Opinion

Felix Salmon

The Assurant plunge

By Felix Salmon
November 10, 2010

Shares in Assurant fell off a cliff this morning, on volume a good order of magnitude greater than is normally seen. What’s going on?

aiz.tiff

CNBC, this morning, was nice enough to cite my story from yesterday as the reason for the move, despite the fact that I added no new information to that which was already included in the American Banker article by Jeff Horwitz. But Horwitz’s story was out all day—I got sent the link just after 1pm, and it was definitely being passed around via email over the course of the afternoon, as the stock went basically nowhere. My post appeared after the market closed, and suddenly this morning Assurant shares plunged at the open.

If my post had anything to do with the move, I think it was due to framing: the American Banker headline, appropriately for a banking trade mag, concentrated on the mortgage servicers, while my headline talked about an “insurance scandal.” I also pulled out a powerful fact from 2,200 words in to the 3,000-word story—that Assurant’s force-placed insurance unit has accounted for $811 million of its $879 million in profits during the last two years.

Finally, I noted something Horwitz mentions only at the very end of the story—that the kind of activity he’s talking about is already illegal, under Dodd-Frank. That means that as soon as there’s a critical mass of publicity around the issue, someone somewhere is likely to crack down on this activity. Maybe regulators don’t spend a lot of time doing close reads of American Banker stories—but they do pay attention when people start talking explicitly about scandals.

Fundamentally, however, I think that what we’re seeing is a function of the amount the stock market in general has risen of late. Assurant is trading around $36 today, which is where it was as recently as the end of August; it was lower than $30 in February, and often something quite small is enough to spark a substantial drop in the share price if there’s a lot of nervousness in the market. The stampede of people rushing to sell Assurant stock this morning says to me that there’s a fair amount of fear in the market right now. And given the high degree of correlation in the market, I wouldn’t be at all surprised to see a big drop in broad indices one morning soon.

Comments
4 comments so far | RSS Comments RSS

Sometmes people just need simplified news pointing to the hole made by the smoking gun being pulled back into the shadows. Someone else did the legwork, but being a trumpet pointing attention to the mook in the corner who is to blame is sometimes even more important…as any politician will tell you.

==RED

Posted by REDruin | Report as abusive
 

Every thing can happen in an instant now and with twitter,and texting it brings a whole new meaning to up to the minute news, gossip en masse.

Your last statement also asked who was responsible for enforcement. As a consumer, I would start here as it falls under Insurance fraud.

*Call the toll-free hotline of the National Insurance Crime Bureau — 1-800-835-6422. The NICB is an internal watchdog.

BUT the Dodd Frank Bill is also now Consumer protection for large Corporations so Law broken:
SEC. 1463. REAL ESTATE SETTLEMENT PROCEDURES ACT OF 1974
AMENDMENTS

HR4173-page number….808

*RESPA is enforced by FDA
http://portal.hud.gov/portal/page/portal  /HUD/federal_housing_administration

there is no report button and report fraud search didn’t help…but I did finda hot-line number at OIG… BUT they do not give you a case number…sheesh your Government sites make ours look good and that’s NOT good! lol

*www.hud.gov/offices/oig/hotline/index.c fm+fraud&output=xml_no_dtd&ie=UTF-8&clie nt=hud2009_frontend&proxystylesheet=hud2 009_frontend&site=default_collection&acc ess=p&oe=ISO-8859-1

Making the regulations tighter means tightening up the report sites and having the staff to enforce them.

Posted by hsvkitty | Report as abusive
 

Not FDA, FHA, sorry. As a consumer (were I am an American consumer)I would complain about the sites and lack of information.

Posted by hsvkitty | Report as abusive
 

It is no surprise to me that Assurant’s stock price plunged. Especially after the whole Force Placed Insurance scandal. I guess what goes around, comes around…
Force Placed Insurance

Posted by ForcePlaced | Report as abusive
 

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