Assurant, Inc. :AIZ-US: Earnings Analysis: Q1, 2017 By the Numbers : June 9, 2017

Assurant, Inc. reports financial results for the quarter ended March 31, 2017.

We analyze the earnings along side the following peers of Assurant, Inc. – Unum Group, Hartford Financial Services Group, Inc., CNO Financial Group, Inc., Aflac Incorporated, MetLife, Inc., UnitedHealth Group Incorporated, Aetna Inc. and Principal Financial Group, Inc. (UNM-US, HIG-US, CNO-US, AFL-US, MET-US, UNH-US, AET-US and PFG-US) that have also reported for this period.

Highlights

  • Summary numbers: Revenues of USD 1,514.90 million, Net Earnings of USD 143.80 million.
  • Earnings decline from operating margin decreases as well as from unusual items

The table below shows the preliminary results and recent trends for key metrics such as revenues and net income (See complete table at the end of this report):

2017-03-31 2016-12-31 2016-09-30 2016-06-30 2016-03-31
Relevant Numbers (Quarterly)
Revenues (mil) 1514.9 1673.21 1698.33 1672.03 2148.18
Revenue Growth (%YOY) -29.48 -34.33 -33 -36.78 -17.42
Earnings (mil) 143.8 31.32 144.37 169.35 220.32
Earnings Growth (%YOY) -34.73 -52.37 2155.92 416.48 340.25
Net Margin (%) 9.49 1.87 8.5 10.13 10.26
EPS 2.53 0.54 2.37 2.7 3.34
Return on Equity (%) 13.93 2.91 12.67 14.77 19.39
Return on Assets (%) 1.94 0.42 1.92 2.25 2.92

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Market Share Versus Profits

Revenues History
Earnings History

AIZ-US‘s change in revenue this period compared to the same period last year of -29.48% is almost the same as its change in earnings, and is about average among the announced results thus far in its peer group, suggesting that AIZ-US is holding onto its market share. Also, for comparison purposes, revenues changed by -9.46% and earnings by 359.19% compared to the immediate last period.

Revenues Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Leader, Earnings Focus, Laggard, Revenues Focus

Earnings Growth Analysis

Insurance companies sometimes tradeoff for improvements in premiums earned by relaxing standards in underwriting policies. A quick way to check against such activity is to compare the changes in loan loss provisions as well any chnages in the level of policy claims. If either of these checks point to a decline in the underwriting standards, it is quite possible that the company’s performance is a result of underwriting policy changes that could have a longer term impact compared to the shorter term pop in premiums earned.

Premiums Earned Percent History
Loss Ratio History

The company’s year-on-year earnings decline has not come as a result of decline in premiums earned as a percent of total revenues or because of any underwriting issues – both premiums earned as a percent of total revenues and the loss ratio have actually improved. Matter of fact, premiums earned went from 65.88% to 69.33% and the loss ratio improved from 38.43% to 34.09% over this period. For comparison, premiums earned as a percent of revenues were 70.21% and the loss ratio 36.49% in the immediate last period.

Premiums Earned Percent Versus Loss Ratio

Margins

The company’s fall in earnings have been influenced by the following factors: (1) Contraction in operating margins after interest from 17.32% to 12.61% and (2) One-time items that contributed to a weakening of pretax margins from 15.71% to 14.20%.

EBIT Margin Versus PreTax Margin

Quadrant label definitions. Hover to know more

Operation driven Earnings, One-time Favorables, Low Earnings Base, One-time Unfavorables
EBIT Margin History
PreTax Margin History

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Company Profile

Assurant, Inc. engages in the provision of risk management solutions, protecting where consumers live and the goods they buy. It operates through following segments: Global Housing, Global Lifestyle, Global Preneed and Total Corporate and Other. The Global Housing segment provides lender-placed homeowners, manufactured housing and flood insurance; renters insurance and related products, also referred to as its multi-family housing business ; and field services, valuation services and other property risk management services, also referred to as its mortgage solutions business. The Global Lifestyle segment provides mobile device protection products and related services and extended service products and related services for consumer electronics and appliances, also referred to as its global connected living business; vehicle protection services; and credit insurance. The Global Preneed segment provides pre-funded funeral insurance and annuity products. The Corporate and Other segment includes corporate and other activities of the holding company, financing and interest expenses, net realized gains and losses on investments and interest income earned from short-term investments held. The company was founded on February 4, 2004 and is headquartered in New York, NY.

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