Assurant (NYSE: AIZ) reported after-market hours today that their loss exposure to Hurricane Sandy will be $200-$220 million and this is the only insurable event that will cost them more than $5 million to date for the quarter. The quarterly (year-end) report is due in February 2013.
In after-tax terms, this translates into about $127-$140 million or about $1.60-1.76/diluted share. This is better than what I was expecting in terms of damage, although you could see this already baked into the market price when looking at a stock graph:
It became apparent that Hurricane Sandy would be causing significant damage to the New York area at the end of October and investors subsequently took the stock down farther than what was likely warranted.
In terms of capital reserves, Assurant’s holding company has $617.6 million in available capital as of the end of September, which they keep $250 million reserved away, so this upcoming loss, while unfavourable, is not going to interrupt the company from continuing to mint money with its share repurchase program. Needless to say, I still view Assurant as a very good opportunity at present for appreciation.
If the market decides to take Assurant’s stock price lower from present levels, I will continue to add to my position.