Assurant 2010 Annual Report Download - page 116

F-46 ASSURANT, INC.  2010 Form 10K
22 Retirement and Other Employee Benefi ts
contract deposits under GAAP, with cost of insurance recognized as
revenue when assessed and other contract charges recognized over
the periods for which services are provided; 4) the classifi cation and
carrying amounts of investments in certain securities are diff erent
under SAP than under GAAP; 5) the criteria for providing asset
valuation allowances, and the methodologies used to determine the
amounts thereof, are diff erent under SAP than under GAAP; 6) the
timing of establishing certain reserves, and the methodologies used to
determine the amounts thereof, are diff erent under SAP than under
GAAP; 7) certain assets are not admitted for purposes of determining
surplus under SAP; 8) methodologies used to determine the amounts
of deferred taxes, intangible assets and goodwill are diff erent under
SAP than under GAAP; and 9) the criteria for obtaining reinsurance
accounting treatment is diff erent under SAP than under GAAP.
 e combined statutory net income, excluding intercompany dividends and surplus note interest, and capital and surplus of the Company’s U.S.
domiciled statutory insurance subsidiaries follow:
Years Ended December 31,
2010 2009 2008
Statutory net income
P&C companies $ 473,191 $ 488,545(2) $ 356,128
Life companies 206,817 78,880 64,214
TOTAL STATUTORY NET INCOME $ 680,008 $ 567,425 $ 420,3421
(1) The $420,342 total statutory net income includes $224,290 (after-tax) of net realized losses on investments, including $177,890 (after-tax) of realized losses due to other-than-
temporary impairments, and $86,200 (after-tax) of incurred insurance losses due to Hurricanes Gustav and Ike.
(2) The $488,545 total statutory P&C companies net income includes a favorable legal settlement of $90,350 (after-tax) with Willis Limited, as subsidiary of Willis Group Holdings
Limited. See note 26 for further information.
December 31,
2010 2009
Statutory capital and surplus
P&C companies $ 1,227,780 $ 1,291,637
Life companies 1,100,498 1,052,929
TOTAL STATUTORY CAPITAL AND SURPLUS $ 2,328,278 $ 2,344,566
 e Company also has non-insurance subsidiaries and foreign insurance
subsidiaries that are not subject to SAP.  e statutory net income and
statutory capital and surplus presented above do not include foreign
insurance subsidiaries in accordance with SAP.
Insurance enterprises are required by state insurance departments to adhere
to minimum risk-based capital (“RBC”) requirements developed by the
NAIC. All of the Company’s insurance subsidiaries exceed minimum
RBC requirements.
 e payment of dividends to the Company by any of the Company’s
regulated U.S domiciled insurance subsidiaries in excess of a certain
amount (i.e., extraordinary dividends) must be approved by the subsidiary’s
domiciliary state department of insurance. Ordinary dividends, for which no
regulatory approval is generally required, are limited to amounts determined
by a formula, which varies by state.  e formula for the majority of the
states in which the Company’s subsidiaries are domiciled is based on the
prior year’s statutory net income or 10% of the statutory surplus as of the
end of the prior year. Some states limit ordinary dividends to the greater
of these two amounts, others limit them to the lesser of these two amounts
and some states exclude prior year realized capital gains from prior year
net income in determining ordinary dividend capacity. Some states have
an additional stipulation that dividends may only be paid out of earned
surplus. If insurance regulators determine that payment of an ordinary
dividend or any other payments by the Company’s insurance subsidiaries
to the Company (such as payments under a tax sharing agreement or
payments for employee or other services) would be adverse to policyholders
or creditors, the regulators may block such payments that would otherwise
be permitted without prior approval. Based on the dividend restrictions
under applicable laws and regulations, the maximum amount of dividends
that the Company’s U.S domiciled insurance subsidiaries could pay to the
Company in 2011 without regulatory approval is approximately $614,362.
No assurance can be given that there will not be further regulatory actions
restricting the ability of the Company’s insurance subsidiaries to
pay dividends.
22. Retirement and Other Employee Benefi ts
Defi ned Benefi t Plans
 e Company and its subsidiaries participate in a non-contributory,
qualifi ed defi ned benefi t pension plan covering substantially all employees.
 is Plan is considered “qualifi ed” because it meets the requirements of
Internal Revenue Code Section 401(a) (“IRC 401(a)”) and the Employee
Retirement Income Security Act of 1974 (“ERISA”).  e qualifi ed defi ned
benefi t pension plan is a pension equity plan with a grandfathered fi nal
average earnings plan for a certain group of employees. Benefi ts are based
on certain years of service and the employee’s compensation during certain
such years of service.  e Company’s funding policy is to contribute amounts
to the plan suffi cient to meet the minimum funding requirements set forth
in ERISA, plus such additional amounts as the Company may determine
to be appropriate from time to time up to the maximum permitted.
Contributions are intended to provide not only for benefi ts attributed
to service to date, but also for those expected to be earned in the future.
Plan assets are maintained in a separate trust and as such are not included
in the consolidated balance sheets of the Company.