ASSURANT, INC. (AIZ)·Q1 2025 Earnings Summary

Executive Summary

• Q1 2025 delivered resilient top-line growth ($3.074B, up ~6.7% YoY) and strong underlying profitability ex-catastrophes, but GAAP results were depressed by California wildfire losses; Adjusted EBITDA ex-cat rose 14% YoY to $439.2M and Adjusted EPS ex-cat rose 16% YoY to $5.79 .
• Versus Wall Street: Adjusted EPS beat consensus (Actual $3.39 vs $2.78 est), revenue was slightly above ($3,074M vs $3,065M est), while EBITDA came in below SPGI’s EBITDA consensus (Actual $267.2M vs $303.7M est); the company’s Adjusted EBITDA was $282.2M in Q1, reflecting different definitions. Significant beat on EPS, mixed on EBITDA, slight revenue beat * *.
• Housing outlook raised: management now expects Global Housing Adjusted EBITDA ex-cat to increase in FY25 (previously guided to a modest decrease), while enterprise Adjusted EBITDA ex-cat and Adjusted EPS ex-cat remain “modest growth” for FY25; depreciation outlook reduced to ~$160M (from ~$165M) .
• Housing fundamentals are strong (lender-placed policies +70k, combined ratio 90% despite elevated cats) and Auto loss trends improved; reinsurance program finalized with $160M per-event retention and ~$1.8B of coverage, setting expected full-year cat load at $300M (incl. Q1 wildfires) and $175M ex-wildfires .
• Capital returns continue: Q1 buybacks of $62M and dividends of $41M; liquidity at $501M. CFO expects balanced buybacks across 2025, with a range of $200–$300M subject to M&A/market conditions .

What Went Well and What Went Wrong

• What Went Well

  • Strong core earnings ex-catastrophes: Adjusted EBITDA ex-cat rose 14% YoY to $439.2M and Adjusted EPS ex-cat rose 16% YoY to $5.79; Lifestyle ex-cat was essentially flat while Housing ex-cat jumped 31% YoY .
  • Housing momentum: +70,000 lender-placed policies, 17% top-line growth within homeowners, and a 90% combined ratio despite elevated cats; management targets mid-80s combined ratio for full-year including expected cats .
  • Strategic execution and tech investments: management emphasized automation, robotics, and AI at device care centers to deepen key mobile client relationships; new partnerships (e.g., Total Wireless by Verizon) and product launches (Vehicle Care Technology Plus) reinforce Lifestyle positioning .

• What Went Wrong

  • Catastrophe impact: Reportable catastrophes surged to $157.0M (vs $13.0M in Q1’24), ~ $125M attributable to California wildfires; GAAP Net Income fell 38% YoY to $146.6M and GAAP EPS fell to $2.83 .
  • Connected Living softness and FX: Lifestyle Adjusted EBITDA decreased 5% YoY (or 2% in constant currency), with lower mobile results and ~$6M unfavorable FX; trade-in activity was muted in Q1 per management .
  • EBITDA miss vs consensus: SPGI’s EBITDA actual registered at $267.2M versus $303.7M estimate; differences in “EBITDA” vs company “Adjusted EBITDA” definitions contributed to optics; company Adjusted EBITDA was $282.2M *.

Financial Results

Note: Asterisk denotes values retrieved from S&P Global.

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “We continued to demonstrate momentum, delivering 14% growth in adjusted EBITDA and 16% growth in adjusted earnings per share, both excluding reportable catastrophes.”
• “Our approach continues to generate momentum and through key investments in leading-edge technology, including automation, robotics and AI at our device care centers.”
• “Driven by 17% top line growth within homeowners… addition of 70,000 lender-placed policies… Even with elevated cats… combined ratio of 90%.”
• “We increased coverage at more attractive terms… per event retention level… now $160 million… Our main U.S. program provides nearly $1.8 billion in loss coverage… expected annual catastrophe load now $175 million excluding the California wildfires… including the wildfire impacts… $300 million.”
• “Holding company liquidity… over $500 million at quarter end… buybacks will remain more balanced… expected range for 2025… between $200 million to $300 million.”

Q&A Highlights

• Tariffs impact: Management incorporated tariffs into FY25 outlook and expects manageable effects; Housing mitigated via quarterly inflation-guard rate adjustments; Auto exposure reduced by risk-sharing contracts (only mid-to-high teens of claims potentially affected), with continued rate/program actions .
• Lifestyle cadence/investments: $3M incremental investments in Q1 for new partnerships; 2025 investment level likely similar to 2024 client-launch spend ($15M), with expected one-year payback trajectories .
• Auto improvement: Two consecutive quarters of increased Auto EBITDA and improved VSC loss experience; GAAP experience has leveled off, supporting growth outlook for FY25 .
• Housing expense ratio: Higher reinsurance (+$11M; ~110 bps) and cat-related claims processing lifted expense ratio to 39.1%, but underlying normalized expenses are comparable YoY .
• Trade-in dynamics: Consumers are keeping devices longer; promotions drive trade-in cycles; Q1 was muted but competitive environment may re-accelerate demand later this year .

Estimates Context

• Note: SPGI’s “Primary EPS” aligned with the company’s Adjusted EPS disclosure in Q1 (3.39). SPGI “EBITDA” is not identical to the company’s “Adjusted EBITDA” (company reported $282.2M). Values retrieved from S&P Global.

Forward estimates snapshot (as reference):

• Q3 2025 Primary EPS est 4.28 vs actual 5.73; Revenue est $3,153.8M vs actual $3,231.5M; EBITDA est $400.4M vs actual $422.7M [GetEstimates]*.
• Q4 2025 Primary EPS est 5.24; Revenue est $3,277.0M; EBITDA est $429.6M [GetEstimates]*.
  Note: Values retrieved from S&P Global.

Key Takeaways for Investors

• Housing is the near-term earnings engine: lender-placed policy growth, favorable non-cat frequency, and raised FY25 Housing ex-cat outlook suggest continued strength, even after Q1 wildfire losses .
• Catastrophe program and load are well telegraphed: retention $160M, coverage ~$1.8B, and expected cat load parameters ($175M ex-wildfires; $300M incl Q1 wildfire) de-risk FY25 profile compared to peers .
• Lifestyle execution continues with strategic wins and innovation: Verizon Total Wireless program and Vehicle Care Technology Plus broaden offerings and cross-sell potential; automation/AI investments aim to expand margins over time .
• EPS resilience ex-cat remains a core narrative: strong ex-cat growth and modest-growth FY25 guidance for enterprise Adjusted EBITDA/EPS underpin medium-term cash generation and buyback capacity ($200–$300M expected) .
• Watch FX, tariffs, and trade-in cadence: management expects FX and incremental investments to mute Lifestyle growth by a few points; tariff scenarios modeled, with mitigants in Housing and Auto; trade-in could re-accelerate with AI-enabled devices later in 2025 .
• Capital returns sustained: $103M returned in Q1; liquidity $501M; dividend at $0.80 per share maintained, supporting total shareholder yield .
• Near-term trading implications: positive bias on Housing-driven earnings quality and raised segment outlook; mixed on EBITDA headline vs SPGI definition; catalysts include further lender-placed wins, tariff clarity, and mobile upgrade cycle acceleration tied to AI adoption .

Additional Relevant Press Releases (Q1 2025)

• Quarterly dividend: Board declared $0.80 per common share (paid Mar 31, 2025) .
• AM Best upgrade (Mexico subsidiary): VSSM FSR to A (Excellent) and ICR to “a” (Excellent), reflecting very strong balance sheet and parental support .
• Consumer device trends: Assurant’s industry report indicates AI-enabled devices may be accelerating upgrades and shortening trade-in ages in late 2024/early 2025 .
• Product launch: Assurant Vehicle Care Technology Plus combines high-tech vehicle component coverage with smartphone repair benefits, expanding Automotive value proposition .

Why Results Moved

• The California wildfires were the primary driver of YoY decline in GAAP results despite strong ex-cat performance; estimated wildfire impact was ~$125M within reportable catastrophes .
• Housing benefited from top-line growth (policies in-force, higher average premiums in lender-placed) and favorable non-cat frequency; prior-year reserve development was favorable ($26.4M) .
• Lifestyle saw improved Auto loss experience but lower mobile results and FX headwinds; incremental investments in new programs (e.g., Verizon Total Wireless) weighed on reported EBITDA but are intended to pay back within one year .

Note: All document-sourced figures include citations in brackets; asterisk denotes values retrieved from S&P Global.