Assurant 2014 Annual Report Download - page 104

ASSURANT, INC. – 2014 Form 10-KF-16
2 Summary of Signifi cant Accounting Policies
Administrator obligor service contracts are sales in which
the Company is designated as the obligor. The 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. These 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 benefi ts and other general operating
expenses and are expensed as incurred.
Leases
The Company records expenses for operating leases on a
straight-line basis over the lease term.
Contingencies
The Company evaluates each contingent matter separately.
A loss contingency is recorded if reasonably estimable and
probable. The 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
affecting the Company primarily relate to litigation matters
which are inherently diffi cult to evaluate and are subject to
signifi cant changes. The Company believes the contingent
amounts recorded are reasonable.
Recent Accounting Pronouncements —
Adopted
On December 31, 2014, the Company adopted the amended
guidance on reporting discontinued operations and disclosures
of disposals of components of an entity. To qualify as a
discontinued operation under the amended guidance, a
component or group of components must represent a strategic
shift that has (or will have) a major effect on an entity’s
operations and fi nancial results. The amended guidance
includes expanded disclosures for discontinued operations
and requires comparative balance sheet presentation. New
disclosures are also required for disposals of individually
signifi cant components that do not qualify as discontinued
operations. The adoption of this amended guidance did
not impact the Company’s fi nancial position or results of
operations.
On January 1, 2014, the Company adopted the new guidance
on presentation of an unrecognized tax benefi t when a net
operating loss carryforward, a similar tax loss, or a tax credit
carryforward exists. The amendments in this guidance state
that an unrecognized tax benefi t, or a portion thereof, should
be presented in the fi nancial statements as a reduction to a
deferred tax asset for a net operating loss carryforward, a
similar tax loss, or a tax credit carryforward. An exception to
this guidance would be where a net operating loss carryforward
or similar tax loss or credit carryforward would not be available
under the tax law to settle any additional income taxes
that would result from the disallowance of a tax position,
or the tax law does not require the entity to use, and the
entity does not intend to use, the deferred tax asset for
such purpose. In such a case, the unrecognized tax benefi t
should be presented in the fi nancial statements as a liability
and should not be combined with deferred tax assets. The
adoption of this new presentation guidance did not impact
the Company’s fi nancial position or results of operations.
On January 1, 2014, the Company adopted the other expenses
guidance that addresses how health insurers should recognize
and classify in their statements of operations fees mandated
by the Affordable Care Act. The Affordable Care Act imposes
an annual fee on health insurers for each calendar year
beginning on or after January 1, 2014. The amendments
specify that the liability for the fee should be estimated
and recorded in full once the entity provides qualifying
health insurance in the applicable calendar year in which
the fee is payable with a corresponding deferred cost that is
amortized to expense ratably over the calendar year during
which it is payable. The Company’s adoption of this guidance
impacts the results of our Assurant Health and Assurant
Employee Benefi ts segments. For the calendar year ended
December 31, 2014, the Company ratably recorded $25,723
in underwriting, general and administrative expenses in the
consolidated statements of operations, and paid, in full, the
fi nal assessment during the third quarter of 2014.
Recent Accounting Pronouncements —
Not Yet Adopted
In May 2014, the Financial Accounting Standards Board
(“FASB”) issued amended guidance on revenue recognition.
The amended guidance affects any entity that either enters
into contracts with customers to transfer goods or services
or enters into contracts for the transfer of nonfi nancial
assets unless those contracts are within the scope of other
standards. Insurance contracts are within the scope of other
standards and therefore are specifi cally excluded from the
scope of the amended revenue recognition guidance. The core
principle of the amended guidance is that an entity recognizes
revenue to depict the transfer of promised goods or services
to customers in an amount that refl ects the consideration
to which the entity expects to be entitled in exchange for
those goods or services. To achieve the core principle, the
entity applies a fi ve step process outlined in the amended
guidance. The amended guidance also includes a cohesive