Why Health Insurance Does Not Serve the Public Interest - Assurant Health 2nd Quarter Financial Report 2009

Although I was not able to join the conference call early this a.m., I have read Assurant's 2009 2nd Quarter Financial Report just released today, and I am flabbergasted. There can be no doubt as to why my health insurance rates, and I am certain those of many other Alaskans, were jacked an astonishing twenty-one percent this quarter. Not surprisingly, it has very little to do with the actual cost of band-aids, doctor's fees, x-rays, blood samples or the hourly rate for nurses. As with AETNA, Assurant's rates hikes are about absorbing losses from the other companies operating under the umbrella of its parent organization who uses the profits from our premiums, paid in sweat, lost time with our children, and the ceaseless financial balancing act performed day in and day out by millions of Americans lucky enough to even have health insurance, to pay off the debts from their bad business investments.

For instance, read this bold statement provided in the report by Assurant to explain their loss to shareholders, then try to swallow the bile that rises in your throat.

"Net operating income1 for the second quarter 2009 decreased 47 percent to $99.3 million, or $0.84 per diluted share, compared to second quarter 2008 net operating income of $185.8 million, or $1.55 per diluted share. The decrease was primarily driven by losses at Assurant Health and reduced earnings at Assurant Specialty Property. The results for the quarter also reflect $6.4 million after-tax of restructuring charges."

"We are taking decisive actions throughout Assurant to improve performance, reduce expenses, enhance revenues and best position the company for the long term," says Robert B. Pollock, president and CEO. "Clearly, we are disappointed with the operating results at Assurant Health and are taking steps to correct the situation."

"The good news is that even in a challenging economy our financial position remains strong. We've grown our book value per share and for the six month period achieved double-digit annualized operating return on equity ("ROE") 2 of 10.5 percent. Our disciplined investment and capital management strategies have positioned us to take advantage of investment opportunities when the time is right." ," says Robert B. Pollock, president and CEO. "Clearly, we are disappointed with the operating results at Assurant Health and are taking steps to correct the situation."

How does one imagine what "decisive" actions will Assurant will need to take to "improve performance, reduce expenses, enhance revenues and best position the company for the long term..."? I highly suspect it will involve denying a claim or two. Or perhaps all that will be needed to reduce expenses is to hold off on a dozen or so bone marrow transplants. Whatever it takes to keep those profit margins intact is what they will do.

Yesterday, I pasted the link to Assurant's Specialty Property web site. I learned about this segment of Assurant a week ago. My gut told me then that it would play a vital role in Assurant's decision to hike my rates. It did, and I am so very, very angry. Even after the collapse of the housing market over a year ago, one would have thought that no company in its right mind would venture into troubled industry of mortgage insurance, but incredibly Assurant did. Now I and countless other paying clients must do our part to lighten the burden on the company so that shareholders, the CEO, CFO and any other Tom, Dick and Harriet suckling on the teats of this "financial entity" can get their fare share.

Assurant provided a cautionary statement, but chose to call it the "Safe Harbor Statement." In it they, like AETNA,lament the threat of increased competition and the introduction of government regulation. I suppose either title is an improvements over the once tried and true "Cover Your Butt" statement. Amazingly Assurant's Safe Harbor statement is eerily similar to AETNA's Cautionary statement, as is the GAAP statement that follows. It was a very good idea for them to have the law firm that draws up such documents change at least a few of the key terms so that the public wouldn't accuse Health Insurance providers of collusion.

Yes, these companies have committed collusion. They collude to send their lobbyist to our Capital. They collude to spend a portion of our precious premiums to pay for those lobbyist, and they collude to keep their paying customers as much in the dark as possible. Why should we question how our premiums are being spent? They collude to stave off competition, and to bring to a grinding halt any legislative efforts to improve health care for America.

Here is the link to the report for those who still doubt what your health insurance premiums mean to the "for profit" health insurance industry.

http://ir.assurant.com/pressroom/releaseDetail.cfm?ReleaseID=399840.0

Finally, I leave you with another quote from the Assurant financial report. If I wanted to play the stock market, I would have done so. Maybe if I had, I might have earned a better return on my "involuntary" investment.

"Assurant Solutions

Assurant Solutions second quarter 2009 net operating income was $27.9 million, a 14 percent decrease from second quarter 2008 net operating income of $32.4 million. Net operating income for the six months of 2009 was $58.2 million, down 27 percent from $79.9 million for the first six months of 2008. For both the quarter and six months, the decline was primarily the result of unfavorable credit insurance loss experience in the United Kingdom, which increased the combined ratio, as well as lower net investment income. The domestic combined ratio continued to improve sequentially and on a quarterly basis. Results for the second quarter 2009 include a $2.4 million restructuring charge, and results for the six months of 2008 include $6.9 million of losses from Brazilian operations and $11.7 million of income from a client related settlement.

Assurant Solutions second quarter 2009 net earned premiums decreased 5 percent to $666.9 million, from $700.6 million in the second quarter 2008. Net earned premiums for the first six months of 2009 decreased 5 percent to $1.3 billion. The decrease for the quarter and the six months was primarily driven by the application of Statement of Financial Accounting Standards 97 ("FASB 97") for pre-need insurance contracts sold in 2009 and the unfavorable impact of foreign exchange. Absent the application of FASB 97 and the impact of foreign exchange, net earned premiums would have increased $36.0 million, or 5.1 percent, for the second quarter of 2009."