Here's Why Investors May Consider Betting on Assurant (AIZ) Now
Assurant, Inc. AIZ has been gaining momentum on the back of organic growth across distribution channels, improved income from higher yields, mobile subscribers and effective capital deployment.
Earnings Estimate
The Zacks Consensus Estimate for Assurant’s 2023 earnings is pegged at $13.59 per share, indicating a 22.1% increase from the year-ago reported figure on 2.6% higher revenues of $10.65 billion. The consensus estimate for 2024 earnings is pegged at $15.79 per share, indicating a 16.1% increase from the year-ago reported figure on 4% higher revenues of $11.08 billion.
Northbound Estimate Revision
The Zacks Consensus Estimate for 2023 and 2024 has moved 2.4% and 5.8% north, respectively, in the past 30 days, reflecting analysts’ optimism.
Earnings Surprise History
Assurant has a decent surprise history, beating earnings estimates in three of the last four quarters and missing in one, the average earnings surprise being 18.18%.
Zacks Rank
The company currently sports a Zacks Rank #1 (Strong Buy). Year to date, shares of AIZ have gained 5% against the industry’s decline of 11.7%.
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Return on Equity (ROE)
Assurant’s ROE for the trailing 12 months is 13.5%, better than the industry average of 9.7%. The same expanded 370 basis points year over year.
Business Tailwinds
Continued organic growth across distribution channels, extended service contracts and mobile subscribers should fuel growth of net earned premiums of Assurant in the long run.
Revenues from the Global Lifestyle segment comprising of Connected Living and Global Automotive business, increased 2.6% in the first quarter. AIZ’s U.S. Connected Living business will continue to drive growth in this segment.
The International business is also expected to stabilize as the multi-line insurer is taking steps to grow its footprint through expansion and expense handling. The Global Automotive business is expected to show steady progress as AIZ materializes benefits from its partnership with CNH Industrial.
Increasing the number of partnerships outside the United States will further boost its results. Adjusted EBITDA is expected to show modest growth for 2023.
The Global Housing segment will benefit from higher policy growth from new and existing clients. As inflation continues to improve, the segment’s bottom line should grow in the future. Ongoing expense actions should lead to improved performance, going forward. Adjusted EBITDA is expected to grow, driven by improved performance in Homeowners reflecting higher lender-placed net earned premiums.
Net investment income is expected to gain from higher income from higher yields on fixed maturity securities, and cash and cash equivalents, and increased income from commercial mortgage loans on real estate due to a rise in invested assets.
Assurant has a strong capital management policy. Its solid capital position supports effective capital deployment. At present, $274 million remains unused under the repurchase authorization. The insurer did not repurchase any shares in the first quarter but aims to resume soon. AIZ paid out dividends worth $37 million in the first quarter of 2023.
Attractive Valuation
Assurant shares are trading at a discount than the industry average. Its price-to-book value of 1.5X is lower than the industry average of 2.2X. Before the valuation expands, it is preferable to take a position in the stock.
AIZ has an impressive Value Score of B. Value stocks have a long history of showing superior returns. Back-tested results have shown that stocks with a Value Score of A or B combined with a Zacks Rank #1 or #2 (Buy) offer better returns.
Other Stocks to Consider
Some other top-ranked stocks from the multi-line insurance industry are Old Republic International Corporation ORI, American International Group, Inc. AIG and Lemonade, Inc. LMND. While Old Republic International and American International sport a Zacks Rank #1, Lemonade carries a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Old Republic International’s earnings surpassed estimates in each of the last four quarters, the average earnings surprise being 29.8%.
The Zacks Consensus Estimate for ORI’s 2023 and 2024 earnings has moved 9.1% and 6.4% north, respectively, in the past 60 days. In the past year, the insurer has gained 15.7%.
American International Group’s earnings surpassed estimates in three of the last four quarters and missed in one, the average earnings surprise being 9.22%.
The Zacks Consensus Estimate for AIG’s 2023 and 2024 earnings implies 42.6% and 20.8% year-over-year growth, respectively. In the past year, the insurer has gained 13.8%.
Lemonade beat earnings estimates in three of the last four quarters and missed in one, the average being 13.89%. In the past year, the insurer has lost 12.9%.
The Zacks Consensus Estimate for LMND’s 2023 and 2024 earnings implies a year-over-year increase of 15.9% and 9.7%, driven by 53.6% and 22.6% higher revenues of $394.30 million and $483.68 million, respectively.
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