Welcome to the Assurant first quarter 2009 financial results conference call. This call is being recorded. All participants will in a listen-only mode for the duration of the conference. There is a question-and-answer session at the end of the presentation. (Operator Instructions) I would like now to turn the call over to Ms. Melissa Kivett, Senior Vice President, Investor Relations. Please go ahead, Ms. Kivett.

Thanks, Kelly. Welcome to Assurant's 2009 first quarter earnings conference call. Joining me today are Rob Pollock, our President and Chief Executive Officer of Assurant; Mike Peninger, our Chief Financial Officer; Craig Lemasters, our President and Chief Executive Officer of Assurant Solutions; and Chris Pagano, our Chief Investment Officer and Treasurer. Our Prepared remarks will last about 25 minutes after which time we will open the call to your questions. Yesterday we issued a news release announcing our first quarter 2009 financial results. The news release as well as corresponding supplementary financial information is also available on our website at assurant.com. Some of the statements we make during today's call may contain forward-looking information. Our actual results might differ materially from those projected in the forward-looking statements. We caution you about relying on these forward-looking statements and direct you to consider the discussions of risks and uncertainties associated with our business and results of operations contained in our 2008 10-K as well as subsequently filed 10-Q and 8-K, which can be accessed from our Web site. The Company undertakes no obligation to update or revise any forward-looking statements. Additionally, this presentation will contain non-GAAP financial measures, which we believe are meaningful in evaluating the Company's performance. For more detailed disclosures on these non-GAAP measures, the most comparable GAAP measures and a reconciliation of the two, please refer to yesterday's earnings release and supplementary financial information we have got on our website. Now, I would like to turn call the over to Rob.

Thanks, Melissa, and good morning, everyone. In 2009, the economic landscape is dramatically different than this time last year when Assurant posted record operating income. First quarter results reflect the adverse and uncertain economic conditions currently affecting consumers, businesses and global financial markets. I'm not happy with overall enterprise results this quarter, but our goal today is to explain them within the context of these realities. We pride ourselves on being forthright in our communications. And today we want to share with you what we're seeing in the marketplace and some of the steps we're taking to address the associated challenges. We want to reinforce that our financial foundation remains solid and our diversified strategy will help us achieve our longer term goals. Since Craig and Mike will run through specific segment results, let me provide some general comments on the current environment. Macroeconomic conditions impact our business in different ways, but all segments are feeling the effects this quarter. Employers reducing or dropping benefits are affecting our health and employee benefit businesses. The pullback in consumer spending is impacting all of our businesses and our solutions business in particular. Our property business is dealing with a variety of loan modification programs requiring more service from us to support our customers as well. What actions are we taking to respond? Remember, at our core is a fundamentally strong business, that's adaptive and flexible. In solutions, we're finding new clients, distribution channels and executing on recent acquisitions to generate revenue. For instance, we anticipate that consumers may retain goods they own for longer time periods. We see this as an opportunity to renew or extend in force service contracts, and we're well positioned with our original equipment manufacturer customers to develop this strategy. At health, we continue to strengthen relationships with…

Thanks, Rob, and good morning, everyone. Assurant Solutions continues to create value for our client partners, especially in a challenging economy, and we're also effectively mixing offense and defense to both protect and grow our business amid the global economic showdown. Net operating income was $30.3 million for the quarter, although this was down 36% compared to first quarter of 2008, remember that 2008 included a benefit from a client settlement of $11.7 million. Sequentially, quarterly results improved as the risk management and expense control actions we have taken began to improve results. Let me outline how our results developed in more detail. Internationally, our combined ratio increased from 102.3% in the first quarter of 2008 to 107.3% in 2009. As I discussed at investor day, we are experiencing high claim activity for unemployment coverage sold primarily through an internet distribution channel in the UK. We have already taken actions to improve the results in this channel, and we expect the impact of these risk management initiatives to emerge later this year. It is important to remember that the majority of our credit insurance programs are structured with extensive risk mitigation provisions. Sequentially, the international combined ratio decreased from the fourth quarter by 670 basis points. Key contributors to the improvement were additional expense controls, no one time Denmark exit costs and improved underwriting results, particularly in Brazil. In our domestic business, the combined ratio for the first quarter increased from 96.5% in 2008 to 98.3% in 2009. However, the 2008 combined ratio was favorably affected by a client settlement of $11.7 million. Absent this settlement, the combined ratio declined by 220 basis points. This decrease resulted from improved domestic loss experience, driven primarily by our integration of the acquisitions of GE's Warranty Management Group and the Signal Holdings. These…

Thanks, Craig for sharing how Assurant Solutions is playing both offense and defense as it navigates through these challenging times. Turning now to the results for the rest of the Company, I'll start with Assurant Specialty Property. Specialty Property's net operating income was $104.7 million, down 16%, versus an exceptional first quarter of 2008, but the business continues to produce very solid results. As a reminder, first quarter of 2008 results reflected a $4.6 million after-tax benefit from a client related settlement and unusually mild winter weather. The first quarter of 2009 saw a return to more normal winter weather patterns and higher loss experience. In addition, we incurred additional catastrophe reinsurance premiums due to growth in our black and harder reinsurance market which reduced net earned premiums by $13 million and after-tax earnings of $8.4 million. Expenses increased in the first quarter of 2009 compared to 2008 due to additional services we are providing our clients such as loss drafts along with investments in technology, infrastructure and businesses that will drive future growth, such as CPI. Also, the client related settlement in the first quarter of last year reduced expenses in that quarter. We placed over half of our catastrophe reinsurance program in January and plan to complete the remainder this quarter. I do want to note that we expect the total cost of the program to be substantially higher than the cost of the 2008 program due to the combination of our growth and the hard reassurance market. We will update you on all the details of the program's structure and costs as soon as the placements are completed early this summer. Net earned premiums for Specialty Property increased 3% to $493.8 million in the first quarter, driven by continued growth in the creditor placed business. The sequential…

Thanks Mike. Operator, we're ready for questions.

Thank you. The question-and-answer session will be conducted electronically. (Operator Instructions) We will take our first question from John Nadel with Sterne, Agee. John Nadel - Sterne, Agee & Leach: Good morning, everybody.

Good morning, John. John Nadel - Sterne, Agee & Leach: A couple quick ones, if I could. So on Specialty Property, can we just talk a little bit more about the drivers here as it relates to what we should expect for premiums? So the loans track number is down, the insured values, at least if I look sequentially, are down for the first time that I can recall. It sounds like rates unlikely to be a real positive driver from here. And Mike mentioned reinsurance costs, "substantially higher". I'm wondering, just as it relates to that specific item, if your rate online, if you expect that to be substantially higher, or is it just absolute costs will be up because of the growth of the business. But overall, I mean, X some major change positively or negatively in loans tracked, should we just expect, I think we should, but maybe you could just comment. Should we just expect a general continued decline in earned premium in this segment from here forward?

Okay. John, if we look at the property business again, I think that the growth drivers have slowed, total insured value, etcetera. The big issue is if you look at the business, I would say we are in the late innings on both the REO business as well as the sub-prime business. John Nadel - Sterne, Agee & Leach: Yes.

We did see an expansion in our placement rate in the prime portfolio. John Nadel - Sterne, Agee & Leach: The prime, yes. Okay.

Again, this is a business we like. We obviously pointed out that we can win new clients when they go to RFP. We think we're well positioned to do that. And we are looking to expand into the similar product for auto. Obviously, there's not that many auto loans being generated these days, but we do see opportunities to expand on the platform. John Nadel - Sterne, Agee & Leach: Yes. And don't take me wrong. I'm not arguing the validity of the business. I think it's a great business. I'm just trying to understand where we should expect it to go from here, in terms of size, not necessarily in terms of the returns. I think the returns are very solid, obviously. Maybe on the reinsurance costs, you can just hit that real quick.

Sure. John Nadel - Sterne, Agee & Leach: As it relates to, is that just more, substantial growth is just been absolute terms because of the book of business growth, or should we also expect some meaningful level of increase because random lines are going up?

Yes. I've got support here, but let me take a few comments and make them one, because our block has grown. We buy to a certain level of coverage. We've typically bought to something in the 1 and 250 or storm level. Again, our model supports doing that. But our coverage amounts quite a bit higher than they were a year ago. Second, because of a variety of activities in the reinsurance market, prices are higher. Third, a contributing factor in reinsurance is the Florida market. And Chris, do you want to just talk about how the Florida market is developing?

Well, for us, the key issue there in terms of the increase in, the percent increase in reinsurance premiums is the fact that we're unlikely to participate in the tickle layer, find that insurance in the private market and as you know in the past, tickle's been a subsidized rate online effectively. John Nadel - Sterne, Agee & Leach: Yes.

Without that, that component of a reinsurance program is going to cost more. John Nadel - Sterne, Agee & Leach: Okay.

So we have got a lot of factors going on there, John. And so what we're doing now, as I said, we're finalizing the structure of the program, which would also include thinking about the attachment points and the sheer size of the coverage layers and things like that. So you have a lot of different things going on there. John Nadel - Sterne, Agee & Leach: Okay. And then, just if I could switch gears over to health and then I'll jump back into queue. I understand, Mike, your comments that it maybe pretty tough at this point to discern whether this change in activity was a blip or is something that's going to continue from here. I'm just wondering, or maybe I'm just, I'd be interested in whether you guys have the, I guess we're having a fire alarm here. I'd be interested in whether you give have the kind of data on a monthly basis or some shorter term period to be able to give us an update on that sooner than your second quarter results. I am just thinking about the drag here, $0.08 to $0.10 a share in the quarter, so roughly $0.30 to $0.40 drag for a full year if it were to maintain itself. Anything you can say in that regard?

Well, it's a little bit harder to give you updates during the quarter, John, because we'd have to have a forum. If we have a forum, a public forum where we can update everyone at the same time, we'd certainly consider doing that because I know it's of interest. John Nadel - Sterne, Agee & Leach: I'd be happy to host the call for you guys whenever you're ready.

That's fine. But I mean, again, you're right. Putting it into a context, when we talked at Investor Day, we had looked at a couple months experience and -- John Nadel - Sterne, Agee & Leach: And you didn't see it.

-- then March came in decidedly different than we had seen in the first couple of months. So understand your point. John Nadel - Sterne, Agee & Leach: Okay. Thanks. I'll jump back in. Thank you.

And we will take our next question from Mark Hughes with Suntrust.

Morning, Mark.

Good morning. Thank you very much. These are pretty volatile funds, economically. Do you sense any change in consumer behavior in recent months or weeks that might help or hinder the Solutions business?

Well, I just, we know everyone is a bit stressed. I know, on the consumer side, I thought it was interesting that we saw a little bit of favorable signs announced just yesterday that the consumer maybe coming in. How that translates and where the spending goes, we're obviously looking for it to show up in Craig's area in particular purchases of things, and let me just have him expand on it.

Yes. Mark, we haven't seen any dramatic movement in the first quarter. Again, our drop in top line was largely because of Circuit going away. But below Circuit, again, from the core electronic retailers, we saw some of our clients that were fairly flat quarter-over-quarter, which was a relatively positive sign in these types. Our auto clients continue to be way done. I think that tracks with what's going on in the industry. I think what was encouraging for us this quarter was again, this notion of playing offense and not waiting on this to get materially better, because none of us know when that is going to happen. So I was particularly pleased with, again, things like launching RBC in Canada, getting our OEM direct stuff integrated. Rob mentioned it earlier, that's a perfect example, I think, where we're not just going to rely on point of sales as we go forward. We have got a mechanism we've built, have this direct machine now where we can extend existing service contracts, which we think is going to bode well as people are going to tend to hang on to their appliances and other equipment longer.

And then with respect to penetration in the prime category, it's been moving up, but obviously delinquencies and foreclosure starts are moving up pretty rapidly as well. Is there anything that accelerates the pace of that penetration in the prime category?

Well there's just such a myriad of factors going on right now, Mark. As I think we've mentioned on prior calls, one of the issues here is how the servicer deals with things like a loan restructuring, etcetera, and we found that to be very servicer specific. But the one thing I do want to point out that we do know is that for most of the prime category, we don't benefit from REO, so the sub-prime, we can write REO on, but Fannie and Freddie self insure all of their real estate owned properties. So that will exhibit a bit of a different dynamic as well.

Okay. Thank you.

And we will take our next question from Adam Klauber with Fox-Pitt.

Morning, Adam.

Morning, Rob. Thanks. On the health and disability loss ratios, is there anything that you can do proactively now that you're seeing some of these trends, to reduce them, over the, say in the next 12 months?

Well, sure. I mean, in essence we'll look and try and determine if there were benefit provisions that might need to be scaled back. That's something we could do. We've looked at experience on certain of our plans where we've integrated the deductible and seen the experience to be different from when it's separate per member. So, that's the normal course of business stuff for us, Adam, is to be tweaking with things on a regular basis. I think the fundamental thing here we're also seeing is, as the consumer wants to use benefits, etcetera, they're after more first dollar benefits, and we have offerings out there actually and are getting quite a bit of sales under that, where in my mind, we're going to have much less severity exposure but they will use the benefit more, and we are trying to put those in play to deal with things as well. Obviously, we honor the contract that's out there for the existing people, and I think it's a demonstration of the value of the benefits that they are using them. And on cases where they are afraid they are going to lose them, they go and use the benefits, and we're going to honor all those things, of course.

Yes. And I'd just make a couple of additional points to add to what Rob said. First, just to remind everyone that if we conclude that pricing changes are needed, it does take time to roll those certainly we have to wait until expirations of brake guarantees and things like that. The other point I would make on the benefits business is we certainly work in a variety of ways with employers to find creative ways to return claimants to work, which we think is the best outcome of a disability, is for someone need to go back to work, and so if the employment situation starts to improve, that could certainly have a definite impact there; and even if it doesn't, then we're kind of redoubling our efforts. And we've historically done very well at returning people back to work, and we think that's a good spot to be in the small employer market, too.

Okay. Thanks. As far as the investment yield, do you see any rebound in the near term?

Well, a couple things on our investment strategy at this point. We're being defensive, again, tactically maintaining greater levels of liquidity, and investing in shorter duration assets than we might typically do. But keep in mind, that's a tactical decision. I think if you look at what's gone on in the treasury market, at least since year end, you've seen quite a substantial increase in treasury yields with an associated up tick in investment grade yields. I think there, the opportunities are starting to present themselves for us to redeploy into high quality defensive sectors and to replace yields that are rolling off through maturities or coupon flow. I think if you look at the numbers in the supplements, you will see that we have been successful maintaining the investment yields in the fixed income and the equity side. It's just a question of the drag on the yield right now has largely been a function of cash yields drifting lower. What we've done to offset that is redeploy some of the cash into two and three year duration, high quality corporates, TLGP assets, etcetera. So we're able to offset it in the near term as we maintain a defensive strategy. The other thing that we know is that the market won't wait for the fed to stop some of the strategies that they're employing to artificially suppress yields, and so we'll start to see some opportunities and better risk adjusted yields going forward.

Okay. And just finally, can you remind us when will we get the results of the A.M. Best review?

A.M. Best visits with us on an annual basis. Maybe the key thing you're focusing in on, Adam is when we will have the new capital formulas.

Right.

We'll visit with them during the second quarter of this year and should be able to update you on what we've learned on our next call.

Great, thank you very much, Rob.

Sure.

(Operator Instructions) And we will take our next question from John Nadel with Sterne, Agee.

Hey John. John Nadel - Sterne, Agee & Leach: Hey, I didn't expect to get back in that quick. Sorry about that. Let me get myself become in gear here. So, Solutions. So Craig, I mean, listen, this is the first quarter in a while you get to, we get to all be happy about the improvement in combined ratios, domestic, international, etcetera. I guess my question there is, was there anything in the quarter that you think we should consider as unsustainable or one time in nature that helped to drive these combined ratio results?

Nothing specific. First of all, thank you John. If you're happy, I'm happy. But no, nothing specific. But again, I think our headwinds I've tried to be real open about starting in Investor Day. The UK IUR, unemployment, loss experience there. We've taken all the right actions, that's going to take several more quarters to work through. So I expect improvement from that later in the year. But again, that's predicated on projections in unemployment. We did see a big jump in the first quarter. If you go back to the fourth quarter, nobody was predicting it. Hopefully, that's stable. That's sort of a one headwind. Then just the general economy and one interesting thing is Mexico, for example didn't have the swine flu on the horizon, and that, our operations are ongoing there. That will have a slowdown. Obviously, people aren't out shopping right now in Mexico. So that's an interesting headwind. But other than that, I'm pleased with our, the things we've been working on in the last two years in terms of improving our core results, the risk management things and all the defensive things we've done, closing Denmark, fixing the Brazil credit insurance situation. John Nadel - Sterne, Agee & Leach: Sure.

Those are starting to take hold, and again, reasonably pleased with some of the offensive moves that we've done in the last quarter. John Nadel - Sterne, Agee & Leach: And Craig, can you help us think about the continued drag from here from the loss of Circuit City? Is that, at this point, in your view, when you think about the gross written premium in domestic, is that at this point fully embedded?

Yes. That's in full, that's gone. So take the full impact of Circuit -- John Nadel - Sterne, Agee & Leach: Yes.

-- that's a big part of our gross written decline. John Nadel - Sterne, Agee & Leach: Can you give us a sense for how much of that decline was just Circuit City no longer being there?

Right. I think we talked, when they went into, or headed towards bankruptcy, it was about 20% of service contract top line, domestically. John Nadel - Sterne, Agee & Leach: Yes, okay, okay. Thank you. And then the last thing is, when you think about the UK credit and this internet-based product, as you think about the, you sort of said later this year, some improvement is expected there. Any way of thinking about what that means to the combined ratio?

Well, again, we took the corrective actions. We did everything we could to mitigate the losses going forward. Now obviously, we stick with our policyholders and as those worked through the system. That's why I'm saying that, that stuff will be around for a number of quarters. Our goal is to see some level of improvement sequentially as we work through those issues in the UK and, again, I'm comfortable that our team has taken all the right actions. I would note also, that in addition to really trying to mitigate the losses, it's also given us an opportunity and great motivation, just overall, to try to lower our expense pace in the UK. And again, our team has taken good action there. On the offense side, again, if you go back to our Swansure and Centrepoint acquisitions, this has also been a good time to grow that footprint. If you remember, that was our strategy, to really have a nice dominant footprint in that network and we're seeing that we're able to do it in this downtime. With all of that said, the way I think about the UK now is when we do get to recovery, not sure when that will come, but when it comes, I see a company there that will have a generally lower expense base and a better footprint. John Nadel - Sterne, Agee & Leach: Okay, okay. Last one for you, Rob. As you think about the results for the quarter. I'm sure you already said it, disappointing results. Do the results this quarter, as you look forward for the remainder of the year, does it change your expectations or the company's expectations with respect to free cash flow generation for the year?

I think it's too early to know on a lot of dimensions there. But obviously, I think the biggest variable for us is really the storm season, John. John Nadel - Sterne, Agee & Leach: Okay.

I'd say that's number one. I'd say number two is just asset valuations in the portfolio. Those would be, I think, the one and two considerations. John Nadel - Sterne, Agee & Leach: Okay. Credit, certainly during the month of April has been markedly improved. All else equal, if you just marked your portfolio to now, right, book value would have to be higher.

I believe that would be the case.

Yes John, again, the metric that we kind of look at, the rule of thumb that we suggested on a number of occasions is to look at the broad investment grade market. We've seen quite a significant improvement in April. John Nadel - Sterne, Agee & Leach: Yes.

I think the unrealized loss position is moving, continues to move in a manner that's similar to broad investment, the Merrill Lynch, Bank of America investment grade corporate index. So if you continue to use that as a rule of thumb. John Nadel - Sterne, Agee & Leach: Okay. Terrific. Thanks, Chris.

Having no further questions, I'd like to turn the conference over to Rob Pollock for any additional closing comments.

Although the economy may continue to operate below capacity in the near term, at our core is a fundamentally strong diversified specialty insurance business. By design, it's flexible and dynamic. This allows us to adapt to changing market conditions and the evolving needs of our clients and customers. We look forward to updating you on our progress next quarter.

This does conclude Assurant's first quarter 2009 call. Please note that a replay will be available as of 12:00 pm Eastern Time. You may now disconnect.