A month has gone by since the last earnings report for Assurant (
AIZ Quick Quote AIZ - Free Report) . Shares have added about 2.9% 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 its most recent earnings report in order to get a better handle on the important catalysts.
Assurant’s Q2 Earnings and Revenues Miss Estimates Assurant, Inc. reported second-quarter 2022 net operating income of $2.95 per share, which missed the Zacks Consensus Estimate by 8.1%. The bottom line decreased 9% from the year-ago quarter. The results reflected growth in lender-placed from higher average insured values and premium rates and premium growth in Global Automotive, offset by higher catastrophes and expenses. Total revenues increased 2.1% year over year to $2.6 billion due to higher net earned premiums, fees and other income and net investment income. The top line however missed the Zacks Consensus Estimate by 2.7%. The figure was lower than our estimate of $2.7 billion. Net investment income was up 10.9% year over year to $92 million and beat the Zacks Consensus Estimate of $83 million. The figure was higher than our estimate of $87.9 million. Total benefits, loss and expenses increased 5.9% to $2.4 billion, mainly on account of an increase in policyholder benefits and underwriting and selling, general and administrative expenses. The figure, however, was lower than our estimate of $2.4 billion . Segmental Performance
Revenue at Global Housing was flat year over year at $495.7 million, as growth in lender-placed from higher average insured values and premium rates was offset by higher catastrophe reinsurance costs. The figure missed the Zacks Consensus Estimate of $537 million and was higher than our estimate of $356.7 million. Adjusted EBITDA of $75.2 million decreased 43% year over year, primarily due to a $17.2 million pre-tax increase in pre-tax reportable catastrophes. The figure was lower than our estimate of $117.3 million.
Revenues at Global Lifestyle increased 2% year over year to $1.9 billion. The increase was due to Global Automotive premium growth from strong prior period sales. Connected Living decreased modestly, mainly from the impact of runoff mobile programs. It was partially offset by higher mobile fee income driven by an increase in global devices serviced, as well as device protection growth in North America. The figure missed the Zacks Consensus Estimate of $2.1 billion and was lower than our estimate of $2.3 billion. Adjusted EBITDA of $206.8 million improved 12% year over year due to continued strong results across Connected Living and Global Automotive. Adjusted EBITDA loss at Corporate & Other was $24.9 million, wider than the year-ago quarter’s adjusted EBITDA loss of $16.9 million on higher employee-related and technology expenses. Financial Position
Liquidity was $595 million as of Jun 30, 2022, about $370 million higher than the company’s current targeted minimum level of $225 million. Total assets decreased 6.5% to $31.7 billion as of Jun 30, 2022 from 2021 end. The figure, however, was lower than our estimate of $38.5 billion. Total shareholders’ equity came in at $4.4 billion, down 18.4% year over year. The figure, however, was lower than our estimate of $5.9 billion.
Share Repurchase and Dividend Update
In the second quarter of 2022, Assurant repurchased 1.3 million shares for $232 million. From Jul 1 through Jul 31, 2022, Assurant repurchased additional shares for approximately $30 million. It now has $338 million remaining under the current repurchase authorization. Assurant’s total dividends amounted to $39 million in the second quarter of 2022.
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. Assurant’s consolidated effective tax rate is expected to be approximately 22 to 24%, which reflects the impact of the first quarter tax benefit.
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. This will be partially offset by unfavorable impacts of foreign exchange and strategic investments to support new business opportunities. Global Automotive is also expected to increase, driven by higher investment income and more favorable loss experience in select ancillary products. Global Housing adjusted EBITDA, excluding reportable catastrophes, is expected to decrease by low- to mid-teens, primarily due to higher non-catastrophe loss experience related to elevated inflationary trends, mainly in lender-placed, as well as increased catastrophe reinsurance costs. The decline will be partially offset by higher average insured values and premium rates in lender-placed, along with ongoing expense initiatives. Corporate and Other Adjusted EBITDA loss is expected to be approximately $105 million, reflecting higher employee-related and technology expenses. Capital is projected to be deployed to support business growth by funding investments and M&A and to return capital to shareholders in the form of share repurchases and dividends, subject to board approval and market conditions. How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
The consensus estimate has shifted -9.73% due to these changes.
Currently, Assurant has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. 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 B. If you aren't focused on one strategy, this score is the one you should be interested in.
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.
Performance of an Industry Player
Assurant belongs to the Zacks Insurance - Multi line industry. Another stock from the same industry, The Hartford (
HIG Quick Quote HIG - Free Report) , has gained 1.4% over the past month. More than a month has passed since the company reported results for the quarter ended June 2022.
The Hartford reported revenues of $3.77 billion in the last reported quarter, representing a year-over-year change of +5.5%. EPS of $2.15 for the same period compares with $2.33 a year ago.
For the current quarter, The Hartford is expected to post earnings of $1.49 per share, indicating a change of +18.3% from the year-ago quarter. The Zacks Consensus Estimate has changed -3.5% over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #2 (Buy) for The Hartford. Also, the stock has a VGM Score of B.