) reported third quarter 2012 operating earnings of $1.55 per
share, beating the Zacks Consensus Estimate by 16 cents and also
significantly surpassing the prior-year quarter earnings of 77
cents per share. The better-than-expected result was the outcome
of significant contributions from segment -Specialty Property. A
lower share count also boosted the bottom-line results.
Total revenue for the reported quarter increased modestly by
approximately 4.0% year over year to $2.15 billion, led by higher
premiums, net realized gains on investment, and fees and other
income, partly offset by a lower net investment income.
Net earned premiums also improved modestly by 3.4% year over year
to $1.84 billion. Net investment income decreased 1.6% year over
year to $169.4 million.
Premiums earned at Assurant
escalated 12% year over year to $752.6 million, led by
improvements in both the domestic as well as international
businesses. Operating income increased 9% to $36.7 million.
Premiums earned at Assurant
increased 9% year over year to $544.9 million due to developments
in loan portfolios and multi-family housing products. A higher
premium earned coupled with very low catastrophe related losses
during the quarter led to more than a two-fold increase in
operating income to $89.4 million.
Net premiums earned at Assurant
fell 8.0% year over year to $405.0 million attributable to
declines in traditional individual medical and small group
business sales. Net operating income of $11.3 million spiked 95%
year over year, led by lower expense and favorable loss
Net premiums earned by Assurant
segment declined 6% year over year to $259.7 million 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 decreased 3% year over year to
The financial position of Assurant remains strong with $4.4
billion of equity capital as of September 30, 2012, which
remained unchanged on a sequential basis. The company maintains a
low leverage ratio of 15.7%, down from 16.6% as of December 31,
Book value per share, excluding accumulated and other
comprehensive income, increased 13.0% from the end of 2011 to
$53.70. The company repurchased 3.1 million shares during the
quarter at a total cost of $109.8 million.
For full year 2012, management expects its Specialty line of
business to benefit from growth in multi-housing loans. 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 benefit from
expense savings and favorable loss experience. However, the
segment is expected to see a drain in premium earned due to
changes in product mix along with lower sale of small employer
group and individual medical insurance. The Employee Benefits
business is expected to witness a decline in top-line growth due
to lost premiums from departure of two assumed disability
ASSURANT INC (AIZ): Free Stock Analysis
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The bottom-line earnings at Assurant are expected get a boost
from its share buyback activity.
Assurant, which closely competes with
), retains a Zacks #3 Rank, which translates into a short-term
Hold rating. Considering the fundamentals, we are also
maintaining our long-term Neutral recommendation on the