable to our insureds regardless of whether we get reimbursed by our reinsurer. As part of our overall risk and capacity management strategy, we purchase reinsurance for certain risks underwritten by our various business segments as described above under “— Reinsurance.”

For the vast majority of our reinsurance recoverables, we are protected from the credit risk by using some type of risk mitigation mechanism such as a trust, letter of credit, or by withholding the assets in a modified coinsurance or co-funds-withheld arrangement. For example, reserves of $1,679 million and $693 million as of December 31, 2002 relating to two large coinsurance arrangements with The Hartford and John Hancock, respectively, related to sales of businesses. If the value of the assets in these trusts decreases, The Hartford and John Hancock, as the case may be, will be required to put more assets in the trusts. We may be dependent on the financial condition of The Hartford and John Hancock, whose A.M. Best ratings are currently A+ and A++, respectively. For recoverables totaling approximately $860 million on a statutory basis as of December 31, 2002, these mechanisms are not present; thus, we are dependent solely on the credit of the reinsurer.

Occasionally, the credit worthiness of the reinsurer becomes questionable. See “Risk Factors— Risks Related to Our Company— Reinsurance may not be available or adequate to protect us against losses, and we are subject to the credit risk of reinsurers.” The exposure group by A.M. Best rating of these reinsurers is as follows:


				Pre-Tax Exposure
A.M. Best Classifications		A.M. Best Ratings of Reinsurer		(Statutory Basis)

				(in millions)
Superior			A++ or A+	$	510
Excellent			A or A-		117
Very Good			B++ or B+		146
Fair			B or B-		1
Weak and Poor			C and lower		—
Not Rated					86

	Total			$	860


	*Inflation Risk*

Inflation risk arises as we invest substantial funds in nominal assets, which are not indexed to the level of inflation, whereas the underlying liabilities are indexed to the level of inflation. Approximately 15% of our pre-funded funeral insurance policies with reserves of approximately $409 million as of June 30, 2003 have death benefits that are guaranteed to grow with the Consumer Price Index. In times of rapidly rising inflation the credited death benefit growth on these liabilities increases relative to the investment income earned on the nominal assets resulting in an adverse impact on earnings. We have partially mitigated this risk by purchasing a contract with payments tied to the Consumer Price Index. See “— Derivatives.”

In addition, we have inflation risk in our individual and small employer group health insurance businesses to the extent that medical costs increase with inflation and we have not been able to increase premiums to keep pace with inflation.


	*Foreign Exchange Risk*

We are exposed to some foreign exchange risk arising from our international operations mainly in Canada. We also have limited foreign exchange risk exposure to currencies other than the Canadian dollar, primarily British pounds and Danish krone. Total invested assets denominated in these other currencies were less than 1% of our total invested assets at December 31, 2002.

Foreign exchange risk is mitigated by matching our liabilities under insurance policies that are payable in foreign currencies with investments that are denominated in such currency. We have not established any hedge to our foreign-currency exchange rate exposure.

We assess our foreign exchange risk by examining the foreign exchange rate exposure of the excess of invested assets over the statutory reserve liabilities denominated in foreign currency. Two stress scenarios are examined.

The first scenario assumes a hypothetical 10% immediate change in the foreign exchange rate.

The second scenario assumes a more severe 2.33 standard deviation event (comparable to a one in 100 probability under a normal distribution).

The modelling techniques we use to calculate our exposure does not take into account correlation among foreign currency exchange rates or correlation among various markets. Our actual experience may differ from

the results noted below due to correlation assumptions utilized or if events occur that were not included in the methodology, such as significant illiquidity or other market events.

The following table summarizes the results of this analysis:

Adverse impact on the excess of investment assets over the statutory reserve

liabilities denominated in foreign currency

As of December 31, 2002

Excess of invested

assets over

Adverse impact for

Total invested

Statutory reserve

statutory reserve

Adverse impact for

a 2.33 standard

assets

liabilities

a 10% change in

deviation change in

(in foreign

exchange rate

Country

currency)

(in $)*

(in $)

(in millions)

Canada

CAD 495.4

CAD 339.9

CAD 155.5

(8.9

)

(10.4

)


*	10% depreciation of CAD would cause a $8.9 million loss in the excess of investment assets over the statutory reserve liabilities.


	*Derivatives*

Derivatives are financial instruments whose values are derived from interest rates, foreign exchange rates, financial indices or the prices of securities or commodities. Derivative financial instruments may be exchange-traded or contracted in the over-the-counter market and include swaps, futures, options and forward contracts.

Under insurance statutes, our insurance companies may use derivative financial instruments to hedge actual or anticipated changes in their assets or liabilities, to replicate cash market instruments or for certain income-generating activities. These statutes generally prohibit the use of derivatives for speculative purposes. We generally do not use derivative financial instruments.

On July 1, 2003, we purchased a contract to partially hedge the inflation risk exposure inherent in some of our pre-funded funeral insurance policies.

BUSINESS

Overview

We pursue a differentiated strategy of building leading positions in specialized market segments for insurance products and related services in North America and selected other markets. We provide creditor-placed homeowners insurance, manufactured housing homeowners insurance, debt protection administration, credit insurance, warranties and extended service contracts, individual health and small employer group health insurance, group dental insurance, group disability insurance, group life insurance and pre-funded funeral insurance. The markets we target are generally complex, have a relatively limited number of competitors and, we believe, offer attractive profit opportunities. In these markets, we leverage the experience of our management team and apply our expertise in risk management, underwriting and business-to-business management, as well as our technological capabilities in complex administration and systems. Through these activities, we seek to generate above-average returns by building on specialized market knowledge, well-established distribution relationships and economies of scale.

As a result of our strategy, we are a leader in many of our chosen markets and products. In our Assurant Solutions business, we have leadership positions or are partnered with clients who are leaders in creditor-placed homeowners insurance, manufactured housing homeowners insurance and debt protection administration. In our Assurant Employee Benefits business, we are a leading writer of group dental plans measured by the number of master contracts in force. In our Assurant PreNeed business, we are the largest writer of pre-funded funeral insurance measured by face amount of new policies sold. We believe that our leadership positions give us a sustainable competitive advantage in our chosen markets.

We currently have four decentralized operating business segments to ensure focus on critical activities close to our target markets and customers, while simultaneously providing centralized support in key functions. Each operating business segment has its own experienced management team with the autonomy to make decisions on key operating matters. These managers are eligible to receive incentive-based compensation based in part on operating business segment performance and in part on company-wide performance, thereby encouraging strong business performance and cooperation across all our businesses. At the operating business segment level, we stress disciplined underwriting, careful analysis and constant improvement and product redesign. At the corporate level, we provide support services, including investment, asset/liability matching and capital management, leadership development, information technology support and other administrative and finance functions, enabling the operating business segments to focus on their target markets and distribution relationships while enjoying the economies of scale realized by operating these businesses together. Also, our overall strategy and financial objectives are set and continuously monitored at the corporate level to ensure that our capital resources are being properly allocated.

We organize and manage our specialized businesses through four operating business segments:


Operating Business		Principal Products and	Principal Distribution	For the Year Ended
Segment		Services	Channels	December 31, 2002

Assurant Solutions				• Total revenues: $2,401 million

	Specialty Property	• Creditor-placed homeowners insurance (including tracking services)	• Mortgage lenders and servicers	• Segment income before income tax: $197 million
		• Manufactured housing homeowners insurance	• Manufactured housing lenders, dealers and vertically integrated builders

	Consumer Protection	• Debt protection administration • Credit insurance • Warranties and extended service contracts -Appliances -Automobiles and recreational vehicles -Consumer electronics -Wireless devices	• Financial institutions (including credit card issuers) and retailers • Consumer electronics and appliance retailers • Vehicle dealerships
Assurant Health				• Total revenues: $1,912 million
	Individual Health	• PPO • Short-term medical insurance • Student medical insurance	• Independent agents • National accounts • Internet	• Segment income before income tax: $144 million
	Small Employer Group Health	• PPO	• Independent agents
Assurant Employee Benefits		• Group dental insurance -Employer-paid -Employee-paid • Group disability insurance • Group term life insurance	• Employee benefit advisors • Brokers • DRMS(1)	• Total revenues: $1,455 million • Segment income before income tax: $88 million
Assurant PreNeed		• Pre-funded funeral insurance	• SCI • Independent funeral homes	• Total revenues: $727 million • Segment income before income tax: $77 million


(1)	DRMS refers to Disability Reinsurance Management Services, Inc., one of our wholly owned subsidiaries that provides a turnkey facility to other insurers to write principally group disability insurance.

We also have a corporate and other segment, which includes activities of the holding company, financing expenses, realized gains (losses) on investments and interest income not allocated to other segments. The Corporate and Other segment also includes (i) the results of operations of FFG (a business we sold on April 2, 2001) and (ii) LTC (a business we sold on March 1, 2000), for the periods prior to their disposition, and amortization of deferred gains associated with the portions of the sales of FFG and LTC sold through reinsurance agreements as described above. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Corporate and Other.”

For the six months ended June 30, 2003, we generated total revenues of $3,455 million and net income of $164 million. For the year ended December 31, 2002, we generated total revenues of $6,532 million and net income before cumulative effect of change in accounting principle of $260 million. As of June 30, 2003, we had total assets of approximately $22,738 million, including separate accounts. Our A.M. Best financial strength ratings, as of September 25, 2003, were either A (“Excellent”) or A- (“Excellent”) for all of our domestic operating subsidiaries. A rating of “A” is the second highest of ten ratings categories and the highest within the category based on modifiers (i.e., A and A- are “Excellent”) and a rating of “A-” is the second highest of ten ratings categories and the lowest within the category based on modifiers. We view the A.M. Best ratings as most relevant for the purpose of managing our businesses because these ratings relate to capital management at our insurance subsidiaries. These ratings reflect A.M. Best’s opinions of our ability to pay policyholder claims, are not applicable to the securities offered in this prospectus and are not a recommendation to buy, sell or hold any security, including our common stock.

Competitive Strengths

We believe our competitive strengths include:


	•	Leadership Positions in Specialized Markets;

	•	Strong Relationships with Key Clients and Distributors;

	•	History of Product Innovation and Ability to Adapt to Changing Market Conditions;

	•	Disciplined Approach to Underwriting and Risk Management;

	•	Prudent Capital Management;

	•	Diverse Business Mix and Superior Financial Strength; and

	•	Experienced Management Team with Proven Track Record and Entrepreneurial Culture.

Leadership Positions in Specialized Markets. We are a market leader in many of our chosen markets. We hold a leading position or are partnered with clients who are leaders in creditor-placed homeowners insurance, manufactured housing homeowners insurance, credit insurance and debt protection administration. In addition, we are market leaders in group dental plans and pre-funded funeral insurance. We seek to participate in markets in which there are a limited number of competitors and that allow us to achieve a market leading position by capitalizing on our market expertise and capabilities in complex administration and systems, as well as on our established distribution relationships. We believe that our leadership positions provide us with the opportunity to generate high returns in these niche markets.

Strong Relationships with Key Clients and Distributors. As a result of our expertise in business-to-business management, we have created strong relationships with our distributors and clients in each of the niche markets we serve. In our Assurant Solutions segment, we have strong long-term relationships in the United States with six out of the ten largest mortgage lenders and servicers, including JPMorgan Chase Bank, Washington Mutual and Wells Fargo Bank, four out of the seven largest manufactured housing builders, including Clayton Homes, four out of the six largest general purpose credit card issuers, including Bank One, Discover, JPMorgan Chase Bank and MBNA, and six out of the ten largest consumer electronics and appliances retailers, including CompUSA, RadioShack and Staples. In our Assurant Health segment, we have exclusive distribution relationships with leading insurance companies, as well as relationships with independent brokers. Through exclusive distribution relationships with companies such as Mutual of Omaha, IPSI, a

wholly owned subsidiary of State Farm, and USAA, we gain access to a broad distribution network and a significant number of potential customers. In our Assurant PreNeed segment, we have an exclusive distribution relationship with SCI, the largest funeral provider in North America, as well as relationships with approximately 2,000 funeral homes. We believe that the strength of our distribution relationships enables us to market our products and services to our customers in an effective and efficient manner that would be difficult for our competitors to replicate.

History of Product Innovation and Ability to Adapt to Changing Market Conditions. We are able to adapt quickly to changing market conditions by tailoring our product and service offerings to the specific needs of our clients. This flexibility has developed, in part, as a result of our entrepreneurial focus and the encouragement of management autonomy at each business segment. By understanding the dynamics of our core markets, we design innovative products and services to seek to sustain profitable growth and market leading positions. For instance, we were one of the first providers of credit insurance to migrate towards fee-based debt protection solutions for our financial institution clients. This has allowed us to meet the evolving needs of our clients. It also has allowed us to continue generating profitable business despite a significant regulatory change that permitted financial institutions to offer debt protection products similar to credit insurance as part of their basic loan agreements with customers without being subject to insurance regulations. Other examples of our innovative products include: warranty products in our property business designed specifically for vertically integrated manufacturers of manufactured homes; specialty products, such as short-term health insurance, to address specific developments in the health insurance market and Medical Savings Account (MSA) features in our individual health products, which we were one of the first companies to offer. In addition, we developed our creditor-placed homeowners insurance business when we perceived a niche market opportunity.

Disciplined Approach to Underwriting and Risk Management. Our businesses share best practices of disciplined underwriting and risk management. We focus on generating profitability through careful analysis of risks and draw on our experience in core specialized markets. Examples of tools we use to manage our risk include our tele-underwriting program, which enables our trained underwriters to interview individual health insurance applicants over the telephone, as well as our electronic billing service in Assurant Employee Benefits, which enables us to collect more accurate data regarding eligibility of insureds. Also, at Assurant Solutions, in order to align our clients’ interests with ours and to help us to better manage risk exposure, a significant portion of Assurant Solutions’ consumer protection solutions contracts are written on a retrospective commission basis, which permits Assurant Solutions to adjust commissions based on claims experience. Under this contingent commission arrangement, compensation to the financial institutions and other agents distributing our products is predicated upon the actual losses incurred compared to premiums earned after a specific net allowance to Assurant Solutions. We also continually seek to improve and redesign our product offerings based on our underwriting experience. In addition, we closely monitor regulatory and market developments and adapt our approach as we deem necessary to achieve our underwriting and risk management goals. In Assurant Health, for example, we have exited states in which we were not achieving acceptable profitability and have re-entered states where the insurance environments have become more favorable. We are focused on loss containment, and we purchase reinsurance as a risk management tool to diversify risk and protect against unexpected events, such as catastrophes. We believe that our disciplined underwriting and risk management philosophy have enabled us to realize above average financial returns while focusing on our strategic objectives.

Prudent Capital Management. We focus on generating above-average returns on a risk-adjusted basis from our operating activities. We invest capital in our operating business segments when we identify attractive profit opportunities in our target markets. To the extent that we believe we can achieve, maintain or improve on leadership positions in these markets by deploying our capital and leveraging our expertise and other competitive advantages, we have done so with the expectation of generating high returns. When expected returns have justified continued investment, we have reinvested cash from operations into enhancing and growing our operating business segments through the development of new products and services, additional distribution relationships and other operational improvements. In addition, when we have identified external opportunities that are consistent with these objectives, we have acquired businesses, portfolios, distribution

relationships, personnel or other resources. For example, we acquired Protective Life Corporation’s Dental Benefits Division in December 2001. Finally, our management has consistently taken a disciplined approach towards withdrawing capital when businesses are no longer anticipated to meet our expectations. For example, we have exited or divested a number of operations including our LTC division, which was sold to John Hancock in 2000 and our FFG division, which was sold to The Hartford in 2001. We believe we have benefited from having the discipline and flexibility to deploy capital opportunistically and prudently to maximize returns to our stockholders.

Diverse Business Mix and Superior Financial Strength. We have four operating business segments across distinct areas of the insurance market. These businesses are generally not affected in the same way by economic and operating trends, which we believe allows us to maintain a greater level of financial stability than many of our competitors across business and economic cycles. In addition, as of June 30, 2003, we had $22,738 million of total assets, including separate accounts, and $2,779 million of stockholders’ equity. Our domestic operating subsidiaries have financial strength ratings of A (“Excellent”) or A- (“Excellent”) from A.M. Best, and two of our domestic operating subsidiaries have financial strength ratings of A2 (“Good”) and A3 (“Good”), respectively, from Moody’s. We employ a conservative investment policy and our portfolio primarily consists of high grade fixed income securities. As of June 30, 2003, we had $10,735 million of investments, consisting primarily of investment grade bonds with an average rating of “A”. We believe our solid capital base and overall financial strength allow us to distinguish ourselves from our competitors and continue to enable us to attract clients that are seeking long-term financial stability.

Experienced Management Team with Proven Track Record and Entrepreneurial Culture. We have a talented and experienced management team both at the corporate level and at each of our business segments. Our management team is led by our President and Chief Executive Officer, J. Kerry Clayton, who has been with our Company or its predecessors for 33 years. Our senior officers have an average tenure of approximately 16 years with our Company and close to 24 years in the insurance and related risk management business. Our management team has successfully managed our business and executed on our specialized niche strategy through numerous business cycles and political and regulatory challenges. Our management team also shares a set of corporate values and promotes a common corporate culture that we believe enables us to leverage business ideas, risk management expertise and focus on regulatory compliance across our businesses. At the same time, we reward and encourage entrepreneurship at each business segment, accomplished in part by our long history of utilizing performance-based compensation systems.

Growth Strategy


	•	Enhance Market Position in Our Business Lines;

	•	Develop New Distribution Channels and Strategic Alliances;

	•	Deploy Capital and Resources to Maintain Flexibility and Establish or Enhance Market Leading Positions;

	•	Maintain Disciplined Pricing Approach; and

	•	Continue to Manage Capital Prudently.

Enhance Market Position in Our Business Lines. We have leading market positions in several of our business lines. We have been selective in developing our product and service offerings and will continue to focus on providing products and services to those markets that we believe offer attractive growth opportunities. We will also seek to continue penetrating our target markets and expand our market positions by developing and introducing new products and services that are tailored to the specific needs of our clients. For example, we are developing products that are targeted to purchasers of recreational vehicles, cell phones and other consumer products. In addition, we will continue to market our products to our existing client base and seek to

identify clients in new target markets such as Brazil, Mexico, Argentina and other countries with emerging middle class populations.

Develop New Distribution Channels and Strategic Alliances. We have a strong, multi-channel distribution network already in place with leading market participants. These relationships have been critical to our market penetration and growth. We will continue to be selective in developing new distribution channels as we seek to expand our market share, enter new geographic markets and develop new niche businesses. For example, we recently entered into a strategic alliance with GE Consumer Products, which will enable us to sell and administer extended service contracts for consumer electronics, major appliances and other consumer goods to General Electric’s customers.

Deploy Capital and Resources to Maintain Flexibility and Establish or Enhance Market Leading Positions. We seek to deploy our capital and resources in a manner that provides us with the flexibility to grow internally through product development, new distribution relationships and investments in technology, as well as to pursue acquisitions. As we expand through internal growth and acquisitions, we intend to leverage our expertise in risk management, underwriting and business-to-business management, as well as our technological capabilities in running complex administration systems and support services.

Maintain Disciplined Pricing Approach. We intend to maintain our disciplined pricing approach by seeking to focus on profitable products and markets and by pursuing a flexible approach to product design. We continuously evaluate the profitability of our products, and we will continue to pursue pricing strategies and adjust our mix of businesses by geography and by product so that we can maintain attractive pricing and margins. We seek to price our products at levels in order to achieve our target profit objectives.

Continue to Manage Capital Prudently. We intend to manage our capital prudently relative to our risk exposure to maximize profitability and long-term growth in stockholder value. Our capital management strategy is to maintain financial strength through conservative and disciplined risk management practices. We do this through product design, strong underwriting and risk selection and prudent claims management and pricing. In addition, we will maintain our conservative investment portfolio management philosophy and properly manage our invested assets in order to match the duration of our insurance product liabilities. We will continue to manage our business segments with the appropriate level of capital required to obtain the ratings necessary to operate in their markets and to satisfy various regulatory requirements. We will also continue to evaluate ways to reduce costs in each of our business lines, including by streamlining the number of legal entities through which we operate.

Operating Business Segments

Our business is comprised of four operating business segments: Assurant Solutions; Assurant Health; Assurant Employee Benefits; and Assurant PreNeed. We also have a Corporate and Other segment. Our business segments and the related net earned premiums and other considerations and fees and other income and segment income before income tax generated by those segments are as follows for the periods indicated:

Net Earned Premiums and Other Considerations and Fees and Other Income by Business Segment



				For the Six Months					For the Year
				Ended					Ended
				June 30, 2003					December 31, 2002

						Percentage					Percentage
				$ (in millions)		of Total			$ (in millions)		of Total

Assurant Solutions:
	Specialty Property			$	358		12	%	$	583		10	%
	Consumer Protection				834		27			1,613		27

		Total Assurant Solutions			1,192		39			2,196		37

Assurant Health:
	Individual				504		16			894		15
	Small Employer Group				480		15			963		16

		Total Assurant Health			984		31			1,857		31

Assurant Employee Benefits					656		21			1,307		22

Assurant PreNeed					274		9			543		9
Corporate and Other					1		—			25		1

			Total Business Segments	$	3,107		100	%	$	5,927		100	%

Segment Income (Loss) Before Income Tax by Business Segment



		For the Six Months						For the Year
		Ended						Ended
		June 30, 2003						December 31, 2002

					Percentage						Percentage
		$ (in millions)			of Total			$ (in millions)			of Total

Assurant Solutions		$	102			41	%	$	197			53	%
Assurant Health			96			39			143			39
Assurant Employee Benefits			41			16			88			24
Assurant PreNeed			29			12			77			21
Corporate and Other			(19	)		(8	)		(135	)		(37	)

	Total Business Segments	$	248			100	%	$	370			100	%

The amount of our total revenues, segment income before and after income tax and total assets by segment and the amount of our revenues and long-lived assets by geographic region is set forth in Note 19 to our consolidated financial statements.

Assurant Solutions

Assurant Solutions has leadership positions or is partnered with clients who are leaders in creditor-placed homeowners insurance and related mortgage tracking services, manufactured housing homeowners insurance and debt protection administration. We develop, underwrite and market our specialty insurance products and services through partnerships with our clients (financial institutions, retailers, manufactured housing and automobile dealers, utilities and other entities) to their customers. We serve our client partners throughout North America, the Caribbean and selected countries in South America and Europe.

Our principal business lines within our Assurant Solutions segment have experienced growth in varying degrees. Growth in premiums in the homeowners market has been driven by increased home purchase activity due to the low interest rate environment, appreciation in home values and an increasing percentage of the population purchasing homes generally. The manufactured housing market has been more challenging because of a more restrictive lending environment with fewer lenders extending credit and increasingly strict underwriting standards being applied since the late 1990’s. Finally, the domestic consumer credit insurance market has been contracting due to an adverse regulatory environment; however, this decline has been offset somewhat by accelerating growth in the debt protection market. At a recent industry conference, a study was presented that projected growth in the U.S. debt protection market from $500 million in 2000 to $5 billion in 2005. In addition, as the global economy and consumer discretionary spending grows, the international market for consumer insurance is expected to grow. We believe that we are well positioned to benefit from the growth in our key business lines with our broad product and service offerings.

In Assurant Solutions, we provide specialty property and consumer protection products and services. In our specialty property solutions division, our strategy is to further develop our creditor-placed homeowners and manufactured housing homeowners insurance products and related services in order to maintain our leadership position or partnerships with clients who are leaders and to gain market share in the mortgage and manufactured housing industries, as well as to develop our renters’ insurance product line. In our consumer protection solutions division, we intend to continue to focus on being a low-cost provider of debt protection administration services, to leverage our administrative infrastructure with our large customer base clients and to manage the switch from credit insurance programs to debt protection programs in the United States.

The following table provides net earned premiums and other considerations, fees and other income and other operating data for Assurant Solutions for the periods indicated:



				For the Six				For the Year
				Months Ended				Ended
				June 30,				December 31,

				2003		2002		2002		2001		2000


				(in millions)
Net earned premiums and other considerations:
	Specialty Property			$	342	$	255	$	552	$	452	$	413
	Consumer Protection				782		740		1,525		1,454		1,367

		Total			1,124		995		2,077		1,906		1,780
Fees and other income					68		57		119		98		68

			Total	$	1,192	$	1,052	$	2,196	$	2,004	$	1,848

Products and Services

Specialty Property Solutions. We underwrite a variety of creditor-placed and voluntary homeowners insurance as well as property coverages on manufactured housing, specialty automobiles, including antique automobiles, recreational vehicles, including motorcycles and watercraft, and leased and financed equipment. We also offer complementary programs such as flood insurance, renters’ insurance and various other property coverages. We are a leading provider of creditor-placed and other collateral protection insurance programs, which protect a lender’s interest in homes, manufactured homes and automobiles. We also offer administra-

tion services for some of the largest mortgage lenders and servicers, manufactured housing lenders, dealers and vertically integrated builders and equipment leasing institutions in the United States. Many of our products and services are sold in conjunction with the sale or lease of the underlying property, vehicle or equipment by our clients. Our market strategy is to partner with institutions who are leaders in their chosen markets and therefore can effectively and efficiently distribute our products and services to large customer bases. By partnering with these leaders, we benefit not only from their internally generated growth, but also from the growth they experience as acquirers of other companies or books of business in their respective markets.

The homeowners insurance product line is our largest line in our specialty property solutions division. The primary program within this line is our creditor-placed homeowners insurance. Creditor-placed homeowners insurance generally consists of fire and dwelling insurance that we provide to ensure collateral protection to a mortgage lender in the event that a homeowner fails to purchase or renew homeowners insurance on a mortgaged dwelling. In our typical arrangements with our mortgage lender and servicer clients, we agree that we will monitor the client’s mortgage loan portfolio over time to verify the existence of homeowners insurance protecting the lender’s interest in the underlying properties. We have developed a proprietary insurance tracking and administration process to verify the existence of insurance on a mortgaged property. In situations where such mortgaged property does not have appropriate insurance and after notification to the mortgageholder of the failure to have such insurance, we issue creditor-placed insurance policies to ensure the mortgaged property is protected. We believe our technology and insurance processing expertise enable us to provide efficient and high quality tracking and administration services.

We also provide fee-based services to our mortgage lender and servicer clients in the creditor-placed homeowners insurance administration area, which services are complementary to our insurance products. Our ability to offer these services is a critical factor in establishing relationships with our client partners. The vast majority of our mortgage lender and servicer clients outsource their insurance processing to us. These fee-based services include receipt of the insurance-related mail, matching of insurance information to specific loans, payment of insurance premiums on escrowed accounts, insurance-related customer service, loss draft administration and other related services. Our extensive use of technology includes specialized optical character recognition software, automated workflow processes and electronic data interchange processes. We believe that we are a leader in insurance and mortgage tracking services based on the number of mortgage loans tracked.

The second largest specialty property line in our specialty property solutions division is homeowners insurance for owners of manufactured homes. We primarily distribute our manufactured housing insurance programs utilizing three marketing channels. Our primary channel is our partnerships with the nation’s leading manufactured housing retailers. Through our proprietary premium rating technology, which is integrated with our client partners’ sales process, we are able to offer our property coverages at the time the home is being sold, thus enhancing our ability to penetrate the new home point-of-sale market place. We also offer our programs to independent specialty agents who distribute our products to individuals subsequent to new home purchases. Finally, we perform the collateral tracking and administration services for the nation’s leading manufactured housing lending organizations. Through these partnerships with lending organizations, we place our homeowners coverage on the manufactured home in the event that the homeowner fails to obtain or renew homeowners coverage on the home. In a typical arrangement with a manufactured housing lending organization, we agree to monitor the organization’s portfolio of loans over time to verify the existence of homeowners insurance protecting the organization’s interest in the underlying manufactured homes. We perform collateral tracking and homeowners insurance placement for some of the largest manufactured housing lenders in the country.

We also provide voluntary homeowners insurance and voluntary manufactured housing homeowners insurance, which generally provide comprehensive coverage for the structure, contents and liability, as well as coverage for floods.

Consumer Protection Solutions. We offer a broad array of credit insurance programs, debt protection services and product warranties and extended service contracts, all of which are consumer-related, both domestically and in selected international markets. Credit insurance and debt protection programs generally

offer a consumer a convenient option to protect a credit card or installment loan in the event of a disability, unemployment or death so that the amount of coverage purchased equals the amount of outstanding debt. Under the credit insurance program, the loan or credit card balance is paid off in the case of death and, in the case of unemployment or disability, payments are made on the loan until the covered holder is employed again or medically able to return to work. Under the terms and conditions of a debt protection agreement, the monthly interest due from a customer may be waived or the monthly payments may be paid for a covered life event, such as disability, unemployment or family leave. Most often in the case of the death of a covered account holder, the debt is extinguished under the debt protection program. Coverage is generally available to all consumers without the underwriting restrictions that apply to term life insurance, such as medical examinations and medical history reports. We are the exclusive provider of debt protection administration services and credit insurance for four of the six largest general purpose credit card issuers in the United States.

Almost all of the largest credit card issuing institutions in the United States have switched from offering credit insurance to their credit card customers to offering their own banking-approved debt protection programs. Assurant Solutions has been able to maintain all of its major credit card clients as they switched from our credit insurance programs to their debt protection programs. We earn fee income rather than net earned premiums from our debt protection administration services. In addition, margins are lower in debt protection administration than in traditional credit insurance programs. However, because debt protection is not an insurance product, certain costs, such as regulatory costs and costs of capital, are expected to be eliminated as the transition from credit insurance to debt protection administration services continues. The fees from debt protection administration do not fully compensate for the decrease in credit insurance premiums. In addition, we continue to provide credit insurance programs for many of the leading retailers, consumer finance companies and other institutions who are involved in consumer lending transactions.

We also underwrite, and provide administration services on, extended service and warranty contracts on appliances, consumer electronics, including personal computers, cellular phones and other wireless devices, and vehicles, including automobiles, recreational vehicles and boats. Our strategy is to provide our clients with all aspects of the extended service contract or warranty, including program design, marketing strategy, technologically advanced administration, claims handling and customer service. We believe that we maintain a unique differentiated position in the market place as a provider of both the required administrative infrastructure and insurance underwriting capabilities.

Marketing and Distribution

Assurant Solutions markets its insurance programs and administration services directly to large financial institutions, mortgage lenders and servicers, credit card issuers, finance companies, automobile retailers, consumer electronics retailers, manufactured housing lenders, dealers and vertically integrated builders and other institutions. Assurant Solutions enters into exclusive and other distribution agreements, typically with terms of one to five years, and develops interdependent systems with its client partners. Through our long-standing relationships, Assurant Solutions has access to numerous potential policyholders and, in partnership with its clients, can tailor its products to suit various market segments. Assurant Solutions maintains a dedicated sales force that establishes and maintains relationships with our clients. We have a disciplined and proven multiple step business development process that is employed by our direct sales force. We maintain a specialized consumer acquisition marketing services group that manages our direct marketing efforts on behalf of our clients.

In the United States, we have strong distribution relationships with six out of the ten largest mortgage lenders and servicers, four out of the seven largest manufactured housing builders, four out of the six largest general purpose credit card issuers and six out of the ten largest consumer electronics and appliances retailers, with an average relationship of at least 10 years.

Underwriting and Risk Management

We, along with Assurant Solutions’ predecessors, have over 50 years of experience in providing specialty insurance programs and therefore maintain extensive proprietary actuarial databases and catastrophe models.

This database enables us to better identify and quantify the expected loss experience of particular products and is employed in the design of our products and the establishment of rates.

We have a disciplined approach to the management of our property product lines. We vigilantly monitor pricing adequacy on a product by region, state, risk and producer. Subject to regulatory considerations, we seek to make timely commission, premium and coverage modifications where we determine them to be appropriate. In addition, we maintain a segregated risk management area for property exposures whose emphasis includes catastrophic exposure management, reinsurance purchasing and analytical review of profitability based on various catastrophe models. We do not underwrite in our creditor-placed homeowners insurance line, as our contracts with our client partners require that we automatically issue these policies, after notice, when a policyholder’s homeowners policy lapses or is terminated.

A distinct characteristic of our credit insurance programs is that the majority of these products have relatively low exposures. This is because policy size is equal to the size of the installment loan or credit card balance. Thus, loss severity for most of this business is low relative to other insurance companies writing more traditional lines of insurance. For those product lines where there is exposure to catastrophes (for example, our homeowners policies), we closely monitor and manage our aggregate risk exposure by geographic area and have entered into reinsurance treaties to manage our exposure to these types of events.

Also, a significant portion of Assurant Solutions’ consumer protection solutions contracts with our client partners are written on a retrospective commission basis, which permits Assurant Solutions to adjust commissions based on claims experience. Under this contingent commission arrangement, compensation to the financial institutions and other clients is predicated upon the actual losses incurred compared to premiums earned after a specific net allowance to Assurant Solutions, which we believe aligns our clients’ interests with ours and helps us to better manage risk exposure.

In Assurant Solutions, our claims processing is highly automated and combines the efficiency of centralized claims handling, customer service centers and the flexibility of field representatives. This flexibility adds significant savings and efficiencies to the claims-handling process. Our claims department also provides automated feedback to help with risk assessment and pricing. In our specialty property solutions division, we complement our automated claims processing with field representatives who manage the claims process on the ground where and when needed.

Assurant Health

Assurant Health is a writer of individual and short-term major medical health insurance. We also provide small employer group health insurance to employer groups primarily of two to 50 employees in size, and health insurance plans to full-time college students. Our predecessor company first issued medical insurance coverage to individuals in 1912. We serve approximately 1.1 million people throughout the United States. We were one of the first companies to offer an MSA feature as part of our individual health products and we continue to be a provider of MSA-linked individual health policies. MSAs are tax-sheltered savings accounts earmarked for medical expenses and are established in conjunction with one of our PPO or indemnity products.

We expect growth in our Assurant Health segment to be driven principally by inflation and increases in the cost of providing medical care. We believe that the number of persons covered by individually purchased health insurance in the United States will remain stable at 14.2 million people based upon existing levels of unemployment and job turnover. Similarly, we believe that the number of small employer groups in the United States will continue to remain steady at 5.8 million firms.

We generally expect medical cost inflation to be the principal driver of growth in this segment; however, reduced funding of health insurance by employers and the increasing attractiveness and flexibility of MSAs could create opportunities for the individual medical insurance market to expand.

In Assurant Health, we intend to continue to concentrate on developing our product capabilities in the individual health insurance market. From 2000 through June 2003, we have increased the relative percentage of individual health insurance products to our total health insurance products from approximately 30% of premium dollars to approximately 50% of premium dollars. We have pursued a variety of distribution

relationships focused on the individual health insurance market. We seek to maintain the lowest combined expense ratio of any of our major competitors serving the health care financing needs of individuals, families and small employer groups.

The following table provides net earned premiums and other considerations, fees and other income and other operating data for Assurant Health for the periods and as of the dates indicated:



				For the
				Six Months						For the Year
				Ended						Ended
				June 30,						December 31,

				2003			2002			2002			2001			2000


				(in millions, except membership data)
Net earned premiums and other considerations:
	Individual			$	494		$	420		$	880		$	738		$	619
	Small employer group				475			484			954			1,100			1,348

		Total			969			904			1,834			1,838			1,967
Fees and other income					15			10			23			14			11

			Total	$	984		$	914		$	1,857		$	1,852		$	1,978

Operating statistics:
	Loss ratio(1)				65.0	%		66.6	%		66.6	%		71.1	%		76.2	%
	Expense ratio(2)				28.8	%		29.0	%		29.4	%		26.8	%		23.8	%
	Combined ratio(3)				92.8	%		94.9	%		95.2	%		97.3	%		99.5	%

Membership by product line (in thousands):
	Individual				715			650			670			600			500
	Small employer group				360			375			355			420			585

		Total membership			1,075			1,025			1,025			1,020			1,085


(1)	The loss ratio is equal to policyholder benefits divided by net earned premiums and other considerations.
(2)	The expense ratio is equal to selling, underwriting and general expenses divided by net earned premiums and other considerations and fees and other income.
(3)	The combined ratio is equal to total benefits, losses and expenses divided by net earned premiums and other considerations and fees and other income.


	Products and Services

Individual Health Insurance Products. Assurant Health’s individual health insurance products are sold to individuals, primarily between the ages of 18 and 64 years, and their families who do not have employer-sponsored coverage. Due to increasingly stringent federal and state restrictions relating to insurance policies sold directly to individuals, we emphasize the sale of individual products through associations and trusts that act as the master policyholder for such products. Our association and trust products offer greater flexibility in pricing, underwriting and product design compared to products sold directly to individuals on a true individual policy basis.

Substantially all of the individual health insurance products we sell are PPO plans, which offer the member the ability to select any health care provider, with benefits reimbursed at a higher level when care is received from a participating network provider. Coverage is typically subject to co-payments or deductibles and coinsurance, with member cost sharing for covered services limited by lifetime policy maximums of $2 million or $3 million, with options to purchase between $6 million and $8 million. Product features often included in these plans are inpatient pre-certification and benefits for preventative services. These products are individually underwritten taking into account the member’s medical history and other factors, and consist primarily of major medical insurance that renews on an annual basis. The remaining products we sell are

indemnity, or fee-for-service, plans. Indemnity plans offer the member the ability to select any health care provider for covered services.

At June 30, 2003 and December 31, 2002, we had total in force medical policies of 281,300 and 264,100, respectively, covering approximately 560,000 and 520,000 individuals, respectively. Approximately 14% and 16% of the individual health insurance products we sold in 2002 and the six months ended June 30, 2003, respectively, included an MSA.

Assurant Health markets additional products to the individual market: short-term medical insurance and student health coverage plans. The short-term medical insurance product is ideal for individuals who are between jobs or seeking interim coverage before their major medical coverage becomes effective. Short-term medical insurance products are generally sold to individuals with gaps in coverage for six months or less. Student health coverage plans are medical insurance plans sold to full-time college students who are not covered by their parents’ health insurance, are no longer eligible for dependant coverage or are seeking a more comprehensive alternative to a college-sponsored plan.

Small Employer Health Insurance Products. Our small employer market primarily includes companies with two to 50 employees, although larger employer coverage is available. Our average group size, as of June 30, 2003, was approximately five employees. In the case of our small employer group medical insurance, we underwrite the entire group and examine the medical risk factors of the individuals in the group for forecasting and reserving purposes.

Substantially all of the small employer health insurance products that we sold in 2002 and the first six months of 2003 were PPO products. At June 30, 2003 and December 31, 2002, we had total in force medical policies for small employer groups of 38,000 and 38,500, respectively, covering approximately 360,000 and 355,000 individuals, respectively.

We recently introduced Health Reimbursement Accounts (HRAs), which are employer-funded accounts provided to employees for reimbursement of qualifying medical expenses. We also offer certain ancillary products to meet the demands of small employers for life insurance, short-term disability insurance and dental insurance.


	Marketing and Distribution

Our health insurance products are principally marketed to an extensive network of independent agents by Assurant Health distributors. Approximately 150,000 agents had access to Assurant Health products during the 2002 calendar year. We also market our products to individuals through a variety of exclusive and non-exclusive national account partnerships and direct distribution channels. In addition, we market our products through NorthStar Marketing, a wholly owned affiliate that proactively seeks business directly from independent agents. Since 2000, Assurant Health has had an exclusive national marketing agreement with IPSI, a wholly-owned subsidiary of State Farm, pursuant to which IPSI captive agents market Assurant Health’s individual health products. In addition, Assurant Health has exclusive distribution relationships with USAA and Mutual of Omaha to market Assurant Health’s individual health products. All of these arrangements have four-year terms from their commencement dates and are generally terminable upon our bankruptcy or similar proceeding or a breach of a material provision by us. Additionally, some of these arrangements permit termination after a specified notice period. We also have had a long-standing relationship with Health Advocates Alliance, the association through which we provide many of our individual health insurance products. Assurant Health also has had a long-term relationship with Rogers Benefit Group, a national marketing organization with 70 offices. Short-term medical insurance and student health coverage plans are also sold through the Internet by Assurant Health and numerous direct writing agents.


	Underwriting and Risk Management

Assurant Health’s underwriting and risk management capabilities include pricing discipline, policy underwriting, renewal optimization, development and retention of provider networks and claims processing.

In establishing premium rates for our health care plans, we use underwriting criteria based upon our accumulated actuarial data, with adjustments for factors such as claims experience and member demographics to evaluate anticipated health care costs. Our pricing considers the expected frequency and severity of claims and the costs of providing the necessary coverage, including the cost of administering policy benefits, sales and other administrative costs. State rate regulation significantly affects pricing. Our health insurance operations are subject to a variety of legislative and regulatory requirements and restrictions covering a range of trade and claim settlement practices. State insurance regulatory authorities have broad discretion in approving a health insurer’s proposed rates. In addition, HIPAA requires certain guaranteed issuance and renewability of health insurance coverage for individuals and small employer groups and limits exclusions based on existing conditions.

In our individual health insurance business, we medically underwrite our applicants and have implemented new programs to improve our underwriting process. These include our tele-underwriting program, which enables individual insurance applicants to be interviewed over the telephone by trained underwriters. Gathering information directly from prospective clients over the telephone greatly reduces the need for costly and time-consuming medical exams and physician reports. We believe this approach leads to lower costs, improved productivity, faster application processing times and improved underwriting information. Our individual underwriting considers not only an applicant’s medical history, but also lifestyle factors such as avocations and alcohol and drug and tobacco use. Our individual health insurance products generally permit us to rescind coverage if an insured has falsified his or her application.

In our small employer group health insurance business, we underwrite the group on the basis of demographic factors such as age, gender, occupation and geographic location and concentration of the group. In addition, we examine individual-level medical risk factors for forecasting and reserving purposes.

Assurant Health offers a broad choice of PPO network options in each of its markets and enrolls members in the network that Assurant Health believes reduces our price paid for health care services while providing high quality care. Assurant Health enrolls indemnity customers in selected PPO networks to obtain discounts on provider services that would otherwise not be available. In situations where a customer does not obtain services from a contracted provider, Assurant Health applies various usual and customary fees, which limit the amount paid to providers within specific geographic areas.

Provider network contracts are a critical dimension in controlling medical costs since there is often a significant difference between a network negotiated rate and the non-discounted rate. To this end, we retain provider networks through a variety of relationships, which include leased networks that contract directly with individual health care providers, proprietary contracts and Private Health Care Systems, Inc. (PHCS). PHCS is a national private company that owned a provider network of approximately 3,600 hospitals and approximately 400,000 physicians as of September 30, 2003. Assurant Health was a co-founder of PHCS, and we currently own 29% of the company. PHCS has a staff solely dedicated to provider relations.

We seek to manage claim costs in our PPO plans by selecting provider networks that have negotiated favorable arrangements with physicians, hospitals and other health care professionals and requiring participation in our various medical management programs. In addition, we manage costs through extensive underwriting, pricing and product design decisions intended to influence the behavior of our insureds. We provide case management programs and have doctors, nurses and pharmacists on staff who endeavor to manage risks related to medical claims and prescription costs.

We utilize a broad range of focused traditional cost containment and care management processes across our various product lines to manage risk and to lower costs. These include case management, disease management and pharmacy benefits management programs. Our case management philosophy is built on helping our insureds confront a complex care system to find the appropriate care in a timely and cost effective manner. We believe this approach builds positive relationships with our providers and insureds and helps us achieve cost savings.

Effective July 1, 2003, Assurant Health transitioned its pharmacy benefits management function to Medco Health Solutions, formerly known as Merck-Medco. Medco Health Solutions has established itself as

a leader in its industry with more than 57,000 participating pharmacies nationwide. Through Medco Health Solutions’ advanced technology platforms, Assurant Health is able to access information about customer utilization patterns on a more timely basis to improve its risk management capabilities. In addition to the technology-based advantages, Medco Health Solutions allows us to purchase our pharmacy benefits at competitive prices. Our agreement with Medco Health Solutions expires June 30, 2007. Assurant Health also utilizes copays and deductibles to reduce prescription drug costs.

We employ approximately 525 claims employees in locations throughout the United States dedicated to Assurant Health. We have an appeals process pursuant to which policyholders can appeal claims decisions made.

Assurant Employee Benefits

Assurant Employee Benefits is a market leader in group dental benefit plans sponsored by employers and funded through payroll deduction. We are also a leading provider of employer-paid or true group dental, disability and term life insurance products and related services to small and medium-sized employers.

In our core benefits business, we focus on employer-sponsored programs for employers with typically between 20 and 1,000 employees. We are willing to write programs for employers with more than 1,000 covered employees when they meet our risk profile. At June 30, 2003, substantially all of our coverages in force and 76% of our annualized premiums in force were for employers with less than 1,000 employees. We have a particularly strong emphasis on employers with under 250 employees, which represented approximately 97% and 59% of our in force coverages and premiums, respectively, as of June 30, 2003. Our average in force case size was 57 enrolled employees as of June 30, 2003.

Growth in our Assurant Employee Benefits segment will be principally driven by increases in the numbers of employees enrolled in our plans, inflation and increases in the cost of providing dental care and, for our group disability and term life business, increases in salaries. We believe that increased penetration of our target employer base could generate growth for this segment. According to the 2003 National Compensation Survey conducted by the Bureau of Labor Statistics, U.S. Department of Labor, in March 2003, 41% of full-time non-agricultural private industry employees lack employer provided or sponsored life insurance coverage, 55% lack short-term disability coverage, 64% lack long-term disability coverage and 60% lack dental coverage. During 2002, according to National Association of Dental Plans and Life Insurance Marketing Research Association studies, approximately $7.2 billion in annualized premiums of group dental, disability and life insurance was sold in the United States. Exclusive of group dental, for which historical data from these sources is not available, the average annual growth rate in sales of the remaining group products for 2000 through 2002 was 5.4% per year. We believe that our broad product and distribution coverage and our expertise in small case underwriting will position us favorably as these markets continue to grow.

In Assurant Employee Benefits, we intend to build upon a leading position in the employee-paid dental lines in order to expand and grow our portfolio of other employee-paid product offerings and service capabilities, where we have seen higher profits than in the employer-paid lines. We are also focusing our efforts on achieving greater bottom line profitability for our disability product offerings.

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