Assurant 2015 Annual Report Download - page 112

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ASSURANT, INC. – 2015 Form 10-KF-26
6 Fair Value Disclosures
an unrealized gain (loss) and is included as part of AOCI�
The Company included the available-for-sale investments
purchased with the cash collateral in its evaluation of other-
than-temporary impairments�
Cash proceeds that the Company received as collateral for
the securities it lent and subsequent repayment of the cash
are regarded by the Company as cash ows from nancing
activities, since the cash received was considered a borrowing�
Since the Company reinvested the cash collateral generally
in investments that were designated as available-for-sale,
the reinvestment is presented as cash ows from investing
activities�
6� Fair Value Disclosures
Fair Values, Inputs and Valuation Techniques for
Financial Assets and Liabilities Disclosures
The 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.
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 signicant to the fair
value measurement in its entirety. The Company’s assessment
of the signicance of a particular input to the fair value
measurement in its entirety requires judgment, and takes
into account factors speci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 signi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
reect management’s own assumptions about the assumptions
a market participant would use in pricing the asset�
The Company reviews fair value hierarchy classications 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�