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Assurant (AIZ) Prices 2.650% $350 Senior Unsecured Notes

·3 min read

Assurant, Inc. AIZ announced the pricing of $350 million aggregate principal amount of senior notes. The notes carry an interest rate of 2.650% and are scheduled to mature in 2032.

The net proceeds from the sale of the notes is expected to be nearly $346.2 million, after deducting underwriting discounts and commissions and estimated offering expenses payable.

The company intends to deploy the net proceeds to redeem $350 million outstanding principal amount of its 4.00% Senior Notes due 2023 and to pay related premiums, fees and expenses.

Assurant displayed prudence by issuing senior notes amid a low interest rate environment to procure funds and enhance financial flexibility without affecting liquidity. Assurant ended the first quarter with $332 million of holding company liquidity, which is $107 million above the current minimum target level.

By capitalizing on the low interest rate environment, the company is also attempting to reduce its interest burden, thus facilitating margin expansion. Also, its operational strength should enable it to service debt uninterruptedly, thereby maintaining the stock’s creditworthiness.

The debt level of the company has decreased over the last few years and its debt to capital has improved. As of Mar 31, 2021, long-term debt of the company was about $2.2 billion, down 2.2% from 2020 end. Debt-to-equity ratio was 27.4 at first-quarter 2021 end, almost in line with 2020 end level and compared favorably with the industry’s measure of 30.1%. Nonetheless, the latest offering will increase the debt-to-capital ratio by 310 basis points.

Further, times interest earned of 6.7 at first-quarter end remained higher than the fourth-quarter end figure of 5.9 and compared favorably with the industry’s measure of 2.3. The firm’s times interest earned ratio has been improving over the years. The improvement in this ratio indicates that the firm will be able to meet current obligations in the near future without any difficulties.

Shares of this Zacks Rank #3 (Hold) multi-line insurer have gained 48.2% in a year’s time, outperforming the industry’s increase of 37%. We expect strong segmental performance along with a robust capital position to continue driving the stock in the near term.

Zacks Investment Research
Zacks Investment Research

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Stocks to Consider

Some better-ranked stocks in the multi-line insurance industry include Prudential Financial, Inc. PRU, Old Republic International Corporation ORI and MetLife, Inc. MET, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Prudential surpassed estimates in each of the last four quarters, with the average earnings surprise being 24.36%.

Old Republic surpassed estimates in each of the last four quarters, with the average beat being 53.01%.

MetLife surpassed estimates in three of the last four quarters and missed in one, with the average earnings surprise being 18.16%.

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