Assurant 2013 Annual Report Download - page 110

ASSURANT, INC. – 2013 Form 10-KF-24
5 Fair Value Disclosures
5. Fair Value Disclosures
Fair Values, Inputs and Valuation Techniques for
Financial Assets and Liabilities Disclosures
The fair value measurements and disclosures guidance
defi nes fair value and establishes a framework for measuring
fair value. Fair value is defi 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 fi nancial assets
and liabilities into a three-level fair value hierarchy based
on the priority of the inputs to the valuation technique.
The 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). The
inputs used to measure fair value may fall into different 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 signifi cant to the fair value measurement in its entirety. The
Company’s assessment of the signifi cance of a particular input
to the fair value measurement in its entirety requires judgment,
and considers factors specifi c to the asset or liability.
The 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. The observable inputs are used in valuation models
to calculate the fair value for the asset.
• Level 3 inputs are unobservable but are signifi cant to the fair
value measurement for the asset, and include situations where
there is little, if any, market activity for the asset. These inputs
refl ect management’s own assumptions about the assumptions
a market participant would use in pricing the asset.
A review of fair value hierarchy classifi cations is conducted
on a quarterly basis. Changes in the observability of valuation
inputs may result in a reclassifi cation of levels for certain
securities within the fair value hierarchy.
The 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, 2013 and 2012. The 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 differ
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 modifi ed
coinsurance arrangement and other derivatives. Other liabilities are comprised of investments in the Assurant Investment Plan,
contingent consideration related to a business combination and other derivatives. The fair value amount and the majority of
the associated levels presented for Other investments and Assets and Liabilities held in separate accounts are received directly
from third parties.
Financial Assets
December 31, 2013
Total Level 1 Level 2 Level 3
Fixed maturity securities:
United States Government and government agencies and authorities $ 410,656 $ 0 $ 410,656 $ 0
State, municipalities and political subdivisions 835,152 0 812,495 22,657
Foreign governments 675,421 789 657,775 16,857
Asset-backed 6,174 0 6,174 0
Commercial mortgage-backed 60,362 0 59,764 598
Residential mortgage-backed 947,904 0 943,737 4,167
Corporate 8,356,206 0 8,240,862 115,344
Equity securities:
Common stocks 29,232 28,548 684 0
Non-redeemable preferred stocks 429,126 0 421,616 7,510
Short-term investments 470,458 273,518b 196,940c 0
Collateral held/pledged under securities agreements 74,212 67,202b 7,010c 0
Other investments 246,748 66,659a 175,918c 4,171d
Cash equivalents 1,233,701 967,372b 266,329c 0
Other assets 3,726 0 1,235f 2,491e
Assets held in separate accounts 1,887,988 1,696,811a 191,177c 0
TOTAL FINANCIAL ASSETS $ 15,667,066 $ 3,100,899 $ 12,392,372 $ 173,795
Other liabilities $ 106,992 $ 54,794a$ 31,868g$ 20,330f
Liabilities related to separate accounts 1,887,988 1,696,811a 191,177c 0
TOTAL FINANCIAL LIABILITIES $ 1,994,980 $ 1,751,605 $ 223,045 $ 20,330