Assurant Inc. (AIZ), facing reviews into whether it overcharges for insurance that some homeowners are compelled to buy, expanded disclosure about its profits after an inquiry from the U.S. Securities and Exchange Commission.
Premium revenue from so-called force-placed coverage was $36 million in New York and $54 million in California in the first six months of this year, New York-based Assurant said in its second-quarter regulatory filing after the correspondence with the SEC. The coverage accounted for 89 percent of profit at Assurant’s specialty property unit this year through June 30, according to the filing.
California, Florida and New York are pressing force-placed insurers to cut premiums amid inquiries into whether firms including Assurant and QBE Insurance Group Ltd. (QBE) charge too much. The National Association of Insurance Commissioners, an organization of state regulators, held a hearing on the coverage this month, and Assurant said other watchdogs may examine the business, also called lender-placed insurance.
“The company has experienced an increase in the number of inquiries from departments of insurance and other regulators,” Assurant said in a letter to the SEC dated June 29 and released today. “If in the aggregate such reviews lead to significant decreases in premium rates for the company’s lender-placed insurance products, our results of operations could be materially adversely affected.”
Assurant slipped 1.7 percent to $33.47 at 4:01 p.m. in New York, the biggest decline in the 24-company KBW Insurance Index. The insurer has dropped 18 percent this year.
Force-placed coverage is typically selected by lenders and paid for by borrowers, and the business expanded as homeowners missed payments amid the financial crisis. It protects the mortgage holder from storm damage and vandalism when homeowners stop paying for their prior policies. Assurant and Sydney-based QBE control at least 90 percent of the U.S. market, Kevin McCarty, Florida’s insurance commissioner, said this month.
The SEC asked Assurant Chief Executive Officer Robert Pollock, 57, in a June 15 letter for additional disclosure about revenue in New York and California. The commission said July 31 that it finished its review after responses from the company. The correspondence is typically made public after the completion of an evaluation.
“Like all registered companies, our filings are subject to review by the SEC,” Robert Byrd, a spokesman for Assurant, said in an e-mail. “We will continue to work cooperatively with regulators at the national and state level.”
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