Results In-line with Full-Year Outlook Driven by The Warranty Group
and Mobile Growth
Key Highlights for First Quarter 2019
- Net income of $161.0 million, or $2.52 per diluted share, up 29 percent
-
Net operating income of $140.6 million, or $148.8 million excluding
reportable catastrophes1, up 31 and 30 percent, respectively -
Net operating income per diluted share of $2.21, or $2.33 excluding
reportable catastrophes2, up 11 and 9 percent, respectively -
$88 million returned to shareholders in share repurchases and common
dividends
Note: References to net income refer to net income attributable to
common stockholders. Comparisons in the quarterly financial highlights
relate to last year’s prior period unless otherwise noted.
NEW YORK–(BUSINESS WIRE)–Assurant,
Inc. (NYSE: AIZ), a leading global provider of housing and lifestyle
solutions that support, protect and connect major consumer purchases,
today reported results for the first quarter ended March 31, 2019.
“Our first quarter results represent a strong start to 2019, driven by
contributions from our acquisition of TWG and organic mobile growth,”
said Assurant President and Chief Executive Officer Alan Colberg. “In
addition to the significant increase in Global Lifestyle earnings, we
also saw higher income from our Global Housing and Global Preneed
segments.”
“As we outlined at our 2019 Investor Day, we believe we’re well
positioned to sustain outperformance over time, driven by our leading
positions and innovative offerings which should support double-digit
earnings growth and significant cash flow generation,” Colberg added.
|
Reconciliation of Net Operating Income to GAAP Net Income |
||||||||
| (UNAUDITED) | 1Q | 1Q | ||||||
| ($ in millions, net of tax) | 2019 | 2018 | ||||||
| Global Housing | $ | 72.7 | $ | 71.2 | ||||
| Global Lifestyle | 100.6 | 55.8 | ||||||
| Global Preneed | 11.8 | 9.8 | ||||||
| Corporate and other | (18.8 | ) | (20.0 | ) | ||||
| Interest expense | (21.0 | ) | (9.6 | ) | ||||
| Preferred stock dividends | (4.7 | ) | — | |||||
| Net operating income | 140.6 | 107.2 | ||||||
| Adjustments: | ||||||||
| Assurant Health runoff operations | 0.1 | 2.0 | ||||||
| Net realized gains on investments | 24.8 | 0.4 | ||||||
| Amortization of deferred gains on disposal of businesses | 6.1 | 14.6 | ||||||
| Net TWG acquisition related charges(1) | (9.0 | ) | (20.5 | ) | ||||
| Foreign exchange related losses | (4.3 | ) | — | |||||
| Other adjustments | 2.7 | 2.3 | ||||||
| GAAP net income attributable to common stockholders | $ | 161.0 | $ | 106.0 | ||||
| Note: |
2018 net operating income includes TWG earnings beginning June 1, 2018 and mortgage solutions results prior to the sale on August 1, 2018. A full reconciliation of net operating income to GAAP net income attributable to common stockholders can be found on Page 10. |
|
| (1) |
Details about the components of net TWG acquisition related |
||
First Quarter 2019 Consolidated Results
-
Net income was $161.0 million, or $2.52 per
diluted share, compared to first quarter 2018 net income of $106.0
million, or $1.96 per diluted share. The increase was primarily due to
Global Lifestyle, including contributions from TWG, an increase in
realized gains on investments, mostly related to a net increase in
fair value of equity securities, and lower net TWG acquisition-related
charges. -
Net operating income3 increased to $140.6 million,
or $2.21 per diluted share, compared to first quarter 2018 net
operating income of $107.2 million, or $2.00 per diluted share.
Assurant incurred $8.2 million of reportable catastrophes in first
quarter 2019, compared to $7.4 million of reportable catastrophes in
first quarter 2018.Excluding reportable catastrophes, net
operating income for first quarter 2019 totaled $148.8 million,
compared to $114.6 million in the first quarter 2018. The increase was
primarily driven by contributions from TWG and mobile organic growth
in Global Lifestyle. This was partially offset by higher financing
costs related to the TWG acquisition.
-
Net earned premiums, fees and other income from the Global
Housing, Global Lifestyle and Global Preneed segments totaled $2.23
billion, compared to $1.49 billion in first quarter 2018. This
reflected $651 million of revenue from TWG. Excluding TWG and the sale
of mortgage solutions, revenue increased 10 percent, primarily from
continued organic growth in mobile programs and Global Automotive.
Reportable Segments
|
Global Housing |
||||||||||||||||||||||||
| ($ in millions) | 1Q19 | 1Q18 | % Change | |||||||||||||||||||||
| Net operating income | $ | 72.7 | $ | 71.2 | 2 % | |||||||||||||||||||
| Net earned premiums, fees and other | $ | 500.0 | $ | 523.1 | (4)% |
|
Note: On August 1, 2018, Assurant closed the sale of Global Housing’s mortgage solutions business. Results for this business are included in Global Housing’s revenue and net operating income through July 2018. |
||
-
Net operating income increased modestly in first quarter 2019.
Results included $8.8 million of reportable catastrophes related to
winter weather, which were consistent with the $8.7 million of
catastrophes in the first quarter 2018.Excluding mortgage
solutions in the prior year period, earnings declined as growth in
multifamily housing was offset by higher catastrophe reinsurance
costs, and decreased profitability in specialty property offerings.
-
Net earned premiums, fees and other income decreased in first
quarter 2019, mainly reflecting the sale of mortgage solutions.
Excluding mortgage solutions, revenue increased 5 percent due to
growth in specialty property products and multifamily housing. This
increase was partially offset by expected lower placement rates and
lower real-estate owned volume in lender-place insurance.
|
Global Lifestyle |
||||||||||||||||||||||||
| ($ in millions) | 1Q19 | 1Q18 | % Change | |||||||||||||||||||||
| Net operating income | $ | 100.6 | $ | 55.8 | 80 % | |||||||||||||||||||
| Net earned premiums, fees and other | $ | 1,681.6 | $ | 918.5 | 83 % |
|
Note: Starting June 1, 2018, the results of TWG business operations is reflected within Global Lifestyle segment results. |
-
Net operating income increased significantly in first quarter
2019, reflecting the TWG acquisition and organic growth in Connected
Living. TWG contributed a total of $30.3 million in the quarter, net
of $2.8 million primarily related to intangible amortization and
inclusive of approximately $10 million of realized operating synergies.Excluding
TWG, results increased 26 percent, mainly due to mobile subscriber
growth from new and existing programs and higher trade-in volumes and
margins, primarily in Asia Pacific and North America. More favorable
Global Automotive results, compared to the prior year period, also
contributed to the quarter. This growth was partially offset by
unfavorable foreign exchange and the continued decline in Financial
Services.
-
Net earned premiums, fees and other income increased primarily
due to the addition of $651 million of TWG revenue. Excluding TWG,
revenue increased 12 percent driven by organic growth in mobile from
new protection programs and higher trade-in volumes, as well as
domestic Global Automotive growth from strong prior period sales.
Unfavorable foreign exchange reduced revenue in Connected Living and
Global Financial Services.
|
Global Preneed |
||||||||||||||||||||||||
| ($ in millions) | 1Q19 | 1Q18 | % Change | |||||||||||||||||||||
| Net operating income | $ | 11.8 | $ | 9.8 | 20 % | |||||||||||||||||||
| Net earned premiums, fees and other | $ | 49.1 | $ | 46.2 | 6 % |
-
Net operating income was up in first quarter 2019 primarily due
to higher investment income and lower mortality in the period compared
to first quarter 2018. -
Net earned premiums, fees and other income increased in the
first quarter 2019, primarily driven by growth in prefunded funeral
policies in U.S., as well as prior period sales of the Final Need
product.
|
Corporate & Other |
||||||||||||||||||||||||
| ($ in millions) | 1Q19 | 1Q18 | % Change | |||||||||||||||||||||
| Net loss attributable to common stockholders | $ | (24.1) | $ | (30.8) | 22 % | |||||||||||||||||||
| Net operating loss (4) | $ | (18.8) | $ | (20.0) | 6 % |
| Note: |
Net (loss) income attributable to common stockholders is the comparable GAAP measure to net operating loss for the Corporate & Other segment. |
|
-
Net operating loss4 decreased in first
quarter 2019, primarily due to lower employee-related expenses
compared to first quarter 2018.
Capital Position
-
Holding company liquidity was approximately $354 million as of
March 31, 2019, $129 million above the company’s current targeted
minimum level of $225 million.Dividends paid to the
holding company in the first quarter 2019 from Assurant operating
segments, inclusive of TWG, totaled $78 million.
-
Share repurchases and common and preferred dividends, totaled
$93 million in first quarter 2019. Dividends to shareholders totaled
$42 million, including $37 million in common stock dividends and $5
million in preferred stock dividends. Assurant repurchased 0.5 million
shares of common stock for $51 million. From April 1 through May 3,
2019, the company repurchased an additional 224,000 shares for
approximately $21 million, with $690 million remaining under the
current repurchase authorization.
Company Outlook
Based on current market conditions, for full-year 2019 the company
continues to expect:
-
Assurant net operating income per diluted share, excluding catastrophe
losses to increase 6 percent to 10 percent from 2018, driven mainly by
profitable growth in Global Lifestyle and Global Housing as well
as share repurchases. This growth rate includes the full year impact
of the 10.4 million shares issued for the TWG acquisition. Assurant’s
consolidated effective tax rate to be between 23 percent to 25 percent. -
Double-digit earnings growth to reflect full-year contributions from
TWG including $25 million to $30 million after-tax of additional
synergy realization, modest organic growth across Connected Living,
Global Automotive and multifamily housing, as well as ongoing expense
management efforts. Lender-placed, excluding reportable catastrophe
losses and the incremental reinsurance costs to further reduce the
company’s catastrophe exposure, is expected to approximate 2018 levels
as revenue declines moderate. Earnings growth will be partially offset
by the continued declines in Global Financial Services.Corporate
& Other full-year net operating loss5 to approximate
2018 levels. Interest expense and preferred dividends are expected to
be between $83 million to $85 million and approximately $20 million,
respectively, reflecting a full year of financing costs related to the
acquisition of TWG.
-
Business segment dividends from Global Housing, Global
Lifestyle and Global Preneed to approximate segment net operating
income, including catastrophe losses. This is subject to the growth of
the businesses and rating agency and regulatory capital requirements. -
Capital to be deployed to support business growth, fund other
investments and return capital to shareholders in the form of share
repurchases and dividends, subject to Board approval and market
conditions.
Earnings Conference Call
The first quarter 2019 earnings conference call and webcast will be held
Tuesday, May 7, 2019 at 8:30 a.m. ET. The live and archived webcast,
along with supplemental information, will be available on Assurant’s
Investor Relations website http://ir.assurant.com/investor/default.aspx
About Assurant
Assurant, Inc. (NYSE: AIZ) is a leading global provider of housing and
lifestyle solutions that support, protect and connect major consumer
purchases. Anticipating the evolving needs of consumers, Assurant
partners with the world’s leading brands to develop innovative products
and services and to deliver an enhanced customer experience. A Fortune
500 company with a presence in 21 countries, Assurant offers mobile
device solutions; extended service contracts; vehicle protection
services; pre-funded funeral insurance; renters insurance and
lender-placed homeowners insurance. The Assurant Foundation strengthens
communities by supporting charitable partners that help protect where
people live and can thrive, connect with local resources, inspire
inclusion and prepare leaders of the future.
Learn more at assurant.com
or on Twitter @AssurantNews.
Safe Harbor Statement
Some of the statements included in this news release and its exhibits,
particularly those anticipating future financial performance, business
prospects, growth and operating strategies and similar matters,
including the benefits and synergies of The Warranty Group acquisition,
are forward-looking statements within the meaning of the U.S. Private
Securities Litigation Reform Act of 1995. You can identify these
statements by the use of words such as “outlook,” “will,” “may,” “can,”
“anticipates,” “expects,” “estimates,” “projects,” “intends,” “plans,”
“believes,” “targets,” “forecasts,” “potential,” “approximately,” or the
negative version of those words and other words and terms with a similar
meaning. Any forward-looking statements contained in this news release
or its exhibits are based upon our historical performance and on current
plans, estimates and expectations. The inclusion of this forward-looking
information should not be regarded as a representation by us or any
other person that the future plans, estimates or expectations
contemplated by us will be achieved. Our actual results might differ
materially from those projected in the forward-looking statements. The
company undertakes no obligation to update or review any forward-looking
statements in this news release or the exhibits, whether as a result of
new information, future events or other developments. The following risk
factors could cause our actual results to differ materially from those
currently estimated by management, including those projected in the
company outlook:
| (i) |
the loss of significant clients, distributors and other parties or those parties facing financial, reputation and regulatory issues; |
|
| (ii) |
significant competitive pressures, changes in customer preferences and disruption; |
|
| (iii) |
the failure to find and integrate acquisitions, including The Warranty Group, or grow organically and risks associated with joint ventures; |
|
| (iv) |
the impact of general economic, financial market and political conditions, including unfavorable conditions in the capital and credit markets, and conditions in the markets in which we operate; |
|
| (v) |
risks related to our international operations and fluctuations in exchange rates; |
|
| (vi) | the impact of catastrophic and non-catastrophe losses; | |
| (vii) |
our inability to recover should we experience a business continuity event; |
|
| (viii) |
our inability to develop and maintain distribution sources or attract and retain sales representatives; |
|
| (ix) |
failure to manage vendors and other third parties who conduct business and provide services to our clients; |
|
| (x) |
declines in the value of mobile devices and export compliance risk in our mobile business; |
|
| (xi) |
negative publicity relating to our products and services or the markets in which we operate; |
|
| (xii) |
failure to implement our strategy and to attract and retain key personnel, including senior management; |
|
| (xiii) | employee misconduct; | |
| (xiv) |
the adequacy of reserves established for claims and our inability to accurately predict and price for claims; |
|
| (xv) |
a decline in financial strength ratings or corporate senior debt ratings; |
|
| (xvi) | an impairment of goodwill or other intangible assets; | |
| (xvii) |
failure to maintain effective internal control over financial reporting; |
|
| (xviii) |
a decrease in the value of our investment portfolio including due to market, credit and liquidity risks; |
|
| (xix) |
the impact of U.S. tax reform legislation and impairment of deferred tax assets; |
|
| (xx) |
the unavailability or inadequacy of reinsurance coverage and credit risk of reinsurers, including those to whom we have sold business through reinsurance; |
|
| (xxi) | the credit risk of some of our agents; | |
| (xxii) |
the inability of our subsidiaries to pay sufficient dividends to the holding company and limitations on our ability to declare and pay dividends; |
|
| (xxiii) | changes in the method for determining or replacement of LIBOR; | |
| (xxiv) |
failure to effectively maintain and modernize our information technology systems and infrastructure and integrate those of acquired businesses; |
|
| (xxv) |
breaches of our information systems or those of third parties or failure to protect data in such systems, including due to cyber-attacks; |
|
| (xxvi) |
costs of complying with, or failure to comply with, extensive laws and regulations to which we are subject, including related to privacy, data security and data protection; |
|
| (xxvii) | the impact from litigation and regulatory actions; | |
| (xxviii) | reductions in the insurance premiums we charge; and | |
| (xxix) | changes in insurance and other regulation. | |
For a detailed discussion of the risk factors that could affect our
actual results, please refer to the risk factors identified in our SEC
reports, including, but not limited to our Annual Report on Form 10-K,
as filed with the SEC.
Non-GAAP Financial Measures
Assurant uses the following non-GAAP financial measures to analyze the
company’s operating performance for the periods presented in this news
release. Because Assurant’s calculation of these measures may differ
from similar measures used by other companies, investors should be
careful when comparing Assurant’s non-GAAP financial measures to those
of other companies.
(1) Assurant uses net operating income (defined below), excluding
reportable catastrophes, as an important measure of the company’s
operating performance. Reportable catastrophes represents reportable
catastrophe losses net of reinsurance and client profit sharing
adjustments and including reinstatement and other premiums. Reportable
catastrophes include ISO events greater than $5 million, pre-tax. The
company believes this metric provides investors a valuable measure of
the performance of the company’s ongoing business because it excludes
reportable catastrophes, which can be volatile. The comparable GAAP
measure is net income attributable to common stockholders.
| (UNAUDITED) | 1Q | 1Q | ||||||||||||||||
| ($ in millions) | 2019 | 2018 | ||||||||||||||||
| Global Housing, excluding reportable catastrophes | $ | 81.5 | $ | 79.9 | ||||||||||||||
| Global Lifestyle(1) | 100.0 | 54.5 | ||||||||||||||||
| Global Preneed | 11.8 | 9.8 | ||||||||||||||||
| Corporate and other | (18.8 | ) | (20.0 | ) | ||||||||||||||
| Interest expense | (21.0 | ) | (9.6 | ) | ||||||||||||||
| Preferred stock dividends | (4.7 | ) | — | |||||||||||||||
| Net operating income, excluding reportable catastrophes | 148.8 | 114.6 | ||||||||||||||||
| Adjustments, pre-tax: | ||||||||||||||||||
| Assurant Health runoff operations | 0.1 | 2.6 | ||||||||||||||||
| Net realized gains on investments | 28.8 | 0.5 | ||||||||||||||||
| Reportable catastrophes | (10.3 | ) | (9.4 | ) | ||||||||||||||
| Amortization of deferred gains on disposal of businesses | 7.8 | 18.5 | ||||||||||||||||
| Net TWG acquisition related charges(2) | (10.7 | ) | (26.0 | ) | ||||||||||||||
| Foreign exchange related losses | (4.2 | ) | — | |||||||||||||||
| Other adjustments | 3.4 | 3.2 | ||||||||||||||||
| (Provision) benefit for income taxes | (2.7 | ) | 2.0 | |||||||||||||||
| GAAP net income attributable to common stockholders | $ | 161.0 | $ | 106.0 | ||||||||||||||
| (1) |
1Q 2019 and 1Q 2018 exclude benefits of $0.6 million after-tax ($0.9 million pre-tax) and $1.3 million after-tax ($1.6 million pre-tax), respectively, due to favorable development related to prior year reportable catastrophes. |
|
| (2) |
Details about the components of net TWG acquisition related |
|
(2) Assurant uses net operating income per diluted share, excluding
reportable catastrophes, as an important measure of the company’s
stockholder value. The company believes this metric provides investors a
valuable measure of stockholder value because it excludes reportable
catastrophes, which can be volatile. The comparable GAAP measure is net
income attributable to common stockholders per diluted share, defined as
net income plus any dilutive preferred stock dividends divided by
weighted average diluted shares outstanding.
| (UNAUDITED) | 1Q | 1Q | ||||||||||||||
| 2019 | 2018 | |||||||||||||||
|
Net operating income, excluding reportable catastrophes, per diluted share(1) |
$ | 2.33 | $ | 2.14 | ||||||||||||
| Adjustments, pre-tax: | ||||||||||||||||
| Dilutive effect from mandatory convertible preferred stock | — | (0.03 | ) | |||||||||||||
| Assurant Health runoff operations | — | 0.05 | ||||||||||||||
| Net realized gains on investments | 0.43 | 0.01 | ||||||||||||||
| Reportable catastrophes | (0.16 | ) | (0.17 | ) | ||||||||||||
| Amortization of deferred gains on disposal of businesses | 0.12 | 0.33 | ||||||||||||||
| Net TWG acquisition related charges | (0.17 | ) | (0.47 | ) | ||||||||||||
| Foreign exchange related losses | (0.06 | ) | — | |||||||||||||
| Other adjustments | 0.06 | 0.06 | ||||||||||||||
| (Provision) benefit for income taxes | (0.03 | ) | 0.04 | |||||||||||||
| Net income attributable to common stockholders per diluted share(1) | $ | 2.52 | $ | 1.96 | ||||||||||||
| (1) |
Information on the share counts used in the per share calculations |
|
(3) Assurant uses net operating income as an important measure of the
company’s operating performance. Net operating income equals net income,
excluding Assurant Health runoff operations, net realized gains on
investments, amortization of deferred gains on disposal of businesses
(including Assurant Employee Benefits), net TWG acquisition related
charges, foreign exchange gains (losses) from remeasurement of monetary
assets and liabilities and other highly variable or unusual items. The
company believes net operating income provides investors a valuable
measure of the performance of the company’s ongoing business because the
excluded items do not represent the ongoing operations of the company.
The comparable GAAP measure is net income attributable to common
stockholders.
| (UNAUDITED) | 1Q | 1Q | ||||||||||
| ($ in millions) | 2019 | 2018 | ||||||||||
| Net operating income | $ | 140.6 | $ | 107.2 | ||||||||
| Adjustments (pre-tax): | ||||||||||||
| Assurant Health runoff operations | 0.1 | 2.6 | ||||||||||
| Net realized gains on investments | 28.8 | 0.5 | ||||||||||
| Amortization of deferred gains on disposal of businesses | 7.8 | 18.5 | ||||||||||
| Net TWG acquisition related charges(1) | (10.7) | (26.0) | ||||||||||
| Foreign exchange related losses | (4.2) | — | ||||||||||
| Other adjustments | 3.4 | 3.2 | ||||||||||
| (Provision) benefit for income taxes | (4.8) | — | ||||||||||
| GAAP net income attributable to common stockholders | $ | 161.0 | $ | 106.0 | ||||||||
| (1) |
Details about the components of net TWG acquisition related |
|
(4) Assurant uses Corporate and Other net operating loss as an important
measure of the corporate segment’s performance. Corporate and Other net
operating loss equals Corporate and Other segment net (loss) income,
excluding Health runoff operations, amortization of deferred gains on
disposal of businesses, net TWG acquisition related charges, interest
expense, net realized losses (gains) on investments, foreign exchange
gains (losses) from remeasurement of monetary assets and liabilities and
other highly variable or unusual items. The company believes Corporate
and Other net operating loss provides investors a valuable measure of
the performance of the company’s corporate segment because it excludes
highly variable items that do not represent the ongoing results of the
company’s corporate segment. The comparable GAAP measure is Corporate &
Other segment net (loss) income attributable to common stockholders.
| (UNAUDITED) | 1Q | 1Q | ||||||||||||
| ($ in millions) | 2019 | 2018 | ||||||||||||
|
GAAP Corporate and Other segment net loss attributable to common stockholders |
$ | (24.1 | ) | $ | (30.8 | ) | ||||||||
| Adjustments, pre-tax: | ||||||||||||||
| Assurant Health runoff operations | (0.1 | ) | (2.6 | ) | ||||||||||
| Amortization of deferred gains on disposal of businesses | (7.8 | ) | (18.5 | ) | ||||||||||
| Net TWG acquisition related charges(1) | 10.7 | 26.0 | ||||||||||||
| Interest expense | 26.5 | 12.2 | ||||||||||||
| Net realized gains on investments | (28.8 | ) | (0.5 | ) | ||||||||||
| Foreign exchange related losses | 4.2 | — | ||||||||||||
| Other adjustments | (3.4 | ) | (3.2 | ) | ||||||||||
| Benefit for income taxes | (0.7 | ) | (2.6 | ) | ||||||||||
| Preferred stock dividends | 4.7 | — | ||||||||||||
| Corporate & other net operating loss | $ | (18.8 | ) | $ | (20.0 | ) | ||||||||
Contacts
Media:
Linda Recupero
Senior Vice President, Global
Communication
Phone: 212.859.7005
[email protected]
Investor Relations:
Suzanne Shepherd
Senior Vice
President, Investor Relations
Phone: 212.859.7062
[email protected]
Sean Moshier
Director, Investor Relations
212.859.5831
[email protected]
