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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 | |
---|---|---|---|---|---|---|---|---|
0.255 | 0.15% | 175.725 | 176.66 | 175.42 | 176.66 | 33,731 | 17:00:00 |
2Q 2016 Net Income of $169.3 million, $2.70 per diluted share
2Q 2016 Net Operating Income of $89.0 million, $1.42 per diluted share
• 17.1 percent annualized GAAP ROE year-to-date; 10.5 percent annualized operating ROE, excluding AOCI1 year-to-date
• $226 million returned to shareholders in share repurchases and dividends in 2Q 2016
• $725 million in corporate capital at June 30, 2016
Assurant, Inc. (NYSE: AIZ), a global provider of risk management solutions, today reported results for second quarter ended June 30, 2016.
“Our second quarter operating results were in line with our outlook for the year and demonstrate a continued focus on the multi-year transformation of our business,” said Alan Colberg, president and CEO of Assurant. “While operating results this quarter were lower year-over-year, we are reaching key milestones by strengthening our portfolio of businesses and realigning our organization. Our continued expansion in the housing and lifestyle markets enables us to further sharpen our customer focus and generate long-term profitable growth.”
Reconciliation of Net Operating Income to Net Income
(UNAUDITED) 2Q 2Q 6 Months 6 Months (dollars in millions, net of tax) 2016 2015 2016 2015 Assurant Solutions $ 61.4 $ 60.8 $ 108.5 $ 115.2 Assurant Specialty Property 56.9 87.5 133.3 162.6Corporate and other
(19.4 ) (9.1 ) (33.3 ) (13.2 ) Interest expense (9.9 ) (9.0 ) (19.3 ) (17.9 ) Net operating income 89.0 130.2 189.2 246.7 Adjustments: Assurant Health runoff operations (5.4 ) (123.8 ) (32.6 ) (207.7 ) Assurant Employee Benefits - 11.3 10.5 21.4 Net realized gains on investments 14.0 7.8 119.2 10.4 Amortization of deferred gains on disposal of businesses 81.8 2.1 112.7 4.2 Other adjustments (10.1 ) 5.2 (9.3 ) 7.8 Net income $ 169.3 $ 32.8 $ 389.7 $ 82.8Note: Beginning in first quarter 2016, Assurant revised 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 and align revenue categories with its key business lines as well as risk-based and fee-based, capital-light models. Assurant Health runoff operations, Assurant Employee Benefits, which was sold on March 1, 2016, and amortization of deferred gains on disposal of businesses and other variable items have been removed from net operating income. Prior period amounts have been revised to conform to the updated presentation as reflected in the following tables.
Additional financial information, including a schedule of disclosed items that affected Assurant’s results by business for the last four quarters appears on page 20 of the company’s Financial Supplement, and is located in the Investor Relations section of www.assurant.com.
Second Quarter 2016 Consolidated Results
Housing and Lifestyle Businesses
Assurant Solutions (in millions) 2Q16 2Q15 % Change 6M16 6M15 % Change Net operating income $ 61.4 $ 60.8 1% $ 108.5 $ 115.2(6)%
Net earned premiums, fees and other $ 958.2 $ 931.2 3% $ 1,935.2 $ 1,858.7 4%(a) Combined ratio for the risk-based businesses are 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 income, for multi-family housing and mortgage solutions businesses.
Corporate & Other (in millions) 2Q16 2Q15 % Change 6M16 6M15 % ChangeNet operating loss3
$ (19.4 ) $ (9.1 ) (111)% (33.3 ) $ (13.2 ) (152)%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
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:
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; extended service contracts; 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 $6 billion in annualized revenue as of June 30, 2016, Assurant is located in 16 countries, while its Assurant Foundation works to support and improve communities. Learn more at assurant.com or on Twitter @AssurantNews.
Safe Harbor StatementSome 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 and our First Quarter Report 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 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.
6 Months 12 Months 2016 2015 Annual operating return on average equity, excluding AOCI 10.5 % 11.5 % Assurant Health runoff operations(1.8)
%
(10.6)
%
Assurant Employee Benefits 0.6 % 1.4 % Net realized gains on investments 6.6 % 0.6 % Amortization of deferred gains on disposal of businesses 6.3 % 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 1.0 % - Amount related to the sale of AEB(1.0)
%
- Intangible asset impairment(0.5)
%
- Change in derivative investment -(0.1)
%
Change due to effect of including AOCI(4.6)
%
(1.2)
%
Annual GAAP return on average equity 17.1 % 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 highly variable 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.
(UNAUDITED) 2Q 2Q 6 Months 6 Months (dollars in millions) 2016 2015 2016 2015 Net operating income $ 89.0 $ 130.2 $ 189.2 $ 246.7 Adjustments (pre-tax): Assurant Health runoff operations (7.8 ) (178.3 ) (42.0 ) (283.7 ) Assurant Employee Benefits - 16.7 16.7 32.9 Net realized gains on investments 21.6 12.0 183.4 16.0 Amortization of deferred gains on disposal of businesses 125.8 3.2 173.4 6.5 Other adjustments (15.6 ) 8.3 (14.3 ) 12.4 (Provision) benefit for income taxes (43.7 ) 40.7 (116.7 ) 52.0 Net income $ 169.3 $ 32.8 $ 389.7 $ 82.8(3)
Assurant uses Corporate & Other net operating loss as an important measure of the corporate segment’s operating performance. Corporate & Other net operating loss equals segment net income (loss), excluding amortization of deferred gains on disposal of businesses, net realized gains (losses) on investments, interest expense and other highly variable items. The company believes Corporate & Other net operating loss provides investors a valuable measure of the performance of the company’s corporate segment because it excludes the effect of amortization of deferred gains on disposal of businesses, net realized gains (losses) on investments, interest expense and those events that are highly variable and do not represent the ongoing operations of the company’s corporate segment. The comparable GAAP measure would be Corporate & Other segment net income.
UNAUDITED 2Q 2Q 6 Months 6 Months (dollars in millions) 2016 2015 2016 2015 GAAP Corporate & Other segment net income (loss) $ 56.4 $ (3.1 ) $ 170.0 $ (8.6 ) Adjustments, pre-tax: Amortization of deferred gains on disposal of businesses (125.8 ) (3.2 ) (173.4 ) (6.5 ) Interest expense 15.2 13.8 29.7 27.6 Net realized gains on investments (21.6 ) (12.0 ) (183.3 ) (16.0 ) Other adjustments 15.6 (8.3 ) 14.3 (12.5 ) Benefit for income taxes 40.8 3.7 109.4 2.8Corporate & Other net operating loss
$ (19.4 ) $ (9.1 ) $ (33.3 ) $ (13.2 )(4)
The company outlook for Corporate & Other full-year net operating loss constitutes forward-looking information and the company believes that a quantitative reconciliation of such forward-looking information to the most comparable GAAP measure cannot be made available without unreasonable efforts. A reconciliation would require the company to quantify amortization of deferred gains on disposal of businesses, interest expense, net realized gains on investments, and change in derivative investment. The last two components cannot be reliably quantified due to the combination of variability and volatility of such components and may, depending on the size of the components, have a significant impact on the reconciliation. The company is able to reasonably quantify the first two components for the forecast period, assuming no additional debt is acquired in the forecast period. Amortization of deferred gains on disposal of businesses is estimated to be approximately $120.0 million while interest expense is estimated to be approximately $18.0 million.
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 Months and Six Months Ended June 30, 2016 and 2015
2Q 6 Months 2016 2015 2016 2015
(in thousands except number of shares and per share amounts)
Revenues Net earned premiums $ 1,202,224 $ 2,138,258 $ 2,617,462 $ 4,297,820 Fees and other income 328,305 323,609 685,995 603,171 Net investment income 119,820 167,786 255,527 320,059 Net realized gains on investments 21,626 11,999 183,344 15,954 Gain on pension plan curtailment - - 29,578 - Amortization of deferred gains on disposal of businesses 125,818 3,242 173,414 6,500 Total revenues 1,797,793 2,644,894 3,945,320 5,243,504 Benefits, losses and expenses Policyholder benefits 400,814 1,267,714 944,630 2,478,441 Selling, underwriting, general and administrative expenses 1,146,235 1,323,377 2,397,936 2,614,289 Interest expense 15,232 13,778 29,735 27,556 Total benefits, losses and expenses 1,562,281 2,604,869 3,372,301 5,120,286 Income before provision for income taxes 235,512 40,025 573,019 123,218 Provision for income taxes 66,163 7,236 183,352 40,385 Net income $ 169,349 $ 32,789 $ 389,667 $ 82,833 Net income per share: Basic $ 2.72 $ 0.48 $ 6.12 $ 1.20 Diluted $ 2.70 $ 0.47 $ 6.06 $ 1.18 Dividends per share $ 0.50 $ 0.30 $ 1.00 $ 0.57 Share data: Basic weighted average shares outstanding 62,244,778 68,558,472 63,665,856 69,161,001 Diluted weighted average shares outstanding 62,723,292 69,244,399 64,274,009 69,946,364Assurant, Inc.
Consolidated Condensed Balance Sheets (unaudited)
At June 30, 2016 and Dec. 31, 2015
June 30, December 31, 2016 2015 (in thousands) Assets Investments and cash and cash equivalents $ 13,194,171 $ 14,283,077 Reinsurance recoverables 8,727,343 7,470,403 Deferred acquisition costs 3,001,603 3,150,934 Goodwill 834,173 833,512 Assets held in separate accounts 1,714,443 1,798,104 Other assets 2,332,480 2,500,372 Total assets $ 29,804,213 $ 30,036,402 Liabilities Policyholder benefits and claims payable $ 13,025,128 13,363,413 Unearned premiums 6,298,466 6,423,720 Debt 1,165,255 1,164,656 Liabilities related to separate accounts 1,714,443 1,798,104 Deferred gain on disposal of businesses 439,268 92,327 Accounts payable and other liabilities 2,553,582 2,670,215 Total liabilities 25,196,142 25,512,435 Stockholders' equity Equity, excluding accumulated other comprehensive income 4,280,817 4,405,418 Accumulated other comprehensive income 327,254 118,549 Total stockholders' equity 4,608,071 4,523,967 Total liabilities and stockholders' equity $ 29,804,213 $ 30,036,402
View source version on businesswire.com: http://www.businesswire.com/news/home/20160726006515/en/
Assurant, Inc.Media:Vera CarleyAssistant Vice President, External CommunicationPhone: 212.859.7002vera.carley@assurant.comorInvestor Relations:Suzanne ShepherdVice President, Investor RelationsPhone: 212.859.7062suzanne.shepherd@assurant.com
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