Assurant, Inc. (AIZ)

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Assurant Inc. (AIZ)

Q3 2010 Earnings Call

October 28, 2010 8:00 AM ET

Executives

Melissa Kivett – Senior Vice President, Investor Relations

Rob Pollock – President and CEO

Mike Peninger – Chief Financial Officer

Chris Pagano – Chief Investment Officer and Treasurer

Analysts

Jeff Schuman – KBW

John Nadel – Sterne, Agee

Ed Spehar – Bank of America/Merrill Lynch

Mark Finkelstein – Macquarie

Jack Sherck – SunTrust

Steve Labbe – Langen McAlenney

Presentation

Operator

Please standby, we are about to begin. Good day, everyone, and welcome to the Assurant Third Quarter 2010 Financial Results Conference Call. Today’s call is being recorded. All lines will be in a listen-only mode until the end of the call at which point there will be a Q&A session and instructions on how to queue up for a question will be given at that time.

I would now like to turn the call over to Ms. Melissa Kivett, Senior Vice President, Investor Relations. Please go ahead, Ms. Kivett.

Melissa Kivett

Great. Thanks so much. Welcome to Assurant’s 2010 third quarter earnings conference call. Joining me with prepared remarks are Rob Pollock, President and Chief Executive Officer of Assurant; and Mike Peninger, our Chief Financial Officer. Prepared remarks will last about 20 minutes and then, we’ll open the call to questions. Chris Pagano, our Chief Investment Officer and Treasurer is also here for questions.

Yesterday we issued a news release announcing our third quarter 2010 financial results. The news release, as well as corresponding supplemental financial information is available on our website at assurant.com.

Some of the statements we make during today’s call may contain forward-looking information. Our actual results may differ materially from those projected in the forward-looking statements. We caution you about relying on these forward-looking statements and direct you to consider the discussions of risks and uncertainties associated with our business and results of operations contained in our 2009 Form 10-K and subsequently filed 10-Q and 8-K, which can be accessed from our website. The company undertakes no obligation to update or revise any forward-looking statement.

Additionally, this presentation will contain non-GAAP financial measures, which we believe are meaningful in evaluating the company’s performance. For more detailed disclosures on these non-GAAP measures the most comparable GAAP measures and a reconciliation of the two please refer to yesterday’s earnings release and supplementary financial information that’s posted on our website at assurant.com.

And with that, I will now turn the call over to Rob.

Rob Pollock

Thanks, Melissa, and good morning, everyone. We are pleased with our third quarter performance. Operating results improved in all four businesses compared to the third quarter of 2009.

Net operating income was up 9% and diluted earnings per share increased 19%. Annualized operating return on equity was 11.5% for the quarter. Our diluted book value per share increased about 3% in the quarter and about 10% compared to year end 2009.

Our actions to adapt our product offerings and manage expenses while pursuing new sources of revenue are building a stronger foundation for long-term growth. I will begin by highlighting a few trends and market conditions related to performance from each of our businesses.

During the quarter Assurant Solutions made progress in developing new customers and distribution channels. International profitability improved and our premium business continued to grow by successfully executing its business plan.

Based upon the actions we have taken the international combined ratio showed meaningful improvement in the quarter. We expect continued improvement in the fourth quarter consistent with our prior estimates.

Our premium life insurance business continues to produce strong results from our partnership with SCI, the leading funeral services provider in North America. Operating income in faith sales both showed nice gains over the third quarter of 2009.

Looking ahead, we expect international credit insurance service contracts worldwide including wireless and our pre-funded funeral products will drive growth for Solutions. We have solid sales pipelines in each of these areas that we expect to translate into revenues. This will help compensate for the run-off from Circuit City and our domestic credit products. At Solutions revenue growth and operational efficiency remain priorities.

Turning to Assurant Specialty Property, third quarter results were strong aided by the mild hurricane season. The business continues to deliver outstanding results in a very dynamic market. We are seeing production from a new client added during the last quarter. At the same time, our efforts to expand other products such as renters and flood are going well. Our new clients will continue to support solid results for specialty property in 2011.

Moving on to Assurant Health, the business continues to focus operations around customers. Improve financial results over the prior year were driven primarily by pricing actions and plan design changes implemented in the second half of 2009. However, health care reform is beginning to impact our results. We expect this will continue in both the fourth quarter and 2011 as the marketplace evolves.

We pride ourselves in our ability to adapt to changing markets. Health demonstrated this by modifying products, discontinuing the sale of other products and reducing expenses. We also developed and introduced new products that address customer needs around coverage and affordability. These products were introduced in mid-September initial feedback from our agents and customer’s is positive, an encouraging signs as we move forward.

We continue to believe there are significant opportunities in the individual medical market and that we have the specialty expertise to be successful. Our experience with individual Health products and our excellent relationship with our distribution partners will continue to serve as well.

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