) reported fourth quarter 2012 operating earnings of 7 cents per
share, which compared favorably with the Zacks Consensus Estimate
of an operating loss of 31 cents per share. Earnings were
however, significantly down 94% year over year.
Despite suffering a huge loss from Superstorm Sandy, Assurant was
able to significantly beat estimates led by revenue growth and
share repurchases, partly offset by higher operating expenses.
Full year 2012 net operating income came in at $5.27 per share,
beating the Zacks Consensus Estimate of $4.86 per share and up
18% year over year.
Net income was down to $ 31 cents per share from $1.70 per share,
in the year ago quarter.
Total revenue for the reported quarter increased modestly by
approximately 2.3% year over year to $2.16 billion, led by higher
premiums, net realized gains on investment, and fees and other
income, partly offset by a higher amortization of deferred gain.
Total revenue was higher than the Zacks Consensus Estimate of
Net earned premiums improved modestly by 2.0% year over year to
$2.0 billion. Net investment income was almost unchanged at
Premium earned at Assurant Solutions was up 4% year over year to
$719.6 million, led by improvements in international businesses,
partly offset by a decline in domestic service contracts.
Operating income, however, decreased 87% to $3.3 million, due to
one time charges related to asset impairment and restructuring.
Premiums earned at Assurant Specialty Property increased 13% year
over year to $583.9 million due to positive developments in loan
portfolios and multi-family housing products. Net operating
income, however, dwindled 91% year over year to $10.2 million,
due to huge losses from superstorm Sandy.
Net premiums earned at Assurant Health fell 13.0% year over year
to $389.1 million attributable to declines in small group
business sales. Net operating income of $0.2 million declined
sharply by 99% year over year, due to lower net earned premiums,
resulting from a continued shift in product mix and fewer small
group insured lives.
Net premiums earned by Assurant Employee Benefits segment
declined 4% year over year to $258.3 million. This was as a
result of the loss of two clients in the disability line of
business, partly mitigated by premium growth in voluntary and
supplemental products. Net operating income increased 18% year
over year to $17.1 million.
The financial position of Assurant remains strong with $4.4
billion of equity capital as of Dec 31, 2012, which remained
unchanged on a sequential basis. The company maintains a low
leverage ratio of 18.3%, almost unchanged from 18.4% as of Dec
Book value per share excluding accumulated and other
comprehensive income, increased 13.8% year over year to $53.87.
Assurant repurchased 11 million shares during the year which is
equivalent to 12% of share outstanding as of Dec 31, 2011.
For full year 2013, management expects its Specialty line of
business to benefit from growth in multi-housing loans and higher
volume in lender-placed loan portfolios. Its Solutions line will
see higher top-line growth from increases in domestic as well as
international businesses. The Health line of business is expected
to see depressed earnings from the ongoing implementation of
health care reform as well as a decline in investment income from
real estate joint venture partnerships. The Employee Benefits
business top line growth is expected to remain unchanged relative
to 2012. However, a low interest rate will result in overall
earnings decline of the segment.
Assurant currently carries a Zacks Rank #3 (Hold). Other property
and casualty players
Assured Guaranty Ltd.
) with Zacks Rank #1 (Strong Buy) and
CNO Financial Group Inc.
Radian Group Inc.
) both carrying Zacks Rank # 2 (Buy) are scheduled to release
fourth quarter earnings shortly.
ASSURED GUARNTY (AGO): Free Stock Analysis
ASSURANT INC (AIZ): Free Stock Analysis
CNO FINL GRP (CNO): Free Stock Analysis
RADIAN GRP INC (RDN): Free Stock Analysis
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