Assurant 2014 Annual Report Download - page 128

ASSURANT, INC. – 2014 Form 10-KF-40
13 Reserves
Mortality assumptions for business issued prior to 2009
are based upon pricing assumptions and modifi ed to allow
for provisions for adverse deviation. For business issued
after 2008, mortality assumptions are based upon pricing
assumptions without provisions for adverse deviation.
Surrender rates vary by product and are based upon pricing
assumptions.
Future assumed policy benefi t increases on preneed life
insurance issued prior to 2009 ranged from 1.0% to 7.0% in
2014 and 2013. Some policies have future policy benefi t
increases, which are guaranteed or tied to equal some
measure of infl ation. The infl ation assumption for most of
these infl ation-linked benefi ts was 3.0% in both 2014 and
2013 with the exception of most policies issued in 2005
through 2007 where the assumption was 2.3%. Future policy
benefi t increases for business issued in 2014 are based on
current assumptions.
The reserves for annuities issued by the independent division
are based on assumed interest rates credited on deferred
annuities, which vary by year of issue, and ranged from
1.0% to 5.5% in 2014 and 2013. Withdrawal charges, if any,
generally range from 7.0% to 0.0% and grade to zero over a
period of seven years for business issued in the U.S. Canadian
annuity products have a surrender charge that varies by
product series and premium paying period.
PreNeed Business — AMLIC Division
Interest and discount rates for preneed life insurance issued
or acquired after September 2000 and prior to 2009 vary by
year of issuance and are based on pricing assumptions and
modifi ed to allow for provisions for adverse deviation. For
preneed life insurance with discretionary death benefi t growth
issued after 2008, interest and discount rates are based on
current assumptions without provisions for adverse deviation.
Discount rates for 2014 and 2013 issues ranged from 1.5% to
4.3%. Preneed insurance issued prior to October 2000 and
all traditional life insurance issued by the AMLIC division
use discount rates, which vary by issue year and product,
ranging from 0.0% to 7.5% in 2014 and 2013.
Mortality assumptions for preneed life insurance issued
or acquired after September 2000 and prior to 2009 are
based upon pricing assumptions, which approximate actual
experience, and modifi ed to allow for provisions for adverse
deviation. For preneed life insurance with discretionary death
benefi t growth issued after 2008, mortality assumptions
are based upon pricing assumptions, which approximate
actual experience, without provisions for adverse deviation.
Surrender rates for preneed life insurance issued or acquired
in October 2000 and beyond vary by product and are based
upon pricing assumptions. Mortality assumptions for all preneed
life insurance and traditional life insurance acquired by the
AMLIC division prior to October 2000 are based on statutory
valuation requirements, which approximate GAAP, with no
explicit provision for lapses.
Future policy benefi t increases for preneed life insurance
products are based upon pricing assumptions. First-year
guaranteed benefi t increases were 0.0% in 2014 and 2013.
Renewal guaranteed benefi t increases ranged from 0.0% to
3.0% in 2014 and 2013. For contracts with minimum benefi t
increases associated with an infl ation index, assumed benefi t
increases equaled the discount rate less 3.0% in 2014 and 2013.
The reserves for annuities issued by the AMLIC division are
based on assumed interest rates credited on deferred annuities
and ranged from 1.0% to 6.5% in 2014 and 2013. Withdrawal
charges ranged from 0.0% to 8.0% grading to zero over eight
years for United States products. Canadian annuity products
have a fl at 35% surrender charge. Nearly all the deferred
annuities contracts have a 3.0% guaranteed interest rate.
Universal Life and Annuities — No Longer
Offered
The reserves for universal life and annuity products
(no longer offered) in the Assurant Solutions segment have
been established based on the following assumptions: Interest
rates credited on annuities, which vary by product and time
when funds were received, ranged from 3.5% to 4.0% with
guaranteed credited rates that ranged from 3.5% to 4.0% in
2014 and 2013, except for a limited number of policies with
credited rates of 4.5% with guaranteed credited rate of 4.5%.
Annuities are also subject to surrender charges, which vary
by contract year and grade to zero over a period no longer
than seven years. Surrender values on annuities will never
be less than the amount of paid-in premiums (net of prior
withdrawals) regardless of the surrender charge. Credited
interest rates on universal life funds vary by product and time
when funds were received and ranged from 4.0% to 4.1% in
2014 and 2013. Guaranteed crediting rates where present
were 4.0%. Additionally, universal life funds are subject to
surrender charges that vary by product, age, sex, year of
issue, risk class, face amount and grade to zero over a period
not longer than 20 years.
FFG and LTC
Reserves for previously disposed FFG and LTC businesses are
included in the Company’s reserves in accordance with the
insurance guidance. The Company maintains an offsetting
reinsurance recoverable related to these reserves. See Note
14 for further information.