Assurant Says Smaller Force-Placed Book Frees Capital
Assurant Inc. (AIZ) will have more capital to deploy as its business covering foreclosed homes shrinks amid an improving housing market, Chief Executive Officer Robert Pollock said.
In an improving economy, “our premium block will shrink,” Pollock said today at an investor conference in New York sponsored by KBW Inc. “It will release capital that’s backing the business and we can take and deploy that capital elsewhere.”
So-called force-placed coverage expanded as homeowners missed payments amid the worst housing crash in seven decades. Assurant and Sydney-based QBE Insurance Group Ltd. (QBE) control at least 90 percent of the U.S. market, Florida insurance commissioner Kevin McCarty said last month at a hearing on the coverage by the National Association of Insurance Commissioners.
Profit from the coverage will slip as New York-based Assurant introduces a new product amid regulatory reviews, Pollock said in July. Force-placed coverage accounted for 89 percent of profit at Assurant’s specialty property unit this year through June 30, according to a regulatory filing.
Assurant advanced 1 percent to $35.61 at 2:24 p.m. in New York. The stock has declined 13 percent this year, compared with the 7.2 percent gain of the 24-company KBW Insurance Index. (KIX)
Assurant and QBE have been investigated by California, Florida and New York over whether they charge too much for force-placed coverage, which protects mortgage holders from storm damage and vandalism when homeowners stop paying for their prior policies.
Premiums for the coverage 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.
Economic growth may boost other lines of business including coverage for tablet computers and mobile phones, Pollock said.
“As consumers buy goods that we can provide some kind of a warranty on, that works to our advantage,” Pollock said today. “If we could see consumer spending pick up, we’re going to benefit from that.”
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