Assurant Reports Fourth Quarter and Full-Year 2014 Financial Results

• Net operating income decreased in fourth quarter and full-year 2014. Lower lender-placed insurance placement and premium rates, higher non-catastrophe losses and the previously disclosed loss of client business affected results in the fourth quarter. Both fourth quarter 2014 and fourth quarter 2013 did not include any reportable catastrophe losses.
  
  Full-year 2014 results decreased due to lower placement and premium rates and higher non-catastrophe losses. Results also include $18.5 million in reportable catastrophe losses compared to $19.2 million in 2013. Full-year 2013 results included a $14.0 million regulatory settlement. 

• Net earned premiums, fees and other income decreased in the quarter, primarily due to declining lender-placed insurance premiums. Lower placement and premium rates and the previously disclosed loss of client business in lender-placed insurance contributed to the decline. Fee income increased due to mortgage solutions acquisitions.
  
  Full-year 2014 net earned premiums, fees and other increased, primarily due to the previously disclosed discontinuation of a lender-placed insurance quota share arrangement and fee income from the mortgage solutions acquisitions. Lower lender-placed placement and premium rates partially offset the increase. 

• Combined ratio increased in the quarter to 87.8 percent, compared to 79.5 percent in fourth quarter 2013. For the full-year, the combined ratio was 85.2 percent, compared to 77.9 percent in 2013. Results reflect higher non-catastrophe losses, lower lender-placed premium rates and higher mix of fee-based business. 

Assurant Health

• Net operating loss in the quarter and full-year 2014 were driven by increased claims from Affordable Care Act (ACA) qualified policies. Results were partially offset by estimated recoveries from the ACA risk-mitigation programs as morbidity throughout the ACA market was higher than expected. Fourth quarter 2013 results include a $3.0 million restructuring charge. Full-year results included a $5.7 million tax liability increase related to the ACA, compared to a $10.2 million increase in 2013.
  
  
• Net earned premiums, fees and other income increased in fourth quarter and full-year 2014 due to growth in individual major medical product sales. Quarterly results reflect $9 million in estimated recoveries from the ACA risk-adjustment program. Full-year results include $122 million in estimated recoveries from the ACA’s risk-adjustment program. 

• Sales increased in fourth quarter and full-year 2014. Quarterly results primarily reflect growth in sales of 2015-effective individual major medical policies during open enrollment under the ACA. Full-year results reflect growth in individual major medical sales during open enrollment and due to qualified life events. 

Assurant Employee Benefits

• Net operating income decreased in fourth quarter 2014, primarily due to less favorable disability loss experience.
  
  Full-year 2014 results improved due to favorable loss experience across all major product lines.

• Net earned premiums, fees and other income increased in fourth quarter and full-year 2014 due to continued growth in voluntary products. 
  
  
• Sales decreased in fourth quarter and full-year 2014, primarily reflecting lower sales in employer-paid products.

Corporate & Other

• Net operating loss decreased in fourth quarter 2014 and full-year 2014, primarily due to lower employee-related benefit costs and acquisition-related expenses.

Capital Position

• Corporate capital stood at approximately $560 million as of Dec. 31, 2014. Deployable capital totaled approximately $310 million, excluding the Company’s $250 million risk buffer. The Company paid $162 million for four business acquisitions during the year, including $71 million for the acquisition of CWI Group in fourth quarter 2014.
   
  For full-year 2014, the business segments paid approximately $453 million of dividends, net of infusions, to the holding company.

• Share repurchases and dividends totaled $295.8 million for full-year 2014. Dividends to shareholders in 2014 totaled $77.5 million. During 2014, the Company repurchased 3.3 million shares, or 4.6 percent of its common stock outstanding at the end of 2013, at a cost of $218.3 million. Through Feb. 6, 2015, the Company repurchased an additional 529,100 shares for $34.7 million, with $452.0 million remaining in the current repurchase authorization.

Financial Position

• Stockholders’ equity, excluding accumulated other comprehensive income (AOCI), was $4.6 billion at Dec. 31, 2014, up $218.9 million from Dec. 31, 2013.

• Book value per diluted share², excluding AOCI, increased 9.0 percent to $64.82 at Dec. 31, 2014 from $59.48 at Dec. 31, 2013. AOCI increased $129.0 million to $555.8 million as of Dec. 31, 2014, from $426.8 million at Dec. 31, 2013.

• Operating return on average equity (ROE)³, excluding AOCI, was 9.7 percent for full-year 2014 compared to full-year operating ROE, excluding AOCI, of 10.6 percent in 2013.
  
  
• Total assets as of Dec. 31, 2014 were approximately $31.6 billion. The ratio of debt to total capital⁴, excluding AOCI, decreased to 20.2 percent at Dec. 31, 2014 from 27.1 percent at Dec. 31, 2013, reflecting repayment of the February 2014 maturity debt. The ratio of invested assets to equity decreased to 2.7, compared to 2.9 from Dec. 31, 2013.

Company Outlook

Based on current market conditions, for full-year 2015, the Company expects:  

• Assurant Solutions’ net earned premiums and fees and net operating income to approximate 2014 levels driven by continued growth from mobile and vehicle service contracts globally. Results to be affected by the loss of a domestic mobile tablet program, carrier marketing programs, declining volumes at certain domestic retailers and foreign exchange volatility.
  
  
• Assurant Specialty Property’s net earned premiums and net operating income to decrease from 2014, reflecting normalization of lender-placed insurance business, previously announced loss of client business and the sale of ARIC. Initiatives to lower expenses in lender-placed insurance to generate net savings in the latter part of the year. Contributions from multi-family housing and mortgage solutions to partially offset the decline. Overall results to be affected by catastrophe losses.

• Assurant Health’s net earned premiums and fees to increase compared to 2014 due to strong sales of individual major medical policies. Plan design and pricing changes implemented for 2015-effective policies and ongoing expense discipline to improve results. Results to vary based on claims development on ACA policies and estimated recoverables under risk mitigation programs.

• Assurant Employee Benefits’ net earned premiums and fees to increase compared to 2014 due to growth in voluntary products. Continued expense management actions to offset pressures from lower investment income. Results to be affected by U.S. employment trends and capital market conditions.

• Corporate & Other full-year net operating loss to decline to $60-65 million, reflecting expense reductions.  

• Capital to be deployed on share repurchases, common stock dividends, investments in the business and strategic acquisitions, subject to market conditions and legal requirements. Business segment dividends to Corporate to approximate segment net operating income and to be subject to the growth of the businesses, rating agency and regulatory capital requirements as well as investment performance.

Earnings Conference Call

• The fourth quarter and full-year 2014 earnings conference call and webcast to be held on Friday, Feb. 13, 2015 at 9:00 a.m. ET. The live and archived webcast along with supplemental information also will be available in the Investor Relations section of www.assurant.com.

About Assurant

Assurant is a premier provider of specialized insurance products and related services in North America, Latin America, Europe and other select worldwide markets. The four key businesses -- Assurant Solutions, Assurant Specialty Property, Assurant Health and Assurant Employee Benefits -- partner with clients who are leaders in their industries and build leadership positions in a number of specialty insurance market segments. Assurant businesses provide mobile device protection; debt protection administration; credit-related insurance; warranties and service contracts; pre-funded funeral insurance; lender-placed homeowners insurance; property, appraisal, preservation and valuation services; renters insurance and related products; manufactured housing homeowners insurance; individual health and small employer group health insurance; group dental insurance; group disability insurance; and group life insurance.

Assurant, a Fortune 500 company and a member of the S&P 500, is traded on the New York Stock Exchange under the symbol AIZ. Assurant has approximately $32 billion in assets and $10 billion in annual revenue. Assurant has approximately 17,500 employees worldwide and is headquartered in New York's financial district. For more information on Assurant, please visit www.assurant.com and follow us on Twitter @AssurantNews.

Media Contact:
Vera Carley
Assistant Vice President, External Communication
Phone: 212.859.7002
[email protected]                                                      

Investor Relations Contact:
Suzanne Shepherd
Assistant Vice President, Investor Relations
Phone: 212.859.7062
[email protected]

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, 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 fact that they may use words such as “will,” “anticipate,” “expect,” “estimate,” “project,” “intend,” “plan,” “believe,” “target,” “forecast,” or the negative versions of those words and terms with a similar meaning. Our actual results may differ materially from those projected in the forward-looking statements. The Company undertakes no obligation to update any forward-looking statements in this earnings release or the exhibits as a result of new information or future events or 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:

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 2013 Annual Report on Form 10-K and our Third Quarter 2014 Form 10-Q, each 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.  

(4)  Assurant uses a ratio of debt to total capital, excluding AOCI, as an important measure of the Company’s financial leverage. Assurant’s debt to total capital ratio, excluding AOCI, equals debt divided by the sum of debt and total stockholders’ equity excluding AOCI. The Company believes that the debt to total capital ratio, excluding AOCI, provides investors a valuable measure of financial leverage, because it excludes the effect of unrealized gains (losses) on investments, which tend to be highly variable from period to period, and other AOCI items. The comparable GAAP measure would be the ratio of debt to total capital. The debt to total capital ratio as of Dec. 31, 2014 and Dec. 31, 2013 was 18.4 percent and 25.3 percent, respectively, as shown in the following reconciliation table.