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Assurant Surges 37% Year to Date: Will the Rally Continue?

Zacks Equity Research

Assurant Inc.’s AIZ shares have surged 37.2% year to date, outperforming the industry's rise of 5.7% and the Zacks S&P 500 composite’s increase of 15.2%. Focus on Specialty Property and Casualty, and Lifestyle Protection continues to drive the stock.

With market capitalization of $7.5 billion, average volume of shares traded in the last three months was 0.5 million.



 

A Look at Some of the Positives

This Zacks Rank #2 (Buy) global provider of risk management solutions in the housing and lifestyle markets has been pursuing strategic initiatives to expand its housing and lifestyle businesses through buyouts, ensuring a predictable and expanded earnings stream. The acquisition of The Warranty Group strengthened its position as an industry-leading lifestyle provider.

Assurant has an impressive VGM Score of A. This style score analyzes the growth prospects of a company.  It helps to identify stocks with the most attractive value, best growth, and most promising momentum.

Assurant delivered positive earnings surprise in the last 11 quarters, reflecting operational excellence. It expects 15% operating return on equity (ROE) by 2020 banking on expansion of fee-based capital-light businesses.

The top line at Global Lifestyle segment has been growing over the past several quarters. Continued growth at Connected Living and Global Automotive should help it to retain the momentum. Assurant projects at least 10% average annual growth in net operating income by 2021.

Pre-need is another important business for Solutions and remains a solid performer. The company expects 13% operating ROE by 2021 in Global Preeneed.

The company is realigning its business in Global Housing segment with an eye on higher returns. Operating ROE is expected to be 17-20% by 2021.

Assurant utilizes 50% of its free cash flow to enhance shareholders value. Its dividend has witnessed 5-year CAGR of 19% and yields 2%. The company has $670 million remaining under its current share buyback authorization. Assurant intends to return $1.35 billion capital through 2021.

The Zacks Consensus Estimate for 2019 and 2020 earnings indicates year-over-year improvement of 51% and 11%, respectively.

Strong franchise, robust Solutions business, consistent cash flow generation, moderate debt ratio and disciplined capital management positions the company well for long-term growth. The company projects operating EPS growth of 6-10% in 2019 and 12% average annual growth.  It has a favorable Growth Score of B. This style score identifies growth prospects of a company.

Banking on operational strength, the company has witnessed its 2019 and 2020 estimates move up about 2% in the past 30 days.

Other Stocks to Consider   

Some other top-ranked multi-line insurance stocks are James River Group Holdings JRVR , MGIC Investment MTG and Radian Group RDN.

James River provides specialty insurance and reinsurance services in the United States. The company delivered positive earnings surprise of 3.13% in the last reported quarter. The stock sports a Zacks Rank #1 (Strong Buy). You can seethe complete list of today’s Zacks #1 Rank  stocks here.

MGIC Investment provides private mortgage insurance, other mortgage credit risk management solutions, and ancillary services to lenders and government sponsored entities in the United States. The company delivered positive surprise of 12.20% in the last reported quarter.

Radian Group engages in the mortgage and real estate services business in the United States. The company delivered positive surprise of 14.29% in the last reported quarter.

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