Assurant Inc is a premier provider of specialized insurance products and related services in North America and selected other international markets. The four key businesses Assurant Employee Benefits; Assurant Health; Assurant Solutions; and Assurant Specialty Property have partnered with clients who are leaders in their industries and have built leadership positions in a number of specialty insurance market segments in the U.S. and selected international markets. The Assurant business units provide creditor placed homeowners insurance; manufactured housing homeowners insurance; debt protection administration; credit-related insurance; warranties and extended service contracts; individual health and small employer group health insurance; group dental insurance; group disability insurance; group life insurance; and pre-funded funeral insurance. Assurant Inc. has a market cap of $2.9 billion; its shares were traded at around $24.58 with a P/E ratio of 5.2 and P/S ratio of 0.3. The dividend yield of Assurant Inc. stocks is 2.3%.
Highlight of Business Operations:Management believes the Company will have sufficient liquidity to satisfy its needs over the next twelve months. For the three months ended March 31, 2009, net cash used in operating activities totaled $(267,156); net cash used in investing activities totaled $(35,155) and net cash used in financing activities totaled $(74,034). We had $664,339 in cash and cash equivalents as of March 31, 2009. Please see Liquidity and Capital Resources, below for further details.
First Quarter 2009 had a net income of $80,581, a decrease of $106,249, or 57%, compared with $186,830 in net income for First Quarter 2008. The decrease was primarily due to less favorable underwriting results from our four operating segments, a decline of $12,542, after-tax, in net investment income due to lower average invested assets and lower investment yields and an $8,155, after-tax, increase in net realized losses on investments due primarily to realized losses on sales of investments.
Segment net income decreased $17,246, or 36%, to $30,311 for First Quarter 2009 from $47,557 for First Quarter 2008. The decrease was primarily due to $11,700 (after-tax) of income related to the accrual of contractual receivables established for certain domestic service contracts and unfavorable loss experience primarily in our United Kingdom (UK) credit insurance business in First Quarter 2009 compared with First Quarter 2008. In addition, net investment income decreased $5,678 (after-tax) in First Quarter 2009 compared with the same period last year due to lower average invested assets and lower investment yields. These decreases were partially offset by improved underwriting results from our domestic businesses including earnings from acquisitions made in our domestic service contract business in the latter part of 2008 and improved underwriting results in our international business, excluding the UK credit business discussed above.
Total revenues decreased $39,866, or 5%, to $794,638 for First Quarter 2009 from $834,504 for First Quarter 2008. The decrease is primarily attributable to reduced net earned premiums and other considerations of $38,881, primarily resulting from our application of Statement of Financial Accounting Standards (FAS) No. 97, Accounting and Reporting by Insurance Enterprises for Certain Long-Duration Contracts and for Realized Gains and Losses from the Sale of Investments (FAS 97), beginning January 1, 2009 for new Preneed life insurance policies in which death benefit increases are determined at the discretion of the Company. These types of policies will now be accounted for as universal life contracts. For contracts sold prior to January 1, 2009, these types of Preneed life insurance sales were accounted for and will continue to be accounted for under FAS No. 60, Accounting and Reporting by Insurance Enterprises (FAS 60). The difference between reporting in accordance with FAS 97 compared with FAS 60 is not material but impacted various income statement captions including net earned premiums and other considerations; however it had no impact on our overall net income. Absent this item, net earned premiums would have decreased by approximately $7,000, or 1%. The decrease in net earned premiums was also related to the continued runoff of our domestic credit insurance and the Preneed independent U.S. businesses and the unfavorable impact of foreign exchange. These declines were partially offset by higher revenues in our domestic service contract business from premiums written in prior periods as well as growth in our international service contract business from both new and existing clients. Also contributing to the decrease in revenues was lower net investment income of $8,735, or 8%, due primarily to lower average invested assets and lower investment yields. Fees and other income increased $7,750, or 18%, primarily from the continued growth of our service contract businesses mostly resulting from acquisitions made in the latter part of 2008 and the application of FAS 97 for our Preneed business.
Gross written premiums decreased $213,333, or 24%, to $681,139 for First Quarter 2009 from $894,472 for First Quarter 2008. Gross written premiums from our domestic service contract business decreased $146,928, primarily due to a client bankruptcy as well as lower retail and auto sales. Gross written premiums from our international credit business decreased $47,833 primarily driven by the unfavorable impact of foreign exchange rates as the U.S. dollar strengthened against international currencies and the slowdown in the UK mortgage market. This was partially offset by growth in other countries from increased marketing efforts and strong client production. Gross written premiums from our domestic credit insurance business decreased $16,995, due to the continued runoff of this product line. Gross written premiums in our international service contract business increased $6,068 attributable to growth from both new and existing clients, which is consistent with our international expansion strategy. This growth was partially offset by the unfavorable impact of foreign exchange rates. Preneed face sales were relatively consistent, decreasing $1,300.
Total benefits, losses and expenses decreased $14,587, or 2%, to $747,626 for First Quarter 2009 from $762,213 for First Quarter 2008. Policyholder benefits decreased $14,658, primarily due to the above-mentioned application of FAS 97 in our Preneed business. This was offset by higher losses related to growth in net earned premiums from our domestic service contract business, combined with unfavorable loss experience in our UK credit business, sold through the internet resulting from higher unemployment rates. Selling, underwriting and general expenses increased $71. General expenses increased $17,340, primarily due to higher expenses associated with the recent domestic service contract business acquisitions. Commissions, taxes, licenses and fees, of which amortization of DAC is a component, decreased $17,269, primarily due to the decrease in net earned premiums in our international business favorable impact of foreign exchange rates, and reduced commission expense resulting from the acquisitions in the latter part of 2008. These declines in First Quarter 2009 were partially offset by an $18,000 reduction in commission expense related to the accrual of contractual receivables established from certain domestic service contract clients recorded in First Quarter 2008.
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