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ASSURANT, INC.2012 Form10-KF-22
5 Fair Value Disclosures
under securities agreements.  e di erence between the collateral held
and obligations under securities lending is recorded as an unrealized
gain (loss) and is included as part of AOCI. All securities are in an
unrealized gain position as of December31, 2012. All securities with
unrealized losses as of December31, 2011 had been in a continuous
loss position for twelve months or longer.  e Company includes the
available-for-sale investments purchased with the cash collateral in its
evaluation of other-than-temporary impairments.
Cash proceeds that the Company receives as collateral for the securities
it lends and subsequent repayment of the cash are regarded by the
Company as cash  ows from  nancing activities, since the cash received is
considered a borrowing. Since the Company reinvests the cash collateral
generally in investments that are designated as available-for-sale, the
reinvestment is presented as cash  ows from investing activities.
5. Fair Value Disclosures
Fair Values, Inputs and Valuation Techniques for
Financial Assets and Liabilities Disclosures
e fair value measurements and disclosures guidance de nes fair value
and establishes a framework for measuring fair value. Fair value is de ned
as the price that would be received to sell an asset or paid to transfer a
liability in an orderly transaction between market participants at the
measurement date. In accordance with this guidance, the Company
has categorized its recurring basis  nancial assets and liabilities into a
three-level fair value hierarchy based on the priority of the inputs to
the valuation technique.
e fair value hierarchy gives the highest priority to quoted prices in
active markets for identical assets or liabilities (Level1)and the lowest
priority to unobservable inputs (Level3).  e inputs used to measure
fair value may fall into di erentlevels of the fair value hierarchy.In
suchcases, the level in the fair value hierarchy within which the fair
value measurement in its entirety falls has been determined based on the
lowest level input that is signi cant to the fair value measurementin its
entirety. e Company’s assessment of the signi cance of a particular
input to the fair value measurement in its entirety requires judgment,
and considers factors speci cto the asset or liability.
e levels of the fair value hierarchy are described below:
•
Level 1 inputs utilize quoted prices (unadjusted) in active markets for
identical assets or liabilities that the Company can access.
•
Level 2 inputs utilize other than quoted prices included in Level
1 that are observable for the asset, either directly or indirectly, for
substantially the full term of the asset. Level 2 inputs include quoted
prices for similar assets in active markets, quoted prices for identical
or similar assets in markets that are not active and inputs other than
quoted prices that are observable in the marketplace for the asset.
e observable inputs are used in valuation models to calculate the
fair value for the asset.
•
Level 3 inputs are unobservable but are signi cant to the fair value
measurement for the asset, and include situations where there is little,
if any, market activity for the asset.  ese inputs re ect management’s
own assumptions about the assumptions a market participant would
use in pricing the asset.
A review of fair value hierarchy classi cations is conducted on a
quarterly basis. Changes in the observability of valuation inputs may
result in a reclassi cation of levels for certain securities within the fair
value hierarchy.
e following tables present the Company’s fair value hierarchy for
assets and liabilities measured at fair value on a recurring basis as of
December31, 2012 and December31, 2011.  e amounts presented
below for Collateral held/pledged under securities agreements, Other
investments, Cash equivalents, Other assets, Assets and Liabilities held in
separate accounts and Other liabilities di er from the amounts presented
in the consolidated balance sheets because only certain investments
or certain assets and liabilities within these line items are measured at
estimated fair value. Other investments are comprised of investments in
the Assurant Investment Plan, American Security Insurance Company
Investment Plan, Assurant Deferred Compensation Plan, a modi ed
coinsurance arrangement and other derivatives. Other liabilities are
comprised of investments in the Assurant Investment Plan and other
derivatives.  e fair value amount and the majority of the associated
levels presented for Other investments and Assets held in separate
accounts are received directly from third parties.
e following tables present the Company’s fair value hierarchy for those
recurring basis assets and liabilities as of December31, 2012 and 2011.