Assurant, Inc. — FY 2023 Form 10-K
Reporting period: Fiscal year ended December 31, 2023. This is an annual filing, not a standalone fourth-quarter results release; the supplied filing text does not provide a clear standalone Q4 income statement. Unless stated otherwise, amounts below are in millions of U.S. dollars.
Business context
Assurant is a global business services and insurance company operating through Global Lifestyle, which includes mobile, consumer electronics and automotive protection, and Global Housing, which includes homeowners, lender-placed, flood and renters insurance. The filing reports these two operating segments and Corporate and Other.
Key financial results
| Metric | FY 2023 | FY 2022 |
|---|---|---|
| Total revenue | $11,131.6 | $10,193.0 |
| Net income | $642.5 | $276.6 |
| Diluted EPS | $11.95 | $5.05 |
| Net investment income | $489.1 | $364.1 |
| Net realized investment losses and equity fair-value changes | $(68.7) | $(179.7) |
| Net cash from operating activities | $1,138.1 | $596.9 |
| Net cash used in investing activities | $(637.7) | $(262.1) |
| Net cash used in financing activities | $(403.9) | $(818.4) |
Revenue increased about 9%; net income more than doubled. Approximate GAAP net margin was 5.8%, versus 2.7% in 2022. The filing’s segment profitability measure, Adjusted EBITDA, is non-GAAP and excludes specified items.
- Global Lifestyle: Net earned premiums, fees and other income were $8,561.4, up 6%; Adjusted EBITDA was $792.3, down 2%. Automotive growth was offset by elevated claims costs, including inflation-related parts and labor, and weaker results in some mobile and service-contract businesses.
- Global Housing: Net earned premiums, fees and other income were $2,142.9, up 14%; Adjusted EBITDA was $574.2, up 133%. Results benefited from homeowners growth, fewer catastrophe losses and favorable prior-year reserve development.
- Corporate and Other: Adjusted EBITDA loss widened to $109.0 from $99.2, mainly due to lower investment income and higher employee-related costs.
Balance sheet, debt and liquidity
- Total assets were $33,635.2 and stockholders’ equity was $4,809.5 at year-end. Debt carrying value was $2,080.6; debt to total capital was 30.2%.
- Cash and cash equivalents were $1,627.4; total investments were $8,220.9. Fixed-maturity securities had fair value of $6,912.1, with net unrealized losses of $380.3 at year-end, improved from $637.1 in 2022.
- Holding-company liquidity was $606.1, above the stated $225.0 target minimum. The $500.0 revolving credit facility was undrawn and available at year-end. Management said it expects sufficient liquidity for the next 12 months.
- Insurance subsidiaries could pay an estimated $592.4 in ordinary dividends to the parent during 2024 without prior regulatory approval; additional distributions may require approval.
Changes, outlook and risks
- Net income improvement was driven mainly by stronger Global Housing results, lower catastrophe losses, less adverse equity-security fair-value changes, and lower non-core and restructuring losses. These factors include potentially variable or nonrecurring benefits.
- Prior-year reserve development was favorable by $26.6 overall in 2023, versus unfavorable development of $55.5 in 2022. Global Housing had $37.1 of favorable development; non-core operations still recorded $40.1 of unfavorable development.
- Management provided no specific forward earnings or revenue guidance in the supplied filing text. It described continued focus on profitable growth, digital-first capabilities, operational efficiency and investment in the businesses. The amended restructuring program was expected to be completed by mid-2024.
- Assurant decided in Q4 2023 to exit mainland China operations, excluding Hong Kong. It also issued $175.0 of 6.10% senior notes due 2026 and used proceeds and cash on hand to redeem $175.0 of 4.20% notes due 2023; the remaining $50.0 of those notes was repaid at maturity.
- Key exposures include catastrophe and inflation-driven claims, reserve-estimation uncertainty, client concentration, competition, interest-rate and credit risk in investments, foreign exchange (including Argentina), reinsurance recoverability, regulatory constraints, and technology, cybersecurity and privacy risks. Assurant reported $31.3 of unfavorable after-tax foreign-exchange impact on net income in 2023.
- The 2024 catastrophe reinsurance program had secured approximately $1.38 billion of protection above a $150.0 retention by January 2024; Florida Hurricane Catastrophe Fund coverage was still to be finalized by June 2024. The company did not expect to buy a Caribbean excess catastrophe treaty for 2024.
- Legal and regulatory proceedings remain pending; management said it could not reasonably estimate possible losses above recorded accruals. It did not believe pending matters were likely to materially harm financial condition, while noting an individual period’s results or cash flows could be materially affected.
Investor verification priorities
- Separate recurring operating performance from the benefit of lower catastrophe losses and favorable Global Housing reserve development; monitor whether those trends persist.
- Track Global Automotive claims severity and margins, and whether cost inflation is offset by pricing and growth.
- Review reserve adequacy, including the continuing adverse development in non-core sharing-economy and small-commercial run-off business.
- Assess catastrophe exposure, reinsurance renewal terms, collateral and counterparty quality, and the impact of the 2024 program’s final Florida coverage.
- Verify the quality and availability of liquidity at the holding company, subsidiary dividend capacity, debt covenants and the 2026 and 2028 senior-note maturities.
- Monitor investment portfolio unrealized losses, credit quality and sensitivity to interest rates, alongside the execution and costs of restructuring and the China exit.
Audit note: PwC issued an unqualified opinion on the consolidated financial statements and internal control over financial reporting as of December 31, 2023. Claims and benefits payable reserves were identified as a critical audit matter.