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Macquarie not seeing 'obvious' buyer for Assurant's health segment

Written by Jasir Jawaid

Macquarie Capital has upgraded its rating on Assurant Inc. on news that the company is planning separate auctions for its health and employee benefits businesses.

Assurant executives, on a May 6 earnings call, said the company would not sell these segments as a packaged deal. Assurant hopes to sell the businesses over the next several months, though it thinks the employee benefits segment has a better sale potential. As for its health segment, the company has a contingency plan for winding down the business by 2016 if a sale does not happen.

In a May 7 note, analyst Sean Dargan said he does not see "an obvious buyer" for the health business due to the regulatory climate and expects it to be put in runoff. He views positively a potential exit from the health insurance market.

"While we still think the lender-placed insurance portion of Specialty Property will be cyclically challenged, the company's planned exit of two capital-intensive businesses should increase free cash flow," Dargan said.

The analyst raised the price target to $70 from $55. He moved the stock to "neutral" from "underperform."

This article was published by S&P Global Market Intelligence on the S&P Capital IQ Pro platform.


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