On Apr 8, 2013, shares of Assurant Inc. (AIZ) hit a 52-week high of $45.78.
Assurant is well placed to benefit from the gradually improving insurance pricing cycle. The company’s Assurant Solutions segment has been performing well over the past several quarters. The company has also taken several steps to improve business in the international arena.
Over the longer time horizon, the international business is anticipated to continue growing steadily, and the domestic business should rebound as the economy improves and consumer electronics spending recovers, leading to overall revenue growth.
Moreover, at Assurant Health insured membership is expected to increase as consumers look for affordable health care alternatives.
Assurant has a very good capital management policy in place. Traditionally Assurant has been utilizing 50% of its free cash flow for repurchasing shares.
Assurant’s Specialty property business is expected to see a decline in placement rates and will likely worsen with the impact of price reductions -- thereby resulting in a plunge in revenues over the next two years.
With respect to earnings trend, Assurant delivered positive earnings surprise in all four quarters of 2012 with an average of 46.21%. The Zacks Consensus Estimate for the first quarter is currently pegged at $1.53 per share. Assurant is scheduled to release its first-quarter 2013 earnings results on Apr 24.
Valuation for Assurant looks attractive. The shares are trading at a 16.7% discount to the peer group average on price-to-earnings basis and at a 6.1% premium on a price-to-book basis. Nevertheless, return on equity is nearly 63% higher than the peer group average. Also, the 1-year return from the stock is 16.9%, much above S&P’s return of 11.8%.
Assurant presently carries a Zacks Rank # 2 (Buy). Other insurers like CIGNA Corp. ( CI) , MGIC Investment Corp. ( MTG) and FBL Financial Group Inc. ( FFG) among others, carry a favorable Zacks Rank # 2 (Buy) and appear impressive.
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