i

FORWARD-LOOKING STATEMENTS

Some of the statements under “Business,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and elsewhere in this report may contain forward-looking statements which reflect our current views with respect to, among other things, future events and financial performance. You can identify these forward-looking statements by the use of forward-looking words such as “outlook,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “should,” “seeks,” “approximately,” “predicts,” “intends,” “plans,” “estimates,” “anticipates” or the negative version of those words or other comparable words. Any forward-looking statements contained in this report are based upon our historical performance and on current plans, estimates and expectations. The inclusion of this forward looking information should not be regarded as a representation by us or any other person that the future plans, estimates or expectations contemplated by us will be achieved. Such forward-looking statements are subject to various risks and uncertainties. Accordingly, there are or will be important factors that could cause our actual results to differ materially from those indicated in this report. We believe that these factors include but are not limited to those described under the subsection entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this report. We undertake no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise.

If one or more of these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual results may vary materially from what we projected. Any forward-looking statements you read in this report reflect our current views with respect to future events and are subject to these and other risks, uncertainties and assumptions relating to our operations, results of operations, financial condition, growth strategy and liquidity.

PART I

Item 1.Business

Legal Organization

Union Security Insurance Company (formerly known as Fortis Benefits Insurance Company) is a stock life insurance company formed in 1910 and organized under the laws of the State of Iowa. Since 1984, it has been an indirect wholly ownedwholly-owned subsidiary of Assurant, Inc. (“Assurant”), which owns and operates companies that provide specialty insurance products and related services in North America and selected other markets. Assurant is traded on the New York Stock Exchange under the symbol AIZ.

In this report, references to the “Union Security,” “we,” “us” or “our” refer to Union Security Insurance Company.

Effective December 31, 2006, International Dental Plans, Inc. (“IDP”), an indirect wholly-owned subsidiary of Assurant, was merged into the operations of Union Security. Accordingly, all prior period amounts have been restated to conform to the 2006 presentation.

Effective April 1, 2006, Union Security transferred assets and liabilities related to its Canadian operations to Assurant Life of Canada (“ALOC”) for the purpose of re-domesticating Assurant’s Canadian operations. ALOC is also an indirect wholly-owned subsidiary of Assurant.

Effective November 9, 2005, Union Security signed an agreement with Forethought Life Insurance Company (“Forethought”) to sell via reinsurance new preneed insurance policies written as of October 1, 2005 in the United States via independent funeral homes and funeral home chains other than those owned and operated by Service Corporation International (“SCI”). Union Security will receive payments from Forethought over the next ten years based on the amount of business transitioned to Forethought.

Effective November 1, 2005, eight dental companies, all indirectly wholly owned subsidiaries of Assurant (the “Dental Companies”), were merged into the operations of Union Security. All of the Dental Companies engaged in the business of marketing prepaid dental care. The assets, liabilities, and operations of the Dental Companies for the year ended December 31, 2005 are included in our consolidated financial statements. Assets and liabilities were included at the current book value of the Dental Companies as of January 1, 2005. The Dental Companies had a combined net income of $3,358 for the year ended December 31, 2004. This amount is not included in our consolidated statements of operations for that period.

Dollar amountsAmounts are presented in United States of America (“U.S.”) dollars and all amounts are in thousands, except number of shares and number of employees.

Business Organization

Union Security, which is licensed to sell life, health and annuity insurance in the District of Columbia and in all states except New York. We writeYork, writes insurance products that are marketed by Assurant’s business segments (see Assurant’s annual report on Form 10-K for the fiscal year ended December 31, 20062007 for a full description of each of these businesses). We perform substantially all of the operations of the Assurant Employee Benefits segment. We directly market, sell and administer directly the group disability, group life and certain of the group dental insurance products, and we manage other Assurant subsidiaries that provide the prepaid dental products. With respect to the Assurant Health segment, we issue small group health insurance policies that are sold through an independent agency. Finally, with respect to the Assurant Solutions segment, we issue accidental death and dismemberment policies for which the segment performs the selling, marketing, and administration functions. We discontinued marketing all pre-funded funeral life insurance business (“preneed”) as a result of two transactions.

First, in November of 2005 we signed an agreement with Forethought Life Insurance Company (“Forethought”) to sell via reinsurance new preneed insurance policies written as of October 1, 2005 in the United StatesU.S. via independent funeral homes and funeral home chains other than those owned and operated by SCI. We will receive payments from Forethought over the next ten years based on the amount of business transitioned to Forethought.Service Corporation International (“SCI”). Second, in April of 2006 we transferred assets and liabilities related to our Canadian operations to ALOC.Assurant Life of Canada (“ALOC”). ALOC is also an indirect wholly-owned subsidiary of Assurant. Of our total gross revenues generated during 2006,2007, approximately 48%79% was from the Assurant Employee Benefits segment, approximately 39% was11% from the Assurant Solutions segment and the remaining from the Assurant Health segment.and Assurant Corporate and Other segments.

As an indirect wholly ownedwholly-owned subsidiary of Assurant, Union Security does not have any publicly issued equity or debt securities. We are, however, subject to certain filing requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), because we have issued certain variable and market value adjusted insurance contracts, which are required to be registered under the Securities Act of 1933, as amended (the “Securities Act”). Effective April 1, 2001, Assurant exited this line of business and sold the business segment, then referred to as Fortis Financial Group (“FFG”), to The Hartford Financial Services Group, Inc. and certain of its subsidiaries (“The Hartford”). This sale was accomplished by means of reinsurance and modified coinsurance. As a result, The Hartford is contractually responsible for servicing the insurance contracts, including the payment of benefits, oversight of investment management, overall contract administration and funding of reserves. If The Hartford fails to fulfill its obligations, however, we will be obligated to perform the services and make the required payments and funding.

Union Security was redomesticated to Iowa from Minnesota in 2004.

As of February 15, 2007,2008, we had approximately 1,700 employees.

Our annual reportsAnnual Reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to such reports, filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act, are available free of charge at the Securities and Exchange Commission’s (“SEC”)Commission website at www.sec.gov.www.sec.gov.

For additional information that relates to our business, we refer you to Assurant’s annual reportAnnual Report on Form 10-K for the fiscal year ended December 31, 2006, filed with the SEC and available on the SEC’sSEC website atwww.sec.gov or through Assurant’s website at www.assurant.com.

Item 1A.Risk Factors

Union Security is subject to risks associated with our business. These risks include, among others:

insurance markets. There is a one-year payback provision against the agency if death or lapse occurs within the first policy year. As a result of the sale of the independent United States pre-funded funeralpreneed business distribution, we will incur losses on chargebacks from agents who have been terminated who will be unable to repay their obligation.

The prevalence and outcomes of any such actions cannot be predicted, and no assurances can be given that such actions or any litigation would not materially adversely affect our results of operations and financial condition. In addition, if we were to experience difficulties with our relationship with a regulatory body in a given jurisdiction, it could have a material adverse effect on our ability to do business in that jurisdiction.

One particular area of focus which has affected our parent, Assurant, has been the accounting treatment for finite reinsurance or other non-traditional or loss mitigation insurance products. For specific details, please see the Risk Factor entitled “Our business is subject to risks related to litigation and regulatory actions” in our parent’s Annual Report on Form 10-K, which we incorporate by reference herein. Some state regulators have made routine inquiries to some of Assurant’s insurers regarding finite reinsurance We depend on our parent, Assurant, for certain administrative, strategic and operational support. We cannot predict at this time the effect that current litigation, investigations and regulatory activity will have on Assurant or our business, but any adverse outcome could have a material adverse affect on our business, results of operations or financial condition.

For additional risks that relate to our business, we refer you toincorporate by reference the Risk Factors in Assurant’s annual reportAnnual Report on Form 10-K for the fiscal year ended December 31, 2006 filed with the SEC and available on the SEC’s website atwww.sec.gov or through Assurant’s website at www.assurant.com.

None.

Our principal office is in Kansas City, Missouri, where we lease office space in a building owned by Assurant. We also lease office space from an unrelated party in Birmingham, Alabama, which is used to house certain employees of our dental benefits division and office space in Atlanta, Georgia used for our Assurant Solutions business. In addition, we have regional claims and sales offices throughout the U.S. We believe that our leased properties are adequate for our current business operations.

We are regularly involved in litigation in the ordinary course of business, both as a defendant and as a plaintiff. We may from time to time be subject to a variety of legal and regulatory actions relating to our current and past business operations. While we cannot predict the outcome of any pending or future litigation, examination or investigation and although no assurances can be given, we do not believe that any pending matter will have a material adverse effect on our financial condition or results of operations.

Not required under reduced disclosure format.

Part II

There is no public trading market for our common stock. As of February 15, 2008, we had 1,000,000 shares of common stock outstanding, all of which are owned directly by Interfinancial Inc., a Georgia corporation that is a direct wholly owned directly by Interfinancial Inc., a Georgia corporation that is a direct wholly-owned subsidiary of Assurant, Inc. We have no equity compensation plan. We paid $197,000, $210,000, and $180,000 in dividends to our stockholder in 2007, 2006 and $76,250 in dividends to our stockholder in 2006, 2005, and 2004, respectively.

Not required under reduced disclosure format.

Not required under reduced disclosure format.

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 which appear elsewhere in this report. It contains forward-looking statements that involve risks and uncertainties. Please see “Forward-Looking Statements” for more information. Our actual results could 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. It contains forward-looking statements that involve risks and uncertainties. Please see “Forward-Looking Statements” for more information. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those discussed elsewhere in this report, particularly under the headings “Item 1A - Risk Factors” and “Forward-Looking Statements.”

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

Year Ended December 31, 2006 Compared to December 31, 2005

Net Income

Net income increased by $30,661, or 26%, to $146,632 for the year ended December 31, 2006 from $115,971 for the year ended December 31, 2005. This increase is primarily due to approximately $40,500 of

after-tax income from a legal settlement and growth in our disability business written through our Disability Reinsurance Management Services (“DRMS”) distribution channel. These increases are partially offset by a decrease in amortization of deferred gains on disposalacquisition costs (“DAC”) and value of businessesbusiness acquired (“VOBA”) and a decline in our group life business.underwriting, general and administrative expenses.

Year Ended December 31, 2007 Compared to December 31, 2006

Net Income

Net income decreased $7,154, or 5%, to $139,478 for the year ended December 31, 2007 from $146,632 for the year ended December 31, 2006. This decrease is primarily due to approximately $40,500 (after-tax) of income from a legal settlement in the prior year, approximately $13,800 (after-tax) of other than temporary impairments in our investment portfolio and a decline in our small employer group health business. These decreases were partially offset by favorable experience in our group disability business. Also, in 2007, we had a decrease in certain tax liabilities of approximately $9,900 compared with an increase of approximately $20,000 in 2006.

Total Revenues

Total revenues decreased by $296,159,$192,507, or 14%11%, to $1,557,889 for the year ended December 31, 2007 from $1,750,396 for the year ended December 31, 2006 from $2,046,555 for the year ended December 31, 2005.2006. This decrease is primarily due to a decrease in net earned premiums and other considerations of $343,951$106,890 partly due to a decrease in our small employer group health business driven by lower sales and declining membership, and decreases in our group disability, group dental and group life businesses, all due to lower persistency of

large cases over the past several quarters as the business continues to implement its small case strategy. Net earned premiums also decreased due to the sale of our Independent—United StatesIndependent – U.S. distribution channel in our pre-funded funeralpreneed business, the loss of a client in our accidental death and dismemberment (“AD&D”) business and declinesthe transfer of our Canadian business to an affiliate. In addition, total revenues decreased due to $28,219 of net realized losses in 2007 compared to net realized gains of $8,490 in 2006 driven by approximately $21,000 of other than temporary impairments in our group dental, group lifeinvestment portfolio, and small employer group health businesses. Also contributing to the decrease in revenues was a decrease in amortization of deferred gains on disposal of businesses of $18,169, of which we took a charge of approximately $10,600 over prior year as a result of our annual review of estimates affecting the deferred gain on disposal of businesses. These decreases were partially offset by a legal settlement, which resulted in a $62,300 increase to fees and other income and an increase in net realized gains (losses) on investments primarily due to the reduction of commercial mortgage loan loss reserves of approximately $9,800 due to a refinementlegal settlement of management’s best estimate of this reserve.approximately $62,300 in the prior year.

Total Benefits, Losses and Expenses

Total benefits, losses and expenses decreased by $364,604,$135,898, or 20%9%, to $1,361,290 for the year ended December 31, 2007 from $1,497,188 for the year ended December 31, 2006 from $1,861,792 for the year ended December 31, 2005.2006. This decrease is primarily due to a decrease in policyholder benefits of $266,235$89,018 driven by thedeclines in our small employer group health business resulting from declining membership, and in our group disability business as a result of favorable experience. The sale of our Independent—United StatesIndependent – U.S. distribution channel in our pre-funded funeralpreneed business, and favorable claims experience inthe transfer of our group dental, group disabilityCanadian business to an affiliate and small employer group health businesses. Also contributing to the decrease was lower selling, underwriting and general expenses of $98,369 primarily due to a decrease in commission expense as a result of the loss of a client in our AD&D business the sale of the Independent – United States distribution channelcontributed to decreases in our pre-funded funeral business, the transfer of our Canadian pre-funded funeral business,policyholder benefits and selling, underwriting and general expenses due to lower commissions resulting from lower sales and renewals in our group dental, group life and small employer group health businesses.commission expense.

Income Taxes

Income taxes increased by $37,784,decreased $49,455, or 55%46%, to $57,121 for the year ended December 31, 2007 from $106,576 for the year ended December 31, 2006 from $68,7922006. The effective tax rate of 29.1% for the year ended December 31, 2005. The increase was primarily driven by2007 decreased from 42.1% for the year ended December 31, 2006 due to a $9,900 reduction in certain tax liabilities in 2007 associated with the resolution of tax audits compared with approximately $20,000 associated with an increase in certain prior year tax liabilities.liabilities in 2006.

Item 7A.Quantitative And Qualitative Disclosures About Market Risk

As a provider of insurance products, effective risk management is fundamental to our ability to protect both our customers’ and our stockholder’s interests. We are exposed to potential loss from various market risks, in particular interest rate risk, credit risk and inflation risk.

Interest rate risk is the possibility the fair value of liabilities will change more or less than the market value of investments in response to changes in interest rates, including changes in the slope or shape of the yield curve and changes in spreads due to credit risks and other factors.

Credit risk is the possibility that counterparties may not be able to meet payment obligations when they become due. We assume counterparty credit risk in many forms. A counterparty is any person or entity from which cash or other forms of consideration are expected to extinguish a liability or obligation to us. Primarily, our credit risk exposure is concentrated in our fixed income investment portfolio and, to a lesser extent, in our reinsurance recoverables.

Inflation risk is the possibility that a change in domestic price levels produces an adverse effect on earnings. This typically happens when only one of invested assets or liabilities is indexed to inflation.

Interest Rate Risk

Interest rate risk arises as we invest substantial funds in interest-sensitive fixed income assets, such as fixed maturity investments, mortgage-backed and asset-backed securities and commercial mortgage loans, primarily in the United States and Canada.loans. There are two forms of interest rate risk—price risk and reinvestment risk. Price risk occurs when fluctuations in interest rates have a direct impact on the market valuation of these investments. As interest rates rise, the market value of these investments falls, and

conversely, as interest rates fall, the market value of these investments rises. Reinvestment risk occurs when fluctuations in interest rates have a direct impact on expected cash flows from mortgage-backed and asset-backed securities. As interest rates fall, an increase in prepayments on these assets results in earlier than expected receipt of cash flows forcing us to reinvest the proceeds in an unfavorable lower interest rate environment, and conversely as interest rates rise, a decrease in prepayments on these assets results in later than expected receipt of cash flows forcing us to forgo reinvesting in a favorable higher interest rate environment. As of December 31, 2007, we held $2,654,969 of fixed maturity securities at fair market value and $822,184 of commercial mortgages at amortized cost for a combined total of 85% of total invested assets. As of December 31, 2006, we held $2,915,346 of fixed maturity securities at fair market value and $750,283 of commercial mortgages at amortized cost for a combined total of 85% of total invested assets. As of December 31, 2005, we held $3,488,415 of fixed maturity securities at fair market value and $758,966 of commercial mortgages at amortized cost for a combined total of 83% of total invested assets.

We expect to manage interest rate risk by selecting investments with characteristics such as duration, yield, currency and liquidity tailored to the anticipated cash outflow characteristics of our insurance and reinsurance liabilities.

Our group long-term disability and group term life waiver of premium reserves are also sensitive to interest rates. These reserves are discounted to the valuation date at the valuation interest rate. The valuation interest rate is determined by taking into consideration actual and expected earned rates on our asset portfolio, with adjustments for investment expenses and provisions for adverse deviation.

Credit Risk

We have exposure to credit risk primarily as a holder of fixed income securities and by entering into reinsurance cessions.

Our risk management strategy and investment policy is to invest in debt instruments of high credit quality issuers and to limit the amount of credit exposure with respect to any one issuer. We attempt to limit our credit exposure by imposing fixed maturity portfolio limits on individual issuers based upon credit quality. Currently our portfolio limits are 1.5% for issuers rated AA-and above, 1% for issuers rated A- to A+, 0.75% for issuers rated BBB- to BBB+ and 0.38% for issuers rated BB- to BB+. These portfolio limits are further reduced for certain issuers with whom we have credit exposure on reinsurance agreements.

We use the lower of Moody’s or Standard & Poor’s ratings to determine an issuer’s rating.

We are also exposed to the credit risk of our reinsurers. When we reinsure, we are still liable to our insureds regardless of whether we get reimbursed by our reinsurer. As part of our overall risk and capacity management strategy, we purchase reinsurance for certain risks that we underwrite.

For at least 50% of our $1,303,620$1,312,268 of reinsurance recoverables at December 31, 2006,2007, we are protected from the credit risk by using some type of risk mitigation mechanism such as a trust, letter of credit or by withholding the assets in a modified coinsurance or co-funds-withheld arrangement. For example, reserves of $752,377$700,483 and $423,889$489,865 as of December 31, 20062007 relating to two large coinsurance arrangements with The Hartford and John Hancock, respectively, related to sales of businesses are secured by such mechanisms. If the value of the assets in these trusts decreases, The Hartford and John Hancock, as the case may be, will be required to put more assets in the trusts. We may be dependent on the financial condition of The Hartford and John

Hancock, whose A.M. Best ratings are currently A+ and A++, respectively. For recoverables that are not protected by these mechanisms, we are dependent solely on the credit of the reinsurer. Occasionally, the credit worthiness of the reinsurer becomes questionable. We believe that a majority of our reinsurance exposure has been ceded to companies rated A- or better by A.M. Best.

Inflation Risk

Inflation risk arises as we invest substantial funds in nominal assets which are not indexed to the level of inflation, whereas the underlying liabilities are indexed to the level of inflation. Approximately 23%22% of our pre-funded funeralpreneed insurance policies with reserves of approximately $347,000$327,000 as of December 31, 20062007 have death benefits that are guaranteed to grow with the Consumer Price Index. In times of

rapidly rising inflation the credited death benefit growth on these liabilities increases relative to the investment income earned on the nominal assets resulting in an adverse impact on earnings. We have partially mitigated this risk by purchasing a contract with payments tied to the Consumer Price Index. See “—Derivatives.”

In addition, we have inflation risk in our individual and small employer group health insurance businesses to the extent that medical costs increase with inflation and we have not been able to increase premiums to keep pace with inflation.

Derivatives

Derivatives are financial instruments whose values are derived from interest rates, foreign exchange rates, financial indices or the prices of securities or commodities. Derivative financial instruments may be exchange-traded or contracted in the over-the-counter market and include swaps, futures, options and forward contracts.

Under insurance statutes, our insurance companies may use derivative financial instruments to hedge actual or anticipated changes in their assets or liabilities, to replicate cash market instruments or for certain income-generating activities. These statutes generally prohibit the use of derivatives for speculative purposes. We generally do not use derivative financial instruments.

We have purchased a contract to partially hedge the inflation risk exposure inherent in some of our pre-funded funeralpreneed insurance policies.

In 2003, we determined that the modified coinsurance agreement with The Hartford contained an embedded derivative. In accordance with the Financial Accounting Standards Board’s Derivatives Implementation Group Statement 133 Implementation Issue No. 36,Embedded Derivatives: Modified Coinsurance Arrangements and Debt Instruments That Incorporate Credit Risk Exposures That Are Unrelated or Only Partially Related to the Creditworthiness of the Obligor under Those Instruments (“DIG B36”), we bifurcated the contract into its debt host and embedded derivative (total return swap) and recorded the embedded derivative at fair value on the balance sheet. Contemporaneous with adoption of DIG B36, we reclassified the invested assets related to this modified coinsurance agreement from fixed maturities available for sale to trading securities, included in other investments. The combination of the two aforementioned transactions has no net impact in the consolidated statements of operations for all periods presented.

The consolidated financial statements and financial statement schedules in Part IV, Item 15(a) 1 and 2 of this report are incorporated by reference into this Item 8.

There have been no changes in or disagreements with accountants on accounting and financial disclosure.

Disclosure Controls and Procedures

Under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, we have evaluated the effectiveness of our disclosure controls and procedures as of December 31, 2006. Based on

this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective as of that date in providing a reasonable level of assurance that information we are required to disclose in reports we file or furnish under the Exchange Act is recorded, processed, summarized and reported within the time periods in SEC rules and forms. Further, our disclosure controls and procedures were effective in providing a reasonable level of assurance that information required to be disclosed by us in such reports is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

There have been no changes in our internal control over financial reporting that occurred during Union Security’s fourth fiscal quarter in 2006 that has materially affected, or is reasonably likely to materially affect, our Interim Chief Executive Officer and Chief Financial Officer, we have evaluated the effectiveness of our disclosure controls and procedures as of December 31, 2007. Based on this evaluation, our Interim Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective as of that date in providing a reasonable level of assurance that information we are required to disclose in reports we file or furnish under

the Exchange Act is recorded, processed, summarized and reported within the time periods in SEC rules and forms. Further, our disclosure controls and procedures were effective in providing a reasonable level of assurance that information required to be disclosed by us in such reports is accumulated and communicated to our management, including our Interim Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Management’s Annual Report on Internal Control Over Financial Reporting

The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting for the Company as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States. A company’s internal control over financial reporting includes policies and procedures that (1) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

The Company’s management assessed its internal control over financial reporting as of December 31, 2007 using criteria established in “Internal Control—Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Management, including the Company’s interim chief executive officer and its chief financial officer, based on their evaluation of the Company’s internal control over financial reporting (as defined in Securities Exchange Act Rule 13a-15(f)), have concluded that the Company’s internal control over financial reporting was effective as of December 31, 2007.

There have been no changes in the Company’s internal control over financial reporting that occurred during the Company’s fourth fiscal quarter in 2007 that have materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

None.

PART III

Not required under reduced disclosure format.

Not required under reduced disclosure format.

Not required under reduced disclosure format.

Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Not required under reduced disclosure format.

Not required under reduced disclosure format.

PricewaterhouseCoopers LLP has audited our financial statements for fiscal 2007. The following table shows the aggregate fees billed to us by PricewaterhouseCoopers LLP for services rendered and the percentage of those services that were approved by Assurant’s Audit Committee, in its capacity as a committee of Assurant’s Board of Directors, during the fiscal years ended December 31, 2007 and 2006.

The Audit Committee of Assurant’s Board of Directors adopted written procedures for pre-approval of services by the independent registered public accounting firm, including procedures relating to the Assurant Audit Committee’s power to:

“Prohibited non-auditing services” are services that Congress, the SEC or the Public Company Accounting Oversight Board prohibits through regulation. Notwithstanding the foregoing, pre-approval is not necessary for minor audit services if: (i) the aggregate amount of all such non-audit services provided to the Company constitutes not more than 5% of the total amount of revenues paid by Assurant and its subsidiaries to its auditor during the fiscal year in which the non-audit services are provided; (ii) such services were not recognized by Assurant at the time of the engagement to be non-audit services; and (iii) such services are promptly brought to the attention of the Assurant Audit Committee and approved prior to the completion of the audit by the Assurant Audit Committee or by one or more members of the Assurant Audit Committee to whom authority to grant such approvals has been delegated by the Assurant Board of Directors. The Assurant Audit Committee may delegate to one or more of its members the authority to approve in advance all significant audit or non-audit services to be provided by the independent registered public accounting firm so long as it is presented to the full Assurant Audit Committee at a later time.

PART IV

The Audit Committee of Assurant’s Board of Directors adopted written procedures for pre-approval of services by the independent auditors, including procedures relating to the Assurant Audit Committee’s power to:

“Prohibited nonauditing services” are services that Congress, the SEC or the Public Company Accounting Oversight Board prohibits through regulation. Notwithstanding the foregoing, pre-approval is not necessary for minor audit services if: (i) the aggregate amount of all such non-audit services provided to Assurant and its subsidiaries constitutes not more than 5% of the total amount of revenues paid by Assurant and its subsidiaries to its auditor during the fiscal year in which the non-audit services are provided; (ii) such services were not recognized by Assurant at the time of the engagement to be non-audit services; and (iii) such services are promptly brought to the attention of the Assurant Audit Committee and approved prior to the completion of the audit by the Assurant Audit Committee or by one or more members of the Assurant Audit Committee to whom authority to grant such approvals has been delegated by the Assurant Board of Directors. The Assurant Audit Committee may delegate to one or more of its members the authority to approve in advance all significant audit or non-audit services to be provided by the independent auditors so long as it is presented to the full Assurant Audit Committee at a later time.

PART IV

Item 15.

Exhibits and Financial Statement Schedules

(a)1. Financial Statements

The following consolidated financial statements of Union Security Insurance Company, incorporated by reference into Item 8, are attached hereto:

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on February 29, 2008.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant in the capacities indicated on February 29, 2008.

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholder of

Union Security Insurance Company:

In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of operations, changes in stockholder’s equity and cash flows present fairly, in all material respects, the financial position of Union Security Insurance Company and its subsidiaries (the Company), an indirect wholly-owned subsidiary of Assurant, Inc. at December 31, 2007 and 2006, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2007 in conformity with accounting principles generally accepted in the United States of America. These consolidated financial statements are the responsibility of the Company’s management; our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits of these statements in accordance with standards of the Public Company Accounting Oversight Board (United States), which require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall consolidated financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

Union Security Insurance Company

Consolidated Balance Sheets

At December 31, 20062007 and 20052006

See the accompanying notes to the consolidated financial statements

Union Security Insurance Company

Consolidated Statements of Operations

Years Ended December 31, 2007, 2006 2005 and 20042005

See the accompanying notes to the consolidated financial statements

Union Security Insurance Company

Consolidated Statements of Changes in Stockholder’s Equity

Years Ended December 31, 2007, 2006 2005 and 20042005

See the accompanying notes to the consolidated financial statements

Union Security Insurance Company

Consolidated Statements of Cash Flows

Years Ended December 31, 2007, 2006 and 2005

See the accompanying notes to the consolidated financial statements

Union Security Insurance Company

Consolidated Statements of Cash Flows

Years Ended December 31, 2007, 2006 2005 and 20042005