Assurant Inc. (AIZ) said earnings from residential coverage that borrowers must buy when they miss payments on their initial policies will slip as the firm introduces a new insurance product amid regulatory reviews.
“The changes, and ultimately a more normal housing market, will mean that our lender-placed revenues will decline, and so too will our profits in this business,” Chief Executive Officer Robert Pollock said today on a conference call with analysts. “The returns, though lower than recent years, will continue to be attractive.”
Assurant has submitted information about the new lender- placed insurance offering to New York regulators, who had questioned the pricing of its coverage. It has also filed fresh rates with California regulators. The insurer has met with Fannie Mae and Freddie Mac and will present its views at an August meeting of the National Association of Insurance Commissioners, Pollock said.
New York Department of Financial Services Superintendent Benjamin Lawsky is examining whether insurers profit excessively from the policies.
“We are working with regulators to introduce a next- generation lender-placed product, to address some of the unanticipated issues that have developed during the housing crisis,” Pollock said.
Premiums on the coverage may vary by location based on the chance a natural disaster will destroy the property, and deductibles can change based on considerations including the amount of coverage, he said.
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