Business Context and Reporting Period
Company: Assurant, Inc.
Filing Type: Form 8-K (Current Report)
Date of Report: October 22, 2018
Subject: Regulation FD disclosure regarding expected reportable catastrophe losses for the third quarter of 2018 and preliminary estimates for Hurricane Michael.
Key Financial Metrics and Catastrophe Loss Estimates
The filing details expected pre-tax and after-tax losses related to specific catastrophic events. The Company defines reportable catastrophes as individual events generating losses in excess of $5 million, pre-tax and net of reinsurance and client profit sharing adjustments.
| Event | Pre-Tax Loss Estimate (Millions) | After-Tax Loss Estimate (Millions) | Primary Segment |
|---|---|---|---|
| Hurricane Florence (3Q18) | $66 - $70 | Part of Total | Global Housing (Wind/Flood) |
| Hurricane Maria (3Q18 Reserve Increase) | $16 - $19 | Part of Total | Global Housing |
| Total 3Q18 Reportable Losses | $82 - $89 | $65 - $70 | Global Housing |
| Hurricane Michael (Preliminary 4Q18) | $55 - $85 | N/A | Global Housing (Wind) |
Note: Hurricane Florence losses include $1 million to $2 million in the Global Lifestyle segment (Global Automotive). Hurricane Maria losses exceed the $170 million per-event limit of the 2017 Caribbean Catastrophe Reinsurance Tower.
Material Changes and Unusual Items
- Hurricane Florence: Made landfall on September 14, 2018. Losses driven by wind and flood damage to lender-placed and manufactured housing products in North and South Carolina.
- Hurricane Maria: Occurred in 3Q17, but the Company is increasing reserves in 3Q18. These additional losses exceed the reinsurance tower limit.
- Hurricane Michael: Made landfall on October 10, 2018, in the Florida panhandle. Preliminary estimates indicate significant exposure to lender-placed products.
Guidance, Outlook, and Management Commentary
Management expects to report third quarter 2018 results and a refined range of estimated fourth quarter losses for Hurricane Michael on November 6, 2018. The initial estimated loss range for Hurricane Michael reflects inherent variability in early loss projections and claims severity, particularly in high-damage regions.
Risks and Contingencies: The filing includes a cautionary statement that estimated reportable catastrophe losses and their impact on the reinsurance program are forward-looking statements subject to significant uncertainties. Actual results may differ materially from projections. The Company undertakes no obligation to update these statements based on new information.
Key Facts for Investor Verification
- Verify the final 3Q18 earnings report on November 6, 2018, for the confirmed loss figures for Hurricanes Florence and Maria.
- Monitor the refined loss estimate for Hurricane Michael to be released on November 6, 2018, as the current range ($55M-$85M) is preliminary.
- Assess the impact of Hurricane Maria losses exceeding the $170 million reinsurance tower limit on the Company's overall reinsurance program capacity.
- Review the breakdown of losses between Global Housing and Global Lifestyle segments in the final 3Q18 filing.