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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 | 392,275 | 21:43:45 |
4Q 2014 Net Operating Income of $63.0 million, $0.87 per diluted shareFull-Year 2014 Net Operating Income of $439.0 million, $6.00 per diluted share
4Q 2014 Net Income of $49.8 million, $0.69 per diluted shareFull-Year 2014 Net Income of $470.9 million, $6.44 per diluted share
Assurant, Inc. (NYSE:AIZ), a premier provider of specialty insurance and insurance-related products and services, today reported results for the fourth quarter and full-year ended Dec. 31, 2014.
“We are disappointed in weaker than expected fourth quarter results. Additional actions are being implemented across Assurant to improve profitability as we align resources to support strategic growth in mobile, mortgage solutions and other targeted areas,” said Assurant’s President and CEO Alan B. Colberg. “Throughout Assurant, we remain focused on generating sustained out-performance for our customers, employees and shareholders by executing on our strategy to capitalize on macro trends and consumer insights, increase operational efficiency and maintain disciplined capital management.”
Fourth Quarter 2014 Consolidated Results
Full-Year 2014 Consolidated Results
Reconciliation of Net Operating Income to Net Income
(UNAUDITED) 4Q 4Q 12 Months 12 Months (dollars in millions, net of tax) 2014 2013 2014 2013 Assurant Solutions $ 58.1 $ 22.6 $ 218.9 $ 125.2 Assurant Specialty Property 71.0 107.8 341.8 423.6 Assurant Health (36.8 ) 0.6 (63.7 ) 5.9 Assurant Employee Benefits 7.2 10.8 48.7 34.6 Corporate and other (19.4 ) (25.2 ) (67.7 ) (82.9 ) Amortization of deferred gain on disposal of businesses (8.1 ) 2.6 (1.0 ) 10.6 Interest expense (9.0 ) (13.2 ) (38.0 ) (50.5 ) Net operating income 63.0 106.0 439.0 466.5 Adjustments: Net realized gains on investments 11.3 2.8 39.5 22.4 Loss on divested business (a) (19.4 ) - (19.4 ) - Change in tax liabilities (6.8 ) - 14.0 - Change in derivative investment 1.7 - (2.2 ) - Net income $ 49.8$
108.8
$ 470.9 $ 488.9(a) Assurant Specialty Property, a reporting segment of Assurant, Inc., completed the sale of its general agency business and associated insurance carrier, American Reliable Insurance Company with the corresponding net loss on sale recorded in consolidated net income in the fourth quarter.
Note: Additional financial information, including a schedule of disclosed items that affected Assurant’s results by business for the last eight quarters on page 20 of the Company’s Financial Supplement, is located in the Investor Relations section of www.assurant.com.
Assurant Solutions
(in millions) 4Q14 4Q13 % Change 12M14 12M13 % Change Net operating income $ 58.1 $ 22.6 157% $ 218.9 $ 125.2 75% Net earned premiums, fees and other $ 1,000.0 $ 848.1 18% $ 3,796.7 $ 3,184.1 19%Assurant Specialty Property
(in millions) 4Q14 4Q13 % Change 12M14 12M13 % Change Net operating income $ 71.0 $ 107.8 (34)% $ 341.8 $ 423.6 (19)% Net earned premiums, fees and other $ 686.5 $ 703.3 (2)% $ 2,807.1 $ 2,513.2 12%Assurant Health
(in millions) 4Q14 4Q13 % Change 12M14 12M13 % Change Net operating (loss) income $ (36.8) $ 0.6 (6,717)% $ (63.7) $ 5.9 (1,188)% Net earned premiums, fees and other $ 503.0 $ 416.7 21% $ 1,985.5 $ 1,610.5 23%Note: In 2014, ACA risk-mitigation programs were implemented to reduce the potential adverse impact to individual health insurers from health care reform provisions. Assurant Health is eligible to participate in the risk-adjustment program, which is based on each carrier’s risk relative to that of the market, as well as the reinsurance program. As of Dec. 31, 2014, estimated recoveries under these two programs totaled $399 million, based on claims submissions and available industry data.
Assurant Employee Benefits
(in millions) 4Q14 4Q13 % Change 12M14 12M13 % Change Net operating income $ 7.2 $ 10.8 (33)% $ 48.7 $ 34.6 41% Net earned premiums, fees and other $ 269.4 $ 262.9 3% $ 1,075.9 $ 1,038.0 4%Corporate & Other
(in millions) 4Q14 4Q13 % Change 12M14 12M13 % Change Net operating loss $ (19.4) $ (25.2) 23% $ (67.7) $ (82.9) 18%Capital Position
Financial Position
Company Outlook
Based on current market conditions, for full-year 2015, the Company expects:
Earnings Conference Call
About Assurant
Assurant is a premier provider of specialized insurance products and related services in North America, Latin America, Europe and other select worldwide markets. The four key businesses -- Assurant Solutions, Assurant Specialty Property, Assurant Health and Assurant Employee Benefits -- partner with clients who are leaders in their industries and build leadership positions in a number of specialty insurance market segments. Assurant businesses provide mobile device protection; debt protection administration; credit-related insurance; warranties and service contracts; pre-funded funeral insurance; lender-placed homeowners insurance; property, appraisal, preservation and valuation services; renters insurance and related products; manufactured housing homeowners insurance; individual health and small employer group health insurance; group dental insurance; group disability insurance; and group life insurance.
Assurant, a Fortune 500 company and a member of the S&P 500, is traded on the New York Stock Exchange under the symbol AIZ. Assurant has approximately $32 billion in assets and $10 billion in annual revenue. Assurant has approximately 17,500 employees worldwide and is headquartered in New York's financial district. For more information on Assurant, please visit www.assurant.com and follow us 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 fact that they may use words such as “will,” “anticipate,” “expect,” “estimate,” “project,” “intend,” “plan,” “believe,” “target,” “forecast,” or the negative versions of those words and terms with a similar meaning. Our actual results may differ materially from those projected in the forward-looking statements. The Company undertakes no obligation to update any forward-looking statements in this earnings release or the exhibits as a result of new information or future events or 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, commissions, fines, penalties or other expenses; (ii) loss of significant client relationships or business, distribution sources and contracts; (iii) the effects of the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010, and the rules and regulations thereunder, on our health and employee benefits businesses; (iv) potential variations between the final risk adjustment amount, as determined by the U.S. Department of Health and Human Services under the Affordable Care Act, and the Company's estimate; (v) unfavorable outcomes in litigation and/or regulatory investigations that could negatively affect our business and reputation; (vi) current or new laws and regulations that could increase our costs and decrease our revenues; (vii) significant competitive pressures in our businesses; (viii) failure to attract and retain sales representatives or key managers; (ix) losses due to natural or man-made catastrophes; (x) a decline in our credit or financial strength ratings (including the risk of ratings downgrades in the insurance industry); (xi) deterioration in the Company’s market capitalization compared to its book value that could result in an impairment of goodwill; (xii) risks related to our international operations, including fluctuations in exchange rates; (xiii) data breaches compromising client information and privacy; (xiv) 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); (xv) failure to find and integrate suitable acquisitions and new ventures; (xvi) cyber security threats and cyber attacks; (xvii) failure to effectively maintain and modernize our information systems; (xviii) failure to predict or manage benefits, claims and other costs; (xix) uncertain tax positions and unexpected tax liabilities; (xx) inadequacy of reserves established for future claims; (xxi) risks related to outsourcing activities; (xxii) unavailability, inadequacy and unaffordable pricing of reinsurance coverage; (xxiii) 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); (xxiv) insolvency of third parties to whom we have sold or may sell businesses through reinsurance or modified co-insurance; (xxv) inability of reinsurers to meet their obligations; (xxvi) credit risk of some of our agents in Assurant Specialty Property and Assurant Solutions; (xxvii) inability of our subsidiaries to pay sufficient dividends; (xxviii) failure to provide for succession of senior management and key executives; and (xxix) 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 2013 Annual Report on Form 10-K and our Third Quarter 2014 Form 10-Q, each as filed with the SEC.
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 net operating income as an important measure of the Company’s operating performance. As shown in the net operating income reconciliation table, net operating income equals net income, excluding net realized gains (losses) on investments 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 both the effect of net realized gains (losses) on investments that tend to be highly variable from period to period, and those events that are unusual and/or unlikely to recur. (2) Assurant uses book value per diluted share, excluding AOCI, as an important measure of the Company’s stockholders’ value. Book value per diluted share, excluding AOCI, equals total stockholders’ equity, excluding AOCI, divided by diluted shares outstanding. The Company believes book value per diluted share, excluding AOCI, provides investors a valuable measure of stockholders’ value because it excludes the effect of unrealized gains (losses) on investments, which tend to be highly variable from period to period and other AOCI items. The comparable GAAP measure would be book value per diluted share, defined as total stockholders’ equity divided by diluted shares outstanding. Book value per diluted share was $72.61 and $65.24 as of Dec. 31, 2014 and Dec. 31, 2013, respectively, as shown in the reconciliation table below. 4Q 4Q 2014 2013 Book value per diluted share (excluding AOCI) $64.82 $59.48 Change due to effect of including AOCI 7.79 5.76 Book value per diluted share $72.61 $65.24 (3)Assurant uses operating ROE, excluding AOCI, as an important measure of the Company’s operating performance. Operating ROE equals net operating income for the periods presented divided by average stockholders’ equity for the year-to-date period, excluding AOCI. The Company believes operating ROE, excluding AOCI, provides investors a valuable measure of the performance of the Company’s ongoing business, because it excludes the effect of net realized gains (losses) on investments that tend to be highly variable from period-to-period, AOCI items and those events that are unusual and/or unlikely to recur. The comparable GAAP measure would be GAAP ROE, defined as net income, for the period presented, divided by average stockholders’ equity for the period. Consolidated GAAP ROE for the 12 months ended Dec. 31, 2014 and 12 months ended Dec. 31, 2013 was 9.4 percent and 9.8 percent, respectively, as shown in the following reconciliation table.
12Months
12Months
2014 2013 Annual operating return on average equity (excluding AOCI) 9.7% 10.6% Net realized gains on investments 0.9% 0.5% Loss on divested business (0.4)% - Change in tax liabilities 0.3% - Change in derivative investment 0.0% - Change due to effect of including AOCI (1.1)% (1.3)% Annual GAAP return on average equity 9.4% 9.8% (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 tend to be highly variable from period to period, and other AOCI items. The comparable GAAP measure would be the ratio of debt to total capital. The debt to total capital ratio as of Dec. 31, 2014 and Dec. 31, 2013 was 18.4 percent and 25.3 percent, respectively, as shown in the following reconciliation table. 4Q 4Q 2014 2013 Debt to total capital ratio (excluding AOCI) 20.2% 27.1% Change due to effect of including AOCI (1.8)% (1.8)% Debt to total capital ratio 18.4% 25.3%A summary of net operating income disclosed items is included on page 20 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 and Twelve Months Ended Dec. 31, 2014 and 2013
4Q 12 Months 2014 2013 2014 2013 (in thousands except number of shares and per share amounts) Revenues Net earned premiums $ 2,142,137 $ 2,045,503 $ 8,632,142 $ 7,759,796 Fees and other income 316,955 185,604 1,033,805 586,730 Net investment income 158,854 161,178 656,429 650,296 Net realized gains on investments 17,201 4,261 60,783 34,525 Amortization of deferred gain on disposal of businesses (12,455 ) 4,072 (1,506 ) 16,310 Total revenues 2,622,692 2,400,618 10,381,653 9,047,657 Benefits, losses and expenses Policyholder benefits 1,123,995 967,389 4,405,333 3,675,532 Selling, underwriting, general and administrative expenses 1,394,573 1,234,326 5,173,788 4,504,691 Interest expense 13,778 20,366 58,395 77,735 Total benefits, losses and expenses 2,532,346 2,222,081 9,637,516 8,257,958 Income before provision for income taxes 90,346 178,537 744,137 789,699 Provision for income taxes 40,591 69,721 273,230 300,792 Net income $ 49,755 $ 108,816 $ 470,907 $ 488,907 Net income per share: Basic $ 0.70 $ 1.48 $ 6.52 $ 6.38 Diluted $ 0.69 $ 1.46 $ 6.44 $ 6.30 Dividends per share $ 0.27 $ 0.25 $ 1.06 $ 0.96 Share data: Basic weighted average shares outstanding 71,054,598 73,639,434 72,181,447 76,648,688 Diluted weighted average shares outstanding 72,104,349 74,713,082 73,152,010 77,654,764Assurant, Inc.Consolidated Condensed Balance Sheets (unaudited)At Dec. 31, 2014 and Dec. 31, 2013
December 31, December 31, 2014 2013 (in thousands) Assets Investments and cash and cash equivalents $ 15,450,108 $ 15,961,199 Reinsurance recoverables 7,254,585 5,752,134 Deferred acquisition costs 2,957,740 3,128,931 Goodwill 841,239 784,561 Assets held in separate accounts 1,906,237 1,941,747 Other assets 3,152,557 2,146,117 Total assets $ 31,562,466 $ 29,714,689 Liabilities Policyholder benefits and claims payable $ 13,182,278 $ 12,035,943 Unearned premiums 6,529,675 6,662,672 Debt 1,171,079 1,638,118 Liabilities related to separate accounts 1,906,237 1,941,747 Deferred gain on disposal of businesses 100,817 99,311 Accounts payable and other liabilities 3,491,073 2,503,419 Total liabilities 26,381,159 24,881,210 Stockholders' equity Equity, excluding accumulated other comprehensive income 4,625,540 4,406,649 Accumulated other comprehensive income 555,767 426,830 Total stockholders' equity 5,181,307 4,833,479 Total liabilities and stockholders' equity $ 31,562,466 $ 29,714,689
Assurant, Inc.Media:Vera Carley, 212-859-7002Assistant Vice President, External Communicationvera.carley@assurant.comorInvestor Relations:Suzanne Shepherd, 212-859-7062Assistant Vice President, Investor Relationssuzanne.shepherd@assurant.com
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