Assurant Specialty Property, a unit of multiline insurer Assurant Inc. (AIZ) announced that it will divest its subsidiary, American Reliable Insurance Company, to Global Indemnity Group, Inc., a subsidiary of Global Indemnity plc (GBLI). The sale will fetch Assurant $114 million in cash, which it expects to invest in high growth return business.

Assurant’s Specialty Property has given favorable performance over the past many quarters, driven by high placement rates and market share from lender’s consolidation. However, the high margins witnessed by the segment is not expected to continue over the long term led by regulator-mandated price cuts and improving housing market conditions which will likely lower placement rates and shrink its lender-placed book of business.

In this backdrop, Assurant has been seeking to offset the profit that it expects to lose by investing in targeted growth areas promising higher return on equity. Currently, high growth is expected from the company’s Solutions segment which has achieved its quarterly goal of $50 million of net operating income much earlier than expected. The company is also contemplating small to mid-sized acquisitions to beef up its specialty business.

Assurant has been working consistently to realign its Specialty Property business (generating over 60% of the company’s earnings) by deleting and adding business. Last October, the company had acquired Field Asset Services, a company specializing in service related to property preservation, restoration and inspection, for $50 million. This acquisition perfectly complemented the segment’s pre-existing Assurant Specialty Property’s field services business via which the segment provides services like property inspection, preservation as well as repairs to mortgagers.

This April, the segment acquired StreetLinks LLC for about $60 million in cash to expand appraisal services for the mortgage industry.

Last month, the segment took over eMortgage Logic to provide new services such as property appraisals, regulatory and compliance services, valuation technology and local market analytics in the mortgage industry. The purchase involved an initial payment of $17 million, and a possible earnout payment based on future performance.

eMortgage Logic is expected to generate approximately $35 million in fee income annually from mortgage servicing and capital market customers. This would directly enhance the company’s earnings.

In the last reported second quarter, Specialty Property’s revenue growth was boosted by incremental fee income from the StreetLinks and Field Asset Services acquisitions. For 2014, the company expects Specialty Property net earned premiums and fees to increase slightly from 2013, in part aided by contributions from acquisitions and roughly flat lender-placed insurance revenue.

Assurant is expected to release third-quarter 2014 earnings on Oct 29, after the market close. The stock’s Zacks Rank #3 (Hold) coupled with an Earnings ESPof +1.3% makes itlikely for the company to beat earnings estimates.

Some better-ranked players include American International Group, Inc. (AIG) and Horace Mann Educators Corp. (HMN). Both these stocks carry a Zacks Rank # 2 (Buy).

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