Assurant 2011 Annual Report Download - page 58

ASSURANT, INC.2011 Form10-K50
PARTII
ITEM 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations
Total Benefi ts, Losses and Expenses
Total bene ts, losses and expenses increased $8,755 to $169,193 for
Twelve Months 2011 compared with $160,438 for Twelve Months
2010. e increase is primarily attributable to increased claims payable
accruals of $6,474 associated with discontinued businesses.
Year Ended December 31, 2010 Compared to the Year
Ended December 31, 2009
Net Loss
Segment net loss increased $35,091 to $(59,502) for Twelve Months
2010 compared to a net loss of $(24,411) for Twelve Months 2009.
 is increase is mainly due to the non-recurrence of an $83,542 (after-
tax) favorable legal settlement, net of attorney fees and allowances
for related recoverables with Willis Limited in Twelve Months 2009.
In addition, amortization of deferred gains on disposal of businesses
declined $7,836 (after-tax) as a portion of the deferred gain liability
was re-established during the fourth quarter of 2010 resulting from
re nements to assumptions associated with policy run-o . Partially
o setting these items is a $66,300 (after-tax) increase in realized gains
on investments.
Total Revenues
Total revenues decreased $49,033, to $76,882 for Twelve Months
2010 compared with $125,915 for Twelve Months 2009.  is decrease
is primarily due to the above-mentioned favorable legal settlement
of $139,000 with Willis Limited in Twelve Months 2009, partially
o set by increased net realized gains on investments of $102,000.
In addition, amortization of deferred gains on disposal of businesses
declined $12,055 for reasons noted above.
Total Benefi ts, Losses and Expenses
Total bene ts, losses and expenses remained relatively  at at $160,438 for
Twelve Months 2010 compared with $161,846 for Twelve Months 2009.
Goodwill Impairment
During 2010 and 2009, the Company recorded goodwill impairments
of $306,381 and $83,000, respectively. No goodwill impairment was
recorded during 2011.  e goodwill accounting guidance in e ect during
2010 and 2009 required that goodwill be tested for impairment using
a two step process. Step 1 of the test identi es potential impairments
at the reporting unit level, which for the Company is the same as our
operating segments, by comparing the estimated fair value of each
reporting unit to its net book value. If the estimated fair value of a
reporting unit exceeds its net book value, there is no impairment of
goodwill and Step 2 is unnecessary. However, if the net book value
exceeds the estimated fair value, then Step 1 is failed, and Step 2 is
performed to determine the amount of the potential impairment.
Step 2 utilizes acquisition accounting guidance and requires the fair
value calculation of all individual assets and liabilities of the reporting
unit (excluding goodwill, but including any unrecognized intangible
assets).  e net fair value of assets less liabilities is then compared to the
reporting unit’s total estimated fair value as calculated in Step 1.  e
excess of fair value over the net asset value equals the implied fair value
of goodwill.  e implied fair value of goodwill is then compared to the
carrying value of goodwill to determine the reporting unit’s goodwill
impairment. During 2011, the Company adopted the amended guidance
on intangibles-goodwill and other.  is guidance provides the option
to  rst assess qualitative factors to determine whether the existence of
events or circumstances leads to a determination that it is more likely
than not that the fair value of a reporting unit is less than its carrying
amount. If, after assessing the totality of events or circumstances, an
entity determines it is not more likely than not that the fair value of
a reporting unit is less than its carrying amount, then performing
the two-step impairment test is unnecessary. However, if an entity
concludes otherwise, then it is required to perform the  rst step of the
two-step impairment test, described above. For the Assurant Specialty
Property reporting unit, the Company chose the option to  rst perform
the qualitative assessment. For the Assurant Solutions reporting unit,
the Company performed a Step 1 test consistent with prior years. See
“Item7-Management’s Discussion and Analysis of Financial Condition
and Results of Operations-Critical Factors A ecting Results-Critical
Accounting Estimates-Valuation and Recoverability of Goodwill” and
Notes 2 and 11 to the Consolidated Financial Statements contained
elsewhere in this report for more information.