Assurant Prices Reflect `Unique Risk,' Unit Head Says as Stock Plummets
Assurant Inc., the insurer of foreclosed properties whose stock plunged after a report citing “evidence of abuses” in the industry, said the pricing of its policies reflects the “unique risk” of the homes it covers.
“Many of the properties we insure have a history of multiple losses,” said Gene Mergelmeyer, president of the New York-based company’s specialty unit, in a conference call today.
Assurant held the call after its stock fell as much as 17 percent today, following an American Banker article on the market for so-called force-placed coverage. Mortgage servicers are profiting at the expense of homeowners and investors by taking payments from the insurers they select to issue force- placed policies on properties where distressed borrowers allow their original coverage to lapse, American Banker said.
Assurant pays commissions that are comparable to those paid by insurers in the voluntary market, Mergelmeyer said. The company’s average policy costs about $2,000 and the average value of the homes it covers is $180,000, the company said.
The insurer slipped $4.48, or 11 percent, to $35.66 at 4 p.m. in New York Stock Exchange composite trading. The company has advanced about 21 percent this year.
Assurant competes with Bank of America Corp., Munich Re and Australia’s QBE Insurance Group Ltd. for sales of force-placed coverage. The policies are riskier than typical home coverage because the properties are more prone to neglect or vandalism.
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