The 2012 CAT reinsurance program includes the following aspects:
Participation in the Florida Hurricane Catastrophe Fund (:FHCF) program has been made mandatory for insurers writing property insurance in the state of
Assurant has chosen a coverage of 90% of losses, up to $465 million in excess of a $181 million retention, as FHCF is the most cost-effective reinsurance available.
The second part of the program is on a per-occurrence basis, which will provide protection of up to $1.5 billion in excess of $240 million retention. This coverage will be available in five parts or layers, with a co-participation of 5% by Assurant in the fifth layer.
The reinsurance agreement also includes catastrophe bonds issuance by Ibis Re Ltd., amounting to $280 million. In order to fund its obligations to Assurant, Ibis Re had issued catastrophe bonds in January 2012 and April 2010.
Taking into account the fact that
In 2012, the reinsurance program will reduce the net premiums earned by nearly $240 million. Assurant’s CAT reinsurance agreements are part of its catastrophe management strategy, which is intended to provide shareholders an acceptable return on the risks assumed in its property business and to reduce variability of earnings while providing protection to its customers.
The stock currently retains a Zacks #3 Rank, which translates into a short-term Hold rating. Considering the fundamentals, we are also maintaining our long-term Neutral recommendation on the shares.Read the Full Research Report on AIZ
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