Assurant(AIZ) - 2024 Q1 - Quarterly Results

Performance Overview Assurant reported a strong start to 2024, with significant increases in GAAP net income and Adjusted EBITDA, driven by exceptional Global Housing and Global Lifestyle growth - Key Financial Metrics | Metric | Q1'24 ($M) | Q1'23 ($M) | Change | | :--- | :--- | :--- | :--- | | GAAP net income | $236.4 | $113.6 | +108% | | Adjusted EBITDA | $370.7 | $242.9 | +53% | | Adjusted EBITDA, ex. catastrophes | $383.7 | $293.3 | +31% | | GAAP net income per diluted share | $4.47 | $2.12 | +111% | | Adjusted earnings per diluted share | $4.78 | $2.75 | +74% | - CEO Keith Demmings highlighted a strong start to the year, attributing the success to exceptional results in Global Housing and ongoing momentum in the U.S. Connected Living business within Global Lifestyle[3] - The company is increasingly confident in its ability to deliver on its 2024 financial objectives, focusing on investing for growth, accelerating innovation, and effectively deploying capital[4] Consolidated Financial Results Consolidated GAAP net income more than doubled and Adjusted EBITDA grew significantly in Q1 2024, driven by Global Housing and increased net earned premiums - Consolidated Financial Performance | Metric | Q1'24 ($M) | Q1'23 ($M) | Change | | :--- | :--- | :--- | :--- | | GAAP net income | $236.4 | $113.6 | +108% | | Adjusted EBITDA | $370.7 | $242.9 | +53% | | Adjusted EBITDA, ex. catastrophes | $383.7 | $293.3 | +31% | - The increase in Adjusted EBITDA was driven primarily by Global Housing, which saw a 181% increase, while Global Lifestyle grew by 4%[9] - Net earned premiums, fees and other income from Global Lifestyle and Global Housing segments totaled $2.76 billion, an increase of 8% (9% on a constant currency basis) from Q1 2023[11] Segment Performance Global Housing significantly increased Adjusted EBITDA due to lower catastrophe losses, while Global Lifestyle grew modestly and Corporate and Other reported a larger loss Global Lifestyle Global Lifestyle's Adjusted EBITDA increased 4% due to Connected Living growth and a one-time client benefit, partially offset by higher Global Automotive claims costs - Global Lifestyle Segment Performance | Metric | Q1'24 ($M) | Q1'23 ($M) | Change | | :--- | :--- | :--- | :--- | | Adjusted EBITDA | $207.7 | $198.9 | +4% | | Net earned premiums, fees and other income | $2,187.8 | $2,040.3 | +7% | - Growth in Connected Living was driven by stronger mobile device protection results, higher investment income, and a one-time $6.9 million client contract benefit[11] - Global Automotive results decreased mainly due to ongoing elevated claims costs from inflation and normalization of select ancillary products[11] Global Housing Global Housing's Adjusted EBITDA soared 181% due to significantly lower catastrophe losses and improved non-catastrophe loss experience - Global Housing Segment Performance | Metric | Q1'24 ($M) | Q1'23 ($M) | Change | | :--- | :--- | :--- | :--- | | Adjusted EBITDA | $192.5 | $68.4 | +181% | | Reportable catastrophes | $12.9 | $49.5 | -74% | | Adjusted EBITDA, ex. catastrophes | $205.4 | $117.9 | +74% | | Net earned premiums, fees and other income | $572.2 | $505.3 | +13% | - Excluding catastrophes, Adjusted EBITDA increased 74%, with over half of the increase driven by lower non-catastrophe loss experience, including a $15.7 million favorable impact from prior period reserve development[13] - Net earned premiums, fees and other income increased 13%, mainly driven by Homeowners top-line growth from higher average premiums and growth in policies in-force[13] Corporate and Other The Corporate and Other segment reported an increased Adjusted EBITDA loss of $29.5 million, primarily due to higher expenses supporting enterprise growth initiatives - Corporate and Other Segment Performance | Metric | Q1'24 ($M) | Q1'23 ($M) | Change | | :--- | :--- | :--- | :--- | | Adjusted EBITDA Loss | ($29.5) | ($24.4) | +21% | - The increased loss was primarily driven by higher expenses to support enterprise growth initiatives[14] Capital Management and Liquidity Assurant maintained strong liquidity with $622 million at the holding company, $397 million above target, and returned $77 million to shareholders in Q1 2024 - Holding company liquidity totaled $622 million, which is $397 million above the company's targeted minimum level of $225 million[15] - Returned $77 million to shareholders in Q1 2024, consisting of $40 million in share repurchases (approx. 225 thousand shares) and $37 million in common stock dividends[15] - As of May 3, 2024, $625 million remained under the current share repurchase authorizations[15] Full-Year 2024 Outlook Assurant updated its full-year 2024 outlook, expecting mid-single-digit growth in Adjusted EBITDA (ex-catastrophes) towards the higher end, with similar growth for Adjusted EPS - The company expects Adjusted EBITDA, excluding reportable catastrophes, to increase by mid-single-digits, with growth now trending towards the higher end of the outlook[9][17] - Adjusted earnings, excluding reportable catastrophes, per diluted share growth rate is expected to approximate the growth rate in Adjusted EBITDA, excluding reportable catastrophes[9][17] - Global Housing's growth is expected to be driven by improving non-catastrophe loss experience and top-line growth, while Global Lifestyle's growth will be led by Connected Living programs[17] - The Corporate and Other Adjusted EBITDA loss is forecasted to be approximately $110 million for the full year[17] Financial Statements This section presents unaudited consolidated financial statements for Q1 2024 and Q1 2023, detailing the company's financial performance and position Consolidated Statement of Operations For Q1 2024, total revenues increased to $2.88 billion, and net income rose to $236.4 million or $4.47 per diluted share - Consolidated Statement of Operations (Unaudited) | Metric | Q1 2024 ($M) | Q1 2023 ($M) | | :--- | :--- | :--- | | Total revenues | $2,880.1 | $2,642.8 | | Net income | $236.4 | $113.6 | | Diluted net income per share | $4.47 | $2.12 | Consolidated Condensed Balance Sheets As of March 31, 2024, Assurant's total assets were $33.23 billion, liabilities $28.31 billion, and equity $4.92 billion, with equity increasing from year-end 2023 - Consolidated Condensed Balance Sheets (Unaudited) | Metric | March 31, 2024 ($M) | December 31, 2023 ($M) | | :--- | :--- | :--- | | Total assets | $33,225.4 | $33,635.2 | | Total liabilities | $28,305.4 | $28,825.7 | | Total equity | $4,920.0 | $4,809.5 | Appendix This appendix provides supplementary information, including a Safe Harbor Statement and detailed reconciliation of Non-GAAP financial measures Safe Harbor Statement This statement cautions that forward-looking statements are subject to various risks and uncertainties, including client loss, competitive pressures, and catastrophe losses - The report contains forward-looking statements which are based on current plans and expectations and are not guarantees of future performance[21][22] - Key risks that could cause actual results to differ materially include loss of significant clients, competitive pressures, catastrophe losses, economic and political conditions, and regulatory changes[23][26] Non-GAAP Financial Measures Assurant uses non-GAAP measures like Adjusted EBITDA and Adjusted EPS to analyze operating performance by excluding volatile or non-recurring items, with detailed reconciliations provided - The company uses non-GAAP measures like Adjusted EBITDA and Adjusted Earnings per Diluted Share to provide investors with a view of ongoing operating performance by excluding items that are highly variable or do not represent core operations[25][27][30] - Reconciliation of GAAP Net Income to Adjusted EBITDA (Q1 2024, $ in millions) | Line Item | Amount ($M) | | :--- | :--- | | GAAP net income | $236.4 | | Less/Add Adjustments | | | Interest expense | $26.8 | | Provision for income taxes | $56.5 | | Depreciation expense | $30.6 | | Amortization of purchased intangible assets | $17.6 | | Other pre-tax adjustments | $1.0 | | Adjusted EBITDA | $370.7 | | Reportable catastrophes | $13.0 | | Adjusted EBITDA, ex. catastrophes | $383.7 | - Reconciliation of GAAP EPS to Adjusted EPS (Q1 2024) | Line Item | Amount | | :--- | :--- | | GAAP net income per diluted share | $4.47 | | Adjustments (per share) | | | Adjusted earnings, per diluted share | $4.78 | | Catastrophe Adjustments (per share) | | | Adjusted earnings, ex. catastrophes, per diluted share | $4.97 |