Assurant is likely to join Chubb as an insurance company forced to suspend stock buybacks as a result of Superstorm Sandy losses.

Assurant's losses, though, stem primarily from its involvement in the force-placed or lender-placed niche insurance market. Analysts say the losses could impact state regulator's plans to force Assurant to slash the premiums it charges in this product line.

California took such an action on Oct. 24, ordering Assurant to cut its force-placed premiums by 30.5 percent within 90 days.

Analysts are concerned that other states looking into the issue, such as Florida and New York, could follow suit, which could have a substantive impact on Assurant's earnings.

Sean Dargan of Macquarie Capital (USA) Inc., is slashing his fourth quarter earnings estimate for Assurant by almost 75 percent, from $1.59 to 33 cents a share.

John Nadel of Sterne Agee is dropping his earnings estimate for the fourth quarter to 99 cents per share from $1.54.

Assurant losses stem from force-placed and other coverages in the 10-state area affected by Sandy. Dargan estimates that Assurant has a 1.7 percent share of the market those areas.

At the same time, Dargan said the losses “could bolster Assurant's stance with state regulators that the premiums it charges in lender-placed insurance are justified given the risk the company assumes.”

Dargan and Nadel estimate Assurant's losses from the storm at between $320 million and $340 million.

Nadel estimates direct losses of $240 million, plus the need to pay reinsurance $80 million in automatic reinstatement premiums.

As a result, he sees Assurant reducing its plans to buy back $175 million in stock in the fourth quarter by $100 million. Dargan has a similar estimate.

Nadel says Assurant had already repurchased $23 million in stock this year through the third week of October.

Late Thursday, Chubb Corp, which is based in northern New Jersey and is a major player in the U.S. northeast, suspended share buybacks because it is unsure how large its losses will be from Superstorm Sandy.

Nadel says he expect the Assurant losses to come from a combination of its lender-placed homeowners business, lender-placed flood business and other lines such as renters and voluntary homeowners insurance.

Nadel says that American Security and American Bankers Insurance Co of Florida, Assurant's two largest P&C operating units, had $447 million of direct earned premiums (before reinsurance ceded) in states along the mid/north-Atlantic, Connecticut, the District of Columbia, Maryland, New Jersey, New York, Pennsylvania and Virginia, in 2011.

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Assurant Could Face Sandy Losses on Forced-Place Business, Bolstering Defense of Rates

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