Q3 2024 Summary
Published Feb 7, 2025, 7:58 PM UTC- Assurant (AIZ) is experiencing strong growth in their Global Housing business, with placement rates up 6 basis points sequentially and 18 basis points year-over-year, driven by onboarding a major new client and growth within existing clients, benefiting from homeowners finding it more challenging to secure traditional voluntary coverage .
- AIZ is leveraging successful strategies from their Global Housing segment to improve profitability in their Global Auto business, having implemented 16 rate changes and redesigned products to be more effective for consumers, expected to create longer-term tailwinds for profitability .
- AIZ is experiencing steady growth in their mobile device protection business, driven by new products with major cable partners generating significant momentum, and expansion in the Asia Pacific region, contributing to substantial subscriber growth .
- Challenges in the Global Auto business could impact profitability. The company acknowledges that elevated losses in the Auto segment require longer-term efforts to return to profitability, unlike the Housing segment which has annual policies. This suggests that the Global Auto business may continue to face profitability pressures in the near term.
- Exposure to catastrophe losses in the Global Housing segment. Despite not having touched the reinsurance tower, the company admits that 2024 has been an active season with multiple catastrophes, which could potentially impact future reinsurance costs and pricing. Stability in pricing heading into 2025 may not fully offset the risks of increased catastrophe events.
- Ongoing investment spending may pressure margins. The company has invested $21 million year-to-date in Connected Living, with plans for additional new investments next year. While these investments are aimed at growth, they represent continued expenses that may affect short-term profitability.
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
Adjusted EBITDA Growth | FY 2024 | High single digits, excluding catastrophes | Low double digits, excluding catastrophes | raised |
Adjusted EPS | FY 2024 | Increase in the low double digits | Mid- to high teens, excluding catastrophes | raised |
Global Lifestyle | FY 2024 | Modest growth | Expected to grow modestly | no change |
Global Housing | FY 2024 | Anticipated to lead enterprise growth | Expected to show strong growth | no change |
Share Repurchases | FY 2024 | High end of $200–$300M range | $300M | raised |
Corporate Adjusted EBITDA Loss | FY 2024 | no prior guidance | Approximately $115M | no prior guidance |
Hurricane Milton Impact | FY 2024 | no prior guidance | $75M–$110M | no prior guidance |
| Topic | Previous Mentions | Current Period | Trend |
|---|---|---|---|
Global Auto | Persistent inflation and higher losses in ancillary products were highlighted; multiple rate increases implemented across Q2 and Q1 2024 , with inflation and rate actions also prominent in Q4 2023. | Faced elevated claims with some moderation in inflation impacts, and rate actions expected to drive improvement in 2025. | Continued focus on profitability; sentiment has improved as inflation moderates and rate increases earn through. |
Rate Increases | Repeated emphasis on rate actions (14-16 changes total) in prior quarters to address inflation; ongoing since Q4 2023. | Implemented 16 rate changes for clients, expected to benefit 2025 as claims inflation stabilizes. | Recurring topic, sentiment remains positive as these actions appear to be improving margins over time. |
GAP Exposure | Noted in Q2 2024 as a smaller business with elevated claims but faster recovery than vehicle service contracts ; not mentioned in Q1 or Q4 2023. | Elevated losses were noted but seen as short-term, with risk participation reduced from 40% in 2022 to 12% in 2024. | Mention remains consistent in Q2 and Q3 2024; focus on risk reduction and shorter-term impact. |
Connected Living | Consistent growth each quarter; new client launches (e.g., Telstra, Spectrum) were key drivers, with flat to modest trade-in volumes occasionally. | Year-to-date EBITDA up 3% (5% constant currency) with investments in innovation, new partnerships, and 2+ million new subscribers. | Ongoing positive sentiment; continues to be a major growth driver with steady investments. |
Device Coverage and Trade-In Volumes | Was impacted by lower promotions in earlier quarters, offset by new programs; generally stable coverage count. | Trade-in was muted in Q3 but expected to pick up with new device launches; device coverage grew by 2 million+. | Consistent theme; sentiment is cautiously optimistic about future trade-in cycles. |
Global Housing and Lender-Placed Insurance | Strong performance in prior quarters (up to 45-75% yoy growth excluding cats), with reinsurance and higher placement rates repeatedly mentioned. | 20%+ EBITDA growth excluding catastrophes, driven by policy growth and better expense ratios; lender-placed benefited from hard voluntary market. | Sentiment remains strong, viewed as a core growth segment with tailwinds from hardening markets. |
Renters Business | Growth was flat to modest previously, though PMC channel consistently saw higher growth. | Continued strong results and double-digit gross written premium growth in the PMC channel. | Supporting consistent growth; positive sentiment around technology-enabled expansion. |
Investment Income and Interest Rates | Previously discussed portfolio yield and solid new money rates, with slight increases in prior quarters. | Mentioned only as higher investment income offsetting auto losses. No deeper details. | Less emphasis this quarter; still a minor offset to claims pressures. |
Inflationary Pressures | A persistent concern in prior quarters, especially in auto; actions (rate increases, better claims processes) were taken. | Moderation seen in auto claims, still elevated but trending positively. | Sentiment improving as inflation stabilizes; remains a focus area. |
Catastrophe Risk (Hurricanes) | Previously highlighted robust reinsurance and some storm impact (Hurricane Beryl, etc.). | 35,000 claims processed, strong reinsurance program in place, stable rates expected for 2025. | Consistent emphasis on strong reinsurance; risk management approach remains steady. |
Prior Year Reserve Development | Fluctuations in prior quarters, often net favorable (e.g., $22M, $17M, $54M). | $30 million favorable year-over-year, driven by reserve reductions. | Continues to enhance results when favorable; no major sentiment shift. |
Capital Management and Share Repurchases | Generally robust dividend flows and share repurchase activity in earlier quarters (target $200-$300M). | Ended Q3 with $636M liquidity, returned $138M in Q3, targeting $300M for 2024. | Consistent capital return strategy, confidence in liquidity position. |
New Partnerships and Client Onboarding | Prior quarters saw Spectrum, Telstra, Bank of America deals, plus expansions in mobile. | Launched Chase Card Services program, plus renewed major mobile clients; additional deals expected in 2025. | Key driver of growth, with continued momentum in multiple segments. |
Asia Pacific Expansion (Japan) | Japan was previously mentioned, including a favorable onetime benefit and stable device count. | No specific mention of Japan this quarter, but APAC growth in device protection noted. | Mentions decreased; no direct Japan updates, focus shifted to broader APAC. |
Profitability Outlook | Previously raised full-year views and saw strong segment performance in Global Housing, with balanced outlook in Lifestyle/Auto. | Expects low double-digit EBITDA and mid- to high-teens EPS growth (excluding catastrophes); confident in model. | Positive trajectory remains; stable sentiment on long-term margin expansion. |
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Global Lifestyle 2025 Outlook
Q: What can we expect for Global Lifestyle in 2025?
A: Management expects accelerated growth in Global Lifestyle in 2025, particularly in Connected Living, as the 2024 investments will transition to generating revenue and EBITDA from new client launches and efficiencies. The auto segment is also anticipated to grow, benefiting from higher earnings from rate increases and stabilizing inflation levels. There will be some additional incremental investments in 2025 for new client programs, with details to come in February. ( ) -
Auto Profitability Improvement
Q: Will auto profitability improve with rate increases?
A: Management anticipates that auto profitability will improve as the 16 total rate changes they've implemented start earning through over the next few years, providing a tailwind. They have worked with clients to redesign products, and the pressure on auto is declining, expecting improvements as they move forward. ( ) -
Connected Living Investments
Q: How will investment spend in Connected Living change?
A: The $21 million investment spend in Connected Living in 2024 is sunsetting, with those investments resulting in new client launches generating revenue and EBITDA in 2025. Management expects additional investments in 2025 for new programs, viewing this as a positive sign of strong commercial momentum. ( ) -
Global Housing Catastrophe Losses
Q: How will catastrophe losses affect 2025 pricing?
A: Despite an active season, management hasn't touched their reinsurance tower and feels good about their program. They expect favorable reinsurance costs heading into 2025 and anticipate pricing to remain relatively stable, with no big shift in premiums. ( ) -
GAAP Losses in Auto
Q: When will GAAP losses in auto run through?
A: The impact from GAAP losses is shorter term, with claims heavier in the first 24 months. Management has reduced risk participation from 40% in 2022 to 12% in 2024. They expect auto to improve in 2025, with pressure declining. ( ) -
Device Count Growth
Q: Will device count growth continue with new Asia clients?
A: The growth in device count is a natural evolution, with continued steady growth domestically and in Asia Pacific. The monetization opportunity is aligned with their standard model, and management is pleased with material year-over-year subscriber growth. ( , ) -
Trade-in Volumes and Q4 Guidance
Q: Is Q4 guidance unusually strong due to trade-in volumes?
A: Management expects trade-in volumes to pick up in Q4 with more promotional activity following the launch of the iPhone 16. The Q4 guidance reflects seasonal improvements, new client revenue, and loss improvements, which are part of normal seasonality rather than unusually strong. ( ) -
Voluntary Business Placement Rates
Q: How are voluntary business placement rates trending?
A: Placement rates are up 6 basis points sequentially and 18 basis points year-over-year, driven by growth in the underlying business and additional policies as homeowners face challenges finding coverage in a hard market. ( ) -
Cross-Selling Opportunities
Q: Are there cross-selling opportunities between businesses?
A: Management sees opportunities to leverage relationships across wide distribution channels and is well-positioned to capitalize on clients looking to reinvent services. They consider it a positive opportunity to expand relationships, as evidenced by partnerships like Chase. ( )