Assurant, Inc. (AIZ)

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Assurant Inc. (AIZ)

Q2 2011 Earnings Call

July 28, 2011 8:00 AM ET


Melissa Kivett – Senior Vice President, Investor Relations

Rob Pollock – President and CEO

Mike Peninger – Chief Financial Officer

Chris Pagano – Chief Investment Officer and Treasurer


Ed Spehar – Bank of America

Chris Giovanni – Goldman Sachs

Mark Hughes – SunTrust



Good day. And welcome to the Assurant Second Quarter 2011 Financial Results Conference Call. Today’s conference is being recorded. All participants will be in a listen-only mode during the presentation. Later, we will conduct a question-and-answer session. Instructions will be given at that time.

At this time, I would like to turn the conference over to Ms. Melissa Kivett, Senior Vice President, Investor Relations. Please go ahead, Ms. Kivett.

Melissa Kivett

Okay. Thanks, [David]. Welcome to Assurant’s second quarter 2011 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 will 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 second quarter 2011 financial results. The news release, as well as corresponding supplemental financial information is available on our website at

Some of the statements we make during today’s calls may contain forward-looking information. Our actual results may differ materially from those projected in the forward-looking statements. Additional information concerning factors that could cause actual results to differ materially from those projected in any forward-looking statements can be found in our 2010 Form 10-K which can be accessed from our website.

The company undertakes no obligation to update or revise any forward-looking statements.

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 the supplementary financial information that’s posted on our website at

Now, I’m glad to turn the call over to Rob.

Rob Pollock

Thanks, Melissa, and good morning, everyone. Midway through the year, we are delivering on the commitments we outlined at our 2011 Investor Day. These commitments include profitable growth, reducing expenses and improving ROEs. Here’s some examples from the quarter.

Profit improvement continues at Assurant Solutions as we grow our wireless service contract and preneed businesses. At Specialty Property we are increasing loans tracked in our lender-placed business and expanding our offerings to rental property managers.

Our new strategy at Assurant Health is gaining traction as we sell new affordable products to provide consumers access to the healthcare system. We are also demonstrating strong expense management and at Assurant Employee Benefits, sales of voluntary products are gaining momentum, as we help employers provide more benefits for their employees.

Now, I will highlight our progress at each business. I’ll begin with Assurant Solutions, results continue to improve. The global economy continues to be a headwind for Assurant Solutions but we are winning new clients. This demonstrates our products and services are meeting customer needs.

We are setting the stage for longer term profitable growth, combined ratios are improving, preneed place sales remain at healthy levels and our sales pipeline is strong for service contracts including wireless. New sales help offset the continued run off of Circuit City and the decline in the domestic credit insurance business.

Overall, solutions 2011 earned premiums will be similar to 2010. We expect earned premiums to grow in 2012. We are well-positioned to deliver on our commitment of a double-digit ROE in 2012 with continued improvements expected in the out years.

Moving to Assurant Specialty Property, quarterly results reflect the impact of unprecedented weather-related events. We are helping our customers affected by the severe storms and will continue to do so as they rebuild and repair their properties.

Our business model leverages a sophisticated tracking system that ensures structures are covered for damage. Our strategic focus on aligning with market leaders in mortgage servicing is again paying dividends.

During the quarter, one of our clients at quarter acquired a portfolio of 200,000 loans. We will begin tracking these loans later in 2011, with premium production beginning in 2012. Adjacency growth opportunities look promising. We are building our niche renters business, focused on distribution through property managers.

In June, we acquired SureDeposit, the market leader in rental security deposit alternatives. The SureDeposit product is offered by property managers serving 1.5 million apartments in 4,500 communities. This product is beneficial to both renters and property managers. Early feedback from SureDeposit clients reinforces that there are opportunities to grow revenue with our full product suite. We are pleased that SureDeposit’s management team and employees are now part of the Assurant family.

For the remainder of 2011, we expect properties premiums will be consistent with year-to-date results. Earnings will be dependent upon catastrophes, particularly hurricanes.

Next, I’ll turn to Assurant Health. Second quarter results reflect continued progress in implementing our strategy, both consumers and distribution partners are recognizing the value and affordability of our health access and supplemental products.

We also improved efficiency in our operations as evidenced by a reduction in quarterly expenses of almost $24 million from a year ago. This is a tremendous accomplishment. It demonstrates our ability to adapt to changing markets.

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