Assurant : Q1 2025 Earnings Transcript

Published: 2025-05-08 01:59:05 ET AIZ

Published on 05/08/2025 at 01:59

It is now my pleasure to turn the floor over to Sean Moshier, Vice President of Investor Relations. You may begin.

Thank you, operator. And good morning, everyone. We look forward to discussing our first quarter results with you today. Joining me for Assurant's conference call are Keith Demmings, our President and Chief Executive Officer; and Keith Meier, our Chief Financial Officer.

Yesterday, after the market closed, we issued an earnings release announcing our results for the first quarter 2025. The release and corresponding financial supplement are available on assurant.com. Also on our website is a slide presentation for our webcast participants. Some of the statements made today are forward looking. Forward-looking statements are based upon our historical performance and current expectations and subject to risks, uncertainties and other factors that may cause actual results to differ materially from those contemplated by these statements. Additional information regarding these factors can be found in the earnings release, presentation and financial supplement on our

website as well as in our SEC reports.

During today's call, we will refer to non-GAAP financial measures, which we believe are important in analyzing the company's performance. For more details on these measures, the most comparable GAAP measures and a reconciliation of the two, please refer to the earnings release, presentation, and financial supplement on our website. We'll start today's call with remarks before moving into Q&A.

I will now turn the call over to Keith Demmings.

Thanks, Sean, and good morning, everyone. I'm pleased to share that 2025 is off to a strong start. For the first quarter, we continue to demonstrate momentum, delivering 14% growth in adjusted EBITDA and 16% growth in adjusted earnings per share, both excluding reportable catastrophes.

This quarter's performance highlights the position of strength from which we continue to operate, and is supported by our diversified global operating model, where we have market leading businesses across Global Housing and Global Lifestyle that are underpinned by our robust capital position. We have a proven track record of delivering through various economic cycles over the long term, and we remain well-positioned to achieve our ninth consecutive year of earnings growth.

Our differentiated business-to-business-to-consumer distribution strategy in attractive markets is reinforced by our world-class workforce that enables us to win, build and scale transparent partnerships with many of the world's leading brands. And our ability to deliver exceptional customer experiences through customized data-driven solutions and comprehensive wraparound services reinforces the strength of Assurant's long-term fundamentals.

Last quarter, we outlined our 2025 priorities, and I'm incredibly proud of our team's progress to date. We're executing, optimizing and scaling significant partnerships across lifestyle and housing through the foundational investments we made in new programs and clients in 2024. We've continued to make high value, incremental investments to support new program launches in our pipeline and accelerate emerging growth opportunities and we remain focused on achieving our 2025 outlook by driving operational excellence and financial performance.

Next, I want to share a few segment highlights that support our attractive position. Starting with Global Lifestyle, we're laser focused on achieving our growth objectives across Connected Living and Global

Automotive. In Connected Living, we continuously enhance the customer and client experience by investing in innovative products and services while providing differentiated value to our clients with integrity and transparency. This has allowed us to build relationships with every major US mobile operator along with many global leaders in the telecom industry. As mobile and cable operators continue to innovate and compete in the wireless space, Assurant's strengthened partnerships, enhance our market position and support long-term growth.

Our approach continues to generate momentum, and through key investments in leading edge technology, including automation, robotics and AI at our device care centers, we anticipate meaningful opportunities to offer additional value-added services to our key mobile clients in the near future. During the first quarter, we continued to build on our track record of deepening relationships with key clients, reinforcing our position as a preferred partner.

Recently, we partnered with Verizon to launch a new mobile device protection plan from Total Wireless, Verizon's fast-growing, no-contract wireless provider. The program, Total Wireless Protect, will allow new and existing customers affordable replacement and repair against accidents and mechanical breakdowns, supported by our more than 900 Assurant authorized repair centers nationwide. This provides an opportunity to continue building deeper relationships with another US mobile carrier.

In Global Automotive, earnings remain stable, supported by a year-over-year improvement in loss experience. Our leadership team is quickly making progress to enable further success, including a unified, consistent branding approach in our go-to-market strategy, allowing us to better leverage our scale as a market leader. This has contributed to new wins within our US and international distribution channels with runway to gain additional share with large national dealers.

And we're launching several new products within Global Auto this year. We recently launched Assurant Vehicle Care Technology Plus, which provides coverage for high-tech vehicle components, wear-and-tear items and smartphone repairs.

Moving to Housing, shifts in the voluntary insurance market throughout the US have increased demand for lender placed insurance products within homeowners. Our product helps lenders, investors and homeowners remove the risk of uninsured loss. Through the exceptional efforts of our claims team, we remain committed to supporting our policyholders when they need us most. We're proud to be honored by the American Red Cross as a 2025 Disaster Relief Hero recognizing our support for those impacted by 2024 storms, including Hurricanes Helene and Milton, and the wildfires in California.

As we look at results, our strong performance continued in the first quarter, driven by 17% top line growth within homeowners, primarily due to the addition of 70,000 lender-placed policies. We've achieved significant expense leverage, resulting in a compelling combined ratio. Even with elevated cats in the first quarter, we delivered a combined ratio of 90%. For 2025, we're on track to deliver a combined ratio around the mid-80s, including our full-year cat assumption of $300 million. We continue to extend the tenure of our client base, renewing two lender placed clients in the first quarter, and we see meaningful opportunity to expand with new clients by leveraging our existing infrastructure.

In Renters, we're executing our strategy to scale our technology-enabled services and recently added a new renters book with over 250,000 policies. Our Cover360 platform continues to support double-digit written premium growth in our property management company or PMC channel, demonstrating our competitive edge in a distribution channel with further growth potential. The strength of our combined Lifestyle and Housing businesses has enabled us to grow significantly. Over the last five years, we've delivered a compound annual adjusted EPS growth rate of 18% and a 12% adjusted EBITDA growth rate, both excluding cats.

Since we successfully placed our 2025 cat reinsurance program in April, which Keith Meier will cover, I want to take a moment to highlight how Assurant compares to certain large cat exposed P&C peers. When we look over the past six years, Assurant ranks among the lowest in terms of cat exposure as a percentage of net earned premiums and as a percentage of shareholders equity. Since 2019, we had the lowest average cat losses as a percentage of net earned premiums, as well as the third lowest as a percentage of shareholders' equity. Equally compelling, our volatility across both metrics is among the lowest in the group. Over the last 10 years, our increased scale and efficiency within housing has driven a 10-year average combined ratio of 89% compared to the broader P&C market of 95%. This data illustrates the power of Assurant's unique and advantaged business portfolio as Global Lifestyle and Global Housing have delivered strong growth and returns with lower volatility.

Given our demonstrated resilience over time through various economic environments, balanced risk management and compelling growth path ahead, it's our belief that we should be valued at a premium to the S&P Composite 1,500 PMC Index median. Our strategy is centered around our powerful B2B2C distribution model across lifestyle and housing, which bolsters our competitive advantage and financial performance in the attractive markets where we operate, we see expanding opportunities to continue profitable growth through the scale and efficiency of our service delivery networks. We expect to continue extending our track record of winning new clients and solidifying relationships across the enterprise. Our business model has created diversified sources of earnings and capital, while generating strong returns, cash flow and growth. Looking toward the future, we believe there are expanding growth opportunities including increasing investments in our core markets, continue to expand offerings with existing clients,

and winning new global partnerships, and entering attractive adjacent sectors through new product launches.

Before handing it over to Keith, I want to spend a moment on the evolving economic landscape and Assurant's position. 2024 marked an exceptional year of outperformance representing our eighth consecutive year of earnings growth. Given the strong start to the year and the strength of our businesses, we remain on track to deliver our ninth consecutive year of profitable growth in 2025, reaffirming our enterprise outlook. We are closely monitoring the impact of macroeconomic conditions and tariff policies on our claims cost and consumer demand. We are also taking action to remain well positioned and stay ahead of future developments.

While there remains significant uncertainty, our outlook considers the impact of tariffs. The differentiated features of our business model positions us to navigate the dynamic macroeconomic environment. In Lifestyle, our alignment of financial interests with our partners enables us to work side-by-side to help mitigate risk. This includes client risk sharing contracts that allow us to manage financial exposure through Connected Living and Global Auto. Our partnership with leading brands provides us access to diverse supply chains across the world, as our clients partner with us to optimize claims costs.

Within Housing, our inflation guard product feature includes quarterly state-by-state rate adjustments and will allow us to react quickly to higher materials costs in our lender-placed business. In addition, lender-placed may also serve as a countercyclical hedge in the event of a broader market downturn, differentiating us from other P&C companies.

Overall, the attributes that unify our lifestyle and housing segments also position Assurant to deliver shareholder value over time through growth and disciplined capital management.

I'll now turn it over to Keith Meier.

Thanks, Keith. And good morning, everyone. Let me begin by sharing some key highlights we saw in the first quarter. 2025 is off to a strong start with double-digit growth across our primary performance metrics, achieving mid-teens growth for adjusted EBITDA and adjusted earnings per share, both excluding catastrophes.

Disclaimer

Assurant Inc. published this content on May 08, 2025, and is solely responsible for the information contained herein. Distributed via Public Technologies (PUBT), unedited and unaltered, on May 08, 2025 at 05:58 UTC.