Assurant 2011 Annual Report Download - page 103

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ASSURANT, INC.2011 Form10-K F-27
5 Fair Value Disclosures
Fair Value of Financial Instruments Disclosures
e nancial instruments guidance requires disclosure of fair value
information about  nancial instruments, as de ned therein, for which
it is practicable to estimate such fair value.  erefore, it requires fair
value disclosure for  nancial instruments that are not recognized or are
not carried at fair value in the consolidated balance sheets. However,
this guidance excludes certain  nancial instruments, including those
related to insurance contracts and those accounted for under the equity
method and joint ventures guidance (such as real estate joint ventures).
For the  nancial instruments included within the following  nancial
assets and  nancial liabilities, the carrying value in the consolidated
balance sheets equals or approximates fair value. Please refer to the
Fair Value Inputs and Valuation Techniques for Financial Assets and
Liabilities Disclosures section above for more information on the
nancial instruments included within the following  nancial assets
and  nancial liabilities and the methods and assumptions used to
estimate fair value:
•Cash and cash equivalents
•Fixed maturity securities
•Equity securities
•Short-term investments
•Collateral held/pledged under securities lending
•Other investments
•Other assets
•Assets held in separate accounts
•Obligation under securities agreements
•Other liabilities
•Liabilities related to separate accounts
In estimating the fair value of the  nancial instruments that are not
recognized or are not carried at fair value in the consolidated balance
sheets, the Company used the following methods and assumptions:
Commercial mortgage loans and policy loans
e fair values of mortgage loans are estimated using discounted cash
ow analyses, based on interest rates currently being o ered for similar
loans to borrowers with similar credit ratings. Mortgage loans with
similar characteristics are aggregated for purposes of the calculations.
e carrying value of policy loans reported in the balance sheets
approximates fair value.
Policy reserves under investment products
e fair values for the Company’s policy reserves under the investment
products are determined using discounted cash  ow analysis.
Funds withheld under reinsurance
e carrying value reported approximates fair value due to the short
maturity of the instruments.
Debt
e fair value of debt is based upon matrix pricing performed by the
pricing service.
Mandatorily redeemable preferred stock
e fair value of mandatorily redeemable preferred stock equals the
carrying value for all series of mandatorily redeemable preferred stock.
Obligations under securities agreements
e obligations under securities agreements are reported at the amount
received from the selected broker/dealers.
e following table discloses the carrying value and fair value of the
nancial instruments that are not recognized or are not carried at fair
value in the consolidated balance sheets as of December31, 2011
and 2010.
December31, 2011 December31, 2010
CarryingValue Fair Value CarryingValue Fair Value
Financial assets
Commercial mortgage loans on real estate $ 1,309,687 $ 1,439,753 $ 1,320,964 $ 1,400,553
Policy loans 54,192 54,192 56,142 56,142
Financial liabilities
Policy reserves under investment products
(Individual and group annuities, subject to discretionary withdrawal) $ 791,341 $ 780,744 $ 815,769 $ 788,258
Funds withheld under reinsurance 64,413 64,413 65,894 65,894
Debt 972,278 1,016,562 972,164 992,340
Mandatorily redeemable preferred stocks — — 5,000 5,000
Obligations under securities agreements 95,494 95,494 122,931 122,931
Only the fair value of the Company’s policy reserves for investment-type contracts (those without signi cant mortality or morbidity risk) are
re ected in the table above.