Assurant 2015 Annual Report Download - page 71

59ASSURANT, INC. – 2015 Form 10-K
PART II
ITEM 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations
During 2015, we contributed $10,750 in cash to the Assurant
Pension Plan� Due to the Plan’s current funding status, no
cash is expected to be contributed to the Assurant Pension
Plan over the course of 2016� See Note 21 to the Consolidated
Financial Statements included elsewhere in this report for
the components of the net periodic benet cost.
The impact of a 25 basis point decrease in the discount rate
assumption on the 2016 projected benet expense would
result in a reduction of $600 for the Assurant Pension Plan
and the various non-qualied pension plans and a reduction
of $100 on the retirement health benet plan. The impact
of a 25 basis point change in the expected return on assets
assumption on the 2016 projected benet expense would
result in a change of $2,100 for the Assurant Pension Plan
and the various non-qualied pension plans and $100 for the
retirement health benets plan.
Commercial Paper Program
Our commercial paper program requires us to maintain
liquidity facilities either in an available amount equal to
any outstanding notes from the program or in an amount
sufcient to maintain the ratings assigned to the notes issued
from the program� Our commercial paper is rated AMB-1 by
A�M� Best, P-2 by Moody’s and A-2 by S&P� Our subsidiaries do
not maintain commercial paper or other borrowing facilities�
This program is currently backed up by a $400,000 senior
revolving credit facility, of which $395,960 was available at
December 31, 2015, due to $4,040 of outstanding letters of
credit related to this program�
On September 16, 2014, we entered into a ve-year unsecured
$400,000 revolving credit agreement, as amended by
Amendment No� 1, dated as of March 5, 2015 (“2014 Credit
Facility”) with a syndicate of banks arranged by JP Morgan
Chase Bank, N�A� and Wells Fargo, N�A� The 2014 Credit
Facility replaces our prior four-year $350,000 revolving
credit facility (“2011 Credit Facility”), which was entered
into on September 21, 2011 and was scheduled to expire
in September 2015� The 2011 Credit Facility terminated
upon the effectiveness of the 2014 Credit Facility� The 2014
Credit Facility provides for revolving loans and the issuance
of multi-bank, syndicated letters of credit and/or letters of
credit from a sole issuing bank in an aggregate amount of
$400,000 and is available until September 2019, provided
we are in compliance with all covenants� The 2014 Credit
Facility has a sublimit for letters of credit issued thereunder
of $50,000� The proceeds of these loans may be used for our
commercial paper program or for general corporate purposes�
The Company may increase the total amount available under
the 2014 Credit Facility to $525,000 subject to certain
conditions� No bank is obligated to provide commitments
above their current share of the $400,000 facility�
We did not use the commercial paper program during the
twelve months ended December 31, 2015 and 2014 and there
were no amounts relating to the commercial paper program
outstanding at December 31, 2015 and December 31, 2014�
The Company made no borrowings using the 2014 Credit
Facility and no loans were outstanding at December 31, 2015�
The 2014 Credit Facility contains restrictive covenants, all of
which were met as of December 31, 2015� These covenants
include (but are not limited to):
(i) Maintenance of a maximum debt to total capitalization
ratio on the last day of any scal quarter of not greater
than 35%, and
(ii) Maintenance of a consolidated adjusted net worth in
an amount not less than the “Minimum Amount”� For
the purpose of this calculation the “Minimum Amount”
is an amount equal to the sum of (a) the base amount
$3,317,000 plus (b) 25% of consolidated net income for
each scal quarter (if positive) ending after June 30,
2014, plus (c) 25% of the net proceeds received by the
Company from any capital contribution to, or issuance
of any Capital Stock or Hybrid Securities received after
June 30, 2014�
At December 31, 2015, our ratio of debt to total capitalization
as calculated under the covenant was 21%, the consolidated
Minimum Amount described in (ii) above was $3,404,584 and
our actual consolidated adjusted net worth as calculated
under the covenant was $4,558,404�
In the event of the breach of certain covenants all obligations
under the 2014 Credit Facility, including unpaid principal
and accrued interest and outstanding letters of credit, may
become immediately due and payable�
Senior Notes
On March 28, 2013, we issued two series of senior notes with
an aggregate principal amount of $700,000 (the “2013 Senior
Notes”). The rst series is $350,000 in principal amount,
bears interest at 2�50% per year and is payable in a single
installment due March 15, 2018� The second series is $350,000
in principal amount, bears interest at 4�00% per year and is
payable in a single installment due March 15, 2023�
The net proceeds from the sale of the 2013 Senior Notes were
$698,093, which represents the principal amount less the
discount before offering expenses� The Company used the
net proceeds of the 2013 Senior Notes for general corporate
purposes, including to repay $500,000 of debt that matured
in February 2014�
Interest on our 2013 Senior Notes is payable semi-annually
on March 15 and September 15 of each year� The interest
expense incurred related to the 2013 Senior Notes was
$22,988, $22,981 and $17,357 for the twelve months ended
December 31, 2015, 2014 and 2013, respectively� There was
$6,635 of accrued interest at both December 31, 2015 and
2014� The 2013 Senior Notes are unsecured obligations and
rank equally with all of the Company’s other senior unsecured
indebtedness� The Company may redeem each series of the
2013 Senior Notes in whole or in part at any time and from
time to time before their maturity at the redemption price
set forth in the Indenture�