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Assurant Inc. (AIZ - Analyst Report) reported first quarter 2013 operating earnings of $1.35 per share, which lagged the Zacks Consensus Estimate of $1.58 per share. Earnings were however, significantly down 23% year over year. 
 
Besides, results for the quarter were affected by a settlement with the New York Department of Financial Services which amounted to $14 million. Earnings also suffered due to $10.0 million from catastrophe losses at Assurant Specialty Property.
 
Net income was $1.46 per share down 19% year over year. 
 
Total revenue for the reported quarter increased modestly by approximately 3.7% year over year to $2.15 billion, led by higher premiums, net realized gains on investment, and fees and other income.
 
Net earned premiums improved 5.3% year over year to $2.0 billion. Net investment decreased to $166.0 million from $172.3 million in the year-ago quarter.
 
Segment Performance
 
Premium earned at Assurant Solutions was up 10% year over year to $768.6 million, led by improvements in international as well as domestic businesses. Operating income, however, decreased 20% to $34.9 million.
 
Premiums earned at Assurant Specialty Property increased 9% year over year to $556.0 million due to positive developments in loan portfolios and multi-family housing products. Net operating income, however, dwindled 17% year over year to $94.2 million.
 
Net premiums earned at Assurant Health fell 7.0% year over year to $385.3 million attributable to decline in individual major medical policies as well as lower small group insured lives. Net operating loss of $5.3 million declined sharply by146% year over year. 
 
Net premiums earned by Assurant Employee Benefits segment declined 3% year over year to $257.6 million. This was as a result of the loss of two major clients in the disability line of business, partly mitigated by premium growth in voluntary and supplemental products. Net operating income decreased 33% year over year to $6.1 million.
 
Financial Position
 
The financial position of Assurant remains strong with $4.4 billion of equity capital as of Mar 31, 2013, which remained unchanged on a sequential basis. The company leverage ratio increased to 27.4% as of Mar 31, 2013 compared with 18.4% as of Dec 31, 2012.
 
Book value per share excluding accumulated and other comprehensive income, increased 2.0% to $54.90 from $53.87 at Dec 31, 2012. 
 
Assurant repurchased 6 million shares during the quarter for a total of $26.6 million.
 
Looking Ahead
 
For 2013, management expects its Specialty line of business to benefit from growth in multi-housing loans and higher volume in lender-placed loan portfolios. Its Solutions line will see higher top-line growth from increases in domestic as well as international businesses. The Health line of business is expected to see depressed earnings from the ongoing implementation of health care reform as well as a decline in investment income from real estate joint venture partnerships. The Employee Benefits business top line growth is expected to remain unchanged relative to 2012. However, a low interest rate will result in overall earnings decline of the segment.
 
Other players in the same industry CIGNA Corp. (CI - Analyst Report), Prudential Financial Inc. (PRU - Analyst Report) and MetLife Inc. (MET - Analyst Report), all carrying a Zacks Rank #2 (Buy) are expected to release first quarter earnings shortly.

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