##### Table of Contents





UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549





FORM 10-Q







|x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ---------------------------------------------------------------------------------------

FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2008

OR



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------

For the transition period from              to

Commission file number 033-37576





UNION SECURITY INSURANCE COMPANY

(Exact name of registrant as specified in
its charter)







|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|IOWA                                                           |  | 81-0170040                          
|(State or Other Jurisdiction of Incorporation or Organization) |  | (I.R.S. Employer Identification No.)



|                                         |  |           
|---------------------------------------- |  | ----------
|6941 VISTA DRIVE WEST DES MOINES, IOWA   |  | 50266     
|(Address of Principal Executive Offices) |  | (Zip Code)

Registrants telephone number, including area code: (651) 361-4000





Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90
days.    Yes  x    No   ̈

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of accelerated filer, large
accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act.



|                        |  |   |  |                           |  |  
|----------------------- |  | - |  | ------------------------- |  | -
|Large accelerated filer |  |  ̈ |  | Accelerated filer         |  |  ̈
|                        |  |   | 
|Non-accelerated filer   |  | x |  | Smaller reporting company |  |  ̈

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act).    Yes   ̈    No  x

As of August 1, 2008, there were 1,000,000 shares of common stock of the registrant outstanding, all of which are owned by Assurant, Inc.



THE REGISTRANT MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION H(1)(a) AND (b) OF
FORM 10-Q AND IS THEREFORE FILING THIS FORM WITH THE REDUCED DISCLOSURE FORMAT.









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UNION SECURITY INSURANCE COMPANY

QUARTERLY REPORT ON FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2008

TABLE OF CONTENTS



|           |  |                                                                                                                                                        |  |           
|---------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ----------
|ItemNumber |  |                                                                                                                                                        |  | PageNumber
|           |  | PART I                                                                                                                                                 |  |           
|           |  | FINANCIAL INFORMATION                                                                                                                                  |  |           
|           |  |                                                                                                                                                       
|1.         |  | FINANCIAL STATEMENTS                                                                                                                                   |  |           
|           |  | Union Security Insurance Company Consolidated Balance Sheets (Unaudited) at June 30, 2008 and December 
31, 2007                                       |  | 2         
|           |  | Union Security Insurance Company Consolidated Statements of Operations (Unaudited) for the three and six months ended
 June 30, 2008 and 2007          |  | 3         
|           |  | Union Security Insurance Company Consolidated Statement of Changes in Stockholders Equity (Unaudited) from December
 31, 2007 to June 30, 2008        |  | 4         
|           |  | Union Security Insurance Company Consolidated Statements of Cash Flows (Unaudited) for the six months ended June 30, 2008
 and 2007                    |  | 5         
|           |  | Union Security Insurance Company Notes to the Consolidated Financial Statements (Unaudited) for the three and six months
 ended June 30, 2008 and 2007 |  | 6         
|           |  |                                                                                                                                                       
|2.         |  | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS                                                                  |  | 13        
|           |  |                                                                                                                                                       
|3.         |  | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK *                                                                                           |  | 18        
|           |  |                                                                                                                                                       
|4T.        |  | CONTROLS AND PROCEDURES                                                                                                                                |  | 18        
|           |  |                                                                                                                                                       
|           |  | PART II                                                                                                                                                |  |           
|           |  | OTHER INFORMATION                                                                                                                                      |  |           
|           |  |                                                                                                                                                       
|1A.        |  | RISK FACTORS                                                                                                                                           |  | 19        
|           |  |                                                                                                                                                       
|2.         |  | UNREGISTERED SALE OF EQUITY SECURITIES AND USE OF PROCEEDS*                                                                                            |  | 19        
|           |  |                                                                                                                                                       
|3.         |  | DEFAULTS UPON SENIOR SECURITIES *                                                                                                                      |  | 19        
|           |  |                                                                                                                                                       
|4.         |  | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS *                                                                                                  |  | 19        
|           |  |                                                                                                                                                       
|5.         |  | OTHER INFORMATION                                                                                                                                      |  | 19        
|           |  |                                                                                                                                                       
|6.         |  | EXHIBITS                                                                                                                                               |  | 19        
|           | 
|SIGNATURES |  | 20                                                                                                                                                    



|* | Not required under reduced disclosure pursuant to General Instruction H(1) (a) and (b) of Form 10-Q
|- | ---------------------------------------------------------------------------------------------------



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Union Security Insurance Company

Consolidated Balance Sheets (unaudited)

At June 30, 2008 and
December 31, 2007



|                                                                                                                         |  |                                                             |           |   |                  |   |          
|------------------------------------------------------------------------------------------------------------------------ |  | ----------------------------------------------------------- | --------- | - | ---------------- | - | ---------
|                                                                                                                         |  | June 30,2008                                                |           |   | December 31,2007
|                                                                                                                         |  | (in thousands except number ofshares and per share amounts)
|Assets                                                                                                                   |  |                                                             |           |   |                  |   |          
|Investments:                                                                                                             |  |                                                             |           |   |                  |   |          
|Fixed maturity securities available for sale, at fair value (amortized cost - $2,470,880 in 2008 and $2,611,076 in 2007) |  | $                                                           | 2,411,032 |   |                  | $ | 2,654,969
|Equity securities available for sale, at fair value (cost - $293,512 in 2008 and $303,785 in 2007)                       |  |                                                             | 255,061   |   |                  |   | 268,672  
|Commercial mortgage loans on real estate, at amortized cost                                                              |  |                                                             | 854,377   |   |                  |   | 822,184  
|Policy loans                                                                                                             |  |                                                             | 14,432    |   |                  |   | 12,346   
|Short-term investments                                                                                                   |  |                                                             | 75,029    |   |                  |   | 44,092   
|Collateral held under securities lending                                                                                 |  |                                                             | 180,906   |   |                  |   | 240,049  
|Other Investments                                                                                                        |  |                                                             | 87,878    |   |                  |   | 74,781   
|                                                                                                                         |  |                                                             |           |   |                  |   |          
|Total investments                                                                                                        |  |                                                             | 3,878,715 |   |                  |   | 4,117,093
|Cash and cash equivalents                                                                                                |  |                                                             | 15,313    |   |                  |   | 32,832   
|Premiums and accounts receivable, net                                                                                    |  |                                                             | 71,229    |   |                  |   | 106,229  
|Reinsurance recoverables                                                                                                 |  |                                                             | 1,331,401 |   |                  |   | 1,307,646
|Due from affiliates                                                                                                      |  |                                                             | 3,487     |   |                  |   | 6,381    
|Accrued investment income                                                                                                |  |                                                             | 41,824    |   |                  |   | 42,352   
|Deferred acquisition costs                                                                                               |  |                                                             | 50,234    |   |                  |   | 50,575   
|Deferred income taxes, net                                                                                               |  |                                                             | 98,422    |   |                  |   | 60,624   
|Goodwill                                                                                                                 |  |                                                             | 156,817   |   |                  |   | 156,817  
|Value of business acquired                                                                                               |  |                                                             | 23,208    |   |                  |   | 22,816   
|Other assets                                                                                                             |  |                                                             | 32,715    |   |                  |   | 36,676   
|Assets held in separate accounts                                                                                         |  |                                                             | 2,405,416 |   |                  |   | 2,867,617
|                                                                                                                         |  |                                                             |           |   |                  |   |          
|Total assets                                                                                                             |  | $                                                           | 8,108,781 |   |                  | $ | 8,807,658
|                                                                                                                         |  |                                                             |           |   |                  |   |          
|Liabilities                                                                                                              |  |                                                             |           |   |                  |   |          
|Future policy benefits and expenses                                                                                      |  | $                                                           | 2,700,825 |   |                  | $ | 2,675,363
|Unearned premiums                                                                                                        |  |                                                             | 38,981    |   |                  |   | 40,147   
|Claims and benefits payable                                                                                              |  |                                                             | 1,810,255 |   |                  |   | 1,840,353
|Commissions payable                                                                                                      |  |                                                             | 11,824    |   |                  |   | 15,507   
|Reinsurance balances payable                                                                                             |  |                                                             | 135       |   |                  |   | 2,706    
|Deferred gains on disposal of businesses                                                                                 |  |                                                             | 124,267   |   |                  |   | 134,607  
|Obligations under securities lending                                                                                     |  |                                                             | 180,906   |   |                  |   | 240,049  
|Accounts payable and other liabilities                                                                                   |  |                                                             | 188,147   |   |                  |   | 208,809  
|Income taxes payable                                                                                                     |  |                                                             | 7,011     |   |                  |   | 1,459    
|Liabilities related to separate accounts                                                                                 |  |                                                             | 2,405,416 |   |                  |   | 2,867,617
|                                                                                                                         |  |                                                             |           |   |                  |   |          
|Total liabilities                                                                                                        |  |                                                             | 7,467,767 |   |                  |   | 8,026,617
|                                                                                                                         |  |                                                             |           |   |                  |   |          
|Commitments and contingencies (Note 6)                                                                                   |  |                                                             |           |   |                  |   |          
|                                                                                                                         |  |                                                            
|Stockholders equity                                                                                                     |  |                                                             |           |   |                  |   |          
|Common stock, par value $5 per share, 1,000,000 shares authorized, issued and outstanding                                |  |                                                             | 5,000     |   |                  |   | 5,000    
|Additional paid-in capital                                                                                               |  |                                                             | 445,635   |   |                  |   | 545,635  
|Retained earnings                                                                                                        |  |                                                             | 254,285   |   |                  |   | 224,710  
|Accumulated other comprehensive (loss) income                                                                            |  |                                                             | (63,906   | ) |                  |   | 5,696    
|                                                                                                                         |  |                                                             |           |   |                  |   |          
|Total stockholders equity                                                                                               |  |                                                             | 641,014   |   |                  |   | 781,041  
|                                                                                                                         |  |                                                             |           |   |                  |   |          
|Total liabilities and stockholders equity                                                                               |  | $                                                           | 8,108,781 |   |                  | $ | 8,807,658
|                                                                                                                         |  |                                                             |           |   |                  |   |          

See the accompanying notes to the consolidated financial statements.



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Union Security Insurance Company

Consolidated Statements of Operations (unaudited)

Three and Six
Months Ended June 30, 2008 and 2007



|                                                                          |  |                            |         |   |                          |   |         |      |  |   |         |   |  |   |        
|------------------------------------------------------------------------- |  | -------------------------- | ------- | - | ------------------------ | - | ------- | ---- |  | - | ------- | - |  | - | -------
|                                                                          |  | Three Months EndedJune 30, |         |   | Six Months EndedJune 30,
|                                                                          |  | 2008                       |         |   | 2007                     |   |         | 2008 |  |   | 2007   
|                                                                          |  | (in thousands)            
|Revenues                                                                  |  |                            |         |   |                          |   |         |      |  |   |         |   |  |   |        
|Net earned premiums and other considerations                              |  | $                          | 288,752 |   |                          | $ | 303,483 |      |  | $ | 590,850 |   |  | $ | 634,893
|Net investment income                                                     |  |                            | 63,815  |   |                          |   | 66,026  |      |  |   | 125,108 |   |  |   | 162,063
|Net realized (losses) gains on investments                                |  |                            | (9,966  | ) |                          |   | (1,885  | )    |  |   | (21,718 | ) |  |   | 346    
|Amortization of deferred gains on disposal of businesses                  |  |                            | 5,160   |   |                          |   | 5,873   |      |  |   | 10,340  |   |  |   | 11,783 
|Fees and other income                                                     |  |                            | 3,170   |   |                          |   | 7,894   |      |  |   | 5,748   |   |  |   | 11,543 
|                                                                          |  |                            |         |   |                          |   |         |      |  |   |         |   |  |   |        
|Total revenues                                                            |  |                            | 350,931 |   |                          |   | 381,391 |      |  |   | 710,328 |   |  |   | 820,628
|                                                                          |  |                            |         |   |                          |   |         |      |  |   |         |   |  |   |        
|Benefits, losses and expenses                                             |  |                            |         |   |                          |   |         |      |  |   |         |   |  |   |        
|Policyholder benefits                                                     |  |                            | 223,369 |   |                          |   | 221,156 |      |  |   | 457,198 |   |  |   | 478,539
|Amortization of deferred acquisition costs and value of business acquired |  |                            | 11,840  |   |                          |   | 11,230  |      |  |   | 23,292  |   |  |   | 21,366 
|Underwriting, general and administrative expenses                         |  |                            | 85,955  |   |                          |   | 95,866  |      |  |   | 177,423 |   |  |   | 191,950
|                                                                          |  |                            |         |   |                          |   |         |      |  |   |         |   |  |   |        
|Total benefits, losses and expenses                                       |  |                            | 321,164 |   |                          |   | 328,252 |      |  |   | 657,913 |   |  |   | 691,855
|                                                                          |  |                            |         |   |                          |   |         |      |  |   |         |   |  |   |        
|Income before provision for income taxes                                  |  |                            | 29,767  |   |                          |   | 53,139  |      |  |   | 52,415  |   |  |   | 128,773
|Provision for income taxes                                                |  |                            | 12,301  |   |                          |   | 6,310   |      |  |   | 20,110  |   |  |   | 33,895 
|                                                                          |  |                            |         |   |                          |   |         |      |  |   |         |   |  |   |        
|Net income                                                                |  | $                          | 17,466  |   |                          | $ | 46,829  |      |  | $ | 32,305  |   |  | $ | 94,878 
|                                                                          |  |                            |         |   |                          |   |         |      |  |   |         |   |  |   |        

See the accompanying notes to the consolidated financial statements.



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Union Security Insurance Company

Consolidated Statement of Changes in Stockholders Equity (unaudited)

From December 31, 2007 to June 30, 2008



|                                                             |  |                |       |                          |   |          |                  |  |   |                                            |   |  |       |         |   |  |   |          |  
|------------------------------------------------------------ |  | -------------- | ----- | ------------------------ | - | -------- | ---------------- |  | - | ------------------------------------------ | - |  | ----- | ------- | - |  | - | -------- | -
|                                                             |  | CommonStock    |       | AdditionalPaid-inCapital |   |          | RetainedEarnings |  |   | AccumulatedOtherComprehensiveIncome (Loss) |   |  | Total |        
|                                                             |  | (in thousands) |      
|Balance, December 31, 2007                                   |  | $              | 5,000 |                          | $ | 545,635  |                  |  | $ | 224,710                                    |   |  | $     | 5,696   |   |  | $ | 781,041  |  
|Return of capital (Note 8)                                   |  |                |      |                          |   | (100,000 | )                |  |   |                                           |   |  |       |        |   |  |   | (100,000 | )
|Cumulative effect of change in accounting principle (Note 3) |  |                |      |                          |   |         |                  |  |   | (2,730                                     | ) |  |       |        |   |  |   | (2,730   | )
|Comprehensive income:                                        |  |                |       |                          |   |          |                  |  |   |                                            |   |  |       |         |   |  |   |          |  
|Net income                                                   |  |                |      |                          |   |         |                  |  |   | 32,305                                     |   |  |       |        |   |  |   | 32,305   |  
|Other comprehensive loss:                                    |  |                |       |                          |   |          |                  |  |   |                                            |   |  |       |         |   |  |   |          |  
|Net change in unrealized losses on securities, net of taxes  |  |                |      |                          |   |         |                  |  |   |                                           |   |  |       | (69,602 | ) |  |   | (69,602  | )
|                                                             |  |                |       |                          |   |          |                  |  |   |                                            |   |  |       |         |   |  |   |          |  
|Total other comprehensive loss                               |  |                |       |                          |   |          |                  |  |   |                                            |   |  |       |         |   |  |   | (69,602  | )
|                                                             |  |                |       |                          |   |          |                  |  |   |                                            |   |  |       |         |   |  |   |          |  
|Total comprehensive loss                                     |  |                |       |                          |   |          |                  |  |   |                                            |   |  |       |         |   |  |   | (37,297  | )
|                                                             |  |                |       |                          |   |          |                  |  |   |                                            |   |  |       |         |   |  |   |          |  
|Balance, June 30, 2008                                       |  | $              | 5,000 |                          | $ | 445,635  |                  |  | $ | 254,285                                    |   |  | $     | (63,906 | ) |  | $ | 641,014  |  
|                                                             |  |                |       |                          |   |          |                  |  |   |                                            |   |  |       |         |   |  |   |          |  

See the accompanying notes to the consolidated financial statements.



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Union Security Insurance Company

Consolidated Statements of Cash Flows (unaudited)

Six Months Ended
June 30, 2008 and 2007



|                                                      |  |                          |          |   |      |   |          |  
|----------------------------------------------------- |  | ------------------------ | -------- | - | ---- | - | -------- | -
|                                                      |  | Six Months EndedJune 30, |         
|                                                      |  | 2008                     |          |   | 2007 |  
|                                                      |  | (in thousands)           |         
|Net cash provided by (used in) operating activities   |  | $                        | 31,237   |   |      | $ | (10,377  | )
|                                                      |  |                          |          |   |      |   |          |  
|Investing activities                                  |  |                          |          |   |      |   |          |  
|Sales of:                                             |  |                          |          |   |      |   |          |  
|Fixed maturity securities available for sale          |  |                          | 254,302  |   |      |   | 214,095  |  
|Equity securities available for sale                  |  |                          | 70,373   |   |      |   | 63,759   |  
|Maturities, prepayments, and scheduled redemption of: |  |                          |          |   |      |   |          |  
|Fixed maturity securities available for sale          |  |                          | 52,444   |   |      |   | 151,814  |  
|Purchase of:                                          |  |                          |          |   |      |   |          |  
|Fixed maturity securities available for sale          |  |                          | (178,713 | ) |      |   | (279,469 | )
|Equity securities available for sale                  |  |                          | (68,874  | ) |      |   | (66,471  | )
|Property and equipment                                |  |                          | 25       |   |      |   |         |  
|Change in other investments                           |  |                          | (13,097  | ) |      |   | 12,354   |  
|Change in commercial mortgage loans on real estate    |  |                          | (32,193  | ) |      |   | (36,743  | )
|Change in short-term investments                      |  |                          | (30,937  | ) |      |   | 24,493   |  
|Change in collateral held under securities lending    |  |                          | 59,143   |   |      |   | (137,953 | )
|Change in policy loans                                |  |                          | (2,086   | ) |      |   | 8        |  
|                                                      |  |                          |          |   |      |   |          |  
|Net cash provided by (used in) investing activities   |  |                          | 110,387  |   |      |   | (54,113  | )
|                                                      |  |                          |          |   |      |   |          |  
|Financing activities                                  |  |                          |          |   |      |   |          |  
|Dividends paid                                        |  |                          |         |   |      |   | (115,000 | )
|Change in obligation under securities lending         |  |                          | (59,143  | ) |      |   | 137,953  |  
|Return of capital                                     |  |                          | (100,000 | ) |      |   |         |  
|                                                      |  |                          |          |   |      |   |          |  
|Net cash (used in) provided by financing activities   |  |                          | (159,143 | ) |      |   | 22,953   |  
|                                                      |  |                          |          |   |      |   |          |  
|Change in cash and cash equivalents                   |  |                          | (17,519  | ) |      |   | (41,537  | )
|Cash and cash equivalents at beginning of period      |  |                          | 32,832   |   |      |   | 75,233   |  
|                                                      |  |                          |          |   |      |   |          |  
|Cash and cash equivalents at end of period            |  | $                        | 15,313   |   |      | $ | 33,696   |  
|                                                      |  |                          |          |   |      |   |          |  

See the accompanying notes to the consolidated financial statements.



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Union Security Insurance Company

Notes to the Consolidated Financial Statements (unaudited)

Six
Months Ended June 30, 2008 and 2007

(In thousands, except per share and share amounts)



|1. | Nature of Operations
|-- | --------------------

Union Security Insurance
Company (the Company) is a provider of life and health insurance products including group disability insurance, group dental insurance, group life insurance, small employer group health insurance and pre-funded funeral insurance
(preneed). The Company is an indirect wholly-owned subsidiary of Assurant, Inc. (the Parent). The Parents common stock is traded on the New York Stock Exchange under the symbol AIZ. The Company distributes its products
in all states except New York.



|2. | Basis of Presentation
|-- | ---------------------

The accompanying unaudited
interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) for interim financial information. Accordingly, these statements do not
include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.

In
the opinion of management, all adjustments (consisting of a normal recurring nature) considered necessary for a fair statement of the consolidated financial statements have been included. The unaudited interim consolidated financial statements
include the accounts of the Company and all of its wholly-owned subsidiaries. All inter-company transactions and balances are eliminated in consolidation. Certain prior period amounts have been reclassified to conform to the 2008 presentation.

The Company recorded an after-tax cumulative effect of change in accounting principle of $(2,730) on January 1, 2008, related to the
adoption of Statement of Financial Accounting Standards (FAS) No. 157, Fair Value Measurements (FAS 157). The amount is reflected in the statement of changes in stockholders equity as required. See Notes 3
and 4 for further information regarding the adoption of FAS 157.

As part of our ongoing monitoring process, we regularly review our
investment portfolio to ensure that investments that may be other-than-temporarily impaired are identified on a timely basis and that any impairment is charged against earnings in the proper period. We have reviewed these securities and recorded
$6,942 and $21,268 of other-than-temporary impairments for the three and six months ended June 30, 2008. There were no other-than-temporary impairments for the three and six months ended June 30, 2007.

Operating results for the three and six months ended June 30, 2008 are not necessarily indicative of the results that may be expected for the year
ending December 31, 2008. The accompanying unaudited interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes included in the Companys Annual Report on
Form 10-K for the year ended December 31, 2007.



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Union Security Insurance Company

Notes to the Consolidated Financial Statements (unaudited)

Six Months Ended June 30, 2008 and 2007

(In thousands, except per share and share amounts)



|3. | Recent Accounting Pronouncements
|-- | --------------------------------

Recent Accounting
Pronouncements  Adopted

On January 1, 2008, the Company adopted FAS 157 which defines fair value, addresses how
companies should measure fair value when they are required to use a fair value measure for recognition or disclosure purposes under GAAP, and expands disclosures about fair value measurements. FAS 157 is applied prospectively for financial assets
and liabilities measured on a recurring basis as of January 1, 2008 except for certain financial assets that were measured at fair value using a transaction price. For these financial instruments, which the Company has, FAS 157 requires limited
retrospective adoption and thus the difference between the fair values using a transaction price and the fair values using an exit price of the relevant financial instruments will be shown as a cumulative-effect adjustment to January 1, 2008
retained earnings. At adoption, the Company recognized a $4,200 decrease to other assets, and a corresponding decrease of $2,730 (after-tax) to retained earnings. See Note 4 for further information regarding FAS 157.

On January 1, 2008, the Company adopted FAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities (FAS
159). FAS 159 provides a choice to measure many financial instruments and certain other items at fair value on specified election dates and requires disclosures about the election of the fair value option. Unrealized gains and losses on items
for which the fair value option has been elected are reported in earnings. The Company has chosen not to elect the fair value option for any financial or non-financial instruments as of the adoption date, thus the adoption of FAS 159 did not have an
impact on the Companys financial position or results of operations.

Recent Accounting Pronouncements  Not Yet Adopted

In December 2007, the Financial Accounting Standards Board (FASB) issued FAS No. 141R, Business Combinations(FAS 141R). FAS 141R replaces FAS No. 141, Business Combinations(FAS 141).FAS 141R retains the fundamental requirements in FAS 141 that the purchase method of accounting be used for all business
combinations, that an acquirer be identified for each business combination and for goodwill to be recognized and measured as a residual. FAS 141R expands the definition of transactions and events that qualify as business combinations to all
transactions and other events in which one entity obtains control over one or more other businesses. FAS 141R broadens the fair value measurement and recognition of assets acquired, liabilities assumed, and interests transferred as a result of
business combinations. FAS 141R also increases the disclosure requirements for business combinations in the financial statements. FAS 141R is effective for fiscal periods beginning after December 15, 2008. Therefore, the Company is required to
adopt FAS 141R on January 1, 2009. The Company is currently evaluating the requirements of FAS 141R and the potential impact on the Companys financial position and results of operations.

In December 2007, the FASB issued FAS No. 160, Noncontrolling Interest in Consolidated Financial Statementsan amendment of ARB
No. 51(FAS 160). FAS 160



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Union Security Insurance Company

Notes to the Consolidated Financial Statements (unaudited)

Six Months Ended June 30, 2008 and 2007

(In thousands, except per share and share amounts)



requires that a non-controlling interest in a subsidiary be separately reported within equity and the amount of consolidated net income attributable to the
non-controlling interest be presented in the statement of operations. FAS 160 also calls for consistency in reporting changes in the parents ownership interest in a subsidiary and necessitates fair value measurement of any non-controlling
equity investment retained in a deconsolidation. FAS 160 is effective for fiscal periods beginning after December 15, 2008. Therefore, the Company is required to adopt FAS 160 on January 1, 2009. The Company is currently evaluating the
requirements of FAS 160 and the potential impact on the Companys financial position and results of operations.

In February 2008, the
FASB issued Financial Statement of Position FAS 157-2, Effective Date of FAS 157 (FSP FAS 157-2). FSP FAS 157-2 defers the effective date of FAS 157 for all non-financial assets and non-financial liabilities measured or disclosed
at fair value in the financial statements on a non-recurring basis to fiscal years beginning after November 15, 2008, and interim periods within those fiscal years, which for the Company is January 1, 2009. The Company is currently
evaluating the requirements of FAS 157 for its non-financial assets and non-financial liabilities measured on a non-recurring basis and the potential impact on the Companys financial position and results of operations.



|4. | Fair Value Measurements
|-- | -----------------------

FAS 157 defines fair
value, establishes a framework for measuring fair value, creates a fair value hierarchy based on the quality of inputs used to measure fair value and enhances disclosure requirements for fair value measurements. FAS 157 defines fair value as the
price that would be received to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. In accordance with FAS 157, the Company has categorized its recurring basis financial
assets and liabilities based on the priority of the inputs to the valuation technique, into a three-level fair value hierarchy. The FASB has deferred the effective date of FAS 157 until January 1, 2009 for non-financial assets and liabilities
that are recognized or disclosed at fair value in the financial statements on a non-recurring basis in accordance with FSP FAS 157-2.

The
fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The inputs used to measure fair value may fall
into different levels of the fair value hierarchy. In such cases, the level in the fair value hierarchy within which the fair value measurement in its entirety falls has been determined based on the lowest level input that is
significant to the fair value measurement in its entirety. The Companys assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the
asset or liability.

The levels of the fair value hierarchy and its application to the Companys financial assets and liabilities are
described below:



| |  |  | Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access. Financial assets
and liabilities utilizing Level 1 inputs include certain U.S. mutual funds, money market funds, common stock and certain foreign securities.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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Union Security Insurance Company

Notes to the Consolidated Financial Statements (unaudited)

Six Months Ended June 30, 2008 and 2007

(In thousands, except per share and share amounts)



| |  |  | Level 2 inputs utilize other than quoted prices included in Level 1 that are observable for the asset, either directly or indirectly, for substantially the full
term of the asset. Level 2 inputs include quoted prices for similar assets in active markets, quoted prices for identical or similar assets in markets that are not active and inputs other than quoted prices that are observable in the marketplace for
the asset. The observable inputs are used in valuation models to calculate the fair value for the asset. Financial assets utilizing Level 2 inputs include corporate, municipal, foreign government and public utilities bonds, private placement bonds,
U.S. Government and agency securities, mortgage and asset backed securities, preferred stocks and certain U.S. and foreign mutual funds.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Level 3 inputs are unobservable but are significant to the fair value measurement for the asset, and include situations where there is little, if any, market
activity for the asset. These inputs reflect managements own assumptions about the assumptions a market participant would use in pricing the asset. Financial assets utilizing Level 3 inputs include certain preferred stocks, corporate bonds and
mortgage backed securities that were quoted by brokers and could not be corroborated by Level 2 inputs and derivatives.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

A
review of fair value hierarchy classifications is conducted on a quarterly basis. Changes in the observability of valuation inputs may result in a reclassification of levels for certain securities within the fair value hierarchy.

The following table presents the Companys fair value hierarchy for those recurring basis assets and liabilities as of June 30, 2008:



|                                         |  |               |           |         |   |           |         |  |         |           |  |   |       
|---------------------------------------- |  | ------------- | --------- | ------- | - | --------- | ------- |  | ------- | --------- |  | - | ------
|                                         |  | June 30, 2008
|Financial Assets                         |  | Total         |           | Level 1 |   |           | Level 2 |  | Level 3
|Fixed maturity securities                |  | $             | 2,411,032 |         | $ |          |         |  | $       | 2,371,589 |  | $ | 39,443
|Equity securities                        |  |               | 255,061   |         |   |          |         |  |         | 247,022   |  |   | 8,039 
|Short-term investments                   |  |               | 75,029    |         |   | 74,787    |         |  |         | 242       |  |   |      
|Collateral held under securities lending |  |               | 166,743   |         |   | 23,081    |         |  |         | 143,662   |  |   |      
|Cash equivalents                         |  |               | 6,750     |         |   | 6,750     |         |  |         |          |  |   |      
|Other assets                             |  |               | 3,720     |         |   |          |         |  |         |          |  |   | 3,720 
|Assets held in separate accounts         |  |               | 2,403,091 |         |   | 2,326,914 | a       |  |         | 76,177    |  |   |      
|                                         |  |               |           |         |   |           |         |  |         |           |  |   |       
|Total financial assets                   |  | $             | 5,321,426 |         | $ | 2,431,532 |         |  | $       | 2,838,692 |  | $ | 51,202
|                                         |  |               |           |         |   |           |         |  |         |           |  |   |       



|a | Mainly includes mutual fund investments
|- | ---------------------------------------



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Union Security Insurance Company

Notes to the Consolidated Financial Statements (unaudited)

Six Months Ended June 30, 2008 and 2007

(In thousands, except per share and share amounts)



The following table summarizes the change in balance sheet carrying value associated with Level 3
financial assets carried at fair value during the three months ended June 30, 2008:



|                                                                  |  |                    |        |   |                         |   |        |                  |  |             |       |  |   |      
|----------------------------------------------------------------- |  | ------------------ | ------ | - | ----------------------- | - | ------ | ---------------- |  | ----------- | ----- |  | - | -----
|                                                                  |  | TotalLevel 3Assets |        |   | FixedMaturitySecurities |   |        | EquitySecurities |  | OtherAssets
|Balance, beginning of quarter                                     |  | $                  | 45,295 |   |                         | $ | 35,970 |                  |  | $           | 6,640 |  | $ | 2,685
|Total net gains (realized/unrealized) included in earnings        |  |                    | 1,079  |   |                         |   | 44     |                  |  |             |      |  |   | 1,035
|Net unrealized gains or (losses) included in stockholders equity |  |                    | (2,428 | ) |                         |   | (2,437 | )                |  |             | 9     |  |   |     
|Purchases, issuances, (sales) and (settlements)                   |  |                    | 3,352  |   |                         |   | 2,867  |                  |  |             | 485   |  |   |     
|Net transfers in                                                  |  |                    | 3,904  |   |                         |   | 2,999  |                  |  |             | 905   |  |   |     
|                                                                  |  |                    |        |   |                         |   |        |                  |  |             |       |  |   |      
|Balance, end of period                                            |  | $                  | 51,202 |   |                         | $ | 39,443 |                  |  | $           | 8,039 |  | $ | 3,720
|                                                                  |  |                    |        |   |                         |   |        |                  |  |             |       |  |   |      

The following table summarizes the change in balance sheet carrying value associated with Level 3
financial assets carried at fair value during the six months ended June 30, 2008:



|                                                           |  |                    |         |   |                         |   |         |                  |  |   |             |   |  |   |      
|---------------------------------------------------------- |  | ------------------ | ------- | - | ----------------------- | - | ------- | ---------------- |  | - | ----------- | - |  | - | -----
|                                                           |  | TotalLevel 3Assets |         |   | FixedMaturitySecurities |   |         | EquitySecurities |  |   | OtherAssets
|Balance, beginning of year                                 |  | $                  | 67,436  |   |                         | $ | 57,416  |                  |  | $ | 7,585       |   |  | $ | 2,435
|Total net gains (realized/unrealized) included in earnings |  |                    | 1,363   |   |                         |   | 78      |                  |  |   |            |   |  |   | 1,285
|Net unrealized losses included in stockholders equity     |  |                    | (4,190  | ) |                         |   | (3,799  | )                |  |   | (391        | ) |  |   |     
|Purchases, issuances, (sales) and (settlements)            |  |                    | 2,907   |   |                         |   | 2,422   |                  |  |   | 485         |   |  |   |     
|Net transfers in (out of)                                  |  |                    | (16,314 | ) |                         |   | (16,674 | )                |  |   | 360         |   |  |   |     
|                                                           |  |                    |         |   |                         |   |         |                  |  |   |             |   |  |   |      
|Balance, end of period                                     |  | $                  | 51,202  |   |                         | $ | 39,443  |                  |  | $ | 8,039       |   |  | $ | 3,720
|                                                           |  |                    |         |   |                         |   |         |                  |  |   |             |   |  |   |      

FAS 157 describes three different valuation techniques to be used in determining fair value for
financial assets and liabilities: the market, income or cost approaches. The three valuation techniques described within FAS 157 are consistent with generally accepted valuation methodologies. The market approach valuation technique uses prices and
other relevant information from market transactions involving identical or comparable assets or liabilities. When possible, quoted prices (unadjusted) in active markets are used as of the period-end date. Otherwise, valuation techniques consistent
with the market approach including matrix pricing and comparables are used. Matrix pricing is a mathematical technique employed to value certain securities without relying exclusively on quoted prices for those securities but comparing those
securities to benchmark or comparable securities. Comparables use market multiples, which might lie in ranges with a different multiple for each comparable.

Income approach valuation techniques convert future amounts, such as cash flows or earnings, to a single present amount, or a discounted amount. These techniques rely on current market expectations of future amounts
as of the period-end date. Examples of income approach valuation techniques include present value techniques, option-pricing models, binomial or lattice models that incorporate present value techniques, and the multi-period excess earnings method.



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##### Table of Contents

Union Security Insurance Company

Notes to the Consolidated Financial Statements (unaudited)

Six Months Ended June 30, 2008 and 2007

(In thousands, except per share and share amounts)



Cost approach valuation techniques are based upon the amount that would be required to replace the
service capacity of an asset at the period-end date, or the current replacement cost. That is, from the perspective of a market participant (seller), the price that would be received for the asset is determined based on the cost to a market
participant (buyer) to acquire or construct a substitute asset of comparable utility, adjusted for obsolescence.

While all three
approaches are not applicable to all financial assets or liabilities, where appropriate, one or more valuation technique may be used. For all the financial assets and liabilities included in the above hierarchy, excluding derivatives and private
placement bonds, the market valuation technique is generally used. For private placement bonds and derivatives, the income valuation technique is generally used. For the period ended June 30, 2008, the application of valuation techniques
applied to similar assets and liabilities has been consistent.

Level 2 valuations include observable market inputs. FAS 157 defines
observable market inputs as the assumptions market participants would use in pricing the asset or liability developed on market data obtained from sources independent of the Company. The extent of the use of each observable market input for a
security depends on the type of security and the market conditions at the balance sheet date. Depending on the security, the priority of the use of observable market inputs may change as some observable market inputs may not be relevant or
additional inputs may be necessary. The following observable market inputs, listed in the approximate order of priority, are utilized in the pricing evaluation of Level 2 securities: benchmark yields, reported trades, broker/dealer quotes, issuer
spreads, two-sided markets, benchmark securities, bids, offers and reference data. Each security is evaluated based on relevant market information including: relevant credit information, perceived market movements and sector news. Valuation models
can change period to period, depending on the appropriate observable inputs that are available at the balance sheet date to price a security.

The Company performs a monthly analysis to assess if the evaluated prices represent a reasonable estimate of their fair value. This process involves quantitative and qualitative analysis and is overseen by investment and accounting
professionals. Examples of procedures performed include, but are not limited to, initial and on-going review of pricing methodologies, review of the evaluated prices, review of pricing statistics and trends, and comparison of prices for certain
securities with two different appropriate price sources for reasonableness. As a result of this analysis, if the Company determines there is a more appropriate fair value based upon available market data, the price of a security is adjusted
accordingly.



|5. | Retirement and Other Employee Benefits
|-- | --------------------------------------

The Parent
sponsors a defined benefit pension plan and certain other post retirement benefits covering employees and certain agents who meet eligibility requirements as to age and length of service. Pension costs allocated to the Company were $1,278 and $1,880
for the three months ended June 30, 2008 and 2007, respectively, and $2,628 and $3,450 for the six months ended June 30, 2008 and 2007, respectively.

The Company participates in a contributory profit sharing plan, sponsored by the Parent, covering employees and certain agents who meet eligibility requirements as to age and length of



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##### Table of Contents

Union Security Insurance Company

Notes to the Consolidated Financial Statements (unaudited)

Six Months Ended June 30, 2008 and 2007

(In thousands, except per share and share amounts)



service. The amounts expensed by the Company were $1,089 and $1,276 for the three months ended June 30, 2008 and 2007, respectively, and $3,337 and
$3,196 for the six months ended June 30, 2008 and 2007, respectively.



|6. | Commitments and Contingencies
|-- | -----------------------------

The Company is
regularly involved in litigation in the ordinary course of business, both as a defendant and as a plaintiff. The Company may from time to time be subject to a variety of legal and regulatory actions relating to the Companys current and past
business operations. While the Company cannot predict the outcome of any pending or future litigation, examination or investigation and although no assurances can be given, the Company does not believe that any pending matter will have a material
adverse effect, individually or in the aggregate, on the Companys consolidated financial condition, results of operations or cash flows.



|7. | Reinsurance Agreement
|-- | ---------------------

On April 1, 2008, the
Company and an affiliate, United Family Life Insurance Company (UFLIC) amended an existing Agreement of Reinsurance (Agreement) between the two companies. Under the terms of the amendment, UFLIC will cede to the Company 100%
of its remaining reinsured liabilities, as defined in the Agreement, on a coinsurance basis. No gain or loss was recognized as a result of this amendment to the Agreement, and the Company paid a ceding fee of $8,159 to UFLIC.



|8. | Return of capital
|-- | -----------------

Based on current operating lines
of business, management determined the Company to be over capitalized. As a result, with the approval of the Iowa Insurance Division, on June 27, 2008, the Company returned $100,000 of contributed capital to its parent company, Interfinancial
Inc.



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##### Table of Contents

|Item 2. | Managements Discussion And Analysis Of Financial Condition And Results Of Operations.
|------- | --------------------------------------------------------------------------------------

(Dollar amounts in thousands)

Managements Discussion
and Analysis of Financial Condition and Results of Operations (MD&A) addresses the financial condition of Union Security Insurance Company and its subsidiaries (collectively, USIC or the Company) as of June 30, 2008, compared
with December 31, 2007, and our results of operations for the three and six months ended June 30, 2008 and 2007. This discussion should be read in conjunction with our MD&A and annual audited financial statements as of
December 31, 2007 included in our Annual Report on Form 10-K for the year ended December 31, 2007 filed with the U.S. Securities and Exchange Commission (hereafter referred to as the Companys 2007 Form 10-K) and the June 30,
2008 unaudited consolidated financial statements and related notes included elsewhere in this Form 10-Q.

Some of the statements included
in this MD&A and elsewhere in this report, particularly those anticipating future financial performance, business prospects, growth and operating strategies and similar matters, are forward-looking statements that involve a number of risks and
uncertainties. You can identify these statements by the fact that they may use words such as will, may, anticipates, expects, estimates, projects, intends,
plans, believes, targets, forecasts, potential, approximately, or the negative version of those words and other words and terms with a similar meaning. 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. Our actual results might differ materially from those projected in the forward-looking statements. The Company undertakes no obligation to publicly update or
review any forward-looking statement, whether as a result of new information, future events or other developments.

In addition to the
factors described in the section below entitled Critical Factors Affecting Results, the following risk factors could cause our actual results to differ materially from those currently estimated by management: (i) failure to maintain
significant client relationships, distribution sources and contractual arrangements; (ii) failure to attract and retain sales representatives; (iii) general global economic, financial market and political conditions (including fluctuations
in interest rates, mortgage rates, monetary policies and inflationary pressure); (iv) inadequacy of reserves established for future claims losses; (v) failure to predict or manage benefits, claims and other costs; (vi) diminished
value of invested assets in our investment portfolio (due to, among other things, credit and liquidity risk, environmental liability exposure and inability to target an appropriate overall risk level); (vii) losses due to natural and man-made
catastrophes; (viii) unavailability, inadequacy and unaffordable pricing of reinsurance coverage; (ix) inability of reinsurers to meet their obligations; (x) insolvency of third parties to whom we have sold or may sell businesses
through reinsurance or modified co-insurance; (xi) credit risk of some of our agents in Assurant Specialty Property and Solutions; (xii) a further decline in the manufactured housing industry; (xiii) a decline in our credit or
financial strength ratings; (xiv) failure to effectively maintain and modernize our information systems; (xv) failure to protect client information and privacy; (xvi) failure to find and integrate suitable acquisitions and new
insurance ventures; (xvii) inability of our subsidiaries to pay sufficient dividends; (xviii) failure to provide for succession of senior management and key executives; (xix) negative publicity and impact on our business due to
unfavorable outcomes in litigation and regulatory



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##### Table of Contents

investigations (including the potential impact on our reputation and business of a negative outcome in the ongoing SEC investigation); (xx) significant
competitive pressures in our businesses and cyclicality of the insurance industry: (xxi) current or new laws and regulations that could increase our costs or limit our growth. These risk factors should not be construed as exhaustive and should
be read in conjunction with the other cautionary statements that are included in this report. For a more detailed discussion of the risk factors that could affect our actual results, please refer to the subsection entitled Risk Factors
in our 2007 Annual Report on Form 10-K.

Critical Factors Affecting Results

Our results depend on the adequacy of our product pricing, underwriting and the accuracy of our methodology for the establishment of reserves for future
policyholder benefits and claims, returns on invested assets and our ability to manage our expenses. Therefore, factors affecting these items may have a material adverse effect on our results of operations or financial condition.

Critical Accounting Policies and Estimates

Our 2007
Form 10-K described the accounting policies and estimates that are critical to the understanding of our results of operations, financial condition and liquidity. The accounting policies and estimates described in the 2007 Form 10-K were consistently
applied to the consolidated interim financial statements for the three and six months ended June 30, 2008.

Recent Accounting Pronouncements

Recent Accounting Pronouncements  Adopted

On January 1, 2008, the Company adopted FAS 157 which defines fair value, addresses how companies should measure fair value when they are required to use a fair value measure for recognition or disclosure
purposes under GAAP, and expands disclosures about fair value measurements. FAS 157 is applied prospectively for financial assets and liabilities measured on a recurring basis as of January 1, 2008 except for certain financial assets that were
measured at fair value using a transaction price. For these financial instruments, which the Company has, FAS 157 requires limited retrospective adoption and thus the difference between the fair values using a transaction price and the fair values
using an exit price of the relevant financial instruments will be shown as a cumulative-effect adjustment to January 1, 2008 retained earnings. At adoption, the Company recognized a $4,200 decrease to other assets, and a corresponding decrease
of $2,730 (after-tax) to retained earnings. See Note 4 for further information regarding FAS 157.

On January 1, 2008, the Company adopted FAS
No. 159, The Fair Value Option for Financial Assets and Financial Liabilities (FAS 159). FAS 159 provides a choice to measure many financial instruments and certain other items at fair value on specified election dates and
requires disclosures about the election of the fair value option. Unrealized gains and losses on items for which the fair value option has been elected are reported in earnings. The Company has chosen not to elect the fair value option for any
financial or non-financial instruments as of the adoption date, thus the adoption of FAS 159 did not have an impact on the Companys financial position or results of operations.



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##### Table of Contents

Recent Accounting Pronouncements  Not Yet Adopted

In December 2007, the Financial Accounting Standards Board (FASB) issued FAS No. 141R, Business Combinations(FAS
141R). FAS 141R replaces FAS No. 141, Business Combinations(FAS 141).FAS 141R retains the fundamental requirements in FAS 141 that the purchase method of accounting be used for all business combinations, that
an acquirer be identified for each business combination and for goodwill to be recognized and measured as a residual. FAS 141R expands the definition of transactions and events that qualify as business combinations to all transactions and other
events in which one entity obtains control over one or more other businesses. FAS 141R broadens the fair value measurement and recognition of assets acquired, liabilities assumed, and interests transferred as a result of business combinations. FAS
141R also increases the disclosure requirements for business combinations in the financial statements. FAS 141R is effective for fiscal periods beginning after December 15, 2008. Therefore, the Company is required to adopt FAS 141R on
January 1, 2009. The Company is currently evaluating the requirements of FAS 141R and the potential impact on the Companys financial position and results of operations.

In December 2007, the FASB issued FAS No. 160, Noncontrolling Interest in Consolidated Financial Statementsan amendment of ARB
No. 51(FAS 160). FAS 160 requires that a non-controlling interest in a subsidiary be separately reported within equity and the amount of consolidated net income attributable to the non-controlling interest be presented in the
statement of operations. FAS 160 also calls for consistency in reporting changes in the parents ownership interest in a subsidiary and necessitates fair value measurement of any non-controlling equity investment retained in a deconsolidation.
FAS 160 is effective for fiscal periods beginning after December 15, 2008. Therefore, the Company is required to adopt FAS 160 on January 1, 2009. The Company is currently evaluating the requirements of FAS 160 and the potential impact on
the Companys financial position and results of operations.

In February 2008, the FASB issued Financial Statement of
Position FAS 157-2, Effective Date of FAS 157 (FSP FAS 157-2). FSP FAS 157-2 defers the effective date of FAS 157 for all non-financial assets and non-financial liabilities measured or disclosed at fair
value in the financial statements on a non-recurring basis to fiscal years beginning after November 15, 2008, and interim periods within those fiscal years, which for the Company is January 1, 2009. The Company is currently evaluating the
requirements of FAS 157 for its non-financial assets and non-financial liabilities measured on a non-recurring basis and the potential impact on the Companys financial position and results of operations.



15



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##### Table of Contents

The tables below present information regarding our consolidated results of operations:



|                                                         |  |                            |         |   |                          |   |         |      |  |   |         |   |  |   |        
|-------------------------------------------------------- |  | -------------------------- | ------- | - | ------------------------ | - | ------- | ---- |  | - | ------- | - |  | - | -------
|                                                         |  | For the Three Months Ended |         |   | For the Six Months Ended
|                                                         |  | June 30,                   |         |   | June 30,                
|                                                         |  | 2008                       |         |   | 2007                     |   |         | 2008 |  |   | 2007   
|                                                         |  | (in thousands)            
|Revenues:                                                |  |                            |         |   |                          |   |         |      |  |   |         |   |  |   |        
|Net earned premiums and other considerations             |  | $                          | 288,752 |   |                          | $ | 303,483 |      |  | $ | 590,850 |   |  | $ | 634,893
|Net investment income                                    |  |                            | 63,815  |   |                          |   | 66,026  |      |  |   | 125,108 |   |  |   | 162,063
|Net realized (losses) gains on investments               |  |                            | (9,966  | ) |                          |   | (1,885  | )    |  |   | (21,718 | ) |  |   | 346    
|Amortization of deferred gains on disposal of businesses |  |                            | 5,160   |   |                          |   | 5,873   |      |  |   | 10,340  |   |  |   | 11,783 
|Fees and other income                                    |  |                            | 3,170   |   |                          |   | 7,894   |      |  |   | 5,748   |   |  |   | 11,543 
|                                                         |  |                            |         |   |                          |   |         |      |  |   |         |   |  |   |        
|Total revenues                                           |  |                            | 350,931 |   |                          |   | 381,391 |      |  |   | 710,328 |   |  |   | 820,628
|                                                         |  |                            |         |   |                          |   |         |      |  |   |         |   |  |   |        
|Benefits, losses and expenses:                           |  |                            |         |   |                          |   |         |      |  |   |         |   |  |   |        
|Policyholder benefits                                    |  |                            | 223,369 |   |                          |   | 221,156 |      |  |   | 457,198 |   |  |   | 478,539
|Selling, underwriting and general expenses (1)           |  |                            | 97,795  |   |                          |   | 107,096 |      |  |   | 200,715 |   |  |   | 213,316
|                                                         |  |                            |         |   |                          |   |         |      |  |   |         |   |  |   |        
|Total benefits, losses and expenses                      |  |                            | 321,164 |   |                          |   | 328,252 |      |  |   | 657,913 |   |  |   | 691,855
|                                                         |  |                            |         |   |                          |   |         |      |  |   |         |   |  |   |        
|Income before provision for income taxes                 |  |                            | 29,767  |   |                          |   | 53,139  |      |  |   | 52,415  |   |  |   | 128,773
|Provision for income taxes                               |  |                            | 12,301  |   |                          |   | 6,310   |      |  |   | 20,110  |   |  |   | 33,895 
|                                                         |  |                            |         |   |                          |   |         |      |  |   |         |   |  |   |        
|Net income                                               |  | $                          | 17,466  |   |                          | $ | 46,829  |      |  | $ | 32,305  |   |  | $ | 94,878 
|                                                         |  |                            |         |   |                          |   |         |      |  |   |         |   |  |   |        



|(1) | Includes amortization of deferred acquisition costs and value of business acquired and underwriting, general and administrative expenses.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------

The following discussion provides a high level analysis of the consolidated results for three and six months ended June 30, 2008 (Second Quarter 2008
and Six Months 2008, respectively) and three and six months ended June 30, 2007 (Second Quarter 2007 and Six Months 2007, respectively). Please see the discussion that follows for a more detailed analysis of
the fluctuations.

For The Three Months Ended June 30, 2008 Compared to The Three Months Ended June 30, 2007.

Net Income

Net income decreased $29,363, or 63%, to
$17,466 for Second Quarter 2008 from $46,829 for Second Quarter 2007. The decrease in net income is primarily due to a reduction of $11,975 in Second Quarter 2007 provision for income taxes due to a reduction in certain tax contingencies associated
with a favorable tax settlement. Also contributing to the decrease is a decrease in net investment income driven by lower than average invested assets and an increase in net realized losses on investments due to the write-down of
other-than-temporary impairments in Second Quarter 2008 of $4,074 (after-tax). Second Quarter 2007 had no write-downs of other-than-temporary impairments. The remaining decrease is attributable to less favorable group disability experience and less
favorable group dental experience.



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Total Revenues

Total revenues decreased $30,460, or 8%, to $350,931 for Second Quarter 2008 from $381,391 for Second Quarter 2007. Net earned premiums decreased $14,731, primarily due to a decline in our small employer group health
business, a decrease in disability net earned premiums due to the transfer of a closed block of business and lower net earned premiums in group life. Net realized losses on investments increased due to other-than-temporary impairments in our
investment portfolio of $6,942, net investment income declined due to lower average invested assets and fees and other income decreased due to contract settlement fee income recorded in the prior year related to the sale of marketing rights for our
Independent  U.S. channel prefunded funeral business. These were partially offset by an increase in net earned premiums in our group dental business.

Total Benefits, Losses and Expenses

Total benefits, losses and expenses decreased $7,088, or 2%, to $321,164 for Second
Quarter 2008 from $328,252 for Second Quarter 2007. The decrease is primarily due to a decline in our small employer group health business, a decrease in disability policyholder benefits due to the transfer of a closed block of business and a
decline in our prefunded funeral business due to run-off of closed blocks of business. These decreases are partially offset by less favorable group disability experience and less favorable group dental experience.

Income Taxes

Income taxes increased $5,991, or 95%,
to $12,301 for Second Quarter 2008 from $6,310 for Second Quarter 2007. The change in income taxes is not proportionate to pretax income primarily due to a reduction of $11,975 in Second Quarter 2007 provision for income taxes due to a reduction in
certain tax contingencies associated with a favorable tax settlement.

For The Six Months Ended June 30, 2008 Compared to The Six Months Ended
June 30, 2007.

Net Income

Net income decreased $62,573, or 66%, to $32,305 for Six Months 2008 from $94,878 for Six Months 2007. The decrease in net income is primarily due to a decrease in net investment income of $22,775 (after-tax), of which $19,600 (after-tax)
is from real estate joint venture partnerships and the remaining is mainly due to lower average invested assets and a reduction of $10,828 for Six Months 2007 provision for income taxes due to a reduction in certain tax contingencies associated with
a favorable tax settlement. Also contributing to the decrease is an increase in net realized losses on investments due to the write-down of other-than-temporary impairments for Six Months 2008 of $13,116 (after-tax). Six Months 2007 had no
write-downs of other-than-temporary impairments. The remaining decrease is attributable to less favorable group disability experience and less favorable group dental experience.

Total Revenues

Total revenues decreased $110,300, or 13%, to $710,328 for Six Months 2008 from
$820,628 for Six Months 2007. Net earned premiums decreased $44,043, primarily due to a decline in our small employer group health business, a decrease in disability net earned premiums



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due to the transfer of a closed block of business and lower net earned premiums in group life. Net investment income decreased $36,955 of which $31,800 is
from real estate joint venture partnerships and the remaining is mainly from lower average invested assets. Net realized losses on investments increased due to other-than-temporary impairments in our investment portfolio of $21,268 and fees and
other income decreased due to contract settlement fee income recorded in the prior year related to the sale of marketing rights for our Independent  U.S. channel prefunded funeral business. These are partially offset by an increase in net
earned premiums in our group dental business.

Total Benefits, Losses and Expenses

Total benefits, losses and expenses decreased $33,942, or 5%, to $657,913 for Six Months 2008 from $691,855 for Six Months 2007. This decrease is
primarily due to a decline in our small employer group health business, a decrease in disability policyholder benefits due to the transfer of a closed block of business and a decline in our prefunded funeral business due to run-off of closed blocks
of business. These decreases are partially offset by less favorable group disability experience and less favorable group dental experience.

Income
Taxes

Income taxes decreased $13,785, or 41%, to $20,110 for Six Months 2008 from $33,895 for Six Months 2007. The change in income
taxes is not proportionate to pretax income primarily due to reduction of $10,828 for Six Months 2007 provision for income taxes due to a reduction in certain tax contingencies associated with a favorable tax settlement.



|Item 3. | Quantitative And Qualitative Disclosures About Market Risk.
|------- | -----------------------------------------------------------

Not required under the reduced disclosure format.



|Item 4T. | Controls And Procedures.
|-------- | ------------------------

Evaluation of
Disclosure Controls and Procedures

Under the supervision and with the participation of our Interim Chief Executive Officer and Chief
Financial Officer, we have evaluated the effectiveness of our disclosure controls and procedures as of June 30, 2008. 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.

Internal Controls over Financial Reporting

There have been no changes in our internal control over
financial reporting that occurred during the second fiscal quarter of 2008 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.



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PART II

OTHER INFORMATION



|Item 1A. | Risk Factors.
|-------- | -------------

Our 2007 Form 10-K described our Risk Factors. There have been no material changes to the Risk Factors during the six months ended June 30, 2008.



|Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds.
|------- | ------------------------------------------------------------

Not required under the reduced disclosure format.



|Item 3. | Defaults Upon Senior Securities.
|------- | --------------------------------

Not required under the reduced disclosure format.



|Item 4. | Submission of Matters to a Vote of Security Holders.
|------- | ----------------------------------------------------

Not required under the reduced disclosure format.



|Item 5. | Other Information.
|------- | ------------------



| | (a) | None.
| | --- | -----



| | (b) | Because all of the Companys outstanding common stock is held indirectly by Assurant, Inc., the Company does not file a Schedule 14A and has not adopted any procedures by which
security holders may recommend nominees to the registrants board of directors.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|Item 6. | Exhibits
|------- | --------

The following
exhibits are filed with this report. Exhibits are available upon request at the investor relations section of our website, located at www.assurant.com.



|31.1 | Rule 13a-14(a)/15d-14(a) Certification of Interim Chief Executive Officer.
|---- | --------------------------------------------------------------------------



|31.2 | Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer.
|---- | ------------------------------------------------------------------



|32.1 | Certification of Interim Chief Executive Officer of Union Security Insurance Company pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
|---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|32.2 | Certification of Chief Financial Officer of Union Security Insurance Company pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002.
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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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 August 4, 2008.



UNION SECURITY INSURANCE COMPANYBy:

/s/ John S. RobertsName:

John S. RobertsTitle:

Interim President and Chief Executive OfficerBy:

/s/ Stacia N. AlmquistName:

Stacia N. AlmquistTitle:

Treasurer and Chief Financial Officer




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