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Assurant (AIZ) Up 0.4% Since Last Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for Assurant (AIZ - Free Report) . Shares have added about 0.4% 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 its most recent earnings report in order to get a better handle on the important drivers.
Assurant Q1 Earnings Beat, Revenues Miss Estimates
Assurant reported first-quarter 2021 net operating income of $2.47 per share, which beat the Zacks Consensus Estimate by 26%. Quarterly results benefited from favorable loss experience in specialty P&C products, as well as continued growth across Global Automotive, Multifamily Housing and Connected Living businesses. However, the bottom line decreased 6.4% from the year-ago quarter.
Total revenues decreased 8.5% year over year to $2.4 billion due to lower fees and other income and net investment income. Moreover, the top line missed the Zacks Consensus Estimate by 0.7%.
Net investment income was down 8.7% year over year to $76.3 million.
Total benefits, loss and expenses decreased 4.6% to $2.2 billion, mainly on account of a decrease in selling, underwriting, general and administrative expenses and policyholder benefits.
Segmental Performance
Revenue at Global Housing decreased 1% year over year to $493 million, primarily due to declines in specialty products, including the expected run-off from small commercial, as well as a modest decline in lender-placed. The decrease was partially offset by growth in Multifamily Housing. Net operating income of $67.4 million declined 9% year over year due to $21.7 million of higher reportable catastrophes, primarily as a result of severe winter storms in Texas.
Revenues at Global Lifestyle declined 4% year over year to $1.9 billion, reflecting the impact of the previously disclosed mobile program contract change. Net operating income of $129.1 million improved 7% year over year, primarily driven by strong results in Global Automotive, including a $4.3 million one-time benefit, as well as higher investment income and underlying global growth.
Net operating loss at Corporate & Other was $21.6 million, unchanged from the year-ago quarter’s net operating loss.
Financial Position
Liquidity was $332 million as of Mar 31, 2021, about $107 million higher than the company’s current targeted minimum level of $225 million. Total assets decreased 0.5% to $44.4 billion as of Mar 31, 2021 from 2020 end. Total shareholders’ equity came in at $5.8 billion, down 2.2% year over year.
Share Repurchase and Dividend Update
In the first quarter, the company bought back 0.3 million shares for $42 million. From Apr 1 through Apr 30, the company repurchased additional 0.09 million shares for $14 million. It now has $731 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.
Sale of Global Preneed
On Mar 9, 2021, Assurant agreed to sell its Global Preneed business and its related legal entities and assets to CUNA Mutual Group for approximately $1.3 billion in cash, with expected net proceeds of approximately $1.2 billion. Assurant expects to close the transaction by the end of the third quarter of 2021, pending regulatory closing conditions.
2021 Guidance
Assurant expects net operating income, excluding reportable catastrophes, per diluted share, to increase approximately 10% to 14% from $9.88 in 2020. This indicates an increase from the company’s prior outlook of 9% growth for full-year 2021.
Results for 2021 are expected to be driven primarily by growth within Global Lifestyle and a lower Corporate loss, as well as share repurchases, including the completion of the company’s three-year capital return objective and initial deployment of proceeds from the expected sale of Global Preneed.
Adjusted EBITDA, excluding reportable catastrophes, is expected to grow at a modestly higher rate than net operating income, excluding reportable catastrophes, due to double-digit adjusted EBITDA growth in Global Lifestyle.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision.
VGM Scores
At this time, Assurant has a poor Growth Score of F, however its Momentum Score is doing a lot better with a C. Charting a somewhat similar path, 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 trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Assurant has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Assurant (AIZ) Up 0.4% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Assurant (AIZ - Free Report) . Shares have added about 0.4% 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 its most recent earnings report in order to get a better handle on the important drivers.
Assurant Q1 Earnings Beat, Revenues Miss Estimates
Assurant reported first-quarter 2021 net operating income of $2.47 per share, which beat the Zacks Consensus Estimate by 26%. Quarterly results benefited from favorable loss experience in specialty P&C products, as well as continued growth across Global Automotive, Multifamily Housing and Connected Living businesses. However, the bottom line decreased 6.4% from the year-ago quarter.
Total revenues decreased 8.5% year over year to $2.4 billion due to lower fees and other income and net investment income. Moreover, the top line missed the Zacks Consensus Estimate by 0.7%.
Net investment income was down 8.7% year over year to $76.3 million.
Total benefits, loss and expenses decreased 4.6% to $2.2 billion, mainly on account of a decrease in selling, underwriting, general and administrative expenses and policyholder benefits.
Segmental Performance
Revenue at Global Housing decreased 1% year over year to $493 million, primarily due to declines in specialty products, including the expected run-off from small commercial, as well as a modest decline in lender-placed. The decrease was partially offset by growth in Multifamily Housing. Net operating income of $67.4 million declined 9% year over year due to $21.7 million of higher reportable catastrophes, primarily as a result of severe winter storms in Texas.
Revenues at Global Lifestyle declined 4% year over year to $1.9 billion, reflecting the impact of the previously disclosed mobile program contract change. Net operating income of $129.1 million improved 7% year over year, primarily driven by strong results in Global Automotive, including a $4.3 million one-time benefit, as well as higher investment income and underlying global growth.
Net operating loss at Corporate & Other was $21.6 million, unchanged from the year-ago quarter’s net operating loss.
Financial Position
Liquidity was $332 million as of Mar 31, 2021, about $107 million higher than the company’s current targeted minimum level of $225 million. Total assets decreased 0.5% to $44.4 billion as of Mar 31, 2021 from 2020 end. Total shareholders’ equity came in at $5.8 billion, down 2.2% year over year.
Share Repurchase and Dividend Update
In the first quarter, the company bought back 0.3 million shares for $42 million. From Apr 1 through Apr 30, the company repurchased additional 0.09 million shares for $14 million. It now has $731 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.
Sale of Global Preneed
On Mar 9, 2021, Assurant agreed to sell its Global Preneed business and its related legal entities and assets to CUNA Mutual Group for approximately $1.3 billion in cash, with expected net proceeds of approximately $1.2 billion. Assurant expects to close the transaction by the end of the third quarter of 2021, pending regulatory closing conditions.
2021 Guidance
Assurant expects net operating income, excluding reportable catastrophes, per diluted share, to increase approximately 10% to 14% from $9.88 in 2020. This indicates an increase from the company’s prior outlook of 9% growth for full-year 2021.
Results for 2021 are expected to be driven primarily by growth within Global Lifestyle and a lower Corporate loss, as well as share repurchases, including the completion of the company’s three-year capital return objective and initial deployment of proceeds from the expected sale of Global Preneed.
Adjusted EBITDA, excluding reportable catastrophes, is expected to grow at a modestly higher rate than net operating income, excluding reportable catastrophes, due to double-digit adjusted EBITDA growth in Global Lifestyle.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision.
VGM Scores
At this time, Assurant has a poor Growth Score of F, however its Momentum Score is doing a lot better with a C. Charting a somewhat similar path, 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 trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Assurant has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.