Assurant Inc. plans to write off about $306 million in goodwill in the fourth quarter to account for the effects of regulatory and economic changes on health and employee benefits operations.
The pending write-down is the result of annual impairment testing, and it will lead to a non-cash charge that should not affect Assurant's business operations, cash flow or regulatory capital ratios, or to result in future cash expenditures, Assurant, New York (NYSE:AIZ), says in a report filed with the U.S. Securities and Exchange Commission.
"Factors underlying the impairment charge include the effects of health care reform, the low interest rate environment, continuing high unemployment and the slow pace of the economic recovery," Assurant says.
Standard & Poor's Ratings Services, New York, says the write-down will have no effect on its views on Assurant, because S&P excludes goodwill when analyzing companies' capital levels.
Insurance securities analysts at Sterne Agee Group Inc., New York, say the impairment is "not much of a surprise."
The interest rates that insurers can get on investment portfolios have risen somewhat since late-summer lows, and there was some hope that the higher rates might be helping the benefits unit, the analysts say.
Few other large, publicly traded benefits companies have been carrying much goodwill on their books, the analysts say.
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