Assurant 2010 Annual Report Download - page 87

F-17ASSURANT, INC.  2010 Form 10K
5 Investments
 e following table sets forth the net realized gains (losses), including other-than-temporary impairments, recognized in the statement of
operations as follows:
Years Ended December 31,
2010 2009 2008
Net realized gains (losses) related to sales and other:
Fixed maturity securities $ 53,880 $ 17,651 $ (23,775)
Equity securities 5,207 (20,931) (46,771)
Commercial mortgage loans on real estate (16,710) (10,219) 326
Other investments 17,193 (1,438) (4,819)
Collateral held under securities lending — — (13,487)
TOTAL NET REALIZED GAINS LOSSES RELATED TO SALES 59,570 14,937 88,526
Net realized losses related to other-than-temporary impairments:
Fixed maturity securities (10,607) (23,238) (191,873)
Equity securities (560) (14,555) (142,756)
Other investments — (867) (5,524)
Total net realized losses related to other-than-temporary impairments (11,167) (38,660) (340,153)
TOTAL NET REALIZED GAINS LOSSES $ 48,403 $ 53,597 $ 428,679
Other- an-Temporary Impairments
Adoption of the OTTI Guidance
On April 1, 2009, the Company adopted the OTTI guidance which requires
entities to separate an OTTI of a debt security into two components when
there are credit related losses associated with the impaired debt security for
which the Company asserts that it does not have the intent to sell, and it
is more likely than not that it will not be required to sell before recovery
of its cost basis. Prior to April 1, 2009, the Company was required to
determine whether it had the intent and ability to hold the investment
for a suffi cient period of time for the value to recover. When the analysis
of the above factors resulted in the Company’s conclusion that declines
in market values were other-than-temporary, the cost of the securities was
written down to market value and the reduction in value was refl ected as
a realized loss in the statement of operations. Under the OTTI guidance,
the amount of the OTTI related to a credit loss is recognized in earnings,
and the amount of the OTTI related to other, non-credit, factors (e.g. ,
interest rates, market conditions, etc.) is recorded as a component of other
comprehensive income. In instances where no credit loss exists but the
Company intends to sell the security or it is more likely than not that the
Company will have to sell the debt security prior to the anticipated recovery,
the decline in market value below amortized cost is recognized as an OTTI
in earnings. In periods after the recognition of an OTTI on debt securities,
the Company accounts for such securities as if they had been purchased on
the measurement date of the OTTI at an amortized cost basis equal to the
previous amortized cost basis less the OTTI recognized in earnings. For
debt securities for which OTTI was recognized in earnings, the diff erence
between the new amortized cost basis and the cash fl ows expected to be
collected will be accreted or amortized into net investment income.
The OTTI guidance required that the Company record, as of
April 1, 2009, the date of adoption, a cumulative eff ect adjustment
to reclassify the noncredit component of a previously recognized OTTI
from retained earnings to other comprehensive income. For purposes
of calculating the cumulative eff ect adjustment, the Company reviewed
OTTI it had recorded through realized losses on securities held at
March 31, 2009, which were $188,614 and estimated the portion related
to credit losses (i.e. , where the present value of cash fl ows expected to
be collected are lower than the amortized cost basis of the security) and
the portion related to all other factors.  e Company determined that
$119,022 of the OTTI previously recorded related to specifi c credit losses
and $69,592 related to all other factors. Under the OTTI guidance,
the Company increased the amortized cost basis of these debt securities
by $66,241 and recorded a cumulative eff ect adjustment, net of tax, in
its shareholders’ equity section.  e cumulative eff ect adjustment had
no eff ect on total shareholders’ equity as it increased retained earnings
and reduced accumulated other comprehensive income.
For the twelve months ended December 31, 2010 and 2009, the
Company recorded $10,244 and $35,905, respectively, of OTTI, of
which $11,167 and $38,660 was related to credit losses and recorded
as net OTTI losses recognized in earnings, with the remaining amounts
of $(923) and $(2,755), respectively, related to all other factors and
was recorded as an unrealized gain component of AOCI.
 e following table sets forth the amount of credit loss impairments
recognized within the results of operations on fi xed maturity securities
held by the Company as of the dates indicated, for which a portion
of the OTTI loss was recognized in AOCI, and the corresponding
changes in such amounts.
Year ended
December 31, 2010
Balance, beginning of year $ 108,053
Additions for credit loss impairments recognized in the current period on securities not previously impaired 2,508
Additions for credit loss impairments recognized in the current period on securities previously impaired 2,777
Reductions for securities which the amount previously recognized in other comprehensive income was recognized in earnings
because the entity intends to sell the security (116)
Reductions for increases in cash fl ows expected to be collected that are recognized over the remaining life of the security (380)
Reductions for credit loss impairments previously recognized on securities which matured, paid down, prepaid or were sold
during the period (7,597)
BALANCE, END OF YEAR $ 105,245