Assurant Buys Field Asset Services
The acquisition of Field Asset Services by Assurant Specialty Property, a segment of Assurant Inc. (AIZ), did not create a significant reaction among the investors community. Despite optimism over the current acquisition, share price inched down 0.3% to close at $54.19 yesterday likely because of broader market fundamentals.
Field Asset Services, a company specializing in providing service related to property preservation, restoration and inspection, has been bought from FirstService Corporation in a transaction valued $55 million.
Field Asset Services will be known as Assurant Field Asset Services and will consist of the employees of both Assurant Property Advantage and Field Asset Services. The buyout will be slightly accretive to the company’s 2014 earnings. The Zacks Consensus Estimate for 2014 is currently pegged at $5.97, translating to a year over year improvement of 5.6%. We expect the estimate to rise as analysts incorporate the accretion in their estimates.
With its network of more than 25 mortgage servicing, asset management and investor clients, Field Asset Services is a perfect compliment for Assurant Specialty Property’s field services business. Via this line of business, Assurant provides services like property inspection, preservation as well as repairs to the mortgagers. This service helps in restoration of values of the mortgaged homes portfolio. Assurant’s field service business was started in 2011 under the name of Assurant Property Advantage.
Assurant’s Specialty Property has shown favorable performance over the past few quarters, driven by high placement rates and market share from lender’s consolidation. However, the high margins witnessed by the segment is not expected to be sustained over the long term led by regulator-mandated price cuts and improving housing market conditions which will likely lower placement rates.
We believe this step has been taken by the company in order to preserve earnings from the segment. Going forward we expect the segment to introduce additional strategies for long term growth.
Assurant carries a Zacks Rank #4 (Sell). Other players – Eastern Insurance Holdings, Inc. (EIHI), FBL Financial Group Inc. (FFG) with Zacks Rank #1 (Strong Buy) and Kemper Corp. (KMPR) with Zacks Rank #2 (Buy) are worth investing in.
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