ASSURANT, INC. - Annual Report: 2019 (Form 10-K)

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(1)	For the years ended December 31, 2019, 2018 and 2017, 55.9%, 55.4%, and 58.7%, respectively, of net earned premiums, fees and other income was from mobile products and 44.1%, 44.6%, and 41.3%, respectively, was from service contracts, including assistance services.

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(1)

A.M. Best financial strength ratings range from “A++” (superior) to “D” (poor). Ratings of A and A- fall under the “excellent” category, which is the second highest of A.M. Best’s seven ratings categories. A rating of B++ falls under the “good” category, which is the third highest of A.M. Best’s seven ratings categories. A.M. Best has a stable outlook on all of our domestic and significant international operating insurance subsidiaries’ financial strength ratings.

(2)

Moody’s insurance financial strength ratings range from “Aaa” (highest quality) to “C” (lowest rated). A numeric modifier may be appended to ratings from “Aa” to “Caa” to indicate relative position within a category, with 1 being the highest and 3 being the lowest. A rating of A3 is considered “upper-medium-grade” and falls within the third highest of Moody’s nine ratings categories. A rating of Baa1 is considered "medium-grade" and falls within the fourth highest of Moody’s nine ratings categories. Moody's has a stable outlook on all of our domestic operating insurance subsidiaries’ insurance financial strength ratings.

(3)

S&P’s insurer financial strength ratings range from “AAA” (extremely strong) to “R” (under regulatory supervision). A “+” or “-” may be appended to ratings from categories AA to CCC to indicate relative position within a category. Ratings of A (strong) are within the third highest of S&P’s ten ratings categories. S&P has a stable outlook on all of our domestic operating insurance subsidiaries’ insurer financial strength ratings.

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•	licensing;

•	capital, surplus and dividends;

•	underwriting requirements and limitations (including, in some cases, minimum or target loss ratios);

•	entrance into and exit from markets;

•	introduction, cancellation and termination of certain coverages;

•	statutory accounting and annual statement disclosure requirements;

•	product types, policy forms and mandated insurance benefits;

•	premium rates;

•	fines, penalties and assessments;

•	claims practices, including occasional regulatory requirements to pay claims on terms other than those mandated by underlying policy contracts;

•	transactions between affiliates;

•	the form and content of disclosures to consumers;

•	the type, amounts and valuation of investments;

•	annual tests of solvency and reserve adequacy;

•	assessments or other surcharges for guaranty funds and the recovery of assessments through premium increases; and

•	market conduct and sales practices of insurers and agents.

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•	individuals and businesses may (i) choose not to purchase our insurance products, warranties and other products and services, (ii) terminate existing policies or contracts or permit them to lapse and (iii) choose to reduce the amount of coverage they purchase;

•	conditions in the markets in which we operate may deteriorate, impacting, among other things, consumer demand for the electronics, appliances, automobiles, housing and other products we insure, including the rate of introduction and success of new products, technologies and promotional programs that provide opportunities for growth;

•	clients are more likely to underperform expectations, experience financial distress, declare bankruptcy or liquidate, which could have an adverse impact on the remittance of premiums from such clients and the collection of receivables from such clients for items such as unearned premiums and could otherwise expose us to credit risk;

•	claims on certain specialized insurance products tend to rise;

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

•	there is an increased risk of fraudulent insurance claims; and

•	substantial decreases in loan availability and origination could reduce the demand for credit insurance that we write or debt cancellation or debt deferment products that we administer, and on the placement of hazard insurance under our Lender-placed Insurance programs.

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•	industry-wide investigations regarding business practices, including the use and marketing of certain types of insurance policies or certificates of insurance, and compliance with guidance issued by regulators;

•	actions by regulatory authorities that may restrict our ability to increase or maintain our premium rates, require us to reduce premium rates, impose fines or penalties and result in other expenses;

•	market conduct examinations, for which we are required to pay the expenses of the regulator as well as our own expenses, and which may result in fines, penalties, and other adverse consequences;

•	disputes regarding our Lender-placed Insurance products, including those relating to rates, agent compensation, consumer disclosure, continuous coverage requirements, loan tracking services and other services that we provide to mortgage servicers;

•	disputes over coverage or claims adjudication;

•	disputes over our treatment of claims, in which states or insureds may allege that we failed to make required payments or meet prescribed deadlines for adjudicating claims;

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

•	disputes over liability claims under comprehensive general liability policies involving property damage or personal injury at insured properties or relating to insured vehicles;

•	disputes alleging bundling of credit insurance and warranty products with other products provided by financial institutions;

•	disputes with tax and insurance authorities regarding our tax liabilities; and

•	disputes relating to customers’ claims that they were not aware of the full cost or existence of the insurance or limitations on insurance coverage.

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

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

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

•	new licensing requirements;

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

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

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

•	increased regulation relating to Lender-placed Insurance;

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

•	restrictions on the solicitation of insurance consumers by funeral board laws for prefunded funeral insurance coverage.

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*	The S&P 400 Multi-line Insurance Index is comprised of mid-cap companies, while the S&P 500 Multi-line Insurance Index is comprised of large-cap companies.

(1)	Shares purchased pursuant to the November 14, 2016 publicly announced share repurchase authorization of up to $600.0 million of outstanding common stock (which was depleted in the third quarter of 2019) and the November 5, 2018 publicly announced share repurchase authorization of up to

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(1)

The increase for the years ended December 31, 2019 and 2018 reflects the acquisition of TWG on May 31, 2018. The decrease for the year ended December 31, 2017 was primarily due to a change in program structure impacting the accounting for revenues on a net instead of gross basis for a large client in Connected Living. The change in program structure had no impact on net income. The decrease for the year ended December 31, 2016 primarily relates to the Assurant Health wind-down and the sale of our Assurant Employee Benefits segment.

(2)	The year ended December 31, 2015 included higher loss experience and adverse claim development on 2015 individual major medical policies associated with Assurant Health.

(3)	The year ended December 31, 2017 included a $177.0 million one-time benefit from the reduction of net deferred tax liabilities following the enactment of the TCJA. The reduction of net deferred tax liabilities was recorded at the reportable segment level using our best estimate of deferred tax balances as of the December 22, 2017 enactment date.

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(4)	Includes reportable catastrophe losses, net of reinsurance and client profit sharing adjustments, and including reinstatement and other premiums. Reportable catastrophe losses include only individual catastrophic events that generated losses to us in excess of $5.0 million, pre-tax.

(1)	Policy liabilities include future policy benefits and expenses, unearned premiums and claims and benefits payable.

(2)	Total book value per basic common share equals total Assurant, Inc. stockholders’ equity divided by the basic common shares outstanding. At December 31, 2019, 2018, 2017, 2016 and 2015 there were 60,693,295, 62,770,031, 53,078,396, 56,660,642, and 66,606,258 common shares, respectively, outstanding.

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•	the nature and extent of the underlying assumptions;

•	the quality and applicability of historical data - whether internal or industry data;

•	current and expected future economic and market conditions;

•	regulatory, legislative, and judicial considerations;

•	the extent of data segmentation - data should be homogeneous yet credible enough for loss development methods to apply;

•	trends in loss frequencies and severities for various causes of loss;

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•	consideration of the distribution of loss reserves, management’s selection of the best estimate that may exceed an estimate based on median values, suggesting that favorable development may be more likely than unfavorable development; and

•	hindsight testing of prior loss estimates - the loss estimates on some product lines will vary from actual loss experience more than others.

(1)	Represents the sum of the case reserves and incurred but not reported reserves as of December 31, 2019 for Global Lifestyle and Global Housing.

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(1)	The following table shows the revenues net of expenses from consolidated investment entities (“CIEs”) for the periods indicated. Refer to Note 9 to the Consolidated Financial Statements included elsewhere in this Report for further detail.

(1)	The investment income from the real estate funds includes income attributable to non-controlling interest of $3.8 million and $2.1 million for the years ended December 31, 2019 and 2018, respectively.

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•	Affirmed all ratings of Assurant entities with a stable outlook, except for two of our subsidiaries that sold the Assurant Employee Benefits business through reinsurance, whose financial strength ratings were downgraded from A- to B++ due to their diminished profile following the sale. The outlook for the ratings of these two entities was revised from negative to stable.

•	Withdrew the A ratings of two U.K. subsidiaries as the Company elected to no longer have these subsidiaries participate in the interactive process.

•	Assigned a bbb+ to our new senior debt issuance with a stable outlook.

•	Assigned a Baa3 rating to our new senior debt issuance with a stable outlook.

•	Assigned a BBB to our new senior debt issuance with a stable outlook.

•	All ratings were affirmed with a stable outlook.

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(i)	Maintenance of a maximum consolidated total debt to capitalization ratio on the last day of any fiscal quarter of not greater than 0.35 to 1.0; and

(ii)

Maintenance of a consolidated adjusted net worth in an amount not less than a “Minimum Amount” equal to the sum of (a) the greater of 70% of our consolidated adjusted net worth on the date of the closing of the TWG acquisition and $2.72 billion, (b) 25% of consolidated net income for each fiscal quarter (if positive) beginning with the first fiscal quarter ending after the date of the closing of the TWG acquisition and (c) 25% of the net cash proceeds received from any capital contribution to, or issuance of any capital stock, disqualified capital stock and hybrid securities, received after the closing of the TWG acquisition.

(1)	Bears floating interest at a rate equal to three-month LIBOR plus 1.25%.

(2)	Bears a 7.00% annual interest rate from March 2018 to March 2028 and annual interest rate equal to three-month LIBOR plus 4.135% thereafter.

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2021 Senior Notes: The first series of senior notes is $300.0 million in principal amount, bears floating interest rate equal to three-month LIBOR plus 1.25% (3.21% as of December 31, 2019) and matures in March 2021 (the “2021 Senior Notes”). Interest on the 2021 Senior Notes is payable quarterly. Commencing on or after March 2019, we may redeem the 2021 Senior Notes at any time in whole or from time to time in part at a redemption price equal to 100% of the principal amount being redeemed plus accrued and unpaid interest. In August 2019, we redeemed $250.0 million of the $300.0 million then outstanding aggregate principal amount of the 2021 Senior Notes.

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2023 Senior Notes: The second series of senior notes is $300.0 million in principal amount, bears interest at 4.20% per year, matures in September 2023 and was issued at a 0.233% discount to the public (the “2023 Senior Notes”). Interest on the 2023 Senior Notes is payable semi-annually. Prior to August 2023, we may redeem the 2023 Senior Notes at any time in whole or from time to time in part at a make-whole premium plus accrued and unpaid interest.

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2028 Senior Notes: The third series of senior notes is $300.0 million in principal amount, bears interest at 4.90% per year, matures in March 2028 and was issued at a 0.383% discount to the public (the “2028 Senior Notes”). Interest on the 2028 Senior Notes is payable semi-annually. Prior to December 2027, we may redeem the 2028 Senior Notes at any time in whole or from time to time in part at a make-whole premium plus accrued and unpaid interest. On or after that date, we may redeem the 2028 Senior Notes at any time in whole or from time to time in part at a redemption price equal to 100% of the principal amount being redeemed plus accrued and unpaid interest.

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(1)

Insurance liabilities reflect undiscounted estimated cash payments to be made to policyholders, net of expected future premium cash receipts on in-force policies and excluding fully reinsured runoff operations. The total gross reserve for fully reinsured runoff operations that was excluded was $4.86 billion which, if the reinsurers defaulted, would be payable over a 30+ year period with the majority of the payments occurring after 5 years. Additional information on the reinsurance arrangements can be found in Note 18 to the Consolidated Financial Statements included elsewhere in this Report. As a result, the amounts presented in this table do not agree to the future policy benefits and expenses and claims and benefits payable in the consolidated balance sheets.

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*	All other financial statement schedules are omitted because they are not applicable or not required or the information is included in the Consolidated Financial Statements or the notes thereto.

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(1)	The following table presents information on assets and liabilities related to consolidated investment entities as of December 31, 2019 and 2018.

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(1)

Amounts relate to: (i) the requirement to recognize the changes in fair value of equity securities directly within income (resulting in a reclassification of unrealized gains as of December 31, 2017 between accumulated other comprehensive income (“AOCI”) and retained earnings); (ii) the impact of adoption of the new revenue recognition standard for revenues from service contracts and sales of products; and (iii) the reclassification from AOCI to retained earnings for stranded tax effects resulting from the U.S. Tax Cuts and Jobs Act. See Note 2 for additional information.

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(1)	Refer to Notes 13 and 16 for further detail on amortization of DAC and VOBA, respectively.

(2)	The year ended December 31, 2018 represents cash received, net of cash transferred, from the sale of Mortgage Solutions ($36.7 million) and Time Insurance Company ($23.9 million). For additional information, refer to Note 4.

(3)	Amounts for the year ended December 31, 2018 primarily consist of $1.49 billion of cash used to fund a portion of the total purchase price of the TWG acquisition, inclusive of the $595.9 million repayment of pre-existing TWG debt at the acquisition date, net of $380.1 million of TWG cash acquired. Refer to Note 3 for further information.

(4)	Relates to cash flows from our variable interest entities. Refer to Note 9 for further information.

(5)	Relates to the current year settlement of a contingent payable from the Company’s acquisition of certain renewal rights in a prior year.

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(1)	Refer to future estimated amortization table below for the amortization pattern of VOBA and other intangible assets with finite lives.

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(1)	The TWG net income allocated to the Global Lifestyle segment included $9.3 million after-tax of client recoverables related to a contract termination payment.

(2)

The TWG net income allocated to Corporate and Other included $11.0 million of net losses as a result of the remeasurement of the Argentina subsidiary’s non-U.S. Dollar denominated monetary assets and liabilities, $10.7 million integration expenses and $8.4 million net realized losses on investments, partially offset by income tax benefits, which include a $5.7 million tax structuring benefit. Refer to Note 2 for further information on the net losses due to remeasurement and Note 12 for further information on the income tax benefit.

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•	Global Lifestyle: provides mobile device solutions and extended service products and related services for consumer electronics and appliances (referred to as “Connected Living”); vehicle protection and related services (referred to as “Global Automotive”); and credit and other insurance products (referred to as “Global Financial Services and Other”);

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Global Housing: provides lender-placed homeowners insurance, lender-placed manufactured housing insurance and lender-placed flood insurance (referred to as “Lender-placed Insurance”); renters insurance and related products (referred to as “Multifamily Housing”); and voluntary manufactured housing insurance, voluntary homeowners insurance and other specialty products (referred to as “Specialty and Other”);

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•	Global Preneed: provides pre-funded funeral insurance, final need insurance and related services; and

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Corporate and Other: includes activities of the holding company, financing and interest expenses, net realized gains (losses) on investments, interest income earned from short-term investments held and income (expenses) primarily related to the Company’s frozen benefit plans. Corporate and Other also includes the amortization of deferred gains associated with the sales of businesses through reinsurance agreements, expenses related to the acquisition of TWG, foreign currency gains (losses) from remeasurement of monetary assets and liabilities, the gain or loss on the sale of businesses, gains or losses associated with the valuation of the investment in Iké and other unusual or infrequent items. Additionally, the Corporate and Other segment includes amounts related to businesses previously disposed of through reinsurance and the runoff of the Assurant Health business.

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(1)	The years ended December 31, 2019, 2018 and 2017 included $13.8 million, $46.9 million and $92.8 million, respectively, related to the amortization of deferred gains associated with the 2016 sale of Assurant Employee Benefits. The remaining Assurant Employee Benefits unamortized deferred gain as of December 31, 2019 was $2.6 million.

(2)

Corporate and Other includes the impact of the total current period net utilization of the Assurant Health premium deficiency reserves for claim costs and claim adjustment expenses in policyholder benefits, as well as maintenance costs, which are included within underwriting, general and administrative expenses. For the years ended December 31, 2019, 2018, and 2017, the Assurant Health premium deficiency reserve liability decreased $0.1 million, $1.0 million and $35.7 million, respectively, through an offset to policyholder benefit expense. In addition, there was favorable claims development experienced through December 31, 2018 and 2017, in excess of actual benefit expense, which contributed to the credit balance within policyholder benefits expenses.

(3)

The year ended December 31, 2019 for Corporate and Other included a $7.4 million loss on assets held for sale associated with an office building previously used as the headquarters for a business in runoff. The years ended December 31, 2019 and 2018 for Corporate and Other included $18.2 million and $17.2 million, respectively, of net losses from foreign exchange related to the remeasurement of net monetary assets in Argentina as a result of the classification of Argentina’s economy as highly inflationary beginning July 1, 2018; and impairment losses of $15.6 million and $20.8 million, respectively, on intangible assets. The year ended December 31, 2018 for Corporate and Other included an $17.7 million gain on the sale of Time Insurance Company and a $40.3 million loss on the sale of Mortgage Solutions. The year ended December 31, 2017 for Corporate and Other included an expense of $17.4 million related to a post-close adjustment pertaining to an estimated indemnification that is expected to be due on a previous disposition.

(4)

The consolidated net benefit for income taxes for the year ended December 31, 2017 included a $177.0 million one-time benefit from the reduction of net deferred tax liabilities following the enactment of the TCJA. The remeasurement of deferred tax assets and liabilities was recorded using our best estimate of deferred tax balances as of December 22, 2017, the enactment date of the TCJA. The total benefit for income taxes was reported through the Corporate segment; however, the remeasured deferred tax assets and liabilities were adjusted within each segment. During the year ended December 31, 2018, the Company finalized the provisional adjustment, recording an expense of $1.5 million. Refer to Note 12 for further detail.

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(1)	Represents the amount of OTTI recognized in AOCI. Amount includes unrealized gains and losses on impaired securities relating to changes in the value of such securities subsequent to the impairment measurement date.

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(1)	The following table shows the revenues net of expenses from consolidated investment entities for the periods indicated. Refer to Note 9 for further detail.

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(1)	The investment income from the real estate funds includes income (loss) attributable to non-controlling interest of $3.8 million and $2.1 million for the years ended December 31, 2019 and 2018, respectively. There was no income attributable to non-controlling interest for the year ended December 31, 2017.

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(1)

The years ended December 31, 2019 and 2018 include $13.4 million and $16.9 million, respectively, of gains on equity investment holdings accounted for under the measurement alternative. The carrying value of equity investments accounted for under the measurement alternative was $90.1 million and $77.6 million as of December 31, 2019 and 2018, respectively. These investments are included within other investments on the consolidated balance sheets. For the year ended December 31, 2019 there was a $1.5 million impairment related to one equity investment. There was no impairment as of December 31, 2018. The Company generally considers follow on funding rounds of equity securities with similar ownership interests as the equity securities held by the Company, and involving new investors, as an observable price in an orderly transaction, which are then reviewed to determine the fair value adjustment.

(2)	Consists of the net realized gains (losses) from the change in fair value of the Company’s direct investment in CLOs. See Note 9 for additional information.

(1)	Net gains for the year ended December 31, 2019 and 2018 are required to be reported through the income statement in accordance with the 2018 accounting guidance on financial instruments. Net unrealized gains of $12.1 million for the year ended December 31, 2017 was reported through AOCI.

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(1)	Amounts consist of money market funds.

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(1)	Total income included in earnings includes $3.8 million and $2.1 million of pre-tax income related to non-controlling interests for 2019 and 2018, respectively.

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

•	Level 2 inputs utilize other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability. Level 2 inputs include quoted prices for

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

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(1)	Primarily includes mutual funds and related obligations.

(2)	Primarily includes money market funds.

(3)	Primarily includes fixed maturity securities and related obligations.

(4)	Primarily includes fixed maturity securities and other derivatives.

(5)	Primarily includes derivative assets and liabilities.

(6)	Includes contingent consideration receivables/liabilities.

(7)	Includes the put/call related to the investment in Iké. See Note 5 for more information.

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(1)	Included as part of net realized gains on investments, excluding other-than-temporary impairment losses, in the consolidated statements of operations.

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

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

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

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(1)

Results for 2019 primarily include the impact of foreign earnings taxed at different rates. Results for 2018 and 2017 include tax benefits associated with the earnings of certain non-U.S. subsidiaries that are deemed reinvested indefinitely and the realization of foreign tax credits for certain other subsidiaries. In addition, 2018 and 2017 reflect a benefit of 2.8% and 1.4%, respectively, related to international reorganizations.

(2)	The TCJA reduced the corporate tax rate to 21%, effective January 1, 2018. Consequently, the Company has recorded a benefit related to the revaluation of deferred tax assets and deferred tax liabilities of $177.0 million in 2017, which had a 39.8% impact to the effective tax rate, and an additional expense of $1.5 million in 2018, which has a 0.5% impact to the effective tax rate.

(3)	The change in valuation allowance in 2019 is primarily related to the valuation allowance of $49.7 million established on the deferred taxes that arose related to losses incurred on our investment in Iké. The changes in valuation allowance in 2018 and 2017 were due to movements in valuation allowances in other foreign subsidiaries.

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(1)

As of December 31, 2019, $461.5 million, $1,291.7 million and $72.7 million of goodwill was assigned to the Connected Living, Global Automotive and Global Financial Services and Other reporting unit, respectively. As of December 31, 2018, $451.2 million, $1,281.3 million and $72.2 million of goodwill was assigned to the Connected Living, Global Automotive and Global Financial Services and Other reporting unit, respectively

(2)	Consolidated goodwill reflects $1,268.1 million of accumulated impairment loss at December 31, 2019 and 2018, and $1,260.9 million of accumulated impairment losses at December 31, 2017.

(3)	Includes goodwill from the TWG acquisition (including the application of measurement period adjustments). Refer to Note 3 for additional information.

(4)	Refer to Note 4 for additional information on the impairment loss on the Mortgage Solutions business.

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(1)	As of December 31, 2019 and 2018, contract based intangibles included $13.7 million of indefinite-lived intangible assets.

(2)	As of December 31, 2019 and 2018, the net amount was reduced for a $15.6 million and a $20.8 million intangible asset impairment charge related to Green Tree, respectively.

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(1)	Acquired reserves from TWG on Acquisition Date include $419.9 million of gross claims and benefits payable and $279.2 million of ceded claims and benefits payable. The reserve roll forward includes the activity of TWG for the relevant periods since the Acquisition Date.

(2)	Includes reinsurance recoverables and claims and benefits payable of $86.8 million, $119.8 million and $555.0 million as of December 31, 2019, 2018 and 2017, respectively, which was ceded to the U.S. government. The Company acts as an administrator for the U.S. government under the voluntary National Flood Insurance Program.

(3)	Claims and benefits payable and related reinsurance ceded were reduced by $730.0 million in December 2018 as a result of the sale of Time Insurance Company, a legal entity associated with the previously exited Assurant Health business.

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(1)	TWG continues to be shown separate from the rest of Global Lifestyle in this presentation and in the claims development claims supplemental information below to enhance comparability across years.

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Table Presentation: The tables are organized by accident year. For certain categories of claims and for reinsurance recoverables, losses may sometimes be reclassified to an earlier or later accident year as more information about the date of occurrence becomes available to us. These reclassifications are shown as development in the respective years in the tables below. Predominantly, the Company writes short-tail lines that are written on occurrence basis. Five years of claims development information is provided since most of the claims are fully developed after five years, as shown in the average payout ratio tables.

•	Table Groupings: The groupings have homogeneous risk characteristics with similar development patterns and would generally be subject to similar trends and reflect our reportable segments.

•	Impact of Reinsurance: The reinsurance program varies by exposure type. Historically, the Company has leveraged facultative and treaty reinsurance, both on pro-rata and excess of loss basis. The reinsurance program may change from year to year, which may affect the comparability of the data presented in the tables.

•	IBNR: Includes development from past reported losses in IBNR.

•	Information excluded from tables: Unallocated loss adjustment expenses are excluded from the tables.

•	Foreign exchange rates: The loss development for operations outside of the U.S. is presented for all accident years using the current exchange rate at December 31, 2019. Although this approach requires restating all prior accident year information, the changes in exchange rates do not impact incurred and paid loss development trends.

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Acquisitions: Includes acquisitions from all accident years presented in the tables. For purposes of this disclosure, we have applied the retrospective method for the acquired reserves, including incurred and paid claim development histories throughout the relevant tables. The TWG acquisition is presented retrospectively separately below to improve comparability across the years presented. It should be noted that historical reserves for the acquired business were established by the acquired companies using methods, assumptions and procedures then in effect which may differ from our current reserving bases. Accordingly, it may not be appropriate to extrapolate future reserve adequacy based on the aggregated historical results shown in the tables.

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•	Dispositions: Excludes dispositions from all accident years presented in the tables.

•	Claim counts: Considers a reported claim to be one claim for each claimant or feature for each loss occurrence. Reported claims for losses from assumed reinsurance contracts are not available and hence not included in the reported claims. There are limitations that should be considered on the reported claim count data in the tables below, including:

◦	Claim counts are presented only on a reported (not an ultimate) basis;

◦	The tables below include lines of business and geographies at a certain aggregated level which may indicate different frequency and severity trends and characteristics, and may not be as meaningful as the claim count information related to the individual products within those lines of business and geographies;

◦	Certain lines of business are more likely to be subject to occurrences involving multiple claimants and features, which can distort measures based on the reported claim counts in the table below; and

◦	Reported claim counts are not adjusted for ceded reinsurance, which may distort the measure of frequency or severity.

•	Required Supplemental Information: The information about incurred and paid loss development for all periods preceding year ended December 31, 2019 and the related historical claims payout percentage disclosure is unaudited and is presented as required supplementary information.

(1)	Includes a provision for development on case reserves.

(2)	Number of paid claims plus open (pending) claims. Claim count information related to ceded reinsurance is not reflected as it cannot be reasonably defined or quantified, given that the Company’s reinsurance includes non-proportional treaties.

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(1)	Includes a provision for development on case reserves.

(2)	Number of paid claims plus open (pending) claims. Claim count information related to ceded reinsurance is not reflected as it cannot be reasonably defined or quantified, given that the Company’s reinsurance includes non-proportional treaties.

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(1)	Includes a provision for development on case reserves.

(2)

Number of paid claims plus open (pending) claims. Claim frequency is determined at a claimant reporting level. Depending on the nature of the product and related coverage triggers, it is possible for a claimant to contribute multiple claim counts in a given policy period. Claim count information related to ceded reinsurance is not reflected as it cannot be reasonably defined or quantified, given that the Company’s reinsurance includes non-proportional treaties.

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(1)	Asbestos and pollution reserves made up $20.7 million of the other short-duration insurance lines.

(2)	Disposed of property and casualty business make up $230.7 million of $311.7 million in reinsurance recoverables for TWG.

(3)	Asbestos and pollution recoveries accounted for all the other short-duration insurance lines.

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(1)	Not Rated ceded claims and benefits payable included reinsurance recoverables of $86.8 million as of December 31, 2019 which were ceded to the U.S. government. The Company acts as an administrator for the U.S. government under the voluntary National Flood Insurance Program.

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(1)	Bears floating interest at a rate equal to three-month LIBOR plus 1.25%.

(2)	Bears a 7.00% annual interest rate from March 2018 to March 2028 and an annual interest rate equal to three-month LIBOR plus 4.135% thereafter.

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2021 Senior Notes: The first series of senior notes is $300.0 million in principal amount, bears floating interest rate equal to three-month LIBOR plus 1.25% (3.21% as of December 31, 2019) and matures in March 2021. Interest on the 2021 Senior Notes is payable quarterly. Commencing on or after March 2019, the Company may redeem the 2021 Senior Notes at any time in whole or from time to time in part at a redemption price equal to 100% of the principal amount being redeemed plus accrued and unpaid interest. In August 2019, the Company redeemed $250.0 million of the $300.0 million then outstanding aggregate principal amount of the 2021 Senior Notes.

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2023 Senior Notes: The second series of senior notes is $300.0 million in principal amount, bears interest at 4.20% per year, matures in September 2023 and was issued at a 0.233% discount to the public (the “2023 Senior Notes”). Interest on the 2023 Senior Notes is payable semi-annually. Prior to August 2023, the Company may redeem the 2023 Senior Notes at any time in whole or from time to time in part at a make-whole premium plus accrued and unpaid interest. On or after that date, the Company may redeem the 2023 Senior Notes at any time in whole or from time to time in part at a redemption price equal to 100% of the principal amount being redeemed plus accrued and unpaid interest.

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2028 Senior Notes: The third series of senior notes is $300.0 million in principal amount, bears interest at 4.90% per year, matures in March 2028 and was issued at a 0.383% discount to the public (the “2028 Senior Notes”). Interest on the 2028 Senior Notes is payable semi-annually. Prior to December 2027, the Company may redeem the 2028 Senior Notes at any time in whole or from time to time in part at a make-whole premium plus accrued and unpaid interest. On or after that date, the Company may redeem the 2028 Senior Notes at any time in whole or from time to time in part at a redemption price equal to 100% of the principal amount being redeemed plus accrued and unpaid interest.

(1)	Including the equivalent ratings of any substitute rating agency.

(2)	Applies to each rating agency individually.

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(i)	Maintenance of a maximum consolidated total debt to capitalization ratio on the last day of any fiscal quarter of not greater than 0.35 to 1.0, subject to certain exceptions; and

(ii)

Maintenance of a consolidated adjusted net worth in an amount not less than a “Minimum Amount” equal to the sum of (a) the greater of 70% of the Company’s consolidated adjusted net worth on the date of the closing of the TWG acquisition and $2.72 billion, (b) 25% of consolidated net income for each fiscal quarter (if positive) beginning with the first fiscal quarter ending after the date of the closing of the TWG acquisition and (c) 25% of the net cash proceeds received from any capital contribution to, or issuance of any capital stock, disqualified capital stock and hybrid securities, received after the closing of the TWG acquisition.

(1)	Vested restricted stock, restricted stock units and performance share units are shown net of shares of common stock retired to cover participant income tax liabilities.

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(1)	The weighted average grant date fair value for RSUs granted in 2018 and 2017 was $93.20 and $99.40, respectively.

(2)	The total fair value of RSUs vested was $38.4 million, $25.3 million and $29.4 million for the years ended December 31, 2019, 2018 and 2017, respectively.

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(1)	The weighted average grant date fair value for PSUs granted in 2018 and 2017 was $123.51 and $112.23, respectively.

(2)	The total fair value of PSUs vested was $19.7 million, $16.5 million and $22.5 million for the years ended December 31, 2019, 2018 and 2017, respectively.

(3)	Represents the change in PSUs issued based upon the attainment of performance goals established by the Company.

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(1)	See Note 2 for additional information.

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(1)	These AOCI components are included in the computation of net periodic pension cost. See Note 24 for additional information.

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(1)

Results for 2019 and 2018 included $35.9 million and $26.0 million of statutory net income for the years ended December 31, 2019 and 2018, respectively, and $361.0 million and $393.4 million in statutory capital and surplus as of December 31, 2019 and 2018, respectively, from Virginia Surety Company, an insurance subsidiary from the TWG acquisition. Additionally, results for 2017 included $41.5 million of statutory net income for the year ended December 31, 2017 from Time Insurance Company, an insurance subsidiary that was sold in the fourth quarter 2018.

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(1)

In accordance with fair value measurements and disclosures guidance, certain investments that are measured at fair value using the net asset value practical expedient have not been classified in the fair value hierarchy. The net asset values of $39.3 million, $8.4 million and $62.0 million as of December 31, 2019 are used as a practical expedient to fair value of the multi-strategy hedge fund, private equity fund and real estate fund, respectively.

(2)	The difference between the fair value of Plan assets above and the amount used in determining the funded status is due to interest receivable, which is not required to be included in the fair value hierarchy.

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(1)

In accordance with fair value measurements and disclosures guidance, certain investments that are measured at fair value using the net asset value practical expedient have not been classified in the fair value hierarchy. The net asset values of $2.1 million, $0.5 million and $3.4 million as of December 31, 2019 are used as a practical expedient to fair value of the multi-strategy hedge fund, private equity fund and real estate fund, respectively.

(2)	The difference between the fair value of Plan assets above and the amount used in determining the funded status is due to interest receivable, which is not required to be included in the fair value hierarchy.

(1)

In accordance with fair value measurements and disclosures guidance, certain investments that are measured at fair value using the net asset value practical expedient have not been classified in the fair value hierarchy. The net asset values of $38.9 million, $9.3 million and $60.4 million as of December 31, 2018 are used as a practical expedient to fair value of the multi-strategy hedge fund, private equity fund and real estate fund, respectively.

(2)	The difference between the fair value of Plan assets above and the amount used in determining the funded status is due to interest receivable, which is not required to be included in the fair value hierarchy.

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(1)

In accordance with fair value measurements and disclosures guidance, certain investments that are measured at fair value using the net asset value practical expedient have not been classified in the fair value hierarchy. The net asset values of $2.2 million, $0.5 million and $3.5 million as of December 31, 2018 are used as a practical expedient to fair value of the multi-strategy hedge fund, private equity fund and real estate fund, respectively.

(2)	The difference between the fair value of Plan assets above and the amount used in determining the funded status is due to interest receivable, which is not required to be included in the fair value hierarchy.

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(1)	In accordance with earnings per share guidance, diluted per common share amounts are computed in the same manner as basic per common share amounts when a loss from operations exists.

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(1)	Amounts for the year ended December 31, 2018 relate to cash received from the sale of Time Insurance Company ($23.9 million). For additional information, refer to Note 4 to the Consolidated Financial Statements.

(2)	Amounts for the year ended December 31, 2018 primarily consist of $1.49 billion of cash used to fund a portion of the total purchase of the TWG acquisition, inclusive of the $595.9 million repayment of pre-existing TWG debt at the acquisition date. Refer to Note 3 to the Consolidated Financial Statements for further information.

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(1)	Includes amortization of value of business acquired and underwriting, general and administration expenses.

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