Assurant, Inc. (AIZ) is a solid investment opportunity, thanks to several growth drivers, including increased mobile subscribers in North America, inorganic and organic growth strategies, higher average insured values, and effective capital deployment. One of the key indicators of AIZ’s financial performance, its return on equity (ROE), currently stands at 13.5%, higher than the industry’s average of 9.8% in the trailing 12 months.
Ranking and Price Performance
AIZ is currently ranked #1 on the Zacks Rank (Strong Buy) list. In comparison to the industry’s 14.1% decline this year, AIZ’s share has risen by 2% in the year-to-date period.
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Optimistic Growth Projections
The Zacks Consensus Estimate for AIZ’s 2023 earnings stands at $13.91 per share, showing an 11.1% increase of the year-ago reported figure of $11.13. The revenue projection for AIZ in 2023 is estimated to be $10.7 billion, reflecting a 2.7% increase from the year-ago reported figure of $10.4 billion.
AIZ earnings have outperformed analysts’ estimates in three of the last four quarters, and the average surprise is 18.2%.
Net earned premiums accounted for 84.5% of the total revenue in the first quarter of 2023. The company is expected to continue achieving organic growth across all distribution channels, extended service contracts, and mobile subscribers to boost this metric in the future.
Revenues from the Global Lifestyle segment, which includes the Connected Living and Global Automotive business, climbed 2.6% in Q1. AIZ’s Connected Living business in the US is expected to fuel growth in this segment.
The company is working to expand its footprint in international markets, and the Global Automotive business is anticipated to make steady progress following its partnership with CNH Industrial. Collaboration with more partners outside the United States is expected to further enhance its results. Adjusted EBITDA growth is expected to be modest in 2023.
The Global Housing segment will benefit from higher policy growth from new and existing clients. As inflation improves, the segment’s bottom line should improve too. Ongoing expense activities should also help to improve performance in the long-term. Adjusted EBITDA is expected to increase on the back of better performance in homeowners insurance arising from higher lender-placed net earned premiums.
Net investment income is also expected to rise due to higher yields on fixed maturity securities, cash equivalents, and commercial mortgage loans on real estate arising from a rise in invested assets.
AIZ has a strong capital management policy, with its solid capital position supporting effective capital deployment. The company has $274 million available for share repurchase, although it did not repurchase any shares in Q1 2023. However, it plans to resume its buyback program soon. The company also paid out dividends worth $37 million in Q1 2023.
One Risk to Monitor
AIZ has seen an increase in operating expenses due to higher policyholder benefits and underwriting, selling, general, and administrative expenses, which continue to impact margin expansion. However, we believe that the company’s strategic action plan could deliver long-term growth prospects.
Other Multiline Insurance Stocks to Consider
Old Republic International Corporation (ORI), Radian Group Inc. (RDN), and American International Group, Inc. (AIG) are some other top names to consider in the multiline insurance industry. While Old Republic International has a Zacks Rank #1, both Radian Group and American International carry a Zacks Rank #2 (Buy). You can access the Zacks#1 Rank stock list here.
In each of the trailing four quarters, Old Republic International has outperformed the Zacks Consensus Estimate, with an average positive surprise of 29.9%. The consensus mark for ORI earnings in 2023 has moved up by 9.1% in the past 30 days.
Radian Group has also outperformed estimates in each of the trailing four quarters, with the average earnings surprise being 38.7%. The consensus mark for RDN’s 2023 earnings has gained 6.5% in the past 30 days.
American International’s earnings have outperformed in three of the last four quarters, with an average earnings surprise of 9.2%. The Zacks Consensus Estimate for AIG’s 2023 earnings suggests a 43.7% increase from the prior-year’s reported figures.
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