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» Assurant CEO Discusses Q3 2010 Results - Earnings Call Transcript
Rob PollockThanks, Melissa, and good morning everyone. We are pleased with our continued progress in executing our strategy. While our results this quarter reflect considerable storm activity, our focus on creating sustainable value for our shareholders remains strong. Our long-term goals center on three key operating metrics: first, operating return on equity. We reported an 8.6% return on an annualized basis excluding AOCI. Catastrophe losses from the storm activity during Q2 and Q3 impacted our ROE; however, we expect ROE will increase in Q4 and future years as our businesses work to improve performance. The second is book value per diluted share. Book value has grown 9.4% year-to-date excluding AOCI. We expect to end 2011 with a double-digit increase in this measure. Third is revenue growth. Our total revenues have not grown in 2011 but we are encouraged that we continue to sign new clients and introduce new products in a difficult economic environment. Let me provide some additional color on the quarter. I’ll begin with Assurant Solutions. We solidified our international presence, reduced expenses, increased our wireless reach and maintained strong pre-need sales. These actions all have contributed to better profitability. Solutions generated meaningful new sales, both domestically and internationally, in a challenging global environment. This can be seen in our growth in gross written premiums. Solutions is well positioned to deliver on its commitment of a double-digit ROE in 2012. Longer-term, we remain focused on progress toward the goals we have outlined. 2011 net earned premiums and fees will be similar to 2010, but we expect modest top line growth in 2012. International, domestic service contracts and pre-need will be the key contributors. We will continue to build our capabilities to serve the wireless marketplace and manage our programs and expenses for continued improvement in the international combined ratio.
Moving to Assurant Specialty Property, quarterly results reflect the impact of catastrophe losses. Our priority is to help our customers affected by severe storms and we continue to assist them as they rebuild and repair their homes. Our strategy to align with market leaders combined with the investments we have made in our tracking system allow us to respond quickly when portfolios move between servicers. This meets an important need for our clients. We are pleased to report that the new client portfolio we mentioned last quarter was successfully implemented earlier than we had previously anticipated. As a result, this portfolio will now generate premiums beginning in Q4 2011. We are well positioned for the movement of loan portfolios that we expect will continue in 2012.Several years ago, insurance for renters was identified as an underserved market by our Specialty Property Team. We created a different way to connect with customers by partnering with owners and managers of multi-family housing properties. This business generates about $100 million in annual net earned premiums and fees and we anticipate growth will continue in 2012. The acquisition of SureDeposit, the market leader in rental security deposit alternatives, expands our product offerings. We are pleased with our integration progress and the acquisition was accretive during the quarter. Next, I’ll turn to Assurant Health. Q3 results reflect continued progress as we implement our strategy. Sales of our new Health Access and supplemental product offerings continue to gain traction. These products are designed to address affordability needs of consumers. We also enhance technologies so our distribution partners can more effectively serve customers. We continue to drive toward a streamlined structure that will allow us to succeed under the minimum loss ratio regulations, and through the first nine months of 2011 we significantly reduced expenses compared to last year. It’s important to remember that 2011 is just the first year of the implementation of healthcare reform. Additional provisions of the legislation will affect reported results in future years, but our focus remains the same – to generate sales and to realize further expense efficiencies. A better customer experience and a simplified business model will help us achieve these goals. Read the rest of this transcript for free on seekingalpha.com