Assurant 2012 Annual Report Download - page 96

ASSURANT, INC.2012 Form10-KF-20
4 Investments
December31, 2011
Less than 12 months 12 Months or More Total
Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses
Fixed maturity securities:
United States Government and government
agencies and authorities $ 8,852 $ (26) $ 0 $ 0 $ 8,852 $ (26)
States, municipalities and political subdivisions 0 0 5,503 (301) 5,503 (301)
Foreign governments 31,125 (150) 9,443 (1,218) 40,568 (1,368)
Asset-backed 2,624 (320) 0 0 2,624 (320)
Residential mortgage-backed 43,141 (513) 2,368 (120) 45,509 (633)
Corporate 718,815 (32,899) 176,279 (25,858) 895,094 (58,757)
TOTAL FIXED MATURITY SECURITIES $ 804,557 $ 33,908 $ 193,593 $ 27,497 $ 998,150 $ 61,405
Equity securities:
Common stocks $ 1,174 $ (54) $ 0 $ 0 $ 1,174 $ (54)
Non-redeemable preferred stocks 51,577 (4,499) 85,704 (20,641) 137,281 (25,140)
TOTAL EQUITY SECURITIES $ 52,751 $ 4,553 $ 85,704 $ 20,641 $ 138,455 $ 25,194
Total gross unrealized losses represent less than 2% and 8% of the
aggregate fair value of the related securities at December31, 2012
and 2011, respectively. Approximately 41% and 44% of these gross
unrealized losses have been in a continuous loss position for less than
twelve months at December31, 2012 and 2011, respectively.  e
total gross unrealized losses are comprised of 238 and 389 individual
securities at December31, 2012 and 2011, respectively. In accordance
with its policy described above, the Company concluded that for these
securities an adjustment to its results of operations for other-than-
temporary impairments of the gross unrealized losses was not warranted
at December31, 2012 and 2011.  ese conclusions were based on a
detailed analysis of the underlying credit and expected cash  ows of
each security. As of December31, 2012, the gross unrealized losses that
have been in a continuous loss position for twelve months or more were
concentrated in the Company’s corporate  xed maturity securities and
in non-redeemable preferred stocks. Within the Company’s corporate
 xed maturity securities, the majority of the loss position relates to
securities in the  nancial industry sector.  e  nancial industry sector’s
gross unrealized losses of twelve months or more were $1,759, or 47%,
of the corporate  xed maturity total.  e non-redeemable preferred
stocks are perpetual preferred securities that have characteristics of both
debt and equity securities. To evaluate these securities, we apply an
impairment model similar to that used for our  xed maturity securities.
As of December31, 2012, the Company did not intend to sell these
securities and it was not more likely than not that the Company would
be required to sell them and no underlying cash  ow issues were
noted.  erefore, the Company did not recognize an OTTI on those
perpetual preferred securities that had been in a continuous unrealized
loss position for twelve months or more. As of December31, 2012,
the Company did not intend to sell the  xed maturity securities and
it was not more likely than not that the Company would be required
to sell the securities before the anticipated recovery of their amortized
cost basis.  e gross unrealized losses are primarily attributable to
widening credit spreads associated with an underlying shift in overall
credit risk premium.
 e cost or amortized cost and fair value of available for sale  xed maturity securities in an unrealized loss position at December31, 2012,
bycontractual maturity, is shown below:
Cost or Amortized Cost Fair Value
Due in one year or less $ 73,121 $ 73,111
Due after one year through  ve years 350,936 348,606
Due after  ve years through ten years 305,773 301,176
Due after ten years 92,854 88,658
TOTAL 822,684 811,551
Asset-backed 3,084 2,662
Residential mortgage-backed 66,527 65,974
TOTAL $ 892,295 $ 880,187
 e Company has exposure to sub-prime and related mortgages
within our  xed maturity security portfolio. At December31, 2012,
approximately 3.3% of the residential mortgage-backed holdings
had exposure to sub-prime mortgage collateral.  is represented
approximately 0.2% of the total  xed income portfolio and 1.0% of
the total unrealized gain position. Of the securities with sub-prime
exposure, approximately 15.0% are rated as investment grade. All
residential mortgage-backed securities, including those with sub-prime
exposure, are reviewed as part of the ongoing other-than-temporary
impairment monitoring process.
 e Company has made commercial mortgage loans, collateralized
by the underlying real estate, on properties located throughout the
U.S. and Canada. At December31, 2012, approximately 38% of
the outstanding principal balance of commercial mortgage loans was
concentrated in the states of California, NewYork, and Utah. Although
the Company has a diversi ed loan portfolio, an economic downturn
could have an adverse impact on the ability of its debtors to repay their
loans.  e outstanding balance of commercial mortgage loans range
in size from $36 to $15,939 at December31, 2012 and from $36 to
$16,285 at December31, 2011.