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Why Is Assurant (AIZ) Down 2.1% 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 lost about 2.1% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Assurant due for a breakout? 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 drivers.
Assurant Q3 Earnings Beat, Revenues Miss Estimates
Assurant, Inc. reported third-quarter 2022 net operating income of $1.01 per share, which beat the Zacks Consensus Estimate by 1% but missed our estimate of $2.36. The bottom line decreased 40.2% from the year-ago quarter. The results reflected growth in specialty products and lender-placed, Global Automotive premium growth and higher net investment income, offset by higher catastrophe reinstatement premiums and expenses.
Total revenues increased 1.9% year over year to $2.6 billion due to higher net earned premiums and net investment income. The top line, however, missed the Zacks Consensus Estimate by 1.8%. The figure was lower than our estimate of $2.7 billion. Net investment income was up 9.9% year over year to $83.5 million. The figure was higher than our estimate of $81.8 million.
Total benefits, loss and expenses increased 3.7% to $2.5 billion, mainly on account of an increase in policyholder benefits and underwriting and selling, general and administrative expenses.
Segmental Performance
Revenues at Global Housing increased 3% year over year to $484.1 million, owing to growth in specialty products and lender-placed, where higher average insured values and premium rates were partially offset by higher catastrophe reinstatement premiums. The figure was lower than our estimate of $531.1 million. Adjusted EBITDA, excluding reportable catastrophes of $99.1 million, decreased 15% year over year. The decrease was due to nearly $38 million of higher non-catastrophe loss experience across all major products. In lender-placed, the elevated loss experience, as well as higher catastrophe reinsurance costs, was largely offset by higher average insured values and premium rates. The figure was higher than our estimate of $79.7 million.
Revenues at Global Lifestyle increased 1.5% year over year to $2 billion. The increase was primarily led by Global Automotive premium growth from strong prior period sales. Connected Living revenues decreased due to runoff mobile programs and the unfavorable impact of foreign exchange. The decrease was partially offset by device protection growth in North America. The figure was lower than our estimate of $2.1 billion. Adjusted EBITDA of $165.9 million decreased 6% year over year due to the challenging macroeconomic environment.
Adjusted EBITDA loss at Corporate & Other was $24.9 million, wider than the year-ago quarter’s adjusted EBITDA loss of $23 million due to lower investment income.
Financial Position
Liquidity was $529 million as of Sep 30, 2022, about $304 million higher than the company’s current targeted minimum level of $225 million. Total assets decreased 2% to $33.2 billion as of Sep 30, 2022 from 2021 end. The figure, however, was lower than our estimate of $33.5 billion. Total shareholders’ equity came in at $4.1 billion, down 25% year over year. The figure, however, was lower than our estimate of $5.4 billion.
Share Repurchase and Dividend Update
In the third quarter of 2022, Assurant repurchased shares for $80 million. From Oct 1 through Oct 28, 2022, Assurant repurchased an additional share for nearly $12 million. It now has $275 million remaining under the current repurchase authorization. Assurant’s total dividends amounted to $37 million in the third quarter of 2022.
2022 Guidance
Assurant expects adjusted EBITDA, excluding reportable catastrophes, to be modestly down to flat year over year, as growth in Global Lifestyle is expected to be offset by a decline in Global Housing. Global Lifestyle adjusted EBITDA is projected to increase in high single-digits. This will be driven by mobile in Connected Living from expansion across device protection and trade-in and upgrade programs, partially offset by pressure in Asia Pacific and Europe from unfavorable foreign exchange and lower program volumes. Global Automotive is also expected to increase, owing to higher investment income and more favorable loss experience in select ancillary products.
Global Housing adjusted EBITDA, excluding reportable catastrophes, is expected to decline by low to mid-teens, due to higher non-catastrophe loss experience related to elevated inflationary trends, mainly in lender-placed, as well as higher catastrophe reinsurance costs. The decline will be partially offset by higher average insured values and premium rates in lender-placed and continuous expense initiatives. Corporate and other adjusted EBITDA loss is expected to be around $105 million due to higher employee-related and technology expenses.
Adjusted earnings, excluding reportable catastrophes, per share are expected to increase by high single-digits, driven by share repurchases, including the return of net proceeds from the sale of Global Preneed. Capital is projected to be deployed to support business growth by funding investments and M&A, as well as to return capital to shareholders via share repurchases and dividends, pending 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 -8.55% due to these changes.
VGM Scores
Currently, Assurant has a poor Growth Score of F, however its Momentum Score is doing a lot better with a C. 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 D. 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. It's no surprise Assurant has a Zacks Rank #4 (Sell). We expect a below average 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, CNO Financial (CNO - Free Report) , has gained 10.1% over the past month. More than a month has passed since the company reported results for the quarter ended September 2022.
CNO reported revenues of $905.3 million in the last reported quarter, representing a year-over-year change of -6.5%. EPS of $0.49 for the same period compares with $0.72 a year ago.
For the current quarter, CNO is expected to post earnings of $0.53 per share, indicating a change of -39.1% from the year-ago quarter. The Zacks Consensus Estimate has changed -3.2% over the last 30 days.
CNO has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of C.
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Why Is Assurant (AIZ) Down 2.1% Since Last Earnings Report?
It has been about a month since the last earnings report for Assurant (AIZ - Free Report) . Shares have lost about 2.1% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Assurant due for a breakout? 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 drivers.
Assurant Q3 Earnings Beat, Revenues Miss Estimates
Assurant, Inc. reported third-quarter 2022 net operating income of $1.01 per share, which beat the Zacks Consensus Estimate by 1% but missed our estimate of $2.36. The bottom line decreased 40.2% from the year-ago quarter. The results reflected growth in specialty products and lender-placed, Global Automotive premium growth and higher net investment income, offset by higher catastrophe reinstatement premiums and expenses.
Total revenues increased 1.9% year over year to $2.6 billion due to higher net earned premiums and net investment income. The top line, however, missed the Zacks Consensus Estimate by 1.8%. The figure was lower than our estimate of $2.7 billion. Net investment income was up 9.9% year over year to $83.5 million. The figure was higher than our estimate of $81.8 million.
Total benefits, loss and expenses increased 3.7% to $2.5 billion, mainly on account of an increase in policyholder benefits and underwriting and selling, general and administrative expenses.
Segmental Performance
Revenues at Global Housing increased 3% year over year to $484.1 million, owing to growth in specialty products and lender-placed, where higher average insured values and premium rates were partially offset by higher catastrophe reinstatement premiums. The figure was lower than our estimate of $531.1 million. Adjusted EBITDA, excluding reportable catastrophes of $99.1 million, decreased 15% year over year. The decrease was due to nearly $38 million of higher non-catastrophe loss experience across all major products. In lender-placed, the elevated loss experience, as well as higher catastrophe reinsurance costs, was largely offset by higher average insured values and premium rates. The figure was higher than our estimate of $79.7 million.
Revenues at Global Lifestyle increased 1.5% year over year to $2 billion. The increase was primarily led by Global Automotive premium growth from strong prior period sales. Connected Living revenues decreased due to runoff mobile programs and the unfavorable impact of foreign exchange. The decrease was partially offset by device protection growth in North America. The figure was lower than our estimate of $2.1 billion. Adjusted EBITDA of $165.9 million decreased 6% year over year due to the challenging macroeconomic environment.
Adjusted EBITDA loss at Corporate & Other was $24.9 million, wider than the year-ago quarter’s adjusted EBITDA loss of $23 million due to lower investment income.
Financial Position
Liquidity was $529 million as of Sep 30, 2022, about $304 million higher than the company’s current targeted minimum level of $225 million. Total assets decreased 2% to $33.2 billion as of Sep 30, 2022 from 2021 end. The figure, however, was lower than our estimate of $33.5 billion. Total shareholders’ equity came in at $4.1 billion, down 25% year over year. The figure, however, was lower than our estimate of $5.4 billion.
Share Repurchase and Dividend Update
In the third quarter of 2022, Assurant repurchased shares for $80 million. From Oct 1 through Oct 28, 2022, Assurant repurchased an additional share for nearly $12 million. It now has $275 million remaining under the current repurchase authorization. Assurant’s total dividends amounted to $37 million in the third quarter of 2022.
2022 Guidance
Assurant expects adjusted EBITDA, excluding reportable catastrophes, to be modestly down to flat year over year, as growth in Global Lifestyle is expected to be offset by a decline in Global Housing. Global Lifestyle adjusted EBITDA is projected to increase in high single-digits. This will be driven by mobile in Connected Living from expansion across device protection and trade-in and upgrade programs, partially offset by pressure in Asia Pacific and Europe from unfavorable foreign exchange and lower program volumes. Global Automotive is also expected to increase, owing to higher investment income and more favorable loss experience in select ancillary products.
Global Housing adjusted EBITDA, excluding reportable catastrophes, is expected to decline by low to mid-teens, due to higher non-catastrophe loss experience related to elevated inflationary trends, mainly in lender-placed, as well as higher catastrophe reinsurance costs. The decline will be partially offset by higher average insured values and premium rates in lender-placed and continuous expense initiatives. Corporate and other adjusted EBITDA loss is expected to be around $105 million due to higher employee-related and technology expenses.
Adjusted earnings, excluding reportable catastrophes, per share are expected to increase by high single-digits, driven by share repurchases, including the return of net proceeds from the sale of Global Preneed. Capital is projected to be deployed to support business growth by funding investments and M&A, as well as to return capital to shareholders via share repurchases and dividends, pending 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 -8.55% due to these changes.
VGM Scores
Currently, Assurant has a poor Growth Score of F, however its Momentum Score is doing a lot better with a C. 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 D. 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. It's no surprise Assurant has a Zacks Rank #4 (Sell). We expect a below average 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, CNO Financial (CNO - Free Report) , has gained 10.1% over the past month. More than a month has passed since the company reported results for the quarter ended September 2022.
CNO reported revenues of $905.3 million in the last reported quarter, representing a year-over-year change of -6.5%. EPS of $0.49 for the same period compares with $0.72 a year ago.
For the current quarter, CNO is expected to post earnings of $0.53 per share, indicating a change of -39.1% from the year-ago quarter. The Zacks Consensus Estimate has changed -3.2% over the last 30 days.
CNO has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of C.