Assurant Inc., a provider of specialized insurance and insurance-related products and services, reported its results for the fourth quarter and the year ended Dec. 31, 2004.
J. Kerry Clayton, president and CEO, noted, “One year after our initial public offering, Assurant continues to increase shareholder value and generate profitable growth through our leading specialty insurance businesses. Our ability to grow net operating income, in spite of the very rare occurrence of four significant hurricanes during the year, demonstrates the inherent strength of our diversified platform.”
Fourth quarter results
Net income in the fourth quarter of 2004 was $86.1 million, or $0.61 per pro forma share (see footnote 1 at the end of this release), versus a fourth quarter 2003 net loss of $77.6 million, or $(0.55) per pro forma share. Pursuant to the American Jobs Creation Act, Assurant in the fourth quarter of 2004 repatriated $110 million of capital from its Puerto Rico affiliate, which resulted in an additional tax charge, net of certain other tax adjustments, of $8.7 million. The year-ago period included a one-time after tax interest premium of $133.8 million on the redemption of mandatorily redeemable preferred securities prior to the initial public offering.
Net operating income for the fourth quarter of 2004 increased 15.6% to $86.5 million, or $0.62 per pro forma share, compared to fourth quarter 2003 net operating income of $74.8 million, or $0.53 per pro forma share. Net operating income was reduced by the one time $8.7 million or $0.06 per share tax adjustment. Net operating income excludes capital gains and losses, IPO-related expenses and interest premium on redemption of mandatorily redeemable preferred securities.
Net earned premiums of $1.6 billion in the fourth quarter of 2004 are up slightly from the same period in 2003.
Net investment income in the fourth quarter of 2004 increased to $163.3 million from $150.7 million in the fourth quarter of 2003 primarily as a result of an increase in invested assets. The yield on average invested assets and cash and cash equivalents was 5.55% in the fourth quarter of 2004, compared to 5.47% in the fourth quarter of 2003.
Twelve-month results
Net income in 2004 grew 88.8% to $350.6 million, or $2.48 per pro forma share, versus 2003 net income of $185.7 million or $1.31 per pro forma share. Excluding the 2003 one-time interest premium paid of $133.8 million on the redemption of preferred securities of subsidiary trusts prior to the initial public offering, 2004 net income grew 9.7%.
Net operating income for the 12 months of 2004 grew 4.8% to $345.0 million, or $2.44 per pro forma share, compared to twelve months 2003 net operating income of $329.2 million, or $2.31 per pro forma share. Net operating income excludes capital gains, loss on disposal of business, IPO-related expenses and interest premium on redemption of mandatorily redeemable preferred securities.
Net earned premiums in 2004 grew 5.3% to $6.5 billion from $6.2 billion in 2003, driven primarily by premium growth in Assurant Health and Assurant Solutions.
Net investment income in the 12 months of 2004 increased to $634.7 million from $607.3 million in the 12 months of 2003 as a result of an increase in invested assets. The yield on average invested assets and cash and cash equivalents was 5.46% for the 12 months of 2004, compared to 5.61% for the 12 months of 2003.
Assurant Solutions fourth quarter 2004 net operating income was $44.6 million, up 34.7% from fourth quarter 2003 net operating income of $33.1 million. Net operating income for the fourth quarter increased due to significantly reduced loss experience in the specialty property business.
Net operating income for the 12 months in 2004 was $126.2 million, down 5.3% from $133.2 million in the 12 months of 2003. Net operating income decreased due to the unprecedented claims activity from four hurricanes during the third quarter of 2004. Total pre-tax catastrophe losses, net of reinsurance recoveries, for 2004 were $93.1 million, compared with $29.7 million in 2003.
Assurant Solutions fourth quarter 2004 net earned premiums decreased 2.0% to $612.2 million from $625.0 million in the same year-ago period. Net earned premiums for the year grew 3.7% to $2.45 billion from $2.36 billion in 2003. The change in net earned premiums was primarily due to overall growth in the specialty property business, extended service contract business and international businesses, offset somewhat by the runoff in domestic credit insurance.
Assurant Health fourth quarter 2004 net operating income increased 18.7% to $33.7 million from $28.4 million in the same period in 2003. Net operating income for the 12 months of 2004 grew 30.8% to $158.3 million from $121.0 million in the 12 months of 2003. The increases in net operating income for the fourth quarter and the 12-month period of 2004 were primarily due to individual medical premium growth, and a favorable combined ratio, offset somewhat by expenses related to second-generation HSA product development and pilot testing of direct-to-consumer marketing programs.
Assurant Health fourth quarter 2004 net earned premiums grew 4.5% to $557.8 million from $533.7 million in the same period in 2003. Net earned premiums in 2004 increased 11.1% to $2.2 billion from $2.0 billion in 2003. Net earned premium growth is attributable to the individual medical insurance business, including premium rate increases, and the successful introduction of individual medical insurance policies that included an HSA.
Assurant Employee Benefits fourth quarter 2004 net operating income increased 54.3% to $20.0 million from net operating income of $12.9 million in the same period of 2003. Net operating income for 2004 increased 1.0% to $62.2 million from $61.6 million in 2003. Excluding a 2003 after tax reserve release of $11.5 million, net operating income for 2004 increased 24.2%. Net operating income for the fourth quarter and 12 months of 2004 increased primarily due to continued improvements in loss experience in disability insurance and increased investment income.
Assurant Employee Benefits fourth quarter 2004 net earned premiums grew 2.3% to $343.8 million from $336.1 million in the same period of 2003. Net earned premiums in 2004 grew 1.6% to $1.28 billion from $1.26 billion in 2003. Net earned premium increases were primarily driven by higher disability premiums.
Assurant Preneed fourth quarter 2004 net operating income increased 6.6% to $8.7 million from net operating income of $8.2 million in the same period of 2003. Net operating income for 2004 decreased 5.0% to $34.2 million from $36.0 million in 2003. The decrease in net operating income in 2004 was attributable to a reduction in investment yields resulting from continued low new money rates. The increase in net operating income for the fourth quarter is due to the reduction of policy crediting rates and expenses.
Assurant Preneed fourth quarter 2004 net earned premiums decreased 2.8% to $124.8 million from $128.4 million in the same period of 2003. Assurant Preneed 12 months 2004 net earned premiums of $526.1 million decreased 0.6% from $529.3 million in the 12 months of 2003, a result of a slight sales decrease due to lower policy crediting rates.
Topics Profit Loss
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