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Assurant (AIZ) Q1 Earnings, Revenues Beat Estimates, Up Y/Y

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Assurant, Inc. (AIZ - Free Report) reported first-quarter 2020 net operating income of $2.64 per share, which beat the Zacks Consensus Estimate by 7.3%. The bottom line increased 19.4% from the year-ago quarter.

The results reflect higher mobile trade-in volumes and income from Global Automotive. Global Lifestyle earnings improved remarkably. Global Housing and Global Preneed segments too delivered improved income.

Assurant, Inc. Price, Consensus and EPS Surprise

Total revenues improved 10.7% year over year to $2.6 billion, mainly attributable to higher premiums earned and fees and other income. Moreover, the top line exceeded the Zacks Consensus Estimate by 4.4%.

Net investment income was down 6.2% year over year to $156 million.

Total benefits, loss and expenses escalated 10.7% to $2.4 billion, mainly on account of a noticeable increase in selling, underwriting, general and administrative expenses.

Segmental Performance

Net earned premiums, fees and others at Global Housing remained flat year over year at $500 million.

Net operating income of $74.2 million improved 2% year over year driven by favorable non-catastrophe loss experience, the absence of losses within the small commercial business, which is now in run-off, as well as higher premium rates in lender-placed. It was partially offset by a reduction in policies in-force, including policies from the previously disclosed financially insolvent client.

Net earned premiums, fees and others at Global Lifestyle rose 16% year over year to $1.9 billion. This upside was primarily driven by higher mobile trade-in volumes and continued subscriber growth from recently added protection programs.

Net operating income of $120.9 million improved 20% year over year, driven by an increase in mobile subscribers from new and existing programs, as well as higher income from Global Automotive. This was partially offset by lower margins from mobile trade-in programs, in part due to the impact of COVID-19 and unfavorable foreign exchange.

Net earned premiums, fees and others at Global Preneed rose 9% year over year to $53.4 million, owing to continued growth in the United States from prefunded funeral policies as well as prior period sales of the Final Need product.

Net operating income increased 4% year over year to $12.3 million.

Net operating loss at Corporate & Other was $19.5 million, wider than the year-ago quarter’s net operating loss of $18.8 million due to lower investment income attributable to lower yielding and more liquid investable assets. It was partially offset by lower employee-related expenses, including travel.

Financial Position

Liquidity was $433 million as of Mar 31, 2020, about $208 million higher than the company’s current targeted minimum level of $225 million.

Total assets decreased 2% to $43.4 billion as of Mar 31, 2020 from 2019 end.

Total shareholders’ equity came in at $5.4 billion, down 5% year over year.

Share Repurchase and Dividend Update

In the first quarter, the company bought back 0.5 million shares for $57 million. From Apr 1 through May 1, the company repurchased additional 0.2 million shares for $18 million. It now has $411 million remaining under its current share buyback authorization.

The company’s total dividends amounted to $43 million in the quarter, including $38 million in common stock dividends and $5 million in preferred stock dividends.

2020 Guidance

Assurant suspended its 2020 outlook due to the uncertainty regarding the duration of the COVID-19 pandemic and its impact on the broader economy. The company will continue to monitor this evolving situation and take additional steps to sustain its strong financial position in the long term.

Zacks Rank

Assurant currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Insurers

Among other players from the insurance industry that have reported first-quarter earnings so far, the bottom line of Brown & Brown, Inc. (BRO - Free Report) beat the Zacks Consensus Estimate while that of RLI Corp. (RLI - Free Report) and Travelers Companies (TRV - Free Report) missed the same.

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