Back to top

Image: Bigstock

Why Is Assurant (AIZ) Up 10.6% Since Last Earnings Report?

Read MoreHide Full Article

A month has gone by since the last earnings report for Assurant (AIZ - Free Report) . Shares have added about 10.6% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Assurant due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Assurant Q1 Earnings, Revenues Beat Estimates, Up Y/Y

Assurant, Inc. reported first-quarter 2020 net operating income of $2.64 per share, which beat the Zacks Consensus Estimate by 7.3%. The bottom line increased 19.4% from the year-ago quarter.

The results reflect higher mobile trade-in volumes and income from Global Automotive. Global Lifestyle earnings improved remarkably. Global Housing and Global Preneed segments too delivered improved income.

Total revenues improved 10.7% year over year to $2.6 billion, mainly attributable to higher premiums earned and fees and other income. Moreover, the top line exceeded the Zacks Consensus Estimate by 4.4%.

Net investment income was down 6.2% year over year to $156 million.

Total benefits, loss and expenses escalated 10.7% to $2.4 billion, mainly on account of a noticeable increase in selling, underwriting, general and administrative expenses.

Segmental Performance

Net earned premiums, fees and others at Global Housing remained flat year over year at $500 million.

Net operating income of $74.2 million improved 2% year over year driven by favorable non-catastrophe loss experience, the absence of losses within the small commercial business, which is now in run-off, as well as higher premium rates in lender-placed. It was partially offset by a reduction in policies in-force, including policies from the previously disclosed financially insolvent client.

Net earned premiums, fees and others at Global Lifestyle rose 16% year over year to $1.9 billion. This upside was primarily driven by higher mobile trade-in volumes and continued subscriber growth from recently added protection programs.

Net operating income of $120.9 million improved 20% year over year, driven by an increase in mobile subscribers from new and existing programs, as well as higher income from Global Automotive. This was partially offset by lower margins from mobile trade-in programs, in part due to the impact of COVID-19 and unfavorable foreign exchange.

Net earned premiums, fees and others at Global Preneed rose 9% year over year to $53.4 million, owing to continued growth in the United States from prefunded funeral policies as well as prior period sales of the Final Need product.

Net operating income increased 4% year over year to $12.3 million.

Net operating loss at Corporate & Other was $19.5 million, wider than the year-ago quarter’s net operating loss of $18.8 million due to lower investment income attributable to lower yielding and more liquid investable assets. It was partially offset by lower employee-related expenses, including travel.

Financial Position

Liquidity was $433 million as of Mar 31, 2020, about $208 million higher than the company’s current targeted minimum level of $225 million.

Total assets decreased 2% to $43.4 billion as of Mar 31, 2020 from 2019 end.

Total shareholders’ equity came in at $5.4 billion, down 5% year over year.

Share Repurchase and Dividend Update

In the first quarter, the company bought back 0.5 million shares for $57 million. From Apr 1 through May 1, the company repurchased additional 0.2 million shares for $18 million. It now has $411 million remaining under its current share buyback authorization.

The company’s total dividends amounted to $43 million in the quarter, including $38 million in common stock dividends and $5 million in preferred stock dividends.

2020 Guidance

Assurant suspended its 2020 outlook due to the uncertainty regarding the duration of the COVID-19 pandemic and its impact on the broader economy. The company will continue to monitor this evolving situation and take additional steps to sustain its strong financial position in the long term.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates revision. The consensus estimate has shifted -8.91% due to these changes.

VGM Scores

Currently, Assurant has a poor Growth Score of F, however its Momentum Score is doing a lot better with a B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Assurant has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


Assurant, Inc. (AIZ) - free report >>

Published in