Assurant Inc.'s first-quarter 2014 earnings of $1.68 per
comfortably beat the Zacks Consensus Estimate of $1.56. Earnings
were also up 24% on a year-over-year basis. Strong performance at
Assurant Solutions and Assurant Employee Benefits along with a
lower share count due to share repurchases boosted the quarter's
results. 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.
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
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
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,
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
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