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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 | |
---|---|---|---|---|---|---|---|---|
0.25 | 0.14% | 174.65 | 177.075 | 174.485 | 174.70 | 308,977 | 01:00:00 |
4Q 2015 Net Operating Income of $65.3 million, $0.97 per diluted share
Full-Year 2015 Net Operating Income of $454.4 million, $6.58 per diluted share
4Q 2015 Net Income of $65.7 million, $0.97 per diluted share
Full-Year 2015 Net Income of $141.6 million, $2.05 per diluted share
Assurant, Inc. (NYSE:AIZ), a premier provider of specialty protection products and related services, today reported results for fourth quarter and full-year ended Dec. 31, 2015.
“Assurant made significant strides in 2015 as we realigned our business portfolio and evolved our organizational framework to support sustainable long-term, profitable growth,” said Assurant President and CEO Alan B. Colberg.
“While fourth quarter results were disappointing and fell short of our expectations, we believe our transformation strategy will improve results and drive shareholder value. We are focusing resources and investments in targeted markets and increasing operating efficiency across the company as we continue to return capital to shareholders,” Colberg added.
Reconciliation of Net Operating Income to Net Income
Beginning in second quarter 2015, Assurant revised its presentation of results to reflect the company’s previously announced strategic realignment to focus on specialty housing and lifestyle protection products and services. As the company continues to wind down its health insurance business, Assurant Health results have been removed from net operating income and now are reflected in net income as runoff operations. Prior period amounts have been revised to conform to the updated presentation. In the third quarter, the company announced the sale of Assurant Employee Benefits. Assurant will continue to report this business under operating results until the sale of the business is closed, which is expected to occur by the end of first quarter 2016.
(UNAUDITED) 4Q 4Q 12 Months 12 Months (dollars in millions, net of tax) 2015 2014 2015 2014 Housing and Lifestyle Assurant Solutions $ 29.6$ 58.1 $ 197.2
$ 218.9 Assurant Specialty Property 57.8 71.0 307.7 341.8 Subtotal 87.4 129.1 504.9 560.7 Assurant Employee Benefits 15.5 7.2 47.3 48.7 Corporate and other (30.7 ) (19.4 ) (70.4 ) (67.7 ) Amortization of deferred gain on disposal of businesses 2.1 (8.1 ) 8.4 (1.0 ) Interest expense (9.0 ) (9.0 ) (35.8 ) (37.9 ) Net operating income 65.3 99.8 454.4 502.8 Adjustments: Assurant Health runoff operations (a) (15.8 ) (36.8 ) (367.9 ) (63.7 ) Net realized gains on investments 6.3 11.3 20.8 39.4 Gain (loss) on divested business 10.0 (19.4 ) 10.7 (19.4 ) Change in tax liabilities - (6.8 ) 16.0 14.0 Payment received related to previous sale of subsidiary - - 9.9 - Change in derivative investment (0.1 ) 1.7 (2.3 ) (2.2 ) Net income $ 65.7 $ 49.8 $ 141.6 $ 470.9
(a) Assurant Health runoff operations include results for the total segment, including major medical operations and portions of the business that Assurant sold to National General Holdings Corp. on Oct. 1, 2015.
Note: Additional financial information, including a schedule of disclosed items that affected Assurant’s results by business for the last eight quarters appears on page 21 of the company’s Financial Supplement, and is located in the Investor Relations section of www.assurant.com.
Fourth Quarter 2015 Consolidated Results
Full-Year 2015 Consolidated Results
Housing and Lifestyle
Assurant Solutions
(in millions) 4Q15 4Q14 % Change 12M15 12M14 % Change Net operating income $ 29.6 $ 58.1 (49)% $ 197.2 $ 218.9 (10)% Net earned premiums, fees and other $ 1,003.2 $ 1,000.0 0% $ 3,801.5 $ 3,796.7 0%Assurant Specialty Property
(in millions) 4Q15 4Q14 % Change 12M15 12M14 % Change Net operating income $ 57.8 $ 71.0 (19)% $ 307.7 $ 341.8 (10)% Net earned premiums, fees and other $ 601.7 $ 686.5 (12)% $ 2,450.2 $ 2,807.1 (13)%Note: In fourth quarter 2014, ARIC accounted for net earned premiums, fees and other income and net operating income of $62.3 million and $6.4 million, respectively. For the 12 months ended 2014, ARIC accounted for net earned premiums, fees and other income and net operating income of $249.3 million and $12.1 million, respectively. This divested business did not contribute to 2015 results.
Employee Benefits
As announced on Sept. 9, 2015, Assurant entered into a definitive agreement to sell Assurant Employee Benefits to Sun Life Assurance Company of Canada, the wholly-owned subsidiary of Sun Life Financial Inc., for $940 million in cash. The transaction is expected to close by the end of first quarter 2016.
Assurant Employee Benefits
(in millions) 4Q15 4Q14 % Change 12M15 12M14 % Change Net operating income $ 15.5 $ 7.2 114% $ 47.3 $ 48.7 (3)% Net earned premiums, fees and other $ 270.8 $ 269.4 1% $ 1,091.8 $ 1,075.9 2%Corporate & Other
(in millions) 4Q15 4Q14 % Change 12M15 12M14 % Change Net operating loss $ (30.7) $ (19.4) (58)% $ (70.4) $ (67.7) (4)%Assurant Health Runoff Operations
The company announced on June 10, 2015 that it was beginning the process to exit the health business, following a review of strategic options for Assurant Health. Related to these plans, the company established a premium deficiency reserve accrual in 2015 for claims and direct expenses on ACA-qualified policies. The company completed the sale of Assurant Health's supplemental and small group self-funded product lines and certain other assets to National General Holdings Corp. on Oct. 1, 2015 for $14 million.
Assurant Health
(in millions) 4Q15 4Q14 % Change 12M15 12M14 % Change Net loss $ (15.8) $ (36.8) 57% $ (367.9) $ (63.7) (477)%Capital Position
Financial Position
Company Outlook
Based on current market conditions, for full-year 2016, the company expects:
Based on the announced exit from the health insurance market, the company expects:
Earnings Conference Call
About Assurant
A global provider of specialty protection products and related services, Assurant (NYSE: AIZ) safeguards clients and consumers against risk. A Fortune 500 company, Assurant partners with clients who are leaders in their industries to provide consumers peace of mind and financial security. Our diverse range of products and services includes: mobile device protection products and services; extended service products and related services for consumer electronics, appliances and vehicles; pre-funded funeral insurance; lender-placed homeowners insurance; property preservation and valuation services; flood insurance; renters insurance and related products; debt protection administration; credit insurance; manufactured housing homeowners insurance; group dental insurance; group disability insurance; and group life insurance.
With approximately $30 billion in assets and $8 billion in annual revenue, Assurant provides its specialty protection offerings primarily through Assurant Solutions, Assurant Specialty Property, and Assurant Employee Benefits. Through the Assurant Foundation, established more than 30 years ago, the company and its employees are dedicated to supporting and partnering with organizations that improve communities. 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 use of words such as “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) inability to implement, or delays in implementing, strategic plans for the Assurant Employee Benefits and Assurant Health segments; (iii) loss of significant client relationships or business, distribution sources or contracts and reliance on a few clients; (iv)the effects of the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010 (the "Affordable Care Act"), and the rules and regulations thereunder, on our health and employee benefits businesses; 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;
(v) unfavorable outcomes in litigation and/or regulatory investigations that could negatively affect our results, business and reputation; (vi) inability to execute strategic plans related to acquisitions, dispositions or new ventures; (vii) failure to adequately predict or manage benefits, claims and other costs; (viii) inadequacy of reserves established for future claims; (ix) current or new laws and regulations that could increase our costs and decrease our revenues; (x) significant competitive pressures in our businesses; (xi) failure to attract and retain sales representatives, key managers, agents or brokers; (xii) losses due to natural or man-made catastrophes; (xiii) a decline in our credit or financial strength ratings (including the risk of ratings downgrades in the insurance industry); (xiv) deterioration in the company’s market capitalization compared to its book value that could result in an impairment of goodwill; (xv) risks related to our international operations, including fluctuations in exchange rates; (xvi) data breaches compromising client information and privacy; (xvii) 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); (xviii) cyber security threats and cyber attacks; (xix) failure to effectively maintain and modernize our information systems; (xx) uncertain tax positions and unexpected tax liabilities; (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 2014 Annual Report on Form 10-K and 2015 First Quarter, Second Quarter and Third Quarter Quarterly Reports on Form 10-Q, 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 operating ROE, excluding AOCI and Assurant Health runoff operations, 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 and Assurant Health runoff operations. The company believes operating ROE, excluding AOCI and Assurant Health runoff operations, 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, other AOCI items, Assurant Health runoff operations 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 periods presented, divided by average stockholders’ equity for the year-to-date period. GAAP ROE for the 12 months ended Dec. 31, 2015 and 12 months ended Dec. 31, 2014 was 2.9 percent and 9.4 percent, respectively, as shown in the following reconciliation table. 12 Months 12 Months 2015 2014 Annual operating return on average equity (excluding AOCI and Assurant Health runoff operations) 11 .3% 12 .1% Assurant Health runoff operations (9 .2)% (1 .5)% Net realized gains on investments 0 .5% 1 .0% Gain (loss) on divested business 0 .3% (0 .5)% Change in tax liabilities 0 .4% 0 .3% Payment received related to previous sale of subsidiary 0 .2% - Change in derivative investment (0 .1)% (0 .1)% Change due to effect of including AOCI (0 .5)% (1 .9)% Annual GAAP return on average equity 2 .9% 9 .4% (2)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, other unusual and/or infrequent items and Assurant Health runoff operations. 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 net realized gains (losses) on investments that tend to be highly variable from period-to-period, those events that are unusual and/or unlikely to recur and Assurant Health runoff operations. Please refer to page 2 of this release for a reconciliation of net operating income to net income.
(3) Assurant uses a ratio of debt to total capital, excluding AOCI and Assurant Health runoff operations, as an important measure of the company’s financial leverage. Assurant’s debt to total capital ratio, excluding AOCI and Assurant Health runoff operations, equals debt divided by the sum of debt and total stockholders’ equity excluding AOCI and Assurant Health runoff operations. The company believes that the debt to total capital ratio, excluding AOCI and Assurant Health runoff operations, 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, other AOCI items and Assurant Health runoff operations. The comparable GAAP measure would be the ratio of debt to total capital. The debt to total capital ratio as of Dec. 31, 2015 and Dec. 31, 2014 was 20.6 percent and 18.4 percent, respectively, as shown in the following reconciliation table. 4Q 4Q 2015 2014 Debt to total capital ratio (excluding AOCI and Assurant Health runoff operations) 23.4 % 21.9 % Change due to effect of including AOCI (0.4 )% (1.8 )% Change due to effect of including Assurant Health runoff operations (2.4 )% (1.7 )% Debt to total capital ratio 20.6 % 18.4 %A summary of net operating income disclosed items is included on page 21 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 12 Months Ended Dec. 31, 2015 and 2014 4Q 12 Months 2015 2014 2015 2014 (in thousands except number of shares and per share amounts) Revenues Net earned premiums $ 1,994,756 $ 2,142,137 $ 8,350,997 $ 8,632,142 Fees and other income 382,772 316,955 1,303,466 1,033,805 Net investment income 157,392 158,854 626,217 656,429 Net realized gains on investments 9,669 17,201 31,826 60,783 Amortization of deferred gain on disposal of businesses 3,245 (12,455 ) 12,988 (1,506 ) Total revenues 2,547,834 2,622,692 10,325,494 10,381,653 Benefits, losses and expenses Policyholder benefits 1,009,889 1,123,995 4,742,535 4,405,333 Selling, underwriting, general and administrative expenses 1,413,950 1,394,573 5,326,662 5,173,788 Interest expense 13,781 13,778 55,116 58,395 Total benefits, losses and expenses 2,437,620 2,532,346 10,124,313 9,637,516 Income before provision for income taxes 110,214 90,346 201,181 744,137 Provision for income taxes 44,470 40,591 59,626 273,230 Net income $ 65,744 $ 49,755 $ 141,555 $ 470,907 Net income per share: Basic $ 0.99 $ 0.70 $ 2.08 $ 6.52 Diluted $ 0.97 $ 0.69 $ 2.05 $ 6.44 Dividends per share $ 0.50 $ 0.27 $ 1.37 $ 1.06 Share data: Basic weighted average shares outstanding 66,732,896 71,054,598 68,163,825 72,181,447 Diluted weighted average shares outstanding 67,592,973 72,104,349 69,017,209 73,152,010 Assurant, Inc. Consolidated Condensed Balance Sheets (unaudited) At Dec. 31, 2015 and Dec. 31, 2014 December 31, December 31, 2015 2014 (in thousands) Assets Investments and cash and cash equivalents $ 14,315,897 $ 15,450,108 Reinsurance recoverables 7,470,403 7,254,585 Deferred acquisition costs 3,150,934 2,957,740 Goodwill 833,512 841,239 Assets held in separate accounts 1,798,104 1,906,237 Other assets 2,507,098 3,152,557 Total assets $ 30,075,948 $ 31,562,466 Liabilities Policyholder benefits and claims payable $ 13,363,413 $ 13,182,278 Unearned premiums 6,423,720 6,529,675 Debt 1,171,382 1,171,079 Liabilities related to separate accounts 1,798,104 1,906,237 Deferred gain on disposal of businesses 92,327 100,817 Accounts payable and other liabilities 2,703,035 3,491,073 Total liabilities 25,551,981 26,381,159 Stockholders' equity Equity, excluding accumulated other comprehensive income 4,405,418 4,625,540 Accumulated other comprehensive income 118,549 555,767 Total stockholders' equity 4,523,967 5,181,307 Total liabilities and stockholders' equity $ 30,075,948 $ 31,562,466
View source version on businesswire.com: http://www.businesswire.com/news/home/20160209006700/en/
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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