Assurant, Inc. AIZ has been favored by investors on the back of organic growth across distribution channels, global expansion, growth in multi-family housing and solid cash flow generation.
Earnings Estimate
The Zacks Consensus Estimate for Assurant’s 2022 and 2023 earnings per share is pegged at $12.19 and $13.98, indicating year-over-year increases of 30.2% and 14.6%, respectively. The expected long-term earnings growth rate is 17.7%, higher than the industry average of 11.7%.
Estimate Revision
The Zacks Consensus Estimate for 2022 and 2023 has moved 2.4% and 0.07% north, respectively, in the past 60 days, reflecting analysts’ optimism.
Earnings Surprise History
Assurant has a decent earnings surprise history, with a trailing four-quarter earnings surprise of 17.03%, on average.
Zacks Rank
The insurer currently carries a Zacks Rank #3 (Hold). The AIZ stock has rallied 28.3% in the past year against the industry’s decline of 7.5%.
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Return on Equity (ROE)
Assurant’s ROE for the trailing 12 months is 9.8%, better than the industry average of 9.5%. The same expanded 60 basis points year over year. This reflects AIZ’s efficiency in utilizing shareholders’ funds.
Style Score
Assurant has a favorable VGM Score of B. VGM Score helps identify stocks with the most attractive value, best growth and the most promising momentum.
Business Tailwinds
Continued organic growth across distribution channels, better loss experience from select ancillary products and higher investment income should drive Global Automotive of the Global Lifestyle segment. Connected Living of the segment is likely to gain from higher trade-in volumes, higher international earnings and continued mobile subscriber growth in North America.
Adjusted EBITDA in Global Lifestyle is expected to grow on the back of mobile in Connected Living from the global expansion in existing and new clients across device protection, and trade-in and upgrade programs.
The Global Housing segment should gain from higher average insured values and premium rates in lender-placed, and growth in multi-family housing.
In the first quarter of 2022, AIZ expanded its long-standing partnership with Telefonica to provide a comprehensive device trade-in program across several key countries in Europe and Latin America. The partnership is expected to boost the multi-line insurer’s capability and expand the range of products and services that Assurant offers.
For 2022, Assurant expects to generate strong cash flow, which is a core component of the insurer’s financial profile. Sustained earnings growth and cash flow generation are expected to provide the insurer with the flexibility to drive long-term growth.
Assurant boasts a proven track record of making high-return, strategic investments in businesses, along with returning capital to shareholders, which is likely to maximize value creation in the long run.
In 2021, Assurant returned $1 billion to shareholders and completed the three-year $1.35-billion capital return objectives. AIZ also completed 60% of the $900 million that it committed to returning through share repurchases as part of the sale of the Preneed business. AIZ estimates to return the remainder by the end of the second quarter of 2022.
Upbeat Guidance
Assurant expects to deliver sustained 8-10% growth in adjusted EBITDA, excluding reportable catastrophes in 2022. AIZ also estimates $3 billion in segment cash generation for the next three years.
Assurant anticipates delivering 10% average annual growth in adjusted EBITDA, excluding reportable catastrophes for 2023-2024.
The insurer expects growth in adjusted earnings, excluding reportable catastrophes, per diluted share of 16-20% for 2022.
AIZ expects 12% or higher average annual growth in adjusted earnings, excluding reportable catastrophes, per diluted share for 2023-2024.
Stocks to Consider
Some better-ranked multi-line insurers are Horace Mann Educators Corporation HMN, Old Republic International Corporation ORI and CNO Financial Group, Inc. CNO, each currently carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Horace Mann’s earnings surpassed estimates in each of the last four quarters, the average beat being 22.8%. In the past year, HMN has declined 3.3%.
The Zacks Consensus Estimate for 2022 and 2023 earnings has moved 8.3% and 11% north, respectively, in the past 60 days.
Old Republic International’s earnings surpassed estimates in each of the last four quarters, the average earnings surprise being 38.74%. In the past year, ORI has rallied 19.4%.
The Zacks Consensus Estimate for Old Republic International’s 2022 and 2023 earnings has moved 3.7% and 7.5% north, respectively, in the past 60 days.
The bottom line of CNO Financial surpassed earnings estimates in each of the last four quarters, the average being 25.48%. In the past year, the insurer has gained 5.7%.
The Zacks Consensus Estimate for CNO Financial’s 2022 and 2023 earnings has moved 3% and 2.8% north, respectively, in the past 60 days.
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