We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Why Is Assurant (AIZ) Down 9.1% Since Last Earnings Report?
Read MoreHide Full Article
It has been about a month since the last earnings report for Assurant (AIZ - Free Report) . Shares have lost about 9.1% 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 catalysts.
Assurant Q1 Earnings Top Estimates, Revenues Rise Y/Y
Assurant, Inc. reported first-quarter 2023 net operating income of $3.49 per share, which beat the Zacks Consensus Estimate by 55% and our estimate of $2.62 per share. The bottom line decreased 12.3% from the year-ago quarter. The decrease was primarily due to lower segment earnings, a higher effective tax rate and an increase in depreciation expense. It was partially offset by share repurchases from previous quarters.
Quarterly results benefited from higher net earned premiums, fees and other income and net investment income. It was partially offset by higher catastrophe events, improved claims costs within extended service contracts and the unfavorable impact of foreign exchange.
Total revenues increased 4.2% year over year to $2.6 billion, driven by higher net earned premiums, fees and other income and net investment income. The top line beat the Zacks Consensus Estimate by 2.2% and matched our estimate of $2.6 billion. Net investment income was up 21.9% year over year to $105.2 million. The figure was higher than our estimate of $97.5 million.
Total benefits, loss and expenses increased 8.1% to $2.5 billion, mainly on account of an increase in policyholder benefits, interest expense and underwriting, selling, general and administrative expenses. The figure was higher than our estimate of $2.3 billion.
Segmental Performance
Revenues at Global Housing increased 10.5% year over year to $526.5 million, primarily driven by higher net earned premiums, fees and other income and net investment income. The figure was lower than our estimate of $582.2 million.
Adjusted EBITDA of $68.4 million decreased 34% year over year due to a $43.3 million increase in reportable catastrophes from severe weather and tornado events. The figure was lower than our estimate of $115.1 million.
Revenues at Global Lifestyle increased 3.5% year over year to $2.1 billion. The increase was primarily driven by higher net earned premiums, fees and other income and net investment income. The figure was higher than our estimate of $2 billion. Adjusted EBITDA of $198.9 million decreased 12% year over year. The decrease was primarily due to lower Connected Living results mainly because of an increase in claims costs within extended service contracts, weaker international performance from Asia Pacific and the unfavorable impact of foreign exchange. Global Automotive also declined from ongoing higher claims costs. The downside was partially offset by higher investment income.
Adjusted EBITDA loss at Corporate & Other was $24.4 million, wider than the year-ago quarter’s adjusted EBITDA loss of $22.2 million. The wider loss was due to lower investment income from lower asset balances.
Financial Position
Liquidity was $383 million as of Mar 31, 2023, which is $158 million higher than the company’s current targeted minimum level of $225 million. Total assets decreased 0.6% to $32.9 billion as of Mar 31, 2023 from 2022 end. Total shareholders’ equity came in at $4.4 billion, up 3.9% year over year.
Share Repurchase and Dividend Update
In the first quarter of 2023 and through Apr 28, 2023, Assurant did not repurchase any shares. It now has $274 million remaining under the current repurchase authorization. Assurant’s total dividends amounted to $37 million in the first quarter of 2023.
2023 Guidance
Assurant expects adjusted EBITDA, excluding reportable catastrophes, to increase by low single-digits, driven by improved performance in Global Housing and more modest growth in Global Lifestyle.
Global Housing Adjusted EBITDA, excluding reportable catastrophes, is expected to grow. The growth is driven by improved performance in Homeowners reflecting higher lender-placed net earned premiums along with expense savings to be realized over the course of the year.
Global Lifestyle Adjusted EBITDA is expected to grow modestly, driven by Connected Living and Global Automotive.
Corporate and Other Adjusted EBITDA loss is expected to be approximately $105 million as the insurer continues to drive expense leverage. Assurant expects adjusted earnings, excluding reportable catastrophes, per diluted share growth rate to be lower than Adjusted EBITDA, excluding reportable catastrophe growth. This is due to higher depreciation expense of nearly $114 million and a higher effective tax rate of approximately 22% to 24%, following a benefit of $9 million in 2022.
Interest expense is expected to be approximately $110 million, in line with 2022. Given expectations for continued strong capital generation, Assurant expects to gradually resume repurchases later in the second quarter.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
The consensus estimate has shifted 18.59% 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 B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the top 40% 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 trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Assurant has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
Assurant is part of the Zacks Insurance - Multi line industry. Over the past month, CNO Financial (CNO - Free Report) , a stock from the same industry, has gained 1.2%. The company reported its results for the quarter ended March 2023 more than a month ago.
CNO reported revenues of $1.01 billion in the last reported quarter, representing a year-over-year change of +19.4%. EPS of $0.51 for the same period compares with $0.42 a year ago.
CNO is expected to post earnings of $0.72 per share for the current quarter, representing a year-over-year change of -15.3%. Over the last 30 days, the Zacks Consensus Estimate has changed +9.9%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for CNO. Also, the stock has a VGM Score of B.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Why Is Assurant (AIZ) Down 9.1% Since Last Earnings Report?
It has been about a month since the last earnings report for Assurant (AIZ - Free Report) . Shares have lost about 9.1% 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 catalysts.
Assurant Q1 Earnings Top Estimates, Revenues Rise Y/Y
Assurant, Inc. reported first-quarter 2023 net operating income of $3.49 per share, which beat the Zacks Consensus Estimate by 55% and our estimate of $2.62 per share. The bottom line decreased 12.3% from the year-ago quarter. The decrease was primarily due to lower segment earnings, a higher effective tax rate and an increase in depreciation expense. It was partially offset by share repurchases from previous quarters.
Quarterly results benefited from higher net earned premiums, fees and other income and net investment income. It was partially offset by higher catastrophe events, improved claims costs within extended service contracts and the unfavorable impact of foreign exchange.
Total revenues increased 4.2% year over year to $2.6 billion, driven by higher net earned premiums, fees and other income and net investment income. The top line beat the Zacks Consensus Estimate by 2.2% and matched our estimate of $2.6 billion. Net investment income was up 21.9% year over year to $105.2 million. The figure was higher than our estimate of $97.5 million.
Total benefits, loss and expenses increased 8.1% to $2.5 billion, mainly on account of an increase in policyholder benefits, interest expense and underwriting, selling, general and administrative expenses. The figure was higher than our estimate of $2.3 billion.
Segmental Performance
Revenues at Global Housing increased 10.5% year over year to $526.5 million, primarily driven by higher net earned premiums, fees and other income and net investment income. The figure was lower than our estimate of $582.2 million.
Adjusted EBITDA of $68.4 million decreased 34% year over year due to a $43.3 million increase in reportable catastrophes from severe weather and tornado events. The figure was lower than our estimate of $115.1 million.
Revenues at Global Lifestyle increased 3.5% year over year to $2.1 billion. The increase was primarily driven by higher net earned premiums, fees and other income and net investment income. The figure was higher than our estimate of $2 billion. Adjusted EBITDA of $198.9 million decreased 12% year over year. The decrease was primarily due to lower Connected Living results mainly because of an increase in claims costs within extended service contracts, weaker international performance from Asia Pacific and the unfavorable impact of foreign exchange. Global Automotive also declined from ongoing higher claims costs. The downside was partially offset by higher investment income.
Adjusted EBITDA loss at Corporate & Other was $24.4 million, wider than the year-ago quarter’s adjusted EBITDA loss of $22.2 million. The wider loss was due to lower investment income from lower asset balances.
Financial Position
Liquidity was $383 million as of Mar 31, 2023, which is $158 million higher than the company’s current targeted minimum level of $225 million. Total assets decreased 0.6% to $32.9 billion as of Mar 31, 2023 from 2022 end. Total shareholders’ equity came in at $4.4 billion, up 3.9% year over year.
Share Repurchase and Dividend Update
In the first quarter of 2023 and through Apr 28, 2023, Assurant did not repurchase any shares. It now has $274 million remaining under the current repurchase authorization. Assurant’s total dividends amounted to $37 million in the first quarter of 2023.
2023 Guidance
Assurant expects adjusted EBITDA, excluding reportable catastrophes, to increase by low single-digits, driven by improved performance in Global Housing and more modest growth in Global Lifestyle.
Global Housing Adjusted EBITDA, excluding reportable catastrophes, is expected to grow. The growth is driven by improved performance in Homeowners reflecting higher lender-placed net earned premiums along with expense savings to be realized over the course of the year.
Global Lifestyle Adjusted EBITDA is expected to grow modestly, driven by Connected Living and Global Automotive.
Corporate and Other Adjusted EBITDA loss is expected to be approximately $105 million as the insurer continues to drive expense leverage. Assurant expects adjusted earnings, excluding reportable catastrophes, per diluted share growth rate to be lower than Adjusted EBITDA, excluding reportable catastrophe growth. This is due to higher depreciation expense of nearly $114 million and a higher effective tax rate of approximately 22% to 24%, following a benefit of $9 million in 2022.
Interest expense is expected to be approximately $110 million, in line with 2022. Given expectations for continued strong capital generation, Assurant expects to gradually resume repurchases later in the second quarter.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
The consensus estimate has shifted 18.59% 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 B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the top 40% 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 trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Assurant has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
Assurant is part of the Zacks Insurance - Multi line industry. Over the past month, CNO Financial (CNO - Free Report) , a stock from the same industry, has gained 1.2%. The company reported its results for the quarter ended March 2023 more than a month ago.
CNO reported revenues of $1.01 billion in the last reported quarter, representing a year-over-year change of +19.4%. EPS of $0.51 for the same period compares with $0.42 a year ago.
CNO is expected to post earnings of $0.72 per share for the current quarter, representing a year-over-year change of -15.3%. Over the last 30 days, the Zacks Consensus Estimate has changed +9.9%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for CNO. Also, the stock has a VGM Score of B.