Assurant, Inc. — Q1 2024 Form 10-Q
Reporting period: Three months ended March 31, 2024; unaudited results compared with Q1 2023. Assurant provides connected-device, automotive, housing and related insurance and service products through Global Lifestyle and Global Housing.
Financial performance and position
| Metric | Q1 2024 | Q1 2023 / prior date |
|---|---|---|
| Total revenue | $2,880.1 million | $2,642.8 million |
| Net income | $236.4 million | $113.6 million |
| Diluted EPS | $4.47 | $2.12 |
| Operating cash flow | $82.5 million | $259.6 million |
| Cash and cash equivalents, March 31 | $1,281.9 million | $1,627.4 million at Dec. 31, 2023 |
| Total debt, March 31 | $2,081.2 million | $2,080.6 million at Dec. 31, 2023 |
| Total assets / equity, March 31 | $33,225.4 million / $4,920.0 million | $33,635.2 million / $4,809.5 million at Dec. 31, 2023 |
Total revenue rose 9% year over year. Net earned premiums were $2,376.5 million, fees and other income $385.7 million, and net investment income $126.7 million. Income before tax was $292.9 million; income tax expense was $56.5 million. The filing attributes the lower annualized effective tax rate mainly to transferable tax credits and a favorable mix of foreign business; it does not state the rate in the provided text.
Operating cash flow declined to $82.5 million. Investing activities used $328.2 million and financing activities used $96.2 million; cash fell by $345.5 million during the quarter. Assurant reported $622.3 million of holding-company liquidity, $397.3 million above its $225 million target minimum. The $500 million revolving credit facility was undrawn, with no commercial paper outstanding.
Segments and changes versus prior year
- Global Lifestyle: Adjusted EBITDA increased 4% to $207.7 million; net earned premiums, fees and other income rose 7% to $2,187.8 million. Connected Living benefited from mobile protection growth, higher investment income and a one-time $6.9 million client-contract benefit. Global Automotive faced elevated inflation-related claims costs and normalization of certain ancillary products.
- Global Housing: Adjusted EBITDA increased to $192.5 million from $68.4 million; net earned premiums, fees and other income rose 13% to $572.2 million. Improvement reflected $36.6 million lower pre-tax reportable catastrophe losses, better non-catastrophe loss experience, favorable prior-year reserve development, premium growth, expense leverage and lower catastrophe reinsurance premiums.
- Corporate and Other: Adjusted EBITDA was a loss of $29.5 million, versus a loss of $24.4 million, primarily due to higher consulting and employee-related costs supporting growth initiatives.
Consolidated net income more than doubled, principally due to stronger Global Housing results and lower catastrophes, alongside higher Global Lifestyle earnings. Favorable prior-period reserve development was $41.6 million, compared with $6.5 million in Q1 2023. Q1 2024 also included $8.8 million of net realized investment losses and equity-security fair-value changes.
Outlook, risks and notable items
- Management said it expects sufficient liquidity to meet needs over the next 12 months, including debt interest and common dividends. The filing provides no specific consolidated earnings or revenue guidance.
- Estimated 2024 catastrophe reinsurance premiums were $190.2 million pre-tax, versus $207.2 million for 2023; actual costs may vary with exposure and catastrophe-related reinstatement premiums. The main U.S. program provides $1.48 billion of coverage above a $150 million first-event retention; a $100 million layer was scheduled for placement in June 2024.
- Fixed-maturity securities had $403.8 million of net unrealized losses at March 31, up $23.5 million from year-end, primarily due to higher Treasury yields. Management said the unrealized losses were non-credit-related and that it did not intend, and was not required, to sell the securities before anticipated recovery. Baa-rated securities were 36.8% of the portfolio; B and lower were 1.1%.
- Key risks include catastrophe and other claims severity, inflation, reserve estimation, investment and interest-rate risk, reinsurance availability and counterparty credit, client and distribution relationships, competition, technology and cyber risks, regulation, and international operations.
- The company has legal and regulatory proceedings; management said pending matters were not believed likely to materially affect financial condition, but an individual period’s results or cash flows could be materially affected. Excess loss beyond recorded accruals could not be estimated.
- A potential sale of the Miami office remains subject to review, approval and other conditions; no definitive transaction is assured. The property’s carrying value was $46.0 million, and any gain is uncertain.
- Assurant repurchased 225,406 shares for $39.9 million before commissions and paid $37.4 million in dividends. $634.6 million remained under repurchase authorizations. The strategic restructuring plan is expected to be substantially complete by mid-2025; estimated remaining costs were $4.6 million.
Important facts for investors to verify
- How sustainable the Q1 Global Housing improvement is after lower catastrophe losses and favorable reserve development.
- Whether Global Automotive claims inflation and mobile-program implementation costs affect future segment profitability.
- Why operating cash flow was substantially below net income, including the timing of vendor payments, claims and incentive payments.
- Investment-portfolio sensitivity to interest rates and credit conditions, and the evolution of unrealized losses and mortgage-loan performance.
- Final catastrophe-reinsurance cost and coverage after the April placement and scheduled June layer placement.
- Whether the Miami property sale proceeds and any potential gain are realized, and whether legal or regulatory matters develop beyond recorded accruals.