Assurant Reports Record Q1 2008 Net Operating Income of $214.9 Million ($1.80
per diluted share), Up 22% and Net Income of $186.8 Million ($1.57 per diluted
share), Up 4% Compared to Q1 2007
NEW YORK, May 1 /PRNewswire-FirstCall/ -- Assurant, Inc. ("Assurant")
(NYSE: AIZ), a premier provider of specialized insurance and insurance-related
products and services, today reported its results for the first quarter of
2008.
Net income in the first quarter of 2008 increased 4% to $186.8 million, or
$1.57 per diluted share, versus first quarter 2007 net income of $179.5
million, or $1.45 per diluted share. Net income in the first quarter of 2008
includes $28.2 million of after-tax realized losses from other than temporary
impairments in the investment portfolio.
Net operating income (see footnote 1 at the end of this release) for the
first quarter of 2008 increased 22% to $214.9 million, or $1.80 per diluted
share, compared to first quarter 2007 net operating income of $175.8 million,
or $1.42 per diluted share.
Robert B. Pollock, president and chief executive officer, said: "We are
off to a good start for 2008, despite a slowing economy. Our record operating
results are grounded in the enduring quality of our diversified, specialty
insurance strategy. We are pleased with the progress we're making in areas we
have targeted for growth and remain committed to managing our business for the
long-term."
Net earned premiums of $1.94 billion in the first quarter of 2008
increased 10% from the same period in 2007, driven primarily by growth in
Assurant Specialty Property and Assurant Solutions.
Net investment income in the first quarter of 2008 decreased 9% to $197.8
million from $216.9 million in the first quarter of 2007 primarily
attributable to $33.5 million of investment income from real estate joint
venture partnerships recognized during the first quarter of 2007. First
quarter 2008 benefited from an increase in average invested assets.
The following chart provides a reconciliation of net operating income to
net income for Assurant:
For the Three Months Ended
March 31, March 31,
2008 2007
(UNAUDITED)
(amounts in millions, net of tax)
Assurant Solutions $47.6 $44.1
Assurant Specialty Property 124.7 74.4
Assurant Health 37.3 40.5
Assurant Employee Benefits 16.3 29.0
Corporate and other (5.9) (7.6)
Amortization of deferred gains on disposal
of businesses 4.8 5.4
Interest expense (9.9) (10.0)
Net operating income 214.9 175.8
Adjustments:
Net realized (losses) gains on investments (28.1) 3.7
Net income $186.8 $179.5
Assurant Solutions
Assurant Solutions first quarter 2008 net operating income was $47.6
million, up 8% from the first quarter 2007 net operating income of $44.1
million. The increase was primarily due to $11.7 million of after-tax income
from the accrual of contractual receivables established from certain domestic
service contract clients. There was no investment income from real estate
joint venture partnerships in the first quarter of 2008 compared with $9.4
million after-tax during the first quarter of 2007. Results in the quarter
were impacted by continued international investments made to support the
business' strategic expansion and by continued less favorable loss experience
in the domestic service contract business.
Assurant Solutions first quarter 2008 net earned premiums increased 17% to
$683.5 million from $583.0 million in the first quarter of 2007. The increase
was primarily due to growth in preneed premiums resulting from the July 2007
acquisition of Mayflower National Life Insurance Company, growth in domestic
and international service contracts and the impact of favorable foreign
currency exchange. Excluding the impact of foreign currency exchange, Assurant
Solutions net earned premiums in the first quarter increased 15% compared with
the first quarter 2007. Results for the quarter were partially offset by the
continued decline in domestic credit insurance premiums.
Assurant Specialty Property
Assurant Specialty Property first quarter 2008 net operating income was
$124.7 million, up 68% from $74.4 million in the first quarter 2007. The
increase was primarily driven by the continued growth in creditor-placed
homeowners insurance, continued favorable combined ratios and an increase in
investment income due to an increase in invested assets. Results for the
quarter were also positively impacted by $4.6 million after-tax from a client
related settlement. There were no reportable catastrophe losses during the
quarter.
Assurant Specialty Property first quarter 2008 net earned premiums
increased 31% to $481.4 million compared to $367.0 million in the same year-
ago period. The increase is mainly attributable to the continued organic
growth in creditor-placed homeowners insurance.
Assurant Health
Assurant Health first quarter 2008 net operating income was $37.3 million,
down 8% from first quarter 2007 net operating income of $40.5 million. There
was no investment income from real estate joint venture partnerships in the
first quarter of 2008 compared with $2.3 million after-tax during the first
quarter of 2007. Net operating income was impacted by the continuing decline
in small group net earned premiums. Assurant Health continues to maintain a
favorable combined ratio.
Assurant Health first quarter 2008 net earned premiums decreased 3% to
$496.1 million from $512.8 million in the same year-ago period. Continued
growth in individual premiums during the quarter was offset by a decline in
small group medical premiums.
Assurant Employee Benefits
Assurant Employee Benefits first quarter 2008 net operating income was
$16.3 million, down 44% from first quarter 2007 net operating income of $29.0
million. There was no investment income from real estate joint venture
partnerships in the first quarter of 2008 compared with $9.2 million after-tax
during the first quarter of 2007. While results for the first quarter of 2008
reflect continued favorable loss experience, the expense ratio increased due
to increased sales expenses as a result of the business' continued investment
in its small case strategy.
Assurant Employee Benefits first quarter 2008 net earned premiums
decreased 5% to $280.4 million from $296.7 million in the same year-ago
period. Results for the quarter include $5.5 million in single premiums from
closed blocks of business compared to $22.8 million in the first quarter of
2007. Excluding single premiums from closed blocks of business, net earned
premium increased slightly.
Corporate & Other
Corporate and other net operating loss for the first quarter of 2008 was
$5.9 million, compared to a loss of $7.6 million in the first quarter of 2007.
The losses for the quarter included a $1.6 million of after-tax expense
related to the ongoing SEC investigation regarding certain loss mitigation
products. The improvement in the net operating loss was mainly due to tax
expenses of $5.8 million in the first quarter of 2007 resulting from changes
in certain tax liabilities.
Financial Position
Our strength is reflected in our financial position. At March 31, 2008
total assets were $26.4 billion. Stockholders' equity, excluding Accumulated
Other Comprehensive Income (AOCI), was $4.2 billion and book value per diluted
share, excluding AOCI, was up 5% to $35.33 from $33.73 at December 31, 2007.
Debt to total capital, excluding AOCI, improved to 18.9% from 19.7% at
December 31, 2007.
Earnings Conference Call
Assurant will host a conference call today at 9:00 A.M. (ET) with access
available via Internet and telephone. Investors and analysts may participate
in the live conference call by dialing 888-603-6873 (toll-free domestic) or
973-582-2706 (international); passcode: 41531604. Please call to register at
least 10 minutes before the conference call begins. A replay of the call will
be available for one week via telephone starting at approximately 12:00 P.M.
(ET) today and can be accessed at 800-642-1687 (toll-free domestic) or 706-
645-9291 (international); passcode: 41531604. The webcast will be archived for
one month on Assurant's website.
About Assurant
Assurant is a premier provider of specialized insurance products and
related services in North America and selected other international markets.
The four key businesses -- Assurant Solutions; Assurant Specialty Property;
Assurant Health; and Assurant Employee Benefits -- have partnered with clients
who are leaders in their industries and have built leadership positions in a
number of specialty insurance market segments in the U.S. and selected
international markets. The Assurant business units provide debt protection
administration; credit-related insurance; warranties and service contracts;
pre-funded funeral insurance; creditor-placed homeowners insurance;
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 more than $26
billion in assets and $8 billion in annual revenue. Assurant has more than
13,000 employees worldwide and is headquartered in New York's financial
district. www.assurant.com.
Safe Harbor Statement
Some of the statements included in this press release, particularly those
anticipating future financial performance, business prospects, growth and
operating strategies and similar matters, are forward-looking statements that
involve a number of risks and uncertainties. Our actual results might differ
materially from those projected in the forward-looking statements. For a
discussion of the factors that could affect our actual results please refer to
the risk factors identified from time to time in our SEC reports, including,
but not limited to, our 10-K, 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 press
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 chart on page 2, 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 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.
Please see page 17 of the financial supplement, which is available on
our website at www.assurant.com, for a summary of net operating income
disclosed items.
Assurant, Inc. and Subsidiaries
Consolidated Statement of Operations (unaudited)
Three Months Ended March 31, 2008 and 2007
Three Months Ended March 31,
2008 2007
(in thousands except number of
shares and per share amounts)
Revenues
Net earned premiums and other
considerations $1,941,417 $1,759,509
Net investment income 197,774 216,896
Net realized (losses) gains on investments (43,143) 5,570
Amortization of deferred gains on disposal
of businesses 7,379 8,349
Fees and other income 73,898 66,939
Total revenues 2,177,325 2,057,263
Benefits, losses and expenses
Policyholder benefits 935,083 889,522
Selling, underwriting, general and
administrative expenses 941,026 874,926
Interest expense 15,288 15,297
Total benefits, losses and expenses 1,891,397 1,779,745
Income before provision for income taxes 285,928 277,518
Provision for income taxes 99,098 98,061
Net income $186,830 $179,457
Net income per share:
Basic $1.58 $1.47
Diluted $1.57 $1.45
Dividends per share $0.12 $0.10
Share Data:
Basic weighted average shares
outstanding 117,883,761 122,149,873
Diluted weighted average shares
outstanding 119,280,980 124,111,534
Assurant, Inc. and Subsidiaries
Consolidated Condensed Balance Sheets
At March 31, 2008 (unaudited) and December 31, 2007
March 31, December 31,
2008 2007
(in thousands)
Assets
Investments and cash and cash
equivalents $14,678,565 $14,552,115
Reinsurance recoverables 3,895,539 3,904,348
Deferred acquisition costs 2,895,498 2,895,345
Goodwill 829,039 832,656
Assets held in separate accounts 2,720,297 3,143,288
Other assets 1,427,477 1,422,564
Total assets 26,446,415 26,750,316
Liabilities
Policyholder benefits and claims payable 10,474,976 10,492,580
Unearned premiums 5,412,023 5,410,709
Debt 971,886 971,863
Mandatorily redeemable preferred stock 11,160 21,160
Liabilities related to separate accounts 2,720,297 3,143,288
Accounts payable and other liabilities 2,648,858 2,621,813
Total liabilities 22,239,200 22,661,413
Stockholders' equity
Equity, excluding accumulated other
comprehensive (loss) income 4,212,712 4,034,992
Accumulated other comprehensive (loss)
income (5,497) 53,911
Total stockholders' equity 4,207,215 4,088,903
Total liabilities and stockholders'
equity $26,446,415 $26,750,316
SOURCE Assurant, Inc.
Drew Guthrie, Manager, Communications and Media Relations, +1-212-859-7002,
Fax: +1-212-859-5893, drew.guthrie@assurant.com, or Investor Relations:
Melissa Kivett, Senior Vice President, Investor Relations, +1-212-859-7029,
Fax: +1-212-859-5893, melissa.kivett@assurant.com, or John Egan, Vice
President Investor Relations, +1-212-859-7197, Fax: +1-212-859-5893,
john.egan@assurant.com, all of Assurant, Inc.
