Assurant 2015 Annual Report Download - page 54

42 ASSURANT, INC. – 2015 Form 10-K
PART II
ITEM 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations
Retirement and Other Employee Benets
We sponsor a qualied pension plan, (the “Assurant Pension
Plan”) and various non-qualied pension plans (including
an Executive Pension Plan), along with a retirement health
benets plan covering our employees who meet specied
eligibility requirements. Effective March 1, 2016, benet
accruals for the Assurant Pension Plan, the various non-
qualied pension plans and the retirement health benets
plan were frozen� 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 benet obligation vary and include
an expectation of long-term appreciation in equity markets
which is not changed by minor short-term market 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�
Contingencies
We account for contingencies by evaluating each contingent
matter separately� A loss is accrued if reasonably estimable
and probable� We establish reserves for these contingencies at
the best estimate, or, if no one estimated amount within the
range of possible losses is more probable than any other, we
report an estimated reserve at the low end of the estimated
range� Contingencies affecting the Company include litigation
matters which are inherently difcult to evaluate and are
subject to signicant changes.
Deferred Taxes
Deferred income taxes are recorded for temporary differences
between the nancial reporting and income tax bases of
assets and liabilities, based on enacted tax laws and statutory
tax rates applicable to the periods in which the Company
expects the temporary differences to reverse� A valuation
allowance is established for deferred tax assets if, based on
the weight of all available evidence, it is more likely than
not that some portion of the asset will not be realized� The
valuation allowance is sufcient to reduce the asset to the
amount that is more likely than not to be realized� The
Company has deferred tax assets resulting from temporary
differences that may reduce taxable income in future periods�
The detailed components of our deferred tax assets, liabilities
and valuation allowance are included in Note 8 to the Notes
to the Consolidated Financial Statements included elsewhere
in this report�
As of December 31, 2014, the Company had a cumulative
valuation allowance of $18,164 against deferred tax assets
of international subsidiaries� During Twelve Months 2015, the
Company recognized a cumulative income tax benet of $4,946
primarily related to the release of a valuation allowance of
certain international subsidiaries� As of December 31, 2015,
the Company has a cumulative valuation allowance of $13,218
against deferred tax assets, as it is management’s assessment
that it is more likely than not that this amount of deferred tax
assets will not be realized� The realization of deferred tax assets
related to net operating loss carryforwards of international
subsidiaries depends upon the existence of sufcient taxable
income of the same character in the same jurisdiction�
In determining whether the deferred tax asset is realizable,
the Company weighed all available evidence, both positive
and negative� We considered all sources of taxable income
available to realize the asset, including the future reversal
of existing temporary differences, future taxable income
exclusive of reversing temporary differences, carry forwards
and tax-planning strategies�
The Company believes it is more likely than not that the
remainder of its deferred tax assets will be realized in the
foreseeable future� Accordingly, other than noted herein for
certain international subsidiaries, a valuation allowance has
not been established�
Future reversal of the valuation allowance will be recognized
either when the benet is realized or when we determine that
it is more likely than not that the benet will be realized.
Depending on the nature of the taxable income that results in
a reversal of the valuation allowance, and on management’s
judgment, the reversal will be recognized either through other
comprehensive income (loss) or through continuing operations
in the consolidated statements of operations� Likewise, if the
Company determines that it is not more likely than not that
it would be able to realize all or part of the deferred tax
asset in the future, an adjustment to the deferred tax asset
valuation allowance would be recorded through a charge
to continuing operations in the consolidated statements of
operations in the period such determination is made�
In determining the appropriate valuation allowance,
management makes judgments about recoverability of deferred
tax assets, use of tax loss and tax credit carryforwards, levels
of expected future taxable income and available tax planning
strategies� The assumptions used in making these judgments
are updated periodically by management based on current
business conditions that affect the Company and overall
economic conditions� These management judgments are
therefore subject to change based on factors that include, but
are not limited to, changes in expected capital gain income
in the foreseeable future and the ability of the Company
to successfully execute its tax planning strategies� Please
see “Item 1A—Risk Factors-Risks Related to Our Company-
Unanticipated changes in tax provisions, changes in tax laws or
exposure to additional income tax liabilities could materially
and adversely affect our results” for more information�