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Assurant (AIZ) Benefits From Robust Segmental Performance

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·4-min read
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  • AIZ
  • CINF
  • BRK-B
  • KNSL

Assurant, Inc. AIZ has been gaining momentum on the back of higher Specialty property and casualty revenues, growth in multifamily housing, higher trading volumes and lower claims activity.

Growth Projections

The Zacks Consensus Estimate for Assurant’s 2021 and 2022 earnings per share is pegged at $9.15 and $11.99, indicating year-over-year increases of 6% and 31%, respectively.

Estimate Revision

Estimates for 2021 have moved up nearly 0.8% in the past 30 days, reflecting investors’ optimism.

Earnings Surprise History

Assurant has a decent earnings surprise history. It beat estimates in three of the last four quarters and missed in one, with the average being 12%.

Zacks Rank & Price Performance

Assurant currently carries a Zacks Rank #3 (Hold). In the past year, the stock has rallied 15.6% compared with the industry’s decrease of 0.5%.

Zacks Investment Research
Zacks Investment Research

Image Source: Zacks Investment Research

Business Tailwinds

Global Housing is likely to gain from higher Specialty property and casualty revenues, higher average insured values and premium rates in lender placed as well as growth in multifamily housing.

Assurant continues to expect Global Housing's net operating income excluding cats to remain unchanged year over year in 2021.

The solid performance of the Global Automotive and Connected Living business will continue to support the long-term strategy of focusing on higher growth fee-based and capital-light businesses.

Connected Living continues to gain from ongoing mobile subscriber growth in North America and better performance in the Asia Pacific, as well as higher trading volumes, led by contributions from Hyla acquisition and carrier promotions.

Global Automotive will likely benefit from organic global growth, higher investment income and lower claims activity.

In 2021, Global Lifestyle revenues are expected to increase modestly, mainly driven by Global Auto and Connected Living growth. Lifestyle's net operating income is expected to grow in high single digits. Adjusted EBITDA for the segment is expected to grow in double digits year over year, in segment net operating income.

The multi-line insurer exited the third quarter with $1.34 billion in holding company liquidity, which was well above the targeted minimum level of $225 million that reflects the proceeds from the sale of the disposed Global Preneed business.

Assurant has a distinguished track record of success with 17 consecutive dividend increases since its initial public offering in 2004. With the third-quarter dividend payment, the insurer will complete its $1.35 billion capital return objective from 2019 to 2021. At present, the insurer has $1.13 billion remaining under its current share buyback authorization.

Assurant estimates a higher-than-usual level of buybacks into 2022 as it expects to return $900 million in net proceeds from the sale of Global Preneed within the next 12 months.

Key Players

Some better-ranked players from the insurance industry include Kinsale Capital KNSL, Cincinnati Financial Corporation CINF and Berkshire Hathaway (BRK.B). While Kinsale Capital sports a Zacks Rank #1, Cincinnati Financial and Berkshire carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Kinsale Capital’s earnings surpassed estimates in each of the last four quarters, the average beat being 37.63%. In the past year, Kinsale Capital has lost 13.9%. The Zacks Consensus Estimate for 2021 and 2022 has moved 15.2% and 11.7% north, respectively, in the past 30 days.

Higher submission activity from brokers across most lines of business, higher rates on bound accounts, favorable market conditions, and high retention rates arising from contract renewals are likely to drive Kinsale Capital’s premium income.

Cincinnati Financial surpassed estimates in each of the last four quarters, the average earnings surprise being 40.05%. In the past year, Cincinnati Financial has rallied 42.5%. The Zacks Consensus Estimate for 2021 and 2022 has moved 0.9% and 5% north, respectively, in the past 30 days.

Cincinnati Financial is well poised to gain from premium growth initiatives, price increases and a higher level of insured exposure.

The bottom line of Berkshire Hathaway surpassed estimates in two of the last four quarters and missed the same in the other two, the average being 5.53%. In the past year, Berkshire Hathaway has rallied 20.1%. The Zacks Consensus Estimate for 2021 and 2022 has moved 0.08% and 1.5% north, respectively, in the past 30 days.

Berkshire Hathaway is expected to benefit from its growing Insurance business, Manufacturing, Service and Retailing, Finance and Financial Products segments, and strategic acquisitions.


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Berkshire Hathaway Inc. (BRK.B) : Free Stock Analysis Report

Cincinnati Financial Corporation (CINF) : Free Stock Analysis Report

Assurant, Inc. (AIZ) : Free Stock Analysis Report

Kinsale Capital Group, Inc. (KNSL) : Free Stock Analysis Report

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