Assurant 2013 Annual Report Download - page 71

ASSURANT, INC. – 2013 Form 10-K 59
PART II
ITEM 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations
portfolios, using holding company cash (if available), issuing
commercial paper, or drawing funds from our revolving credit
facility. In addition, we have fi led an automatically effective
shelf registration statement on Form S-3 with the SEC. This
registration statement allows us to issue equity, debt or
other types of securities through one or more methods of
distribution. The terms of any offering would be established
at the time of the offering, subject to market conditions. If
we decide to make an offering of securities, we will consider
the nature of the cash requirement as well as the cost of
capital in determining what type of securities we may offer.
On January 10, 2014, our Board of Directors declared a
quarterly dividend of $0.25 per common share payable on
March 10, 2014 to stockholders of record as of February 24,
2014. We paid dividends of $0.25 per common share on
December 10, 2013 to stockholders of record as of December 2,
2013, $0.25 per common share on September 10, 2013 to
stockholders of record as of August 26, 2013, and $0.25 per
common share on June 11, 2013 to stockholders of record
as of May 28, 2013. This represents a 19 percent increase
above the quarterly dividend of $0.21 per common share
paid on March 11, 2013 to stockholders of record as of
February 25, 2013. Any determination to pay future dividends
will be at the discretion of our Board of Directors and will
be dependent upon: our subsidiaries’ payments of dividends
and/or other statutorily permissible payments to us; our
results of operations and cash fl ows; our fi nancial position
and capital requirements; general business conditions; legal,
tax, regulatory and contractual restrictions on the payment
of dividends; and other factors our Board of Directors deems
relevant.
On November 18, 2013, our Board of Directors authorized
the Company to repurchase up to an additional $600,000 of
its outstanding common stock, making its total authorization
$752,436 at that date. During the year ended December 31,
2013, we repurchased 7,707,014 shares of our outstanding
common stock at a cost of $398,026, exclusive of commissions.
As of December 31, 2013, $704,874 remained under the
total repurchase authorization. The timing and the amount
of future repurchases will depend on market conditions and
other factors.
Management believes the Company will have suffi cient
liquidity to satisfy its needs over the next twelve months,
including the ability to pay interest on our senior notes and
dividends on our common shares.
Retirement and Other Employee Benefi ts
We sponsor a qualifi ed pension plan, (the “Assurant Pension
Plan”) and various non-qualifi ed pension plans (including
an Executive Pension Plan), along with a retirement health
benefi ts plan covering our employees who meet specifi ed
eligibility requirements. The reported expense and liability
associated with these plans requires an extensive use of
assumptions which include, but are not limited to, the
discount rate, expected return on plan assets and rate
of future compensation increases. We determine these
assumptions based upon currently available market and
industry data, and historical performance of the plan and its
assets. The actuarial assumptions used in the calculation of
our aggregate projected benefi t obligation vary and include
an expectation of long-term appreciation in equity markets
which is not changed by minor short-term market fl uctuations,
but does change when large interim deviations occur. The
assumptions we use may differ materially from actual results
due to changing market and economic conditions, higher
or lower withdrawal rates or longer or shorter life spans of
the participants.
As of January 1, 2014, the Assurant Pension and Executive
Pension Plans are no longer offered to new hires. Current
employees will not be affected and will continue to accrue
benefi ts under the Assurant Pension and Executive Pension
Plans. Employees who are currently eligible but not yet
participating will remain eligible to participate in the future
once they meet the Assurant Pension and Executive Pension
Plan requirements.
The Pension Protection Act of 2006 (“PPA”) requires certain
qualifi ed plans, like the Assurant Pension Plan, to meet
specifi ed funding thresholds. If these funding thresholds are
not met, there are negative consequences to the Assurant
Pension Plan and participants. If the funded percentage
falls below 80%, full payment of lump sum benefi ts as well
as implementation of amendments improving benefi ts are
restricted.
As of January 1, 2013, the Assurant Pension Plan’s funded
percentage was 128% on a PPA calculated basis (based on an
actuarial average value of assets compared to the funding
target). Therefore, benefi t and payment restrictions did not
occur during 2013. The 2013 funded measure will also be
used to determine restrictions, if any, that can occur during
the fi rst nine months of 2014. Due to the funding status of
the Assurant Pension Plan in 2013, no restrictions will exist
before October 2014 (the time that the January 1, 2014
actuarial valuation needs to be completed). Also, based on
the estimated funded status as of January 1, 2014, we do
not anticipate any restrictions on benefi ts for the remainder
of 2014.
The Assurant Pension Plan was over-funded by $18,078 and
under-funded by $107,666 (based on the fair value of the
assets compared to the projected benefi t obligation) on a
GAAP basis at December 31, 2013 and 2012, respectively. This
equates to an 102% and 87% funded status at December 31,
2013 and 2012, respectively. The change in funded status
is mainly due to favorable investment returns as well as
contributions made to the plan and an increase in the discount
rate used to determine the projected benefi t obligation.
The Company’s funding policy is to contribute amounts to the
plan suffi cient to meet the minimum funding requirements
in ERISA, plus such additional amounts as the Company may
determine to be appropriate from time to time up to the
maximum permitted. The funding policy considers several
factors to determine such additional amounts including
items such as the amount of service cost plus 15% of the
Assurant Pension Plan defi cit and the capital position of the
Company. During 2013, we contributed $50,000 in cash to