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Why Is Assurant (AIZ) Up 15.9% Since Last Earnings Report?
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A month has gone by since the last earnings report for Assurant (AIZ - Free Report) . Shares have added about 15.9% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Assurant due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Assurant Q2 Earnings & Revenues Beat, View Raised
Assurant, Inc. reported second-quarter 2024 net operating income of $4.08 per share, which beat the Zacks Consensus Estimate by nearly 14%. The bottom line rose 4.9% year over year. Quarterly results benefited from higher net earned premiums, fees and other income and net investment income, and solid performance in the Global Lifestyle segment. These were partially offset by higher expenses and weakness in the Corporate & Other segment.
Total revenues increased 7% year over year to $2.9 billion, driven by higher net earned premiums, fees and other income and net investment income. The top line beat the Zacks Consensus Estimate by 2.5%. Net earned premiums, fees and other income increased 6% year over year to $2.8 billion, driven by growth across both segments. Our estimate was $2.7 billion. Net investment income was up 10.4% year over year to $124.7 million, driven by higher yields and assets in fixed maturity securities, short-term investments and cash and cash equivalents. Our estimate was $127.9 million. The Zacks Consensus Estimate was pegged at $127 million.
Total benefits, loss and expenses increased 6.5% to $2.7 billion, mainly due to higher policyholders benefit and underwriting and selling, general and administrative expenses. Our estimate was $2.5 billion. Adjusted EBITDA, excluding reportable catastrophes, increased 10% to $369.1 million. Our estimate was $359.5 million.
Segmental Performance
Revenues at Global Housing increased 18.1% year over year to $663.5 million, primarily driven by higher net earned premiums and net investment income. The figure was higher than our estimate of $572.6 million. The Zacks Consensus Estimate was $594 million. Net earned premiums, fees and other income increased 18% year over year driven by Homeowners’ top-line growth, including growth in policies in force and higher average premiums within lender-placed.
Adjusted EBITDA, excluding catastrophes, surged 23% year over year to $206.4 million on continued top-line growth within Homeowners, including higher policies in force from new lender-placed programs and portfolios. The figure was higher than our estimate of $174 million. The Zacks Consensus Estimate was $179 million.
Revenues at Global Lifestyle rose 3.6% year over year to $2.3 billion, matching the Zacks Consensus Estimate and our estimate. The increase was primarily driven by higher net earned premiums, fees and other income. Adjusted EBITDA, excluding catastrophes, of $189.9 million decreased 4% year over year, attributable to lower Global Automotive results from ongoing elevated claims costs and elevated losses within select ancillary products. The figure was lower than our estimate of $212.9 million. The Zacks Consensus Estimate was pegged at $205 million.
Adjusted EBITDA loss at Corporate & Other was $27.25 million, narrower than the year-ago quarter’s adjusted EBITDA loss of $28.5 million. The narrower loss was attributable to higher net investment income from higher asset levels and yields.
Financial Position
Liquidity was $735 million as of Jun 30, 2024, which was $397 million higher than the company’s current targeted minimum level of $225 million. Total assets increased 0.4% to $33.7 billion as of Jun 30, 2024, from the end of 2023. Total shareholders’ equity came in at $5 billion, up 4.1% year over year. Debt-to-total capital ratio of 29.4 improved 80 bps from the 2023 end level.
Share Repurchase and Dividend Update
In the second quarter, Assurant returned $80 million to shareholders, comprising $40 million in buybacks and $40 million in dividends. Through Aug 2, the insurer bought back another $20 million worth of shares and now has $575 million remaining under the current repurchase authorization.
2024 Guidance Raised
Assurant expects adjusted EBITDA to increase in high single digits led by strong growth in Global Housing and modest growth in Global Lifestyle. It expected the same to increase by mid-single digits earlier. Global Housing adjusted EBITDA, excluding reportable catastrophes, is expected to increase, mainly driven by top-line growth in Homeowners, benefits from expense leverage and lower catastrophe reinsurance premiums. Global Lifestyle adjusted EBITDA is expected to increase modestly. The company continues to expect organic growth and improved profitability in Connected Living programs. Corporate and Other adjusted EBITDA loss is expected to approximate $110 million.
The company now expects a lower effective tax rate of approximately 19% to 21%. It continues to expect depreciation expense of approximately $130 million, interest expense of approximately $107 million and amortization of purchased intangible assets of approximately $70 million.
Adjusted earnings per share are expected to grow in low double digits, excluding reportable catastrophes. It earlier expected adjusted earnings per share, excluding reportable catastrophes, growth rate to approximate the growth rate in adjusted EBITDA, excluding reportable catastrophes. The insurer expects share repurchases to be toward the high end of its $200-$300 million range, reflecting a strong capital position and comprehensive catastrophe reinsurance program.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates.
VGM Scores
Currently, Assurant has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Assurant has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
Assurant belongs to the Zacks Insurance - Multi line industry. Another stock from the same industry, MGIC Investment (MTG - Free Report) , has gained 9% over the past month. More than a month has passed since the company reported results for the quarter ended June 2024.
MGIC reported revenues of $305.55 million in the last reported quarter, representing a year-over-year change of +3.4%. EPS of $0.77 for the same period compares with $0.68 a year ago.
For the current quarter, MGIC is expected to post earnings of $0.67 per share, indicating a change of +4.7% from the year-ago quarter. The Zacks Consensus Estimate has changed +0.5% over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #1 (Strong Buy) for MGIC. Also, the stock has a VGM Score of D.
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Why Is Assurant (AIZ) Up 15.9% Since Last Earnings Report?
A month has gone by since the last earnings report for Assurant (AIZ - Free Report) . Shares have added about 15.9% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Assurant due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Assurant Q2 Earnings & Revenues Beat, View Raised
Assurant, Inc. reported second-quarter 2024 net operating income of $4.08 per share, which beat the Zacks Consensus Estimate by nearly 14%. The bottom line rose 4.9% year over year. Quarterly results benefited from higher net earned premiums, fees and other income and net investment income, and solid performance in the Global Lifestyle segment. These were partially offset by higher expenses and weakness in the Corporate & Other segment.
Total revenues increased 7% year over year to $2.9 billion, driven by higher net earned premiums, fees and other income and net investment income. The top line beat the Zacks Consensus Estimate by 2.5%. Net earned premiums, fees and other income increased 6% year over year to $2.8 billion, driven by growth across both segments. Our estimate was $2.7 billion. Net investment income was up 10.4% year over year to $124.7 million, driven by higher yields and assets in fixed maturity securities, short-term investments and cash and cash equivalents. Our estimate was $127.9 million. The Zacks Consensus Estimate was pegged at $127 million.
Total benefits, loss and expenses increased 6.5% to $2.7 billion, mainly due to higher policyholders benefit and underwriting and selling, general and administrative expenses. Our estimate was $2.5 billion. Adjusted EBITDA, excluding reportable catastrophes, increased 10% to $369.1 million. Our estimate was $359.5 million.
Segmental Performance
Revenues at Global Housing increased 18.1% year over year to $663.5 million, primarily driven by higher net earned premiums and net investment income. The figure was higher than our estimate of $572.6 million. The Zacks Consensus Estimate was $594 million. Net earned premiums, fees and other income increased 18% year over year driven by Homeowners’ top-line growth, including growth in policies in force and higher average premiums within lender-placed.
Adjusted EBITDA, excluding catastrophes, surged 23% year over year to $206.4 million on continued top-line growth within Homeowners, including higher policies in force from new lender-placed programs and portfolios. The figure was higher than our estimate of $174 million. The Zacks Consensus Estimate was $179 million.
Revenues at Global Lifestyle rose 3.6% year over year to $2.3 billion, matching the Zacks Consensus Estimate and our estimate. The increase was primarily driven by higher net earned premiums, fees and other income. Adjusted EBITDA, excluding catastrophes, of $189.9 million decreased 4% year over year, attributable to lower Global Automotive results from ongoing elevated claims costs and elevated losses within select ancillary products. The figure was lower than our estimate of $212.9 million. The Zacks Consensus Estimate was pegged at $205 million.
Adjusted EBITDA loss at Corporate & Other was $27.25 million, narrower than the year-ago quarter’s adjusted EBITDA loss of $28.5 million. The narrower loss was attributable to higher net investment income from higher asset levels and yields.
Financial Position
Liquidity was $735 million as of Jun 30, 2024, which was $397 million higher than the company’s current targeted minimum level of $225 million. Total assets increased 0.4% to $33.7 billion as of Jun 30, 2024, from the end of 2023. Total shareholders’ equity came in at $5 billion, up 4.1% year over year. Debt-to-total capital ratio of 29.4 improved 80 bps from the 2023 end level.
Share Repurchase and Dividend Update
In the second quarter, Assurant returned $80 million to shareholders, comprising $40 million in buybacks and $40 million in dividends. Through Aug 2, the insurer bought back another $20 million worth of shares and now has $575 million remaining under the current repurchase authorization.
2024 Guidance Raised
Assurant expects adjusted EBITDA to increase in high single digits led by strong growth in Global Housing and modest growth in Global Lifestyle. It expected the same to increase by mid-single digits earlier. Global Housing adjusted EBITDA, excluding reportable catastrophes, is expected to increase, mainly driven by top-line growth in Homeowners, benefits from expense leverage and lower catastrophe reinsurance premiums. Global Lifestyle adjusted EBITDA is expected to increase modestly. The company continues to expect organic growth and improved profitability in Connected Living programs. Corporate and Other adjusted EBITDA loss is expected to approximate $110 million.
The company now expects a lower effective tax rate of approximately 19% to 21%. It continues to expect depreciation expense of approximately $130 million, interest expense of approximately $107 million and amortization of purchased intangible assets of approximately $70 million.
Adjusted earnings per share are expected to grow in low double digits, excluding reportable catastrophes. It earlier expected adjusted earnings per share, excluding reportable catastrophes, growth rate to approximate the growth rate in adjusted EBITDA, excluding reportable catastrophes. The insurer expects share repurchases to be toward the high end of its $200-$300 million range, reflecting a strong capital position and comprehensive catastrophe reinsurance program.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates.
VGM Scores
Currently, Assurant has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Assurant has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
Assurant belongs to the Zacks Insurance - Multi line industry. Another stock from the same industry, MGIC Investment (MTG - Free Report) , has gained 9% over the past month. More than a month has passed since the company reported results for the quarter ended June 2024.
MGIC reported revenues of $305.55 million in the last reported quarter, representing a year-over-year change of +3.4%. EPS of $0.77 for the same period compares with $0.68 a year ago.
For the current quarter, MGIC is expected to post earnings of $0.67 per share, indicating a change of +4.7% from the year-ago quarter. The Zacks Consensus Estimate has changed +0.5% over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #1 (Strong Buy) for MGIC. Also, the stock has a VGM Score of D.