Assurant(AIZ) - 2024 Q2 - Quarterly Report

PART I FINANCIAL INFORMATION This section provides the unaudited interim financial statements and management's analysis of the company's financial performance and condition Item 1. Consolidated Financial Statements (unaudited) This section presents the unaudited consolidated financial statements for Assurant, Inc. as of June 30, 2024, and for the three and six-month periods then ended. It includes the balance sheets, statements of operations, comprehensive income, changes in equity, and cash flows, along with accompanying notes detailing accounting policies and segment information Consolidated Balance Sheets This subsection presents the unaudited consolidated balance sheets, detailing assets, liabilities, and equity as of June 30, 2024, and December 31, 2023 Consolidated Balance Sheet Highlights (as of June 30, 2024) | Metric | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Total Investments | $8,524.9M | $8,220.9M | | Cash and cash equivalents | $1,713.1M | $1,627.4M | | Total Assets | $33,773.0M | $33,635.2M | | Total Liabilities | $28,768.7M | $28,825.7M | | Total Equity | $5,004.3M | $4,809.5M | Consolidated Statements of Operations This subsection provides the unaudited consolidated statements of operations, outlining revenues, expenses, and net income for the three and six-month periods ended June 30, 2024 and 2023 Consolidated Statements of Operations Highlights | Metric | Q2 2024 | Q2 2023 | Six Months 2024 | Six Months 2023 | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $2,924.9M | $2,731.6M | $5,805.0M | $5,374.4M | | Net Income | $188.7M | $156.3M | $425.1M | $269.9M | | Diluted EPS | $3.58 | $2.90 | $8.05 | $5.01 | Consolidated Statements of Cash Flows This subsection details the unaudited consolidated statements of cash flows, categorizing cash movements from operating, investing, and financing activities for the six-month periods ended June 30, 2024 and 2023 Consolidated Cash Flow Summary (Six Months Ended June 30) | Activity | 2024 | 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $793.4M | $445.0M | | Net cash used in investing activities | ($521.6M) | ($483.8M) | | Net cash used in financing activities | ($177.0M) | ($100.4M) | | Change in cash and cash equivalents | $85.7M | ($135.0M) | Notes to Consolidated Financial Statements This subsection provides detailed notes to the unaudited consolidated financial statements, explaining significant accounting policies, segment information, and other relevant disclosures - The company operates through two main segments: Global Lifestyle (Connected Living and Global Automotive) and Global Housing (Homeowners and Renters)[21] Adjusted EBITDA by Segment (Six Months Ended June 30) | Segment | 2024 | 2023 | | :--- | :--- | :--- | | Global Lifestyle | $397.4M | $395.9M | | Global Housing | $353.4M | $223.0M | | Corporate and Other | ($56.7M) | ($52.9M) | Net Earned Premiums, Fees and Other Income by Segment (Six Months Ended June 30) | Segment | 2024 | 2023 | | :--- | :--- | :--- | | Global Lifestyle | $4,371.3M | $4,149.2M | | Global Housing | $1,205.8M | $1,041.9M | - For the six months ended June 30, 2024, the company experienced net favorable prior year loss development of $65.0 million, compared to $15.0 million in the same period of 2023. Global Housing was the primary contributor with $48.4 million in favorable development[77][79] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's financial condition and results of operations for the second quarter and first half of 2024. The analysis covers consolidated results, detailed performance of the Global Lifestyle and Global Housing segments, investment portfolio performance, and liquidity and capital resources. The company highlights increased net income driven by Global Housing's performance and lower losses from non-core operations Executive Summary This subsection provides a high-level overview of the company's financial performance, highlighting key drivers for changes in consolidated net income and segment-level Adjusted EBITDA - Consolidated net income for Q2 2024 increased 21% YoY to $188.7 million, primarily due to lower after-tax losses from non-core operations and a lower effective tax rate[115] - Global Lifestyle Adjusted EBITDA decreased 4% in Q2 2024, driven by lower Global Automotive results from inflation-related claims costs and investments in new programs[116] - Global Housing Adjusted EBITDA grew 4% in Q2 2024, despite a $32.1 million increase in reportable catastrophes, driven by top-line growth in Homeowners[118] Global Lifestyle Segment Analysis This subsection analyzes the financial performance of the Global Lifestyle segment, detailing changes in Adjusted EBITDA and total revenues, along with contributing factors Global Lifestyle Financial Performance | Metric | Q2 2024 | Q2 2023 | Change | | :--- | :--- | :--- | :--- | | Adjusted EBITDA | $189.7M | $197.0M | -4% | | Total Revenues | $2,269.2M | $2,189.8M | +4% | - The decrease in Adjusted EBITDA was primarily driven by elevated claims costs in Global Automotive due to inflation on labor and parts, investments in new client programs, and lower mobile trade-in volumes[131] - Revenue growth was driven by a 20% increase in fees and other income, mainly from newly launched mobile trade-in programs, and a 1% increase in net earned premiums from global mobile device protection programs[132] Global Housing Segment Analysis This subsection examines the financial performance of the Global Housing segment, focusing on changes in Adjusted EBITDA, total revenues, and the impact of reportable catastrophes Global Housing Financial Performance | Metric | Q2 2024 | Q2 2023 | Change | | :--- | :--- | :--- | :--- | | Adjusted EBITDA | $160.9M | $154.6M | +4% | | Total Revenues | $663.5M | $561.8M | +18% | | Reportable Catastrophes | $45.5M | $13.4M | +240% | - Adjusted EBITDA increased despite significantly higher reportable catastrophes, driven by strong growth in the Homeowners business from new lender-placed programs, higher insured values, and operational efficiencies[139] - The segment experienced $17.0 million of favorable non-catastrophe prior period reserve development in Q2 2024, compared to $27.7 million in Q2 2023[139] Investments Analysis This subsection provides an analysis of the company's investment portfolio, detailing total investments and net investment income, along with factors influencing changes - Total investments increased to $8.52 billion as of June 30, 2024, from $8.22 billion at year-end 2023[154] Net Investment Income | Period | Q2 2024 | Q2 2023 | Six Months 2024 | Six Months 2023 | | :--- | :--- | :--- | :--- | :--- | | Net Investment Income | $124.7M | $112.9M | $251.4M | $218.1M | - The increase in net investment income was primarily driven by higher yields and asset balances in fixed maturity securities[155][157] Liquidity and Capital Resources This subsection discusses the company's liquidity position, capital resources, and capital deployment activities, including holding company liquidity and share repurchases - As of June 30, 2024, the company had approximately $734.7 million in holding company liquidity, which is $509.7 million above its targeted minimum level of $225.0 million[167] - During the first six months of 2024, the company returned capital to shareholders through $80.0 million in common stock repurchases and dividend payments totaling $77.3 million[169][171] - The company consolidated its main reinsurance purchases into a single placement date of April 2024, with estimated 2024 premiums of $188.1 million, down from $207.2 million in 2023[160] Item 3. Quantitative and Qualitative Disclosures About Market Risk This section refers to the company's 2023 Annual Report on Form 10-K and the Investments section within this report for disclosures about market risk - The company's disclosures about market risk are referenced to 'Item 7A—Quantitative and Qualitative Disclosures About Market Risk' in the 2023 Annual Report and the 'Investments' section of the MD&A in this Q2 2024 report[190] Item 4. Controls and Procedures Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of June 30, 2024. The company also noted the ongoing multi-year implementation of a new global financial system (GFS), which became operational in Q2 2024 and resulted in modifications to internal controls - Management concluded that as of June 30, 2024, the company's disclosure controls and procedures were effective[191] - The company is in the process of a multi-year implementation of an integrated global financial system (GFS), with the first phase becoming operational in Q2 2024, leading to modifications in internal controls over financial reporting[192] PART II OTHER INFORMATION This section provides additional information beyond the financial statements, including legal proceedings, risk factors, equity security sales, and a list of exhibits Item 1. Legal Proceedings This section refers to Note 14 of the Consolidated Financial Statements for information on material pending legal proceedings. Management does not believe pending matters are likely to have a material adverse effect on the company's financial condition - For details on legal proceedings, the report refers to Note 14, 'Commitments and Contingencies—Legal and Regulatory Matters'[196] - Management does not currently believe that pending legal matters will have a material adverse effect on the company's financial condition[106] Item 1A. Risk Factors This section states that there are no material changes from the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2023 - The report refers to 'Item 1A—Risk Factors' in the 2023 Annual Report for a discussion of potential risks and uncertainties[197] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section provides details on the company's common stock repurchases during the second quarter of 2024. A total of 234,276 shares were repurchased at an average price of $171.35 per share Issuer Purchases of Equity Securities (Q2 2024) | Period | Total Shares Purchased | Average Price Paid Per Share | | :--- | :--- | :--- | | April 2024 | 56,426 | $176.91 | | May 2024 | 57,011 | $170.05 | | June 2024 | 120,839 | $169.37 | | Total | 234,276 | $171.35 | - As of June 30, 2024, $594.5 million remained available for repurchase under the November 2023 share repurchase authorization[198] Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including CEO and CFO certifications and the Interactive Data File (XBRL) - Exhibits filed with the report include CEO and CFO certifications pursuant to Sarbanes-Oxley Act Sections 302 and 906, and the financial statements formatted in XBRL[201][202]