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Why Is Assurant (AIZ) Up 4% Since Last Earnings Report?
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It has been about a month since the last earnings report for Assurant (AIZ - Free Report) . Shares have added about 4% in that time frame, underperforming 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 the most recent earnings report in order to get a better handle on the important drivers.
Assurant Q3 Earnings & Revenues Surpass Estimates
Assurant, Inc. reported third-quarter 2020 net operating income of $1.41 per share, which outpaced the Zacks Consensus Estimate by 50%. However, the bottom line declined 16.6% from the year-ago quarter.
The earnings reflect persistent growth in mobile subscribers within Global Lifestyle and prior period sales of the Final Need product within Global Preneed, which was partially offset by run-off of small commercial business within Global Housing and softer investment income.
Total revenues increased 0.1% year over year to $2.5 billion, primarily due to higher premiums. Moreover, the top line beat the Zacks Consensus Estimate by 2.1%.
Net investment income plunged 20.3% year over year to $135.1 million. Nevertheless, total benefits, loss and expenses declined 0.6% to $2.5 billion, mainly on account of a decline in policyholder benefits and selling, underwriting, general and administrative expenses and interest expense.
Segmental Performance
Net earned premiums, fees and others at Global Lifestyle increased 3% year over year to $1.8 billion. The uptick can primarily be attributed to prior period sales in Global Automotive as well as continued mobile subscriber growth. It was partially offset by lower mobile trade-in results and unfavorable foreign exchange.
Net operating income of $106.6 million improved 4% year over year, driven primarily by Connected Living mainly due to mobile from continued subscriber growth in North America and Asia Pacific, as well as improved profitability from extended service contracts. It was partially offset by lower investment income and unfavorable foreign exchange, as well as lower volumes and unfavorable loss experience in Global Financial Services, including impacts from COVID-19.
Net earned premiums, fees and others at Global Housing declined 4% year over year to $491.3 million. This was primarily due to the expected run-off of small commercial business and declines in lender-placed policies in-force from the previously disclosed financially insolvent client. The decrease was partially offset by continued growth in multifamily housing and specialty products. Net operating income of $13.1 million declined 69% year over year as third-quarter results included $87.0 million of reportable catastrophes, primarily due to Hurricane Laura.
Net earned premiums, fees and others at Global Preneed inched up 2% year over year to $51.9 million, driven by prior period sales of the Final Need product. Net operating income increased 78% year over year to $13.2 million.
Net operating loss at Corporate & Other was $23.5 million, wider than the year-ago quarter’s net operating loss of $20.8 million on account of lower investment income attributable to a higher concentration of more liquid investable assets with lower yields compared to the prior- year period.
Financial Position
Liquidity was $235 million as of Sep 30, 2020, about $132 million higher than the company’s current targeted minimum level of $225 million. Total assets declined 1.6% to $43.6 billion as of Sep 30, 2020 from 2019 end. Total shareholders’ equity came in at $5.9 billion, up 5% from the level at 2019 end.
Share Repurchase and Dividend Update
In the third quarter, the company bought back 0.57 million shares for $70 million. From Oct 1 through Oct 30, 2020, the company repurchased an additional 0.3 million shares for approximately $41 million. It now has $292 million remaining under its current share buyback authorization.
The company’s total dividends amounted to $43 million in the reported quarter, including $38 million in common stock dividends and $5 million in preferred stock dividends.
2020 Guidance
For the full year, Assurant estimates net operating income per share, excluding catastrophe losses, to rise in the band of 17-21% from the figure reported in 2019 ($9.21). The improvement can primarily be attributed to profitable growth and ongoing expense management across all business segments.
The company anticipates double-digit growth in net operating income, excluding catastrophes. The upside is likely to come on the back of earnings growth within Global Lifestyle and Global Housing.
For 2020, net operating loss in Corporate and Other is expected to be $90 million, mainly due to reduced investment income primarily from lower yields partially offset by lower general expenses. Interest expense and preferred dividends are expected to be approximately $81 million and $19 million, respectively.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month. The consensus estimate has shifted -6.71% due to these changes.
VGM Scores
At this time, Assurant has a nice Growth Score of B, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. 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. It's no surprise Assurant has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
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Why Is Assurant (AIZ) Up 4% Since Last Earnings Report?
It has been about a month since the last earnings report for Assurant (AIZ - Free Report) . Shares have added about 4% in that time frame, underperforming 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 the most recent earnings report in order to get a better handle on the important drivers.
Assurant Q3 Earnings & Revenues Surpass Estimates
Assurant, Inc. reported third-quarter 2020 net operating income of $1.41 per share, which outpaced the Zacks Consensus Estimate by 50%. However, the bottom line declined 16.6% from the year-ago quarter.
The earnings reflect persistent growth in mobile subscribers within Global Lifestyle and prior period sales of the Final Need product within Global Preneed, which was partially offset by run-off of small commercial business within Global Housing and softer investment income.
Total revenues increased 0.1% year over year to $2.5 billion, primarily due to higher premiums. Moreover, the top line beat the Zacks Consensus Estimate by 2.1%.
Net investment income plunged 20.3% year over year to $135.1 million. Nevertheless, total benefits, loss and expenses declined 0.6% to $2.5 billion, mainly on account of a decline in policyholder benefits and selling, underwriting, general and administrative expenses and interest expense.
Segmental Performance
Net earned premiums, fees and others at Global Lifestyle increased 3% year over year to $1.8 billion. The uptick can primarily be attributed to prior period sales in Global Automotive as well as continued mobile subscriber growth. It was partially offset by lower mobile trade-in results and unfavorable foreign exchange.
Net operating income of $106.6 million improved 4% year over year, driven primarily by Connected Living mainly due to mobile from continued subscriber growth in North America and Asia Pacific, as well as improved profitability from extended service contracts. It was partially offset by lower investment income and unfavorable foreign exchange, as well as lower volumes and unfavorable loss experience in Global Financial Services, including impacts from COVID-19.
Net earned premiums, fees and others at Global Housing declined 4% year over year to $491.3 million. This was primarily due to the expected run-off of small commercial business and declines in lender-placed policies in-force from the previously disclosed financially insolvent client. The decrease was partially offset by continued growth in multifamily housing and specialty products. Net operating income of $13.1 million declined 69% year over year as third-quarter results included $87.0 million of reportable catastrophes, primarily due to Hurricane Laura.
Net earned premiums, fees and others at Global Preneed inched up 2% year over year to $51.9 million, driven by prior period sales of the Final Need product. Net operating income increased 78% year over year to $13.2 million.
Net operating loss at Corporate & Other was $23.5 million, wider than the year-ago quarter’s net operating loss of $20.8 million on account of lower investment income attributable to a higher concentration of more liquid investable assets with lower yields compared to the prior- year period.
Financial Position
Liquidity was $235 million as of Sep 30, 2020, about $132 million higher than the company’s current targeted minimum level of $225 million. Total assets declined 1.6% to $43.6 billion as of Sep 30, 2020 from 2019 end. Total shareholders’ equity came in at $5.9 billion, up 5% from the level at 2019 end.
Share Repurchase and Dividend Update
In the third quarter, the company bought back 0.57 million shares for $70 million. From Oct 1 through Oct 30, 2020, the company repurchased an additional 0.3 million shares for approximately $41 million. It now has $292 million remaining under its current share buyback authorization.
The company’s total dividends amounted to $43 million in the reported quarter, including $38 million in common stock dividends and $5 million in preferred stock dividends.
2020 Guidance
For the full year, Assurant estimates net operating income per share, excluding catastrophe losses, to rise in the band of 17-21% from the figure reported in 2019 ($9.21). The improvement can primarily be attributed to profitable growth and ongoing expense management across all business segments.
The company anticipates double-digit growth in net operating income, excluding catastrophes. The upside is likely to come on the back of earnings growth within Global Lifestyle and Global Housing.
For 2020, net operating loss in Corporate and Other is expected to be $90 million, mainly due to reduced investment income primarily from lower yields partially offset by lower general expenses. Interest expense and preferred dividends are expected to be approximately $81 million and $19 million, respectively.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month. The consensus estimate has shifted -6.71% due to these changes.
VGM Scores
At this time, Assurant has a nice Growth Score of B, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. 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. It's no surprise Assurant has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.