Assurant (AIZ)

Insurance services company Assurant (NYSE:AIZ) beat Wall Street’s revenue expectations in Q3 CY2025, with sales up 8.9% year on year to $3.23 billion. Its non-GAAP profit of $5.73 per share was 34% above analysts’ consensus estimates.

Company Overview

With roots dating back to 1892 when it was founded by a Civil War veteran, Assurant (NYSE:AIZ) provides specialized insurance products and services that protect major consumer purchases like mobile devices, vehicles, homes, and appliances.

Property & Casualty (P&C) insurers protect individuals and businesses against financial loss from damage to property or from legal liability. This is a cyclical industry, and the sector benefits when there is 'hard market', characterized by strong premium rate increases that outpace loss and cost inflation, resulting in robust underwriting margins. The opposite is true in a 'soft market'. Interest rates also matter, as they determine the yields earned on fixed-income portfolios. On the other hand, P&C insurers face a major secular headwind from the increasing frequency and severity of catastrophe losses due to climate change. Furthermore, the liability side of the business is pressured by 'social inflation'—the trend of rising litigation costs and larger jury awards.

Assurant's competitors include insurance providers like The Allstate Corporation (NYSE:ALL), Progressive Corporation (NYSE:PGR), and Travelers Companies (NYSE:TRV) in the property and casualty space. In the mobile device protection market, it competes with SquareTrade (owned by Allstate) and AppleCare, while in the vehicle service contract business, it faces competition from Ally Financial (NYSE:ALLY) and CarShield.

Insurance companies earn revenue from three primary sources: 1) The core insurance business itself, often called underwriting and represented in the income statement as premiums 2) Income from investing the “float” (premiums collected upfront not yet paid out as claims) in assets such as fixed-income assets and equities 3) Fees from various sources such as policy administration, annuities, or other value-added services. Regrettably, Assurant’s revenue grew at a tepid 5.1% compounded annual growth rate over the last five years. This fell short of our benchmark for the insurance sector and is a poor baseline for our analysis.

We at StockStory place the most emphasis on long-term growth, but within financials, a half-decade historical view may miss recent interest rate changes, market returns, and industry trends. Assurant’s annualized revenue growth of 7.9% over the last two years is above its five-year trend, suggesting some bright spots. Note: Quarters not shown were determined to be outliers, impacted by outsized investment gains/losses that are not indicative of the recurring fundamentals of the business.

This quarter, Assurant reported year-on-year revenue growth of 8.9%, and its $3.23 billion of revenue exceeded Wall Street’s estimates by 1.5%.

Net premiums earned made up 84% of the company’s total revenue during the last five years, meaning Assurant barely relies on non-insurance activities to drive its overall growth.

Markets consistently prioritize net premiums earned growth over investment and fee income, recognizing its superior quality as a core indicator of the company’s underwriting success and market penetration.

When insurers sell policies, they protect themselves from extremely large losses or an outsized accumulation of losses with reinsurance (insurance for insurance companies). Net premiums earned are therefore net of what’s ceded to reinsurers as a risk mitigation and transfer strategy.

Assurant’s net premiums earned has grown at a 4.7% annualized rate over the last five years, worse than the broader insurance industry and in line with its total revenue.

When analyzing Assurant’s net premiums earned over the last two years, we can see that growth accelerated to 5.8% annually. Since two-year net premiums earned grew slower than total revenue over this period, it’s implied that other line items such as investment income grew at a faster rate. While these supplementary streams affect the bottom line, their contribution can fluctuate. Some firms have been more successful and consistent in investing their float over the long term, but sharp movements in the fixed income and equity markets can play a substantial role in short-term performance.

This quarter, Assurant’s net premiums earned was $2.63 billion, up 8.7% year on year and topping Wall Street Consensus estimates by 2.7%.

Revenue growth is one major determinant of business quality, and the efficiency of operations is another. For insurance companies, we look at pre-tax profit rather than the operating margin that defines sectors such as consumer, tech, and industrials.

This is because insurers are balance sheet businesses, where assets and liabilities define the core economics. This means that interest income and expense should be factored into the definition of profit but taxes - which are largely out of a company’s control - should not.

Over the last four years, Assurant’s pre-tax profit margin couldn’t build momentum, hanging around 8.4%. Luckily, it seems the company has recently taken steps to address its expense base as its pre-tax profit margin expanded by 2.1 percentage points on a two-year basis.

In Q3, Assurant’s pre-tax profit margin was 10.2%. This result was 5.1 percentage points better than the same quarter last year.

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Assurant’s EPS grew at a remarkable 16% compounded annual growth rate over the last five years, higher than its 5.1% annualized revenue growth. However, this alone doesn’t tell us much about its business quality because its pre-tax profit margin didn’t improve.

Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.

For Assurant, its two-year annual EPS growth of 15.9% is similar to its five-year trend, implying stable earnings.

In Q3, Assurant reported adjusted EPS of $5.73, up from $3 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects Assurant’s full-year EPS of $19.01 to grow 4%.

Insurers are balance sheet businesses, collecting premiums upfront and paying out claims over time. Premiums collected but not yet paid out, often referred to as the float, are invested and create an asset base supported by a liability structure. Book value per share (BVPS) captures this dynamic by measuring these assets (investment portfolio, cash, reinsurance recoverables) less liabilities (claim reserves, debt, future policy benefits). BVPS is essentially the residual value for shareholders.

We therefore consider BVPS very important to track for insurers and a metric that sheds light on business quality because it reflects long-term capital growth and is harder to manipulate than more commonly-used metrics like EPS.

Assurant’s BVPS grew at a sluggish 2.4% annual clip over the last five years. However, BVPS growth has accelerated recently, growing by 15.3% annually over the last two years from $85.15 to $113.29 per share.

The debt-to-equity ratio is a widely used measure to assess a company's balance sheet health. A higher ratio means that a business aggressively financed its growth with debt. This can result in higher earnings (if the borrowed funds are invested profitably) but also increases risk.

If debt levels are too high, there could be difficulties in meeting obligations, especially during economic downturns or periods of rising interest rates if the debt has variable-rate payments.

Assurant currently has $2.21 billion of debt and $5.76 billion of shareholder's equity on its balance sheet, and over the past four quarters, has averaged a debt-to-equity ratio of 0.4×. We think this is safe and raises no red flags. In general, we’re comfortable with any ratio below 1.0× for an insurance business. Anything below 0.5× is a bonus.

Return on equity, or ROE, represents the ultimate measure of an insurer's effectiveness, quantifying how well it transforms shareholder investments into profits. Over the long term, insurance companies with robust ROE metrics typically deliver superior shareholder returns through a balanced approach to capital management.

Over the last five years, Assurant has averaged an ROE of 11.5%, uninspiring for a company operating in a sector where the average shakes out around 12.5%.

It was good to see Assurant beat analysts’ EPS expectations this quarter. We were also excited its net premiums earned outperformed Wall Street’s estimates by a wide margin. Zooming out, we think this was a solid print. The stock traded up 2.5% to $220 immediately following the results.

Updated: December 3, 2025 at 11:11 PM EST

A common mistake we notice when investors are deciding whether to buy a stock or not is that they simply look at the latest earnings results. Business quality and valuation matter more, so we urge you to understand these dynamics as well.

Assurant’s business quality ultimately falls short of our standards. To begin with, its revenue growth was uninspiring over the last five years, and analysts don’t see anything changing over the next 12 months. And while its remarkable EPS growth over the last five years shows its profits are trickling down to shareholders, the downside is its BVPS growth was weak over the last five years. On top of that, its projected EPS for the next year is lacking.

Assurant’s P/B ratio based on the next 12 months is 1.9x. Beauty is in the eye of the beholder, but we don’t really see a big opportunity at the moment. We're fairly confident there are better investments elsewhere.

Wall Street analysts have a consensus one-year price target of $253.67 on the company (compared to the current share price of $222.39).