Assurant 2012 Annual Report Download - page 94

ASSURANT, INC.2012 Form10-KF-18
4 Investments
 e following table sets forth the net realized gains (losses), including other-than-temporary impairments, recognized in the statement of
operations as follows:
Years Ended December31,
2012 2011 2010
Net realized gains (losses) related to sales and other:   
Fixed maturity securities $ 59,815 $ 44,924 $ 53,880
Equity securities (3,466) (7,010) 5,207
Commercial mortgage loans on real estate 3,072 336 (16,710)
Other investments 6,775 2,166 17,193
TOTAL NET REALIZED GAINS RELATED TO SALES AND OTHER 66,196 40,416 59,570
Net realized losses related to other-than-temporary impairments:
Fixed maturity securities (1,287) (7,780) (10,607)
Equity securities (226) (21) (560)
Other investments (330) (35) 0
Total net realized losses related to other-than-temporary impairments (1,843) (7,836) (11,167)
TOTAL NET REALIZED GAINS $ 64,353 $ 32,580 $ 48,403
Other- an-Temporary Impairments
 e Company follows the OTTI guidance which requires entities to
separate an OTTI of a debt security into two components when there
are credit related losses associated with the impaired debt security for
which the Company asserts that it does not have the intent to sell,
and it is more likely than not that it will not be required to sell before
recovery of its cost basis. Under the OTTI guidance, the amount
of the OTTI related to a credit loss is recognized in earnings, and
the amount of the OTTI related to other, non-credit, factors (e.g.,
interest rates, market conditions, etc.) is recorded as a component of
other comprehensive income. In instances where no credit loss exists
but the Company intends to sell the security or it is more likely than
not that the Company will have to sell the debt security prior to the
anticipated recovery, the decline in market value below amortized cost is
recognized as an OTTI in earnings. In periods after the recognition of
an OTTI on debt securities, the Company accounts for such securities
as if they had been purchased on the measurement date of the OTTI at
an amortized cost basis equal to the previous amortized cost basis less
the OTTI recognized in earnings. For debt securities for which OTTI
was recognized in earnings, the di erence between the new amortized
cost basis and the cash  ows expected to be collected will be accreted
or amortized into net investment income.
For the twelve months ended December31, 2012 and 2011, the
Company recorded $1,939 and $8,183, respectively, of OTTI, of
which $1,843 and $7,836 was related to credit losses and recorded as
net OTTI losses recognized in earnings, with the remaining amounts
of $96 and $347, respectively, related to all other factors and was
recorded as an unrealized loss component of AOCI.
 e following table sets forth the amount of credit loss impairments
recognized within the results of operations on  xed maturity securities
held by the Company as of the dates indicated, for which a portion
of the OTTI loss was recognized in AOCI, and the corresponding
changes in such amounts.
Year ended December31,
2012 2011 2010
Balance, beginning of year $ 103,090 $ 105,245 $ 108,053
Additions for credit loss impairments recognized in the current period on securities not previously impaired 0 1,455 2,508
Additions for credit loss impairments recognized in the current period on securities previously impaired 56 1,598 2,777
Reductions for securities which the amount previously recognized in other comprehensive income was
recognized in earnings because the entity intends to sell the security 0 0 (116)
Reductions for increases in cash  ows expected to be collected that are recognized over the remaining life of
the security (1,590) (669) (380)
Reductions for credit loss impairments previously recognized on securities which matured, paid down,
prepaid or were sold during the period (5,967) (4,539) (7,597)
BALANCE, END OF YEAR $ 95,589 $ 103,090 $ 105,245
We regularly monitor our investment portfolio to ensure investments
that may be other-than-temporarily impaired are identi ed in a
timely fashion, properly valued, and charged against earnings in
the proper period.  e determination that a security has incurred
an other-than-temporary decline in value requires the judgment of
management. Assessment factors include, but are not limited to, the
length of time and the extent to which the market value has been less
than cost, the  nancial condition and rating of the issuer, whether any
collateral is held, the intent and ability of the Company to retain the
investment for a period of time su cient to allow for recovery for equity
securities and the intent to sell or whether it is more likely than not
that the Company will be required to sell for  xed maturity securities.
Inherently, there are risks and uncertainties involved in making these
judgments. Changes in circumstances and critical assumptions such as
a continued weak economy, a more pronounced economic downturn
or unforeseen events which a ect one or more companies, industry
sectors, or countries could result in additional impairments in future
periods for other-than-temporary declines in value. Any equity security