On the four Ms, Assurant earns 72 for management and 89 for moat. The management score rests on a return on invested capital of 7.0% and a gross margin of 77.2% — figures that describe a business earning a respectable return on what it employs. Debt sits at 0.38x equity. The wide moat and strong management are not the same judgement, and the gap between them is where the argument about this business sits.
The valuation runs on assumptions chosen to understate rather than flatter. Growth is modelled at 5.9% a year, the rate measured from the filings. The exit multiple assumed is 11.8x. That produces an intrinsic value of $109.89, a 10-CAP price of $345.19 and a payback time price of $360.89, with the value zone set at the highest of the three, $360.89. Today's price of $266.24 sits inside that zone.
A business scoring this well, trading inside its value zone, is the combination the framework exists to find — which is also the reason to check why the market disagrees. A margin of safety score of 21 describes the cushion, not the certainty.
| Price | $266.24 |
| Market cap | $13.2B |
| P/E ratio | 12.6x |
| Return on invested capital | 7.0% |
| Gross margin | 77.2% |
| Debt to equity | 0.38x |
| Free cash flow yield | 13.2% |
| Growth rate used | 5.9% |
| Growth rate measured | 6.0% |
| Exit multiple assumed | 11.8x |
| Company | Moat | Buy price |
| Erie Indemnity (ERIE) | 93 | $142.85 |
| Kinsale Capital Group Inc (KNSL) | 95 | $700.60 |
| Markel Group Inc (MKL) | 77 | $2,610.51 |
| Loews Corporation (L) | 70 | $113.81 |
Every number above is built on assumptions that can be changed. In Moatly you can move the growth rate, the exit multiple and the margin of safety and watch every figure recalculate, so you are testing your own view of Assurant rather than accepting ours.