On Tuesday, Assurant Inc. (NYSE:AIZ), a global provider of risk management solutions, maintained its Overweight rating and $205.00 stock price target from Piper Sandler after pre-announcing its second-quarter 2024 catastrophe losses.
The company reported approximately $46 million in pre-tax losses within its Global Housing segment, a result of severe weather events but highlighted that no single event is expected to cause pre-tax losses exceeding $15 million.
Assurant experienced five reportable catastrophe events during the quarter, primarily affecting lender-placed products due to severe convective storms in the Southwest, Midwest, and Southeast regions. The company defines reportable catastrophes as individual events leading to losses over $5 million pre-tax, after accounting for reinsurance and client profit sharing adjustments, and inclusive of reinstatement and other premiums.
The pre-announcement indicates a potential uptick in losses as the third quarter approaches, which is typically the period of higher catastrophe loss for Assurant due to its exposure to coastal regions. However, the projected losses for the second quarter seem to be lower than those reported by other companies in the same period.
Despite the pre-announced losses, Piper Sandler slightly adjusted its 2024 earnings per share (EPS) estimate for Assurant downwards by $0.05. The new second-quarter EPS estimate of $3.92 still stands above the consensus estimate of $3.91. Assurant's shares are currently trading at a multiple of approximately 10 times the projected 2025 earnings, which is around 1.4 times below the five-year average for the company.
In other recent news, Assurant has reported robust growth in its first quarter, with a 31% year-over-year increase in adjusted EBITDA to $384 million and a 42% year-over-year growth in adjusted EPS. This growth was primarily driven by Assurant's Global Housing and Global Lifestyle segments, despite challenges in the Global Automotive sector due to inflation.
Analysts from Piper Sandler and Keefe, Bruyette & Woods have responded positively to these results. Piper Sandler maintained an Overweight rating, citing Assurant's limited exposure to the Midwest region and potential for expense leverage as key factors.
Meanwhile, Keefe, Bruyette & Woods raised their price target for Assurant from $182 to $186, anticipating a strong 16% year-over-year increase in Assurant's Housing growth. These are recent developments that could lead to an upward revision of guidance when earnings are announced in August.
Assurant's valuation is seen as attractive, trading at a significant discount compared to its five-year average, which is particularly compelling given the broader industry's reserve concerns.
InvestingPro Insights
Assurant Inc.'s resilience in managing risk is underscored by its ability to maintain dividend payments for an impressive 21 consecutive years, as highlighted by an InvestingPro Tip. This consistency in returning value to shareholders is a testament to the company's financial stability. Additionally, analysts remain optimistic about Assurant's profitability, predicting the company will remain profitable this year, which aligns with its performance over the last twelve months.
InvestingPro Data provides a real-time snapshot of the company's valuation and performance metrics. With a market capitalization of $8.9 billion and a price-to-earnings (P/E) ratio of 11.93, slightly adjusted to 11.3 for the last twelve months as of Q1 2024, Assurant appears to be valued reasonably in the market. The revenue growth of 9.81% over the last twelve months as of Q1 2024 also suggests a solid trajectory in its business operations.
For readers interested in a deeper analysis, there are additional InvestingPro Tips available that could provide further insights into Assurant's financial health and future prospects. To explore these tips and gain a more comprehensive understanding, visit https://www.investing.com/pro/AIZ and remember to use the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription.
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