Business Context and Reporting Period
This Form 8-K Current Report was filed by Assurant, Inc. on March 6, 2018. The filing primarily addresses a revision to the financing plan for the acquisition of TWG Holdings Limited ("TWG") and provides updated capital deployment guidance. It also includes historical financial data for TWG and unaudited pro forma combined financial information for the year ended December 31, 2017.
Key Financial Metrics
The filing does not provide Assurant's standalone revenue, profit, or cash flow figures for the current period. However, it discloses the following specific metrics regarding TWG and combined operations:
- TWG Net Income (2017): $83 million (adjusted to exclude $15 million of interest expense and $5 million of net realized gains on investments).
- Combined Segment Contribution (2017): Based on the addition of Assurant segment net operating income and TWG adjusted net income, the business segments represented the following shares of combined income:
- Global Housing: 48%
- Global Lifestyle: 45%
- Global Preneed: 7%
- Non-Lender-Placed Insurance Contribution: Lines of business excluding lender-placed insurance accounted for 59% of total net operating income in 2017 (up from 54% in 2016 and 46% in 2015).
Material Changes and Strategic Updates
Assurant has revised its financing plan for the TWG acquisition, lowering the overall equity issuance based on the company's view of its stock's intrinsic value and available cash. Consequently, the company now believes share repurchases in 2018 are unlikely, though this will be revisited post-closing. Capital deployment in 2018 will focus on financing and integrating TWG, funding the acquisition of Iké Asistencia (a services assistance business in Latin America), and meeting ongoing business capital needs.
Guidance, Outlook, and Risks
Outlook: Beyond 2018, management expects the combined operations of Assurant and TWG to drive long-term profitable growth and margin expansion through higher-valued offerings and expense efficiencies. The company targets growth in operating earnings per diluted share and strong cash flow generation, with segment dividends approximating segment earnings. Excess capital will be deployed across share repurchases, dividends, and investments subject to market conditions.
Risks and Contingencies: The filing includes standard forward-looking statement disclaimers. Actual results may differ materially due to risk factors detailed in the company's Annual Report on Form 10-K. The pro forma combined financial statements are not indicative of the actual results of the combined company, which may be materially different.
Investor Verification Checklist
- Verify the specific terms of the revised financing plan for the TWG acquisition in the Amended and Restated Agreement and Plan of Merger.
- Review Exhibit 99.1 for the reconciliation of net operating income excluding catastrophes, reinsurance, and client profit sharing adjustments.
- Examine Exhibit 99.2 for the audited consolidated financial statements of TWG Holdings Limited for the year ended December 31, 2017.
- Review Exhibit 99.3 for the unaudited pro forma condensed combined financial statements to understand the projected financial impact of the acquisition.
- Confirm the status and timeline for the acquisition of Iké Asistencia.