January 24, 2010
Assurant Settles SEC Charges of improper Reinsurance Accounting
On January 21, 2010, the SEC and Assurant, Inc., settled charges that the company violated corporate reporting, books and records and internal controls provisions of the Securities Exchange Act of 1934 ("Exchange Act"). Under the terms of the settlement, Assurant will pay a civil penalty in the amount of $3.5 million. The determination of this penalty amount took into account, among other things, the company's failure fully to comply with Commission subpoenas on a timely basis. The proposed settlement is subject to court approval.
The Commission's complaint alleges that Assurant improperly accounted for a $10 million recovery it obtained under a reinsurance policy in the aftermath of the 2004 Florida hurricane season. The complaint alleges that Assurant booked the $10 million payment as a bona fide reinsurance recovery when, in fact, the payment was, and should have been booked as, the return of a deposit under Generally Accepted Accounting Principles ("GAAP"). As a result, Assurant materially overstated the net income that it reported for the quarter ended September 30, 2004 to the public and in Commission filings.
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