Assurant 2012 Annual Report Download - page 89

ASSURANT, INC.2012 Form10-K F-13
2 Summary of Signi cant Accounting Policies
Short Duration Contracts
 e Company’s short duration contracts are those on which the
Company recognizes revenue on a pro-rata basis over the contract term.
 e Company’s short duration contracts primarily include group term
life, group disability, medical, dental, vision, property and warranty,
credit life and disability, and extended service contracts and individual
medical contracts issued from 2003 through 2006 in most jurisdictions
and in all jurisdictions after 2006.
Reinstatement premiums for reinsurance are netted against net earned
premiums and other considerations in the consolidated statements of
operations.
Total Other- an-Temporary Impairment Losses
For debt securities with credit losses and non-credit losses or gains, total
other-than-temporary impairment (“OTTI”) losses is the total of the
decline in fair value from either the most recent OTTI determination
or a prior period end in which the fair value declined until the current
period end valuation date.  is amount does not include any securities
that had fair value increases. For equity securities and debt securities that
the Company has the intent to sell or if it is more likely than not that
it will be required to sell for equity securities that have an OTTI or for
debt securities if there are only credit losses, total other-than-temporary
impairment losses is the total amount by which the fair value of the
security is less than its amortized cost basis at the period end valuation
date and the decline in fair value is deemed to be other-than-temporary.
Fees and Other Income
Income earned on preneed life insurance policies with discretionary
death bene t growth issued after 2008 is presented within fees and
other income.
 e Company also derives fees and other income from providing
administrative services.  ese fees are recognized monthly when
services are performed.
Dealer obligor service contracts are sales in which the retailer/dealer is
designated as the obligor (administrative service-only plans). For these
contract sales, the Company recognizes administrative fee revenue on
a straight-line pro-rata basis over the terms of the service contract.
Administrator obligor service contracts are sales in which the Company
is designated as the obligor.  e Company recognizes and reports
administration fees related to these contracts as earned on the same
basis as the premium is recognized or on a straight-line pro-rata basis.
Administration fees related to the unexpired portion of the contract
term for both the dealer obligor and administrator obligor service
contracts are deferred and amortized over the term of the contracts.
 ese unexpired amounts are reported in accounts payable and other
liabilities on the consolidated balance sheets.
Underwriting, General and Administrative
Expenses
Underwriting, general and administrative expenses consist primarily
of commissions, premium taxes, licenses, fees, salaries and personnel
bene ts and other general operating expenses.
Leases
 e Company records expenses for operating leases on a straight-line
basis over the lease term.
Contingencies
 e Company evaluates each contingent matter separately. A loss
contingency is recorded if reasonably estimable and probable.  e
Company establishes reserves for these contingencies at the best estimate,
or if no one estimated number within the range of possible losses is
more probable than any other, the Company records an estimated
reserve at the low end of the estimated range. Contingencies a ecting
the Company primarily relate to litigation matters which are inherently
di cult to evaluate and are subject to signi cant changes.  e Company
believes the contingent amounts recorded are reasonable.
Recent Accounting Pronouncements—Adopted
On September30, 2012, the Company adopted the amended intangibles-
goodwill and other guidance.  is guidance allows an entity to  rst assess
qualitative factors to determine whether it is necessary to perform a
quantitative impairment test for inde nite-lived intangible assets. Under
this amended guidance, an entity would not be required to calculate
the fair value of an inde nite-lived intangible asset, unless the entity
determines, based on qualitative assessment, that it is more likely than
not that its fair value is less than its carrying amount.  e amended
guidance includes a number of events and circumstances for an entity
to consider in conducting the qualitative assessment and did not have
an impact on the Company’s  nancial position or results of operations.
On January1, 2012, the Company adopted the guidance on fair
value measurement.  is amended guidance changes certain fair value
measurement principles and expands required disclosures to include
quantitative and qualitative information about unobservable inputs
in Level 3 measurements to achieve common fair value measurement
and disclosure requirements in GAAP and International Financial
Reporting Standards.  e adoption of this guidance did not have an
impact on the Company’s  nancial position or results of operations.
On January1, 2012, the Company adopted the amendments to
existing guidance on accounting for costs associated with acquiring
or renewing insurance contracts.  e amendments modi ed the
de nition of the types of costs incurred by insurance entities that can
be capitalized in the acquisition of new and renewal contracts. Under
this amended guidance, only direct incremental costs associated with
successful insurance contract acquisitions or renewals are deferrable.
 is guidance was adopted retrospectively and has been applied to all
prior period  nancial information contained in these consolidated
 nancial statements. As of January1, 2010, the beginning of the earliest
period presented, the cumulative e ect adjustment recorded to re ect
this guidance resulted in a decrease of $148,242 in retained earnings,
an increase of $2,149 in accumulated other comprehensive income
and a decrease of $146,093 in total stockholders’ equity.