ASSURANT, INC. (AIZ) stock intrinsic value fair value estimate & owner earnings analysis

WHAT THE BUSINESS IS. Assurant sells protection products through other companies' customer relationships rather than to the public directly. Global Lifestyle (about $9.6 billion of 2025 premiums, fees and other income) has two parts. Connected Living ($5.4 billion) covers mobile phone protection, trade-in and upgrade programs, extended service contracts for electronics and appliances, and credit-related products, sold through mobile carriers, device makers, cable companies, retailers and banks. Global Automotive ($4.2 billion) sells vehicle service contracts and related protection through car dealers and finance companies. Global Housing ($2.8 billion) is mainly lender-placed homeowners insurance: when a mortgage borrower's own home insurance lapses, the loan servicer puts cover in place through Assurant. It also writes renters and specialty property insurance. About 80% of Lifestyle revenue comes from the US and Canada, and Housing is almost entirely US. What keeps the business going is that its products sit inside partners' sales and servicing processes. Mortgage contracts require hazard insurance, and carriers and dealers bundle protection into what they sell. Those relationships have lasted for decades. HOW WE MEASURED EARNINGS. We start with operating cash flow and strip out swings in insurance reserves, receivables, reinsurance balances and deferred acquisition costs, which move sharply around hurricane seasons and contract timing. We then subtract stock-based pay and the capital spending needed to maintain the business (mostly technology). On this basis owner earnings per share were about $10 to $12 a year from 2019 through 2023, then $21.29 in 2024 and $21.80 in 2025. Two accounting judgements matter. First, non-cash items are added back: amortisation of intangibles from the 2018 purchase of The Warranty Group (about $109 million in 2025) and recurring investment losses of about $70 million a year. Second, the 2023 and 2024 figures are distorted by the timing of tax payments. In 2023 the company paid $273 million of current tax and booked a $109 million deferred benefit. In 2024 it booked a $78 million current benefit and $245 million of deferred expense. To remove that timing effect we replaced each year's deferred tax with the ten-year average of about $78 million. That gives about $15.60, $18.10 and $21.30 per share for 2023 to 2025. We use the middle figure, about $18 per share, as our starting level. We chose 2023 to 2025 because they describe the company as it is now, after the Warranty Group was absorbed and the preneed life business was sold in 2021. Those years also include real catastrophe losses: $245 million pre-tax in 2024 and $199 million in 2025, including the Los Angeles wildfires. The $18 starting level is deliberately below 2025's roughly $21 because part of 2025's Housing gain came from unusually low non-catastrophe claims and from comparison with a one-off $27.5 million charge in 2024. BASE CASE (about $445 per share). Earnings per share grow 5% in the first year. That is above the 2.4% per-share growth reported for 2025, but the first half of 2026 supports it: net income was $573 million against $382 million a year earlier, and revenue rose 10%. Even after that year the base case is still below what 2025 actually earned. Growth is then 6% a year for years two to five and 4% for years six to ten. That comes from three sources. Global Lifestyle grew revenue 7% in 2025, although its earnings grew only 4% because commissions rose with mobile growth. Lender-placed policy counts and average premiums have been rising. And share buybacks have been steady: diluted shares fell from 63 million in 2020 to under 50 million by mid-2026. After year ten we hold earnings flat in dollar terms with no further growth. Our reason for letting earnings continue is the long record of lender-placed insurance and embedded protection programs. Flat dollars already allow for a slow decline in real terms. BEAR CASE (about $181 per share). Earnings fall back to about $15 per share, close to the 2023 level, and stay flat for three years. Three things could cause this. Homeowners who were forced into lender-placed cover when regular insurers pulled back could return to the voluntary market. Non-catastrophe claims could go back to normal. And catastrophe reinsurance costs, already higher after the 2024 program was restructured, keep squeezing Housing margins. Buybacks alone then lift per-share earnings about 2% a year to year ten, after which earnings fade to zero over twenty years. That fade stands for rising catastrophe exposure, recurring restructuring charges and investment losses, and the risk that large distribution partners take programs elsewhere. Debt of roughly $2.2 billion against about $6 billion of equity is moderate and does not threaten the business in this case. BULL CASE (about $612 per share). First-year earnings reach about $22 per share, in line with 2025's tax-adjusted level and the strong first half of 2026. Growth is then 9% a year for four years as mobile programs, the new financial services program and lender-placed growth continue at their 2025 pace and buybacks continue. Growth slows to 6% for years six to ten, and earnings are held flat after that. CAVEATS. These values use a 6% discount rate and treat earnings as continuing for a long time, so they sit well above what a market charging higher returns would pay. Assurant has kept roughly half of its recent owner earnings to support growth and regulatory capital. Over 2023 to 2025 it returned about $1.3 billion through dividends and buybacks against about $2.9 billion of owner earnings. The growth in these cases depends on that retained capital. Catastrophe losses are the largest single source of year-to-year swings, and management's bonus measure excludes them, while our figures include them. The company does not name its largest clients in its annual report, so we could not measure how much depends on any single partner. The margin-of-safety price is about $200, roughly 55% below the base case and about 10% above the bear case. That price allows for catastrophe volatility and the gap between our 6% rate and a 20% annual return target.