We are reiterating our Neutral recommendation on
) following the fourth quarter earnings release. The company
reported earnings ahead of the Zacks Consensus Estimate and threw
a positive earnings surprise of 122.6%. We, however, remain on
the sidelines on this Zacks Rank #3 (Hold) multi-line insurer,
given headwinds faced by its business units.
Assurant 's Solutions segment has been performing well over
the past several quarters. Assurant Solutions expanded in several
targeted areas. It strengthened its position in Latin America, a
key market for Solutions. The segment has a robust sales pipeline
and it is focused on achieving a goal of 14% ROE in 2014.
However, Assurant Health had been underperforming for the past
several quarters due to the challenging marketplace. It is
expected that the segment's earnings will remain under pressure
due to ongoing implementation of health care reform and lower
investment income from real estate joint venture
The company's Employee Benefits segment has been pressured by
persistent economic challenges in the small group sector, leading
to higher lapse rates and lower premium growth on in-force
policies. We do not expect a substantial improvement in earnings
from this segment until the U.S economy recovers substantially.
Nevertheless the company manages its capital prudently. Its
strong balance sheet continues to provide great flexibility.
The stock has witnessed a positive estimate revision since
earnings release. The Zacks Consensus Estimate for 2013 has gone
up 0.4% to $5.59 per share. Moreover, the Zacks Consensus
Estimate for 2014 has also increased 1.5% to $5.62 per share.
Other carriers under our coverage
Assured Guaranty Ltd.
) carrying a Zacks Rank #1 (Strong Buy) and
FBL Financial Group Inc.
) with a Zacks Rank #2 (Buy) are worth considering.
AEGON N V (AEG): Free Stock Analysis Report
ASSURED GUARNTY (AGO): Free Stock Analysis
ASSURANT INC (AIZ): Free Stock Analysis
FBL FINL GRP-A (FFG): Free Stock Analysis
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