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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Assurant Inc | NYSE:AIZ | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
4.41 | 2.50% | 180.49 | 180.52 | 176.46 | 177.31 | 392,276 | 00:02:48 |
1Q 2016 Net Operating Income of $100.1 million, $1.52 per diluted share1Q 2016 Net Income of $220.3 million, $3.34 per diluted share
• 11.2 percent annualized operating ROE, excluding AOCI1; 19.4 percent annualized GAAP ROE
• $291 million returned to shareholders in share repurchases and dividends in 1Q 2016
• $450 million in corporate capital at quarter-end
Assurant, Inc. (NYSE:AIZ), a premier provider of specialty protection products and related services, today reported results for first quarter ended March 31, 2016.
“In the first quarter, we continued to make significant progress in our multi-year transformation as demonstrated by the organic growth in our fee-based, capital-light businesses and increased operating efficiencies,” said Alan B. Colberg, president and CEO of Assurant. “Despite the decline in earnings for the quarter, results were solid and exceeded our expectations. Looking forward, we remain focused on serving our customers while creating value for our shareholders through growth in our businesses, operating efficiencies and disciplined capital management.”
Reconciliation of Net Operating Income to Net Income
Beginning in first quarter 2016, Assurant is revising its financial supplement and corresponding news release to reflect the company’s ongoing multi-year, transformation to focus on specialty housing and lifestyle protection products and services. Assurant Health runoff operations, Assurant Employee Benefits, which was sold on March 1, 2016, and amortization of deferred gains on disposal of businesses have been removed from net operating income. Prior period amounts have been revised to conform to the updated presentation as reflected in the following table. In addition, the company has updated revenue categories for Assurant Solutions and Assurant Specialty Property to align with its key business lines as well as risk-based and fee-based, capital-light models.
(UNAUDITED) 1Q 1Q (dollars in millions, net of tax) 2016 2015 Assurant Solutions $ 47.1 $ 54.4 Assurant Specialty Property 76.4 75.1 Corporate and other (14.0) (4.1) Interest expense (9.4) (8.9) Net operating income 100.1 116.5 Adjustments: Assurant Health runoff operations (27.2) (84.0) Assurant Employee Benefits 10.5 10.1 Net realized gains on investments 105.2 2.6 Amortization of deferred gains on disposal of businesses 30.9 2.1 Other adjustments 0.8 2.7 Net income $ 220.3 $ 50.0Note: Additional financial information, including a schedule of disclosed items that affected Assurant’s results by business for the last four quarters appears on page 19 of the company’s Financial Supplement, and is located in the Investor Relations section of www.assurant.com.
First Quarter 2016 Consolidated Results
Housing and Lifestyle Businesses
Assurant Solutions (in millions) 1Q16 1Q15 % Change Net operating income $ 47.1 $ 54.4 (13)% Net earned premiums, fees and other $ 977.0 $ 927.5 5%Assurant Specialty Property (in millions) 1Q16 1Q15 % Change Net operating income $ 76.4 $ 75.1 2% Net earned premiums, fees and other $ 577.4 $ 612.7 (6)%
(a) Combined ratio for the risk-based businesses is equal to total benefits, losses and expenses, including reportable catastrophe losses, divided by net earned premiums and fees and other income, for lender-placed and manufactured housing and other businesses.
(b) Pre-tax margin for the fee-based, capital-light businesses is equal to income before provision for income taxes divided by total net earned premiums, fees and other, for multi-family housing and mortgage solutions businesses.
Corporate & Other (in millions) 1Q16 1Q15 % Change Net operating loss $ (14.0) $ (4.1)247%
Assurant Health Runoff Operations
Following the decision to exit the health insurance business in 2015, the company began to wind down operations and expects to be substantially out of the health insurance market by the end of 2016.
Capital Position
Financial Position
Company Outlook
Based on current market conditions, for full-year 2016, the company expects:
Based on current market conditions, for full-year 2016, the company expects in regards to runoff operations:
Earnings Conference Call
About Assurant
Assurant, Inc. (NYSE:AIZ) is a global provider of risk management solutions, protecting where consumers live and the goods they buy. A Fortune 500 company, Assurant focuses on the housing and lifestyle markets, and is among the market leaders in mobile device protection; vehicle protection; pre-funded funeral insurance; renters insurance; lender-placed homeowners insurance; and mortgage valuation and field services. With approximately $30 billion in assets and $8 billion in annual revenue, Assurant is located in 15 countries, while its Assurant Foundation works to support and improve communities. Learn more at assurant.com or on Twitter @AssurantNews.
Safe Harbor Statement
Some of the statements included in this news release and its exhibits, particularly those anticipating future financial performance, business prospects, growth and operating strategies and similar matters, are forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. You can identify these statements by the use of words such as “outlook,” “will,” “may,” “anticipates,” “expects,” “estimates,” “projects,” “intends,” “plans,” “believes,” “targets,” “forecasts,” “potential,” “approximately,” or the negative version of those words and other words and terms with a similar meaning. Any forward-looking statements contained in this news release or its exhibits are based upon our historical performance and on current plans, estimates and expectations. The inclusion of this forward-looking information should not be regarded as a representation by us or any other person that the future plans, estimates or expectations contemplated by us will be achieved. Our actual results might differ materially from those projected in the forward-looking statements. The company undertakes no obligation to update or review any forward-looking statements in this news release or the exhibits, whether as a result of new information, future events or other developments. The following risk factors could cause our actual results to differ materially from those currently estimated by management, including those projected in the company outlook:
(i) actions by governmental agencies or government sponsored entities or other circumstances, including pending regulatory matters affecting our lender-placed insurance business, that could result in reductions of premium rates or increases in expenses, including claims, fines, penalties or other expenses; (ii)loss of significant client relationships or business, distribution sources or contracts and reliance on a few clients;
(iii)
potential variations between the final risk adjustment amount and reinsurance amounts, as determined by the U.S. Department of Health and Human Services under the Affordable Care Act, and the company's estimate;
(iv) unfavorable outcomes in litigation and/or regulatory investigations that could negatively affect our results, business and reputation; (v) inability to execute strategic plans related to acquisitions, dispositions or new ventures; (vi) failure to adequately predict or manage benefits, claims and other costs;(vii)
inadequacy of reserves established for future claims;
(viii)
current or new laws and regulations that could increase our costs and decrease our revenues;
(ix) significant competitive pressures in our businesses; (x) failure to attract and retain sales representatives, key managers, agents or brokers; (xi) losses due to natural or man-made catastrophes;(xii)
a decline in our credit or financial strength ratings (including the risk of ratings downgrades in the insurance industry);
(xiii)
deterioration in our market capitalization compared to its book value that could result in an impairment of goodwill;
(xiv)
risks related to our international operations, including fluctuations in exchange rates;
(xv) data breaches compromising client information and privacy;(xvi)
general global economic, financial market and political conditions (including difficult conditions in financial, capital, credit and currency markets, the global economic slowdown, fluctuations in interest rates or a prolonged period of low interest rates, monetary policies, unemployment and inflationary pressure);
(xvii)
cyber security threats and cyber attacks;
(xviii)
failure to effectively maintain and modernize our information systems;
(xix)
uncertain tax positions and unexpected tax liabilities;
(xx) risks related to outsourcing activities;(xxi)
unavailability, inadequacy and unaffordable pricing of reinsurance coverage;
(xxii)
diminished value of invested assets in our investment portfolio (due to, among other things, volatility in financial markets; the global economic slowdown; credit, currency and liquidity risk; other than temporary impairments and increases in interest rates);
(xxiii)
insolvency of third parties to whom we have sold or may sell businesses through reinsurance or modified co-insurance;
(xxiv)
inability of reinsurers to meet their obligations;
(xxv)
credit risk of some of our agents in Assurant Specialty Property and Assurant Solutions;
(xxvi)
inability of our subsidiaries to pay sufficient dividends;
(xxvii)
failure to provide for succession of senior management and key executives; and
(xxviii)
cyclicality of the insurance industry.
For a detailed discussion of the risk factors that could affect our actual results, please refer to the risk factors identified in our SEC reports, including, but not limited to our 2015 Annual Report on Form 10-K, as filed with the SEC, and our upcoming First Quarter Report on Form 10-Q.
Non-GAAP Financial Measures
Assurant uses the following non-GAAP financial measures to analyze the company’s operating performance for the periods presented in this news release. Because Assurant’s calculation of these measures may differ from similar measures used by other companies, investors should be careful when comparing Assurant’s non-GAAP financial measures to those of other companies.
(1) Assurant uses operating return on equity ("Operating ROE"), excluding accumulated other comprehensive income ("AOCI"), as an important measure of the company’s operating performance. Operating ROE, excluding AOCI, equals net operating income (defined below) for the periods presented divided by average stockholders’ equity, excluding AOCI, for the year to date period. The company believes Operating ROE provides investors a valuable measure of the performance of the company’s ongoing business because it excludes the effect of Assurant Health runoff operations and the divested Assurant Employee Benefits business, which was sold on March 1, 2016. The calculation also excludes net realized gains (losses) on investments, amortization of deferred gains on disposal of businesses and those events that are highly variable and do not represent the ongoing operations of the company. The comparable GAAP measure would be GAAP return on equity (“GAAP ROE”), defined as net income, for the periods presented, divided by average stockholders’ equity for the year to date period.
1Q 12 Months 2016 2015 Annual operating return on average equity 11.2% 11.5% Assurant Health runoff operations (3.0)% (10.6)% Assurant Employee Benefits 1.2% 1.4% Net realized gains on investments 11.8% 0.6% Amortization of deferred gains on disposal of businesses 3.5% 0.2% Other adjustments: Gain on divested business - 0.3% Change in tax liabilities - 0.5% Payment received related to previous sale of subsidiary - 0.3% Gain related to benefit plan activity 2.1% - Amount related to the sale of AEB (1.9)% - Change in derivative investment (0.1)% (0.1)% Change due to effect of including AOCI (5.4)% (1.2)% Annual GAAP return on average equity 19.4% 2.9%(2) Assurant uses net operating income as an important measure of the company’s operating performance. Net operating income equals net income, excluding Assurant Health runoff operations, Assurant Employee Benefits, net realized gains (losses) on investments, amortization of deferred gains on disposal of businesses and other unusual and/or infrequent items. The company believes net operating income provides investors a valuable measure of the performance of the company’s ongoing business because it excludes the effect of Assurant Health runoff operations and the divested Assurant Employee Benefits business, which was sold on March 1, 2016. The calculation also excludes net realized gains (losses) on investments, amortization of deferred gains on disposal of businesses and those events that are highly variable and do not represent the ongoing operations of the company.
(3) Assurant uses Operating ROE, excluding AOCI (defined above) and reportable catastrophe losses, as another important measure of the company’s operating performance. The company believes Operating ROE excluding AOCI and reportable catastrophe losses provides investors a valuable measure of the performance of the company’s ongoing business because it excludes the effect of reportable catastrophe losses, which can be volatile. The comparable GAAP measure would be GAAP ROE.
1Q 12 Months 2016 2015 Annual operating return on average equity, excluding AOCI and reportable catastrophe losses 12.3% 12.0% Assurant Health runoff operations (3.0)% (10.6)% Assurant Employee Benefits 1.2% 1.4% Net realized gains on investments 11.8% 0.6% Amortization of deferred gains on disposal of businesses 3.5% 0.2% Reportable catastrophe losses (1.1)% (0.5)% Other adjustments: Gain on divested business - 0.3% Change in tax liabilities - 0.5% Payment received related to previous sale of subsidiary - 0.3% Gain related to benefit plan activity 2.1% - Amount related to the sale of AEB (1.9)% - Change in derivative investment (0.1)% (0.1)% Change due to effect of including AOCI (5.4)% (1.2)% Annual GAAP return on average equity 19.4% 2.9%(4) Assurant uses a ratio of debt to total capital, excluding AOCI, as an important measure of the company’s financial leverage. Assurant’s debt to total capital ratio, excluding AOCI, equals debt divided by the sum of debt and total stockholders’ equity, excluding AOCI. The company believes that the debt to total capital ratio, excluding AOCI, provides investors a valuable measure of financial leverage, because it excludes the effect of unrealized gains (losses) on investments, which are highly variable and do not represent the ongoing operations of the company, and other AOCI items. The comparable GAAP measure would be the ratio of debt to total capital.
1Q 4Q 2016 2015 Debt to total capital ratio (excluding AOCI ) 24.6%20.9%
Change due to effect of including AOCI (0.9)% (0.4)% Debt to total capital ratio 23.7% 20.5%A summary of net operating income disclosed items is included on page 19 of the company’s Financial Supplement, which is available in the Investor Relations section of www.assurant.com.
Assurant, Inc.
Consolidated Statement of Operations (unaudited)
Three Months Ended March 31, 2016 and 2015
1Q 2016 2015
(in thousands except number of shares and per share amounts)
Revenues Net earned premiums $ 1,415,238 $ 2,159,562 Fees and other income 357,690 279,562 Net investment income 135,707 152,273 Net realized gains on investments 161,718 3,955 Gain on pension plan curtailment 29,578 -Amortization of deferred gains on disposal of businesses
47,596 3,258 Total revenues 2,147,527 2,598,610 Benefits, losses and expenses Policyholder benefits 543,816 1,210,727 Selling, underwriting, general and administrative expenses 1,251,701 1,290,912 Interest expense 14,503 13,778 Total benefits, losses and expenses 1,810,020 2,515,417 Income before provision for income taxes 337,507 83,193 Provision for income taxes 117,189 33,149 Net income $ 220,318 $ 50,044 Net income per share: Basic $ 3.38 $ 0.72 Diluted $ 3.34 $ 0.71 Dividends per share $ 0.50 $ 0.27 Share data: Basic weighted average shares outstanding 65,086,935 69,770,224 Diluted weighted average shares outstanding 65,920,546 70,757,549Assurant, Inc.
Consolidated Condensed Balance Sheets (unaudited)
At March 31, 2016 and Dec. 31, 2015
March 31, December 31, 2016 2015 (in thousands) Assets Investments and cash and cash equivalents $ 13,485,925 $ 14,283,077 Reinsurance recoverables 8,689,823 7,470,403 Deferred acquisition costs 3,079,611 3,150,934 Goodwill 839,766 833,512 Assets held in separate accounts 1,719,454 1,798,104 Other assets 2,472,616 2,500,372 Total assets $ 30,287,195 $ 30,036,402 Liabilities Policyholder benefits and claims payable $ 13,064,929 13,363,413 Unearned premiums 6,308,939 6,423,720 Debt 1,414,704 1,164,656 Liabilities related to separate accounts 1,719,454 1,798,104 Deferred gain on disposal of businesses 564,122 92,327 Accounts payable and other liabilities 2,650,402 2,670,215 Total liabilities 25,722,550 25,512,435 Stockholders' equity Equity, excluding accumulated other comprehensive income 4,339,405 4,405,418 Accumulated other comprehensive income 225,240 118,549 Total stockholders' equity 4,564,645 4,523,967 Total liabilities and stockholders' equity $ 30,287,195 $ 30,036,402
View source version on businesswire.com: http://www.businesswire.com/news/home/20160426006831/en/
For Assurant:Media:Vera Carley, 212.859.7002Assistant Vice President, External Communicationvera.carley@assurant.comorInvestor Relations:Suzanne Shepherd, 212.859.7062Vice President, Investor Relationssuzanne.shepherd@assurant.com
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