Assurant (AIZ) Tops Q2 EPS by 5c
Assurant (NYSE: AIZ) reported Q2 EPS of $1.63, $0.05 better than the analyst estimate of $1.58. Revenue for the quarter came in at $1.6 billion versus the consensus estimate of $1.57 billion.
Guidance (emphasis Street Insider):
- Assurant net operating income, excluding reportable catastrophe losses, to be roughly level with 2016 results, excluding catastrophe losses. Profitable growth primarily in fee-based, capital-light offerings and a lower net operating loss at Corporate to be offset by declines in lender-placed insurance and legacy businesses.
- Assurant operating earnings per diluted share, excluding catastrophe losses, to grow double-digits from 2016 primarily due to share repurchase activity.
- Global Housing net earned premiums and net operating income, excluding reportable catastrophe losses, to decrease from 2016 as a result of additional declines in lender-placed insurance reflecting lower placement rates anticipated for the second half of 2017, as well as reduced contributions from mortgage solutions. Ongoing expense management initiatives within Global Housing and growth in multi-family housing to partially mitigate declines.
- Global Lifestyle to increase net operating income as a result of improved performance in Connected Living, driven primarily by growth in mobile, as well as higher contributions from vehicle protection and from expense efficiencies. Declines in legacy credit insurance and retail clients to continue. Revenue expected to decrease, largely due to a change in program structure for a large service contract client. Under the new structure, the overall economics of the program are maintained with no impact to profitability, however net earned premiums will be lower by approximately $500 million compared to 2016 with a commensurate reduction in expenses. Excluding this, net earned premiums and fee income to increase from growth in Connected Living and vehicle protection globally. Results to be impacted by foreign exchange.
- Global Preneed fee income and earnings to increase due to sales growth across North America from our alignment with market leaders and operational efficiencies.
- Corporate & Other6 full-year net operating loss to be approximately $60 million, compared to $71 million in 2016, primarily reflecting lower tax and employee-related costs as well as reduced corporate expenditures.
- Capital to be deployed through a combination of share repurchases, common stock dividends, and reinvestments and acquisitions in the business, subject to market conditions and other factors. Business segment dividends from Global Housing, Global Lifestyle and Global Preneed to approximate segment net operating income including catastrophe losses, subject to the growth of the businesses, rating agency and regulatory capital requirements. In addition to the $86 million received year-to-date, approximately $15 million in dividends expected from Assurant Health and Assurant Employee Benefits, subject to regulatory approval.
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