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Assurant Hits 52-Week High on Q3 Beat and Restructuring

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On Nov 23, 2015, shares of Assurant Inc.AIZ hit a new 52-week high of $86.99, driven by strong third-quarter earnings and its recent business restructuring efforts. Over the past one year, the stock has returned 27% comparing favorably with 1.1% return by the S&P 500, over the same time frame.

The stock must have received a boost after its third-quarter earnings of $1.71 per share beat the estimates by 11.8%. Revenues of $2.5 billion also surpassed the Zacks Consensus Estimate of $2.1 billion.

Though Assurant reported a decline in premium earned by its specialty and property segments in the third quarter, investors are hopeful that significant actions undertaken by the company in recent months to support its strategic realignment and transformation will bear fruit.

Investors favorably view the company's plan to exit both the Health and Employee Benefits businesses which will allow it to focus on the Specialty Property and Casualty, and Lifestyle Protection businesses, which have the potential to generate higher returns. As part of its restructuring, the company divested certain assets and business lines from Assurant Health to National General Holdings NGHC for $14 million in October. In the same month, the company exited the vehicle title business, which was a non-growth area for it. This business represented less than $10 million of annualized fee income and was sold for $19 million in cash proceeds. In September, Assurant also agreed to vend off Employee Benefits to Sun Life Assurance Company of Canada, a wholly owned subsidiary of Sun Life Financial Inc. SLF for $940 million.

The transactions are expected to give Assurant more financial flexibility and boost its capital base. Assurant expects the capital to be successfully re-deployed by year-end 2016.

Also, Assurant Solutions, a business unit of Assurant, announced that it will acquire Coast To Coast Dealer Services, Inc - a leading Canadian auto service contract company. The acquisition is expected to expand the vehicle service capabilities of Assurant.

The company also announced leadership changes in September which will add senior level expertise to its management committee in four critical functions; enterprise risk management, technology, strategy and business development, and communication and marketing. These leaders are expected to steer the company more efficiently and accelerate its transformation.

Stock to Consider

Assurant carries a Zacks Rank #3 (Hold). A stock worth considering in this space is Old Republic International Corporation ORI , with a Zacks Rank #1 (Strong Buy).

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ASSURANT INC (AIZ): Free Stock Analysis Report

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NATIONAL GNL HL (NGHC): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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