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Reasons Why Investors Should Retain Assurant (AIZ) Stock

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Assurant, Inc. (AIZ - Free Report) has been gaining momentum on the back of mobile subscriber growth, higher mobile trade-in volumes, higher investment income and lower claims activity.

Growth Projections

The Zacks Consensus Estimate for 2021 and 2022 earnings per share is pegged at $9.93 and $12.16, indicating year-over-year increase of 15% and 22.4%, respectively.

Estimate Revision

Estimates for 2021 and 2022 have moved up nearly 2.2% and 0.3%, respectively, in the past 30 days that reflects investors’ optimism.

Earnings Surprise History

Assurant has a decent earnings surprise history. It beat estimates in three of the last four quarters and missed in the other one, with the average being 20.9%.

Zacks Rank & Price Performance

Assurant currently carries a Zacks Rank #3 (Hold). Year to date, the stock has rallied 20.4%, compared with the industry’s increase of 11.4%.

Zacks Investment Research
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Return on Assets (ROA)

The company’s ROA for the trailing 12 months is 1.2%, better than the industry average of 0.8%. This implies efficient utilization of the company's assets for generating income.

Style Score

The company has a favorable VGM Score of B. VGM Score helps to identify stocks with the most attractive value, best growth and the most promising momentum.

Business Tailwinds

Global Housing is likely to gain from double-digit growth in Multifamily housing, as well as higher revenues in lender-placed including higher premium rates and average-insured values.

Owing to the solid first-half results, Assurant expects Global Housing's 2021 net operating income excluding catastrophe loss to be flat compared with 2020.

Assurant expects net operating income of Global Lifestyle to grow in high-single digits compared with $437 million reported in 2020.

Continued growth in Global Automotive and Connected Living will likely boost the Global Lifestyle segment. Connected Living continued to gain from mobile subscriber growth and higher mobile trade-in volumes, including contributions from recent acquisitions. Global Automotive will likely benefit from organic global growth, higher investment income and lower claims activity.

For 2021, Lifestyle revenues are expected to increase modestly, mainly driven by year-to-date Global Auto and Connected Living growth. It continues to expect mobile devices to grow mid-single digits in 2021 on rise in subscribers in key geographies like the United States and Japan.

The company boasts a solid balance sheet as well as improving leverage. It exited the second quarter with high liquidity of $353 million, which is around $128 million higher than the company’s current targeted minimum level of $225 million. Though its debt to capital of 30.2% deteriorated 280 basis points from 2020 end level, the company’s cash and cash equivalents are sufficient to meet its debt obligations. Its times interest earned of 6.8 is better than the fourth quarter 2020 end figure of 5.9, implying that its earnings are sufficient to cover debt obligations.

Given its strong capital management policy, in the first half, the company bought back shares for $232.2 million and another $150 million in July and has $1.45 billion remaining under its current share buyback authorization.  The insurer raised its dividend at a seven-year (2014-2021) CAGR of 14.9% and it currently yields 1.6%. From 2019 through June of 2021, Assurant returned over 88% or almost $1.2 billion of its three-year $1.35 billion objective to shareholders.

Key Players

Some better-ranked players in the multi-line insurance industry include Old Republic International Corporation (ORI - Free Report) , Horace Mann Educators Corporation (HMN - Free Report) , and CNO Financial Group, Inc. (CNO - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Old Republic International has a trailing four-quarter earnings surprise of 59.51%, on average.

Horace Mann Educators surpassed estimates in each of the last four quarters, with the average being 21.12%.

CNO Financial surpassed estimates in three of the last four quarters (while missing in one), with the average being 26.12%.