As the economy continued its recovery, 2010 proved to be a good financial year for Assurity.

Total assets grew to $2.3 billion, up 4 percent over 2009. The company’s net gain from operations was nearly $12.7 million, an increase of $7.3 million over the previous year. Our net income stood at nearly $15 million, after capital gains and losses, as of Dec. 31, 2010.

As a result of our strong income and the rising stock market, total surplus, including the asset valuation reserve (AVR), increased to a record $279.6 million—a 4.9 percent gain over 2009. This brings Assurity’s ratio of surplus and AVR to assets to 12 percent, a very strong capital position and a high margin of safety for our customers.

Another key gauge of an insurer’s financial strength is its risk-based capital (RBC) ratio. At 583 percent for 2010, Assurity’s RBC ratio significantly exceeds the industry’s 2009 average ratio of 418 percent, the most recent information available, according to the American Council of Life Insurance.

Total revenues for 2010 were $397.3 million, including $293.1 million in total premiums, $122 million in net investment income and $18.9 million in miscellaneous income. Insurance in force totaled $12.3 billion as of Dec. 31, 2010.

Investment Performance

To ensure our company will be able to meet its financial obligations over the long term, Assurity has remained steadfast in its commitment to a disciplined investment strategy. By managing a diversified portfolio of carefully selected investments which offer attractive risk-adjusted returns, Assurity’s asset quality and investment yields historically have remained very stable.

In 2010 we continued to enhance both the quality and diversification of our asset portfolio. The majority of our fixed-income portfolio is composed of high-quality investments, consisting primarily of corporate bonds at 76.4 percent, while commercial mortgage loans accounted for 13.5 percent; the remaining 10.1 percent included policy loans, equities, real estate, cash and miscellaneous.

Our emphasis on high-quality investments is reflected in further improvement in our bond portfolio at year-end 2010. Investment-grade bonds comprised 97.4 percent of our bond holdings, while only 2.6 percent were rated noninvestment-grade, in contrast to the industry average of 6.9 percent as of Sept. 30, 2010. The mortgage loan portfolio continues to perform well with minimal and very manageable problem loans.

While 2010 brought a return of economic growth, the primary challenge of the low interest-rate environment involved finding yields that would not compromise our overall portfolio yield and quality standards.

Throughout Assurity’s 120-year legacy, our guiding principle has been to maintain our financial strength and integrity in order to support the promises made to our customers. We are committed to exercising responsible, prudent management and providing superior value to our policyholders, today and in the future.

For a summary of Assurity’s 2010 statutory financial results, click here.

Independent Analyst’s Rating

Based primarily on Assurity’s financial strength, A.M. Best Company, the insurance industry’s leading independent evaluator, has rated our company A- (Excellent)* with a stable outlook. This rating is given to companies that, in the opinion of A.M. Best, have an excellent ability to meet their ongoing insurance obligations.

*A.M. Best ratings range from A++ (Superior) to F (in liquidation).

Benefit payments to policyholders totaled $218.5 million in 2010. Dividends of $24.2 million were included in this total.

Death benefits amounted to nearly $49.8 million. Other types of benefit payments include living benefits such as disability income payments, critical illness benefits and annuity payouts.

Sales Results

Assurity’s diversified mix of life and specialty health insurance products is particularly relevant to our customers’ needs in today’s uncertain economic environment. For 2010, total companywide sales were 6 percent higher on an annualized basis. Contributing to this growth were strong overall life insurance sales, which were up 36 percent. For the Individual Sales Division, a 9 percent increase in total annualized premium was also driven by life insurance sales which were 39 percent over the previous year.

Sales in our voluntary worksite area were steady in 2010. Our Worksite Sales Division continues to expand its value-added package by offering a full line of voluntary products and a focus on providing superior service to customers. With a growing consumer preference for buying insurance coverage at the workplace, Assurity at Work is well-positioned for solid growth in the coming years.