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Assurant (AIZ) Q1 Earnings Beat, Revenues Miss Estimates

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Assurant, Inc. AIZ reported first-quarter 2021 net operating income of $2.47 per share, which beat the Zacks Consensus Estimate by 26%. Quarterly results benefited from favorable loss experience in specialty P&C products, as well as continued growth across Global Automotive, Multifamily Housing and Connected Living businesses. However, the bottom line decreased 6.4% from the year-ago quarter.

Total revenues decreased 8.5% year over year to $2.4 billion due to lower fees and other income and net investment income. Moreover, the top line missed the Zacks Consensus Estimate by 0.7%.

Net investment income was down 8.7% year over year to $76.3 million.

Total benefits, loss and expenses decreased 4.6% to $2.2 billion, mainly on account of a decrease in selling, underwriting, general and administrative expenses and policyholder benefits.

Assurant, Inc. Price, Consensus and EPS Surprise

Assurant, Inc. Price, Consensus and EPS Surprise
Assurant, Inc. Price, Consensus and EPS Surprise

Assurant, Inc. price-consensus-eps-surprise-chart | Assurant, Inc. Quote

Segmental Performance

Revenues at Global Housing decreased 1% year over year to $493 million, primarily due to declines in specialty products, including the expected run-off from small commercial, as well as a modest decline in lender-placed. The decrease was partially offset by growth in Multifamily Housing.

Net operating income of $67.4 million declined 9% year over year due to $21.7 million of higher reportable catastrophes, primarily as a result of severe winter storms in Texas.

Revenues at Global Lifestyle declined 4% year over year to $1.9 billion, reflecting the impact of the previously disclosed mobile program contract change.

Net operating income of $129.1 million improved 7% year over year, primarily driven by strong results in Global Automotive, including a $4.3 million one-time benefit, as well as higher investment income and underlying global growth.

Net operating loss at Corporate & Other was $21.6 million, unchanged from the year-ago quarter’s net operating loss.

Financial Position

Liquidity was $332 million as of Mar 31, 2021, about $107 million higher than the company’s current targeted minimum level of $225 million.

Total assets decreased 0.5% to $44.4 billion as of Mar 31, 2021 from 2020 end. Total shareholders’ equity came in at $5.8 billion, down 2.2% year over year.

Share Repurchase and Dividend Update

In the first quarter, the company bought back 0.3 million shares for $42 million. From Apr 1 through Apr 30, the company repurchased additional 0.09 million shares for $14 million. It now has $731 million remaining under its current share buyback authorization.

The company’s total dividends amounted to $43 million in the quarter, including $38 million in common stock dividends and $5 million in preferred stock dividends.

Sale of Global Preneed

On Mar 9, 2021, Assurant agreed to sell its Global Preneed business and its related legal entities and assets to CUNA Mutual Group for approximately $1.3 billion in cash, with expected net proceeds of approximately $1.2 billion. Assurant expects to close the transaction by the end of the third quarter of 2021, pending regulatory closing conditions.

2021 Guidance

Assurant expects net operating income, excluding reportable catastrophes, per diluted share, to increase approximately 10% to 14% from $9.88 in 2020. This indicates an increase from the company’s prior outlook of 9% growth for full-year 2021.

Results for 2021 are expected to be driven primarily by growth within Global Lifestyle and a lower Corporate loss, as well as share repurchases, including the completion of the company’s three-year capital return objective and initial deployment of proceeds from the expected sale of Global Preneed.

Adjusted EBITDA, excluding reportable catastrophes, is expected to grow at a modestly higher rate than net operating income, excluding reportable catastrophes, due to double-digit adjusted EBITDA growth in Global Lifestyle.

Zacks Rank

Assurant currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Insurers

First-quarter earnings of Cincinnati Financial Corporation CINF, Arthur J. Gallagher & Co. AJG and Everest Re Group, Ltd. RE beat the respective Zacks Consensus Estimate.

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