Assurant Inc. (AIZ) Sees Growth from Diversified Segments

On Dec 26, we issued an updated research report on Assurant Inc. (AIZ). The company has a strong position in a number of niche, specialty property & casualty insurance markets, such as lender-placed homeowners insurance, credit insurance/protection, multifamily housing products, and extended service contracts/warranties. It operates in the United States and derives revenues from diversified segments: solutions, specialty property, health, and employee benefits.

Assurant’s Solutions business has been performing well over the past several quarters. Over the long term, growth is expected to come from the company’s mobile business. The segment is also witnessing domestic and international business growth.

Assurant is also working consistently to realign its Specialty Property business (generating over 60% of the company’s earnings) by deleting and adding business. During the third quarter, the company announced that it will divest its subsidiary, American Reliable Insurance Company, to Global Indemnity Group, Inc., a subsidiary of Global Indemnity plc (GBLI). The sale will fetch Assurant $114 million in cash, which it expects to invest in high-growth return business.

Recently, the company has also appointed Alan B. Colberg as president and chief executive officer (CEO), and a solid and stable team of talented and experienced individuals will continue to steer this great company to scale newer heights.

Assurant also has a strong capital management policy in place. Traditionally, Assurant has been utilizing 50% of its free cash flow to repurchase shares. The company also raises dividend from time to time. A low debt-to-capital ratio also reflects a solid capital position.

Assurant’s Health business had been underperforming for the past several quarters due to the challenging marketplace. While insured membership is expected to increase as consumers look for affordable health-care alternatives, top-line growth, that is net earned premiums and fees, is expected to decline due to product mix changes undertaken by the company.

Other headwinds faced by the company include a substantial level of catastrophe exposure from its lender-placed homeowners’ line, and exposure to adverse changes in the legal and regulatory environment given its niche products.

Assurant carries a Zacks Rank #2 (Buy). Other stocks worth considering include CNO Financial Group, Inc. (CNO) and FBL Financial Group Inc. (FFG). Both stocks carry a Zacks Rank # 1(Strong Buy).