Delaware | 001-31978 | 39-1126612 | ||
(State or Other Jurisdiction of Incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) |
28 Liberty Street, 41st Floor New York, New York | 10005 | |
(Address of Principal Executive Offices) | (Zip Code) |
☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CR 230.425) |
☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Title of Each Class | Trading Symbol(s) | Name of Each Exchange on Which Registered |
Common Stock, $0.01 Par Value | AIZ | New York Stock Exchange |
6.50% Series D Mandatory Convertible Preferred Stock, $1.00 Par Value | AIZP | New York Stock Exchange |
ASSURANT, INC. | |||
Date: May 6, 2019 | By: | /s/ Carey S. Roberts | |
Carey S. Roberts | |||
Executive Vice President, Chief Legal Officer and Secretary |
Exhibit No. | Description |
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 | |
• $88 million returned to shareholders in share repurchases and common dividends |
(UNAUDITED) | 1Q | 1Q | |||||
($ 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 |
• | 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. |
• | 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 $651 million of revenue from TWG. Excluding TWG and the sale of mortgage solutions, revenue increased 10 percent, primarily from continued organic growth in mobile programs and Global Automotive. |
($ in millions) | 1Q19 | 1Q18 | % Change | ||||||||
Net operating income | $ | 72.7 | $ | 71.2 | 2 | % | |||||
Net earned premiums, fees and other | $ | 500.0 | $ | 523.1 | (4 | )% |
• | 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 $8.7 million of catastrophes in the first quarter 2018. |
• | Net earned premiums, fees and other income decreased in first quarter 2019, mainly reflecting the sale of mortgage solutions. Excluding mortgage solutions, revenue increased 5 percent due to growth in specialty property products and multifamily housing. This increase was partially offset by expected lower placement rates and lower real-estate owned volume in lender-place insurance. |
($ 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 | % |
• | 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. |
• | Net earned premiums, fees and other income increased primarily due to the addition of $651 million of TWG revenue. Excluding TWG, revenue increased 12 percent driven by organic growth in mobile from new protection programs and higher trade-in volumes, as well as domestic Global Automotive growth from strong prior period sales. Unfavorable foreign exchange reduced revenue in Connected Living and Global Financial Services. |
($ 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. |
($ 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 | % |
• | Net operating loss4 decreased in first quarter 2019, primarily due to lower employee-related expenses compared to first quarter 2018. |
• | 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. |
• | 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. |
• | 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 |
• | 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. |
(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. |
(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 charges are included in the Financial Supplement located on Assurant’s Investor Relations website http://ir.assurant.com/investor/default.aspx |
(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 |
(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 charges are included in the Financial Supplement located on Assurant’s Investor Relations website http://ir.assurant.com/investor/default.aspx |
(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 | ) |
1Q | |||||||
2019 | 2018 | ||||||
($ in millions except number of shares and per share amounts) | |||||||
Revenues | |||||||
Net earned premiums | $ | 1,904.4 | $ | 1,124.9 | |||
Fees and other income | 328.3 | 364.5 | |||||
Net investment income | 166.3 | 130.2 | |||||
Net realized gains on investments | 28.8 | 0.5 | |||||
Amortization of deferred gains on disposal of businesses | 7.8 | 18.5 | |||||
Total revenues | 2,435.6 | 1,638.6 | |||||
Benefits, losses and expenses | |||||||
Policyholder benefits | 614.7 | 414.6 | |||||
Selling, underwriting, general and administrative expenses | 1,577.4 | 1,066.0 | |||||
Interest expense | 26.5 | 21.5 | |||||
Total benefits, losses and expenses | 2,218.6 | 1,502.1 | |||||
Income before provision for income taxes | 217.0 | 136.5 | |||||
Provision for income taxes | 48.4 | 30.5 | |||||
Net income | 168.6 | 106.0 | |||||
Less: Net income attributable to non-controlling interests | (2.9 | ) | — | ||||
Net income attributable to stockholders | 165.7 | 106.0 | |||||
Less: Preferred stock dividends | (4.7 | ) | — | ||||
Net income attributable to common stockholders | $ | 161.0 | $ | 106.0 | |||
Net income attributable to common stockholders per share: | |||||||
Basic | $ | 2.57 | $ | 1.99 | |||
Diluted | $ | 2.52 | $ | 1.96 | |||
Common stock dividends per share | $ | 0.60 | $ | 0.56 | |||
Share data: | |||||||
Basic weighted average shares outstanding | 62,594,828 | 53,169,358 | |||||
Diluted weighted average shares outstanding | 65,777,945 | 54,189,498 |
March 31, | December 31, | ||||||
2019 | 2018 | ||||||
($ in millions) | |||||||
Assets | |||||||
Investments and cash and cash equivalents | $ | 15,257.9 | $ | 14,657.9 | |||
Reinsurance recoverables | 9,061.6 | 9,166.0 | |||||
Deferred acquisition costs | 5,371.5 | 5,103.0 | |||||
Goodwill | 2,331.2 | 2,321.8 | |||||
Value of business acquired | 2,858.1 | 3,157.8 | |||||
Assets held in separate accounts | 1,801.1 | 1,609.7 | |||||
Other assets | 3,497.9 | 3,387.7 | |||||
Assets of consolidated investment entities | 2,057.7 | 1,685.4 | |||||
Total assets | $ | 42,237.0 | $ | 41,089.3 | |||
Liabilities | |||||||
Policyholder benefits and claims payable | $ | 12,061.4 | $ | 12,054.6 | |||
Unearned premiums | 15,638.7 | 15,648.0 | |||||
Debt | 2,006.6 | 2,006.0 | |||||
Liabilities related to separate accounts | 1,801.1 | 1,609.7 | |||||
Deferred gain on disposal of businesses | 45.4 | 53.1 | |||||
Accounts payable and other liabilities | 3,410.9 | 3,128.9 | |||||
Liabilities of consolidated investment entities | 1,801.2 | 1,455.1 | |||||
Total liabilities | 36,765.3 | 35,955.4 | |||||
Stockholders' equity | |||||||
Equity, excluding accumulated other comprehensive income | 5,337.2 | 5,267.4 | |||||
Accumulated other comprehensive income | 103.4 | (155.4 | ) | ||||
Total Assurant, Inc. stockholders' equity | 5,440.6 | 5,112.0 | |||||
Non-controlling interest | 31.1 | 21.9 | |||||
Total equity | 5,471.7 | 5,133.9 | |||||
Total liabilities and equity | $ | 42,237.0 | $ | 41,089.3 |