Assurant 2015 Annual Report Download - page 129

ASSURANT, INC. – 2015 Form 10-K F-43
14 Reinsurance
14� Reinsurance
In the ordinary course of business, the Company is involved in both the assumption and cession of reinsurance with non-afliated
companies. The following table provides details of the reinsurance recoverables balance for the years ended December 31:
2015 2014
Ceded future policyholder benets and expense $4,037,682 $4,052,976
Ceded unearned premium 1,667,228 1,587,583
Ceded claims and benets payable 1,429,128 1,283,510
Ceded paid losses 336,365 330,516
TOTAL $ 7,470,403 $ 7,254,585
A key credit quality indicator for reinsurance is the A.M. Best
nancial strength ratings of the reinsurer. The A.M. Best ratings
are an independent opinion of a reinsurer’s ability to meet
ongoing obligations to policyholders� The A�M� Best ratings for
new reinsurance agreements where there is material credit
exposure are reviewed at the time of execution� The A�M�
Best ratings for existing reinsurance agreements are reviewed
on a periodic basis, at least annually. The following table
provides the reinsurance recoverable as of December 31,
2015 grouped by A�M� Best rating:
Best Ratings of Reinsurer
Ceded future
policyholder benets
and expense
Ceded unearned
premiums
Ceded claims and
benets payable Ceded paid losses Total
A++ or A+ $ 2,567,918 $50,041 $977,498 $17,445 $3,612,902
A or A- 1,460,465 79,623 185,131 25,292 1,750,511
B++ or B+ 747 23,153 2,628 —26,528
B or B- 251 258 86 45 640
Not Rated 8,301 1,514,153 263,785 304,403 2,090,642
Total 4,037,682 1,667,228 1,429,128 347,185 7,481,223
Less: Allowance — — — (10,820)(10,820)
NET REINSURANCE
RECOVERABLE $ 4,037,682 $ 1,667,228 $ 1,429,128 $ 336,365 $ 7,470,403
A.M. Best ratings for The Hartford and John Hancock, the
reinsurers with the largest reinsurance recoverable balances,
are A- and A+, respectively. A.M. Best currently maintains
a stable outlook on the nancial strength ratings of John
Hancock and The Hartford� The total amount of recoverable for
these two reinsurers is $4,607,056 as of December 31, 2015.
Most of the assets backing reserves relating to reinsurance
recoverables from these two counterparties are held in trust�
A substantial portion of the Not Rated category is related
to Assurant Solutions’ and Assurant Specialty Property’s
agreements to reinsure premiums and risks related to business
generated by certain clients to the clients’ own captive
insurance companies or to reinsurance subsidiaries in which
the clients have an ownership interest� To mitigate exposure
to credit risk for these reinsurers, the Company evaluates
the nancial condition of the reinsurer and holds substantial
collateral (in the form of funds withheld, trusts, and letters
of credit) as security� The Not Rated category also includes
recoverables from the Department of Health and Human
Services, the National Flood Insurance Program and the
Florida Hurricane Catastrophe Fund�
An allowance for doubtful accounts related to reinsurance
recoverables is recorded on the basis of periodic evaluations
of balances due from reinsurers (net of collateral), reinsurer
solvency, management’s experience and current economic
conditions. The allowance for doubtful accounts was $10,820
at December 31, 2015 and 2014, respectively. There were
no additions or write-downs charged against the allowance
during 2015 or 2014�