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Assurant Unveils Property CAT Reinsurance Program For 2019

By Zacks Investment ResearchStock MarketsJul 08, 2019 10:33PM ET
www.investing.com/analysis/assurant-unveils-property-cat-reinsurance-program-for-2019-200438108
Assurant Unveils Property CAT Reinsurance Program For 2019
By Zacks Investment Research   |  Jul 08, 2019 10:33PM ET
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Assurant Inc. (NYSE:AIZ) announced its 2019 property catastrophe (CAT) reinsurance program worth $1.4 billion. Assurant’s premium for this reinsurance program is expected to be $165 million pre-tax.

A portion of the 2019 CAT reinsurance program is on a per-occurrence basis, which will provide protection of up to $1.16 billion. This amount is in excess of $80 million retention for the United States. Coverage in the Caribbean and Latin America markets increased as Assurant Specialty Property extended its services in select property markets where it offers residential dwelling policies, covering the structure, contents and liability. The program thus includes coverage in the Caribbean of up to $177.5 million in excess of $17.5 million, and the extension of 2018 Latin America protection of up to $427.5 million in excess of $4.5 million.

Considering the fact that Florida is a hurricane-prone state, Assurant is also opting for multiple storm protection coverage in the area to guard itself against further losses.

A reinsurance agreement is a kind of reimbursement program for an insurance company. Programs such as these lower the financial exposure of the company and enable them to better serve both homeowners as well as renters who suffer due to harsh weather conditions.

Given its exposure to catastrophes losses, the Zacks Rank #3 (Hold) insurer intends to mitigate the losses through reinsurance program. The company had earlier decided to place two-third of its 2019 catastrophe reinsurance program wherein it significantly reduced its per event retention from $120 million to $80 million pretax. This change is expected to further protect the insurer’s earnings and cash flows during an active cat year. Notably, catastrophe exposed businesses presently account for 36% segment net operating income versus 54% in 2015. Assurant increased its multi-year reinsurance from 28% in 2018 to 36% in 2019, adding stability at attractive pricing.

Assurant has taken an extended reinsurance cover as its business exposure in catastrophe prone areas has increased. The company offers its reinsurance program to more than 45 reinsurers, most of which carry strong investment grade ratings of A- or better from A.M. Best.

The company’s shares have surged 23.5% year to date, outperforming the industry's rise of 15.7%. Strong franchise, robust Solutions business, consistent cash flow generation, moderate debt ratio and disciplined capital management will likely help the company to maintain its solid run.



Stocks to Consider

Some belter-ranked insurers are American International Group, Inc. (NYSE:AIG) , Cigna Corporation (NYSE:CI) and Radian Group Inc. (NYSE:RDN) . Each of these stocks carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here..

AIG provides insurance products for commercial, institutional, and individual customers in North America and internationally. The company delivered positive surprise of 47.66% in the last reported quarter.

Cigna provides insurance and related products and services in the United States and internationally. The company delivered positive surprise of 4.28% in the last reported quarter.

Radian Group engages in the mortgage and real estate services business in the United States. The company delivered positive surprise of 7.35% in the last reported quarter.

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Radian Group Inc. (RDN): Free Stock Analysis Report

American International Group, Inc. (AIG): Free Stock Analysis Report

Assurant, Inc. (AIZ): Free Stock Analysis Report

Cigna Corporation (CI): Free Stock Analysis Report

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Zacks Investment Research
Assurant Unveils Property CAT Reinsurance Program For 2019
 
Assurant Unveils Property CAT Reinsurance Program For 2019

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