Item 7. 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 included elsewhere in this Report. It contains forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those discussed below and elsewhere in this Report, particularly under the headings “Item 1A – Risk Factors” and “Forward-Looking Statements.”

General

We report our results through four segments: Global Housing, Global Lifestyle, Global Preneed and Total Corporate and Other. Total 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 our frozen benefit plans. Total Corporate and Other also includes the amortization of deferred gains and gains associated with the sales of Fortis Financial Group, Long-Term Care and Assurant Employee Benefits through reinsurance agreements, expenses related to the acquisition of TWG, foreign gains (losses) from remeasurement of monetary assets and liabilities, the loss on the sale of Mortgage Solutions, the gain on the sale of Time Insurance Company and other unusual or infrequent items. Additionally, the Total Corporate and Other segment includes amounts related to the runoff of the Assurant Health business. As Assurant Health was a reportable segment in prior years, these amounts are disclosed separately for comparability. In addition, Assurant Employee Benefits was a separate segment in 2016 and primarily includes the results of operations for the periods prior to its sale on March 1, 2016. See Note 4 to the Consolidated Financial Statements included elsewhere in this Report for more information.

The following discussion covers the year ended December 31, 2018 (“Twelve Months 2018”), year ended December 31, 2017 (“Twelve Months 2017”) and year ended December 31, 2016 (“Twelve Months 2016”). Please see the discussion that follows, for each of these segments, for a more detailed comparative analysis.

Executive Summary

On May 31, 2018, we acquired TWG Holdings Limited and its subsidiaries (as subsequently reorganized, “TWG”) for a total enterprise value of $2.47 billion. This amount included $894.9 million in cash, the repayment of $595.9 million of TWG’s pre-existing debt and issuance of $975.5 million of Assurant, Inc. common stock. As a result, the equityholders of TWG, including TPG Capital, received a total of 10,399,862 shares of Assurant, Inc. common stock. TWG specializes in the underwriting, administration and marketing of service contracts on a wide variety of consumer goods, including automobiles, consumer electronics and major home appliances. We expect the acquisition will enhance the Company’s position as a leading lifestyle provider, particularly within the Global Automotive business, with significant operating synergies expected and a deepened global footprint. For more information regarding the acquisition, see Note 3 to the Consolidated Financial Statements included elsewhere in this Report.

On August 1, 2018, we sold our Mortgage Solutions business to Xome, an indirect wholly owned subsidiary of WMIH Corp., for $36.7 million and potential future payments based on performance. The sale includes all of Assurant’s mortgage solutions businesses consisting of title, valuations and field services. The disposition resulted in a total pre-tax loss of $40.3 million which was included in the consolidated statements of operations in Twelve Months 2018. For more information on the sale, see Note 4 to the Consolidated Financial Statements, included elsewhere in this Report.

On December 3, 2018, we sold Time Insurance Company, a subsidiary of the runoff Assurant Health business, to Haven Holdings, Inc. for cash consideration of $30.9 million. The disposition resulted in a total pre-tax gain of $18.4 million which was included in the consolidated statements of operations in Twelve Months 2018. For more information on the sale, see Note 4 to the Consolidated Financial Statements included elsewhere in this Report.

Consolidated net income attributable to common stockholders decreased $282.8 million, or 54%, to $236.8 million for Twelve Months 2018 from $519.6 million for Twelve Months 2017. The decrease was driven by the absence of a $177.0 million one-time benefit related to the reduction of net deferred tax liabilities following the enactment of the U.S. Tax Cuts and Jobs Act (the “TCJA”) in 2017, an increase in net realized losses on investments and higher expenses related to the TWG acquisition. These decreases were partially offset by the impact of a lower effective tax rate, net operating income from TWG and lower reportable catastrophes (reportable catastrophe losses, net of reinsurance and client profit sharing adjustments, and including reinstatement and other premiums).

Global Housing net income increased $53.4 million, or 55%, to $150.8 million for Twelve Months 2018 from $97.4 million for Twelve Months 2017, primarily due to a lower effective tax rate and lower reportable catastrophes. Segment net income for Twelve Months 2018 included $169.7 million of after-tax reportable catastrophes compared to $190.5 million of after-tax reportable catastrophes for Twelve Months 2017. Reportable catastrophes for Twelve Months 2018 reflect a corporate tax rate of 21% as compared to 35% in 2017 as a result of the enactment of the TCJA. Excluding the lower effective tax rate

and reportable catastrophes, segment net income decreased due to a lower contribution from our Lender-placed Insurance business primarily due to less favorable non-catastrophe loss experience, the ongoing declines in placement rates and lower REO volumes. This decrease was partially offset by growth in Multifamily Housing and a lower net loss from our Mortgage Solutions business, which was sold on August 1, 2018.

Global Housing net earned premiums, fees and other income decreased $85.8 million to $2.09 billion for Twelve Months 2018 compared with $2.18 billion for Twelve Months 2017, primarily due to the sale of Mortgage Solutions. Excluding Mortgage Solutions, net earned premiums, fees and other income increased approximately 3% due to growth from specialty property offerings, including commercial property and Multifamily housing. These increases were partially offset by lower volumes from our REO Lender-placed Insurance product and the ongoing declines in placement rates in our Lender-placed Insurance business.

Global Lifestyle net income increased $119.7 million, or 67%, to $297.7 million for Twelve Months 2018 from $178.0 million for Twelve Months 2017. The increase was primarily driven by $74.7 million of net operating income contribution from TWG and the impact of a lower effective tax rate. Excluding the impact of these items, segment net income increased primarily due to increased income from our Connected Living business, which was driven by growth from recently launched mobile programs and continued growth in existing mobile programs, partially offset by continued declines in Global Financial Services, primarily from expected discontinued partnerships, and unfavorable foreign exchange.

Global Lifestyle net earned premiums, fees and other income increased $1.79 billion to $5.18 billion for the Twelve Months 2018 compared with $3.40 billion for Twelve Months 2017, primarily due to the addition of $1.47 billion of net earned premiums and fee income from TWG. Excluding TWG, net earned premiums, fees and other income increased 9% due to increased revenue from our Connected Living business, due to growth from existing and recently launched mobile programs, as well as growth from our Global Automotive business. These increases were partially offset by lower earned premiums and fees from our international extended service contracts and Global Financial Services business due to unfavorable foreign exchange.

Global Preneed net income increased $18.1 million, or 46%, to $57.7 million for Twelve Months 2018 from $39.6 million for Twelve Months 2017. This increase was primarily due to the lower effective tax rate. Excluding the impact of a lower effective tax rate, segment net income increased due to higher investment income and the absence of $5.0 million in after-tax software impairment recorded in 2017.

Global Preneed net earned premiums, fees and other income increased $8.5 million to $189.5 million for Twelve Months 2018 compared with $181.0 million for Twelve Months 2017 primarily due to growth in pre-funded funeral policies in the U.S. and Canada, as well as prior period sales of the Final Need product.

Critical Factors Affecting Results

Our results depend on, among other things, the appropriateness of our product pricing, underwriting, the accuracy of our reserving methodology for future policyholder benefits and claims, the frequency and severity of reportable and non-reportable catastrophes, returns on and values of invested assets and our ability to manage our expenses and achieve expense savings. Our results will also depend on our ability to profitably grow our Connected Living, Multifamily Housing and Global Automotive businesses, and manage the pace of declines in placement rates in our Lender-placed Insurance business and the U.S. credit insurance business in Global Financial Services. In addition, our results will be impacted by our ability to integrate TWG and achieve benefits and synergies from the acquisition. Factors affecting these items, including, but not limited to, conditions in financial markets, the global economy and the markets in which we operate, fluctuations in exchange rates and inflation, may have a material adverse effect on our results of operations or financial condition. For more information on these and other factors that could affect our results, see “Item 1A – Risk Factors.”

Management believes that we will have sufficient liquidity to satisfy our needs over the next twelve months, including the ability to pay interest on our debt and dividends on our common and preferred stock.

For Twelve Months 2018, net cash provided by operating activities totaled $656.7 million; net cash used in investing activities totaled $2.20 billion and net cash provided by financing activities totaled $1.84 billion. We had $1.25 billion in cash and cash equivalents as of December 31, 2018. Please see “ – Liquidity and Capital Resources” below for further details.

Revenues

We generate revenues primarily from the sale of our insurance policies, service contracts and related products and services and from income earned on our investments. Sales of insurance policies are recognized in revenue as earned premiums while sales of administrative services are recognized as fee income.

Under the universal life insurance guidance, income earned on preneed life insurance policies sold after January 1, 2009 are presented within fee income net of policyholder benefits. Under the limited pay insurance guidance, the consideration

received on preneed policies sold prior to January 1, 2009 is presented separately as net earned premiums, with policyholder benefits expense shown separately.

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

Interest rate volatility can increase or reduce unrealized gains or losses in our investment 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.

The fair market value of the fixed maturity securities in our investment 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. We also have investments that are subject to pre-payment risk, such as mortgage-backed and asset-backed securities. Interest rate fluctuations may cause actual net investment income and/or cash flows from such investments to differ from estimates made at the time of investment. In periods of declining interest rates, mortgage prepayments generally increase and mortgage-backed securities, commercial mortgage obligations and bonds are more likely to be prepaid or redeemed as borrowers seek to borrow at lower interest rates. Therefore, in these circumstances we may be required to reinvest those funds in lower-interest earning investments.

Our revenues may also be impacted by our ability to continue to grow in the markets in which we operate, including in our Connected Living, Multifamily Housing and Global Automotive businesses, and to manage our Lender-placed Insurance business. Our mobile business is subject to volatility in mobile device trade-in volumes based on the release of new devices and carrier promotional programs, as well as to changes in the mobile device market dynamics. Our Lender-placed Insurance revenues will also be impacted by changes in the housing market. In addition, across many of our businesses, we must respond to the threat of disruption. See “Item 2 – Risk Factors – Business and Competitive Risks – Significant competitive pressures, changes in customer preferences and disruption could adversely affect our results of operations.”

Expenses

Our expenses are primarily policyholder benefits, underwriting, general and administrative expenses and interest expense.

Policyholder benefits are affected by our claims management programs, reinsurance coverage, contractual terms and conditions, regulatory requirements, economic conditions, and numerous other factors. Benefits paid or reserves required for future benefits could substantially exceed our expectations, causing a material adverse effect on our business, results of operations and financial condition.

Underwriting, general and administrative expenses consist primarily of commissions, premium taxes, licenses, fees, amortization of deferred costs, general operating expenses and income taxes. In connection with our transformation, we are undertaking various expense savings initiatives while also making investments in information technology, among other things, which will impact our expenses.

We incur interest expense related to our debt.

Critical Accounting Estimates

Certain items in our Consolidated Financial Statements are based on estimates and judgment. Differences between actual results and these estimates could in some cases have material impacts on our Consolidated Financial Statements.

The following critical accounting policies require significant estimates. The actual amounts realized in these areas could ultimately be materially different from the amounts currently provided for in our Consolidated Financial Statements.

Reserves

Reserves are established using generally accepted actuarial methods and reflect judgments about expected future claim payments. Factors used in their calculation include experience derived from historical claim payments and actuarial assumptions. Calculations incorporate assumptions about the incidence of incurred claims, the extent to which all claims have been reported, reporting lags, expenses, inflation rates, future investment earnings, internal claims processing costs and other relevant factors. While the methods of making such estimates and establishing the related liabilities are periodically reviewed and updated, the estimation of reserves includes an element of uncertainty given that management is using historical information and methods to project future events and reserve outcomes.

The recorded reserves represent our best estimate at a point in time of the ultimate costs of settlement and administration of a claim or group of claims, based upon actuarial assumptions and projections using facts and circumstances known at the time of calculation. The adequacy of reserves may 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, including, but not limited to: changes in the economic cycle, inflation, changes in repair costs, natural or human-made catastrophes, judicial trends, legislative changes and claims handling procedures.

Many of these items are not directly quantifiable and not all future events can be anticipated when reserves are established. Reserve estimates are refined as experience develops. Adjustments to reserves, both positive and negative, are reflected in the consolidated statement of operations in the period in which such estimates are updated.

Because establishment of reserves is an inherently complex process involving significant judgment and estimates, there can be no certainty that future settlement amounts for claims incurred through the financial reporting date will not vary from reported claim reserves. Future loss development could require reserves to be increased or decreased, which could have a material effect on our earnings in the periods in which such increases or decreases are made. However, based on information currently available, we believe our reserve estimates are adequate. See “Item 1A – Risk Factors – Financial Risks – Our actual claims losses may exceed our reserves for claims, requiring us to establish additional reserves or to incur additional expense for settling unreserved liabilities, which could have a material adverse effect on our results of operations, profitability and capital” for more detail on this risk.

The following table provides reserve information for our reporting segment lines as of December 31, 2018 and 2017:

	December 31, 2018																December 31, 2017
									Claims and Benefits Payable																Claims and Benefits Payable
	Future Policy Benefits and Expenses				Unearned Premiums				Case Reserves				Incurred But Not Reported Reserves				Future Policy Benefits and Expenses				Unearned Premiums				Case Reserves				Incurred But Not Reported Reserves
Long Duration Contracts:
Global Preneed	$	5,943.7			$	322.6			$	18.8			$	8.8			$	5,779.2			$	35.7			$	18.9			$	8.9
Disposed and runoff businesses	3,185.0				20.1				655.7				64.0				4,493.3				34.9				1,259.3				122.1
All other	112.2				0.2				2.0				1.3				124.9				0.2				1.3				1.3
Short Duration Contracts:
Global Lifestyle	—				13,819.6				133.2				326.9				—				5,518.7				73.3				204.4
Global Housing	—				1,472.5				183.3				468.0				—				1,434.9				669.4				589.3
Disposed and runoff businesses	—				13.0				777.3				174.4				—				14.2				766.6				67.4
Total	$	9,240.9			$	15,648.0			$	1,770.3			$	1,043.4			$	10,397.4			$	7,038.6			$	2,788.8			$	993.4

For additional information regarding our reserves, see Note 16 to the Consolidated Financial Statements included elsewhere in this Report.

Short Duration Contracts

Claims and benefits payable reserves for short duration contracts include (1) case reserves for known claims which are unpaid as of the balance sheet date; (2) 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. Periodically, we review emerging experience and make adjustments to our reserves and assumptions where necessary. Below are further discussions on the reserving process for our major short duration products.

Global Housing and Global Lifestyle

Ultimate loss and loss adjustment expenses are estimated utilizing generally accepted actuarial loss reserving methods. Both paid claims development as well as case incurred development are typically analyzed at the product or product grouping level, considering product size and data credibility. The reserving methods widely employed by us include the Chain Ladder, Munich Chain Ladder and Bornhuetter-Ferguson methods. For Global Housing, reportable catastrophes are analyzed and reserved for separately using a frequency and severity approach.

The methods all involve aggregating paid and case-incurred loss data by accident quarter (or accident year) and accident age for each product grouping. As the data ages, development factors are calculated that measure emerging claim development patterns between reporting periods. By selecting loss development factors indicative of remaining development, known losses

are projected to an ultimate incurred basis for each accident period. The underlying premise of the Chain Ladder method is that future claims development is best estimated using past claims development, whereas the Bornhuetter-Ferguson method employs a combination of past claims development and prior estimates of ultimate losses based on an expected loss ratio. The Munich Chain Ladder method incorporates the correlations between paid and incurred development in projecting future development factors, and is typically more applicable to products experiencing variability in incurred to paid ratios.

Each of these methods applied to the data groupings produces an estimate of the loss reserves for the product grouping. The best estimate is generally selected from a blend of the different methods. The IBNR associated with the best estimate is then allocated to accident year based on a weighting of the underlying actuarial methods. The determination of the best estimate is based on many factors, including but not limited to:

•	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;

•	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.

When employing the reserving methods, consideration is given to contractual requirements, historical utilization trends and payment patterns, coverage changes, seasonality, product mix, the legislative and regulatory environment, economic factors, natural catastrophes, and other relevant factors. We consistently apply reserving principles and methodologies from year to year, while also giving due consideration to the potential variability of these factors.

While management has used judgment in establishing its best estimate of required reserves, different assumptions and variables could lead to significantly different reserve estimates. Two key measures of loss activity are loss frequency, which is a measure of the number of claims per unit of insured exposure, and loss severity, which is a measure of the average size of claims. Factors affecting loss frequency include the effectiveness of loss controls, changes in economic activity and weather patterns. Factors affecting loss severity include changes in policy limits, retentions, rate of inflation and judicial interpretations.

If the actual level of loss frequency and severity are higher or lower than expected, the ultimate reserves required will be different than management’s estimate. The effect of higher and lower levels of loss frequency and severity on our ultimate costs for claims occurring in 2018 would be as follows:

Change in both loss frequency and severity for all Global Housing and Global Lifestyle	Ultimate cost of claims occurring in 2018				Change in cost of claims occurring in 2018
3% higher	$	1,179.0			$	67.6
2% higher	$	1,156.0			$	44.6
1% higher	$	1,134.0			$	22.6
Base scenario (1)	$	1,111.4			$	—
1% lower	$	1,089.0			$	(22.4	)
2% lower	$	1,066.0			$	(45.4	)
3% lower	$	1,044.0			$	(67.4	)

(1)	Represents the sum of the case reserves and incurred but not reported reserves as of December 31, 2018 for Global Housing and Global Lifestyle.

Disposed and Runoff Short Duration Lines

We have exposure to asbestos, environmental and other general liability claims arising from our participation in various reinsurance pools from 1971 through 1985. This exposure arose from a contract that we discontinued writing many years ago. We carried case reserves for these liabilities, as recommended by the various pool managers, and IBNR reserves totaling $26.9 million (before reinsurance) and $22.9 million (net of reinsurance) at December 31, 2018. Estimation of these liabilities is subject to greater than normal variation and uncertainty due to the general lack of sufficiently detailed data, reporting delays and absence of a generally accepted actuarial methodology for determining the 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. Based on information currently available, and after consideration of the reserves reflected in the Consolidated Financial Statements, we do not believe or expect that changes in reserve estimates for these claims are likely to be material.

Long Duration Contracts

Reserves for future policy benefits represent the present value of future benefits to policyholders and related expenses less the present value of future net premiums. Reserve assumptions reflect best estimates for expected investment yield, inflation, mortality, morbidity, expenses and withdrawal rates. These assumptions are based on our experience to the extent it is credible, modified where appropriate to reflect current trends, industry experience and provisions for possible unfavorable deviation. We also record an unearned revenue reserve which represents premiums received which have not yet been recognized in our consolidated statements of operations.

Historically, premium deficiency testing on continuing lines of business has not resulted in material adjustments to deferred acquisition costs or reserves. Such adjustments could occur, however, if economic or mortality conditions significantly deteriorated.

Global Preneed

Global Preneed includes pre-funded funeral life insurance and annuity contracts and legacy traditional life insurance (no longer offered). The reserve assumptions for future policy benefits and expenses are determined based upon pricing, which approximates actual experience.

For preneed life insurance issued after 2008 with discretionary death benefit growth, the universal life-type accounting model is applied whereby reserve assumptions are made without provision for adverse deviation. Interest and discount rates are based upon investment returns of the assets acquired to support the business. Expected mortality rates, lapse rates, and future death benefit increases are based upon pricing assumptions.

For preneed life insurance issued after 2008 with either no death benefit growth or death benefit growth linked to an inflation index, the long-duration accounting model is applied whereby reserve assumptions are made with provision for adverse deviation. Interest and discount rates are based upon investment returns of the assets acquired to support the business. Expected mortality rates and lapse rates are based upon pricing assumptions. For contracts with minimum benefit increases associated with an inflation index, the reserves assume expected benefit increases equal to a selected discount rate less a spread.

For preneed life insurance issued prior to 2009, the long-duration accounting model is applied whereby reserve assumptions are made with provision for adverse deviation. Interest and discount rates are based upon investment returns of the assets acquired to support the business. Expected mortality rates, lapse rates, and future death benefit increases are based upon pricing assumptions.

Annuity contracts have reserve assumptions made without provision for adverse deviation. Assumed discount rates and interest rates credited on deferred annuities vary by year of issue. Withdrawal charge assumptions are based upon contract provisions. Nearly all of the deferred annuity contracts have a minimum guaranteed interest rate.

For life insurance and annuity contracts acquired in 2000 and prior, interest and discount rates as well as mortality assumptions are based on statutory valuation requirements, which approximate the GAAP valuation requirements, with no explicit provision for lapses.

Disposed and Runoff Long Duration Lines

Risks related to the reserves recorded for certain discontinued individual life, annuity, and long-term care insurance policies have been fully ceded via reinsurance. While we have not been released from our contractual obligation to the policyholders, changes in and deviations from economic, mortality, morbidity, and withdrawal assumptions used in the calculation of these reserves will not directly affect our results of operations unless there is a default by the assuming reinsurer.

Deferred Acquisition Costs (“DAC”) and Value of Business Acquired (“VOBA”)

Only direct incremental costs associated with the successful acquisition of new or renewal insurance contracts are deferred to the extent that such costs are deemed recoverable from future premiums or gross profits. Acquisition costs primarily consist of commissions and premium taxes. Certain direct response advertising expenses are deferred when the primary purpose of the advertising is to elicit sales to customers who can be shown to have specifically responded to the advertising and the direct response advertising results in probable future benefits.

Premium deficiency testing is performed annually and generally reviewed quarterly. Such testing involves the use of best estimate assumptions including the anticipation of investment income to determine if anticipated future policy premiums are adequate to recover all DAC and related claims, benefits and expenses. To the extent a premium deficiency exists, it is recognized immediately by a charge to the consolidated statement of operations and a corresponding reduction in DAC. If the premium deficiency is greater than unamortized DAC, a loss (and related liability) is recorded for the excess deficiency.

Long Duration Contracts

Acquisition costs for pre-funded funeral (“preneed”) life insurance policies issued prior to 2009 and certain life insurance policies no longer offered are deferred and amortized in proportion to anticipated premiums over the premium-paying period. These acquisition costs consist primarily of first year commissions paid to agents.

For preneed investment-type annuities, preneed life insurance policies with discretionary death benefit growth issued after January 1, 2009, universal life insurance policies and investment-type annuities no longer offered, DAC is amortized in proportion to the present value of estimated gross profits from investment, mortality, expense margins and surrender charges over the estimated life of the policy or contract. Estimated gross profits include the impact of unrealized gains or losses on investments as if these gains or losses had been realized, with corresponding credits or charges included in accumulated other comprehensive income (“AOCI”). The assumptions used for the estimates are consistent with those used in computing the policy or contract liabilities.

Short Duration Contracts

Acquisition costs relating to extended service contracts, vehicle service contracts, mobile device protection, credit insurance, lender-placed homeowners insurance and flood, multifamily housing and manufactured housing are amortized over the term of the contracts in relation to premiums earned. These acquisition costs consist primarily of advance commissions paid to agents.

Acquisition costs relating to disposed lines of business (group term life, group disability, group dental and group vision) consist primarily of compensation to sales representatives. Such costs are deferred and amortized over the estimated terms of the underlying contracts.

VOBA

As part of the acquisition of businesses that sell long-term extended service contracts, such as warranty contracts sold by TWG, and long-duration insurance contracts, such as life products, we establish an intangible asset related to VOBA, which represents the fair value of the expected future profits in unearned premium for insurance contracts acquired. For vehicle service contracts and extended service contracts such as those purchased in connection with the TWG acquisition, the amount is determined using estimates, for premium earnings patterns, paid loss development patterns, expense loads, and discount rates applied to cash flows that include a provision for credit risk. For vehicle service contracts and extended service contracts, VOBA is amortized consistent with the premium earning patterns of the underlying in-force contracts. For limited payment policies, preneed life insurance policies, universal life policies and annuities, the valuation of VOBA at the time of acquisition is derived from similar assumptions to those used to establish the associated claim or benefit reserves and is amortized over the expected life of the policies.

Investments

We regularly monitor our investment portfolio to ensure that investments that may be other-than-temporarily impaired are timely identified, properly valued and charged against earnings in the proper period. The determination that a security has incurred an other-than-temporary decline in value requires the judgment of management. Assessment factors include, but are not limited to, the length of time and the extent to which the market value has been less than cost, the financial condition and rating of the issuer, whether any collateral is held, our intent and ability to retain the investment for a period of time sufficient to allow for recovery and our intent to sell or whether it is more likely than not that we will be required to sell for fixed maturity securities. 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 that affect one or more companies, industry sectors, or countries could result in additional impairments in future periods for other-than-temporary declines in value.

The impairment of a fixed maturity security that we have the intent to sell or that we will more likely than not be required to sell is deemed other-than-temporary and is written down to its market value at the balance sheet date with the amount of the impairment reported as a realized loss in that period. For all other-than-temporarily impaired fixed maturity securities that do not meet either of these two criteria, we are required to analyze our ability to recover the amortized cost of the security by calculating the net present value of projected future cash flows. For these other-than-temporarily impaired fixed maturity securities, the net amount recognized in earnings equals the difference between the amortized cost of the fixed maturity security and its net present value.

See also Notes 2 and 7 to the Consolidated Financial Statements included elsewhere in this Report and “Item 1A – Risk Factors – Financial Risks – Our investment portfolio is subject to market risk, including changes in interest rates that may adversely affect our results of operations and financial condition” and “ – Investments” contained later in this item.

Reinsurance

Reinsurance recoverables were $9.17 billion and $9.79 billion as of December 31, 2018 and 2017, respectively, which include amounts we are owed by reinsurers for claims paid as well as those included in reserve estimates that are subject to the reinsurance. Reinsurance premiums paid are amortized as reductions to premium over the terms of the underlying reinsured policies. Amounts recoverable from reinsurers are estimated in a manner consistent with claim and claim adjustment expense reserves or future policy benefits reserves. An estimated allowance for doubtful accounts is recorded on the basis of periodic evaluations of balances due from reinsurers (net of collateral), reinsurer solvency, historical disputes of reinsurance liabilities, management’s experience and current economic conditions. The ceding of insurance does not discharge our primary liability to our insureds.

We have used reinsurance to exit certain businesses, including Assurant Employee Benefits business and blocks of individual life, annuity, and long-term care business. The reinsurance recoverables relating to these dispositions amounted to $4.41 billion and $6.49 billion at December 31, 2018 and 2017, respectively.

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 as of December 31, 2018 and 2017:

	2018				2017
Ceded future policyholder benefits and expense	$	3,132.3			$	4,440.9
Ceded unearned premium	3,876.3				2,014.5
Ceded claims and benefits payable	2,046.1				3,183.0
Ceded paid losses	111.3				151.8
Total	$	9,166.0			$	9,790.2

We utilize reinsurance for loss protection and capital management, business dispositions and, in Global Lifestyle and Global Housing, client risk and profit sharing. See also “Item 1A – Risk Factors – Reinsurance may not be adequate or available to protect us against losses, and we are subject to the credit risk of reinsurers,” and “Item 7A – Quantitative and Qualitative Disclosures About Market Risk – Credit Risk.”

Retirement and Other Employee Benefits

We sponsor a qualified pension plan (the “Assurant Pension Plan”) and various non-qualified pension plans (including an Executive Pension Plan), along with a retirement health benefits plan covering our employees who meet specified eligibility requirements. Effective March 1, 2016, benefit accruals for the Assurant Pension Plan, the various non-qualified pension plans and the retirement health benefits plan were frozen. The reported amounts associated with these plans requires an extensive use of assumptions which include, but are not limited to, the discount rate and expected return on plan assets. We determine these assumptions based upon currently available market and industry data, and historical performance of the plan and its assets. The actuarial assumptions used in the calculation of our aggregate projected benefit obligation vary and include an expectation of long-term appreciation in equity markets which is not changed by minor short-term market fluctuations, but does change when large prolonged interim deviations occur. The assumptions we use may differ materially from actual results due to changing market and economic conditions and higher or lower withdrawal rates.

Contingencies

A loss contingency is recorded if reasonably estimable and probable. We establish reserves for these contingencies at the best estimate, or, if no one estimated amount within the range of possible losses is more probable than any other, we record an estimated reserve at the low end of the estimated range. Contingencies affecting us primarily relate to legal and regulatory matters which are inherently difficult to evaluate and are subject to significant changes.

Deferred Taxes

Deferred income taxes are recorded for temporary differences between the financial reporting and income tax bases of assets and liabilities, based on enacted tax laws and statutory tax rates applicable to the periods in which we expect the temporary differences to reverse. A valuation allowance is established for deferred tax assets if, based on the weight of all available evidence, it is more likely than not that some portion of the asset will not be realized. The valuation allowance is sufficient to reduce the asset to the amount that is more likely than not to be realized. We have deferred tax assets resulting from temporary differences that may reduce taxable income in future periods. The detailed components of our deferred tax assets, liabilities and valuation allowance are included in Note 11 to the Consolidated Financial Statements included elsewhere in this Report.

As of December 31, 2018 and 2017, we had a cumulative valuation allowance of $26.4 million and $9.2 million, respectively, against deferred tax assets of international subsidiaries. The change during the period related to the new valuation allowance carried by TWG of $17.8 million, as partially offset by a cumulative income tax benefit of $0.6 million related to the release of valuation allowances against foreign net operating loss carryforwards and other deferred tax assets. The realization of deferred tax assets related to net operating loss carryforwards of international subsidiaries depends upon the existence of sufficient future taxable income of the same character in the same jurisdiction.

In determining whether the deferred tax asset is realizable, we weighed all available evidence, both positive and negative. We considered all sources of taxable income available to realize the asset, including the future reversal of existing temporary differences, future taxable income exclusive of reversing temporary differences, carry forwards and tax-planning strategies.

We believe it is more likely than not that the remainder of our deferred tax assets will be realized. Accordingly, other than as noted herein for certain international subsidiaries, a valuation allowance has not been established.

Future reversal of the valuation allowance will be recognized either when the benefit is realized or when we determine that it is more likely than not that the benefit will be realized. Depending on the nature of the taxable income that results in a reversal of the valuation allowance, and on management’s judgment, the reversal will be recognized either through other comprehensive income (loss) or through continuing operations in the consolidated statements of operations. Likewise, if we determine that it is not more likely than not that we would be able to realize all or part of the deferred tax asset in the future, an adjustment to the deferred tax asset valuation allowance would be recorded through a charge to continuing operations in the consolidated statements of operations in the period such determination is made.

In determining the appropriate valuation allowance, management makes judgments about recoverability of deferred tax assets, use of tax loss and tax credit carryforwards, levels of expected future taxable income and available tax planning strategies. The assumptions used in making these judgments are updated periodically by management based on current business conditions that affect us and overall economic conditions. These management judgments are therefore subject to change based on factors that include, but are not limited to, changes in expected capital gain income in the foreseeable future and our ability to successfully execute our tax planning strategies. See also “Item 1A – Risk Factors – Financial Risks – The value of our deferred tax assets could become impaired, which could materially and adversely affect our results of operations and financial condition.”

Valuation and Recoverability of Goodwill

Our goodwill related to previous acquisitions of businesses was $2.32 billion and $917.7 million as of December 31, 2018 and 2017, respectively. We review our goodwill annually in the fourth quarter for impairment, or more frequently if indicators of impairment exist. Such indicators include, but are not limited to: a significant adverse change in legal factors, an adverse action or assessment by a regulator, unanticipated competition, loss of key personnel or a significant decline in our expected future cash flows due to changes in company-specific factors or the broader business climate. The evaluation of such factors requires considerable management judgment. Any adverse change in these factors could have a significant impact on the recoverability of goodwill and could have a material impact on our Consolidated Financial Statements.

Goodwill is tested for impairment at the reporting unit level, which is either at the operating segment or one level below, if that component is a business for which discrete financial information is available and segment management regularly reviews such information. Components within an operating segment can be aggregated into one reporting unit if they have similar economic characteristics. A goodwill impairment loss is measured as the excess of the carrying value, including goodwill, of the reporting unit over its fair value. An impairment loss is limited to the amount of goodwill allocated to the reporting unit.

Prior to 2018, our reporting units for goodwill testing qualified for aggregation at the same level as our operating segments. In 2018, given the expansion of our business and the TWG acquisition, the three reporting units within our Global Lifestyle operating segment no longer qualified for aggregation due to further differentiation of certain components of underlying products, including the economics and distribution of the various products. As a result, Connected Living, Global Automotive and Global Financial Services reporting units were evaluated and tested separately. The carrying amount of our Global Lifestyle legacy goodwill was allocated based on the fair value of the three new reporting units. The carrying amount of

our goodwill from the TWG acquisition was allocated to the three new reporting units based on the acquisition multiple and implied forward earnings contribution of each reporting unit.

The following table illustrates the amount of goodwill carried by operating segment as of the dates indicated:

	December 31,
	2018				2017
Global Housing	$	379.5			$	386.7
Global Lifestyle (1)	1,804.7				392.8
Global Preneed	137.6				138.2
Total	$	2,321.8			$	917.7

(1) As of December 31, 2018, $451.2 million, $1.28 billion, and $72.2 million of goodwill was assigned to Connected Living, Global Automotive and Global Financial Services reporting units, respectively.

In the fourth quarter of 2018, using our test date of October 1, 2018, we performed a quantitative goodwill impairment assessment for all reporting units. Based on this assessment, we determined that it was more likely than not that the reporting units’ fair values were more than their carrying amounts.

The following describes the various valuation methodologies used in the quantitative test which were weighted using our judgment as to which were the most representative in determining the estimated fair value of our reporting units.

A Dividend Discount Method (“DDM”) was used to value each of the five reporting units based upon the present value of expected cash flows available for distribution over future periods. Cash flows were estimated for a discrete projection period based on detailed assumptions, and a terminal value was calculated to reflect the value attributable to cash flows beyond the discrete period. Cash flows and the terminal value were then discounted using the reporting unit’s estimated cost of capital. The estimated fair value of the reporting unit represented the sum of the discounted cash flows and terminal value.

A Guideline Company Method, in which we identified a group of peer companies that have similar operations to the reporting unit, was used; however, direct peer comparisons for our reporting units were limited. This method was used to value each reporting unit based upon its relative performance to peer companies, based on several measures, including price to trailing 12 month earnings, price to projected earnings, price to tangible net worth and return on equity.

A Guideline Transaction Method was used to value each reporting unit based on available data concerning the purchase prices paid in acquisitions of similar companies operating in the insurance industry. The application of certain financial multiples calculated from these transactions provided an indication of estimated fair value of the reporting units.

While all three valuation methodologies were considered in assessing fair value, the DDM was weighed more heavily since management believes that expected cash flows are the most important factor in the valuation of a business enterprise. In addition, the relative lack of comparable acquisition transactions and directly comparable companies, made the other methods less credible.

Following the quantitative test, we concluded that the estimated fair value of the Global Housing reporting unit exceeded its net book value by 95%, the estimated fair value of the Connected Living reporting unit exceeded its net book value by 148%, the estimated fair value of the Global Automotive reporting unit exceeded its net book value by 15%, the estimated fair value of the Global Financial Services reporting unit exceeded its net book value by 5% and the estimated fair value of the Global Preneed reporting unit exceeded its net book value by 32%.

The determination of fair value of our reporting units requires many estimates and assumptions. These estimates and assumptions include, but are not limited to, earnings and required capital projections discussed above, discount rates, terminal growth rates, operating income and dividend forecasts for each reporting unit and the weighting assigned to the results of each of the three valuation methods described above. Changes in certain assumptions could have a significant impact on the goodwill impairment assessment. For example, an increase of the discount rate of more than 48 basis points, with all other assumptions held constant, for Global Financial Services would result in its estimated fair value being less than its net book value as of December 31, 2018. Likewise, a reduction of 112 basis points in the terminal growth rate, with all other assumptions held constant, for Global Financial Services would result in its estimated fair value being less than its net book value as of December 31, 2018. Additionally, an increase in the discount rate of more than 125 basis points, with all other assumptions held constant, for Global Automotive would result in its estimated fair value being less than its net book value as of December 31, 2018. Likewise, a reduction of 301 basis points in the terminal growth rate, with all other assumptions held constant, for Global Automotive would result in its estimated fair value being less than its net book value as of December 31, 2018. Given the much larger excess of fair value over book value for our Global Housing, Connected Living and Global Preneed reporting units it would take much more significant movements in our estimates and assumptions in order for their estimated fair values to be less than their net book values.

We evaluated the significant assumptions used to determine the estimated fair values of Global Housing, Connected Living, Global Automotive, Global Financial Services and Global Preneed, both individually and in the aggregate, and concluded they are reasonable. However, should the operating results of these reporting units decline substantially compared to projected results, or should further interest rate declines increase the net unrealized investment portfolio gain position, we could determine that we need to perform an updated impairment test due to the potential impairment indicators, which may require the recognition of a goodwill impairment loss in any of our reporting units.

Had the net book value for any of our reporting units exceeded its estimated fair value in the quantitative test, we would have recognized a goodwill impairment loss for the difference up to the amount of goodwill allocated to the reporting unit.

Recent Accounting Pronouncements

Please see Note 2 to the Consolidated Financial Statements included elsewhere in this Report.

Results of Operations

Assurant Consolidated

Overview

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

	For the Years Ended December 31,
	2018				2017				2016
Revenues:
Net earned premiums	$	6,156.9			$	4,404.1			$	5,007.3
Fees and other income	1,308.1				1,383.1				1,422.5
Net investment income	598.4				493.8				515.7
Net realized gains on investments	(62.7		)		30.1				162.2
Amortization of deferred gains and gains on disposal of businesses	56.9				103.9				394.5
Gain on pension plan curtailment	—				—				29.6
Total revenues	8,057.6				6,415.0				7,531.8
Benefits, losses and expenses:
Policyholder benefits	2,342.6				1,870.6				1,808.5
Amortization of deferred acquisition costs and value of business acquired	2,300.8				1,340.0				1,351.3
Underwriting, general and administrative expenses	2,980.4				2,710.4				3,442.8
Interest expense	100.3				49.5				57.6
Loss on extinguishment of debt	—				—				23.0
Total benefits, losses and expenses	7,724.1				5,970.5				6,683.2
Income before provision (benefit) for income taxes	333.5				444.5				848.6
Provision (benefit) for income taxes	80.9				(75.1		)		283.2
Net income	252.6				519.6				565.4
Less: Net income attributable to non-controlling interest	(1.6		)		—				—
Net income attributable to stockholders	251.0				519.6				565.4
Less: Preferred stock dividends	(14.2		)		—				—
Net income attributable to common stockholders	$	236.8			$	519.6			$	565.4

Year Ended December 31, 2018 Compared to the Year Ended December 31, 2017

Consolidated net income attributable to common stockholders decreased $282.8 million, or 54%, to $236.8 million for Twelve Months 2018 from $519.6 million for Twelve Months 2017. The decrease was primarily related to the absence of a $177.0 million tax benefit from the reduction of net deferred tax liabilities following the enactment of the TCJA that was recorded in 2017 and an increase in net realized losses on investments. The decrease was also due to an increase in expenses

related to the TWG acquisition including a $58.8 million increase in after-tax net acquisition and integration expenses and a $32.2 million increase in after-tax interest expense and preferred dividends from acquisition related financing. Additionally, the decrease was due to lower amortization of deferred gains associated with the sale of Assurant Employee Benefits, a $31.9 million after-tax loss on the sale of our Mortgage Solutions business and the absence of a $27.1 million tax benefit from the release of a reserve for uncertain tax positions included in 2017. These decreases were partially offset by the impact of a lower effective tax rate due to the TCJA, $74.7 million of net operating income from TWG and a decrease in reportable catastrophes.

Year Ended December 31, 2017 Compared to the Year Ended December 31, 2016

Consolidated net income attributable to common stockholders decreased $45.8 million, or 8%, to $519.6 million for Twelve Months 2017 from $565.4 million for Twelve Months 2016. The decrease was primarily related to $266.5 million of lower after-tax net gains, including a reduction in amortization of deferred gains and net realized gains on investments associated with the sale of Assurant Employee Benefits. Twelve Months 2017 also included a $90.1 million after-tax increase in reportable catastrophes primarily in Global Housing, as previously mentioned. These items were partially offset by a one-time $177.0 million tax benefit from the reduction of net deferred tax liabilities, a $51.6 million after-tax improvement in the results of our Assurant Health run-off operations, and a $27.1 million tax benefit from the release of a reserve for uncertain tax positions. Additionally, the decrease was partially offset by a $25.6 million increase from Global Lifestyle, excluding reportable catastrophes, that was driven by higher contributions from the Connected Living and Global Automotive businesses, lower lender placed insurance regulatory expenses and the absence of debt extinguishment expenses incurred in 2016.

Global Housing

Overview

The table below presents information regarding the Global Housing segment’s results of operations for the periods indicated:

	For the Years Ended December 31,
	2018				2017				2016
Revenues:
Net earned premiums	$	1,806.2			$	1,761.4			$	1,829.1
Fees and other income	283.0				413.6				459.7
Net investment income	80.8				75.6				72.7
Total revenues	2,170.0				2,250.6				2,361.5
Benefits, losses and expenses:
Policyholder benefits	938.4				958.4				828.6
Amortization of deferred acquisition costs and value of business acquired	204.5				194.9				238.2
Underwriting, general and administrative expenses	837.1				953.0				1,013.7
Total benefits, losses and expenses	1,980.0				2,106.3				2,080.5
Segment income before provision for income taxes	190.0				144.3				281.0
Provision for income taxes	39.2				46.9				92.4
Segment net income	$	150.8			$	97.4			$	188.6
Net earned premiums, fees and other income:
Lender-placed Insurance	$	1,149.7			$	1,224.9			$	1,317.2
Multifamily Housing	406.1				366.3				320.9
Mortgage Solutions	116.1				257.7				329.3
Manufactured Housing and Other	417.3				326.1				321.4
Total	$	2,089.2			$	2,175.0			$	2,288.8
Ratio:
Combined ratio for risk-based businesses (1)	97.7		%		99.1		%		91.1		%

(1)	The combined ratio for risk-based businesses equals total benefits, losses and expenses, including reportable catastrophe losses, divided by net earned premiums, fees and other income for Lender-placed Insurance and Manufactured Housing and Other insurance businesses.

Year Ended December 31, 2018 Compared to the Year Ended December 31, 2017

Net Income

Segment net income increased $53.4 million, or 55%, to $150.8 million for Twelve Months 2018 from $97.4 million for Twelve Months 2017, primarily due to a lower effective tax rate and lower reportable catastrophes. Segment net income for Twelve Months 2018 included $169.7 million of after-tax reportable catastrophes compared to $190.5 million of after-tax reportable catastrophes for Twelve Months 2017. Reportable catastrophes for Twelve Months 2018 reflect a corporate tax rate at 21% as compared to 35% in 2017 as a result of the enactment of the TCJA. Excluding the lower effective tax rate and reportable catastrophes, segment net income decreased due to a lower contribution from our Lender-placed Insurance business primarily due to less favorable non-catastrophe loss experience, the ongoing declines in placement rates and lower REO volumes. This decrease was partially offset by growth in Multifamily Housing and lower net loss from our Mortgage Solutions business, which was sold on August 1, 2018.

Total Revenues

Total revenues decreased $80.6 million, or 4%, to $2.17 billion for Twelve Months 2018 from $2.25 billion for Twelve Months 2017. Net earned premiums increased $44.8 million, or 3%, primarily due to growth from renters insurance in Multifamily Housing, additional premiums from new commercial property and liability business and lower reinsurance reinstatement and other premiums related to 2017 catastrophes, partially offset by lower volumes from our REO Lender-placed Insurance product and the ongoing declines in placement rates in our Lender-placed Insurance business. Fees and other income decreased $130.6 million, or 32%, primarily due to the sale of our Mortgage Solutions business. Net investment income increased $5.2 million, or 7%, primarily due to higher income from real estate related fund investments.

Total Benefits, Losses and Expenses

Total benefits, losses and expenses decreased to $1.98 billion for Twelve Months 2018 from $2.11 billion for Twelve Months 2017. Total policyholder benefits decreased $20.0 million, or 2%, primarily due to a $69.2 million decrease in reportable catastrophe losses, partially offset by less favorable non-catastrophe loss experience from our Lender-placed Insurance business. Underwriting, general and administrative expenses decreased $115.9 million, or 12%, primarily due to a decrease in expenses resulting from the sale of our Mortgage Solutions business, partially offset by higher information technology expenses.

Year Ended December 31, 2017 Compared to the Year Ended December 31, 2016

Net Income

Segment net income decreased $91.2 million, or 48%, to $97.4 million for Twelve Months 2017 from $188.6 million for Twelve Months 2016, primarily due to an $88.1 million after-tax increase in reportable catastrophes, net of reinsurance and including reinstatement and other premiums. Absent the impact of these items, the decrease in net income was due to higher non-catastrophe loss experience and a reduction from our lender placed insurance business due to the ongoing normalization of placement rates. These decreases were partially offset by a reduction of lender placed regulatory expenses, fees and reimbursements from the NFIP for processing flood claims following Hurricane Harvey, and profitable growth from our Multifamily Housing business.

Total Revenues

Total revenues decreased $110.9 million, or 5%, to $2.25 billion for Twelve Months 2017 from $2.36 billion for Twelve Months 2016. Net earned premiums decreased $67.7 million, or 4%, mainly due to a decline in placement rates in our Lender-placed Insurance business and $22.4 million of reinstatement and other premiums from the increase in reportable catastrophes, partially offset by growth in Multifamily Housing. Fees and other income decreased $46.1 million, or 10%, mainly due to a decrease in Mortgage Solutions fee income driven by lower demand for originations and field services and reduced client volumes.

Total Benefits, Losses and Expenses

Total benefits, losses and expenses increased to $2.11 billion for Twelve Months 2017 from $2.08 billion for Twelve Months 2016. Total policyholder benefits increased $129.8 million, or 16%, mainly due to a $118.3 million increase in net losses, excluding reinstatement and other premiums, from reportable catastrophes. Reportable catastrophe losses include only individual catastrophic events that generated losses to us in excess of $5.0 million, pre-tax and net of reinsurance. There was

also an increase in non-catastrophe losses primarily due to the impact of lower premium rates and higher weather losses. Underwriting, general and administrative expenses decreased $60.7 million, or 6%, mainly driven by the reduction in our Mortgage Solutions business, lower lender placed regulatory expenses and an increased focus on expense management. Also contributing to this decrease were fees and reimbursements from the NFIP for processing flood claims for Hurricane Harvey.

Global Lifestyle

Overview

The table below presents information regarding the Global Lifestyle segment’s results of operations for the periods indicated:

	For the Years Ended December 31,
	2018				2017				2016
Revenues:
Net earned premiums	$	4,291.8			$	2,576.5			$	2,901.4
Fees and other income	891.5				819.7				804.7
Net investment income	189.4				114.6				113.1
Total revenues	5,372.7				3,510.8				3,819.2
Benefits, losses and expenses:
Policyholder benefits	1,145.6				700.4				663.8
Amortization of deferred acquisition costs and value of business acquired	2,025.8				1,083.3				1,045.9
Underwriting, general and administrative expenses	1,812.6				1,480.8				1,901.8
Total benefits, losses and expenses	4,984.0				3,264.5				3,611.5
Segment income before provision for income taxes	388.7				246.3				207.7
Provision for income taxes	91.0				68.3				53.3
Segment net income	$	297.7			$	178.0			$	154.4
Net earned premiums, fees and other income:
Connected Living (mobile and service contracts)	$	2,800.6			$	2,156.0			$	2,570.1
Global Automotive	1,909.2				782.8				715.8
Global Financial Services	473.5				457.4				420.2
Total	$	5,183.3			$	3,396.2			$	3,706.1
Net earned premiums, fees and other:
Domestic	$	3,560.9			$	2,159.8			$	2,561.6
International	1,622.4				1,236.4				1,144.5
Total	$	5,183.3			$	3,396.2			$	3,706.1
Ratios:
Combined ratio for risk-based businesses (1)	97.2		%		96.2		%		95.9		%
Pre-tax income margin for fee-based, capital-light businesses (2)	7.0		%		5.7		%		3.5		%

(1)	The combined ratio for risk-based businesses equals to total benefits, losses and expenses divided by net earned premiums, fees and other income for Global Automotive and Global Financial Services insurance businesses.

(2)	The pre-tax income margin for fee-based, capital-light businesses equals income before provision for income taxes divided by net earned premiums, fees and other income for Connected Living.

Year Ended December 31, 2018 Compared to the Year Ended December 31, 2017

Net Income

Segment net income increased $119.7 million, or 67%, to $297.7 million for Twelve Months 2018 from $178.0 million for Twelve Months 2017, benefiting from the acquisition of TWG, which contributed $74.7 million of net operating income, and a lower effective tax rate following the enactment of the TCJA. Additionally, segment net income for Twelve Months 2018 included $9.3 million in after-tax benefits for client recoverables and $3.9 million of nonrecurring tax benefits, compared to $12.5 million and $9.6 million, respectively, for Twelve Months 2017. Excluding the impact of these items, segment net

income increased primarily due to increased income from our Connected Living business, which was primarily driven by growth from recently launched mobile programs and continued growth in existing mobile programs, partially offset by higher mobile loss experience, continued declines in Global Financial Services, primarily from expected discontinued partnerships, and unfavorable foreign exchange.

Total Revenues

Total revenues increased $1.86 billion, or 53%, to $5.37 billion for Twelve Months 2018 from $3.51 billion for Twelve Months 2017, primarily attributable to TWG. Excluding the impact of TWG, net earned premiums increased $282.0 million, or 11%, mostly driven by increased revenue from our Connected Living business, due to growth from existing and recently launched mobile programs, as well as growth from our Global Automotive business. This increase was partially offset by unfavorable foreign exchange. Excluding the impact of TWG, fees and other income increased $31.5 million, or 4%, primarily driven by growth from recently launched mobile programs, partially offset by a decrease from our mobile repair and logistics business due to lower average selling price, and continued declines in Global Financial Services mainly driven by anticipated discontinued partnerships. Excluding the impact of TWG, net investment income increased $12.3 million, or 11%, primarily due to higher income from real estate related fund investments.

Total Benefits, Losses and Expenses

Total benefits, losses and expenses increased $1.72 billion, or 53%, to $4.98 billion for Twelve Months 2018 from $3.26 billion for Twelve Months 2017. The increase in total benefits, losses and expenses was primarily due to TWG. Excluding the impact of TWG, policyholder benefits increased $77.9 million, or 11%, primarily due to growth from our global mobile and Global Automotive businesses. Excluding the impact of TWG, amortization of deferred acquisition costs and value of business acquired increased $89.7 million, or 8%, primarily due to growth from our Global Automotive business. Excluding the impact of TWG, underwriting, general and administrative expenses increased $130.7 million, or 9%, primarily due to the growth from our global mobile programs and Global Automotive businesses, partially offset by unfavorable foreign exchange.

Year Ended December 31, 2017 Compared to the Year Ended December 31, 2016

Net Income

Segment net income increased $23.6 million, or 15%, to $178.0 million for Twelve Months 2017 from $154.4 million for Twelve Months 2016. The increase was primarily driven by our Connected Living business due to higher contributions from extended service contracts from original equipment manufacturer clients and other distribution channels as well as growth in our mobile business, partially offset by lower volume from our domestic repair and logistics business. The increase was also driven by growth in our domestic vehicle protection business. Results for Twelve Months 2017 included $12.5 million in after-tax benefits for client recoverables, for both service contracts and mobile over the course of the year, and $9.6 million of nonrecurring tax benefits. Results for Twelve Months 2016 included $18.0 million in tax benefits related to a redemption of shares in our international markets.

Total Revenues

Total revenues decreased $308.4 million, or 8%, to $3.51 billion for Twelve Months 2017 from $3.82 billion for Twelve Months 2016. Net earned premiums decreased $324.9 million, or 11%, due to a change in program structure in the fourth quarter of 2016 impacting the accounting for revenues from our Connected Living business for a previously disclosed large service contract client on a net instead of gross basis. This change has no impact to our earnings. Excluding the program structure change, Twelve Months 2017 net earned premiums increased 7% primarily due to growth from our Connected Living business mainly driven by global mobile, as well as growth from international credit and domestic vehicle protection businesses. Fees and other income increased $15.0 million, or 2%, primarily driven by growth in our Connected Living business, specifically in our global mobile programs and inclusive of the aforementioned client recoverable, partially offset by lower volume from domestic mobile repair and logistics businesses.

Total Benefits, Losses and Expenses

Total benefits, losses and expenses decreased $347.0 million, or 10%, to $3.26 billion for Twelve Months 2017 from $3.61 billion for Twelve Months 2016. The decreases were impacted by the aforementioned change in program structure in the fourth quarter of 2016. Excluding this program structure change, Policyholder benefits increased 11%, primarily driven by growth in our global mobile protection programs, mostly in Europe, in our Connected Living business and in our international credit insurance business. Excluding the program structure change, amortization of deferred acquisition costs and value of business acquired, underwriting, general and administrative expenses increased 3%, primarily due to growth in our Connected Living business, specifically from our international mobile programs, partially offset by lower volumes in our domestic repairs and logistics business. Additionally, the increase was driven by growth in our international credit insurance and domestic vehicle protection businesses.

Global Preneed

Overview

The table below presents information regarding the Global Preneed segment’s results of operations for the periods indicated:

	For the Years Ended December 31,
	2018				2017				2016
Revenues:
Net earned premiums	$	58.4			$	59.5			$	61.7
Fees and other income	131.1				121.5				109.6
Net investment income	278.0				262.0				259.8
Total revenues	467.5				443.0				431.1
Benefits, losses and expenses:
Policyholder benefits	263.3				259.1				250.4
Amortization of deferred acquisition costs and value of business acquired	70.5				61.8				61.4
Underwriting, general and administrative expenses	60.1				63.1				55.5
Total benefits, losses and expenses	393.9				384.0				367.3
Segment income before provision for income taxes	73.6				59.0				63.8
Provision for income taxes	15.9				19.4				21.5
Segment net income	$	57.7			$	39.6			$	42.3

Year Ended December 31, 2018 Compared to the Year Ended December 31, 2017

Net Income

Segment net income increased $18.1 million, or 46%, to $57.7 million for Twelve Months 2018 from $39.6 million for Twelve Months 2017, primarily due to a lower effective tax rate. Excluding the impact of the lower effective tax rate, segment net income increased due to the absence of a $5.0 million after-tax software impairment included in 2017, an increase in investment income from real estate investments, an increase in invested assets consistent with the growth of the domestic preneed business and higher yields. The increases were partially offset by an increase in information technology expenses and an increase in benefits on policies in runoff pegged to the Consumer Price Index.

Total Revenues

Total revenues increased $24.5 million, or 6%, to $467.5 million for Twelve Months 2018 from $443.0 million for Twelve Months 2017. Fees and other income increased $9.6 million, or 8%, primarily due to growth in the domestic preneed business and the final need product. Net investment income increased $16.0 million, or 6%, primarily due to higher income from sales of certain real estate joint venture partnerships, an increase in invested assets consistent with the growth of the domestic preneed business and higher yields.

Total Benefits, Losses and Expenses

Total benefits, losses and expenses increased $9.9 million, or 3%, to $393.9 million for Twelve Months 2018 from $384.0 million for Twelve Months 2017, primarily due to growth in the preneed business, an increase in benefits on policies in runoff pegged to the Consumer Price Index and increased information technology expenses. The increase was partially offset by the absence of a $7.7 million impairment of software included in 2017.

Year Ended December 31, 2017 Compared to the Year Ended December 31, 2016

Net Income

Segment net income decreased $2.7 million, or 6%, to $39.6 million for Twelve Months 2017 from $42.3 million for Twelve Months 2016. This decrease was primarily due to a $5.0 million after-tax impairment of software in 2017, partially offset by an increase in net investment income and fee income due to growth of the underlying preneed business.

Total Revenues

Total revenues increased $11.9 million, or 3%, to $443.0 million for Twelve Months 2017 from $431.1 million for Twelve Months 2016. This increase was primarily due to growth in preneed business, favorable foreign exchange and higher investment income.

Total Benefits, Losses and Expenses

Total benefits, losses and expenses increased $16.7 million, or 5%, to $384.0 million for Twelve Months 2017 from $367.3 million for Twelve Months 2016. This increase was primarily due to an increase in policyholder benefits due to growth in the preneed business. Additionally, the increase includes a $7.7 million impairment of software that was written off in 2017.

Assurant Employee Benefits

Overview

The table below presents information regarding the Assurant Employee Benefits segment’s results of operations, through the sale date of March 1, 2016:

	For the Year Ended December 31,
	2016
Revenues:
Net earned premiums	$	178.0
Fees and other income	4.2
Net investment income	17.3
Total revenues	199.5
Benefits, losses and expenses:
Policyholder benefits	118.4
Amortization of deferred acquisition costs and value of business acquired	5.8
Underwriting, general and administrative expenses	61.5
Total benefits, losses and expenses	185.7
Segment income before provision for income taxes	13.8
Provision for income taxes	5.3
Segment net income	$	8.5

On March 1, 2016, we sold our Assurant Employee Benefits segment to Sun Life Assurance Company of Canada, a wholly owned subsidiary of Sun Life Financial, Inc. For more information on the sale see Note 4 to the Consolidated Financial Statements, included elsewhere in this Report.

The amounts included in Twelve Months 2016 primarily represent January and February 2016 results of operations, the period prior to the sale. All amounts related to the net gain on the sale are included in the Total Corporate and Other segment, discussed later. Since this business has been sold and is no longer part of our ongoing operations, a discussion of results for the periods presented has been excluded.

Total Corporate and Other

The table below presents information regarding the Total Corporate and Other segment’s results of operations for the periods indicated:

	For the Years Ended December 31,
	2018												2017												2016
	Corporate and Other				Assurant Health				Total Corporate and Other				Corporate and Other				Assurant Health				Total Corporate and Other				Corporate and Other				Assurant Health				Total Corporate and Other
Revenues:
Net earned premiums	$	—			$	0.5			$	0.5			$	—			$	6.7			$	6.7			$	—			$	37.1			$	37.1
Fees and other income	2.1				0.4				2.5				24.8				3.5				28.3				24.5				19.8				44.3
Net investment income	47.6				2.6				50.2				35.1				6.5				41.6				44.0				8.8				52.8
Net realized gains (losses) on investments (1)	(62.7		)		—				(62.7		)		30.1				—				30.1				162.2				—				162.2
Amortization of deferred gains and gains on disposal of businesses	56.9				—				56.9				103.9				—				103.9				394.5				—				394.5
Gain on pension plan curtailment	—				—				—				—				—				—				29.6				—				29.6
Total revenues	43.9				3.5				47.4				193.9				16.7				210.6				654.8				65.7				720.5
Benefits, losses and expenses:
Policyholder benefits	—				(4.7		)		(4.7		)		—				(47.3		)		(47.3		)		—				(52.7		)		(52.7		)
Amortization of deferred acquisition costs and value of business acquired	—				—				—				—				—				—				—				—				—
Underwriting, general and administrative expenses (2)	265.6				5.0				270.6				165.5				48.0				213.5				244.6				165.7				410.3
Interest expense	100.3				—				100.3				49.5				—				49.5				57.6				—				57.6
Loss on extinguishment of debt	—				—				—				—				—				—				23.0				—				23.0
Total benefits, losses and expenses	365.9				0.3				366.2				215.0				0.7				215.7				325.2				113.0				438.2
Segment (loss) income before (benefit) provision for income taxes	(322.0		)		3.2				(318.8		)		(21.1		)		16.0				(5.1		)		329.6				(47.3		)		282.3
(Benefit) provision for income taxes	(65.8		)		0.6				(65.2		)		(215.1		)		5.4				(209.7		)		117.0				(6.3		)		110.7
Segment net (loss) income	(256.2		)		2.6				(253.6		)		194.0				10.6				204.6				212.6				(41.0		)		171.6
Less: Net income attributable to non-controlling interest	(1.6		)		—				(1.6		)		—				—				—				—				—				—
Net (loss) income attributable to stockholders	(257.8		)		2.6				(255.2		)		194.0				10.6				204.6				212.6				(41.0		)		171.6
Less: Preferred stock dividends	(14.2		)		—				(14.2		)		—				—				—				—				—				—
Net (loss) income attributable to common stockholders	$	(272.0	)		$	2.6			$	(269.4	)		$	194.0			$	10.6			$	204.6			$	212.6			$	(41.0	)		$	171.6

(1)	Net realized gains on investments for Corporate and Other in Twelve Months 2016 includes $146.7 million of gains included in overall net gain from the sale of Assurant Employee Benefits.

(2)	Underwriting, general and administrative expenses for Corporate and Other in Twelve Months 2016 includes $26.6 million of loss on the retroactive component that was included within the net gain from the sale of Assurant Employee Benefits.

Corporate and Other

Year Ended December 31, 2018 Compared to the Year Ended December 31, 2017

Net Income (Loss) Attributable to Common Stockholders

Corporate and Other had a net loss attributable to common stockholders of $272.0 million for Twelve Months 2018 compared with net income attributable to common stockholders of $194.0 million for Twelve Months 2017. The change was primarily related to the absence of a $177.0 million tax benefit from the reduction of net deferred tax liabilities that was recorded in 2017 and an increase in net realized losses on investments and an increase in expenses related to the TWG acquisition. Additionally, the decrease was due to lower amortization of deferred gains associated with the sale of Assurant Employee Benefits, a $31.9 million after-tax loss on the sale of our Mortgage Solutions business, the absence of a $27.1 million tax benefit from the release of a reserve for uncertain tax positions included in 2017 and $14.7 million of net losses from foreign exchange, primarily driven by the remeasurement of net monetary assets from our operations in Argentina.

Total Revenues

Total revenues decreased $150.0 million or 77%, to $43.9 million for Twelve Months 2018 compared with $193.9 million for Twelve Months 2017. The decrease was primarily related to a $92.8 million unfavorable change in net realized gains (losses) on investments mostly driven by a $64.8 million decrease from fixed income securities that were sold at a net loss in 2018 as compared to a net gain in 2017 due to the effect of an increase in interest rates on the market value of fixed maturity securities. Additionally, Twelve Months 2018 includes $18.8 million of net unrealized losses from the change in fair value of equity securities, following an accounting change requiring fair value changes to be recognized in income beginning January 1, 2018. Prior to 2018, the net unrealized gains and losses on equity securities were recorded in other comprehensive income. The remaining decrease in revenues was due to a $47.0 million reduction in amortization of deferred gains primarily associated with the sale of Assurant Employee Benefits and a reduction in income from transitional services provided in connection with the sale of Assurant Employee Benefits. These transitional services were contractually completed in the first half of 2018. Additionally, the decrease was partially offset by an increase in net investment income mostly driven by $4.8 million in third-party investment management fees from consolidated investment entities and $4.5 million of income from sales of certain real estate joint venture partnerships.

Total Benefits, Losses and Expenses

Total benefits, losses and expenses increased $150.9 million or 70%, to $365.9 million in Twelve Months 2018 compared with $215.0 million in Twelve Months 2017. The increase was primarily due to a $50.4 million increase in transaction and integration expenses associated with the TWG acquisition, a $50.8 million increase in interest expense primarily due to additional interest from acquisition related financing and a $40.3 million net loss on the sale of our Mortgage Solutions business. The increase in total benefits, losses and expenses was also due to a $20.8 million loss from an impairment of certain intangible assets associated with the acquisition of Green Tree Insurance Agency (as partially offset by a $4.8 million reduction of a contingent earn-out liability) in the fourth quarter of 2018, a $15.2 million reduction in net pension benefit and $14.7 million of net losses from foreign exchange, primarily related to the remeasurement of net monetary assets from our operations in Argentina. These decreases were partially offset by a gain on the sale of Time Insurance Company, a legal entity associated with the previously exited Assurant Health business and absence of $17.4 million of expenses pertaining to an estimated indemnification related to a previous disposition that was recorded in 2017.

Year Ended December 31, 2017 Compared to the Year Ended December 31, 2016

Net Income (Loss) Attributable to Common Stockholders

Corporate and Other net income decreased $18.6 million or 9%, to $194.0 million for Twelve Months 2017 compared with $212.6 million for Twelve Months 2016. The decrease was primarily related to $266.5 million of lower after-tax net gains associated with the sale of Assurant Employee Benefits, including a reduction in amortization of deferred gains and lower net realized gains on investments associated with the transaction. This decrease was partially offset by a one-time $177.0 million tax benefit from the reduction of net deferred tax liabilities, a $27.1 million tax benefit from the release of a reserve for uncertain tax positions, and $15.0 million after-tax loss on extinguishment of debt recorded in 2016. Additionally, the decrease was offset by the absence of a $10.8 million after-tax intangible asset impairment charge recorded in 2016. The $177.0 million benefit was related to the re-measurement of the total deferred tax assets and liabilities of the Company, including those that are allocated to the other reportable segments. This presentation is consistent with how management views the adjustment related to this item.

Total Revenues

Total revenues decreased $460.9 million or 70%, to $193.9 million for Twelve Months 2017 compared with $654.8 million for Twelve Months 2016. The decrease in revenues was mainly due to $437.3 million of lower after-tax net gains associated with the sale of Assurant Employee Benefits, including a reduction in amortization of deferred gains and lower net realized gains on investments associated with the transaction. Also, Twelve Months 2016 included a $29.6 million curtailment gain associated with our pension plan freeze.

Total Benefits, Losses and Expenses

Total benefits, losses and expenses decreased $110.2 million or 34%, to $215.0 million in Twelve Months 2017 compared with $325.2 million in Twelve Months 2016. This decrease was primarily driven by activity from 2016, including a $26.6 million loss on the retroactive reinsurance component related to the sale of our Assurant Employee Benefits segment, a $23.0 million loss on extinguishment of debt, a $16.7 million intangible asset impairment charge related to trade names no longer used or defended by the Company and overall higher residual expenses related to the sale of Assurant Employee Benefits. Additionally, expenses in 2017 were significantly lower than 2016 due to the ongoing expense management initiatives. These decreases were partially offset by $12.5 million of integration and transaction related expenses associated with the TWG acquisition.

Assurant Health

We began to wind down our major medical operations in late 2015 and substantially completed our exit of the health insurance market in 2016.

The Affordable Care Act

The Affordable Care Act introduced new premium stabilization programs in 2014: reinsurance, risk adjustment, and risk corridor. We participated in the premium stabilization programs during 2014 through 2016. With the exit from the health insurance market, we no longer participate in these programs. As of December 31, 2018, we had no net reinsurance recoverables related to these programs and we had not recorded a net receivable under the risk corridor programs because payments from the U.S. Department of Health and Human Services are considered unlikely.

Year Ended December 31, 2018 Compared to the Year Ended December 31, 2017

Net Income

Segment net income decreased $8.0 million to $2.6 million for Twelve Months 2018 compared to $10.6 million for Twelve Months 2017. The decrease was primarily due to a reduction in favorable claims development as we continue to run off the business.

Total Revenues

Total revenues decreased $13.2 million to $3.5 million for Twelve Months 2018 compared to $16.7 million for Twelve Months 2017, primarily due to our exit of the health insurance market.

Total Benefits, Losses and Expenses

Total benefits, losses and expenses were $0.3 million for Twelve Months 2018 compared to $0.7 million for Twelve Months 2017. The decrease was primarily due to a decrease in general expenses, partially offset by a reduction in favorable claims development, as we continue to run off the business.

Year Ended December 31, 2017 Compared to the Year Ended December 31, 2016

Net Income

Segment net income was $10.6 million for Twelve Months 2017 compared to a net loss of $41.0 million for Twelve Months 2016. The change in results was primarily due to lower expenses and favorable claims development as we continue to run off the business.

Total Revenues

Total revenues decreased $49.0 million to $16.7 million for Twelve Months 2017 compared to $65.7 million for Twelve Months 2016. The decrease was primarily due to our exit of the health insurance market.

Total Benefits, Losses and Expenses

Total benefits, losses and expenses were $0.7 million for Twelve Months 2017 compared to $113.0 million for Twelve Months 2016. The decrease was primarily related to lower expenses due to the substantial completion of the runoff of the business in 2017.

Investments

We had total investments of $13.40 billion and $11.55 billion as of December 31, 2018 and 2017, respectively. Net unrealized gains on our fixed maturity securities portfolio decreased $483.0 million during 2018, from $906.1 million at December 31, 2017 to $423.1 million at December 31, 2018, primarily due to an increase in U.S. Treasury yields and widening credit spreads.

The following table shows the credit quality of our fixed maturity securities portfolio as of the dates indicated:

		Fair Value as of
Fixed Maturity Securities by Credit Quality		December 31, 2018							December 31, 2017
Aaa / Aa / A		$	7,329.8			65.1	%		$	6,155.4			63.7	%
Baa		3,322.7				29.5	%		2,982.5				30.9	%
Ba		447.9				4.0	%		400.8				4.1	%
B and lower		156.7				1.4	%		123.9				1.3	%
Total		$	11,257.1			100.0	%		$	9,662.6			100.0	%

The following table shows the major categories of net investment income for the periods indicated:

	Years Ended December 31,
	2018				2017				2016
Fixed maturity securities	$	451.6			$	411.8			$	419.3
Equity securities	21.5				22.8				25.1
Commercial mortgage loans on real estate	33.4				31.5				41.7
Short-term investments	22.0				7.2				5.5
Other investments	41.6				25.2				24.3
Cash and cash equivalents	25.7				15.8				17.5
Revenue from consolidated investment entities (1)	$	77.8			$	9.8			$	—
Total investment income	673.6				524.1				533.4
Investment expenses	(23.3		)		(21.9		)		(17.7		)
Expenses from consolidated investment entities (1)	(51.9		)		(8.4		)		—
Net investment income	$	598.4			$	493.8			$	515.7

(1)

The net of revenues and expenses from consolidated investment entities of $25.9 million for Twelve Months 2018 includes $9.2 million, $9.5 million, and $2.1 million of investment income from our direct investment in the real estate fund, CLOs, and the related non-controlling interest, respectively, and $5.1 million related to investment management fees. The net of revenues and expenses from consolidated investment entities of $1.4 million for Twelve Months 2017 includes $0.5 million and $0.6 million of investment income from our direct investment in the real estate fund and CLOs, respectively, and $0.3 million related to investment management fees. See Note 8 to the Consolidated Financial Statements included elsewhere in this Report for further detail.

Net investment income increased $104.6 million, or 21%, to $598.4 million for Twelve Months 2018 from $493.8 million for Twelve Months 2017, benefiting from the acquisition of TWG, which contributed $62.5 million of net investment income. Excluding TWG, the remaining increase was primarily due to $25.5 million of additional net investment income from consolidated investment entities related to additional CLO structures that were launched in 2018 and a $16.4 million increase in net investment income from real estate investments. The increase from real estate investments is due to a $10.5 million

increase in earnings from our consolidated real estate fund that was mostly driven by increases in the fair market value of certain real estate properties and a $5.9 million increase in income from sales of certain real estate joint venture partnerships.

Net investment income decreased $21.9 million, or 4%, to $493.8 million for Twelve Months 2017 from $515.7 million for Twelve Months 2016. The decrease is primarily attributable to lower invested assets, lower investment yields and a $0.9 million decrease in investment income from real estate joint venture partnerships.

As of December 31, 2018, we owned $72.5 million of securities guaranteed by financial guarantee insurance companies. Included in this amount was $57.6 million of municipal securities, whose credit rating was A+ with the guarantee, but would have had a rating of A- without the guarantee.

For more information on our investments, see Notes 7 and 9 to the Consolidated Financial Statements included elsewhere in this Report.

Liquidity and Capital Resources

Regulatory Requirements

Assurant, Inc. is a holding company and, as such, has limited direct operations of its own. Our 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. Our insurance subsidiaries’ ability to pay such dividends and to make such other payments will be limited by applicable laws and regulations of the jurisdictions in which our subsidiaries are domiciled, which subject our subsidiaries to significant regulatory restrictions. The dividend requirements and regulations vary from jurisdiction to jurisdiction 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 they can pay to the holding company. See “Item 1 – Business – Regulation – U.S. Insurance Regulation” and “Item 1A – Risk Factors – Legal and Regulatory Risks – Changes in insurance regulation may reduce our profitability and limit our growth.” Along with solvency regulations, the primary driver in determining the amount of capital used for dividends is the level of capital needed to maintain desired financial strength ratings from A.M. Best Company (“A.M. Best”).

Regulators or rating agencies could become more conservative in their methodology and criteria, increasing capital requirements for our insurance subsidiaries. In 2018, in addition to assigning ratings to the our new debt issuances, the following actions were taken by the rating agencies:

A.M. Best

•	Affirmed all ratings of legacy Assurant entities with a stable outlook, except for a revised negative outlook on the financial strength ratings for our two subsidiaries that sold the Assurant Employee Benefits business through reinsurance due to their diminished profile following the sale.

•	Upgraded the financial strength ratings of rated TWG entities from A- to A with a stable outlook.

Moody’s Investors Service, Inc. (“Moody’s”)

•	In connection with the acquisition of TWG and the related financing, lowered our senior debt rating to Baa3 from Baa2 and our subordinated debt rating to Ba1 from Baa3.

•	Revised the insurance financial strength ratings of property and casualty operating subsidiaries to A3 from A2, life insurance subsidiaries to Baa1 from A3 and the commercial paper rating to P-3 from P-2, with a stable outlook on all ratings.

S&P Global Ratings (“S&P”)

•	In connection with the acquisition of TWG and the related financing, lowered our long-term issuer credit rating from BBB+ to BBB with a stable outlook.

•	Affirmed our short-term issuer credit rating.

•	Affirmed financial strength ratings of rated operating subsidiaries with a stable outlook.

For further information on our ratings and the risks of ratings downgrades, see “Item 1 – Business – Ratings” and “Item 1A – Risk Factors – Financial Risks – A decline in the financial strength ratings of our insurance company subsidiaries could adversely affect our results of operations and financial condition.”

For the year ending December 31, 2019, the maximum amount of dividends our regulated U.S. domiciled insurance subsidiaries could pay us, under applicable laws and regulations without prior regulatory approval, is approximately $353.3 million.

Holding Company

As of December 31, 2018, we had approximately $473.0 million in holding company capital. We use the term “holding company capital” to represent the portion of cash and other liquid marketable securities held at Assurant, Inc., out of a total of $608.0 million of holding company investment securities and cash, which we are not otherwise holding for a specific purpose as of the balance sheet date. We can use such capital for stock repurchases, stockholder dividends, acquisitions and other corporate purposes. $250.0 million of the $473.0 million of holding company capital is intended to serve as a buffer against remote risks (such as large-scale catastrophe losses).

Dividends or returns of capital paid by our subsidiaries, net of infusions and excluding amounts used for acquisitions or received for dispositions, were approximately $739.0 million for Twelve Months 2018, which included approximately $727.0 million from legal entities in our Global Housing, Global Lifestyle and Global Preneed operating segments and approximately $12.0 million from Assurant Health and capital formerly backing Assurant Employee Benefits. For Twelve Months 2017 and Twelve Months 2016, dividends, net of infusions and excluding amounts used or set aside for acquisitions, made to the holding company from its operating companies were $374.0 million and $1.65 billion (including approximately $894.0 million of dividends from statutory insurance subsidiaries that received cash proceeds related to the sale of Assurant Employee Benefits), respectively. We use these cash inflows primarily to pay expenses, to make interest payments on indebtedness, to make dividend payments to our stockholders, to fund acquisitions and to repurchase our shares.

In addition to paying expenses, making interest payments on indebtedness and making dividend payments on our preferred stock, our capital management strategy provides for several uses of the cash generated by our subsidiaries, including without limitation, returning capital to common stockholders through share repurchases and dividends, investing in our business to support growth in targeted areas and making prudent and opportunistic acquisitions. From time to time, we may also seek to purchase outstanding debt in open market repurchases or privately negotiated transactions. During Twelve Months 2018, Twelve Months 2017 and Twelve Months 2016, we made common stock repurchases and paid dividends to our common stockholders of $266.1 million, $508.5 million and $994.8 million, respectively. We expect to deploy capital primarily to support business growth, fund other investments and return capital to shareholders, subject to Board approval and market conditions.

In 2014, we made a 40% investment in Iké Asistencia (“Iké”), a services assistance business, for which we paid approximately $110.0 million. We have a call right and Iké has a put right relating to our acquisition of the remainder of the company by mid-2019. There can be no assurance whether we will exercise our call right or Iké will exercise its put right and the acquisition will be completed.

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

Assurant Subsidiaries

The primary sources of funds for our subsidiaries consist of premiums and fees collected, proceeds from the sales and maturity of investments and net 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 investment income.

We conduct periodic asset liability studies to measure the duration of our insurance liabilities, to develop optimal asset portfolio maturity structures for our significant lines of business and ultimately to assess that cash flows are sufficient to meet the timing of cash needs. These studies are conducted in accordance with formal company-wide Asset Liability Management guidelines.

To complete a study for a particular line of business, models are developed to project asset and liability cash flows and balance sheet items under a large, varied set of plausible economic scenarios. These models consider many factors including the current investment portfolio, the required capital for the related assets and liabilities, our tax position and projected cash flows from both existing and projected new business.

Alternative asset portfolio structures are analyzed for significant lines of business. An investment portfolio maturity structure is then selected from these profiles given our return hurdle and risk preference. Sensitivity testing of significant liability assumptions and new business projections is also performed.

Our liabilities generally have limited policyholder optionality, which means that the timing of payments is relatively insensitive to the interest rate environment. In addition, our investment portfolio is largely comprised of highly liquid fixed

maturity securities with a sufficient component of such securities invested that are near maturity which may be sold with minimal risk of loss to meet cash needs. Therefore, we believe we have limited exposure to disintermediation risk.

Generally, our subsidiaries’ premiums, fees and investment income, along with planned asset sales and maturities, provide sufficient cash to pay claims and expenses. However, there may be instances when unexpected cash needs arise in excess of that available from usual operating sources. In such instances, we have several options to raise needed funds, including selling assets from the subsidiaries’ investment portfolios, using holding company cash (if available), issuing commercial paper, or drawing funds from the Credit Facility. In addition, on January 22, 2018, we filed an automatically effective shelf registration statement on Form S-3 with the SEC. This registration statement allows us to issue equity, debt and other types of securities through one or more methods of distribution. The terms of any offering would be established at the time of the offering, subject to market conditions. If we decide to make an offering of securities, we will consider the nature of the cash requirement as well as the cost of capital in determining what type of securities we may offer.

Dividends and Repurchases

On January 18, 2019, the Board declared a quarterly dividend of $0.60 per common share payable on March 18, 2019 to stockholders of record as of February 25, 2019. We paid dividends of $0.60 per common share on December 17, 2018 to stockholders of record as of November 26, 2018. This represents a 7% increase to the quarterly dividend of $0.56 per common share paid on September 18, 2018 to stockholders of record as of August 27, 2018, $0.56 per common share paid on June 19, 2018 to stockholders of record as of May 29, 2018, and $0.56 per common share paid on March 19, 2018 to stockholders of record as of February 26, 2018.

On January 18, 2019, the Board declared a quarterly dividend of $1.6250 per share of Mandatory Convertible Preferred Stock payable on March 15, 2019 to stockholders of record as of March 1, 2019. We paid dividends of $1.6250 per share of Mandatory Convertible Preferred Stock on December 17, 2018 to stockholders of record as of December 1, 2018, $1.6250 per share of Mandatory Convertible Preferred Stock on September 17, 2018 to stockholders of record as of September 1, 2018 and $1.6792 per share of Mandatory Convertible Preferred Stock on June 15, 2018 to stockholders of record as of June 1, 2018.

Any determination to pay future dividends will be at the discretion of the Board and will be dependent upon various factors, including: our subsidiaries’ payments of dividends and/or other statutorily permissible payments to us; our results of operations and cash flows; our financial condition and capital requirements; general business conditions and growth prospects; legal, tax, regulatory and contractual restrictions on the payment of dividends; and other factors the Board deems relevant. Payments of dividends on shares of common stock are subject to the preferential rights of the Mandatory Convertible Preferred Stock described below. The Credit Facility also contains limitations on our ability to pay dividends to our stockholders if we are in default, or such dividend payments would cause us to be in default, of our obligations thereunder. In addition, if we defer the payment of interest on our Subordinated Notes, we generally may not make payments on our capital stock.

On November 5, 2018, the Board authorized us to repurchase up to an additional $600.0 million of our outstanding common stock. During Twelve Months 2018, we repurchased 1,269,683 shares of our outstanding common stock at a cost of $132.3 million, exclusive of commissions. As of December 31, 2018, $761.2 million remained under the total repurchase authorization (including amounts remaining under the prior authorization). The timing and the amount of future repurchases will depend on market conditions, our financial condition, results of operations, liquidity and other factors.

Mandatory Convertible Preferred Stock

In March 2018, we issued 2,875,000 shares of our 6.50% Series D Mandatory Convertible Preferred Stock, with a par value of $1.00 per share. Each outstanding share of Mandatory Convertible Preferred Stock will convert automatically on March 15, 2021 into between 0.9358 (the “minimum conversion rate”) and 1.1229 shares of common stock, subject to customary anti-dilution adjustments. At any time prior to March 2021, holders may elect to convert each share of Mandatory Convertible Preferred Stock into shares of common stock at the minimum conversion rate or in the event of a fundamental change at the specified rates defined in the Certificate of Designations of the Mandatory Convertible Preferred Stock.

Dividends on the Mandatory Convertible Preferred Stock will be payable on a cumulative basis when, as and if declared, at an annual rate of 6.50% of the liquidation preference of $100.00 per share. We may pay declared dividends in cash or, subject to certain limitations, in shares of our common stock, or in any combination of cash and shares of our common stock quarterly, commencing in June 2018 and ending in March 2021. No dividend or distribution may be declared or paid on common stock or any other class or series of junior stock, and no common stock or any other class or series of junior stock or parity stock may be purchased, redeemed or otherwise acquired for consideration unless all accumulated and unpaid dividends on the Mandatory Convertible Preferred Stock for all preceding dividend periods have been declared and paid in full, subject to certain limited exceptions. We paid preferred stock dividends of $14.2 million for Twelve Months 2018. For additional information regarding the Mandatory Convertible Preferred Stock, see Note 19 in the Consolidated Financial Statements included elsewhere in this Report.

Credit Facility and Commercial Paper Program

We have a five-year senior unsecured $450.0 million revolving credit agreement (the “Credit Facility”) with a syndicate of banks arranged by JPMorgan Chase Bank, N.A. and Wells Fargo Bank, National Association. The Credit Facility provides for revolving loans and the issuance of multi-bank, syndicated letters of credit and letters of credit from a sole issuing bank in an aggregate amount of $450.0 million, which may be increased up to $575.0 million. The Credit Facility is available until December 2022, provided we are in compliance with all covenants. The Credit Facility has a sub-limit for letters of credit issued thereunder of $50.0 million. The proceeds from these loans may be used for our commercial paper program or for general corporate purposes.

Our commercial paper program requires us to maintain liquidity facilities either in an available amount equal to any outstanding notes from the program or in an amount sufficient to maintain the ratings assigned to the notes issued from the program. Our commercial paper is rated AMB-1 by A.M. Best, P-3 by Moody’s and A-2 by S&P. Our subsidiaries do not maintain commercial paper or other borrowing facilities. This program is currently backed up by the Credit Facility, of which $441.0 million was available as of December 31, 2018, and $9.0 million letters of credit were outstanding.

We did not use the commercial paper program during Twelve Months 2018 or Twelve Months 2017 and there were no amounts relating to the commercial paper program outstanding as of December 31, 2018 or 2017. We made no borrowings using the Credit Facility during Twelve Months 2018 or Twelve Months 2017 and no loans were outstanding as of December 31, 2018 or 2017.

Covenants

The Credit Facility contains restrictive covenants including, but not limited to:

(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 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.

In the event of the breach of certain covenants, all obligations under the Credit Facility, including unpaid principal and accrued interest and outstanding letters of credit, may become immediately due and payable.

Senior and Subordinated Notes

The following table shows the principal amount and carrying value of our outstanding debt, less unamortized discount and issuance costs as applicable, as of December 31, 2018 and 2017:

					December 31,
					2018				2017
	Principal Amount				Carrying Value
2.50% Senior Notes due March 2018 (1)	$	350.0			$	—			$	349.8
Floating Rate Senior Notes due March 2021 (2)	300.0				298.1				—
4.00% Senior Notes due March 2023	350.0				348.1				347.7
4.20% Senior Notes due September 2023	300.0				296.8				—
4.90% Senior Notes due March 2028	300.0				297.6				—
6.75% Senior Notes due February 2034	375.0				370.9				370.7
7.00% Fixed-to-Floating Rate Subordinated Notes due March 2048 (3)	400.0				394.5				—
Total debt					$	2,006.0			$	1,068.2

(1)	Repaid upon maturity on March 15, 2018.

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

(3)	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.

2021, 2023 and 2028 Senior Notes

In March 2018, we issued the following three series of senior notes with an aggregate principal amount of $900.0 million:

•

2021 Senior Notes: The first series of senior notes is $300.0 million in principal amount, bears floating interest at a rate equal to three-month LIBOR plus 1.25% (4.06% as of December 31, 2018) and is payable in a single installment due 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.

•

2023 Senior Notes: The second series of senior notes is $300.0 million in principal amount, bears interest at 4.20% per year, is payable in a single installment due September 2023 and was issued at a 0.233% discount (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. On or after that date, we 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.

•

2028 Senior Notes: The third series of senior notes is $300.0 million in principal amount, bears interest at 4.90% per year, is payable in a single installment due March 2028 and was issued at a 0.383% discount (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.

The interest rate payable on each of the 2021 Senior Notes, the 2023 Senior Notes and the 2028 Senior Notes will be subject to adjustment from time to time, if either Moody’s or S&P downgrades the credit rating assigned to such series of senior notes to Ba1 or below or to BB+ or below, respectively, or subsequently upgrades the credit ratings once the senior notes are at or below such levels. For more details on the increase in interest rate over the issuance rate by rating, see Note 18 to our Consolidated Financial Statements included elsewhere in this Report.

Subordinated Notes

In March 2018, we issued fixed-to-floating rate subordinated notes due March 2048 with a principal amount of $400.0 million (the “Subordinated Notes”), which bear interest from March 2018 to March 2028 at an annual rate of 7.00%, payable semi-annually. The Subordinated Notes will bear interest at an annual rate equal to three-month LIBOR plus 4.135%, payable quarterly, beginning in June 2028. On or after March 2028, we may redeem the Subordinated Notes in whole at any time or in part from time to time, at a redemption price equal to their principal amount plus accrued and unpaid interest provided that if they are not redeemed in whole, a minimum amount must remain outstanding. At any time prior to March 2028, we may redeem the Subordinated Notes in whole but not in part after the occurrence of a tax event, rating agency event or regulatory capital event as defined in the global note representing the Subordinated Notes, at a redemption price equal to (i) with respect to a rating agency event 102% of their principal amount and (ii) with respect to a tax event or regulatory capital event, their principal amount plus accrued and unpaid interest.

In addition, so long as no event of default with respect to the Subordinated Notes has occurred and is continuing, we have the right, on one or more occasions, to defer the payment of interest on the Subordinated Notes for one or more consecutive interest periods for up to five years as described in the global note representing the Subordinated Notes. During a deferral period, interest will continue to accrue on the Subordinated Notes at the then-applicable interest rate. At any time when we have given notice of our election to defer interest payments on the Subordinated Notes, we generally may not make payments on or redeem or purchase any shares of our capital stock or any of our debt securities or guarantees that rank upon our liquidation on a parity with or junior to the Subordinated Notes, subject to certain limited exceptions.

Other Notes

In March 2013, we issued two series of senior notes with an aggregate principal amount of $700.0 million. The first series was $350.0 million in principal amount, bore interest at 2.50% per year and was repaid in a single installment in March 2018. The second series is $350.0 million in principal amount and was issued at a 0.365% discount. This series bears interest at 4.00% per year and is payable in a single installment due March 2023. Interest is payable semi-annually. We may redeem the outstanding series of senior notes in whole or in part at any time and from time to time before maturity at the redemption price set forth in the global note representing the outstanding series of senior notes.

In February 2004, we issued senior notes with an aggregate principal amount of $475.0 million at a 0.61% discount, which bear interest at 6.75% per year and are payable in a single installment due February 2034. Interest is payable semi-annually. These senior notes are not redeemable prior to maturity. In December 2016, we completed a cash tender offer and purchased $100.0 million in aggregate principal amount of such senior notes.

See Note 18 to the Consolidated Financial Statements included elsewhere in this Report for more information.

Retirement and Other Employee Benefits

We have sponsored a qualified pension plan, (the “Assurant Pension Plan”) and various non-qualified pension plans (including an Executive Pension Plan), along with a retirement health benefits plan covering our employees who meet specified eligibility requirements. Effective March 1, 2016, benefit accruals for the Assurant Pension Plan, the various non-qualified pension plans and the retirement health benefits plan were frozen. The reported amounts associated with these plans requires an extensive use of assumptions, which include, but are not limited to, the discount rate and expected return on plan assets. We determine these assumptions based upon currently available market and industry data, and historical performance of the plan and its assets. The actuarial assumptions used in the calculation of our aggregate projected benefit obligation vary and include an expectation of long-term appreciation in equity markets, which is not changed by minor short-term market fluctuations, but does change when large prolonged interim deviations occur. The assumptions we use may differ materially from actual results due to changing market and economic conditions, higher or lower withdrawal rates or longer or shorter life spans of the participants.

As of January 1, 2014, the Assurant Pension Plan and Executive Pension Plans are no longer offered to new hires. Subsequently, effective January 1, 2016, the Assurant Pension Plan was amended and split into two separate plans (Plan No. 1 and Plan No. 2). Plan No. 1 generally covers all eligible employees (including the active population as of January 1, 2016, the remainder of the terminated vested population and all Puerto Rico participants). Plan No. 2 included a subset of the terminated vested population and the total in-payment population as of January 1, 2016. Assets for both plans remain in the Assurant, Inc. Pension Plan Trust; however, separate accounting entities were maintained for Plan No. 1 and Plan No. 2. Effective December 31, 2017, Plan No. 1 and Plan No. 2 were merged back together into the Assurant Pension Plan.

During 2018, there were no contributions to the Assurant Pension Plan. Due to the Plan’s current overfunded status, no contributions are expected to the Assurant Pension Plan over the course of 2019. See Note 23 to the Consolidated Financial Statements included elsewhere in this Report for more information.

Cash Flows

We monitor cash flows at the consolidated, holding company 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 periods indicated:

	For the Years Ended December 31,
	2018				2017				2016
Net cash provided by (used in):
Operating activities	$	656.7			$	530.4			$	108.6
Investing activities	(2,202.5		)		(541.2		)		725.6
Financing activities	1,838.0				(26.7		)		(1,080.3		)
Effect of exchange rate changes on cash and cash equivalents	(35.0		)		2.3				(16.1		)
Cash included in business classified as held for sale	—				—				5.9
Net change in cash	$	257.2			$	(35.2	)		$	(256.3	)

Cash Flows for the Years Ended December 31, 2018, 2017 and 2016

Operating Activities:

We typically generate operating cash inflows from premiums collected from our insurance products, fees received for services and income received from our investments while outflows consist of policy acquisition costs, benefits paid and operating expenses. These net cash flows are then invested to support the obligations of our insurance products and required capital supporting these products. Our cash flows from operating activities are affected by the timing of premiums, fees, and investment income received and expenses paid.

Net cash provided by operating activities was $656.7 million and $530.4 million for Twelve Months 2018 and Twelve Months 2017, respectively. The increase in net cash provided by operating activities was primarily due to the absence of an $85.0 million payment made during Twelve Months 2017 related to lender-placed market conduct examination settlement agreements. The increase was also due to higher cash from operations due to growth of our Connected Living business and $26.7 million of cash from the settlement of a series of derivative transactions exercised in connection with acquisition-related

financing. These increases were partially offset by a $41.5 million payment of an accrued indemnification liability related to the previous sale of our general agency business and claim payments made, net of reinsurance, related to losses from 2017 reportable catastrophes.

Net cash provided by operating activities was $530.4 million and $108.6 million for Twelve Months 2017 and Twelve Months 2016, respectively. The increase in net cash provided by operating activities was primarily due to prior year activity as Assurant Health was paying significant claims without a corresponding collection of premiums while in run-off. Also contributing to the increase was the timing of payments in the normal course of business. These items were partially offset by changes in the premium stabilization program receivables related to Assurant Health and an $85.0 million payment during Twelve Months 2017 related to the lender-placed market conduct examination settlement agreements. See Note 26 to the Consolidated Financial Statements included elsewhere in this Report for additional information.

Investing Activities:

Net cash used in investing activities was $2.20 billion and $541.2 million for Twelve Months 2018 and Twelve Months 2017, respectively. The change in net cash (used in) provided by investing activities is primarily due to cash used for the TWG acquisition. During Twelve Months 2018, we used $1.49 billion of cash to fund a portion of the $2.47 billion purchase price of the TWG acquisition (which was partially offset by TWG cash acquired of $308.1 million) compared to $125.0 million used during Twelve Months 2017 for the acquisition of Green Tree Insurance Agency, Inc. See Note 3 to the Consolidated Financial Statements included elsewhere in this Report for additional information. Additionally, net cash used by our consolidated investment entities to purchase senior secured leveraged loans in connection with the planned formation of CLO structures increased by $322.9 million. See Note 8 to the Consolidated Financial Statements, included elsewhere in this Report, for additional information. This increase was partially offset by $36.7 million of proceeds from the sale of our Mortgage Solutions business and $23.9 million of proceeds, net of cash transferred, from the sale of Time Insurance Company during Twelve Months 2018. See Note 4 to the Consolidated Financial Statements, included elsewhere in this Report, for additional information.

Net cash (used in) provided by investing activities was $(541.2) million and $725.6 million for Twelve Months 2017 and Twelve Months 2016, respectively. The change in net cash (used in) provided by investing activities is primarily due to the sale of Assurant Employee Benefits in 2016, mainly through reinsurance transactions, to Sun Life. Also contributing to the decrease was the 2017 acquisition of Green Tree Insurance Agency, Inc., the sale of commercial mortgage loans on real estate in 2016, changes in our short-term investments and the purchase of invested assets related to the consolidated investment entities (the “CIEs”). See Note 8 to the Consolidated Financial Statements included elsewhere in this Report for additional information. These are partially offset by a decrease in the purchases of fixed maturity securities and equity securities.

Financing Activities:

Net cash provided by (used in) in financing activities was $1.84 billion and $(26.7) million for Twelve Months 2018 and Twelve Months 2017, respectively. The increase in net cash provided by financing activities was primarily due to financing related to the TWG acquisition. Net proceeds from the issuance of debt and preferred stock were $1.29 billion and $276.4 million, respectively. We used $350.0 million to repay principal on the senior notes that matured during the first quarter of 2018. Additionally, net cash provided by the issuance of CLO notes related to the CLO structures that were closed during Twelve Months 2018 and borrowings from short-term warehouse facilities to fund the planned formation of CLO structures increased by $807.9 million compared to Twelve Months 2017. The increases were partially offset by a decrease of $370.5 million in repayment of borrowings from the short-term warehouse facilities related to CLO structures that closed.

Net cash used in financing activities was $26.7 million and $1.08 billion for Twelve Months 2017 and Twelve Months 2016, respectively. The change in cash used in financing activities was primarily due to a decrease in the repurchase of our outstanding common stock in 2017, partially offset by a net increase in cash provided by our CIEs. See Note 8 to the Consolidated Financial Statements included elsewhere in this Report for additional information.

The table below shows our cash outflows for taxes, interest and dividends for the periods indicated:

	For the Years Ended December 31,
	2018				2017				2016
Income taxes paid	$	93.9			$	18.8			$	226.1
Interest paid on debt	79.5				48.1				56.2
Common stock dividends	133.8				119.0				125.3
Preferred stock dividends	14.2				—				—
Total	$	321.4			$	185.9			$	407.6

Commitments and Contingencies

We have obligations and commitments to third parties as a result of our operations, as detailed in the table below by maturity date as of December 31, 2018:

	As of December 31, 2018
	Total				Less than 1 Year				1-3 Years				3-5 Years				More than 5 Years
Contractual obligations:
Insurance liabilities (1)	$	8,515.5			$	1,077.2			$	734.3			$	706.3			$	5,997.7
Debt and related interest	3,519.7				105.5				502.8				829.1				2,082.3
Operating leases	122.5				24.8				39.5				22.7				35.5
Pension obligations and postretirement benefit	549.5				57.6				111.8				105.1				275.0
Purchase agreements	9.0				4.5				4.5				—				—
Commitments:
Investment purchases outstanding:
Commercial mortgage loans on real estate	3.7				3.7				—				—				—
Capital contributions to consolidated VIEs	4.2				4.2				—				—				—
Capital contributions to non-consolidated VIEs	32.8				32.8				—				—				—
Liability for unrecognized tax benefit	13.0				—				9.3				—				3.7
Total obligations and commitments	$	12,769.9			$	1,310.3			$	1,402.2			$	1,663.2			$	8,394.2

(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 $4.82 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 17 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.

Liabilities for future policy benefits and expenses have been included in the commitments and contingencies table. Significant uncertainties relating to these liabilities include mortality, morbidity, expenses, persistency, investment returns, inflation, contract terms and the timing of payments.

Letters of Credit

In the normal course of business, letters of credit are issued primarily to support reinsurance arrangements in which we are the reinsurer. These letters of credit are supported by commitments under which we are required to indemnify the financial institution issuing the letter of credit if the letter of credit is drawn. We had $13.2 million and $18.1 million of letters of credit outstanding as of December 31, 2018 and 2017, respectively.

Off-Balance Sheet Arrangements

The Company does not have any off-balance sheet arrangements that are reasonably likely to have a material effect on the financial condition, results of operations, liquidity or capital resources of the Company.