Assurant 2011 Annual Report Download - page 69

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ASSURANT, INC.2011 Form10-K 61
PARTII
ITEM 9 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
FOREIGN EXCHANGE MOVEMENT ANALYSIS OF NET INCOME
As of December31,2011
Foreign exchange daily average rate for the year
endedDecember31,2011, US Dollar to Canadian Dollar -10% -5% 0 5% 10%
Net income $ 540,687 $ 543,263 $ 545,839 $ 548,415 $ 550,991
% change of net income from base case (0.94)% (0.47)% —% 0.47% 0.94%
$ change of net income from base case $ (5,152) $ (2,576) $ — $ 2,576 $ 5,152
As of December31,2010
Foreign exchange daily average rate for the year
ended December31,2010. US Dollar to Canadian Dollar -10% -5% 0 5% 10%
Net income $ 274,761 $ 276,969 $ 279,177 $ 281,385 $ 283,593
% change of net income from basecase (1.58)% (0.79)% —% 0.79% 1.58%
$ change of net income from basecase $ (4,416) $ (2,208) $ — $ 2,208 $ 4,416
Derivatives
Derivatives are  nancial instruments whose values are derived from
interest rates, foreign exchange rates,  nancial indices or the prices of
securities or commodities. Derivative  nancial instruments may be
exchange-traded or contracted in the over-the-counter market and
include swaps, futures, options and forward contracts.
Under insurance statutes, our insurance companies may use derivative
nancial instruments to hedge actual or anticipated changes in their
assets or liabilities, to replicate cash market instruments or for certain
income-generating activities.  ese statutes generally prohibit the
use of derivatives for speculative purposes. We generally do not use
derivative  nancial instruments.
We have purchased contracts to cap the in ation risk exposure inherent
in some of our preneed insurance policies.
In accordance with the guidance on embedded derivatives, we have
bifurcated the modi ed coinsurance agreement with  e Hartford into
its debt host and embedded derivative (total return swap) and recorded
the embedded derivative at fair value in the consolidated balance sheets.
e invested assets related to this modi ed coinsurance agreement
are included in other investments in the consolidated balance sheets.
ITEM 8 Financial Statements and Supplementary Data
e consolidated  nancial statements and  nancial statement schedules in PartIV, Item15(a) 1 and 2 of this report are incorporated by reference
into this Item8.
ITEM 9 Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure
ere have been no disagreements with accountants on accounting and  nancial disclosure.