21. Retirement and Other Employee Benefits

Defined Benefit Plans

The Company and its subsidiaries participate in a non-contributory, qualified defined benefit pension plan covering substantially all employees. This Plan is considered "qualified" because it meets the requirements of Internal Revenue Code Section 401(a) ("IRC 401(a)") and the Employee Retirement Income Security Act of 1974 ("ERISA"). The qualified defined benefit pension plan is a pension equity plan with a grandfathered final average earnings plan for a certain group of employees. Benefits are based on certain years of service and the eemployee's compensation during certain such years of service. The Company's funding policy is to contribute amounts to the plan sufficient 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 deficit and the capital position of the Company. During 2011, we contributed $40,000 in cash to the Assurant Pension Plan. We expect to contribute $50,000 in cash to the Assurant Pension Plan over the course of 2012. Contributions are intended to provide not only for benefits attributed to service to date, but also for those expected to be earned in the future. Plan assets are maintained in a separate trust and as such are not included in the consolidated balance sheets of the Company.

The Company also has various non-contributory, non-qualified supplemental plans covering certain employees. Since these plans are "non-qualified" they are not subject to the laws and regulations of IRC 401(a) and ERISA. As such, the Company is not required, and does not, fund these plans. The qualified and nonqualified plans are referred to as "Pension Benefits" unless otherwise noted. The Company has the right to modify or terminate these benefits; however, the Company will not be relieved of its obligation to plan participants for their vested benefits.

In addition, the Company provides certain life and health care benefits ("Retirement Health Benefits") for retired employees and their dependents. Substantially all employees of the Company may become eligible for these benefits depending on age and years of service. On July 1, 2011, the Company terminated certain health care benefits for employees who do not qualify for "grandfathered" status and will no longer offer these benefits to new hires. The Company contribution, plan design and other terms of the remaining benefits will not change for those remaining employees. The Company has the right to modify or terminate these benefits. Plan assets and benefit obligations are measured as of December 31, 2011.

Summarized information on the Company's Pension Benefits and Retirement Health Benefits plans (together the "Plans") for the years ended December 31 is as follows:


					Pension Benefits						Retirement Health Benefits
		2011			2010			2009			2011			2010			2009
Change in projected benefit
obligation
Projected benefit obligation at
beginning of year	$	(749,284	)	$	(658,164	)	$	(581,432	)	$	(97,436	)	$	(83,553	)	$	(67,166	)
Service cost		(31,832	)		(30,945	)		(26,153	)		(3,233	)		(4,556	)		(3,571	)
Interest cost		(38,919	)		(38,772	)		(36,127	)		(3,915	)		(5,005	)		(4,263	)
Amendments		(1,865	)		0			(374	)		13,541			0			(1,926	)
Actuarial loss		(73,449	)		(56,952	)		(45,515	)		13,249			(6,050	)		(8,456	)
Benefits paid		39,711			35,549			31,437			2,092			1,728			1,829

Projected benefit obligation at end of
year	$	(855,638	)	$	(749,284	)	$	(658,164	)	$	(75,702	)	$	(97,436	)	$	(83,553	)


Change in plan assets
Fair value of plan assets at beginning
of year	$	533,867		$	460,961		$	380,577		$	39,663		$	36,546		$	23,687
Actual return on plan assets		56,965			63,877			59,956			4,502			4,845			4,117
Employer contributions		51,740			45,493			53,063			0			0			10,571
Benefits paid (including
administrative expenses)		(40,910	)		(36,464	)		(32,635	)		(2,092	)		(1,728	)		(1,829	)

Fair value of plan assets at end of
year	$	601,662		$	533,867		$	460,961		$	42,073		$	39,663		$	36,546


Funded status at end of year	$	(253,976	)	$	(215,417	)	$	(197,203	)	$	(33,629	)	$	(57,773	)	$	(47,007	)

In accordance with the guidance on retirement benefits, the Company aggregates the results of the qualified and non-qualified plans as "Pension Benefits" and is required to disclose the aggregate projected benefit obligation, accumulated benefit obligation and fair value of plan assets, if the obligations within those plans exceed plan assets.

For the years ended December 31, 2011, 2010 and 2009, the projected benefit obligations and the accumulated benefit obligations of Pension Benefits exceeded plan assets as follows:


		Qualified Pension Benefits								Non-Qualified Pension Benefits								Total Pension Benefits
		2011			2010		2009			2011		2010			2009			2011			2010			2009
Fair value of plan assets
	$	601,662		$	533,867	$	460,961		$	0	$	0		$	0		$	601,662		$	533,867		$	460,961
Projected benefit
obligation		(727,179	)		(630,145	)	(548,938	)		(128,459	)	(119,139	)		(109,226	)		(855,638	)		(749,284	)		(658,164	)


Funded status at end of
year	($	125,517	)	($	96,278	) ($	87,977	)	($	128,459	) ($	119,139	)	($	109,226	)	($	253,976	)	($	215,417	)	($	197,203	)


Accumulated benefit
obligation	$	604,763		$	512,072	$	466,491		$	110,435	$	102,518		$	93,697		$	715,198		$	614,590		$	560,188

The Pension Protection Act of 2006 ("PPA") requires certain qualified plans, like the Assurant Pension Plan, to meet specified funding thresholds. If these funding thresholds are not met, there are negative consequences to the Plan and participants. If the funded percentage falls below 80%, full payment of lump sum benefits as well as implementation of amendments improving benefits are restricted.

As of January 1, 2011, the Plan's funded percentage was 106% on a PPA calculated basis. Therefore, benefit and payment restrictions did not occur during 2011. The 2011 funded measure will also be used to determine restrictions, if any, that can occur during the first nine months of 2012. Due to the funding status of the Plan in 2011, no restrictions will exist before October 2012 (the time that the January 1, 2012 actuarial valuation needs to be completed). Also, based on the estimated funded status as of January 1, 2012, we do not anticipate any restrictions on benefits for the remainder of 2012.

Amounts recognized in the consolidated balance sheets consist of:


						Pension Benefits						Retirement Health Benefits
		2011				2010			2009			2011			2010			2009
Assets		$	0		$	0		$	0		$	0		$	0		$	0
Liabilities	$	(253,976		)	$	(215,417	)	$	(197,203	)	$	(33,629	)	$	(57,773	)	$	(47,007	)

Amounts recognized in accumulated other comprehensive income (loss) consist of:


					Pension Benefits						Retirement Health Benefits
		2011			2010			2009			2011		2010			2009
Net (loss) gain	$	(286,535	)	$	(242,902	)	$	(223,497	)	$	3,741	$	(10,763	)	$	(6,872	)
Prior service (cost) credit		(5,756	)		(5,578	)		(6,548	)		7,968		(5,848	)		(7,332	)

	$	(292,291	)	$	(248,480	)	$	(230,045	)	$	11,709	$	(16,611	)	$	(14,204	)

Components of net periodic benefit cost and other amounts recognized in accumulated other comprehensive income (loss) for the years ended December 31 were as follows:


					Pension Benefits						Retirement Health Benefits
		2011			2010			2009			2011			2010			2009
Net periodic benefit cost
Service cost	$	31,832		$	30,945		$	26,153		$	3,233		$	4,556		$	3,571
Interest cost		38,919			38,772			36,127			3,915			5,005			4,263
Expected return on plan assets		(40,698	)		(38,069	)		(35,207	)		(2,957	)		(2,685	)		(2,044	)
Amortization of prior service cost		795			970			1,506			275			1,483			1,483
Amortization of net loss (gain)		15,119			12,654			9,494			(290	)		0			0
Curtailment (gain)/settlement loss		521			0			(610	)		0			0			0

Net periodic benefit cost	$	46,488		$	45,272		$	37,463		$	4,176		$	8,359		$	7,273

Other changes in plan assets and benefit
obligations recognized in accumulated
other comprehensive income (loss)
Net loss	$	58,752		$	32,059		$	23,048		$	(14,794	)	$	3,890		$	6,383
Amortization of prior service cost		(1,687	)		(970	)		(2,256	)		(275	)		(1,483	)		(1,483	)
Amortization of net (loss) gain		(15,119	)		(12,654	)		(9,218	)		290			0			0
Prior service credit (cost)		1,865			0			374			(13,541	)		0			1,926

Total recognized in accumulated other
comprehensive income	$	43,811		$	18,435		$	11,948		$	(28,320	)	$	2,407		$	6,826

Total recognized in net periodic benefit
cost and accumulated other
comprehensive income (loss)	$	90,299		$	63,707		$	49,411		$	(24,144	)	$	10,766		$	14,099

In 2010 and 2009, the improvement in the global economy caused actual asset returns of the Plans' investment portfolios to be much greater than expected. The Company uses a five-year averaging method to determine the market-related value of plan assets, which is used to calculate the expected return of plan assets component of the Plans' expense. Under this methodology, asset gains/losses that result from actual returns which differ from the Company's expected long-term rate of return on assets assumption are recognized in the market-related value of assets on a level basis over a five year period. The difference between actual as compared to expected asset returns for the Plans will be fully reflected in the market-related value of plan assets over the next five years using the methodology described above.

The estimated net loss and prior service cost of Pension Benefits that will be amortized from accumulated other comprehensive income into net periodic benefit cost over the next fiscal year are $23,061 and $781, respectively. The estimated net loss and prior service credit of Retirement Health Benefits that will be amortized from accumulated other comprehensive income into net periodic cost over the next fiscal year is $0 and $933, respectively.

Determination of the projected benefit obligation was based on the following weighted-average assumptions for the years ended December 31:


	Qualified Pension Benefits							Nonqualified Pension Benefits							Retirement Health Benefits
	2011		2010		2009		2011			2010		2009			2011		2010		2009
Discount rate	4.59	%	5.44	%	5.94	%		4.40	%	5.11	%		5.73	%	4.64	%	5.55	%	6.06	%

Determination of the net periodic benefit cost was based on the following weighted-average assumptions for the years ended December 31:


	Qualified Pension Benefits						Nonqualified Pension Benefits						Retirement Health Benefits
	2011		2010		2009		2011		2010		2009		2011		2010		2009
Discount rate	5.44	%	5.94	%	6.25	%	5.11	%	5.73	%	6.29	%	5.55	%	6.06	%	6.22	%
Expected long- term
return on plan assets	7.50	%	7.50	%	7.50	%	0		0		0		7.50	%	7.50	%	7.50	%

*	Assumed rates of compensation increases are also used to determine net periodic benefit cost. Assumed rates varied by age and ranged from 3.25% - 9.30% for the Pension Benefits for the years ended December 31, 2011, 2010 and 2009.

The selection of our discount rate assumption reflects the rate at which the Plans' obligations could be effectively settled at December 31, 2011, 2010 and 2009. The methodology for selecting the discount rate was to match each Plan's cash flows to that of a yield curve that provides the equivalent yields on zero-coupon corporate bonds for each maturity. The yield curve utilized in the cash flow analysis was comprised of 249 bonds rated AA by Moody's with maturities between zero and thirty years. The discount rate for each Plan is the single rate that produces the same present value of cash flows.

To develop the expected long-term rate of return on assets assumption, the Company considered the current level of expected returns on risk free investments (primarily, government bonds), the historical level of the risk premium associated with the other asset classes in which the portfolio is invested and the expectations for future returns of each asset class. The expected long-term rate of return on plan assets reflects the average rate of earnings expected on the funds invested or to be invested. The expected return for each asset class was then weighted based on the targeted asset allocation to develop the expected long-term rate of return on asset assumptions for the portfolio. This resulted in the selection of 7.50% for the fiscal years 2011, 2010 and 2009. The Company believes the current assumption reflects the projected return on the invested assets, given the current market conditions and the modified portfolio structure. Actual return on plan assets was 10.7% and 13.8% for the years ended December 31, 2011 and 2010. The Company lowered its expected long-term rate of return on assets to 6.75% as of January 1, 2012. The Company believes the revised assumption reflects the projected return on the invested assets, given the current market conditions and the modified portfolio structure.

The assumed health care cost trend rates used in measuring the accumulated benefit obligation and net periodic benefit cost were as follows:


	Retirement Health Benefits
	2011		2010		2009
Health care cost trend rate assumed for next year:
Pre-65 Non-reimbursement Plan	9.8	%	9.1	%	9.5	%
Post-65 Non-reimbursement Plan	9.5	%	9.1	%	9.5	%
Pre-65 Reimbursement Plan	9.8	%	9.1	%	9.5	%
Post-65 Reimbursement Plan	9.8	%	9.1	%	9.5	%
Rate to which the cost trend rate is assumed to decline (the ultimate trend rate)	4.5	%	4.5	%	4.5	%
Year that the rate reaches the ultimate trend rate
Pre-65 Non-reimbursement Plan	2028		2028		2028
Post-65 Non-reimbursement Plan	2028		2028		2028
Pre-65 Reimbursement Plan	2028		2028		2028
Post-65 Reimbursement Plan	2028		2028		2028

Assumed health care cost trend rates have a significant effect on the amounts reported for the health care plans. A one-percentage point change in assumed health care cost trend rates would have the following effects:


		Retirement Health Benefits
		2011			2010			2009
One percentage point increase in health care cost trend rate
Effect on total of service and interest cost components	$	62		$	52		$	43
Effect on postretirement benefit obligation		863			695			596
One percentage point decrease in health care cost trend rate
Effect on total of service and interest cost components	$	(91	)	$	(67	)	$	(55	)
Effect on postretirement benefit obligation		(1,196	)		(838	)		(719	)

The assets of the Plans are managed to maximize their long-term pre-tax investment return, subject to the following dual constraints: minimization of required contributions and maintenance of solvency requirements. It is anticipated that periodic contributions to the Plans will, for the foreseeable future, be sufficient to meet benefit payments thus allowing the balance to be managed according to a long-term approach. The Investment Committee for the Plans meets on a quarterly basis and reviews the re-balancing of existing fund assets and the asset allocation of new fund contributions.

The goal of our asset strategy is to ensure that the growth in the value of the fund over the long-term, both in real and nominal terms, manages (controls) risk exposure. Risk is managed by investing in a broad range of asset classes, and within those asset classes, a broad range of individual securities. Diversification by asset classes stabilizes total fund results over short-term time periods. Each asset class is externally managed by outside investment managers appointed by the Investment Committee. Derivatives may be used consistent with the Plan's investment objectives established by the Investment Committee. All securities must be U.S. dollar denominated.

Beginning in 2009, 8% of the Plans' assets were allocated to Mesirow Institutional Multi-Strategy Fund, L.P. ("MIMSF"). MIMSF is a multi-strategy product for U.S. tax-exempt investors subject to ERISA. MIMSF allocates to five primary sub-strategies including hedged equity, credit, event, relative value and multi-strategy. Allocations to these sub-strategies will shift over time depending upon MIMSF's investment outlook. MIMSF is managed to be broadly diversified in terms of both strategy and manager exposures.

The Investment Committee that oversees the investment of the plan assets conducts an annual review of the investment strategies and policies of the Plans. This includes a review of the strategic asset allocation, including the relationship of the Plans' liabilities and portfolio structure. As a result of this review, the Investment Committee has adopted the current target asset allocation. The allocation is consistent with 2010.


			The Plans'
			Asset Allocation Percentages
Financial Assets	Low		Target (2)		High
Equity securities (1):
Common stock- U.S. listed small cap	5.0	%	7.5	%	10.0	%
Mutual fund- U.S. listed large cap	22.0	%	27.0	%	32.0	%
Common/collective trust- foreign listed	5.0	%	7.5	%	10.0	%
Fixed maturity securities:
U.S. & foreign government and government agencies and authorities	8.0	%	10.5	%	13.0	%
Corporate- U.S & foreign investment grade	29.5	%	32.0	%	34.5	%
Corporate- U.S & foreign high yield	5.0	%	7.5	%	10.0	%
Investment fund:
Multi-strategy hedge fund	5.5	%	8.0	%	10.5	%

(1)

The Plans' long-term asset allocation targets are 30% equity, 50% fixed income and 20% investment funds. Current target asset allocations for equity securities include allocations for investment funds. The Company invests certain plan assets in investment funds, examples of which include real estate investment funds and private equity funds, during 2011. Amounts allocated for these investments are included in the equity securities caption of the fair value hierarchy at December 31, 2011, provided in the section above.

(2)

It is understood that these guidelines are targets and that deviations may occur periodically as a result of cash flows, market impact or short-term decisions implemented by either the Investment Committee or their investment managers.

The assets of the Plans are primarily invested in fixed maturity and equity securities. While equity risk is fully retained, interest rate risk is hedged by aligning the duration of the fixed maturity securities with the duration of the liabilities. Specifically, interest rate swaps are used to synthetically extend the duration of fixed maturity securities to match the duration of the liabilities, as measured on a projected benefit obligation basis. In addition, the Plans' fixed income securities have exposure to credit risk. In order to adequately diversify and limit exposure to credit risk, the Investment Committee established parameters which include a limit on the asset types that managers are permitted to purchase, maximum exposure limits by sector and by individual issuer (based on asset quality) and minimum required ratings on individual securities. As of December 31, 2011, 50.5% of plan assets were invested in fixed maturity securities and 24.0%, 22.2% and 15.6% of those securities were concentrated in the energy, communications and financial industries, with no exposure to any single creditor in excess of 5.0%, 5.3% and 5.6% of those industries, respectively. As of December 31, 2011, 39.0% of plan assets were invested in equity securities and 60.6% of the Plans' equity securities were invested in a mutual fund that attempts to replicate the return of the Standard & Poor's 500 index ("S&P 500") by investing its assets in large capitalization stocks that are included in the S&P 500 using a weighting similar to the S&P 500.

The fair value hierarchy for the Company's qualified pension plan and other post retirement benefit plan assets at December 31, 2011 by asset category, is as follows:


Qualified Pension Benefits					December 31, 2011
Financial Assets		Total			Level 1		Level 2		Level 3
Cash and cash equivalents:
Short-term investment funds	$	20,235		$	0	$	20,235	$	0
Equity securities:
Common stock- U.S. listed small cap		47,127			47,127		0		0
Mutual funds- U.S. listed large cap		142,337			142,337		0		0
Common/collective trust- foreign listed		45,466			0		45,466		0
Fixed maturity securities:
U.S. & foreign government and government agencies and
authorities		90,872			0		90,872		0
Corporate- U.S & foreign investment grade		177,043			0		177,043		0
Corporate- U.S & foreign high yield		35,924			0		35,924		0
Investment fund:
Multi-strategy hedge fund		43,200			0		0		43,200
Derivatives:
Interest rate swap		16,089			0		16,089		0

Total financial assets	$	618,293	(1)	$	189,464	$	385,629	$	43,200

(1)	The difference between the fair value of plan assets above and the amount used in determining the funded status is due to interest receivable which is not required to be included in the fair value hierarchy.


Retirement Health Benefits					December 31, 2011
Financial Assets		Total			Level 1		Level 2		Level 3
Cash and cash equivalents:
Short-term investment funds	$	1,415		$	0	$	1,415	$	0
Equity securities:
Common stock- U.S. listed small cap		3,296			3,296		0		0
Mutual funds- U.S. listed large cap		9,953			9,953		0		0
Common/collective trust- foreign listed		3,179			0		3,179		0
Fixed maturity securities:
U.S. & foreign government and government agencies and
authorities		6,355			0		6,355		0
Corporate- U.S & foreign investment grade		12,380			0		12,380		0
Corporate- U.S & foreign high yield		2,512			0		2,512		0
Investment fund:
Multi-strategy hedge fund		3,021			0		0		3,021
Derivatives:
Interest rate swap		1,125			0		1,125		0

Total financial assets	$	43,236	(1)	$	13,249	$	26,966	$	3,021

(1)	The difference between the fair value of plan assets above and the amount used in determining the funded status is due to interest receivable which is not required to be included in the fair value hierarchy.

The fair value hierarchy for the Company's qualified pension plan and other post retirement benefit plan assets at December 31, 2010 by asset category, is as follows:


Qualified Pension Benefits					December 31, 2010
Financial Assets		Total			Level 1		Level 2		Level 3
Cash and cash equivalents:
Short-term investment funds	$	9,071		$	0	$	9,071	$	0
Equity securities:
Common stock- U.S. listed small cap		42,619			42,619		0		0
Mutual funds- U.S. listed large cap		139,731			139,731		0		0
Common/collective trust- foreign listed		50,130			0		50,130		0
Fixed maturity securities:
U.S. & foreign government and government agencies and
authorities		66,390			0		66,390		0
Corporate- U.S & foreign investment grade		152,306			0		152,306		0
Corporate- U.S & foreign high yield		29,686			0		29,686		0
Investment fund:
Multi-strategy hedge fund		38,738			0		0		38,738
Derivatives:
Interest rate swap		1,522			0		1,522		0

Total financial assets	$	530,193	(1)	$	182,350	$	309,105	$	38,738

(1)	The difference between the fair value of plan assets above and the amount used in determining the funded status is due to interest receivable which is not required to be included in the fair value hierarchy.


Retirement Health Benefits					December 31, 2010
Financial Assets		Total			Level 1		Level 2		Level 3
Cash and cash equivalents:
Short-term investment funds	$	674		$	0	$	674	$	0
Equity securities:
Common stock- U.S. listed small cap		3,166			3,166		0		0
Mutual funds- U.S. listed large cap		10,381			10,381		0		0
Common/collective trust- foreign listed		3,724			0		3,724		0
Fixed maturity securities:
U.S. & foreign government and government agencies and
authorities		4,932			0		4,932		0
Corporate- U.S & foreign investment grade		11,316			0		11,316		0
Corporate- U.S & foreign high yield		2,206			0		2,206		0
Investment fund:
Multi-strategy hedge fund		2,878			0		0		2,878
Derivatives:
Interest rate swap		113			0		113		0

Total financial assets	$	39,390	(1)	$	13,547	$	22,965	$	2,878

(1)	The difference between the fair value of plan assets above and the amount used in determining the funded status is due to interest receivable which is not required to be included in the fair value hierarchy.

The following table for the Company's qualified pension plan and retirement health benefit plan summarizes the change in fair value associated with the MIMSF, the only Level 3 financial asset.


				Retirement
		Pension		Health
		Benefit		Benefit
Beginning balance at December 31, 2010	$	38,738	$	2,878
Actual return on plan assets and plan expenses		4,462		143

Ending balance at December 31, 2011	$	43,200	$	3,021

For all the financial assets included in the above hierarchy, the market valuation technique is used. For the year ended December 31, 2011, the application of the valuation technique applied to similar assets has been consistent.

Level 1 and Level 2 securities are valued using various observable market inputs obtained from a pricing service. The pricing service prepares estimates of fair value measurements for our Level 2 securities using proprietary valuation models based on techniques such as matrix pricing which include observable market inputs. Observable market inputs for Level 1 and 2 securities are consistent with the observable market inputs described in Note 5, Fair Value Disclosures. The MIFSF utilizes all three levels of inputs to price its holdings. Since unobservable inputs may have been significant to the fair value measurement, it was classified as Level 3.

The Company obtains one price for each investment. A quarterly analysis is performed to assess if the evaluated prices represent a reasonable estimate of their fair value. This process involves quantitative and qualitative analysis and is overseen by benefits, investment and accounting professionals. Examples of procedures performed include, but are not limited to, initial and on-going review of pricing service methodologies, review of pricing statistics and trends, and comparison of prices for certain securities with two different appropriate price sources for reasonableness. Following this analysis, the Company uses the best estimate of fair value based upon all available inputs. The pricing service provides information regarding their pricing procedures so that the Company can properly categorize the Plans' financial assets in the fair value hierarchy.

The Company expects to contribute up to $50,000 to its qualified pension plan in 2012. No contributions are expected to be made to the retirement health benefit plan in 2012.

The following pension benefits, which reflect expected future service, as appropriate, are expected to be paid:


			Retirement
		Pension	Health
		Benefits	Benefits
2012		36,967	2,342
2013		40,113	2,662
2014		42,654	2,986
2015		62,998	3,342
2016		50,320	3,752
Years 2017-2021		310,775	25,105

Total	$	543,827	40,189

Defined Contribution Plan

The Company and its subsidiaries participate in a defined contribution plan covering substantially all employees. The defined contribution plan provides benefits payable to participants on retirement or disability and to beneficiaries of participants in the event of the participant's death. The amounts expensed by the Company related to this plan were $33,337, $33,043 and $32,962 in 2011, 2010, and 2009, respectively.