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ASSURANT, INC.2011 Form10-K F-37
13 Reinsurance
A key credit quality indicator for reinsurance is the A.M. Best  nancial strength ratings of the reinsurer.  e A.M. Best ratings are an independent
opinion of a reinsurer’s ability to meet ongoing obligations to policyholders.  e A.M. Best ratings for new reinsurance agreements where there is
material credit exposure are reviewed at the time of execution.  e A.M. Best ratings for existing reinsurance agreements are reviewed on a periodic
basis, at least annually.  e following table provides the reinsurance recoverable as of December31, 2011 grouped by A.M. Best rating:
Best Ratings of Reinsurer
Cededfuture policyholder
bene ts and expense
Ceded unearned
premiums
Cededclaims and
bene ts payable
Cededpaid
losses Total
A++ or A+ $ 1,843,575 $ 40,389 $ 642,282 $ 8,888 $ 2,535,134
A or A- 1,514,287 60,693 136,162 5,775 1,716,917
B++ or B+ 40,209 20,132 4,297 5 64,643
Not Rated 1,867 892,564 163,159 47,413 1,105,003
Total 3,399,938 1,013,778 945,900 62,081 5,421,697
Less: Allowance — — — (10,633) (10,633)
NET REINSURANCE RECOVERABLE $ 3,399,938 $ 1,013,778 $ 945,900 $ 51,448 $ 5,411,064
A.M. Best ratings for  e Hartford and John Hancock, the reinsurers
with the largest reinsurance recoverable balances, are A and A+,
respectively. A.M. Best currently maintains a stable outlook on the
nancial strength ratings of John Hancock and  e Hartford.  e
total amount of recoverable for these two reinsurers is $3,624,906 as
of December31, 2011. Most of the assets backing reserves relating to
reinsurance recoverables from these two counterparties are held in trust.
A substantial portion of the Not Rated category is related to Assurant
Solutions’ and Assurant Specialty Property’s agreements to reinsure
premiums and risks related to business generated by certain clients
to the clients’ own captive insurance companies or to reinsurance
subsidiaries in which the clients have an ownership interest. To mitigate
exposure to credit risk for these reinsurers, the Company evaluates the
nancial condition of the reinsurer and holds substantial collateral (in
the form of funds withheld, trusts, and letters of credit) as security.
e Not Rated category also includes recoverables from the National
Flood Insurance Program and the Florida Hurricane Catastrophe Fund.
An allowance for doubtful accounts related to reinsurance recoverables
is recorded on the basis of periodic evaluations of balances due from
reinsurers (net of collateral), reinsurer solvency, management’s experience
and current economic conditions.  e allowance for doubtful accounts
was $10,633 and $15,635 at December31, 2011 and 2010, respectively.
Information about the valuation allowance for reinsurance recoverable is as follows:
Years Ended December31,
2011 2010
Balance as of beginning-of-year $ 15,635 $ 6,253
Provision 356 9,266
Other additions 57 116
Direct write-downs charged against the allowance (5,415) —
BALANCE AS OF THE ENDOFYEAR $ 10,633 $ 15,635
e e ect of reinsurance on premiums earned and bene ts incurred was as follows:
Years Ended December31,
2011 2010 2009
Long
Duration
Short
Duration Total
Long
Duration
Short
Duration Total
Long
Duration
Short
Duration Total
Direct earned
premiums and other
considerations $ 584,532 $ 8,553,695 $ 9,138,227 $ 641,284 $ 8,664,723 $ 9,306,007 $ 745,625 $ 8,632,312 $ 9,377,937
Premiums assumed 13,048 306,920 319,968 7,467 317,635 325,102 8,852 222,250 231,102
Premiums ceded (330,523) (2,002,304) (2,332,827) (345,837) (1,882,233) (2,228,070) (360,221) (1,698,483) (2,058,704)
NET EARNED
PREMIUMS
AND OTHER
CONSIDERATIONS $ 267,057 $ 6,858,311 $ 7,125,368 $ 302,914 $ 7,100,125 $ 7,403,039 $ 394,256 $ 7,156,079 $ 7,550,335
Direct policyholder
bene ts $ 1,078,442 $ 3,653,693 $ 4,732,135 $ 1,634,348 $ 3,465,590 $ 5,099,938 $ 1,166,137 $ 3,690,611 $ 4,856,748
Policyholder
bene ts assumed 31,087 228,367 259,454 25,875 209,975 235,850 31,647 153,792 185,439
Policyholder
bene ts ceded (734,968) (501,412) (1,236,380) (1,284,157) (410,653) (1,694,810) (764,441) (409,764) (1,174,205)
NET
POLICYHOLDER
BENEFITS $ 374,561 $ 3,380,648 $ 3,755,209 $ 376,066 $ 3,264,912 $ 3,640,978 $ 433,343 $ 3,434,639 $ 3,867,982