Assurant 2012 Annual Report Download - page 121

ASSURANT, INC.2012 Form10-K F-45
20 Retirement and Other Employee Bene ts
and amortized under GAAP; 2) the value of business acquired is not
capitalized under SAP but is under GAAP; 3) amounts collected from
holders of universal life-type and annuity products are recognized as
premiums when collected under SAP, but are initially recorded as
contract deposits under GAAP, with cost of insurance recognized as
revenue when assessed and other contract charges recognized over
the periods for which services are provided; 4) the classi cation and
carrying amounts of investments in certain securities are di erent
under SAP than under GAAP; 5) the criteria for providing asset
valuation allowances, and the methodologies used to determine the
amounts thereof, are di erent under SAP than under GAAP; 6) the
timing of establishing certain reserves, and the methodologies used to
determine the amounts thereof, are di erent under SAP than under
GAAP; 7) certain assets are not admitted for purposes of determining
surplus under SAP; 8) methodologies used to determine the amounts
of deferred taxes, intangible assets and goodwill are di erent under
SAP than under GAAP; and 9) the criteria for obtaining reinsurance
accounting treatment is di erent under SAP than under GAAP.
 e combined statutory net income, excluding intercompany dividends and surplus note interest, and capital and surplus of the Company’s U.S.
domiciled statutory insurance subsidiaries follow:
Years Ended December31,
2012 2011 2010
Statutory net income
P&C companies $ 371,520 $ 367,315 $ 473,191
Life companies 223,519 148,554 206,817
TOTAL STATUTORY NET INCOME $ 595,039 $ 515,869 $ 680,008
December31,
2012 2011
Statutory capital and surplus
P&C companies $ 1,382,745 $ 1,227,075
Life companies 973,446 1,084,411
TOTAL STATUTORY CAPITAL AND SURPLUS $ 2,356,191 $ 2,311,486
 e Company also has non-insurance subsidiaries and foreign insurance
subsidiaries that are not subject to SAP.  e statutory net income and
statutory capital and surplus presented above do not include foreign
insurance subsidiaries in accordance with SAP.
Insurance enterprises are required by state insurance departments to
adhere to minimum risk-based capital (“RBC”) requirements developed
by the NAIC. All of the Company’s insurance subsidiaries exceed
minimum RBC requirements.
 e payment of dividends to the Company by any of the Company’s
regulated U.S domiciled insurance subsidiaries in excess of a certain
amount (i.e., extraordinary dividends) must be approved by the
subsidiary’s domiciliary state department of insurance. Ordinary
dividends, for which no regulatory approval is generally required, are
limited to amounts determined by a formula, which varies by state.
 e formula for the majority of the states in which the Company’s
subsidiaries are domiciled is based on the prior year’s statutory net
income or 10% of the statutory surplus as of the end of the prior
year. Some states limit ordinary dividends to the greater of these two
amounts, others limit them to the lesser of these two amounts and
some states exclude prior year realized capital gains from prior year
net income in determining ordinary dividend capacity. Some states
have an additional stipulation that dividends may only be paid out of
earned surplus. If insurance regulators determine that payment of an
ordinary dividend or any other payments by the Company’s insurance
subsidiaries to the Company (such as payments under a tax sharing
agreement or payments for employee or other services) would be adverse
to policyholders or creditors, the regulators may block such payments
that would otherwise be permitted without prior approval. Based on
the dividend restrictions under applicable laws and regulations, the
maximum amount of dividends that the Company’s U.S domiciled
insurance subsidiaries could pay to the Company in 2013 without
regulatory approval is approximately $524,000. No assurance can
be given that there will not be further regulatory actions restricting
the ability of the Company’s insurance subsidiaries to pay dividends.
20. Retirement and Other Employee Benefi ts
Defi ned Benefi t Plans
 e Company and its subsidiaries participate in a non-contributory,
quali ed de ned bene t pension plan covering substantially all employees.
 is Plan is considered “quali ed” because it meets the requirements of
Internal Revenue Code Section401(a) (“IRC 401(a)”) and the Employee
Retirement Income Security Act of 1974 (“ERISA”).  e quali ed
de ned bene t pension plan is a pension equity plan with a grandfathered
 nal average earnings plan for a certain group of employees. Bene ts
are based on certain years of service and the employee’s compensation
during certain such years of service.  e Company’s funding policy
is to contribute amounts to the plan su cient to meet the minimum
funding requirements in ERISA, plus such additional amounts as the
Company may determine to be appropriate from time to time up to
the maximum permitted.  e funding policy considers several factors
to determine such additional amounts including items such as the
amount of service cost plus 15% of the Assurant Pension Plan de cit
and the capital position of the Company. During 2012, wecontributed
$50,000 in cash to the Assurant Pension Plan. Weexpect to contribute