Assurant 2011 Annual Report Download - page 112

ASSURANT, INC.2011 Form10-KF-36
13 Reinsurance
 e reserves for annuities issued by the independent division are based
on assumed interest rates credited on deferred annuities, which vary
by year of issue, and ranged from 1.5% to 5.5% in 2011 and 2010.
Withdrawal charges, if any, generally range from 7.0% to 0.0% and
grade to zero over a period of seven years for business issued in the
U.S. Canadian annuity products have a surrender charge that varies
by product series and premium paying period.
Preneed Business—AMLIC Division
Interest and discount rates for preneed life insurance issued or acquired
after September 2000 and prior to 2009 vary by year of issuance and
are based on pricing assumptions and modi ed to allow for provisions
for adverse deviation. For preneed life insurance with discretionary
death bene t growth issued after 2008, interest and discount rates are
based on product nonforfeiture rates and current assumptions without
provisions for adverse deviation. Discount rates for 2011 and 2010
issues ranged from 4.0% to 5.8%. Preneed insurance issued prior to
October 2000 and all traditional life insurance issued by the AMLIC
division use discount rates, which vary by issue year and product,
ranging from 0.0% to 7.5% in 2011 and 2010.
Mortality assumptions for preneed life insurance issued or acquired
after September 2000 and prior to 2009 are based upon pricing
assumptions, which approximate actual experience, and modi ed to
allow for provisions for adverse deviation. For preneed life insurance
with discretionary death bene t growth issued after 2008, mortality
assumptions are based upon pricing assumptions, which approximate
actual experience, without provisions for adverse deviation. Surrender
rates for preneed life insurance issued or acquired in October 2000
and beyond vary by product and are based upon pricing assumptions.
Mortality assumptions for all preneed life insurance and traditional life
insurance acquired by the AMLIC division prior to October 2000 are
based on statutory valuation requirements, which approximate GAAP,
with no explicit provision for lapses.
Future policy bene t increases for preneed life insurance products are
based upon pricing assumptions. First-year guaranteed bene t increases
were 0.0% in 2011 and 2010. Renewal guaranteed bene t increases
ranged from 0.0% to 3.0% in 2011 and 2010. For contracts with
minimum bene t increases associated with an in ation index, assumed
bene t increases equaled the discount rate less 3.0% in 2011 and 2010.
 e reserves for annuities issued by the AMLIC division are based
on assumed interest rates credited on deferred annuities and ranged
from 1.0% to 6.5% in 2011 and 2010. Withdrawal charges ranged
from 0.0% to 8.0% grading to zero over eight years for business issued
in the United States. Canadian annuity products have a  at 35%
surrender charge. Nearly all the deferred annuities contracts have a
3.0% guaranteed interest rate.
Universal Life and Annuities—No Longer
Off ered
 e reserves for universal life and annuity products (no longer o ered)
in the Assurant Solutions segment have been established based on the
following assumptions: Interest rates credited on annuities, which vary
by product and time when funds were received, ranged from 3.5% to
4% with guaranteed credited rates that ranged from 3.5% to 4.0% in
2011 and 2010, except for a limited number of policies with credited
rates of 4.5% with guaranteed credited rate of 4.5%. Annuities are also
subject to surrender charges, which vary by contract year and grade
to zero over a period no longer than seven years. Surrender values on
annuities will never be less than the amount of paid-in premiums (net of
prior withdrawals) regardless of the surrender charge. Credited interest
rates on universal life funds vary by product and time when funds were
received and ranged from 4.0% to 4.1% in 2011 and 2010. Guaranteed
crediting rates where present were 4.0%. Additionally, universal life
funds are subject to surrender charges that vary by product, age, sex,
year of issue, risk class, face amount and grade to zero over a period
not longer than 20 years.
FFG and LTC
Reserves for businesses previously disposed of by FFG and LTC are
included in the Company’s reserves in accordance with the insurance
guidance.  e Company maintains an o setting reinsurance recoverable
related to these reserves. See Note 13 for further information.
13. Reinsurance
In the ordinary course of business, the Company is involved in both the assumption and cession of reinsurance with non-a liated companies.
 e following table provides details of the reinsurance recoverables balance for the years ended December31:
2011 2010
Ceded future policyholder bene ts and expense $ 3,399,938 $ 3,344,066
Ceded unearned premium 1,013,778 796,944
Ceded claims and bene ts payable 945,900 823,731
Ceded paid losses 51,448 32,575
TOTAL $ 5,411,064 $ 4,997,316