Assurant, Inc. Under Investor Investigation Over Possible Securities Laws Violations

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An investigation on behalf of investors of Assurant, Inc. (NYSE:AIZ) over possible violations of Federal Securities Laws by Assurant and others was announced.

The investigation by a law firm concerns on whether Assurant, Inc. (NYSE:AIZ) or others violated Federal Securities Laws. Assurant’s 12 month Total Revenue increased from $8.07billion in 2006 to $8.7billion in 2009. But while its total revenue increased its Net Income went from $715.42million in 2006 to $430.57million in 2009.

Shares of Assurant, Inc. (Public, NYSE:AIZ) rose from under $25 in 2004 to over $68 per share in July 2008. Until November 2008 AIZ shares lost substantially in value and traded on November 21, 2008 as low as $15.06 per share. AIZ shares recovered slightly before falling back to $17.19 per share on March 09. Since then AIZ shares consistently slowly increased in value to almost $42 per share in October 2010.

Specficially the investigation focuses on an November 10, 2010 articles published in the Amercian Banker under the title:” Ties to Insurers Could Land Mortgage Servicers in More Trouble”
The article stated as follows:“Evidence of abuses and self-dealing in the force-placed insurance industry suggests that there may be far larger problems in how servicers are handling distressed loans than the sloppy document recording that has been the recent focus of industry woes.
Behind banks’ servicing insurance practices lie conflicts of interest that align servicers and their insurer partners against borrowers and investors. [Most major services]receive commissions or reinsurance fees on the very same policies they purchase on investors’ and borrowers’ behalf. [..]The ‘commissions’ that [Assurant] paid . . . were in fact kickbacks,” the attorney wrote in a complaint still being litigated. . . .[…] The more vexing issue for Assurant, however, seems to be that giving the servicers part of the deal leaves less for the company. In a section discussing risks arising from servicer industry consolidation, Assurant warns that giant servicers are compressing margins and that it may receive a lower share of premiums if it provides them with bigger insurance deals.”
On November 10, 2010, Assurant’s common stock declined by $4.48 per share, more than 11%, to close at $35.66 per share. AIZ shares closed last weeks trading at $35.00 per share, roughly 16% down from its current 52weekHigh of $41.87 per share.