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Why Is Assurant (AIZ) Up 1.3% 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 1.3% 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 the most recent earnings report in order to get a better handle on the important drivers.

Assurant Q4 Earnings Beat, Revenues Miss Estimates

Assurant, Inc. reported fourth-quarter 2021 net operating income of $2.47 per share, which beat the Zacks Consensus Estimate by 7.4%. The bottom line increased 35.7% from the year-ago quarter.

The company’s results benefited from improved top-line growth, lower reportable catastrophes coupled with continued growth in Global Automotive and Connected Living, which forms part of the Global Lifestyle segment. However, the upside was partly offset by elevated costs.

Total revenues were up 2.2% year over year to $2.5 billion due to higher net earned premiums (3.5%), fees and other income (47.9%) and net investment income (8%). The top line missed the Zacks Consensus Estimate by 0.07%.      
Total benefits, loss and expenses increased 6.8% to $2.4 billion due to higher selling, underwriting, general and administrative expenses and interest expense.

Full-Year Highlights

For 2021, Assurant delivered a net operating income of $9.36 per share, which beat the Zacks Consensus Estimate by 2.1%. The bottom line improved 21% year over year.

Total revenues of $10.05 billion missed the consensus mark by 0.09% but grew 4.7% year over year.

Segmental Performance

Revenue at Global Housing increased 2% year over year to $505.8 million, primarily due to growth in lender-placed and Multifamily Housing. This was partially offset by a decline in specialty products from client runoff.

The segment reported a net operating income of $80.3 million, which increased 31% year over year, primarily due to lower reportable catastrophes.

Revenues at Global Lifestyle increased 9% year over year to $1.9 billion due to continued growth in Global Automotive from strong prior period sales and further expansion in Connected Living, including strong fee income growth in mobile from higher trade-in volumes, as well as domestic subscriber growth. It was partially offset by runoff mobile programs.

Net operating income of $107.8 million increased 23% year over year, primarily due to growth in Global Automotive and mobile within Connected Living. The increase in Global Automotive was mainly from underlying growth from prior period sales across all distribution channels and favorable loss experience in select ancillary products. Mobile growth was driven by strong trade-in volumes, including HYLA Mobile, and improved performance in Europe and the Asia Pacific. The upside was partially offset by in-store mobile service and repair capability investments.

Net operating loss at Corporate & Other was $23.9 million, narrower than the year-ago quarter’s $26.6 million, primarily due to an increase in investment income from higher asset balances.

Financial Update

The company exited the fourth quarter with total assets of $33.9 billion, down 24% year over year. Debt was $2.2 billion, which decreased 2.2% year over year. Stockholders’ equity of $5.5 billion at the end of the quarter decreased 7.7% year over year.

2022 Guidance

In 2022, the company expects 8% to 10% growth in Adjusted EBITDA, excluding reportable catastrophes, driven by expansion across Global Lifestyle and Global Housing.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates.

VGM Scores

At this time, Assurant has an average Growth Score of C, a grade with the same score on the momentum front. However, the stock was allocated a grade of A on the value side, putting it in the top 20% 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. 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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