| [May 03, 2018] |
 |
Assurant Reports First Quarter 2018 Financial Results
Assurant,
Inc. (NYSE: AIZ), a premier global provider of risk management
solutions, today reported results for first quarter ended March 31, 2018.
"We are pleased with our first quarter 2018 results, which were in-line
with our expectations. The quarter benefitted from the lower effective
U.S. tax rate and modest underlying profitable growth in key businesses
such as mobile and multi-family housing, despite higher corporate
expenses and catastrophe losses," said Assurant President and Chief
Executive Officer Alan Colberg.
"We continue to believe we can achieve double-digit operating earnings
growth in 2018 and capitalize on future growth opportunities as we
integrate our acquisition of The Warranty Group later this year," he
added.
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Reconciliation of Net Operating Income to GAAP Net Income
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(UNAUDITED)
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1Q
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1Q
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(in millions, net of tax)
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2018
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2017
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Global Housing
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$
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71.2
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$
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61.9
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Global Lifestyle
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55.8
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52.4
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Global Preneed
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9.8
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9.9
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Corporate and other
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(20.0
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)
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(10.1
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)
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Interest expense
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(9.6
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)
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(8.2
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)
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Net operating income
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107.2
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105.9
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Adjustments:
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Assurant Health runoff operations
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2.0
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7.9
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Net realized gains on investments
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0.4
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2.2
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Amortization of deferred gains and gains on disposal of businesses
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14.6
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24.1
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Expenses related to The Warranty Group acquisition(1)
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(20.5
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)
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-
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Other adjustments
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2.3
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3.7
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GAAP net income
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$
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106.0
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$
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143.8
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(1)
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1Q 2018 includes transaction, financing and integration costs
related to the pending acquisition of The Warranty Group, including
$7.4 million after-tax ($9.3 million pre-tax) of pre-close interest
expense on the debt issued in connection with the acquisition and
amortization of the premium on derivatives used to hedge the debt.
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Additional financial information, including a schedule of
disclosed items that affected Assurant's results by business for
the last eight quarters, appears on page 21 of the company's
Financial Supplement and is located on Assurant's Investor
Relations website http://ir.assurant.com/investor/default.aspx
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First Quarter 2018 Consolidated Results
-
Net income declined to $106.0 million, or $1.96 per diluted
share, compared to first quarter 2017 net income of $143.8 million, or
$2.53 per diluted share, primarily reflecting higher expenses related
to The Warranty Group acquisition and lower amortization of deferred
gains and gains on disposal of businesses from the sale of Assurant
Employee Benefits. This was partially offset by a lower effective tax
rate following the enactment of the U.S. Tax Cuts and Jobs Act (TCJA).
-
Net operating income4 increased to $107.2 million,
or $2.00 per diluted share, compared to first quarter 2017 net
operating income of $105.9 million, or $1.87 per diluted share.
Results reflected a lower effective tax rate, decreasing from 33.1
percent to 22.3 percent, following the enactment of the TCJA and
modest underlying business growth. This was partially offset by a
higher Corporate net operating loss and greater reportable
catastrophes in Global Housing. First quarter 2017 also included the
benefit of $7.5 million in Global Lifestyle client recoverables that
did not repeat this quarter.
Assurant incurred $7.4 million
of reportable catastrophes in first quarter 2018, compared to $0.6
million of reportable catastrophe losses in first quarter 2017.
Excluding catastrophe losses, net operating income for first quarter
2018 increased to $114.6 million compared to $106.5 million in the
prior-year period due to the factors noted above.
-
Net earned premiums, fees and other income from Global Housing,
Global Lifestyle and Global Preneed segments totaled $1.49 billion,
compared to $1.38 billion in first quarter 2017. The increase
primarily reflects growth from mobile programs launched in 2017 and
existing mobile programs in Connected Living and continued expansion
of Assurant's vehicle protection and multi-family housing businesses.
This was partially offset by lower lender-placed insurance premiums
and declining fee income in mortgage solutions.
Reportable Segments
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Global Housing
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(in millions)
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1Q18
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1Q17
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% Change
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Net operating income
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$
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71.2
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$
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61.9
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15%
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Net earned premiums, fees and other
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$
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523.1
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$
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531.7
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(2)%
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-
Net operating income increased in first quarter 2018 due to the
impact of a lower effective tax rate following the enactment of the
TCJA, partially offset by $8.7 million in reportable catastrophe
losses from severe winter storms in the Northeastern U.S. Excluding
reportable catastrophe losses and the impact of a lower effective tax
rate, underlying earnings grew mainly due to higher contributions from
international housing products, profitable growth in multi-family
housing and residual income for processing National Flood Insurance
Program (NFIP) flood claims following Hurricane Harvey. This was
partially offset by ongoing normalization of lender-placed insurance.
-
Net earned premiums, fees and other income decreased in first
quarter 2018, primarily reflecting lower placement rates and lower
real-estate owned volume in lender-placed insurance and reduced client
demand for originations and field services in mortgage solutions. This
was partially offset by continued growth in multi-family housing and
higher contributions from international housing products.
-
Combined ratio for risk-based businesses(a) increased
to 85.3 percent in the first quarter 2018 from 82.9 percent in
prior-year quarter. This reflects higher reportable catastrophes
compared to the first quarter 2017. Excluding reportable catastrophes,
the combined ratio for risk-based business was roughly flat.
-
Pre-tax margin for fee-based, capital-light businesses(b)
was 11.4 percent, up from 8.8 percent from the first quarter
of 2017. The increase was primarily due to profitable growth in
multi-family 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
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 multi-family
housing and mortgage solutions businesses.
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Global Lifestyle
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(in millions)
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1Q18
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1Q17
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% Change
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Net operating income
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$
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55.8
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$
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52.4
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6%
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Net earned premiums, fees and other
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$
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918.5
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$
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804.9
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14%
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-
Net operating income increased in first quarter 2018 due to the
impact of a lower effective tax rate following the enactment of the
TCJA. First quarter 2017 included $7.5 million of one-time client
recoverables in Connected Living and credit insurance, resulting from
actions taken to improve profitability in select international
markets. Excluding this one-time benefit and the impact of a lower
effective tax rate, underlying results increased mainly from mobile
programs launched in 2017, continued growth from existing mobile
programs and favorable client contract term amendments in Connected
Living. This was partially offset by less favorable vehicle protection
results and continued declines in credit insurance.
-
Net earned premiums, fees and other income increased compared
to first quarter 2017 due to growth from new and existing mobile
protection programs and vehicle protection, partially offset by lower
mobile trade-in volumes.
-
Combined ratio for risk-based businesses(a)
increased to 99.1 percent from 92.2 percent in first quarter 2017,
largely driven by less favorable vehicle protection results, which
included increased expenses and higher loss experience compared to a
favorable prior period. The ratio increase also reflects the absence
of the $4.3 million pre-tax client recoverable in credit insurance in
the first quarter of 2017.
-
Pre-tax margin for fee-based, capital-light businesses(b)
was 8.2 percent, up from 7.1 percent in first quarter 2017. The
increase was largely driven by growth from new and existing mobile
programs and favorable client contract term amendments. The main
factors partially offsetting the improvement were the absence of the
$6.7 million pre-tax of client recoverables from Connected Living and
lower mobile repair and logistics margins.
(a) Combined ratio for the Global Lifestyle risk-based businesses is
equal to total policyholder benefits, losses and expenses, divided by
net earned premiums and fees and other income, for vehicle protection,
credit and other businesses.
(b) Pre-tax margin for the Global Lifestyle fee-based, capital-light
businesses is equal to income before provision for income taxes divided
by total net earned premiums, fees and other income, for Connected
Living, including mobile, extended service contracts and assistance
services.
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Global Preneed
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(in millions)
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1Q18
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1Q17
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% Change
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Net operating income
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$
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9.8
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$
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9.9
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(1)%
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Net earned premiums, fees and other
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$
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46.2
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$
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44.2
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5%
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-
Net operating income was flat in first 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 decreased primarily reflecting higher technology expenses.
-
Net earned premiums, fees and other income increased due to
growth in U.S., including prior period sales of the Final Need product.
-
Face sales totaled $224.1 million in first quarter 2018
compared to $235.8 million in first quarter 2017 due to a decrease in
Final Need product sales.
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Corporate & Other
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(in millions)
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1Q18
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1Q17
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% Change
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Net operating loss (5)
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$
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(20.0)
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$
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(10.1)
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98%
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-
Net operating loss5 increased in first
quarter 2018 reflecting higher employee-related costs compared to
first quarter 2017, and the adverse impact from the lower effective
tax rate.
Capital Position
-
During the quarter, we completed the financing related to the pending
acquisition of The Warranty Group, which is expected to close in
second quarter 2018. This included a $1.3 billion debt issuance, of
which $350 million replaced the 2018 notes that matured in the quarter
and $288 million mandatory convertible preferred stock issuance. The
financing mix and overall reduced debt and equity issued took into
account additional cash available at the holding company following the
impact of TCJA and bringing forward capital that was originally
earmarked for share repurchases later in the year. The remaining
consideration is expected to be financed by a 10.4 million share
issuance to TPG Capital and cash available at the holding company at
closing.
-
Excluding the net proceeds of approximately $1.2 billion related to
the TWG financing, corporate capital totaled approximately $575
million as of March 31, 2018. Deployable capital totaled approximately
$325 million, net of the company's $250 million risk buffer.
-
Dividends paid by Global Housing, Global Lifestyle and Global Preneed
operating segments to the holding company in first quarter 2018
totaled $182 million, including $140 million from the capital related
to the reduction in deferred tax liabilities following the enactment
of the TCJA. Assurant also made a $42 million payment for final
settlement of claim reserve indemnification obligations related to the
2015 sale of its general agency business. This settlement payment was
previously accrued for and therefore had no material impact to
earnings. In addition, Assurant invested $8 million mainly to
strengthen connected home and asset disposition capabilities.
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Common stock dividends to shareholders totaled $30 million.
There were no share repurchases during the quarter.
Company Outlook
On October 18, 2017, Assurant announced an agreement to acquire The
Warranty Group from TPG Capital for $2.5 billion of enterprise value,
including TWG's existing debt. Prior to closing, Assurant's 2018 outlook
will exclude the impact of TWG and $1.2 billion in related acquisition
financing.
Based on current market conditions, for full-year 2018 the company now
expects:
-
Assurant net operating income, excluding reportable catastrophe
losses, to increase between 10 to 14 percent from 2017 reported
results of $413 million. Earnings growth to reflect a lower effective
tax rate, and modest growth in underlying segment earnings when
adjusting for $12.5 million of net benefits in 2017 disclosed items.
Profitable growth in Connected Living and multi-family housing, as
well as vehicle protection to offset declines in lender-placed
insurance and credit insurance.
With the enactment of the
U.S. Tax Cuts and Jobs Act (TCJA), Assurant's consolidated effective
tax rate is expected to decrease to 22-24 percent from 33 percent,
with approximately one-third of the savings to be reinvested to
support future growth.
-
Assurant operating earnings per diluted share, excluding
catastrophe losses to grow in excess of net operating income,
reflecting the benefit of a lower consolidated effective tax rate,
modest growth in underlying earnings, as well as capital management.
-
Global Housing net operating income, excluding reportable
catastrophes, to be down before taking into account recently enacted
tax reform. Further declines expected in lender-placed insurance and
mortgage solutions. Declines to be partially offset by continued
growth in multi-family housing. Additional savings from expense
management efforts to be realized towards the end of 2018 and into
2019. Net operating income to increase after reflecting a lower
effective tax rate of approximately 20-21 percent, with a portion of
the tax savings to be reinvested for future growth. Revenue expected
to approximate 2017 levels as declines in lender-placed are offset by
growth in multi-family housing.
-
Global Lifestyle net operating income to increase modestly,
before taking into account recently enacted tax reform. Profitable
growth driven primarily by newly launched mobile programs and vehicle
protection expansion and ongoing expense management efforts, partially
offset by ongoing declines in credit insurance. Mobile trade-in
activity to vary based on the timing and availability of new
smartphone introductions and carrier promotional activity. Results to
benefit from a lower effective tax rate of approximately 22-24
percent, with a portion of the tax savings to be reinvested for future
growth. The tax rate may fluctuate based on geographic mix of income
across various jurisdictions. Revenue expected to increase from growth
in Connected Living and vehicle protection, globally.
-
Global Preneed revenue and earnings to continue 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.
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Corporate & Other6 full-year net
operating loss to approximate 2017 loss of $63 million, before taking
into account recently enacted tax reform. Increased investments for
growth will be partially funded by continued expense management
initiatives. The loss will increase after accounting for an effective
tax rate of approximately 20 percent.
-
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. 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 dividends, subject to market
conditions.
Earnings Conference Call
The first quarter 2018 earnings conference call and webcast will be held
Friday, May 4, 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;
pre-funded funeral insurance; renters insurance; lender-placed
homeowners insurance; and mortgage valuation and field services. With
approximately $32 billion in assets and $6 billion in annualized revenue
as of March 31, 2018, Assurant has a market presence in 16 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 pending transaction with 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:
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(i)
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the successful completion of the pending transaction with The
Warranty Group and the effective integration of its operations;
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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 of unfavorable outcomes in potential litigation and/or
potential regulatory investigations;
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(xvii)
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the extensive regulations we are subject to 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
functions in our mortgage solution business and 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.
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(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.
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(UNAUDITED)
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1Q
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|
1Q
|
|
(in millions)
|
|
2018
|
|
2017
|
|
Global Housing, excluding reportable catastrophes
|
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$
|
79.9
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$
|
62.5
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Global Lifestyle(1)
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54.5
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52.4
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Global Preneed
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9.8
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|
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9.9
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Corporate and other
|
|
|
(20.0
|
)
|
|
|
(10.1
|
)
|
|
Interest expense
|
|
|
(9.6
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)
|
|
|
(8.2
|
)
|
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Net operating income
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|
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114.6
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106.5
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Adjustments, pre-tax:
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Assurant Health runoff operations
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2.6
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12.6
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Net realized gains on investments
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0.5
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3.4
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Reportable catastrophes
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(9.4
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)
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(0.9
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)
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Amortization of deferred gains and gains on disposal of businesses
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18.5
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|
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37.0
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|
|
Expenses related to The Warranty Group acquisition(2)
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|
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(26.0
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)
|
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|
-
|
|
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Other adjustments
|
|
|
3.2
|
|
|
|
5.8
|
|
|
Benefit (provision) for income taxes
|
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|
2.0
|
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(20.6
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)
|
|
GAAP net income
|
|
$
|
106.0
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$
|
143.8
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(1)
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1Q 2018 excludes a $1.3 million benefit after-tax ($1.6 million
pre-tax) due to favorable development related to 3Q 2017 reportable
catastrophes.
|
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(2)
|
|
1Q 2018 includes transaction, financing and integration costs
related to the pending acquisition of The Warranty Group, including
$7.4 million after-tax ($9.3 million pre-tax) of pre-close interest
expense on the debt issued in connection with the acquisition and
amortization of the premium on derivatives used to hedge the debt.
|
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(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 per
diluted share, defined as net income divided by weighted average
diluted shares outstanding.
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|
(UNAUDITED)
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1Q
|
|
1Q
|
|
|
|
2018
|
|
2017
|
|
Net operating income, excluding reportable catastrophes, per
diluted share(1)
|
|
$
|
2.14
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|
$
|
1.88
|
|
|
Adjustments, pre-tax:
|
|
|
|
|
|
Dilutive effect from mandatory convertible preferred stock
|
|
|
(0.03
|
)
|
|
|
-
|
|
|
Assurant Health runoff operations
|
|
|
0.05
|
|
|
|
0.22
|
|
|
Net realized gains on investments
|
|
|
0.01
|
|
|
|
0.06
|
|
|
Reportable catastrophes
|
|
|
(0.17
|
)
|
|
|
(0.02
|
)
|
|
Amortization of deferred gains and gains on disposal of businesses
|
|
|
0.33
|
|
|
|
0.65
|
|
|
Expenses related to The Warranty Group acquisition
|
|
|
(0.47
|
)
|
|
|
-
|
|
|
Other adjustments
|
|
|
0.06
|
|
|
|
0.10
|
|
|
Benefit (provision) for income taxes
|
|
|
0.04
|
|
|
|
(0.36
|
)
|
|
Net income per diluted share
|
|
$
|
1.96
|
|
|
$
|
2.53
|
|
|
(1)
|
|
Net operating income per diluted share, excluding reportable
catastrophes, for 1Q 2018 is calculated by dividing the net
operating income by 53,477,776 shares which is the weighted average
diluted shares outstanding, excluding the effect for the period of
711,722 shares of dilutive securities from the assumed conversion of
the outstanding mandatory convertible preferred stock, which was
issued as part of the financing of the pending TWG acquisition. Net
income per diluted share for 1Q 2018 includes the effect of such
dilutive securities.
|
|
(3)
|
|
Assurant uses operating return on 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
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 equity ("GAAP ROE"), defined as net income
(loss), for the period presented, divided by average stockholders'
equity for the year to date period.
|
|
(UNAUDITED)
|
|
1Q
|
|
1Q
|
|
|
|
2018
|
|
2017
|
|
Annual operating return on average equity, excluding AOCI and
reportable catastrophes(1)
|
|
11.2 %
|
|
10.8 %
|
|
Assurant Health runoff operations
|
|
0.2 %
|
|
0.8 %
|
|
Net realized gains (losses) on investments
|
|
-%
|
|
0.2 %
|
|
Reportable catastrophes
|
|
(0.7)%
|
|
-%
|
|
Amortization of deferred gains and gains on disposal of businesses
|
|
1.4 %
|
|
2.5 %
|
|
Expenses related to The Warranty Group acquisition
|
|
(2.0)%
|
|
-%
|
|
Other adjustments
|
|
0.2 %
|
|
0.4 %
|
|
Change due to effect of including AOCI
|
|
(0.6)%
|
|
(0.8)%
|
|
Annual GAAP return on average equity
|
|
9.7 %
|
|
13.9 %
|
|
(1)
|
|
1Q 2018 excludes the effect of $276.4 million of the mandatory
convertible preferred stock which was issued as part of the
financing of the pending TWG acquisition. Annual GAAP return on
average equity for 1Q 2018 includes the effect of the mandatory
convertible preferred stock.
|
|
(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, Assurant
Employee Benefits, net realized gains on investments, amortization
of deferred gains and gains on disposal of businesses, expenses
relating to the pending acquisition of TWG and other highly variable
or unusual items. Additionally, the calculation for the fourth
quarter and full year 2017 excludes a one-time estimated benefit
related to the enactment of the TCJA. The company believes net
operating income provides investors a valuable measure of the
performance of the company's ongoing business because it excludes
the effect of Assurant Health runoff operations and the divested
Assurant Employee Benefits business, which was sold in 2016, and the
other excluded items that do not represent the ongoing operations of
the company. The comparable GAAP measure is net income.
|
|
|
|
|
|
|
|
(UNAUDITED)
|
|
1Q
|
|
1Q
|
|
(in millions)
|
|
2018
|
|
2017
|
|
Net operating income
|
|
$
|
107.2
|
|
|
$
|
105.9
|
|
|
Adjustments (pre-tax):
|
|
|
|
|
|
Assurant Health runoff operations
|
|
|
2.6
|
|
|
|
12.6
|
|
|
Net realized gains on investments
|
|
|
0.5
|
|
|
|
3.4
|
|
|
Amortization of deferred gains and gains on disposal of businesses
|
|
|
18.5
|
|
|
|
37.0
|
|
|
Expenses related to The Warranty Group acquisition(1)
|
|
|
(26.0
|
)
|
|
|
-
|
|
|
Other adjustments
|
|
|
3.2
|
|
|
|
5.8
|
|
|
Provision for income taxes
|
|
|
-
|
|
|
|
(20.9
|
)
|
|
GAAP net income
|
|
$
|
106.0
|
|
|
$
|
143.8
|
|
|
(1)
|
|
1Q 2018 includes transaction, financing and integration costs
related to the pending acquisition of The Warranty Group, including
$7.4 million after-tax ($9.3 million pre-tax) of pre-close interest
expense on the debt issued in connection with the acquisition and
amortization of the premium on derivatives used to hedge the debt.
|
|
(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 and gains on disposal of businesses,
net realized gains on investments, interest expense, expenses
associated with the pending TWG acquisition and other highly
variable or unusual items. Additionally, the calculation for the
fourth quarter and full year 2017 excludes a one-time estimated
benefit related to the enactment of the TCJA. 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.
|
|
|
|
|
|
|
|
(UNAUDITED)
|
|
1Q
|
|
1Q
|
|
(in millions)
|
|
2018
|
|
2017
|
|
GAAP Total Corporate & Other segment net (loss) income
|
|
$
|
(30.8
|
)
|
|
$
|
19.6
|
|
|
Excluding: Health runoff operations net income
|
|
|
2.0
|
|
|
|
7.9
|
|
|
GAAP Corporate & Other segment net (loss) income
|
|
|
(32.8
|
)
|
|
|
11.7
|
|
|
Adjustments, pre-tax:
|
|
|
|
|
|
Amortization of deferred gains and gains on disposal of businesses
|
|
|
(18.5
|
)
|
|
|
(37.0
|
)
|
|
Expenses related to The Warranty Group acquisition(1)
|
|
|
26.0
|
|
|
|
-
|
|
|
Interest expense
|
|
|
12.2
|
|
|
|
12.6
|
|
|
Net realized gains on investments
|
|
|
(0.5
|
)
|
|
|
(3.4
|
)
|
|
Other adjustments
|
|
|
(3.2
|
)
|
|
|
(5.8
|
)
|
|
(Benefit) provision for income taxes
|
|
|
(3.2
|
)
|
|
|
11.8
|
|
|
Corporate & other net operating loss
|
|
$
|
(20.0
|
)
|
|
$
|
(10.1
|
)
|
|
(1)
|
|
1Q 2018 includes transaction, financing and integration costs
related to the pending acquisition of The Warranty Group, including
$7.4 million after-tax ($9.3 million pre-tax) of pre-close interest
expense on the debt issued in connection with the acquisition and
amortization of the premium on derivatives used to hedge the debt.
|
|
(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. A
reconciliation would require the company to quantify amortization of
deferred gains and gains on disposal of businesses, interest
expense, net realized gains on investments, and change in derivative
investment. The last two 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
reasonably quantify a range for the first component 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 the second component assuming it does
not incur additional debt or extinguish debt in the forecast period.
Amortization of deferred gains and gains on disposal of businesses
is expected to be approximately $42-50 million after-tax while
interest expense is expected to be approximately $43-45 million
after-tax. This reflects the lower effective tax rate and the
recently refinanced Assurant notes but excludes debt incurred in
connection with the financing of the TWG acquisition.
|
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 Ended March 31, 2018 and 2017
|
|
|
|
|
|
|
|
|
|
1Q
|
|
|
|
|
2018
|
|
|
2017
|
|
(in millions except number of shares and per share amounts)
|
|
Revenues
|
|
|
|
|
|
Net earned premiums
|
|
$
|
1,124.9
|
|
$
|
1,050.3
|
|
Fees and other income
|
|
|
364.5
|
|
|
340.2
|
|
Net investment income
|
|
|
130.2
|
|
|
120.6
|
|
Net realized gains on investments
|
|
|
0.5
|
|
|
3.4
|
|
Amortization of deferred gains and gains on disposal of businesses
|
|
|
18.5
|
|
|
37.0
|
|
Total revenues
|
|
|
1,638.6
|
|
|
1,551.5
|
|
Benefits, losses and expenses
|
|
|
|
|
|
Policyholder benefits
|
|
|
414.6
|
|
|
358.0
|
|
Selling, underwriting, general and administrative expenses
|
|
|
1,066.0
|
|
|
965.8
|
|
Interest expense
|
|
|
21.5
|
|
|
12.6
|
|
Total benefits, losses and expenses
|
|
|
1,502.1
|
|
|
1,336.4
|
|
Income before provision for income taxes
|
|
|
136.5
|
|
|
215.1
|
|
Provision for income taxes
|
|
|
30.5
|
|
|
71.3
|
|
Net income
|
|
$
|
106.0
|
|
$
|
143.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per share:
|
|
|
|
|
|
Basic
|
|
$
|
1.99
|
|
$
|
2.56
|
|
Diluted
|
|
$
|
1.96
|
|
$
|
2.53
|
|
|
|
|
|
|
|
Dividends per share
|
|
$
|
0.56
|
|
$
|
0.53
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share data:
|
|
|
|
|
|
Basic weighted average shares outstanding
|
|
|
53,169,358
|
|
|
56,201,342
|
|
|
|
|
|
|
|
Diluted weighted average shares outstanding
|
|
|
54,189,498
|
|
|
56,756,641
|
|
Assurant, Inc.
Consolidated Condensed Balance Sheets (unaudited)
At March 31, 2018 and Dec. 31, 2017
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
December 31,
|
|
|
|
2018
|
|
2017
|
|
|
|
(in millions)
|
|
Assets
|
|
|
|
|
|
Investments and cash and cash equivalents
|
|
$ 13,304.9
|
|
$ 12,550.3
|
|
Reinsurance recoverables
|
|
9,278.4
|
|
9,790.2
|
|
Deferred acquisition costs
|
|
3,646.3
|
|
3,484.5
|
|
Goodwill
|
|
923.1
|
|
917.7
|
|
Assets held in separate accounts
|
|
1,816.9
|
|
1,837.1
|
|
Other assets
|
|
2,416.3
|
|
2,516.7
|
|
Assets of consolidated investment entities
|
|
1,042.0
|
|
746.5
|
|
Total assets
|
|
$ 32,427.9
|
|
$ 31,843.0
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
Policyholder benefits and claims payable
|
|
$ 13,579.6
|
|
$ 14,179.6
|
|
Unearned premiums
|
|
7,084.8
|
|
7,038.6
|
|
Debt
|
|
2,004.4
|
|
1,068.2
|
|
Liabilities related to separate accounts
|
|
1,816.9
|
|
1,837.1
|
|
Deferred gain on disposal of businesses
|
|
109.6
|
|
128.1
|
|
Accounts payable and other liabilities
|
|
2,500.7
|
|
2,736.5
|
|
Liabilities of consolidated investment entities
|
|
830.9
|
|
573.4
|
|
Total liabilities
|
|
27,926.9
|
|
27,561.5
|
|
|
|
|
|
|
|
Stockholders' equity
|
|
|
|
|
|
Equity, excluding accumulated other comprehensive income
|
|
4,438.1
|
|
4,036.6
|
|
Accumulated other comprehensive income
|
|
51.7
|
|
234.0
|
|
Total Assurant, Inc. stockholders' equity
|
|
4,489.8
|
|
4,270.6
|
|
Non-controlling interest
|
|
11.2
|
|
10.9
|
|
Total equity
|
|
4,501.0
|
|
4,281.5
|
|
Total liabilities and equity
|
|
$ 32,427.9
|
|
$ 31,843.0
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20180503006537/en/
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