Charlie Lederer

Charles Lederer asked about the acceleration in Connected Living's written premium growth (48% from 21% last quarter and 9% the quarter before) in the context of the Lifestyle segment's mid- to high-single-digit EBITDA growth guidance. He inquired if slower earn-in, lower margin business, or underlying investments were offsetting the premium growth. He also asked about the outlook for prior-year reserve development (PYD) in housing, reserve confidence, and the continued hardening of the traditional home insurance market, including any signs of abatement or geographic concentration.

Answer

CEO Keith Demmings expressed satisfaction with the 2026 lifestyle growth, expecting contributions from both Connected Living and Global Automotive, driven by 2 million subscriber increases year-over-year. CFO Keith Meier clarified that multi-year contracts in the extended warranty business and a Q4 book acquisition would earn through over several years, supporting future growth. Regarding PYD, CFO Keith Meier affirmed confidence in the housing reserve position. CEO Keith Demmings highlighted consistent favorable development in 2024 and 2025, with underlying housing growth (loan/policy growth, AIV increases, neutral rate environment, low-to-mid 80s combined ratios) continuing strongly. For the hardening home insurance market, CFO Keith Meier noted growth in California and the Midwest, partially offset by flat to slightly down trends in Florida, resulting in an overall positive mix.

Charles Lederer at BMO returned to ask for more detail on the growth in the Midwest housing market, specifically whether it was primarily driven by hard market dynamics or new partnerships. He also inquired about the potential for upside to the 2026 share repurchase guidance, given the high level of excess liquidity ($887 million) held at year-end.

Answer

CFO Keith Meier attributed Midwest housing growth to a combination of hard market dynamics and the mix of Assurant's portfolios. Regarding share repurchases, he acknowledged the strong capital position and increased 2026 guidance ($250 million-$350 million), noting the 10% dividend increase. He emphasized that while returning capital is important, the primary focus is on organic growth investments (like home warranty and AI) and M&A to accelerate strategy, positioning Assurant to take advantage of opportunities.

Charlie Lederer inquired about the expected impact and trajectory of new Connected Living partnerships (reverse logistics, Best Buy Geek Squad), future investment spend, and the implications of the increased buyback guide for 2026 capital deployment.

Answer

Keith Demmings, President and CEO, stated that both new Connected Living partnerships would contribute positively to EBITDA in 2026, with investments tapering off. Keith Meier, CFO, emphasized Assurant's strong capital position and balanced approach to capital allocation, including organic investments, M&A, buybacks, and dividends, promising more 2026 guidance in February. Demmings also noted consistent double-digit growth in renters, fueled by renewed and new PMC partnerships.

Charlie Lederer asked for quantification and trajectory of new Connected Living partnerships (reverse logistics, Best Buy Geek Squad), the expected investment spend for next year, and the outlook for capital deployment in 2026 given the increased buyback guide.

Answer

CEO Keith Demmings stated that both new Connected Living partnerships would begin contributing positively to EBITDA in 2026, with current year investments tapering off. CFO Keith Meyer emphasized Assurant's strong capital position and balanced approach to capital allocation, including organic investments, M&A, buybacks, and dividends, with more detailed 2026 guidance to follow in February. Demmings also mentioned expectations for continued growth across all three businesses and a higher corporate loss in 2026 due to a new program.

Charlie Lederer asked for more detail on the incremental opportunities identified with the upsizing of the Accelerating Aon United (AAU) savings and NFP integration, including the pacing of these savings and their contribution to the 50 basis points margin expansion laid out for 2026. He also asked for clarification on the moving pieces of the $4.3 billion free cash flow guide for 2026, considering adjusted earnings growth, upside costs, and the tax payment from the NFP Wealth sale.

Answer

CEO Greg Case explained that the upsizing of AAU savings is driven by proven progress and the application of Aon Business Services (ABS) into the middle market, specifically NFP, leveraging Aon's integrated AI-embedded ABS platform. CFO Edmund Reese confirmed the AAU program will be completed in 2026, with total savings increasing from $350 million to $450 million, detailing progress in application reduction, cloud migration, and Global Capability Centers. He noted that the NFP team recognized the opportunity to standardize operations and integrate technology platforms into ABS, accelerating this integration into 2026 to drive revenue growth and synergies, contributing to margin expansion. Regarding free cash flow, Edmund Reese clarified that the $4.3 billion guide is prior to the tax impact from NFP Wealth and is driven by consistent operating cash flows and continued working capital improvements, mirroring Aon's historical double-digit free cash flow growth, supported by the completion of the AAU program and the wind-down of original NFP integration costs.

Charlie Lederer asked for clarification on the incremental opportunities identified with the upsizing of AAU savings, particularly with NFP integration, including the pacing and contribution to the 50 basis points of margin expansion for the year, and sought details on the moving pieces behind the $4.3 billion free cash flow guide for 2026.

Answer

President and CEO Greg Case explained the AAU program's success, driven by ABS and AI, is now being applied to the middle market through NFP integration. CFO Edmund Reese confirmed the AAU program completion in 2026, with savings increasing from $350 million to $450 million, and highlighted the acceleration of NFP integration into ABS for standardized operations and technology. For free cash flow, Edmund Reese attributed the $4.3 billion guide to operating cash flows, working capital improvements, and the wind-down of integration costs, offset by NFP Wealth tax impact, maintaining confidence in double-digit growth.

Charlie Lederer asked for a geographical breakdown of the improving product environment, the commercial/personal mix in TWFG's M&A pipeline, and the outlook for contingent financing.

Answer

Gordy Bunch, CEO, Chairman, and Director, TWFG, noted that the market softening, which began in Q2 2025, is widespread with reduced rates and increased capacity, except for California. Cat-exposed hurricane geographies are relatively soft. He stated that M&A focuses on cultural fit, portfolio quality, and accretion rather than a specific commercial/personal mix, with recent acquisitions being majority commercial and the future pipeline being mixed. He expressed high confidence in achieving full-year contingent income projections.