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Assurant falls to Q3 loss despite lower cat impact

6th November 2019 - Author: Matt Sheehan

US specialty insurance group Assurant has posted a net loss of $59.5 million for the third quarter of 2019, despite a much smaller impact from catastrophe losses on its Global Housing segment.

AssurantAssurant’s earnings were down from $48.3 million in Q3 2018, primarily due to charges related to the $124.8 million reduction in fair value of Iké Asistencia, based on the company’s strategic review process and intent to sell the business.

This was partially offset by $30.9 million of lower reportable catastrophes in Global Housing and mobile profitable growth in Global Lifestyle.

Assurant recorded after-tax catastrophe losses of $35.7 million primarily from Hurricane Dorian, compared to $66.6 million in the prior year period.

Net operating income showed a better picture, increasing to $104.8 million in Q3 2019, compared with $67.4 million for the same period last year.

Combined, net earned premiums, fees and other income from the Global Housing, Global Lifestyle and Global Preneed segments totalled $2.31 billion, increasing 9% from $2.11 billion in Q3 2018. This reflected organic growth in both Connected Living and Global Automotive.

The Global Housing segment in particular increased its net operating income by 114% in Q3 to $41.6 million, mainly due to the lower level of catastrophe losses. In contrast premiums were down slightly due to the sale of mortgage solutions.

For Global Lifestyle, Assurant reported a 35% increase in net operating income, primarily due to organic growth in mobile subscribers in Asia Pacific and North America, and improved operating performance in European mobile business. Global Automotive organic growth also contributed to earnings.

But Assurant’s other two segments – Global Preneed and Corporate & Other – saw downturns in profit, with the Corporate & Other business posting a loss of $210.6 million.

Based on these results, Assurant expects its net operating income per diluted share (excluding catastrophe losses) to increase by 6-10% by year-end, compared with 2018.

Similarly, it anticipates double-digit earnings growth to reflect contributions from its acquisition of The Warranty Group (TWG) earlier this year, including $30 million of additional after-tax synergies, organic growth in Connected Living, and expansion in Global Automotive and multifamily housing/

Earnings growth is forecast to be partially offset by the continued declines in Global Financial Services, modest declines in Global Housing, mainly as a result of higher claims in small commercial products, and the accounting adjustment in Global Preneed.

Lender-placed net operating income, excluding reportable catastrophe losses and the incremental reinsurance costs, is expected to decline slightly from 2018 mainly due to the reduction in loans tracked from a financially insolvent client, as well as higher non-catastrophe losses.

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