Assurant Inc.’s (AIZ - Free Report) broad range of risk management services, strategic acquisitions and a strong capital position will continue to fuel its prospects. This Zacks Rank #3 (Hold) multiline insurer has high potential owing to a number of growth drivers.
Growth Projections: The Zacks Consensus Estimate for earnings per share is $6.57, reflecting a year-over-year surge 49.91%. For 2018, the Zacks Consensus Estimate for earnings per share is pegged at $7.17, up 9.14% year over year.
Assurant has long-term expected earnings per share growth of 21.40%, much higher than the industry average of 9.30%.
An Outperformer: Assurant’s shares have gained 7.75% year to date, outperforming the industry’s 2.25% gain.
Positive Earnings Surprise History: Assurant has surpassed the Zacks Consensus Estimate in three of the last four quarters with an average beat of 7.43%.
Growth Drivers in Place
Assurant is on track to restructure business for long-term growth. While it has divested Employee Benefits business and has fully exited the health insurance market, it has intensified focus on Specialty Property and Casualty and Lifestyle Protection.
The company envisions earnings growth and margin expansion at the Lifestyle segment through a combination of profitable growth and operating efficiencies. It is also focused on growing the fee-based capital-light businesses, presently consisting of 52% segmental revenues.
Management estimates this contribution to continue in the upward direction in double digits over the longer term. Expansion of the fee-based offerings will prove to be an important driver to achieve the 15% goal of operating ROE by 2020.
Assurant deploys capital prudently. Traditionally, Assurant has been utilizing 50% of free cash flow to repurchase shares. Management is on track to return $1.5 billion to shareholders by this year-end.
Assurant anticipates operating earnings per diluted share (excluding catastrophe losses) to grow in double digits in 2017.
Stocks to Consider
Some better-ranked stocks from the insurance industry are Atlas Financial Holdings, Inc. (AFH - Free Report) , Markel Corporation (MKL - Free Report) and Mercury General Corporation (MCY - Free Report) , each flaunting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Atlas Financial underwrites commercial automobile insurance policies in the United States. The company delivered a four-quarter average positive surprise of 57.94%.
Markel markets and underwrites specialty insurance products in the United States and internationally. The company delivered positive surprises in the last four quarters with the average beat of 21.06%.
Mercury General writes personal automobile insurance in the United States. The company delivered positive surprises in the trailing four quarters with the average beat being 1.06%.
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