Assurant 2014 Annual Report Download - page 132

ASSURANT, INC. – 2014 Form 10-KF-44
15 Debt
15. Debt
On March 28, 2013, the Company issued two series of senior
notes with an aggregate principal amount of $700,000 (the
“2013 Senior Notes”). The Company received net proceeds
of $698,093 from this transaction, which represents the
principal amount less the discount before offering expenses.
The discount of $1,907 is being amortized over the life of the
2013 Senior Notes and is included as part of interest expense
on the consolidated statements of operations. The fi rst series is
$350,000 in principal amount, bears interest at 2.50% per year
and is payable in a single installment due March 15, 2018 and
was issued at a 0.18% discount. The second series is $350,000
in principal amount, bears interest at 4.00% per year and is
payable in a single installment due March 15, 2023 and was
issued at a 0.37% discount. Interest on the 2013 Senior Notes is
payable semi-annually on March 15 and September 15 of each
year. The 2013 Senior Notes are unsecured obligations and
rank equally with all of the Company’s other senior unsecured
indebtedness. The Company may redeem each series of the
2013 Senior Notes in whole or in part at any time and from
time to time before their maturity at the redemption price set
forth in the Indenture. The 2013 Senior Notes are registered
under the Securities Act of 1933, as amended.
The interest expense incurred related to the 2013 Senior Notes
was $22,981 and $17,357 for the year ended December 31, 2014
and 2013, respectively. There was $6,635 of accrued interest
at December 31, 2014 and 2013, respectively. The Company
made interest payments on the 2013 Senior Notes of $11,375
on March 15, 2014 and $11,375 and $10,553 on September 15,
2014 and 2013, respectively.
In February 2004, the Company issued two series of senior notes
with an aggregate principal amount of $975,000 (the “2004
Senior Notes”). The Company received net proceeds of $971,537
from this transaction, which represents the principal amount
less the discount before operating expenses. The discount of
$3,463 is being amortized over the life of the 2004 Senior Notes
and is included as part of interest expense on the statement of
operations. The fi rst series was $500,000 in principal amount,
issued at a 0.11% discount, bore interest at 5.63% per year and
was repaid on February 18, 2014. The second series is $475,000
in principal amount, bears interest at 6.75% per year and is
payable in a single installment due February 15, 2034 and was
issued at a 0.61% discount. Interest on the 2004 Senior Notes
is payable semi-annually on February 15 and August 15 of each
year. The 2004 Senior Notes are unsecured obligations and
rank equally with all of the Company’s other senior unsecured
indebtedness. The senior notes are not redeemable prior to
maturity. All of the holders of the 2004 Senior Notes exchanged
their notes in May 2004 for new notes registered under the
Securities Act of 1933, as amended.
The interest expense incurred related to the 2004 Senior
Notes was $35,414, $59,414, and $60,306 for the years ended
December 31, 2014, 2013, and 2012, respectively. There was
$12,023 and $21,876 of accrued interest at December 31, 2014
and 2013, respectively. The Company made interest payments
on the 2004 Senior Notes of $30,094 on February 15, 2014 and
2013 and $16,031 and $30,094 on August 15, 2014 and 2013,
respectively.
Credit Facility
The Company’s commercial paper program requires the
Company to maintain liquidity facilities either in an available
amount equal to any outstanding notes from the commercial
paper program or in an amount suffi cient to maintain the
ratings assigned to the notes issued from the commercial
paper program. The Company’s subsidiaries do not maintain
commercial paper or other borrowing facilities at their level.
This program is currently backed up by a $400,000 senior
revolving credit facility, of which $395,740 was available at
December 31, 2014, due to $4,260 of outstanding letters of
credit related to this program.
On September 16, 2014, the Company entered into a fi ve-year
unsecured $400,000 revolving credit agreement (“2014 Credit
Facility”) with a syndicate of banks arranged by JP Morgan
Chase Bank, N.A. and Wells Fargo, N.A. The 2014 Credit
Facility replaces the Company’s prior four-year $350,000
revolving credit facility (the “2011 Credit Facility”), which
was entered into on September 21, 2011 and was scheduled to
expire in September 2015. The 2011 Credit Facility terminated
upon the effectiveness of the 2014 Credit Facility. The 2014
Credit Facility provides for revolving loans and the issuance
of multi-bank, syndicated letters of credit and/or letters of
credit from a sole issuing bank in an aggregate amount of
$400,000 and is available until September 2019, provided the
Company is in compliance with all covenants. The 2014 Credit
Facility has a sublimit for letters of credit issued thereunder
of $50,000. The proceeds of these loans may be used for
the Company’s commercial paper program or for general
corporate purposes. The Company may increase the total
amount available under the 2014 Credit Facility to $525,000
subject to certain conditions. No bank is obligated to provide
commitments above their share of the $400,000 facility.
The Company did not use the commercial paper program
during the years ended December 31, 2014 and 2013
and there were no amounts relating to the commercial
paper program outstanding at December 31, 2014 and
December 31, 2013. The Company made no borrowings using
either the 2011 Credit Facility or the 2014 Credit Facility and
no loans are outstanding at December 31, 2014.
The 2014 Credit Facility contains restrictive covenants and
requires that the Company maintain certain specifi ed minimum
ratios and thresholds. Among others, these covenants include
maintaining a maximum debt to capitalization ratio and a
minimum consolidated adjusted net worth. At December 31,
2014, the Company was in compliance with all covenants,
minimum ratios and thresholds.