[August 07, 2018] |
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Assurant Reports Second Quarter 2018 Financial Results
Assurant,
Inc. (NYSE: AIZ), a premier global provider of risk management
solutions, today reported results for second quarter ended June 30, 2018.
"We're pleased with our results in the second quarter, which were driven
by strong performance in our Global Lifestyle and Global Housing
segments and a lower effective tax rate," said Assurant President and
Chief Executive Officer Alan Colberg. "Momentum continues across our
Connected Living and Global Automotive businesses, where we've added
global capabilities through our acquisition of The Warranty Group."
Colberg added, "We also continued to evolve our Global Housing portfolio
with the sale of our mortgage solutions business and the ongoing
expansion of multifamily housing. We are well positioned to achieve our
stated financial objectives for the year, as well as to return capital
to shareholders."
Reconciliation of Net Operating Income to GAAP Net Income
Attributable to Common Stockholders
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(UNAUDITED)
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2Q
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2Q
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6 Months
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6 Months
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(in millions, net of tax)
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2018
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2017
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2018
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2017
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Global Housing
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$
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72.6
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$
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56.2
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$
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143.8
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$
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118.1
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Global Lifestyle
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68.1
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40.2
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123.9
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92.6
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Global Preneed
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14.7
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12.8
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24.5
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22.7
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Corporate and other
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(17.5
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)
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(10.6
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)
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(37.5
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)
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(20.7
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)
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Interest expense
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(14.4
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)
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(8.1
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)
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(24.0
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(16.3
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)
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Preferred stock dividends
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(1.6
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-
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(1.6
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)
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-
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Net operating income
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121.9
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90.5
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229.1
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196.4
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Adjustments:
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Assurant Health runoff operations
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0.2
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3.5
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2.2
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11.4
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Net realized (losses) gains on investments
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(9.0
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)
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8.6
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(8.6
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10.8
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Amortization of deferred gains on disposal of businesses
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11.9
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15.2
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26.5
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39.3
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Net TWG acquisition related charges(1)
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(32.5
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)
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-
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(53.0
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)
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-
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Loss on net assets held for sale
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(34.4
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)
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-
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(34.4
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)
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-
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Other adjustments
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4.1
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2.4
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6.4
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6.1
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GAAP net income attributable to common stockholders
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$
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62.2
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$
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120.2
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$
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168.2
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$
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264.0
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Note: Q2 2018 includes TWG results for the month of June, the related
acquisition financing and results from mortgage solutions. Net operating
income equals net income attributable to common stockholders, excluding
Assurant Health runoff operations, net realized gains on investments,
amortization of deferred gains, expenses relating to the acquisition of
The Warranty Group (TWG) and other highly variable or unusual items.
(1) 2Q 2018 and Six Months 2018 net TWG acquisition-related charges
include charges related to pre-close interest expense for the
amortization of net premiums on certain interest rate derivative
contracts used to hedge the acquisition debt, pre-close interest expense
and preferred dividends related to the acquisition financing,
transaction costs, financing costs, and integration costs net of
pre-close investment income on the proceeds from the acquisition
financing and a tax benefit realized after the close.
Additional financial information, including details regarding net TWG
acquisition related charges and a schedule of disclosed items that
affected Assurant's results by business for the last eight quarters, is
located on Assurant's Investor Relations website http://ir.assurant.com/investor/default.aspx
Second Quarter 2018 Consolidated Results
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Net income declined to $62.2 million, or $1.09 per diluted
share, compared to second quarter 2017 net income of $120.2 million,
or $2.16 per diluted share, primarily reflecting the $34.4 million
loss on net assets held for sale related to Global Housing's mortgage
solutions business and $32.5 million of net charges related to the
acquisition of TWG.
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Net operating income4 increased to $121.9 million,
or $2.13 per diluted share, compared to second quarter 2017 net
operating income of $90.5 million, or $1.63 per diluted share. Results
reflected a lower effective tax rate of 19.6 percent, compared to 32.4
percent, following the enactment of the U.S. Tax Cuts and Jobs Act
(TCJA), organic growth in the Global Lifestyle and Global Housing
segments and $9.4 million of net operating income from TWG for the
month of June.
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Net earned premiums, fees and other income from Global Housing,
Global Lifestyle and Global Preneed segments totaled $1.69 billion,
compared to $1.43 billion in second quarter 2017. The increase
primarily reflects the $202.6 million revenue contribution from TWG
for the month of June, as well as organic growth from mobile programs
in Connected Living and continued expansion of Assurant's Global
Automotive and multifamily housing businesses. This was partially
offset by expected declines in lender-placed and mortgage solutions.
Reportable Segments
Global Housing
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(in millions)
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2Q18
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2Q17
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% Change
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6M18
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6M17
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% Change
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Net operating income
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$
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72.6
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$
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56.2
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29 %
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$
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143.8
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$
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118.1
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22 %
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Net earned premiums, fees and other
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$
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542.5
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$
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550.2
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(1)%
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$
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1,065.6
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$
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1,081.9
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(2)%
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Note: On August 1, 2018, Assurant closed the sale of Global Housing's
mortgage solutions business. Results for this business are included in
Global Housing's revenue and net operating income through the second
quarter 2018.
-
Net operating income increased in second quarter 2018 primarily
due to the impact of a lower effective tax rate following the
enactment of the TCJA. Excluding the impact of a lower effective tax
rate, underlying results grew mainly due to more favorable
non-catastrophe loss experience in lender-placed insurance and
profitable growth in multifamily housing, partially offset by ongoing
lender-placed normalization.
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Net earned premiums, fees and other income decreased slightly
in second quarter 2018, primarily due to lower real-estate owned
volume, expected lower placement rates in lender-placed insurance and
reduced client demand for originations and field services in mortgage
solutions. This was partially offset by continued growth across
multifamily housing, international and other housing products.
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Combined ratio for risk-based businesses(a) improved
to 85.7 percent in the second quarter 2018 from 87.0 percent in
prior-year quarter. This reflects fewer non-catastrophe claims and
lower expenses. Second quarter 2018 included $1.3 million pre-tax of
favorable development related to third quarter 2017 reportable
catastrophes, compared to no reportable catastrophes in second quarter
2017.
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Pre-tax margin for fee-based, capital-light businesses(b)
was 14.3 percent, up from 11.7 percent from the second
quarter of 2017. The increase was primarily due to growth in
multifamily housing.
(a) Combined ratio for the Global Housing risk-based businesses is equal
to total policyholder benefits, losses and expenses, including
reportable catastrophe losses, divided by net earned premiums and fees
and other income, for lender-placed and manufactured housing and other
risk-based businesses.
(b) Pre-tax margin for the Global Housing fee-based, capital-light
businesses is equal to income before provision for income taxes divided
by total net earned premiums, fees and other income, for multifamily
housing and mortgage solutions businesses.
Global Lifestyle
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(in millions)
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2Q18
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2Q17
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% Change
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6M18
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6M17
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% Change
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Net operating income
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$
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68.1
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$
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40.2
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69 %
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$
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123.9
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$
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92.6
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34 %
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Net earned premiums, fees and other
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$
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1,102.2
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$
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836.0
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32 %
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$
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2,020.7
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$
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1,640.9
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23 %
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Note: Starting June 1, 2018, the results of TWG business operations, is
reflected within Global Lifestyle segment results.
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Net operating income increased in second quarter 2018,
benefitting from a lower effective tax rate following the enactment of
the TCJA. Excluding the impact of a lower effective tax rate,
underlying results increased, driven by strong mobile growth including
contributions from programs launched in 2017. This was partially
offset by continued declines in Financial Services. The quarter also
included a $3.9 million tax benefit and approximately $2.0 million in
one-time benefits in the Global Automotive business. TWG contributed
$9.4 million of net operating income for the month of June.
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Net earned premiums, fees and other income increased primarily
due to the addition of $202.6 million of TWG revenue for the month of
June, new and existing mobile protection programs and Assurant's
Global Automotive business, mainly from Assurant's third-party
administrator distribution channel. This was partially offset by lower
average selling prices for the trade-in of mobile devices.
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Combined ratio for risk-based businesses(a)
improved to 96.6 percent from 97.0 percent in second quarter 2017,
driven by favorable loss experience and $2.5 million pre-tax of
one-time items in Global Automotive. Excluding TWG, the combined ratio
was unchanged at 96.6 percent for the quarter.
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Pre-tax margin for fee-based, capital-light businesses(b)
was 7.1 percent, up from 6.4 percent in second quarter 2017,
including service contract business from TWG. The increase was largely
driven by profitable growth from global mobile programs launched in
2017. Excluding TWG, the margin was 7.6 percent.
(a) Combined ratio for the Global Lifestyle risk-based businesses is
equal to total policyholder benefits, losses and expenses, divided by
net earned premiums and fees and other income, for Global Automotive and
Financial Services.
(b) Pre-tax margin for the Global Lifestyle fee-based, capital-light
businesses is equal to income before provision for income taxes divided
by total net earned premiums, fees and other income, for Connected
Living, including mobile, extended service contracts and assistance
services.
Global Preneed
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(in millions)
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2Q18
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2Q17
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% Change
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6M18
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6M17
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% Change
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Net operating income
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$
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14.7
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$
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12.8
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15 %
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$
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24.5
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$
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22.7
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8 %
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Net earned premiums, fees and other
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$
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46.9
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$
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46.3
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1 %
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$
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93.1
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$
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90.5
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3 %
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-
Net operating income increased in second quarter 2018 due to
the impact of a lower effective tax rate following the enactment of
the TCJA. Excluding the impact of a lower effective tax rate,
underlying results were flat.
-
Net earned premiums, fees and other income was flat. Growth in
U.S. driven by prior period sales of the Final Need product was offset
by lower production in Canada compared to a favorable second quarter
2017.
-
Face sales totaled $257 million in second quarter 2018
compared to $239.0 million in second quarter 2017 as Global Preneed
continued to benefit from its alignment with market leaders.
Corporate & Other
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(in millions)
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2Q18
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2Q17
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% Change
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6M18
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6M17
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% Change
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Net operating loss (5)
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$
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(17.5)
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$
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(10.6)
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(65)%
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$
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(37.5)
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$
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(20.7)
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(81)%
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-
Net operating loss5 increased in
second quarter 2018, reflecting the adverse impact from the lower
effective tax rate and higher employee-related and technology expenses.
Capital Position
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On May 31, 2018, Assurant closed the TWG acquisition. The transaction
was funded with $1.2 billion acquisition-related financing completed
in March 2018, the issuance of 10.4 million shares, and cash available
at the holding company at closing.
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As of June 30, 2018, corporate capital was approximately $497 million.
Deployable capital totaled approximately $247 million, net of the
company's $250 million risk buffer. This excludes the $35 million of
cash proceeds from the sale of mortgage solutions which will be
included in third quarter 2018 holding company capital.
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Dividends paid to the holding company in the second quarter 2018
totaled $296 million, including $284 million from Assurant's Global
Housing, Global Lifestyle and Global Preneed operating segments,
including the remaining $86 million of capital related to the
reduction in deferred tax liabilities following the enactment of the
TCJA. Assurant Employee Benefits and Assurant Health contributed $12
million in dividends. Overall, capital brought up to the holding
company was accelerated during the quarter in preparation for the TWG
close.
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Dividends to shareholders totaled $36 million, including $31
million in common stock dividends and $5 million in preferred stock
dividends. There were no share repurchases during the quarter. From
July 1 through August 3, 2018, the company repurchased an additional
319,000 shares for approximately $34 million, with $259 million
remaining under the current repurchase authorization.
Company Outlook
On May 31, 2018, Assurant closed the acquisition of The Warranty Group
from TPG Capital for $2.5 billion of enterprise value, including TWG's
existing debt. Starting June 1, TWG results, the acquisition financing,
and expected expense synergies will be reflected in Assurant's operating
results and its 2018 outlook. TWG business operations will be included
in Global Lifestyle, while certain expenses will be allocated to
Corporate & Other. Results for the mortgage solutions business sold on
August 1, 2018 are included in the outlook for periods prior to sale.
Based on current market conditions, for full-year 2018 the company now
expects:
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Assurant net operating income, excluding reportable catastrophe
losses, to increase between 20 to 25 percent from Assurant 2017
reported results of $413 million. Earnings growth to reflect
contributions from TWG, a lower effective tax rate, and modest organic
growth. Assurant to realize approximately $10 million after-tax of
operating synergies from the TWG acquisition through year-end.
With
the enactment of the U.S. Tax Cuts and Jobs Act (TCJA), Assurant's
consolidated effective tax rate is expected to decrease to 22 to 24
percent from 33 percent, with approximately one-third of the savings
to be reinvested in the second half of 2018 to support future growth.
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Assurant operating earnings per diluted share, excluding
catastrophe losses to grow reflecting earnings expansion and
capital management, but at a slower rate than net operating income due
to the effect of TWG-related share issuance without a full run-rate
contribution of TWG income.
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Global Housing net operating income, excluding reportable
catastrophes, to increase after reflecting a lower effective tax rate
of approximately 20 to 21 percent, with a portion of the tax savings
to be reinvested for future growth, primarily in the second half of
2018. Net operating income, excluding reportable catastrophes, to
decrease before taking into account the benefit of lower effective tax
rate. Declines in lender-placed insurance to be partially offset by
continued profitable growth in multifamily housing. Additional savings
from expense management efforts to be realized towards the end of 2018
and into 2019. Revenue expected to contract from 2017 levels due to
declines in lender-placed and mortgage solutions through July 2018.
Excluding mortgage solutions for the full year, revenue to increase
due to growth in multifamily housing, international and other housing
products.
-
Global Lifestyle net operating income to increase after
reflecting contributions from TWG inclusive of operating synergies, a
lower effective tax rate of approximately 22 to 24 percent and organic
growth. A portion of the tax savings to be reinvested for future
growth, primarily in the second half of 2018. The tax rate to
fluctuate based on geographic mix of income across various
jurisdictions. Before taking into account the benefit from a lower
effective tax rate and contributions from TWG acquisition, net
operating income to increase modestly. Profitable growth driven
primarily by newly launched mobile programs, Global Automotive
expansion and ongoing expense management efforts, partially offset by
ongoing declines in Financial Services due to discontinued client
partnerships in the second half of 2018. Mobile trade-in activity to
vary based on the timing and availability of new smartphone
introductions and carrier promotional activity. Revenue expected to
increase from growth in Connected Living and Global Automotive,
globally.
-
Global Preneed revenue and earnings to increase modestly from
our alignment with market leaders, before taking into account recently
enacted tax reform. Results to benefit from a lower effective tax rate
of roughly 22 percent, with a portion of the tax savings to be
reinvested for future growth, primarily in the second half of 2018.
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Corporate & Other6 full-year net
operating loss to be in the range of $80 to $85 million, after
accounting for the adverse impact of lower effective tax rate of
approximately 20 percent, increased investments for growth and
additional expenses related to legacy TWG corporate functions. This
will be partially offset by continued expense management efforts.
-
Business segment dividends from Global Housing, Global
Lifestyle and Global Preneed to exceed segment net operating income,
including catastrophe losses, due to the impact of TCJA and TWG's
full-year dividend contributions. This is subject to the growth of the
businesses and rating agency and regulatory capital requirements.
-
Capital to be deployed primarily to fund the financing and
integration of TWG and other ongoing capital needs of the business.
Excess capital will be deployed primarily to fund other investments
and return capital to shareholders in the form of share repurchase and
dividends, subject to market conditions.
Earnings Conference Call
The second quarter 2018 earnings conference call and webcast will be
held Wednesday, August 8, 2018 at 8:00 a.m. ET. The live and archived
webcast, along with supplemental information, will be available in the
Investor Relations section of www.assurant.com.
About Assurant
Assurant, Inc. (NYSE: AIZ) is a global provider of risk management
solutions, protecting where consumers live and the goods they buy. A
Fortune 500 company, Assurant focuses on the housing and lifestyle
markets, and is among the market leaders in mobile device protection and
related services; extended service contracts; vehicle protection
products; pre-funded funeral insurance; renters insurance; and
lender-placed homeowners insurance. Assurant has a market presence in 21
countries, while its Assurant Foundation works to support and improve
communities. Learn more at assurant.com
or on Twitter @AssurantNews.
Safe Harbor Statement
Some of the statements included in this news release and its exhibits,
particularly those anticipating future financial performance, business
prospects, growth and operating strategies and similar matters including
with respect to The Warranty Group and the benefits and synergies of the
transaction, are forward-looking statements within the meaning of the
U.S. Private Securities Litigation Reform Act of 1995. You can identify
these statements by the use of words such as "outlook," "will," "may,"
"can," "anticipates," "expects," "estimates," "projects," "intends,"
"plans," "believes," "targets," "forecasts," "potential,"
"approximately," or the negative version of those words and other words
and terms with a similar meaning. Any forward-looking statements
contained in this news release or its exhibits are based upon our
historical performance and on current plans, estimates and expectations.
The inclusion of this forward-looking information should not be regarded
as a representation by us or any other person that the future plans,
estimates or expectations contemplated by us will be achieved. Our
actual results might differ materially from those projected in the
forward-looking statements. The company undertakes no obligation to
update or review any forward-looking statements in this news release or
the exhibits, whether as a result of new information, future events or
other developments. The following risk factors could cause our actual
results to differ materially from those currently estimated by
management, including those projected in the company outlook:
(i)
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the effective integration of The Warranty Group acquisition;
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(ii)
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the loss of significant client relationships or business,
distribution sources and contracts;
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(iii)
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the impact of general economic, financial market and political
conditions;
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(iv)
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the adequacy of reserves established for future claims;
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(v)
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the impact of catastrophic losses, including human-made catastrophic
losses;
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(vi)
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a decline in our credit or financial strength ratings;
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(vii)
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risks related to our international operations, including
fluctuations in exchange rates;
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(viii)
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an impairment of the company's goodwill or other intangible assets
resulting from a sustained significant decline in the company's
stock price, a decline in actual or expected future cash flows or
income, a significant adverse change in the business climate or
slower growth rate, among other circumstances;
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(ix)
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a failure to effectively maintain and modernize our information
technology systems;
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(x)
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the company's vulnerability to system security threats, data
protection breaches, cyber-attacks and data breaches compromising
client information and privacy;
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(xi)
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significant competitive pressures in our businesses or changes in
customer preferences;
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(xii)
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the failure to find and integrate suitable acquisitions and new
ventures;
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(xiii)
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a decline in the sales of our products and services resulting from
an inability to develop and maintain distribution sources or attract
and retain sales representatives;
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(xiv)
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a decrease in the value of our investment portfolio;
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(xv)
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the impact of recently enacted tax reform legislation in the U.S.;
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(xvi)
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the impact from litigation, other contingent liabilities and loss
contingencies, regulatory investigations, reviews and markets
studies to which we are or may become subject;
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(xvii)
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the extensive laws and regulations to which we are and may become
subject, including relating to data privacy, could increase our
costs; restrict the conduct of our business and limit our growth;
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(xviii)
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the failure to successfully manage outsourcing activities, such as
call center services;
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(xix)
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a decline in the value of mobile devices in our inventory or those
that are subject to guaranteed buyback provisions;
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(xx)
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the unavailability or inadequacy of reinsurance coverage;
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(xxi)
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the insolvency of third parties to whom we have sold or may sell
businesses through reinsurance or modified co-insurance;
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(xxii)
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the credit risk of some of our agents that we are exposed to due to
the structure of our commission program;
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(xxiii)
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the inability of our subsidiaries to pay sufficient dividends to the
holding company; and
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(xxiv)
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the failure to attract and retain key personnel and to provide for
succession of senior management and key executives.
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For a detailed discussion of the risk factors that could affect our
actual results, please refer to the risk factors identified in our SEC
reports, including, but not limited to our Annual Report on Form 10-K,
as filed with the SEC.
Non-GAAP Financial Measures
Assurant uses the following non-GAAP financial measures to analyze the
company's operating performance for the periods presented in this news
release. Because Assurant's calculation of these measures may differ
from similar measures used by other companies, investors should be
careful when comparing Assurant's non-GAAP financial measures to those
of other companies.
(1)
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Assurant uses net operating income (defined below), excluding
reportable catastrophes (which represents catastrophe losses net of
reinsurance and client profit sharing adjustments and including
reinstatement and other premiums), as an important measure of the
company's operating performance. 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.
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|
|
(UNAUDITED)
|
|
2Q
|
|
2Q
|
|
6 Months
|
|
6 Months
|
(in millions)
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Global Housing, excluding reportable catastrophes
|
|
$
|
71.6
|
|
|
$
|
56.2
|
|
|
$
|
151.5
|
|
|
$
|
118.7
|
|
Global Lifestyle(1)
|
|
|
68.1
|
|
|
|
40.2
|
|
|
|
122.6
|
|
|
|
92.6
|
|
Global Preneed
|
|
|
14.7
|
|
|
|
12.8
|
|
|
|
24.5
|
|
|
|
22.7
|
|
Corporate and other
|
|
|
(17.5
|
)
|
|
|
(10.6
|
)
|
|
|
(37.5
|
)
|
|
|
(20.7
|
)
|
Interest expense
|
|
|
(14.4
|
)
|
|
|
(8.1
|
)
|
|
|
(24.0
|
)
|
|
|
(16.3
|
)
|
Preferred stock dividends
|
|
|
(1.6
|
)
|
|
|
-
|
|
|
|
(1.6
|
)
|
|
|
-
|
|
Net operating income, excluding reportable catastrophes
|
|
|
120.9
|
|
|
|
90.5
|
|
|
|
235.5
|
|
|
|
197.0
|
|
Adjustments, pre-tax:
|
|
|
|
|
|
|
|
|
Assurant Health runoff operations
|
|
|
0.3
|
|
|
|
4.3
|
|
|
|
2.9
|
|
|
|
16.9
|
|
Net realized (losses) gains on investments
|
|
|
(11.4
|
)
|
|
|
13.2
|
|
|
|
(10.9
|
)
|
|
|
16.6
|
|
Reportable catastrophes
|
|
|
1.3
|
|
|
|
-
|
|
|
|
(8.1
|
)
|
|
|
(0.9
|
)
|
Amortization of deferred gains on disposal of businesses
|
|
|
15.0
|
|
|
|
23.4
|
|
|
|
33.5
|
|
|
|
60.4
|
|
Net TWG acquisition related charges(2)
|
|
|
(38.5
|
)
|
|
|
-
|
|
|
|
(64.5
|
)
|
|
|
-
|
|
Loss on net assets held for sale
|
|
|
(43.5
|
)
|
|
|
-
|
|
|
|
(43.5
|
)
|
|
|
-
|
|
Other adjustments
|
|
|
5.2
|
|
|
|
3.9
|
|
|
|
8.4
|
|
|
|
9.7
|
|
Benefit (provision) for income taxes
|
|
|
13.0
|
|
|
|
(15.1
|
)
|
|
|
15.0
|
|
|
|
(35.7
|
)
|
GAAP net income attributable to common stockholders
|
|
$
|
62.2
|
|
|
$
|
120.2
|
|
|
$
|
168.2
|
|
|
$
|
264.0
|
|
(1)
|
|
Six months 2018 excludes a $1.3 million benefit after-tax ($1.6
million pre-tax) due to favorable development related to 3Q 2017
reportable catastrophes.
|
(2)
|
|
Additional 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 (defined
below), excluding reportable catastrophes (defined above) 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)
|
|
2Q
|
|
2Q
|
|
6 Months
|
|
6 Months
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Net operating income, excluding reportable catastrophes, per
diluted share(1)(2)
|
|
$
|
2.11
|
|
|
$
|
1.63
|
|
|
$
|
4.24
|
|
|
$
|
3.51
|
|
Adjustments, pre-tax:
|
|
|
|
|
|
|
|
|
Dilutive effect from mandatory convertible preferred stock
|
|
|
-
|
|
|
|
-
|
|
|
|
(0.10
|
)
|
|
|
-
|
|
Assurant Health runoff operations
|
|
|
-
|
|
|
|
0.08
|
|
|
|
0.05
|
|
|
|
0.30
|
|
Net realized (losses) gains on investments
|
|
|
(0.20
|
)
|
|
|
0.24
|
|
|
|
(0.19
|
)
|
|
|
0.30
|
|
Reportable catastrophes
|
|
|
0.02
|
|
|
|
-
|
|
|
|
(0.14
|
)
|
|
|
(0.02
|
)
|
Amortization of deferred gains on disposal of businesses
|
|
|
0.26
|
|
|
|
0.42
|
|
|
|
0.58
|
|
|
|
1.09
|
|
Net TWG acquisition related charges
|
|
|
(0.66
|
)
|
|
|
-
|
|
|
|
(1.07
|
)
|
|
|
-
|
|
Loss on net assets held for sale
|
|
|
(0.76
|
)
|
|
|
-
|
|
|
|
(0.76
|
)
|
|
|
-
|
|
Other adjustments
|
|
|
0.09
|
|
|
|
0.07
|
|
|
|
0.15
|
|
|
|
0.17
|
|
Benefit (provision) for income taxes
|
|
|
0.23
|
|
|
|
(0.28
|
)
|
|
|
0.26
|
|
|
|
(0.64
|
)
|
Net income attributable to common stockholders per diluted share(1)
|
|
$
|
1.09
|
|
|
$
|
2.16
|
|
|
$
|
3.02
|
|
|
$
|
4.71
|
|
(1)
|
|
Net operating income per diluted share and net income attributable
to common stockholders per diluted share for 2Q 2018 exclude the
effect of 1,041,293 and 3,056,700 shares, respectively, of
potentially dilutive securities, based on the assumed conversion of
the outstanding mandatory convertible preferred stock, which were
anti-dilutive for the period. Since the mandatory convertible
preferred stock is anti-dilutive for the period, the preferred stock
dividends are not added back to the net operating income or net
income attributable to common stockholders for the calculations.
|
(2)
|
|
Net operating income per diluted share for Six Months 2018 excludes
the effect of 1,362,083 of potentially dilutive securities, based on
the assumed conversion of the outstanding mandatory convertible
preferred stock, prior to the acquisition date. Net income
attributable to common stockholders per diluted share for Six Months
2018 includes the effect of such dilutive securities.
|
(3)
|
|
Assurant uses operating return on common stockholders' equity
("Operating ROE"), excluding accumulated other comprehensive income
("AOCI") and reportable catastrophes (defined above), as an
important measure of the company's operating performance. Operating
ROE, excluding AOCI and reportable catastrophe losses, equals net
operating income (as defined below) for the periods presented
divided by average common stockholders' equity, excluding AOCI and
reportable catastrophe losses, for the year to date period. The
company believes this metric provides investors a valuable measure
of the performance of the company's ongoing business because it
excludes the effect of reportable catastrophes, which can be
volatile. The comparable GAAP measure is GAAP return on common
stockholders' equity ("GAAP ROE"), defined as net income
attributable to common stockholders', for the period presented,
divided by average common stockholders' equity for the year to date
period.
|
|
|
|
|
|
|
|
|
|
(UNAUDITED)
|
|
2Q
|
|
2Q
|
|
6 Months
|
|
6 Months
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Annual operating return on average common stockholders' equity,
excluding AOCI and reportable catastrophes(1)
|
|
10.7
|
%
|
|
9.2
|
%
|
|
11.0
|
%
|
|
10.0
|
%
|
Assurant Health runoff operations
|
|
-
|
%
|
|
0.4
|
%
|
|
0.1
|
%
|
|
0.6
|
%
|
Net realized (losses) gains on investments
|
|
(0.8
|
)%
|
|
0.9
|
%
|
|
(0.4
|
)%
|
|
0.6
|
%
|
Amortization of deferred gains on disposal of businesses
|
|
1.1
|
%
|
|
1.5
|
%
|
|
1.2
|
%
|
|
2.0
|
%
|
Net TWG acquisition related charges
|
|
(2.9
|
)%
|
|
-
|
%
|
|
(2.5
|
)%
|
|
-
|
%
|
Reportable catastrophes
|
|
0.1
|
%
|
|
-
|
%
|
|
(0.3
|
)%
|
|
-
|
%
|
Loss on net assets held for sale
|
|
(3.1
|
)%
|
|
-
|
%
|
|
(1.6
|
)%
|
|
-
|
%
|
Other adjustments
|
|
0.4
|
%
|
|
0.2
|
%
|
|
0.3
|
%
|
|
0.3
|
%
|
Change due to effect of including AOCI
|
|
0.1
|
%
|
|
(0.7
|
)%
|
|
-
|
%
|
|
(0.8
|
)%
|
Annual GAAP return on average common stockholders' equity(1)
|
|
5.6
|
%
|
|
11.5
|
%
|
|
7.8
|
%
|
|
12.7
|
%
|
(1)
|
|
Average common stockholders' equity excludes $276.4 million of
preferred stock for 2Q and Six Months 2018. In addition, 2Q 2018 and
Six Months 2018 average common stockholders' equity reflects the
impact of the 10.4 million common shares issued in connection with
the TWG acquisition for the period that they were outstanding.
|
(4)
|
|
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, loss on net assets held for sale
related to mortgage solutions 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)
|
|
2Q
|
|
2Q
|
|
6 Months
|
|
6 Months
|
(in millions)
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Net operating income
|
|
$
|
121.9
|
|
|
$
|
90.5
|
|
|
$
|
229.1
|
|
|
$
|
196.4
|
|
Adjustments (pre-tax):
|
|
|
|
|
|
|
|
|
Assurant Health runoff operations
|
|
|
0.3
|
|
|
|
4.3
|
|
|
|
2.9
|
|
|
|
16.9
|
|
Net realized (losses) gains on investments
|
|
|
(11.4
|
)
|
|
|
13.2
|
|
|
|
(10.9
|
)
|
|
|
16.6
|
|
Amortization of deferred gains on disposal of businesses
|
|
|
15.0
|
|
|
|
23.4
|
|
|
|
33.5
|
|
|
|
60.4
|
|
Net TWG acquisition related charges(1)
|
|
|
(38.5
|
)
|
|
|
-
|
|
|
|
(64.5
|
)
|
|
|
-
|
|
Loss on net assets held for sale
|
|
|
(43.5
|
)
|
|
|
-
|
|
|
|
(43.5
|
)
|
|
|
-
|
|
Other adjustments
|
|
|
5.2
|
|
|
|
3.9
|
|
|
|
8.4
|
|
|
|
9.7
|
|
Benefit (provision) for income taxes
|
|
|
13.3
|
|
|
|
(15.1
|
)
|
|
|
13.3
|
|
|
|
(36.0
|
)
|
GAAP net income attributable to common stockholders
|
|
$
|
62.2
|
|
|
$
|
120.2
|
|
|
$
|
168.2
|
|
|
$
|
264.0
|
|
(5)
|
|
Assurant uses Corporate and Other net operating loss as an important
measure of the corporate segment's performance. Corporate and Other
net operating loss equals Total Corporate and Other segment net
(loss) income, excluding Health runoff operations net income,
amortization of deferred gains on disposal of businesses, net TWG
acquisition related charges, interest expense, net realized gains on
investments, loss on net assets held for sale related to mortgage
solutions and other highly variable or unusual items. The company
believes Corporate and Other net operating loss provides investors a
valuable measure of the performance of the company's corporate
segment because it excludes highly variable items that do not
represent the ongoing results of the company's corporate segment.
The comparable GAAP measure is Total Corporate & Other segment net
(loss) income attributable to common stockholders.
|
|
|
|
|
|
|
|
|
|
(UNAUDITED)
|
|
2Q
|
|
2Q
|
|
6 Months
|
|
6 Months
|
(in millions)
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
GAAP Total Corporate & Other segment net (loss) income
attributable to common stockholders
|
|
$
|
(93.2
|
)
|
|
$
|
11.0
|
|
|
$
|
(124.0
|
)
|
|
$
|
30.6
|
|
Excluding: Health runoff operations net income
|
|
|
0.2
|
|
|
|
3.5
|
|
|
|
2.2
|
|
|
|
11.4
|
|
GAAP Corporate & Other segment net (loss) income attributable to
common stockholders
|
|
|
(93.4
|
)
|
|
|
7.5
|
|
|
|
(126.2
|
)
|
|
|
19.2
|
|
Adjustments, pre-tax:
|
|
|
|
|
|
|
|
|
Amortization of deferred gains on disposal of businesses
|
|
|
(15.0
|
)
|
|
|
(23.4
|
)
|
|
|
(33.5
|
)
|
|
|
(60.4
|
)
|
Net TWG acquisition related charges(1)
|
|
|
38.5
|
|
|
|
-
|
|
|
|
64.5
|
|
|
|
-
|
|
Interest expense
|
|
|
18.2
|
|
|
|
12.4
|
|
|
|
30.4
|
|
|
|
25.0
|
|
Net realized losses (gains) on investments
|
|
|
11.4
|
|
|
|
(13.2
|
)
|
|
|
10.9
|
|
|
|
(16.6
|
)
|
Loss on net assets held for sale
|
|
|
43.5
|
|
|
|
-
|
|
|
|
43.5
|
|
|
|
-
|
|
Other adjustments
|
|
|
(5.2
|
)
|
|
|
(3.9
|
)
|
|
|
(8.4
|
)
|
|
|
(9.7
|
)
|
(Benefit) provision for income taxes
|
|
|
(17.1
|
)
|
|
|
10.0
|
|
|
|
(20.3
|
)
|
|
|
21.8
|
|
Preferred stock dividends
|
|
|
1.6
|
|
|
|
-
|
|
|
|
1.6
|
|
|
|
-
|
|
Corporate & other net operating loss
|
|
$
|
(17.5
|
)
|
|
$
|
(10.6
|
)
|
|
$
|
(37.5
|
)
|
|
$
|
(20.7
|
)
|
(6)
|
|
The company outlook for Corporate & Other full-year net operating
loss constitutes forward-looking information and the company
believes that it cannot reconcile such forward-looking information
to the most comparable GAAP measure without unreasonable efforts.
Many of these components cannot be reliably quantified due to the
combination of variability and volatility of such components and
may, depending on the size of the components, have a significant
impact on the reconciliation. The company is able to quantify ranges
for the components discussed below. The company is able to
reasonably quantify a range for amortization of deferred gains based
on certain assumptions relating to future reinsured premium on
disposed business during the forecast period. In addition, the
company is able to quantify a range for interest expense assuming it
does not incur additional debt or extinguish debt in the forecast
period. Finally, the company is able to quantify an estimate for
preferred stock dividends, which are subject to Board approval.
Amortization of deferred gains on disposal of businesses is expected
to be approximately $42-50 million after-tax, interest expense is
expected to be approximately $65-66 million after-tax and preferred
stock dividends are expected to be $11 million. This reflects the
lower effective tax rate and the notes refinanced in March but
excludes $13.5 million after-tax interest expense and $3.2 million
of preferred dividends incurred in connection with the financing of
the TWG acquisition prior to June 1, 2018 that were included in GAAP
net income.
|
A summary of net operating income disclosed items is included on page 21
of the company's Financial Supplement, which is available in the
Investor Relations section of www.assurant.com.
Assurant, Inc.
Consolidated Statement of Operations (unaudited)
Three Months and Six Months Ended June 30, 2018 and 2017
|
|
|
|
|
|
|
|
|
|
|
|
2Q
|
|
6 Months
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
|
(in millions except number of shares and per share amounts)
|
Revenues
|
|
|
|
|
|
|
|
|
Net earned premiums
|
|
$
|
1,338.3
|
|
|
$
|
1,115.3
|
|
$
|
2,463.2
|
|
|
$
|
2,165.6
|
Fees and other income
|
|
|
354.2
|
|
|
|
326.9
|
|
|
718.7
|
|
|
|
667.1
|
Net investment income
|
|
|
135.6
|
|
|
|
121.7
|
|
|
265.8
|
|
|
|
242.3
|
Net realized (losses) gains on investments
|
|
|
(11.4
|
)
|
|
|
13.2
|
|
|
(10.9
|
)
|
|
|
16.6
|
Amortization of deferred gains on disposal of businesses
|
|
|
15.0
|
|
|
|
23.4
|
|
|
33.5
|
|
|
|
60.4
|
Total revenues
|
|
|
1,831.7
|
|
|
|
1,600.5
|
|
|
3,470.3
|
|
|
|
3,152.0
|
Benefits, losses and expenses
|
|
|
|
|
|
|
|
|
Policyholder benefits
|
|
|
490.6
|
|
|
|
416.4
|
|
|
905.2
|
|
|
|
774.4
|
Selling, underwriting, general and administrative expenses
|
|
|
1,236.8
|
|
|
|
993.0
|
|
|
2,302.8
|
|
|
|
1,958.8
|
Interest expense
|
|
|
26.0
|
|
|
|
12.4
|
|
|
47.5
|
|
|
|
25.0
|
Total benefits, losses and expenses
|
|
|
1,753.4
|
|
|
|
1,421.8
|
|
|
3,255.5
|
|
|
|
2,758.2
|
Income before provision for income taxes
|
|
|
78.3
|
|
|
|
178.7
|
|
|
214.8
|
|
|
|
393.8
|
Provision for income taxes
|
|
|
11.3
|
|
|
|
58.5
|
|
|
41.8
|
|
|
|
129.8
|
Net income
|
|
|
67.0
|
|
|
|
120.2
|
|
|
173.0
|
|
|
|
264.0
|
Less: Preferred stock dividends
|
|
|
(4.8
|
)
|
|
|
-
|
|
|
(4.8
|
)
|
|
|
-
|
Net income attributable to common stockholders
|
|
$
|
62.2
|
|
|
$
|
120.2
|
|
$
|
168.2
|
|
|
$
|
264.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to common stockholders per share:
|
|
|
|
|
|
|
|
Basic
|
|
$
|
1.09
|
|
|
$
|
2.18
|
|
$
|
3.05
|
|
|
$
|
4.74
|
Diluted
|
|
$
|
1.09
|
|
|
$
|
2.16
|
|
$
|
3.02
|
|
|
$
|
4.71
|
|
|
|
|
|
|
|
|
|
Common stock dividends per share
|
|
$
|
0.56
|
|
|
$
|
0.53
|
|
$
|
1.12
|
|
|
$
|
1.06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share data:
|
|
|
|
|
|
|
|
|
Basic weighted average shares outstanding
|
|
|
57,060,313
|
|
|
|
55,230,367
|
|
|
55,125,584
|
|
|
|
55,713,172
|
|
|
|
|
|
|
|
|
|
Diluted weighted average shares outstanding
|
|
|
57,264,408
|
|
|
|
55,509,898
|
|
|
57,273,428
|
|
|
|
56,075,152
|
Assurant, Inc.
Consolidated Condensed Balance Sheets (unaudited)
At June 30, 2018 and Dec. 31, 2017
|
|
|
|
June 30, 2018
|
|
December 31, 2017
|
|
|
|
|
|
|
|
(in millions)
|
Assets
|
|
|
|
|
|
Investments and cash and cash equivalents
|
|
$
|
14,642.9
|
|
|
|
$
|
12,550.3
|
Reinsurance recoverables
|
|
|
10,978.3
|
|
|
|
|
9,790.2
|
Deferred acquisition costs
|
|
|
3,882.7
|
|
|
|
|
3,484.5
|
Goodwill
|
|
|
2,369.2
|
|
|
|
|
917.7
|
Value of business acquired
|
|
|
3,962.5
|
|
|
|
|
24.4
|
Assets held in separate accounts
|
|
|
1,858.3
|
|
|
|
|
1,837.1
|
Other assets
|
|
|
3,362.2
|
|
|
|
|
2,492.3
|
Assets of consolidated investment entities
|
|
|
1,305.2
|
|
|
|
|
746.5
|
Total assets
|
|
$
|
42,361.3
|
|
|
|
$
|
31,843.0
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
Policyholder benefits and claims payable
|
|
$
|
13,889.1
|
|
|
|
$
|
14,179.6
|
Unearned premiums
|
|
|
14,505.0
|
|
|
|
|
7,038.6
|
Debt
|
|
|
2,004.8
|
|
|
|
|
1,068.2
|
Liabilities related to separate accounts
|
|
|
1,858.3
|
|
|
|
|
1,837.1
|
Deferred gain on disposal of businesses
|
|
|
94.7
|
|
|
|
|
128.1
|
Accounts payable and other liabilities
|
|
|
3,590.0
|
|
|
|
|
2,736.5
|
Liabilities of consolidated investment entities
|
|
|
1,086.5
|
|
|
|
|
573.4
|
Total liabilities
|
|
|
37,028.4
|
|
|
|
|
27,561.5
|
|
|
|
|
|
|
Stockholders' equity
|
|
|
|
|
|
Equity, excluding accumulated other comprehensive income
|
|
|
5,450.4
|
|
|
|
|
4,036.6
|
Accumulated other comprehensive income
|
|
|
(137.9
|
)
|
|
|
|
234.0
|
Total Assurant, Inc. stockholders' equity
|
|
|
5,312.5
|
|
|
|
|
4,270.6
|
Non-controlling interest
|
|
|
20.4
|
|
|
|
|
10.9
|
Total equity
|
|
|
5,332.9
|
|
|
|
|
4,281.5
|
Total liabilities and equity
|
|
$
|
42,361.3
|
|
|
|
$
|
31,843.0
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20180807005862/en/
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