Assurant 2010 Annual Report Download - page 83

F-13ASSURANT, INC.  2010 Form 10K
2 Summary of Signifi cant Accounting Policies
Contingencies
 e Company follows the guidance on contingencies, which requires
the Company to evaluate each contingent matter separately. A loss
contingency is recorded if reasonably estimable and probable.  e
Company establishes reserves for these contingencies at the best estimate,
or if no one estimated number within the range of possible losses is
more probable than any other, the Company records an estimated
reserve at the low end of the estimated range. Contingencies aff ecting
the Company primarily relate to litigation matters which are inherently
diffi cult to evaluate and are subject to signifi cant changes.  e Company
believes the contingent amounts recorded are adequate and reasonable.
Recent Accounting Pronouncements—Adopted
On January 1, 2010, the Company adopted the new guidance on
transfers of fi nancial assets.  is new guidance amends the derecognition
guidance and eliminates the exemption from consolidation for qualifying
special-purpose entities.  e adoption of this new guidance did not have
an impact on the Company’s fi nancial position or results of operations.
On January 1, 2010, the Company adopted the new guidance on the
accounting for a variable interest entity (“VIE”).  is new guidance
amends the consolidation guidance applicable to VIEs to require a
qualitative assessment in the determination of the primary benefi ciary
of the VIE, to require an ongoing reconsideration of the primary
benefi ciary, to amend the events that trigger a reassessment of whether
an entity is a VIE and to change the consideration of kick-out rights in
determining if an entity is a VIE.  e adoption of this new guidance
did not have an impact on the Company’s fi nancial position or results
of operations.
On July 1, 2009, the Company adopted the new guidance that
establishes a single source of authoritative accounting and reporting
guidance recognized by the FASB for nongovernmental entities (the
“Codifi cation”).  e Codifi cation does not change current GAAP, but is
intended to simplify user access to all authoritative GAAP by providing
all the authoritative literature related to a particular topic in one place.
All existing accounting standard documents will be superseded and
all other accounting literature not included in the Codifi cation will
be considered non-authoritative.  e adoption of the new guidance
did not have an impact on the Company’s fi nancial position or results
of operations. References to accounting guidance contained in the
Company’s consolidated fi nancial statements and disclosures have been
updated to refl ect terminology consistent with the Codifi cation. Plain
English references to the accounting guidance have been made along
with references to the ASC topic number and name.
On December 31, 2009, the Company adopted the new guidance
on postretirement benefi t plan assets.  is new guidance requires
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