De-risked & Ready for a Repricing (AIZ)
Assurant, Inc. (AIZ) is a niche property-casualty & risk-management insurance company that competes worldwide. One of the interesting products the company offers is mobile device protection. Every time some buys a tablet or mobile phone, etc., AIZ has a potential customer. Since the retailer offers this coverage, it is a cost efficient sale for the company. The company also offers vehicle protection and pre-funded funeral insurance. The company is also in a number of other steady, repeatable businesses associated with the real estate market. They provide credit insurance, renters insurance, lender-sold homeowners insurance, mortgage valuation and field services, and manufactured housing insurance. It also provides title and valuation services for home equity lenders.We think AIZ represents a boring yet intriguing investment opportunity for a couple of reasons. (1) They have a strong position in a repeatable business insuring items that virtually everyone owns. The cost of insuring these products is predictable and diversifiable, allowing the company to convert revenues to profits in a very steady manner. (1) The company wisely exited the Health Insurance market, this is a business is full of negative surprises due to the escalating cost of health care. They also exited the Employee Benefits business that is a low-margin, high-volume business that like the health insurance business requires economies of scale to compete. (2) The company was formerly part of the Fortis Inc. family of insurance companies. It was spun off in February 2004 and has never seemed to capture the imagination of investors causing it to trade at a discount to the median stock in the S&P500.
