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