Assurant 2011 Annual Report Download - page 89

ASSURANT, INC.2011 Form10-K F-13
2 Summary of Signi cant Accounting Policies
For a majority of individual medical contracts issued prior to 2003, a
limited number of individual medical contracts currently issued from
2003 through 2006 in certain jurisdictions, individual voluntary
limited bene t health policies issued in 2007 and later and traditional
life insurance contracts previously sold by the preneed business (no
longer o ered), revenue is recognized when due from policyholders.
For universal life insurance and investment-type annuity contracts
previously sold by the Assurant Solutions segment (no longer o ered),
revenues consist of charges assessed against policy balances.
Premiums for LTC insurance and traditional life insurance contracts
within FFG are recognized as revenue when due from the policyholder.
For universal life insurance and investment-type annuity contracts
within FFG, revenues consist of charges assessed against policy balances.
For the FFG and LTC businesses previously sold, all revenue is ceded.
Short Duration Contracts
 e Company’s short duration contracts are those on which the
Company recognizes revenue on a pro-rata basis over the contract term.
 e Company’s short duration contracts primarily include group term
life, group disability, medical, dental, vision, property and warranty,
credit life and disability, and extended service contracts and individual
medical contracts issued from 2003 through 2006 in most jurisdictions
and in all jurisdictions after 2006.
Reinstatement premiums for reinsurance are netted against net earned
premiums and other considerations in the consolidated statements of
operations.
Total Other- an-Temporary Impairment Losses
For debt securities with credit losses and non-credit losses or gains, total
other-than-temporary impairment (“OTTI”) losses is the total of the
decline in fair value from either the most recent OTTI determination
or a prior period end in which the fair value declined until the current
period end valuation date.  is amount does not include any securities
that had fair value increases. For equity securities and debt securities
that the Company has the intent to sell or if it is more likely than not
that it will be required to sell for equity securities that have an OTTI
or for debt securities if there are only credit losses, total other-than-
temporary impairment losses is the total amount by which the fair
value of the security is less than its amortized cost basis at the period
end valuation date and the decline in fair value is deemed to be other-
than-temporary.
Fees and Other Income
Income earned on preneed life insurance policies with discretionary
death bene t growth issued after 2008 is presented within fees and
other income.
 e Company also derives fees and other income from providing
administrative services.  ese fees are recognized monthly when
services are performed.
Dealer obligor service contracts are sales in which the retailer/dealer is
designated as the obligor (administrative service-only plans). For these
contract sales, the Company recognizes administrative fee revenue on
a straight-line pro-rata basis over the terms of the service contract.
Administrator obligor service contracts are sales in which the Company
is designated as the obligor.  e Company recognizes and reports
administration fees related to these contracts as earned on the same
basis as the premium is recognized or on a straight-line pro-rata basis.
Administration fees related to the unexpired portion of the contract
term for both the dealer obligor and administrator obligor service
contracts are deferred and amortized over the term of the contracts.
 ese unexpired amounts are reported in accounts payable and other
liabilities on the consolidated balance sheets.
Underwriting, General and Administrative
Expenses
Underwriting, general and administrative expenses consist primarily
of commissions, premium taxes, licenses, fees, salaries and personnel
bene ts and other general operating expenses.
Leases
 e Company records expenses for operating leases on a straight-line
basis over the lease term.
Contingencies
 e Company evaluates each contingent matter separately. A loss
contingency is recorded if reasonably estimable and probable.  e
Company establishes reserves for these contingencies at the best estimate,
or if no one estimated number within the range of possible losses is
more probable than any other, the Company records an estimated
reserve at the low end of the estimated range. Contingencies a ecting
the Company primarily relate to litigation matters which are inherently
di cult to evaluate and are subject to signi cant changes.  e Company
believes the contingent amounts recorded are adequate and reasonable.
Recent Accounting Pronouncements—Adopted
On December31, 2011, the Company adopted the new guidance related
to the presentation of comprehensive income.  is guidance provides
two alternatives for presenting comprehensive income. An entity can
report comprehensive income either in a single continuous  nancial
statement or in two separate but consecutive  nancial statements. Each
component of net income and each component of other comprehensive
income, together with totals for comprehensive income and its two
parts, net income and other comprehensive income, are displayed
under either alternative.  e statement(s) are to be presented with
equal prominence as the other primary  nancial statements.  e new
guidance eliminates the Company’s previously applied option to report
other comprehensive income and its components in the statement of
changes in stockholders’ equity.  e guidance does not change the
items that constitute net income or other comprehensive income,
and does not change when an item of other comprehensive income
must be reclassi ed to net income.  e Company chose to early adopt
this guidance and therefore is reporting comprehensive income in a
separate but consecutive statement, with full retrospective application
as required by the guidance.  e adoption of the new presentation
requirements did not have an impact on the Company’s  nancial
position or results of operations.