UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended March 31, 2019

OR 

¨ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from                      to                     

Assurant, Inc.

(Exact name of registrant as specified in its charter)

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

(212) 859-7000

(Address, including zip code, and telephone number, including area code, of Registrant’s Principal Executive Offices)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    YES  x    NO  ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    YES  x    NO  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	x	Accelerated filer	¨
Non-accelerated filer	¨	Smaller reporting company	¨
		Emerging growth company	¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    YES  ¨    NO  x

Securities registered pursuant to Section 12(b) of the Act:

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

The number of shares of the registrant’s Common Stock outstanding at May 3, 2019 was 61,474,682.

ASSURANT, INC.

QUARTERLY REPORT ON FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2019

TABLE OF CONTENTS

Item Number		Page Number
	PART I FINANCIAL INFORMATION
1.	Consolidated Financial Statements (unaudited) of Assurant, Inc.:
	Consolidated Balance Sheets (unaudited) at March 31, 2019 and December 31, 2018	2
	Consolidated Statements of Operations (unaudited) for the three months ended March 31, 2019 and 2018	4
	Consolidated Statements of Comprehensive Income (unaudited) for the three months ended March 31, 2019 and 2018	5
	Consolidated Statements of Changes in Equity (unaudited) for the three months ended March 31, 2019 and 2018	6
	Consolidated Statements of Cash Flows (unaudited) for the three months ended March 31, 2019 and 2018	7
	Notes to Consolidated Financial Statements (unaudited)	9
2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	36
3.	Quantitative and Qualitative Disclosures About Market Risk	53
4.	Controls and Procedures	53
	PART II OTHER INFORMATION
1.	Legal Proceedings	54
1A.	Risk Factors	54
2.	Unregistered Sales of Equity Securities and Use of Proceeds	54
6.	Exhibits	55
	Signatures	56

Amounts are presented in United States of America (“U.S.”) dollars and all amounts are in millions, except number of shares and per share amounts.

1

Assurant, Inc.

Consolidated Balance Sheets (unaudited)

As of March 31, 2019 and December 31, 2018

	March 31, 2019			December 31, 2018
	(in millions except number of  shares and per share amounts)
Assets
Investments:
Fixed maturity securities available for sale, at fair value (amortized cost - $11,042.5 and $10,834.0 at March 31, 2019 and December 31, 2018, respectively)	$	11,834.6		$	11,257.1
Equity securities at fair value	388.4			378.8
Commercial mortgage loans on real estate, at amortized cost	758.1			759.6
Short-term investments	343.9			373.2
Other investments	658.7			635.2
Total investments	13,983.7			13,403.9
Cash and cash equivalents	1,274.2			1,254.0
Premiums and accounts receivable, net	1,695.5			1,643.5
Reinsurance recoverables	9,061.6			9,166.0
Accrued investment income	130.8			125.5
Deferred acquisition costs	5,371.5			5,103.0
Property and equipment, at cost less accumulated depreciation	409.8			392.5
Tax receivable	10.7			36.3
Goodwill	2,331.2			2,321.8
Value of business acquired	2,858.1			3,157.8
Other intangible assets, net	606.5			622.4
Other assets	644.6			567.5
Assets held in separate accounts	1,801.1			1,609.7
Assets of consolidated investment entities (1)	2,057.7			1,685.4
Total assets	$	42,237.0		$	41,089.3
Liabilities
Future policy benefits and expenses	$	9,310.8		$	9,240.9
Unearned premiums	15,638.7			15,648.0
Claims and benefits payable	2,750.6			2,813.7
Commissions payable	336.4			338.6
Reinsurance balances payable	319.3			330.9
Funds held under reinsurance	294.0			272.0
Deferred gains on disposal of businesses	45.4			53.1
Accounts payable and other liabilities	2,461.2			2,187.4
Debt	2,006.6			2,006.0
Liabilities related to separate accounts	1,801.1			1,609.7
Liabilities of consolidated investment entities (1)	1,801.2			1,455.1
Total liabilities	36,765.3			35,955.4
Commitments and contingencies (Note 17)
Stockholders’ equity
6.50% Series D mandatory convertible preferred stock, par value $1.00 per share, 2,875,000 shares authorized, issued and outstanding at March 31, 2019 and December 31, 2018	2.9			2.9
Common stock, par value $0.01 per share, 800,000,000 shares authorized, 161,448,903 and 161,153,454 shares issued and 61,678,749 and 61,908,979 shares outstanding at March 31, 2019 and December 31, 2018, respectively	1.6			1.6
Additional paid-in capital	4,496.0			4,495.6
Retained earnings	5,879.7			5,759.7
Accumulated other comprehensive income (loss)	103.4			(155.4		)
Treasury stock, at cost; 99,659,705 and 99,244,475 shares at March 31, 2019 and December 31, 2018, respectively	(5,043.0		)	(4,992.4		)
Total Assurant, Inc. stockholders’ equity	5,440.6			5,112.0
Non-controlling interests	31.1			21.9
Total equity	5,471.7			5,133.9
Total liabilities and equity	$	42,237.0		$	41,089.3

2

Assurant, Inc.

Consolidated Balance Sheets (unaudited)

As of March 31, 2019 and December 31, 2018

(1) The following table presents information on assets and liabilities related to consolidated investment entities as of March 31, 2019 and December 31, 2018.

	March 31, 2019		December 31, 2018
	(in millions)
Assets
Cash and cash equivalents	$	110.4	$	62.6
Investments, at fair value	1,909.2		1,576.2
Other receivables	38.1		46.6
Total assets	$	2,057.7	$	1,685.4
Liabilities
Collateralized loan obligation notes, at fair value	1,603.6		1,316.7
Other liabilities	197.6		138.4
Total liabilities	$	1,801.2	$	1,455.1

See the accompanying Notes to Consolidated Financial Statements

3

Assurant, Inc.

Consolidated Statements of Operations (unaudited)

Three Months Ended March 31, 2019 and 2018

	Three Months Ended March 31,
	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, excluding other-than-temporary impairment losses	29.1			0.5
Other-than-temporary impairment losses recognized in earnings	(0.3		)	—
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
Amortization of deferred acquisition costs and value of business acquired	777.3			346.4
Underwriting, general and administrative expenses	800.1			719.6
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
Earnings Per Common Share
Basic	$	2.57		$	1.99
Diluted	$	2.52		$	1.96
Share Data
Weighted average common shares outstanding used in basic per common share calculations	62,594,828			53,169,358
Plus: Dilutive securities	3,183,117			1,020,140
Weighted average common shares used in diluted per common share calculations	65,777,945			54,189,498

See the accompanying Notes to Consolidated Financial Statements

4

Assurant, Inc.

Consolidated Statements of Comprehensive Income (unaudited)

Three Months Ended March 31, 2019 and 2018

	Three Months Ended March 31,
	2019			2018
	(in millions)
Net income	$	168.6		$	106.0
Other comprehensive income (loss):
Change in unrealized gains on securities, net of taxes of $(69.0) and $47.8 for the three months ended March 31, 2019 and 2018, respectively	248.9			(175.2		)
Change in unrealized gains on derivative transactions, net of taxes of $0.2 and $(5.6) for the three months ended March 31, 2019 and 2018, respectively	(0.3		)	21.1
Change in other-than-temporary impairment losses, net of taxes of $0.1 and $0.9 for the three months ended March 31, 2019 and 2018, respectively	(0.2		)	(3.5		)
Change in foreign currency translation, net of taxes of $(0.6) and $0.5 for the three months ended March 31, 2019 and 2018, respectively	10.2			9.2
Amortization of pension and postretirement unrecognized net periodic benefit cost, net of taxes of $(0.1) for the three months ended March 31, 2019	0.2			—
Total other comprehensive income (loss)	258.8			(148.4		)
Total comprehensive income (loss)	427.4			(42.4		)
Less: Comprehensive income attributable to non-controlling interests	(2.9		)	—
Total comprehensive income (loss) attributable to common stockholders	$	424.5		$	(42.4	)

See the accompanying Notes to Consolidated Financial Statements

5

Assurant, Inc.

Consolidated Statements of Equity (unaudited)

Three Months Ended March 31, 2019 and 2018

	Three Months Ended March 31, 2019
	Preferred Stock		Common Stock		Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive (Loss) Income			Treasury Stock			Non-controlling Interests		Total
	(in millions)
Balance at December 31, 2018	$	2.9	$	1.6	$	4,495.6		$	5,759.7		$	(155.4	)	$	(4,992.4	)	$	21.9	$	5,133.9
Stock plan exercises	—		—		(11.1		)	—			—			—			—		(11.1		)
Stock plan compensation expense	—		—		11.5			—			—			—			—		11.5
Common stock dividends ($0.60 per share)	—		—		—			(37.4		)	—			—			—		(37.4		)
Acquisition of common stock	—		—		—			—			—			(50.6		)	—		(50.6		)
Net income	—		—		—			165.7			—			—			2.9		168.6
Preferred stock dividends ($1.63 per share)	—		—		—			(4.7		)	—			—			—		(4.7		)
Change in equity of non-controlling interests	—		—		—			(3.6		)	—			—			6.3		2.7
Other comprehensive income	—		—		—			—			258.8			—			—		258.8
Balance at March 31, 2019	$	2.9	$	1.6	$	4,496.0		$	5,879.7		$	103.4		$	(5,043.0	)	$	31.1	$	5,471.7

	Three Months Ended March 31, 2018
	Preferred Stock		Common Stock		Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Income			Treasury Stock			Non-controlling Interests		Total
	(in millions)
Balance at December 31, 2017	$	—	$	1.5	$	3,197.9		$	5,697.3		$	234.0		$	(4,860.1	)	$	10.9	$	4,281.5
Cumulative effect of change in accounting principles, net of taxes	—		—		—			41.4			(33.9		)	—			—		7.5
Stock plan exercises	—		—		(2.2		)	—			—			—			—		(2.2		)
Stock plan compensation expense	—		—		9.6			—			—			—			—		9.6
Common stock dividends ($0.56 per share)	—		—		—			(29.7		)	—			—			—		(29.7		)
Net income	—		—		—			106.0			—			—			—		106.0
Issuance of preferred stock	2.9		—		273.5			—			—			—			—		276.4
Change in equity of non-controlling interests	—		—		—			—			—			—			0.3		0.3
Other comprehensive loss	—		—		—			—			(148.4		)	—			—		(148.4		)
Balance at March 31, 2018	$	2.9	$	1.5	$	3,478.8		$	5,815.0		$	51.7		$	(4,860.1	)	$	11.2	$	4,501.0

See the accompanying Notes to Consolidated Financial Statements

6

Assurant, Inc.

Consolidated Statements of Cash Flows (unaudited)

Three Months Ended March 31, 2019 and 2018

	Three Months Ended March 31,
	2019			2018
	(in millions)
Operating activities
Net income attributable to stockholders	$	165.7		$	106.0
Adjustments to reconcile net income to net cash provided by operating activities:
Noncash revenues, expenses, gains and losses included in income:
Deferred tax expense	36.6			13.5
Amortization of deferred gains on disposal of businesses	(7.8		)	(18.5		)
Depreciation and amortization	29.7			30.0
Net realized gains on investments	(29.6		)	(0.5		)
Stock based compensation expense	11.5			9.6
Income from real estate joint ventures	(3.3		)	(3.6		)
Changes in operating assets and liabilities:
Change in insurance policy reserves and expenses	34.9			(579.4		)
Change in premiums and accounts receivable	(43.3		)	4.8
Change in reinsurance recoverable	200.9			479.5
Change in reinsurance balance payable	(13.6		)	(20.4		)
Change in funds withheld under reinsurance	21.2			(4.8		)
Change in deferred acquisition costs and value of business acquired	(158.0		)	(43.3		)
Change in other assets and other liabilities	17.3			(202.3		)
Change in taxes payable	25.7			94.0
Other	(41.2		)	59.7
Net cash provided by (used in) operating activities	246.7			(75.7		)
Investing activities
Sales of:
Fixed maturity securities available for sale	597.6			742.5
Equity securities	41.6			42.3
Other invested assets	10.2			31.8
Maturities, calls, prepayments, and scheduled redemption of:
Fixed maturity securities available for sale	135.1			156.7
Commercial mortgage loans on real estate	14.0			56.4
Purchases of:
Fixed maturity securities available for sale	(873.0		)	(723.2		)
Equity securities	(32.8		)	(39.2		)
Commercial mortgage loans on real estate	(10.7		)	(70.4		)
Other invested assets	(11.2		)	(18.5		)
Property and equipment and other	(32.4		)	(16.5		)
Consolidated investment entities (1):
Purchases of investments	(489.3		)	(301.5		)
Sale of investments	172.8			106.1
Change in short-term investments	30.6			116.0
Other	0.3			(3.4		)
Net cash (used in) provided by investing activities	(447.2		)	79.1
Financing activities
Issuance of mandatory convertible preferred stock, net of issuance costs (2)	—			276.4
Issuance of debt, net of issuance costs (3)	—			1,285.8

7

Assurant, Inc.

Consolidated Statements of Cash Flows (unaudited)

Three Months Ended March 31, 2019 and 2018

Repayment of debt (3)	—			(350.0		)
Issuance of collateralized loan obligation notes (1)	418.5			—
Issuance of debt for consolidated investment entities (1)	189.1			156.6
Repayment of debt for consolidated investment entities (1)	(317.4		)	—
Acquisition of common stock	(50.0		)	(7.0		)
Common stock dividends paid	(37.4		)	(29.7		)
Preferred stock dividends paid	(4.7		)	—
Withholding on stock based compensation	13.6			6.6
Non-controlling interest	9.2			0.3
Other	—			5.0
Net cash provided by financing activities	220.9			1,344.0
Effect of exchange rate changes on cash and cash equivalents	(0.2		)	(2.2		)
Change in cash and cash equivalents	20.2			1,345.2
Cash and cash equivalents at beginning of period	1,254.0			996.8
Cash and cash equivalents at end of period	$	1,274.2		$	2,342.0

 

(1) Relates to cash flows from our variable interest entities. Refer to Note 8 for further information.

(2) Refer to Note 14 for additional information.

(3) Refer to Note 11 for additional information.

See the accompanying Notes to Consolidated Financial Statements

8

Assurant, Inc.

Notes to Consolidated Financial Statements (unaudited)

(In millions, except number of shares and per share amounts)

1. Nature of Operations

Assurant, Inc. (the “Company”) is a global provider of risk management solutions in the housing and lifestyle markets, protecting where people live and the goods they buy. The Company operates in North America, Latin America, Europe and Asia Pacific through three operating segments: Global Housing, Global Lifestyle and Global Preneed. The Company partners with clients who are leaders in their industries to provide consumers a diverse range of protection products and services. Through its Global Housing segment, the Company provides lender-placed homeowners insurance; renters insurance and related products (referred to as “Multifamily Housing”); manufactured housing and flood insurance and other specialty products (referred to as “Specialty and Other”). Through its Global Lifestyle segment, the Company provides mobile device protection products and related services and extended service products and related services for consumer electronics and appliances (referred to as “Connected Living”); vehicle protection and related services (referred to as “Global Automotive”); and credit and other insurance (referred to as “Global Financial Services and Other”). Through its Global Preneed segment, the Company provides pre-funded funeral insurance and annuity products.

The Company’s common stock is traded on the New York Stock Exchange under the symbol “AIZ.”

2. Basis of Presentation

The accompanying unaudited interim Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information. Accordingly, these statements do not include all of the information and notes required by GAAP for complete financial statements.

The interim financial data as of March 31, 2019 and for the three months ended March 31, 2019 and 2018 is unaudited; in the opinion of management, the interim data includes all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of the results for the interim periods. The unaudited interim Consolidated Financial Statements include the accounts of the Company and all of its wholly owned subsidiaries. All inter-company transactions and balances are eliminated in consolidation.

Operating results for the three months ended March 31, 2019 are not necessarily indicative of the results that may be expected for the year ending December 31, 2019. The accompanying unaudited interim Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 (the “2018 annual financial statements”).

3. Recent Accounting Pronouncements

Adopted

Lease accounting: On January 1, 2019, the Company adopted the new lease guidance on a modified retrospective basis and therefore did not restate comparative periods. The new guidance requires that entities recognize assets and liabilities associated with leases on the balance sheet and disclose key information about leasing arrangements. The Company and its subsidiaries lease office space and equipment under operating lease arrangements for which the Company is the lessee. Therefore, the primary change at the time of adoption involved the recognition of right-of-use assets and lease liabilities related to operating leases with terms in excess of 12 months in which the Company is the lessee. Upon adoption, the Company elected the package of practical expedients permitted under the transition guidance, which allowed the carryforward of 1) historical lease classifications, 2) the prior assessment on whether a contract is or contains a lease, and 3) initial direct costs for any leases that existed prior to adoption. As of January 1, 2019, the new lease liability and right-of-use asset was $85.3 million and $78.0 million, respectively. Deferred rent liability of $7.3 million, which was required under the previous guidance, was reversed. There was an immaterial impact to equity upon adoption.

As of March 31, 2019, the lease liability and right-of-use asset was $81.3 million and $73.0 million, respectively. These balances are included in accounts payable and other liabilities and other assets, respectively, in the consolidated balance sheets.

9

Assurant, Inc.

Notes to Consolidated Financial Statements (unaudited)

(In millions, except number of shares and per share amounts)

For the three months ended March 31, 2019, the operating lease cost recognized for leases with terms in excess of 12 months was $5.8 million and related cash outflows reducing the lease liability was $5.1 million. At March 31, 2019, the weighted average remaining lease term and discount rate was 6.8 years and 4.5%, respectively.

Not Yet Adopted

Reporting credit losses of assets held at amortized cost: In June 2016, the FASB issued amended guidance on reporting credit losses for assets held at amortized cost and available for sale debt securities. For assets held at amortized cost, the amended guidance eliminates the probable recognition threshold and instead requires an entity to reflect the current estimate of all expected credit losses. For available for sale debt securities, credit losses will be measured in a manner similar to current accounting requirements; however, the amended guidance requires that credit losses be presented as an allowance rather than as a permanent impairment. The amendments affect loans, debt securities, trade receivables, net investments in leases, off balance sheet credit exposures, reinsurance receivables, and any other financial assets not excluded from the scope that have the contractual right to receive cash. The Company expects to adopt the amended guidance on its effective date of January 1, 2020. The Company is evaluating the requirements of this amended guidance and the potential impact on the Company’s financial position and results of operations. While the Company expects an increase in its allowances for credit losses related to financial assets within scope of the standard, principally reinsurance receivables and commercial mortgage loans on real estate, the amount of the allowance will be dependent on the asset composition and economic conditions at that time of adoption.

Customer’s accounting for implementation costs incurred in a cloud computing arrangement that is a service contract: In August 2018, the FASB issued guidance aligning the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. For these arrangements, the guidance also limits the period to expense capitalized implementation costs based on the term of the hosting agreement, including the noncancellable period of the arrangement plus periods covered by options to extend the arrangement that are reasonably certain of exercise. The accounting for the service element of a hosting arrangement that is a service contract is not affected by the amendments. The guidance is effective for public business entities for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Early adoption is permitted, including adoption in any interim period. The guidance is required to be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. The Company is evaluating the requirements of this guidance and the potential impact on the Company’s financial position and results of operations.

Targeted improvements to the accounting for long-duration contracts: In August 2018, the FASB issued guidance that provides targeted improvements to the accounting for long-duration contracts. The guidance includes the following primary changes: assumptions supporting benefit reserves will no longer be locked-in but must be updated at least annually with the impact of changes to the liability reflected in earnings (except for discount rates); the discount rate assumptions will be based on an upper-medium grade (low credit risk) fixed-income instruments instead of the earnings rate of invested assets; the discount rate must be evaluated at each reporting date and the impact of changes to the liability estimate as a result of updating the discount rate assumption is required to be recognized in other comprehensive income; the provision for adverse deviation is eliminated; and premium deficiency testing is eliminated. Other noteworthy changes include the following: differing models for amortizing deferred acquisition costs will become uniform for all long-duration contracts based on a constant rate over the expected term of the related in-force contracts; all market risk benefits associated with deposit contracts must be reported at fair value with changes reflected in income except for changes related to credit risk which will be recognized in other comprehensive income; and disclosures will be expanded to include disaggregated roll forwards of the liability for future policy benefits, policyholder account balances, market risk benefits, separate account liabilities, and deferred acquisition costs, as well as information about significant inputs, judgments, assumptions and methods used in measurement.

For public business entities, the guidance is effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. Early adoption is permitted. Generally, the amendments are applied retrospectively as of the beginning of the earliest period presented with two transition options available for changing the assumptions.

This guidance will apply to the Company’s preneed life insurance policies, as well as its annuity and universal life products (which are no longer offered and are in runoff). The Company is evaluating the requirements of this guidance and the potential impact on the Company’s financial position and results of operations.

10

Assurant, Inc.

Notes to Consolidated Financial Statements (unaudited)

(In millions, except number of shares and per share amounts)

4. Acquisitions

TWG Acquisition

On May 31, 2018 (the “Acquisition Date”), the Company acquired TWG for total consideration of $2.47 billion. This amount included $894.9 million in cash, the repayment of TWG’s $595.9 million pre-existing debt and issuance of $975.5 million of Assurant, Inc. common stock. As a result, the equityholders of TWG, including TPG Capital, received a total of 10.4 million shares of Assurant, Inc. common stock. TWG specializes in the underwriting, administration and marketing of service contracts on a wide variety of consumer goods, including automobiles, consumer electronics and major home appliances.

Fair Value of Net Assets Acquired and Liabilities Assumed

The fair values listed below are estimates and are subject to adjustment, including assessment of the value of business acquired (“VOBA”) and other intangible assets, as well as certain components of deferred tax liabilities included within accounts payable and other liabilities. The initial accounting included certain provisional amounts recorded as of June 30, 2018 (the end of the reporting period in which the acquisition occurred). During the measurement period (which includes the period from June 1, 2018 to March 31, 2019), the Company made adjustments to the provisional amounts to reflect new information obtained about facts and circumstances that existed as of the Acquisition Date, which, if known, would have affected the measurement of the amounts recognized as of that date. Such adjustments impacted certain identifiable assets acquired and liabilities assumed, resulting in a net increase to total identifiable net assets acquired and a corresponding decrease in goodwill of $36.1 million. The adjustments to income that would have been recognized in previous periods if the measurement period adjustments had been completed as of the Acquisition Date were immaterial. The Company may recognize additional measurement period adjustments to the provisional amounts in future periods, but no later than one year from the Acquisition Date.

Assets acquired and (liabilities) assumed (updated as of March 31, 2019)

Fixed maturity securities available for sale	$	2,268.8
Equity securities	49.4
Short-term investments	165.5
Other investments	100.9
Cash and cash equivalents	380.1
Premiums and accounts receivable, net	285.7
Reinsurance recoverables	1,916.9
Accrued investment income	31.6
Property and equipment	15.4
Value of business acquired	3,973.0
Other intangible assets	459.7
Other assets	200.5
Unearned premiums and contract fees	(7,521.3		)
Claims and benefits payable	(418.2		)
Reinsurance balances payable	(186.1		)
Funds held under reinsurance	(202.2		)
Accounts payable and other liabilities	(479.3		)
Non-controlling interest	(1.8		)
Total identifiable net assets acquired	1,038.6
Goodwill	1,427.7
Total acquisition consideration	$	2,466.3

Total goodwill of $1.43 billion is mainly attributable to expected growth and profitability, none of which is expected to be

11

Assurant, Inc.

Notes to Consolidated Financial Statements (unaudited)

(In millions, except number of shares and per share amounts)

deductible for income tax purposes.

VOBA and Other Intangible Assets

The following table shows the preliminary purchase price allocation to VOBA and other intangible assets, including the effect of measurement period adjustments to provisional estimates as described above.

	Amount
Value of business acquired (1)	$	3,973.0
Finite life (1):
Customer related intangibles (distribution network)	$	390.3
Technology based intangibles	57.8
Total finite life other intangible assets	448.1
Indefinite life:
Contract based intangibles	11.6
Total other intangible assets	$	459.7

(1) Refer to future estimated amortization table below for the amortization pattern of VOBA and other intangible assets with finite lives.

Total amortization of VOBA related to TWG was $298.4 million for the three months ended March 31, 2019. Total amortization of other intangible assets related to TWG was $4.5 million for the three months ended March 31, 2019. At March 31, 2019, the estimated amortization of VOBA and other intangible assets with finite lives related to TWG for the remainder of 2019, the next five years and thereafter is as follows:

Year	VOBA		Other Intangible Assets (with Finite Lives)
April 1 - December 31, 2019	$	785.3	$	14.0
2020	822.0		26.2
2021	576.0		31.0
2022	353.8		35.0
2023	218.8		36.1
2024	79.0		36.6
Thereafter	7.5		254.2
Total	$	2,842.4	$	433.1

Acquisition-related Costs

Transaction costs related to the acquisition were expensed as incurred. These costs include advisory, legal, accounting, valuation and other professional or consulting fees, as well as general and administrative costs. Transaction costs incurred to date in connection with the acquisition of TWG totaled $40.2 million, including $0.3 million and $5.2 million for the three months ended March 31, 2019 and 2018, respectively, which were reported through the underwriting, general and administrative expenses line item in the consolidated statements of operations.

As a part of the ongoing integration of TWG’s operations, the Company has incurred, and will continue to incur, costs associated with restructuring systems, processes and workforce. These costs include such items as severance, retention, facilities and consulting. Integration costs incurred to date in connection with the acquisition of TWG totaled $40.9 million, including $10.4 million and $2.3 million for the three months ended March 31, 2019 and 2018, respectively, which were reported through the underwriting, general and administrative expenses line item in the consolidated statements of operations.

12

Assurant, Inc.

Notes to Consolidated Financial Statements (unaudited)

(In millions, except number of shares and per share amounts)

5. Segment Information

As of March 31, 2019, the Company had four reportable segments, which are defined based on the manner in which our chief operating decision maker, the Chief Executive Officer (“CEO”), reviews the business to assess performance and allocate resources, and align to the nature of the products and services offered:

• Global Housing: provides lender-placed homeowners insurance; renters insurance and related products (referred to as “Multifamily Housing”); and manufactured housing and flood insurance and other specialty products (referred to as “Specialty and Other”);

• Global Lifestyle: provides mobile device protection products and related services and extended service products and related services for consumer electronics and appliances (referred to as “Connected Living”); vehicle protection and related services (referred to as “Global Automotive”); and credit and other insurance (referred to as “Global Financial Services and Other”);

• Global Preneed: provides pre-funded funeral insurance and annuity products; and

• Corporate and Other: Corporate and Other includes activities of the holding company, financing and interest expenses, net realized gains (losses) on investments, interest income earned from short-term investments held and income (expenses) primarily related to the Company’s frozen benefit plans. Corporate and Other also includes the amortization of deferred gains associated with the sales of businesses through reinsurance agreements, expenses related to the acquisition of TWG, foreign currency gains (losses) from remeasurement of monetary assets and liabilities, the gain or loss on the sale of businesses and other unusual or infrequent items. Additionally, the Corporate and Other segment includes amounts related to the runoff of the Assurant Health business.

13

Assurant, Inc.

Notes to Consolidated Financial Statements (unaudited)

(In millions, except number of shares and per share amounts)

The following tables summarize selected financial information by segment:

	Three Months Ended March 31, 2019
	Global Housing		Global Lifestyle		Global Preneed		Corporate and Other		Consolidated
Revenues
Net earned premiums	$	460.1	$	1,428.5	$	15.8	$	—	$	1,904.4
Fees and other income	39.9		253.1		33.3		2.0		328.3
Net investment income	25.4		58.9