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Should You Retain Assurant (AIZ) Stock in Your Portfolio?

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Assurant, Inc. (AIZ - Free Report) has been gaining momentum on the back of higher trade-in volumes, higher international earnings, higher income from fixed maturity securities and a solid capital management policy.

Earnings Estimate

The Zacks Consensus Estimate for Assurant’s 2022 and 2023 earnings per share is pegged at $12.41 and $14.24, indicating year-over-year increases of 32.6% and 14.7%, respectively. The expected long-term earnings growth rate is 17.5%, higher than the industry average of 12.1%.

Earnings Surprise History

Assurant has a decent surprise history, beating earnings estimates in three of the last four quarters and missing in one.

Zacks Rank

Assurant currently carries a Zacks Rank #3 (Hold). The AIZ stock has rallied 10.2% year to date against the industry’s decline of 1.6%.

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Return on Equity (ROE)

Assurant’s ROE for the trailing 12 months is 11.6%, up 260 basis points year over year. This reflects AIZ’s efficiency in utilizing shareholders’ funds.

Style Score

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

Business Tailwinds

Solid performance in Global Automotive and Connected Living is likely to drive the Global Lifestyle segment. Continued organic growth across distribution channels, better loss experience from select ancillary products and higher investment income should drive Global Automotive. Connected Living is likely to gain from higher trade-in volumes, higher international earnings and continued mobile subscriber growth in North America.

Global Lifestyle adjusted EBITDA is expected to increase by mid-to high-teens. It is driven mainly by mobile in Connected Living from global expansion in existing and new clients across device protection and trade-in and upgrade programs.

The Global Housing segment should gain from higher average insured values and premium rates in the Lender-placed Insurance business, and continued growth from renters insurance in the Multifamily Housing business.

Higher income from fixed maturity securities related to higher invested assets and higher yields, higher rates on short-term investments and cash and cash equivalents, and higher income on commercial mortgage loans on real estate are expected to drive the net investment income of this multi-line insurer.

AIZ boasts a solid capital management policy. While it has been increasing dividends for the last 17 straight years, the insurer has $367.9 million remaining under its current share buyback authorization.

Upbeat Guidance

Assurant expects 3% to 6% growth in adjusted EBITDA, excluding reportable catastrophes, driven by profitable growth in Global Lifestyle, partially offset by a decline in Global Housing.  

Assurant expects 14% to 18% growth in adjusted earnings, excluding reportable catastrophes, per share, driven by share repurchases, including the return of net proceeds from the sale of Global Preneed, and earnings growth in Global Lifestyle.

AIZ estimates about 10% average annual growth in 2023-2024. Segment wise, Global Lifestyle is expected to deliver 10% average annual growth in 2023-2024.

Stocks to Consider

Some better-ranked stocks from the multi-line insurance industry are James River Group Holdings, Ltd. (JRVR - Free Report) , Radian Group Inc. (RDN - Free Report) and Old Republic International Corporation (ORI - Free Report) . While James River Group and Radian Group sport a Zacks Rank #1 (Strong Buy), Old Republic International carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for James River Group’s 2022 and 2023 earnings implies 137% and 15.3% year-over-year growth, respectively.

The Zacks Consensus Estimate for JRVR’s 2022 and 2023 earnings has moved 2.6% and 4.6% north, respectively, in the past 30 days.  Year to date, the insurer has declined 11.5%.

Radian Group’s earnings surpassed estimates in three of the last four quarters and missed in one, the average earnings surprise being 29.51%.

The Zacks Consensus Estimate for RDN’s 2022 and 2023 earnings has moved 16.1% and 4.2% north, respectively, in the past 30 days.  Year to date, the insurer has increased 11.2%.

Old Republic International’s earnings surpassed estimates in three of the last four quarters and missed in one, the average earnings surprise being 15.1%.

The Zacks Consensus Estimate for ORI’s 2022 earnings has moved 4.2% north in the past 30 days. Year to date, the insurer has declined 3.3%.

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