Rating Action on Assurant

A.M. Best Co. has conferred ‘bbb’ on senior debt, ‘bbb-’ on subordinated debt and ‘bb+’ on preferred stock of Assurant, Inc. (AIZ - Analyst Report). The outlook is stable.

They ratings came on the back of Assurant’s diversified business mix, strong presence in niche markets, solid operating results and superior capitalization.

Presently, Assurant’s property/casualty companies have a financial strength rating (FSR) of A (Excellent) and issuer credit ratings (ICR) of ‘a’ from A.M. Best. The life/health companies of Assurant have an FSR of A- (Excellent) and ICR of “a-”. The outlook of these ratings is stable.

Assurant reported third-quarter 2011 operating earnings of 79 cents per share, beating the Zacks Consensus Estimate by 2 cents but significantly lagging the prior-year quarter’s earnings of $1.27 per share.

The outperformance was led by higher international underwriting results, while the year-over-year decline was led by high catastrophe loss (cat loss) incidence, decline in premiums, as well as lower investment income.

The Zacks Consensus Estimate for fourth-quarter 2011 is $1.35 per share. For full years 2011 and 2012, the Zacks Consensus Estimates are, respectively, $4.25 per share and $5.53 per share.

Sustained solid operating performance coupled with strong risk-adjusted capitalization might likely fetch positive rating for Assurant going forward. On the contrary, if revenue and profitability are hurt by the stressed macro environment, Assurant might face rating downgrades.

We retain our Neutral recommendation on Assurant Inc. The quantitative Zacks #3 Rank (short term Hold rating) for the company indicates no clear directional pressure on the stock over the near term.

Headquartered in New York’s financial district, Assurant Inc. is a premier provider of specialized insurance products in North America and other selected markets overseas. The company competes with CIGNA Corporation (CI - Analyst Report) and First American Financial Corporation (FAF - Snapshot Report).

Read the full analyst report on AIZ

Read the full analyst report on CI

Read the full analyst report on FAF