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Will Global Lifestyle Aid Assurant's (AIZ) Q4 Earnings?

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Assurant, Inc. (AIZ - Free Report) is slated to report fourth-quarter 2017 results on Feb 7 after the market closes. The company delivered a positive surprise in all the trailing four quarters of 2017 with an average beat of +16.3%.

Let’s see, how things are shaping up for this announcement.

Results at Global Housing segment in the fourth quarter are likely to be weighed on by cat loss, stemming from California wildfires. Assurant estimates fourth-quarter pretax cat loss between $6 million and $8 million. Nonetheless, the company expects placement rate that declined in the third quarter to moderate in the quarter to be reported. However, net earned premiums and earnings are expected to have decreased in the period, attributable to ongoing normalization of lender-placed and soft performance in mortgage solutions. For 2017, the company anticipates Global Housing’s net earned premiums and net operating income to fall due to the ongoing normalization of lender-placed insurance business.

A combination of profitable growth and operating efficiencies has likely aided Global Lifestyle segment’s earnings growth and margin expansion. Growth in the wireless and automotive business is projected to have fueled domestic revenues.

Growth in mobile business as well as higher contributions from vehicle protection and expense efficiencies possibly has augmented operating income at Connected Living.

The company is likely to have benefited from growth in its fee-based capital-light offerings and lower loss at Corporate segment, partially offset by sluggish performance at lender-placed and legacy businesses. It expects net operating loss at Corporate segment between $55 million to $60 million, lower than the level in 2016.

Share buyback should boost the bottom line.

The Zacks Consensus Estimate for fourth-quarter earnings is pegged at $1.58 per share, up 243.5% year over year.

The company anticipates operating earnings (excluding catastrophe loss) in 2017 to increase from the year-ago level.

What Our Quantitative Model Predicts

Our proven model does not conclusively show that Assurant is likely to beat on earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a bullish Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. But that is not the case here as you will see below.

Zacks ESP: Assurant has an Earnings ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at $1.58. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Assurant, Inc. Price and EPS Surprise

 

Assurant, Inc. Price and EPS Surprise | Assurant, Inc. Quote

 

Zacks Rank: Assurant carries a Zacks Rank #3, which increases the predictive power of ESP. However, a company’s 0.00% ESP makes surprise prediction difficult.

We caution against all Sell-rated stocks (#4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Some stocks worth considering from the insurance industry with the right combination of elements to exceed estimates this time around are as follows:

CNA Financial Corporation (CNA - Free Report) is set to report fourth-quarter earnings on Feb 12. The stock has an Earnings ESP of +2.75% and a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.

CNO Financial Group, Inc. (CNO - Free Report) has an Earnings ESP of +1.61% and a Zacks Rank of 2. The company is scheduled to announce fourth-quarter earnings on Feb 13.

Sun Life Financial Inc. (SLF - Free Report) has an Earnings ESP of +0.71% and a Zacks Rank #3. The company is slated to release fourth-quarter earnings on Feb 14.

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