Assurant (NYSE:AIZ), Inc. AIZ has been gaining momentum on the back of higher trade-in volumes, improved investment income and higher underlying global growth
Growth Projections
The Zacks Consensus Estimate for 2021 and 2022 earnings per share is pegged at $9.74 and $12.1, indicating year-over-year increase of 12.8% and 24.2%, respectively.
Earnings Surprise History
Assurant has a decent earnings surprise history. It beat estimates in three of the last four quarters and missed in the other one, with the average being 21.71%.
Zacks Rank & Price Performance
Assurant currently carries a Zacks Rank #2 (Buy). In the past year, the stock has rallied 56.7%, compared with the industry’s increase of 57.7%.
Return on Equity (ROE)
The company’s ROE for the trailing 12 months is 8.8%, better than the industry average of 8.4%. This reflects the company’s efficiency in utilizing shareholders’ fund.
Style Score
It has an impressive Value Score of B. Back-tested results show that stocks with a Value Score of A or B, when combined with a Zacks Rank #1 (Strong Buy) or 2 offer the best opportunities in the value investing space.
Business Tailwinds
Assurant expects net operating income, excluding reportable catastrophes, per diluted share, to increase nearly 10% to 14% from $9.88 in 2020, indicating an increase from the company’s prior outlook of 9% growth for 2021. This will be driven by high single-digit earnings growth mainly from Global Lifestyle and lower corporate loss.
While Connected Living continued to gain from increased mobile subscriber growth in Asia Pacific and North America, higher trade-in volumes and contributions from recent acquisitions, Global Automotive will likely benefit from organic global growth, higher investment income and lower claims activity.
Therefore, strong results in Global Automotive and Connected Living, higher investment income and underlying global growth are expected to fuel the performance of Global Lifestyle segment in the near term.
Assurant expects net operating income of Global Lifestyle to grow in high single digits in 2021, compared with $437 million reported in 2020.
The company boasts a solid balance sheet as well as improving leverage. It exited the first quarter with high liquidity of $332 million, which is around $107 million higher than the company’s current targeted minimum level of $225 million. Its debt to capital of 27.4% betters the industry average of 30.1%. Moreover, its times interest earned of 6.7 is better than the industry average of 2.3. This implies that its earnings are sufficient to cover interest obligations.
Furthermore, growth in less capital-intensive and risk businesses generate robust cash flows, which will provide capital and support growth.
Given its strong capital management policy, the board of directors approved a $900 million buyback program recently, marking the second authorization this year. It had $731 million remaining under its current share buyback authorization on Apr 30. The insurer raised its dividend at a seven-year (2014-2021) CAGR of 14.9% and it currently yields 1.7%. Assurant is on track to return $1.35 billion of capital to shareholders by 2021, of which it has already paid back more than 70%.
Other Stocks to Consider
Some other top-ranked insurance stocks are Old Republic International (NYSE:ORI) Corporation ORI, American Financial Group (NYSE:AFG), Inc. AFG and Horace Mann Educators (NYSE:HMN) Corporation HMN, each carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
The bottom line of Old Republic International surpassed estimates in each of the last four quarters, the average being 53.01%.
American Financial surpassed estimates in three of the last four quarters and missed in the other one, the average earnings surprise being 32.2%.
Horace Mann Educators’ earnings surpassed estimates in each of the last four quarters, the average being 33.43%.
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