Assurant 2010 Annual Report Download - page 43

37ASSURANT, INC.  2010 Form 10K
PART II
ITEM 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations
companies to make additional disclosures about plan assets for defi ned
benefi t pension and other postretirement benefi t plans.  e additional
disclosure requirements include how investment allocation decisions are
made, the major categories of plan assets and the inputs and valuation
techniques used to measure the fair value of plan assets.  e adoption of
this new guidance did not have an impact on the Company’s fi nancial
position or results of operations. See Note 22 for further information.
On October 1, 2009, the Company adopted the new guidance on
measuring the fair value of liabilities. When the quoted price in an
active market for an identical liability is not available, this new guidance
requires that either the quoted price of the identical or similar liability
when traded as an asset or another valuation technique that is consistent
with the fair value measurements and disclosures guidance be used to
fair value the liability.  e adoption of this new guidance did not have
an impact on the Company’s fi nancial position or results of operations.
On April 1, 2009, the Company adopted the new OTTI guidance.
 is new guidance amends the previous guidance for debt securities
and modifi es the presentation and disclosure requirements for debt and
equity securities. In addition, it amends the requirement for an entity to
positively assert the intent and ability to hold a debt security to recovery
to determine whether an OTTI exists and replaces this provision with
the assertion that an entity does not intend to sell or it is not more
likely than not that the entity will be required to sell a security prior
to recovery of its amortized cost basis. Additionally, this new guidance
modifi es the presentation of certain OTTI debt securities to only present
the impairment loss within the results of operations that represents the
credit loss associated with the OTTI with the remaining impairment
loss being presented within other comprehensive income (loss) (“OCI”).
At adoption, the Company recorded a cumulative eff ect adjustment to
reclassify the non-credit component of previously recognized OTTI
securities which resulted in an increase of $43,117 (after-tax) in retained
earnings and a decrease of $43,117 (after-tax) in AOCI. See Note 5 for
further information.
On April 1, 2009, the Company adopted the new guidance on determining
fair value in illiquid markets.  is new guidance clarifi es how to estimate
fair value when the volume and level of activity for an asset or liability
have signifi cantly decreased.  is new guidance also clarifi es how to
identify circumstances indicating that a transaction is not orderly.
Under this new guidance, signifi cant decreases in the volume and level
of activity of an asset or liability, in relation to normal market activity,
requires further evaluation of transactions or quoted prices and exercise
of signifi cant judgment in arriving at fair values.  is new guidance
also requires additional interim and annual disclosures.  e adoption of
this new guidance did not have an impact on the Company’s fi nancial
position or results of operations.
On April 1, 2009, the Company adopted the new fair value of fi nancial
instruments guidance.  is new guidance requires disclosures about the
fair value of fi nancial instruments already required in annual fi nancial
statements to be included within interim fi nancial statements.  is new
guidance also requires disclosure of the methods and assumptions used
to estimate fair value.  e adoption of this new guidance did not have
an impact on the Company’s fi nancial position or results of operations.
See Note 6 for further information.
On January 1, 2009, the Company adopted the revised business
combinations guidance.  e revised guidance retains the fundamental
requirements of the previous guidance in that the acquisition method
of accounting be used for all business combinations, that an acquirer be
identifi ed for each business combination and for goodwill to be recognized
and measured as a residual.  e revised guidance expands the defi nition
of transactions and events that qualify as business combinations to all
transactions and other events in which one entity obtains control over one
or more other businesses.  e revised guidance broadens the fair value
measurement and recognition of assets acquired, liabilities assumed and
interests transferred as a result of business combinations. It also increases
the disclosure requirements for business combinations in the consolidated
fi nancial statements.  e adoption of the revised guidance did not have
an impact on the Company’s fi nancial position or results of operations.
However, should the Company enter into a business combination in
2010 or beyond, our fi nancial position or results of operations could
incur a signifi cantly diff erent impact than had it recorded the acquisition
under the previous business combinations guidance. Earnings volatility
could result, depending on the terms of the acquisition.
On January 1, 2009, the Company adopted the new consolidations
guidance.  e new guidance requires that a noncontrolling interest in
a subsidiary be separately reported within equity and the amount of
consolidated net income attributable to the noncontrolling interest be
presented in the statement of operations.  e new guidance also calls for
consistency in reporting changes in the parent’s ownership interest in a
subsidiary and necessitates fair value measurement of any noncontrolling
equity investment retained in a deconsolidation.  e adoption of the new
guidance did not have an impact on the Company’s fi nancial position
or results of operations.
On January 1, 2009, the Company applied the fair value measurements
and disclosures guidance for all non-fi nancial assets and liabilities measured
at fair value on a non-recurring basis.  e application of this guidance
for those assets and liabilities did not have an impact on the Company’s
fi nancial position or results of operations.  e Company’s non-fi nancial
assets measured at fair value on a non-recurring basis include goodwill
and intangible assets. In a business combination, the non-fi nancial assets
and liabilities of the acquired company would be measured at fair value
in accordance with the fair value measurements and disclosures guidance.
 e requirements of this guidance include using an exit price based on an
orderly transaction between market participants at the measurement date
assuming the highest and best use of the asset by market participants. To
perform a market valuation, the Company is required to use a market,
income or cost approach valuation technique(s).  e Company performs
its annual impairment analyses of goodwill and indefi nite-lived intangible
assets in the fourth quarter, or when events or changes in circumstances
indicate that the carrying amount of the assets may not be recoverable.
If Step 1 of the impairment test indicates that the net book value of the
reporting unit is greater than the estimated fair value, then Step 2 test
is required. Step 2 requires that the Company measure the fair value of
goodwill of the reporting unit. As mentioned above, the application of
this guidance which was used to measure the fair value of goodwill in
Step 2 of the goodwill impairment test did not have an impact on the
Company’s fi nancial position or results of operations.
On January 1, 2009, the Company adopted the new earnings per share
guidance on participating securities and the two class method.  e new
guidance requires unvested share-based payment awards that have non-
forfeitable rights to dividend or dividend equivalents to be treated as
participating securities.  erefore, the Company’s restricted stock and
restricted stock units which have non-forfeitable rights to dividends are
included in calculating basic and diluted earnings per share under the
two-class method. All prior period earnings per share data presented have
been adjusted retrospectively.  e adoption of the new guidance did not
have a material impact on the Company’s basic and diluted earnings per
share calculations for the years ended December 31, 2009 and 2008.
See Note 24 for further information.