We are reiterating our Neutral recommendation on the shares of
) prior to its third-quarter earnings release, scheduled for
October 24, 2012. We expect the company to continue performing
favorably during the quarter. However, we are concerned with
micro as well as macro economic headwinds faced by its various
The Zacks Consensus estimates third quarter earnings of $1.35
per share which would translate into earnings growth of 70.5% year
Assurant Solutions has been performing well over the past
several quarters. Though results in UK have been disappointing for
some quarters, the company has taken several steps to improve in
the international arena.
Over the longer time horizon, the international business is
anticipated to continue growing at a steadily, and the domestic
business should rebound as the economy improves and consumer
electronics spending recovers, leading to overall revenue growth.
Though Assurant Health had been underperforming for the past
several quarters, its profitability has shown some improvement. In
response to the challenging marketplace, the company entered into a
network agreement with AETNA signature Administrators and a
marketing agreement with American Family. In addition, it focused
on the distribution of individual healthy policies to its
The Employee Benefits segment has been pressured by persistent
economic challenges in the small group sector leading to higher
lapse rates and lower premium growth on in-force policies. Since
there have been few new employee additions and a modest wage
growth, premium income from the segment will remain under pressure
in the near term.
In the absence of a substantial organic growth, Assurant has
maintained its bottom-line earnings via an active capital
Assurant is conservatively placed with respect to its investment
portfolio. It has below-average investment allocations to risky
assets such as commercial real estate, European sovereign debt, BBB
bonds and subprime/Alt-A securities. We believe this conservative
portfolio will cushion earnings if the macro conditions
Based in New York's financial district, Assurant competes with
Principal Financial Group Inc.
) among others. The company's stock currently retains a Zacks #3
Rank, which translates into a short-term Hold rating.
ASSURANT INC (AIZ): Free Stock Analysis Report
CNO FINL GRP (CNO): Free Stock Analysis Report
LOEWS CORP (L): Free Stock Analysis Report
PRINCIPAL FINL (PFG): Free Stock Analysis
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