Hurricanes Drive Assurant’s Income Down 20%

Dayton Daily News (OH)

Feb. 12--Assurant, one of Springfield's largest employers, reported costs related to natural disasters including hurricanes and wildfires drove its operating income down about 20 percent last year.

But company officials said they had a solid fourth quarter and the underlying results exceeded expectations, excluding losses from the natural disasters.

Assurant's Global Housing Division, based in Springfield, provides insurance and related services in partnership with financial institutions and other major clients. The Global Housing Division has more than 1,900 workers here and it said last year it planned to hire as many as 130 more employees to handle additional work related to serving customers affected by the hurricanes.

"In 2017, we surpassed our initial expectations for the year and delivered strong growth in net operating income and earnings per share, on a year-over-year basis, excluding catastrophic losses," said Alan Colberg, the company's president and CEO in a statement. "Consistent with our capital management commitment, we also completed the return of $1.5 billion of capital to shareholders since 2016."

The company reported net operating income of $220 million last year, down about 20 percent compared to the nearly $277 million in 2016, in part due to higher reportable catastrophes related to Hurricanes Harvey, Irma and Maria. The Global Housing Division also noted losses from wildfires in California in the fourth quarter last year.

The decrease was partially offset by a one-time reduction of net deferred tax liabilities related to the recent federal tax cut package.

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Excluding catastrophic losses, Assurant reported a total of about $413 million in net operating income, up about 9 percent compared to 2016. Improved results from the company's Global Lifestyle division and lower corporate expenses contributed to an improved bottom line, excluding the catastrophes.

The Global Housing Division reported $97.4 million in net operating income last year, down 48 percent compared to $189 million in 2016.

Assurant reported company-wide fourth-quarter income spiked from $27 million in 2016 to just shy of $100 million at the end of last year.

"This was driven primarily by lower reportable catastrophes and the absence of lender-placed regulatory expenses," the company said in a press release.

Assurant expects a solid year in 2018, Colberg said. The business announced an agreement in October last year to acquire The Warranty Group from TPG Capital in a transaction valued at $2.5 billion. That agreement is expected to close in the second quarter of this year.

The company also expects income to increase between 10 and 14 percent this year compared to 2017, excluding reportable catastrophe losses, and reflecting a lower effective tax rate.

"We expect to build on this solid foundation in 2018, as we close our acquisition of The Warranty Group and leverage our expanded scale and expertise in key Housing and Lifestyle markets to sustain long-term, profitable growth at Assurant," Colberg said.

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