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Assurant (AIZ) Q2 Earnings Beat Estimates, Revenues Up Y/Y
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Assurant, Inc. (AIZ - Free Report) reported second-quarter 2021 net operating income of $2.99 per share, which outpaced the Zacks Consensus Estimate by 20.1%. The bottom line improved 19.6% year over year.
The company’s results gained on the back of higher revenues, reduced catastrophe losses, strong contributions by Global Lifestyle as well as Global Housing segments, and decline in net operating loss across Corporate and Other segment. However, the upside was partly offset by escalating costs.
Total revenues of $2.5 billion rose 3.6% year over year, courtesy of rise in net earned premiums, fees and other income and net investment income. The top line surpassed the consensus mark by 6.4%.
Net investment income climbed 26.8% year over year to $82.9 million in the quarter under review.
Total benefits, losses and expenses of $2.3 billion increased 7.6% year over year primarily due to rise in selling, underwriting, general and administrative expenses, and policyholder benefits.
Revenues at Global Lifestyle advanced 10% year over year to $1.9 billion, on account of solid contributions made by Global Automotive and Connected Living businesses. Global Automotive was driven by robust U.S. sales coupled with benefits stemming from recent buyouts. Meanwhile, expansion of service contracts and mobile trade-in fetching improved fee income benefited the Connected Living unit.
Net operating income rose 2% year over year to $123.8 million on the back of organic growth across Global Automotive, improved investment income and enhanced claims experience in Global Financial Services.
Revenues at Global Housing of $511.1 million improved 5% year over year in the quarter under review. The uptick came on the back of well-performing Multifamily Housing and lender-placed riding on increased higher premium rates and average insured values. However, the rise has been partly offset by decline in real estate owned volumes.
Net operating income grew 10% year over year to $93.7 million attributable to reduced catastrophes losses.
Net operating loss at Corporate & Other of $11.5 million was narrower than the prior-year quarter’s loss of $28.8 million.
Financial Update
The company exited the second quarter with liquidity of $353 million, which remains $128 million higher than the company’s current targeted minimum level of $225 million.
Total assets came in at $46 billion as of Jun 30, 2021, up 3% from the figure at 2020 end.
Total shareholders’ equity was $5.9 billion, which decreased 0.7% year over year.
Share Repurchase and Dividend Update
The company bought back 1.2 million shares worth $191 million in the second quarter. Over Jul 1-Jul 30 period, the company bought back additional 0.74 million shares for around $115 million. Presently, it has $1.3 billion left under its share buyback program.
The company’s total common stock dividends amounted to $42 million in the quarter under review.
Completed Global Preneed Sale
On Aug 2, 2021, Assurant closed sale of its Global Preneed business and its related legal entities and assets to CUNA Mutual Group’s units. The deal fetched net proceeds of around $1.2 billion for Assurant, out of which $900 million are likely to be returned in no less than one year of closing via share buybacks. The remaining balance will be utilized for undertaking investments across the company’s Connected Living, Global Automotive and Multifamily Housing businesses.
2021 Guidance
Assurant continues to anticipate net operating income, excluding reportable catastrophes, per diluted share, to register 10% to 14% approximate growth from the 2020’s figure of $9.88. However, net operating income, excluding reportable catastrophes, is anticipated to be lesser in the second half of 2021 when compared to the first half of the year due to higher investments undertaken to drive growth across its connected world businesses and reduced investment income.
Management reiterated that strength in Global Lifestyle, decline in Corporate loss and share buybacks are expected to provide a boost to 2021 results.
The company expects that adjusted EBITDA, excluding reportable catastrophes is likely to increase at the same rate as that of net operating income, excluding reportable catastrophes. Global Lifestyle segment is anticipated to witness double-digit adjusted EBITDA growth.
Of the multiline insurance industry players, which have reported second-quarter results so far, the bottom lines of Old Republic International Corporation (ORI - Free Report) , CNO Financial Group, Inc. (CNO - Free Report) and The Hartford Financial Services Group, Inc. (HIG - Free Report) beat the respective Zacks Consensus Estimate.
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Assurant (AIZ) Q2 Earnings Beat Estimates, Revenues Up Y/Y
Assurant, Inc. (AIZ - Free Report) reported second-quarter 2021 net operating income of $2.99 per share, which outpaced the Zacks Consensus Estimate by 20.1%. The bottom line improved 19.6% year over year.
The company’s results gained on the back of higher revenues, reduced catastrophe losses, strong contributions by Global Lifestyle as well as Global Housing segments, and decline in net operating loss across Corporate and Other segment. However, the upside was partly offset by escalating costs.
Total revenues of $2.5 billion rose 3.6% year over year, courtesy of rise in net earned premiums, fees and other income and net investment income. The top line surpassed the consensus mark by 6.4%.
Net investment income climbed 26.8% year over year to $82.9 million in the quarter under review.
Total benefits, losses and expenses of $2.3 billion increased 7.6% year over year primarily due to rise in selling, underwriting, general and administrative expenses, and policyholder benefits.
Assurant, Inc. Price, Consensus and EPS Surprise
Assurant, Inc. price-consensus-eps-surprise-chart | Assurant, Inc. Quote
Segmental Performances
Revenues at Global Lifestyle advanced 10% year over year to $1.9 billion, on account of solid contributions made by Global Automotive and Connected Living businesses. Global Automotive was driven by robust U.S. sales coupled with benefits stemming from recent buyouts. Meanwhile, expansion of service contracts and mobile trade-in fetching improved fee income benefited the Connected Living unit.
Net operating income rose 2% year over year to $123.8 million on the back of organic growth across Global Automotive, improved investment income and enhanced claims experience in Global Financial Services.
Revenues at Global Housing of $511.1 million improved 5% year over year in the quarter under review. The uptick came on the back of well-performing Multifamily Housing and lender-placed riding on increased higher premium rates and average insured values. However, the rise has been partly offset by decline in real estate owned volumes.
Net operating income grew 10% year over year to $93.7 million attributable to reduced catastrophes losses.
Net operating loss at Corporate & Other of $11.5 million was narrower than the prior-year quarter’s loss of $28.8 million.
Financial Update
The company exited the second quarter with liquidity of $353 million, which remains $128 million higher than the company’s current targeted minimum level of $225 million.
Total assets came in at $46 billion as of Jun 30, 2021, up 3% from the figure at 2020 end.
Total shareholders’ equity was $5.9 billion, which decreased 0.7% year over year.
Share Repurchase and Dividend Update
The company bought back 1.2 million shares worth $191 million in the second quarter. Over Jul 1-Jul 30 period, the company bought back additional 0.74 million shares for around $115 million. Presently, it has $1.3 billion left under its share buyback program.
The company’s total common stock dividends amounted to $42 million in the quarter under review.
Completed Global Preneed Sale
On Aug 2, 2021, Assurant closed sale of its Global Preneed business and its related legal entities and assets to CUNA Mutual Group’s units. The deal fetched net proceeds of around $1.2 billion for Assurant, out of which $900 million are likely to be returned in no less than one year of closing via share buybacks. The remaining balance will be utilized for undertaking investments across the company’s Connected Living, Global Automotive and Multifamily Housing businesses.
2021 Guidance
Assurant continues to anticipate net operating income, excluding reportable catastrophes, per diluted share, to register 10% to 14% approximate growth from the 2020’s figure of $9.88. However, net operating income, excluding reportable catastrophes, is anticipated to be lesser in the second half of 2021 when compared to the first half of the year due to higher investments undertaken to drive growth across its connected world businesses and reduced investment income.
Management reiterated that strength in Global Lifestyle, decline in Corporate loss and share buybacks are expected to provide a boost to 2021 results.
The company expects that adjusted EBITDA, excluding reportable catastrophes is likely to increase at the same rate as that of net operating income, excluding reportable catastrophes. Global Lifestyle segment is anticipated to witness double-digit adjusted EBITDA growth.
Zacks Rank
Assurant currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Multiline Insurers
Of the multiline insurance industry players, which have reported second-quarter results so far, the bottom lines of Old Republic International Corporation (ORI - Free Report) , CNO Financial Group, Inc. (CNO - Free Report) and The Hartford Financial Services Group, Inc. (HIG - Free Report) beat the respective Zacks Consensus Estimate.