Assurant 2014 Annual Report Download - page 113

ASSURANT, INC. – 2014 Form 10-K F-25
6 Fair Value Disclosures
6. Fair Value Disclosures
Fair Values, Inputs and Valuation Techniques for
Financial Assets and Liabilities Disclosures
The fair value measurements and disclosures guidance
defi nes fair value and establishes a framework for measuring
fair value. Fair value is defi ned as the price that would be
received to sell an asset or paid to transfer a liability in
an orderly transaction between market participants at the
measurement date. In accordance with this guidance, the
Company has categorized its recurring basis fi nancial assets
and liabilities into a three-level fair value hierarchy based
on the priority of the inputs to the valuation technique.
The fair value hierarchy gives the highest priority to quoted
prices in active markets for identical assets or liabilities
(Level 1) and the lowest priority to unobservable inputs
(Level 3). The inputs used to measure fair value may fall into
different levels of the fair value hierarchy. In such cases,
the level in the fair value hierarchy within which the fair
value measurement in its entirety falls has been determined
based on the lowest level input that is signifi cant to the fair
value measurement in its entirety. The Company’s assessment
of the signifi cance of a particular input to the fair value
measurement in its entirety requires judgment, and considers
factors specifi c to the asset or liability.
The levels of the fair value hierarchy are described below:
• Level 1 inputs utilize quoted prices (unadjusted) in active
markets for identical assets or liabilities that the Company
can access.
• Level 2 inputs utilize other than quoted prices included in
Level 1 that are observable for the asset, either directly
or indirectly, for substantially the full term of the asset.
Level 2 inputs include quoted prices for similar assets in
active markets, quoted prices for identical or similar assets
in markets that are not active and inputs other than quoted
prices that are observable in the marketplace for the
asset. The observable inputs are used in valuation models
to calculate the fair value for the asset.
•Level 3 inputs are unobservable but are signifi cant to the
fair value measurement for the asset, and include situations
where there is little, if any, market activity for the asset.
These inputs refl ect management’s own assumptions about
the assumptions a market participant would use in pricing
the asset.
A review of fair value hierarchy classifi cations is conducted
on a quarterly basis. Changes in the observability of valuation
inputs may result in a reclassifi cation of levels for certain
securities within the fair value hierarchy.
The following tables present the Company’s fair value hierarchy for assets and liabilities measured at fair value on a
recurring basis as of December 31, 2014 and 2013. The amounts presented below for Collateral held/pledged under securities
agreements, Other investments, Cash equivalents, Other assets, Assets and Liabilities held in separate accounts and Other
liabilities differ from the amounts presented in the consolidated balance sheets because only certain investments or certain
assets and liabilities within these line items are measured at estimated fair value. Other investments are comprised of
investments in the Assurant Investment Plan, American Security Insurance Company Investment Plan, Assurant Deferred
Compensation Plan, a modifi ed coinsurance arrangement and other derivatives. Other liabilities are comprised of investments
in the Assurant Investment Plan, contingent consideration related to a business combination and other derivatives. The fair
value amount and the majority of the associated levels presented for Other investments and Assets and Liabilities held in
separate accounts are received directly from third parties.
Financial Assets
December 31, 2014
Total Level 1 Level 2 Level 3
Fixed maturity securities:
United States Government and government agencies and authorities $ 176,842 $ — $ 176,842 $ —
State, municipalities and political subdivisions 769,841 — 769,841 —
Foreign governments 664,863 757 664,106 —
Asset-backed 5,519 — 5,519 —
Commercial mortgage-backed 46,016 — 45,613 403
Residential mortgage-backed 968,726 — 964,081 4,645
Corporate 8,631,367 — 8,527,092 104,275
Equity securities:
Common stocks 37,950 37,266 684 —
Non-redeemable preferred stocks 461,457 — 459,457 2,000
Short-term investments 345,246 266,980b78,266c—
Collateral held/pledged under securities agreements 74,985 67,783b7,202c—
Other investments 272,755 59,358a211,276c2,121d
Cash equivalents 683,142 635,804b47,338c—
Other assets 1,674 — 867f807e
Assets held in separate accounts 1,854,193 1,682,671a171,522c—
TOTAL FINANCIAL ASSETS $ 14,994,576 $ 2,750,619 $ 12,129,706 $ 114,251
Financial Liabilities
Other liabilities $ 84,660 $ 59,358a$69
f$ 25,233f
Liabilities related to separate accounts 1,854,193 1,682,671a171,522c—
TOTAL FINANCIAL LIABILITIES $ 1,938,853 $ 1,742,029 $ 171,591 $ 25,233