Monday February 27, 2012
by David Fried, editor The Buyback Letter
The Buyback Premium Portfolio is beating the S&P 500 by more than 30% since its inception in 2000.
Two new positions added to this portfolio are insurance providers Assurant (AIZ) and Torchmark (TMK). Here's our reasoning.
We have purchased Assurant several times in the last few years, most recently in August 2010.
A Fortune 500 company and a member of the S&P 500, Assurant is a premier provider of specialty insurance and insurance-related products and services, Assurant has more than $27 billion in assets and $8 billion in annual revenue.
It provides homeowners insurance, debt protection administration, credit insurance, warranties and extended services contracts, individual health and small employer group health insurance, group dental insurance, group disability insurance, group life insurance and pre-funded funeral insurance.
AIZ, a large developer and administrator of extended service contracts, has just released its new mobile application, MyClaim, the first of its kind in the industry.
The app allows consumers to enter, view and manage their extended service contract information using an Android device, iPhone or iPad.
Once a claims process has been initiated, policyholders also can track the status of their claim and reschedule service appointments directly through the app.
Early this month, AIZ reported fourth-quarter net income rose to $162.3 million from a net loss of $184.4 million a year earlier; management credited this up to targeting products more closely to consumers' needs. T
he company's net income for Oct.-Dec. last year was $1.73 a share, compared with a loss of $1.74 a share in the same period in 2010. Fourth-quarter revenue edged up to $2.11 billion from $2.10 billion.
For the full year, Assurant's net income nearly doubled, to $545.8 million, or $5.58 a share, from $279.2 million, or $2.50 a share, in 2010. Revenue fell to $8.27 billion from $8.53 billion.
Assurant has reduced shares outstanding in the last 12 months by 13.6%.
Torchmark is a holding company specializing in life and supplemental health insurance for "middle income" Americans marketed through multiple distribution channels including direct response, and exclusive and independent agencies.
Torchmark has several nationally recognized insurance subsidiaries. Globe Life And Accident is a direct-response provider of life insurance known for its administrative efficiencies. American Income Life provides individual life insurance to labor union members.
Liberty National Life, one of the oldest traditional life insurers in the Southeast, is the largest life insurer in its home state of Alabama. United American is a consumer-oriented provider of supplemental health insurance.
For the quarter ended Dec. 31, 2011, net income was $1.23 per share, compared with $ 1.28 per share for the year-ago quarter.
Net operating income for the quarter was $1.25 per share, compared with $1.12 per share for the year-ago quarter.
Net income for the year was $4.72 per share (compared with $4.20 per share), and net operating income was $4.68 per share (compared with $4.27 per share).
In the last 12 months, management has reduced shares outstanding by a whopping 15.2%.
Learn more about this financial newsletter at David Fried's The Buyback Letter.