Assurant's (AIZ) Q2 Earnings and Revenues Miss Estimates

Assurant, Inc. AIZ reported second-quarter 2022 net operating income of $2.95 per share, which missed the Zacks Consensus Estimate by 8.1%. The bottom line decreased 9% from the year-ago quarter.

The results reflected growth in lender-placed from higher average insured values and premium rates and premium growth in Global Automotive, offset by higher catastrophes and expenses.

Assurant, Inc. Price, Consensus and EPS Surprise

Assurant, Inc. Price, Consensus and EPS Surprise

Assurant, Inc. price-consensus-eps-surprise-chart | Assurant, Inc. Quote

Total revenues increased 2.1% year over year to $2.6 billion due to higher net earned premiums, fees and other income and net investment income. The top line however missed the Zacks Consensus Estimate by 2.7%. The figure was lower than our estimate of $2.7 billion.

Net investment income was up 10.9% year over year to $92 million and beat the Zacks Consensus Estimate of $83 million. The figure was higher than our estimate of $87.9 million.

Total benefits, loss and expenses increased 5.9% to $2.4 billion, mainly on account of an increase in policyholder benefits and underwriting and selling, general and administrative expenses.

Segmental Performance

Revenue at Global Housing was flat year over year at $495.7 million, as growth in lender-placed from higher average insured values and premium rates was offset by higher catastrophe reinsurance costs. The figure missed the Zacks Consensus Estimate of $537 million and was higher than our estimate of $356.7 million.

Adjusted EBITDA of $75.2 million decreased 43% year over year, primarily due to a $17.2 million pre-tax increase in pre-tax reportable catastrophes. The figure was lower than our estimate of $117.3 million.

Revenues at Global Lifestyle increased 2% year over year to $1.9 billion. The increase was due to Global Automotive premium growth from strong prior period sales. Connected Living decreased modestly, mainly from the impact of runoff mobile programs. It was partially offset by higher mobile fee income driven by an increase in global devices serviced, as well as device protection growth in North America. The figure missed the Zacks Consensus Estimate of $2.1 billion and was lower than our estimate of $2.3 billion

Adjusted EBITDA of $206.8 million improved 12% year over year due to continued strong results across Connected Living and Global Automotive.

Adjusted EBITDA loss at Corporate & Other was $24.9 million, wider than the year-ago quarter’s adjusted EBITDA loss of $16.9 million on higher employee-related and technology expenses.

Financial Position

Liquidity was $595 million as of Jun 30, 2022, about $370 million higher than the company’s current targeted minimum level of $225 million.

Total assets decreased 6.5% to $31.7 billion as of Jun 30, 2022 from 2021 end. The figure, however, was lower than our estimate of $38.5 billion.

Total shareholders’ equity came in at $4.4 billion, down 18.4% year over year. The figure, however, was lower than our estimate of $5.9 billion.

Share Repurchase and Dividend Update

In the second quarter of 2022, Assurant repurchased 1.3 million shares for $232 million. From Jul 1 through Jul 31, 2022, Assurant repurchased additional shares for approximately $30 million. It now has $338 million remaining under the current repurchase authorization.

Assurant’s total dividends amounted to $39 million in the second quarter of 2022.

2022 Guidance

Assurant expects 3% to 6% growth in adjusted EBITDA, excluding reportable catastrophes, driven by profitable growth in Global Lifestyle, partially offset by a decline in Global Housing.

Assurant expects 14% to 18% growth in adjusted earnings, excluding reportable catastrophes, per share, driven by share repurchases, including the return of net proceeds from the sale of Global Preneed, and earnings growth in Global Lifestyle.

Assurant’s consolidated effective tax rate is expected to be approximately 22 to 24%, which reflects the impact of the first quarter tax benefit.

Global Lifestyle adjusted EBITDA is expected to increase by mid-to high-teens. It is driven mainly by mobile in Connected Living from global expansion in existing and new clients across device protection and trade-in and upgrade programs. This will be partially offset by unfavorable impacts of foreign exchange and strategic investments to support new business opportunities.

Global Automotive is also expected to increase, driven by higher investment income and more favorable loss experience in select ancillary products.

Global Housing adjusted EBITDA, excluding reportable catastrophes, is expected to decrease by low- to mid-teens, primarily due to higher non-catastrophe loss experience related to elevated inflationary trends, mainly in lender-placed, as well as increased catastrophe reinsurance costs. The decline will be partially offset by higher average insured values and premium rates in lender-placed, along with ongoing expense initiatives.

Corporate and Other Adjusted EBITDA loss is expected to be approximately $105 million, reflecting higher employee-related and technology expenses.

Capital is projected to be deployed to support business growth by funding investments and M&A and to return capital to shareholders in the form of share repurchases and dividends, subject to board approval and market conditions.

Zacks Rank

Assurant currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Some Other Insurers

Of the insurance industry players that have reported second-quarter results so far, The Hartford Financial Services Group, Inc. HIG, Willis Towers Watson Public Limited Company WTW and Chubb Limited CB beat the respective Zacks Consensus Estimate for earnings.

The Hartford Financial Services Group reported second-quarter 2022 adjusted operating earnings of $2.15 per share, which beat the Zacks Consensus Estimate by 41.5%. The bottom line, however, decreased 8% year over year.

Hartford Financial’s operating revenues amounted to $3,765 million, which improved from $3,568 million in the second quarter of 2022. Also, the top line beat the consensus mark by 1.5%. The total earned premium of $4,810 million beat the consensus mark of $4,776.3 million and increased from $4,460 million a year ago. Net investment income of $541 million declined from $581 million a year ago due to lower annualized return on alternative investments. The reported figure was below the Zacks Consensus Estimate of $564.5 million.

Willis Towers Watson delivered second-quarter 2022 adjusted earnings of $2.32 per share, which beat the Zacks Consensus Estimate by 0.4%.  The bottom line improved 9% year over year.

Willis Towers Watson posted adjusted consolidated revenues of $2.03 billion, down 3% year over year on a reported basis. Revenues increased 3% on an organic basis. The top line however missed the Zacks Consensus Estimate by 2.3%. Adjusted operating income was $314 million, down 1% year over year. Margin expanded 30 bps to 15.5%.

Chubb reported second-quarter 2022 core operating income of $2.40 per share, which outpaced the Zacks Consensus Estimate by about 17%. The bottom line also improved 16% from the year-ago quarter. Net premiums written improved 7.9% year over year to $10.3 billion in the quarter. Net premiums earned rose 8.4% to $9.6 billion. Adjusted net investment income was a record $950 million, up 0.5%.

Property and casualty underwriting income was a record $1.4 billion, up 21.1% from the year-ago quarter. Chubb incurred an after-tax catastrophe loss of $241 million, 6.6% wider year over year. The combined ratio improved 150 bps on a year-over-year basis to a record 84% in the quarter under review.

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