Assurant 2010 Annual Report Download - page 82

F-12 ASSURANT, INC.  2010 Form 10K
2 Summary of Signifi cant Accounting Policies
Deferred Gain on Disposal of Businesses
 e Company recorded a deferred gain on disposal of businesses utilizing
reinsurance. On March 1, 2000, the Company sold its LTC business
using a coinsurance contract. On April 2, 2001, the Company sold its
FFG business using a modifi ed coinsurance contract. Since the form of
sale did not discharge the Company’s primary liability to the insureds,
the gain on these disposals was deferred and reported as a liability.
 e liability is decreased and recognized as revenue over the estimated
life of the contracts’ terms.  e Company reviews and evaluates the
estimates aff ecting the deferred gain on disposal of businesses annually
or when signifi cant information aff ecting the estimates becomes known
to the Company, and adjusts the revenue recognized accordingly. In
the fourth quarter of 2010, the Company re-established $8,158 of the
FFG deferred gain based on its annual review.
Debt
 e Company reports debt net of unamortized discount or premium.
Interest expense related to debt is expensed as incurred.
 e Company reports mandatorily redeemable preferred stock equal
to its redemption value.
Premiums
Long Duration Contracts
Currently, the Company’s long duration contracts which are actively
being sold are preneed life insurance and certain group worksite insurance
policies.  e preneed life insurance policies include provisions for death
benefi t growth that is either pegged to the changes in the Consumer
Price Index or determined periodically at the discretion of management.
For preneed life insurance policies issued prior to 2009, revenues are
recognized when due from policyholders. For preneed life insurance
policies with discretionary death benefi t growth issued after 2008
and for preneed investment-type annuity contracts, revenues consist
of charges assessed against policy balances. Revenues are recognized
when earned on group worksite insurance products.
For a majority of individual medical contracts issued prior to 2003, a
limited number of individual medical contracts currently issued from
2003 through 2006 in certain jurisdictions, individual voluntary
limited benefi t health policies issued in 2007 and later and traditional
life insurance contracts previously sold by the preneed business (no
longer off ered), revenue is recognized when due from policyholders.
For universal life insurance and investment-type annuity contracts
previously sold by the Assurant Solutions segment (no longer off ered),
revenues consist of charges assessed against policy balances.
Premiums for LTC insurance and traditional life insurance contracts
within FFG are recognized as revenue when due from the policyholder.
For universal life insurance and investment-type annuity contracts
within FFG, revenues consist of charges assessed against policy balances.
For the FFG and LTC businesses previously sold, all revenue is ceded.
Short Duration Contracts
 e Company’s short duration contracts are those on which the
Company recognizes revenue on a pro-rata basis over the contract term.
 e Company’s short duration contracts primarily include group term
life, group disability, medical, dental, property and warranty, credit life
and disability, and extended service contracts and individual medical
contracts issued from 2003 through 2006 in most jurisdictions and
in all jurisdictions after 2006.
Reinstatement premiums for reinsurance are netted against net earned
premiums and other considerations in the consolidated statement of
operations.
Total Other- an-Temporary Impairment Losses
For debt securities with credit losses and non-credit losses or gains, total
other-than-temporary impairment (“OTTI”) losses is the total of the
decline in fair value from either the most recent OTTI determination
or a prior period end in which the fair value declined until the current
period end valuation date.  is amount does not include any securities
that had fair value increases. For equity securities and debt securities
that the Company has the intent to sell or if it is more likely than not
that it will be required to sell for equity securities that have an OTTI
or for debt securities if there are only credit losses, total other-than-
temporary impairment losses is the total amount by which the fair
value of the security is less than its amortized cost basis at the period
end valuation date and the decline in fair value is deemed to be other-
than-temporary.
Fees and Other Income
Income earned on preneed life insurance policies with discretionary
death benefi t growth issued after 2008 is presented within fees and
other income.
 e Company also derives fees and other income from providing
administrative services.  ese fees are recognized monthly when
services are performed.
Dealer obligor service contracts are sales in which the retailer/dealer is
designated as the obligor (administrative service-only plans). For these
contract sales, the Company recognizes administrative fee revenue on
a straight-line pro-rata basis over the terms of the service contract.
Administrator obligor service contracts are sales in which the Company
is designated as the obligor.  e Company recognizes and reports
administration fees related to these contracts as earned on the same
basis as the premium is recognized or on a straight-line pro-rata basis.
Administration fees related to the unexpired portion of the contract
term for both the dealer obligor and administrator obligor service
contracts are deferred and amortized over the term of the contracts.
 ese unexpired amounts are reported in accounts payable and other
liabilities on the consolidated balance sheets.
Underwriting, General and Administrative
Expenses
Underwriting, general and administrative expenses consist primarily
of commissions, premium taxes, licenses, fees, salaries and personnel
benefi ts and other general operating expenses.
Leases
 e Company records expenses for operating leases on a straight-line
basis over the lease term.