Assurant 2014 Annual Report Download - page 119

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ASSURANT, INC. – 2014 Form 10-K F-31
6 Fair Value Disclosures
based on the credit risk associated with the borrower
and the U.S. Treasury spot curve. Mortgage loans with
similar characteristics are aggregated for purposes of the
calculations.
Policy loans: the carrying value of policy loans reported in
the consolidated balance sheets approximates fair value.
Other investments: Other investments include Certifi ed
Capital Company tax credits, business debentures, credit
tenant loans and social impact loans which are recorded
at amortized cost. The carrying value reported for these
investments approximates fair value. Due to the nature of
these investments, there is a lack of liquidity in the primary
market which results in the holdings being classifi ed as Level 3.
Policy reserves under investment products: the fair values for
the Company’s policy reserves under investment products are
determined using discounted cash fl ow analysis. Key inputs
to the valuation include projections of policy cash fl ows,
reserve run-off, market yields and risk margins.
Funds held under reinsurance: the carrying value reported
approximates fair value due to the short maturity of the
instruments.
Debt: the fair value of debt is based upon matrix pricing
performed by the pricing service utilizing the standard inputs.
Obligation under securities agreements: obligation under
securities agreements is reported at the amount of cash
received from the selected broker/dealers.
The following tables disclose the carrying value, fair value amount and hierarchy level of the fi nancial instruments that are
not recognized or are not carried at fair value in the consolidated balance sheets:
December 31, 2014
Fair Value
Carrying Value Total Level 1 Level 2 Level 3
Financial Assets
Commercial mortgage loans on real estate $ 1,272,616 $ 1,448,215 $ — $ — $ 1,448,215
Policy loans 48,272 48,272 48,272 — —
Other investments 10,896 10,896 — — 10,896
TOTAL FINANCIAL ASSETS $ 1,331,784 $ 1,507,383 $ 48,272 $ — $ 1,459,111
Financial Liabilities
Policy reserves under investment products
(Individual and group annuities, subject to
discretionary withdrawal)(1)
$ 743,951 $ 764,949 $ — $ — $ 764,949
Funds withheld under reinsurance 75,161 75,161 75,161 — —
Debt 1,171,079 1,296,139 — 1,296,139 —
Obligations under securities agreements 95,986 95,986 95,986 — —
TOTAL FINANCIAL LIABILITIES $ 2,086,177 $ 2,232,235 $ 171,147 $ 1,296,139 $ 764,949
December 31, 2013
Fair Value
Carrying Value Total Level 1 Level 2 Level 3
Financial Assets
Commercial mortgage loans on real estate $ 1,287,032 $ 1,444,974 $ — $ — $ 1,444,974
Policy loans 51,678 51,678 51,678 — —
TOTAL FINANCIAL ASSETS $ 1,338,710 $ 1,496,652 $ 51,678 $— $ 1,444,974
Financial Liabilities
Policy reserves under investment products
(Individual and group annuities, subject to
discretionary withdrawal)(1)
$ 809,628 $ 808,734 $ — $ — $ 808,734
Funds withheld under reinsurance 76,778 76,778 76,778 — —
Debt 1,638,118 1,656,588 — 1,656,588 —
Obligations under securities agreements 95,206 95,206 95,206 — —
TOTAL FINANCIAL LIABILITIES $ 2,619,730 $ 2,637,306 $ 171,984 $ 1,656,588 $ 808,734
(1) Only the fair value of the Company’s policy reserves for investment-type contracts (those without significant mortality or morbidity risk) are
reflected in the table above.