DOW JONES NEWSWIRES
Assurant Inc.'s (AIZ) first-quarter net income dropped 57% on
lower revenue and higher investment losses.
The results fell short of Wall Street's expectations.
"Our quarterly results reflect how the economy is challenging
consumers, employers and the financial markets," said Chief
Executive Robert B. Pollock.
He noted claims were up because of the poor economy, citing as
an example heavy use of medical services by people fearing they
might lose their jobs and medical coverage. However, Pollock added
Assurant is finding new business opportunities in the U.S. and
abroad.
Assurant has suffered, along with other insurers, from stock
market declines and hurricane-related losses, even though it is
among the few companies benefiting from rising mortgage defaults
and slipping home prices. Its specialty-property unit collects
premiums from banks for insurance on homes whose owners have fallen
behind on their coverage.
The company, which insures a range of items from credit cards to
trailer parks, reported net income of $80.6 million, or 68 cents a
share, down from $186.8 million, or $1.56 a share, a year
earlier.
The latest results included $36.2 million in net realized
investment losses and $21 million in tax expense caused by a change
in deferred tax assets. The prior-year quarter included net
realized investment losses of $28 million. Operating earnings,
which exclude net realized investment gains and losses, fell to
$1.17 a share from $1.80.
Revenue slid 4.1% to $2.09 billion.
Analysts' estimates were for per-share operating earnings of
$1.43 and revenue of $2.25 billion, according to a poll by Thomson
Reuters.
Net premiums earned fell 3.4%, and net investment income
declined 9.8%.
Profit in the largest segment, specialty property, fell 16%
because of higher catastrophe reinsurance costs and claims related
to normal winter weather, compared with the mild winter a year
earlier. Earnings were lower in all other segments.
Assurant's shares closed Wednesday at $28.03, up 2.5%, and were
inactive after hours. The stock price has been cut in half in the
past seven months.
-By Kathy Shwiff, Dow Jones Newswires; 201-938-5975;
Kathy.Shwiff@dowjones.com
