Assurant Inc. (AIZ): New Analyst Report from Zacks Equity Research - Zacks Equity Research Report

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Summary:
Assurant Inc. reported second-quarter 2014 operating income of $1.62 per share, comfortably beating the Zacks Consensus Estimate of $1.53. Earnings were up 5.9% on a year-over-year basis. The quarter's results were driven by strong performance at Assurant Solutions, partly offset by fire damage and severe weather-related damages at the Assurant Specialty Property segment. We expect the company to continue giving its impressive performance given its strong franchise, consistent cash flow generation, moderate debt ratio and well performing solutions business. However, weakness in employee benefits and challenges in the health insurance business are significant headwinds. Specialty property earnings are also expected to decline due to regulator-mandated price cuts and lower placement rates. Nevertheless, a disciplined capital management strategy by way of regular share repurchases will aid bottom-line growth. We thus maintain our Neutral recommendation on the shares.

Overview:

Founded in 1969, with its headquarters in New York's financial district, Assurant Inc. is a premier provider of specialized insurance products in North America and other selected markets overseas. The company operates through four main business segments:

Assurant Solutions (accounted for 39% of 2013 revenues) This segment provides credit-related insurance including life, disability and unemployment, debt protection administration services, warranties and service contracts, life insurance policies and annuity products that provide benefits to fund pre-arranged funerals.

Assurant Specialty Property (30%) This segment provides creditor-placed homeowners' insurance and manufactured housing homeowners' insurance, such as fire and dwelling hazard insurance and creditor-placed auto and renters products.

Assurant Health (18%) This segment provides individual, short-term and small group health insurance and student health insurance, as well as small employer group insurance products, underwritten and issued by Time Insurance Company and John Alden Life Insurance Company (both domiciled in Milwaukee, Wisconsin).

Assurant Employee Benefits (13%) This segment continues to be one of largest writers of group dental, disability and group life insurance in the smaller case (under 500) market in the U.S. AEB offers products on a true group as well as a voluntary basis. Union Security Insurance Company (USIC) (headquartered in Kansas City, MO) is the flagship company within this business unit.

The company markets its products through financial institutions, mortgage lenders, manufactured housing lenders, manufactured housing retailers, independent specialty agents, direct distribution channels, sales force, and independent employee benefits advisors. It also operates in Canada, the United Kingdom, Denmark, Germany, Spain, Italy, Argentina, Brazil, Mexico, and Puerto Rico.


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



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