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Here's Why Investors Should Retain Assurant (AIZ) Stock

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·4 min read
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Assurant, Inc. AIZ has been gaining momentum on the back of strong performance across its segments, sufficient liquidity and prudent capital deployment.

The stock carries a VGM Score of B. VGM Score helps to identify stocks with the most attractive value, best growth and the most promising momentum.

The company has a decent earnings surprise history. It surpassed estimates in three of the trailing four quarters, the beat being 17.04%, on average.

The stock has seen its estimates for 2021 and 2022 move up nearly 1.23% and 5.33%, respectively, in the past seven days that reflects investors’ optimism.

Assurant continues to benefit from the solid performance of its Global Lifestyle segment, which contributed the lion’s share of total revenues in 2020. Increased mobile subscriber base with 54 million through new and expanded partnerships in Connected Living are expected to boost this segment’s performance in the days ahead.

For the full year of 2021, it expects continued growth in Global Lifestyle's net operating income, with growth more heavily weighted toward the second half of the year.

Mobile, new and expanded programs as well as contributions from recent acquisitions are expected to lead to earnings expansion in 2021.

Solid operational performance in Assurant is likely to be driven by strong results in global housing and continued growth in Global Lifestyle particularly Connected Living.

Growth in U.S. sales and increased base sales since the second quarter of 2020 have significantly driven the performance of Global Preneed, another segment of the company. Despite the global pandemic, the company expects Preneed earnings in 2021 to be better than 2020 on the back of strength of the business. Further, it continued to produce strong cash flows with the high quality $6-billion asset base.

The pandemic did not materially impact its liquidity and capital resources. The company boasts a solid balance sheet with high liquidity of $407.2 million and improving leverage. Its debt to capital of 27.4% betters the industry average of 29.9%. Its capital and liquidity positions remain strong, supported by robust cash flows generated by Global Lifestyle and Global Housing.

The multi-line insurer had returned approximately $880 million in the last two years. In the first quarter of 2021, it authorized a share buyback program to return more value to investors. The latest authorization will allow the company to spend up to $600 million to repurchase its common stock. It expects to complete three-year $1.35 billion capital return objectives to shareholders in 2021. At present, it has $770 million remaining in share repurchase authorization. The company raised its dividend at a seven-year (2014-2021) CAGR of 14.9% and the company’s current dividend yield stands at 1.9%.

Moreover, return on equity (ROE), reflecting the company’s efficient utilization of its shareholders’ funds to generate earnings, has been increasing over the past several years. Its trailing twelve months ROE of 9.2% betters the industry average of 7.7%.

Shares of this Zacks Rank #3 (Hold) multi-line insurer have underperformed the industry in a year’s time. The stock has gained 62.4% compared with the industry’s increase of 88.1%.



Nevertheless, the Zacks Consensus Estimate for 2021 and 2022 earnings per share is pegged at $10.68 and $12.44, indicating year-over-year increase of nearly 23.7% and 16.4%, respectively.

Key Players

Some better-ranked players in the multi-line insurance industry include Old Republic International Corporation ORI, James River Group Holdings Ltd. JRVR and SelectQuote, Inc. SLQT. While Old Republic International sports a Zacks Rank #1 (Strong Buy), James River Group and SelectQuote carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Old Republic International has a trailing four-quarter earnings surprise of 65.77%, on average.

James River Group surpassed estimates in three of the last four quarters (While missing in one), with the average being 11.63%.

SelectQuote surpassed estimates in three of the last four quarters (while missing in one), with the average being 121.53%.

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Assurant, Inc. (AIZ) : Free Stock Analysis Report

Old Republic International Corporation (ORI) : Free Stock Analysis Report

James River Group Holdings, Ltd. (JRVR) : Free Stock Analysis Report

SelectQuote, Inc. (SLQT) : Free Stock Analysis Report

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