Assurant Reports First Quarter 2022 Financial Results

Double-Digit Growth in Global Lifestyle from Connected Living and Global Automotive

Reaffirm 2022 Outlook for Adjusted EBITDA and Adjusted EPS, Both Ex. Catastrophes

NEW YORK, May 3, 2022 — Assurant, Inc. (NYSE: AIZ), a leading global business services company that supports, protects and connects major consumer purchases, today reported results for the first quarter ended March 31, 2022.

“Our first quarter results were led by strong performance from our fee-based and capital-light offerings within Global Lifestyle, which came in ahead of our expectations,” said Assurant President and CEO Keith Demmings. “While Global Housing results were weaker in the first quarter, we continue to believe we are well-positioned to deliver on our financial objectives for 2022 as we focus on driving profitable growth while delivering market-leading innovation for our clients and their customers,” Demmings added.

First Quarter 2022 Summary:

• GAAP net income decreased 2 percent versus prior year period, while net income per diluted share increased 7 percent

• Adjusted EBITDA, excluding reportable catastrophes², was in-line with the prior year period at $302.0 million

• Adjusted earnings, excluding reportable catastrophes, per diluted share⁴, increased 17 percent to $3.80

• Holding company liquidity was $738 million, including the remaining Global Preneed sale proceeds

• Share repurchases and common stock dividends totaled $280 million

     2022 Outlook

     In 2022, the company continues to expect:

• 8 to 10 percent growth in Adjusted EBITDA, excluding reportable catastrophes⁵, driven by profitable growth across Global Lifestyle and Global Housing

• 16 to 20 percent growth in Adjusted earnings, excluding reportable catastrophes, per diluted share⁵, driven by continued profitable growth and share buybacks

Note: References to net income, including in net income per diluted share, throughout this press release refer to net income from continuing operations. Some of the metrics throughout this press release are non-GAAP measures of performance. A full reconciliation of each non-GAAP measure to the most comparable GAAP measure can be found in the Non-GAAP Financial Measures section.

First Quarter Consolidated Results 

Global Lifestyle

• Adjusted EBITDA increased compared to the prior year period, due to strong results across Connected Living and Global Automotive. In Connected Living, mobile increased primarily from device protection performance in North America, including more favorable loss experience and subscriber growth, as well as an increase in global mobile devices serviced, mainly from higher trade-in volumes. Global Automotive increased from higher investment income, favorable loss experience in select ancillary products and expansion across distribution channels.
  

• Revenue increased compared to the prior year period, led by Global Automotive premium increases from strong prior period sales. Connected Living increased modestly as mobile fee income growth from service and repair and trade-in was partially offset by premium declines in runoff mobile programs.
  

Global Housing

• Adjusted EBITDA increased compared to the prior year period primarily due to a $40.5 million pre-tax decrease in reportable catastrophes. Excluding reportable catastrophes, Adjusted EBITDA² decreased due to higher non-cat loss experience, including a $13.8 million year-over-year increase within sharing economy offerings primarily related to a reserve adjustment and adverse development from policies previously written under less favorable terms. Lender-placed also experienced higher non-cat losses mainly from elevated fire claims.
  

• Revenue increased modestly year-over-year, as growth in lender-placed from higher average insured values and premium rates and multifamily housing was partially offset by a decline in specialty products from client runoff.
  

Corporate and Other

2022 Company Outlook⁵

Safe Harbor Statement

Some of the statements included in this news release and its exhibits, including our business and financial plans and any statements regarding the company’s anticipated future financial performance, business prospects, growth and operating strategies and similar matters, may constitute forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995.

You can identify forward-looking statements by the use of words such as “outlook,” “objective,” “will,” “may,” “can,” “anticipates,” “expects,” “estimates,” “projects,” “intends,” “plans,” “believes,” “targets,” “forecasts,” “potential,” “approximately,” and 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 our future plans, estimates or expectations will be achieved. Our actual results might differ materially from those projected in the forward-looking statements. We undertake no obligation to update or review any forward-looking statement, whether as a result of new information, future events or other developments. The following factors could cause our actual results to differ materially from those currently estimated by management, including those projected in the company outlook:

(i)                 the loss of significant clients, distributors or other parties with whom we do business, or if we are unable to renew contracts with them on favorable terms, or if those parties face financial, reputational or regulatory issues;

(ii)               significant competitive pressures, changes in customer preferences and disruption;

(iii)             the failure to execute our strategy, including through the continuing service of key executives, senior leaders, highly-skilled personnel and a high-performing workforce;

(iv)             the failure to find suitable acquisitions at attractive prices, integrate acquired businesses effectively or identify new areas for organic growth;

(v)               our inability to recover should we experience a business continuity event;

(vi)             the failure to manage vendors and other third parties on whom we rely to conduct business and provide services to our clients;

(vii)           risks related to our international operations;

(viii)         declines in the value of mobile devices, or export compliance or other risks in our mobile business;

(ix)             our inability to develop and maintain distribution sources or attract and retain sales representatives and executives with key client relationships;

(x)               risks associated with joint ventures, franchises and investments in which we share ownership and management with third parties;

(xi)             the impact of catastrophe and non-catastrophe losses, including as a result of climate change;

(xii)           negative publicity relating to our business or industry;

(xiii)         the impact of general economic, financial market and political conditions and conditions in the markets in which we operate, including the conflict in Ukraine and the current inflationary environment; 

(xiv)         the impact of the COVID-19 pandemic and measures taken in response thereto;

(xv)           the adequacy of reserves established for claims and our inability to accurately predict and price for claims;

(xvi)         a decline in financial strength ratings of our insurance subsidiaries or in our corporate senior debt ratings;

(xvii)       fluctuations in exchange rates;

(xviii)     an impairment of goodwill or other intangible assets;

(xix)          the failure to maintain effective internal control over financial reporting;

(xx)            unfavorable conditions in the capital and credit markets;

(xxi)          a decrease in the value of our investment portfolio, including due to market, credit and liquidity risks, and changes in interest rates;

(xxii)        an impairment in the value of our deferred tax assets;

(xxiii)     the unavailability or inadequacy of reinsurance coverage and the credit risk of reinsurers, including those to whom we have sold business through reinsurance;

(xxiv)      the credit risk of some of our agents, third-party administrators and clients;

(xxv)        the inability of our subsidiaries to pay sufficient dividends to the holding company and limitations on our ability to declare and pay dividends or repurchase shares;

(xxvi)      limitations in the analytical models we use to assist in our decision-making;

(xxvii)    the failure to effectively maintain and modernize our information technology systems and infrastructure, or the failure to integrate those of acquired businesses;

(xxviii)  breaches of our information systems or those of third parties with whom we do business, or the failure to protect the security of data in such systems, including due to cyberattacks and as a result of working remotely;

(xxix)      the costs of complying with, or the failure to comply with, extensive laws and regulations to which we are subject, including those related to privacy, data security, data protection or tax;

(xxx)        the impact of litigation and regulatory actions;

(xxxi)      reductions or deferrals in the insurance premiums we charge;

(xxxii)    changes in insurance, tax and other regulations;

(xxxiii)  volatility in our common stock price and trading volume; and

(xxxiv)  employee misconduct.

Non-GAAP Financial Measures

Assurant uses the following non-GAAP financial measures to analyze the company’s operating performance. Assurant’s non-GAAP financial measures should not be considered in isolation or as a substitute for GAAP financial measures. 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)   Assurant uses Adjusted EBITDA as an important measure of the company’s operating performance. Assurant defines Adjusted EBITDA as net income from continuing operations, excluding net realized losses (gains) on investments and fair value changes to equity securities, COVID-19 direct and incremental expenses, loss on extinguishment of debt, net income (loss) attributable to non-controlling interests, interest expense, provision (benefit) for income taxes, depreciation expense, amortization of purchased intangible assets, restructuring costs related to strategic exit activities (outside of normal periodic restructuring and cost management activities), as well as other highly variable or unusual items. The company believes this metric provides investors with an important measure of the company’s operating performance because it excludes items that do not represent the ongoing operations of the company, and therefore (i) enhances management’s and investors’ ability to analyze the ongoing operations of its businesses and (ii) facilitates comparisons of its operating performance over multiple periods, including because the amortization expense associated with purchased intangible assets may fluctuate from period to period based on the timing, size, nature and number of acquisitions. Although the company excludes amortization of purchased intangible assets from Adjusted EBITDA, revenue generated from such intangible assets is included within the revenue in determining Adjusted EBITDA.  The comparable GAAP measure is net income from continuing operations. See Note 2 below for a full reconciliation.

(2)   Adjusted EBITDA, Excluding Reportable Catastrophes: Assurant uses Adjusted EBITDA (defined above), excluding reportable catastrophes (which represents individual catastrophic events that generate losses in excess of $5.0 million, pre-tax, net of reinsurance and client profit sharing adjustments and including reinstatement and other premiums), as another important measure of the company’s performance. The company believes this metric provides investors with an important measure of the company’s performance for the reasons noted above, and because it  excludes reportable catastrophes, which can be volatile. The comparable GAAP measure is net income from continuing operations.

(1)     Throughout this press release, additional details about the components of Other adjustments and other key financial metrics are included in the Financial Supplement located on Assurant’s Investor Relations website: https://ir.assurant.com/investor/default.aspx

(3)   Adjusted Earnings per Diluted Share: Assurant uses Adjusted earnings per diluted share as an important measure of the company’s stockholder value. Assurant defines Adjusted earnings per diluted share as net income from continuing operations, excluding net realized gains (losses) on investments, amortization of purchased intangibles, COVID-19 direct and incremental expenses, the CARES Act tax benefit, loss on extinguishment of debt, net income (loss) attributable to non-controlling interests, restructuring costs related to strategic exit activities (outside of normal periodic restructuring and cost management activities), as well as other highly variable or unusual items, plus any dilutive preferred stock dividends, divided by the weighted average diluted shares outstanding. The company believes this metric provides investors with an important measure of stockholder value because it excludes items that do not represent the ongoing operations of the company, and therefore (i) enhances management’s and investors’ ability to analyze the ongoing operations of its businesses and (ii) facilitates comparisons of its operating performance over multiple periods, including because the amortization expense associated with purchased intangible assets may fluctuate from period to period based on the timing, size, nature and number of acquisitions. Although the company excludes amortization of purchased intangible assets from Adjusted earnings, revenue generated from such intangible assets is included within the revenue in determining Adjusted earnings. The comparable GAAP measure is net income from continuing operations per diluted share, defined as net income from continuing operations plus any dilutive preferred stock dividends less net income from non-controlling interests, divided by the weighted average diluted shares outstanding. See Note 4 below for a full reconciliation.

(4)   Adjusted Earnings, Excluding Reportable Catastrophes, per Diluted Share: Assurant uses Adjusted earnings, excluding reportable catastrophes, per diluted share (each as defined above) as another important measure of the company's stockholder value. The company believes this metric provides investors with an important measure of stockholder value for the reasons noted above, and because it excludes reportable catastrophes, which can be volatile. The comparable GAAP measure is net income from continuing operations per diluted share, defined as net income from continuing operations plus any dilutive preferred stock dividends less net income from non-controlling interests, divided by the weighted average diluted shares outstanding.

(1)     Throughout this press release, information on the share counts used in the per share calculations are included in the Financial Supplement located on Assurant’s Investor Relations website https://ir.assurant.com/investor/default.aspx

(5)   The company outlook for Adjusted earnings, excluding reportable catastrophes, per diluted share and Adjusted EBITDA, excluding reportable catastrophes, for Assurant and Global Housing each constitute 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 the GAAP 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 a full-year estimate of interest expense, depreciation expense and amortization of purchased intangible assets, each on a pre-tax basis, which are expected to be approximately $109 million, $85 million and $70 million, respectively. The interest expense estimate assumes no additional debt is incurred or extinguished in the forecast period and excludes after-tax interest expenses included in debt extinguishment and other related costs.

Assurant, Inc.

Consolidated Statement of Operations (unaudited)

Three Months Ended March 31, 2022 and 2021

Assurant, Inc.

Consolidated Condensed Balance Sheets (unaudited)

At March 31, 2022 and December 31, 2021