Assurant 2014 Annual Report Download - page 107

ASSURANT, INC. – 2014 Form 10-K F-19
5 Investments
December 31, 2013
Cost or Amortized
Cost
Gross Unrealized
Gains
Gross Unrealized
Losses Fair Value
OTTI
in AOCI(a)
Fixed maturity securities:
United States Government and government
agencies and authorities $ 408,378 $ 4,166 $ (1,888) $ 410,656 $ —
States, municipalities and political
subdivisions 774,233 63,543 (2,624) 835,152 —
Foreign governments 647,486 35,543 (7,608) 675,421 —
Asset-backed 4,320 1,910 (56) 6,174 1,773
Commercial mortgage-backed 57,594 2,850 (82) 60,362 —
Residential mortgage-backed 919,216 41,905 (13,217) 947,904 19,525
Corporate 7,709,083 684,776 (37,653) 8,356,206 19,359
TOTAL FIXED MATURITY SECURITIES $ 10,520,310 $ 834,693 $ (63,128) $ 11,291,875 $ 40,657
Equity securities:
Common stocks $ 17,890 $ 11,352 $ (10) $ 29,232 $ —
Non-redeemable preferred stocks 399,645 38,880 (9,399) 429,126 —
TOTAL EQUITY SECURITIES $ 417,535 $ 50,232 $ (9,409) $ 458,358 $ —
(a) Represents the amount of OTTI recognized in accumulated other comprehensive income (“AOCI”). Amount includes unrealized gains and losses on
impaired securities relating to changes in the value of such securities subsequent to the impairment measurement date.
Our states, municipalities and political subdivisions holdings
are highly diversifi ed across the U.S. and Puerto Rico, with
no individual state’s exposure (including both general
obligation and revenue securities) exceeding 0.5% of the
overall investment portfolio as of December 31, 2014 and
2013. At December 31, 2014 and 2013, the securities include
general obligation and revenue bonds issued by states,
cities, counties, school districts and similar issuers, including
$270,107 and $234,640, respectively, of advance refunded
or escrowed-to-maturity bonds (collectively referred to
as “pre-refunded bonds”), which are bonds for which an
irrevocable trust has been established to fund the remaining
payments of principal and interest. As of December 31,
2014 and 2013, revenue bonds account for 51% and 53% of
the holdings, respectively. Excluding pre-refunded revenue
bonds, the activities supporting the income streams of the
Company’s revenue bonds are across a broad range of sectors,
primarily highway, water, transit, airport and marina, higher
education, specifi cally pledged tax revenues, and other
miscellaneous sources such as bond banks, fi nance authorities
and appropriations.
The Company’s investments in foreign government fi xed
maturity securities are held mainly in countries and currencies
where the Company has policyholder liabilities, which
allow the assets and liabilities to be more appropriately
matched. At December 31, 2014, approximately 76%, 10%,
and 5% of the foreign government securities were held in
the Canadian government/provincials and the governments
of Brazil and Germany, respectively. At December 31, 2013,
approximately 70%, 15% and 6% of the foreign government
securities were held in the Canadian government/provincials
and the governments of Brazil and Germany, respectively.
No other country represented more than 3% of our foreign
government securities as of December 31, 2014 and 2013.
The Company has European investment exposure in its
corporate fi xed maturity and equity securities of $1,060,655
with a net unrealized gain of $116,975 at December 31, 2014
and $1,082,129 with a net unrealized gain of $78,126 at
December 31, 2013. Approximately 22% and 25% of the
corporate European exposure is held in the fi nancial industry
at December 31, 2014 and 2013, respectively. Our largest
European country exposure represented approximately 5%
and 6% of the fair value of our corporate securities as of
December 31, 2014 and 2013, respectively. Approximately
5% of the fair value of the corporate European securities
are pound and euro-denominated and are not hedged to
U.S. dollars, but held to support those foreign-denominated
liabilities. Our international investments are managed as
part of our overall portfolio with the same approach to risk
management and focus on diversifi cation.
The Company has exposure to the energy sector in its corporate
fi xed maturity securities of $992,012 with a net unrealized
gain of $89,590 at December 31, 2014 and $996,901 with
a net unrealized gain of $78,667 at December 31, 2013.
Approximately 89% and 87% of the energy exposure is rated
as investment grade as of December 31, 2014 and 2013,
respectively.
The cost or amortized cost and fair value of fi xed maturity
securities at December 31, 2014 by contractual maturity are
shown below. Expected maturities may differ from contractual
maturities because issuers of the securities may have the
right to call or prepay obligations with or without call or
prepayment penalties.