Assurant(AIZ) - 2025 Q1 - Quarterly Report

PART I - FINANCIAL INFORMATION Item 1. Consolidated Financial Statements (unaudited) The unaudited consolidated financial statements present Assurant, Inc.'s financial position as of March 31, 2025, and its results of operations and cash flows for the three months ended March 31, 2025 and 2024. Total assets slightly decreased to $35.0 billion. For the first quarter of 2025, the company reported total revenues of $3.1 billion and a net income of $146.6 million, a decrease from $236.4 million in the prior year's quarter, primarily due to higher policyholder benefits. Net cash provided by operating activities significantly increased to $392.4 million Consolidated Balance Sheet Highlights (in millions) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total investments | $9,043.6 | $8,544.5 | | Cash and cash equivalents | $1,669.6 | $1,807.7 | | Total assets | $34,988.4 | $35,020.6 | | Unearned premiums | $20,132.5 | $20,211.4 | | Total liabilities | $29,754.2 | $29,913.9 | | Total equity | $5,234.2 | $5,106.7 | Consolidated Statement of Operations Highlights (in millions, except per share data) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Total revenues | $3,074.0 | $2,880.1 | | Policyholder benefits | $779.7 | $623.1 | | Net income | $146.6 | $236.4 | | Diluted EPS | $2.83 | $4.47 | Consolidated Statement of Cash Flows Highlights (in millions) | Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $392.4 | $82.5 | | Net cash used in investing activities | ($421.6) | ($328.2) | | Net cash used in financing activities | ($118.7) | ($96.2) | | Change in cash and cash equivalents | ($138.1) | ($345.5) | Notes to Consolidated Financial Statements (unaudited) The notes detail the basis of presentation and significant accounting policies. Key highlights include segment performance, where Global Lifestyle's Adjusted EBITDA decreased to $197.8 million while Global Housing's fell to $112.4 million due to catastrophe losses. The company experienced $61.3 million in net favorable loss development in Q1 2025. The investment portfolio is primarily composed of high-quality fixed maturity securities. The company also details its restructuring plans, which incurred a net credit of $1.1 million in Q1 2025 - The company operates through two main segments: Global Lifestyle (Connected Living and Global Automotive) and Global Housing (Homeowners and Renters)[18] Segment Adjusted EBITDA (in millions) | Segment | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Global Lifestyle | $197.8 | $207.7 | | Global Housing | $112.4 | $192.5 | | Corporate and Other | ($28.0) | ($29.5) | - The company experienced net favorable prior-year loss development of $61.3 million in Q1 2025, compared to $41.6 million in Q1 2024. Global Lifestyle contributed $31.7 million and Global Housing contributed $27.6 million of this favorable development[75][76][77] - In Q1 2025, the company repurchased 298,946 shares of common stock for $62.5 million and paid dividends of $40.9 million ($0.80 per share)[11][147] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management's discussion attributes the 38% decrease in consolidated net income for Q1 2025 to $146.6 million primarily to higher reportable catastrophe losses in the Global Housing segment. Global Lifestyle's Adjusted EBITDA saw a 5% decrease due to lower results in Connected Living. Global Housing's Adjusted EBITDA dropped 42%, driven by $143.8 million in pre-tax reportable catastrophes, mainly from California wildfires. The company maintains strong liquidity, with $501.2 million in holding company liquidity, and continues its capital return program through dividends and share repurchases Executive Summary Consolidated net income for Q1 2025 was $146.6 million, a 38% decrease from Q1 2024, mainly due to significant catastrophe losses in Global Housing. Global Lifestyle's Adjusted EBITDA decreased 5% to $197.8 million, while Global Housing's Adjusted EBITDA fell 42% to $112.4 million. Excluding catastrophes, Global Housing's Adjusted EBITDA grew 31%, driven by top-line growth and favorable non-catastrophe loss experience - Consolidated net income decreased by $89.8 million (38%) YoY, primarily due to higher reportable catastrophes in Global Housing[112] - Global Lifestyle Adjusted EBITDA decreased 5% to $197.8 million, driven by lower results in Connected Living[113] - Global Housing Adjusted EBITDA decreased 42% to $112.4 million, impacted by $143.8 million of higher pre-tax reportable catastrophes, including about $125 million from California wildfires[115] Results of Operations The detailed operational review shows a consolidated revenue increase to $3.1 billion, but a net income decline to $146.6 million. Global Lifestyle revenue grew 5% to $2.39 billion, but Adjusted EBITDA fell 5% due to lower device protection results and a prior-year one-time benefit. Global Housing revenue increased 15% to $690.5 million, but higher catastrophe losses drove a 42% drop in Adjusted EBITDA. Corporate and Other segment's Adjusted EBITDA loss narrowed slightly due to lower expenses - Global Lifestyle's revenue increase was driven by growth in global mobile device protection and a new financial services program, but Adjusted EBITDA declined due to lower domestic device protection results and unfavorable foreign exchange[125][126] - Global Housing's Adjusted EBITDA decrease was mainly due to $143.8 million of higher pre-tax reportable catastrophes. This was partially offset by growth in policies, higher premium rates, and favorable non-catastrophe loss experience[129] - Global Housing policyholder benefits increased 66% to $333.0 million, primarily due to higher reportable catastrophe losses[131] Investments Total investments grew to $9.04 billion as of March 31, 2025. The fixed maturity securities portfolio, which comprises the bulk of investments, remains high quality with 93% rated 'Baa' or better. Net investment income for Q1 2025 decreased slightly by 1% to $124.8 million, due to lower partnership income and yields on cash, despite higher income from fixed maturity securities. Net realized losses on investments increased to $16.0 million Net Investment Income by Source (in millions) | Source | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Fixed maturity securities | $100.9 | $90.8 | | Cash and cash equivalents | $16.0 | $19.8 | | Other investments | ($1.0) | $6.3 | | Total Net Investment Income | $124.8 | $126.7 | - Net realized losses on investments and fair value changes to equity securities increased by $7.2 million to $16.0 million in Q1 2025, driven by sales of fixed maturity securities at a loss[137] Liquidity and Capital Resources The company maintains a strong liquidity position, with holding company liquidity at $501.2 million as of March 31, 2025, well above its $225.0 million minimum target. In Q1 2025, subsidiaries paid $66.6 million in dividends to the holding company. The company returned $103.4 million to shareholders through $62.5 million in share repurchases and $40.9 million in dividends. The company has a $500.0 million revolving credit facility which was undrawn during the quarter - As of March 31, 2025, holding company liquidity was $501.2 million, which is $276.2 million above the targeted minimum level of $225.0 million[144] - In Q1 2025, the company repurchased 298,946 shares for $62.5 million. As of March 31, 2025, $312.1 million remained under the share repurchase authorization[147] - The 2025 catastrophe reinsurance program premiums are estimated to be $222.7 million pre-tax, an increase from $188.9 million in 2024, reflecting exposure changes and market conditions[138] Item 3. Quantitative and Qualitative Disclosures About Market Risk This section refers to the company's 2024 Annual Report on Form 10-K and the 'Investments' section within the current report for disclosures regarding market risk - The company directs readers to its 2024 Annual Report and the MD&A section of this report for quantitative and qualitative disclosures about market risk[166] Item 4. Controls and Procedures Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures and concluded they were effective as of March 31, 2025. There were no material changes to the company's internal control over financial reporting during the quarter - Management concluded that as of March 31, 2025, the company's disclosure controls and procedures were effective[167] - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, the company's internal controls[168] PART II - OTHER INFORMATION Item 1. Legal Proceedings The company is involved in various legal and regulatory proceedings in the normal course of business. Management does not believe these pending matters are likely to have a material adverse effect on the company's financial condition, though an individual reporting period's results could be materially affected - For details on material pending legal proceedings, the report refers to Note 14 of the Consolidated Financial Statements[170] Item 1A. Risk Factors This section refers to the 'Risk Factors' section of the company's 2024 Annual Report on Form 10-K for a discussion of potential risks and uncertainties - The report refers readers to Item 1A—Risk Factors in the 2024 Annual Report for a full discussion of potential risks[171] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds During the first quarter of 2025, the company repurchased a total of 298,946 shares of its common stock at an average price of $208.98 per share. These repurchases were made under the November 2023 authorization, which had $312.1 million remaining as of March 31, 2025 Issuer Purchases of Equity Securities (Q1 2025) | Period | Total Shares Purchased | Average Price Paid Per Share | | :--- | :--- | :--- | | January 2025 | 91,518 | $210.08 | | February 2025 | 58,295 | $209.26 | | March 2025 | 149,133 | $208.19 | | Total | 298,946 | $208.98 | - As of March 31, 2025, $312.1 million remained available for future repurchases under the current authorization[172] Item 5. Other Information On March 10, 2025, Keith W. Demmings, the President and CEO, adopted a Rule 10b5-1 trading plan for the sale of up to 18,000 shares of the company's common stock. The plan is set to terminate by February 27, 2026, or earlier if all shares are sold or the plan is otherwise terminated - President and CEO Keith W. Demmings adopted a Rule 10b5-1 trading plan on March 10, 2025, for the sale of up to 18,000 shares of common stock[173] Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including CEO and CFO certifications (Rule 13a-14(a)/15d-14(a) and Section 906) and financial data formatted in XBRL - Exhibits filed include CEO/CFO certifications and financial statements in XBRL format[175]