Assurant Banks On High Premiums & Robust Capital Position
Zacks Investment Research | Mar 23, 2020 10:57PM ET
Assurant, Inc. (NYSE:AIZ) is currently riding on strong premium earned at its Global Lifestyle and Global Preneed segments, which, in turn, is boosting its top-line growth.
The company has a decent earnings surprise history. It surpassed estimates in two of the trailing four quarters, the beat being 1.8%, on average.
Let’s delve deep into the factors that bodewell for the company.
What’s Driving Assurant?
The multi line insurer continues to benefit on the back of strong performance across its two segments – Global Lifestyle and Global Preneed. The Global Lifestyle segment, which accounted for nearly 77% of the company’s total net operating income in 2019, has consistently performed well, owing to adoption of inorganic and organic growth strategies. Net earned premiums, fees and other income in this segment improved nearly 37% year over year in 2019.
The company’s Global Preneed segment has put up an impressive performance as well. Net earned premiums, fees and other income in this segment inched up 6% year over year in 2019. Based on such solid segmental results, Assurant’s top line has registered a rise of 25.2% year over year in 2019 and this momentum is expected to continue in the near future as well. Evidently, the Zacks Consensus Estimate for first-quarter 2020 revenues is pegged at $2.6 billion, indicating a rise of 6.2% from the prior-year quarter.
Net investment income continues to be another important driver of the company’s top-line growth and the same metric improved 12.8% year over year in 2019. However, the current low interest rate environment is likely to keep investment yields under pressure, which would consequently weigh on its overall investment income.
Apart from launching products, Assurant has always been in a bid to leverage its existing platforms aimed at enhancing its suite of products and services. Last month, it upgraded Assurant Virtual Learning Platform by introducing Virtual Coach. The new addition is likely to enhance the skill development process of traders, who will also get access to innovative solutions on which their business is likely to grow.
Furthermore, Assurant flaunts a solid capital position by virtue of which it returns value to shareholders in the form of share buybacks and dividends. Last year, in November, the board of directors approved a dividend hike of 5%. Its dividend payouts have also witnessed a CAGR of 20.3% in the past five years (2014-2019).
Shares of this Zacks Rank #3 (Hold) company have lost 1.5% in a year compared with its Zacks Investment Research
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