Assurant Inc. (AIZ) slid the most since January after saying earnings would be reduced by the decision to cut rates in California under pressure from a regulator.
Assurant will lower prices 30.5 percent at the American Security unit, which sells home coverage that borrowers must buy when they miss payments on their initial policies, California Insurance Commissioner Dave Jones said yesterday. The firm declined 5.5 percent to $38.64 at 4:01 p.m. in New York.
Regulators in California, Florida and New York have been pressing providers of so-called force-placed policies to cut premiums amid inquiries into whether they charge too much. The coverage is typically selected by lenders and paid for by borrowers. The New York-based insurer, which dominates the market for the coverage along with QBE Insurance Group Ltd., said yesterday the California changes will cut annualized net income by about $18 million.
“We think a real risk to 2013-2014 earnings will come if other states demand premium rate cuts,” Sean Dargan, an analyst at Macquarie Group Ltd., wrote in a note dated yesterday. “New York may be next.”
To contact the reporter on this story: Susanna Pak in New York at email@example.com
To contact the editor responsible for this story: Dan Kraut at firstname.lastname@example.org