Assurant, Inc.’s AIZ shares have rallied 34% in the year-to-date period compared with the industry's growth of 26%. The Finance sector and the Zacks S&P 500 index have returned 24.6% and 26.7% in the said time frame, respectively. With a market capitalization of $11.58 billion, the average volume of shares traded in the last three months was 0.3 million. Currently priced at $ 225.73, the stock is slightly below its 52-week high of $230.55.

AIZ Outperforms Industry, Sector, S&P

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The rally was largely driven by the well-performing Global Lifestyle business, growth of fee-based capital-light businesses, solid capital management, favorable estimates and effective capital deployment.

AIZ’s Growth Projection Encourages

The Zacks Consensus Estimate for Assurant’s 2024 revenues is pegged at $11.87 billion, implying a year-over-year improvement of 5.9%. The consensus estimate for 2025 earnings per share and revenues indicates an increase of 16.6% and 3.3%, respectively, from the corresponding 2024 estimates.

Optimistic Analyst Sentiment on AIZ

Three of the four analysts covering the stock have raised estimates for 2024, and four analysts have raised the same for 2025 over the past 30 days. Thus, the Zacks Consensus Estimate for 2024 and 2025 moved 5.7% and 2.7% north, respectively, in the last 30 days.

AIZ Trading Above 50-Day and 200-Day Moving Average

This Zacks Rank #3 (Hold) multi-line insurer is trading above its 50-day and 200-day simple moving average (SMA) of $202.81 and $183.69, respectively, indicating solid upward momentum. SMA is a widely used technical analysis tool to predict future price trends by analyzing historical price data.

Assurant’s Favorable Return on Capital

Return on equity in the trailing 12 months was 17.4%, better than the industry average of 15.3%. This highlights the company’s efficiency in utilizing shareholders’ funds. 

Also, the return on invested capital (ROIC) has been increasing over the last few quarters as the company raised its capital investment over the same time frame, reflecting AIZ’s efficiency in utilizing funds to generate income. ROIC in the trailing 12 months was 11.1%, better than the industry average of 2.5%.

Key Points to Note for AIZ

Assurant’s focus on growing fee-based capital-light businesses, which account for 52% of segmental revenues, bodes well for growth. Management estimates that contribution from the same will continue to grow in double digits over the long term.

Better Homeowners’ performance reflecting higher lender-placed net earned premiums should drive better results at Global Housing. At the same time, growth across Connected Living and Global Automotive should drive Global Lifestyle.

The insurer remains focused on ramping up the Connected Living platform, deploying innovative products and services, and adding new partnerships. These initiatives are expected to double the margins of Connected Living to 8% over the long term.

Investment income, which has been witnessing an increase in net investment income over the past few years, should benefit from higher yields on fixed-maturity securities.

Prudent Capital Deployment

AIZ has a solid capital management policy in place. Assurant’s board of directors approved an 11% hike in cash dividend in November 2024. AIZ’s distribution of wealth to shareholders via dividend hikes is impressive. The recent hike marks the insurer increasing dividends for straight 20 quarters. 

Assurant expects to return $300 million to shareholders through share repurchases in 2024. This is the top end of the anticipated range from the beginning of 2024. Notably, its free cash flow conversion has remained more than 100% over the last few quarters, reflecting its solid earnings.

Key Picks

Investors interested in the multi-line insurance industry may look at some better-ranked players like EverQuote, Inc. EVER, CNO Financial Group, Inc. CNO and Radian Group Inc.  RDN, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for EverQuote’s 2024 and 2025 earnings implies year-over-year growth of 147.4% and 10.7%, respectively. It beat earnings estimates in each of the past four quarters, with an average surprise of 149.58%. Year to date, shares of EVER have rallied 58.8%.

The Zacks Consensus Estimate for CNO Financial’s 2024 and 2025 earnings implies year-over-year growth of 20.7% and 0.6%. It beat earnings estimates in three of the past four quarters while missing in one, with an average surprise of 24.51%. Year to date, shares of CNO have gained 41.2%.

The Zacks Consensus Estimate for Radian’s 2024 and 2025 revenues implies year-over-year growth of 6.4% and 4.8%, respectively. It beat earnings estimates in each of the past four quarters, with an average surprise of 17.65%. Year to date, shares of RDN have gained 25.2%.

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