Q4 2024 Summary
Published Feb 12, 2025, 4:20 PM UTC- Policies in force (PIF) in the lender-placed homeowners business increased by 16% year-over-year, driven by client growth, the hardening insurance market in California, and similar dynamics across the rest of the country. This strong growth trend continued in the fourth quarter and is expected to contribute momentum into 2025.
- Global Auto losses have stabilized, with losses from the third quarter to the fourth quarter being flat to slightly better. The company expects growth in auto as they progress through 2025, with most of the new business written in 2025 being off of most risks, contributing to long-term stability.
- Securing major mobile clients in the Connected Living segment, including the renewal of top clients, positions the company for continued top-line growth in Global Lifestyle in 2025. The addition of Chase as a client in the fourth quarter will drive financial services growth throughout the year. The company expects consistent growth to continue moving forward.
- Elevated losses in the Global Auto segment's Guaranteed Asset Protection (GAP) and vehicle service contract products may continue to impact earnings, despite recent actions to stabilize performance.
- Catastrophe losses from the California wildfires are expected to approach or slightly exceed $150 million, increasing the catastrophe load in 2025 and potentially affecting profitability in the Global Housing segment. This may also lead to higher reinsurance costs, impacting margins.
- Growth in lender-placed policies within the Housing segment may slow down, as management expects continued growth but "probably not at the same level" as before, potentially reducing the segment's growth momentum.
| Metric | YoY Change | Reason |
|---|---|---|
Total Revenue | +4.6% (from $2,967.7M in Q3 2024 to $3,104.8M in Q4 2024) | The revenue increase is largely driven by organic growth in key segments, with strong contributions from the Global Lifestyle division—especially Connected Living ($1,295.6M) and Global Automotive ($1,050.9M)—building on the previous quarter’s momentum. |
Net Income | +50% (rising from $133.8M in Q3 2024 to $201.3M in Q4 2024) | A 50% surge in net income reflects improved operational performance and profitability, possibly recovering from prior period challenges such as catastrophe-related losses; enhanced efficiency in segments and reduced restructuring costs further contributed to the rebound. |
Basic EPS | +51% (climbing from $2.57 in Q3 2024 to $3.89 in Q4 2024) | The marked improvement in EPS mirrors the net income increase and is further boosted by share repurchases that reduced the weighted average share count from 53.5M to 52.2M, amplifying per-share gains despite underlying operational headwinds noted in previous quarters. |
Cash Flow Dynamics | Non-cash adjustments of $848M and a dramatic working capital swing of –$1,967.5M | The substantial non-cash adjustments combined with a pronounced working capital swing indicate aggressive liquidity management and changes in the operating cycle, reflecting strategic initiatives like share repurchases and dividend distributions; this contrasts with more stable cash flow dynamics observed in earlier periods. |
Intangible Assets | Increased from $545.9M in Q3 2024 to $10,000.8M in Q4 2024 | The extraordinary jump in intangible assets is primarily due to a significant revaluation or acquisition impact, which contrasts with the routine amortization of purchased intangibles seen in the previous period; this suggests a transformative asset addition or accounting reassessment that substantially altered the balance sheet. |
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
Adjusted EBITDA Growth | FY 2025 | low double digits | high single-digit | lowered |
Adjusted EPS Growth | FY 2025 | mid- to high teens | high single-digit | lowered |
Global Lifestyle Adjusted EBITDA | FY 2025 | grow modestly | growth expected, driven by higher contributions from Connected Living and Global Automotive; partially offset by unfavorable FX and new partnership investments | no change |
Global Housing Adjusted EBITDA | FY 2025 | strong growth | on an underlying basis, strong growth is expected | no change |
Combined Ratio for Global Housing | FY 2025 | no prior guidance | mid-80s, including approximately 10 points of catastrophe losses (around $150 million) | no prior guidance |
Reinsurance Costs | FY 2025 | no prior guidance | expected to increase slightly due to higher volumes with pricing anticipated to remain favorable | no prior guidance |
Foreign Exchange and Investments Impact | FY 2025 | no prior guidance | foreign exchange and incremental investments are expected to mute growth by a few percentage points | no prior guidance |
| Metric | Period | Guidance | Actual | Performance |
|---|---|---|---|---|
Share Repurchases | FY 2024 | $300 million | $665.2 million (46.1+ 41.6+ 121.5+ 456) | Beat |
| Topic | Previous Mentions | Current Period | Trend |
|---|---|---|---|
Global Auto | Faced persistent inflation-driven losses across vehicle service contracts and GAP throughout Q1–Q3 2024, with rate changes and program adjustments gradually stabilizing earnings and improving sentiment | Stabilized in the second half of 2024, with executives expressing optimism for earnings and growth in 2025, citing successful rate actions and moderating inflation | Sentiment improving |
Lender-placed homeowners | Showcased strong PIF growth each quarter, driven by challenges in the traditional homeowners market, though executives noted potential growth moderation and ongoing reinsurance considerations across Q1–Q3 2024 | Experienced 16% year-over-year PIF growth in 2024, with continued optimism but expectations that high levels of growth may moderate in 2025 | Sustained growth, some caution |
Connected Living | Demonstrated progress with major carrier renewals, new partnerships (e.g., Spectrum, Telstra), and investment in automation and client launches during Q1–Q3 2024; investments slightly dampened near-term EBITDA | Completed renewals with three of the top five U.S. mobile carriers and launched a strategic offering with T-Mobile, investing $25 million in new capabilities expected to drive future returns | Strong momentum, positive outlook |
California wildfires | Not specifically referenced by name in Q1–Q3 2024, though Assurant discussed active storm seasons and general catastrophe risk | Expected to approach or exceed the $150 million per-event retention, potentially affecting Q1 2025 results and reinsurance costs, with further updates planned | Newly addressed area with high-cost potential |
New major client partnerships | Expanded relationships with Chase, Bank of America, and Telstra in Q1–Q3 2024, powering growth across Global Housing and Connected Living | Renewed large U.S. mobile clients and launched new products (e.g., T-Mobile’s Protection 360 Home Tech), underscoring continued expansion heading into 2025 | Continued expansion fueling future growth |
Renters | Referenced through Q2 2024 with strong performance in the property management channel; absent in Q3 and Q4 2024 discussions | No mention in Q4 2024 documents | Overshadowed by other segments |
Ongoing inflationary pressures | Persistent vehicle parts and repair cost inflation noted in Q1 2024; some moderation shown in Q2; beginning to stabilize in Q3 as rate actions take effect | Still elevated but addressed via established processes and rate reviews, with executives expressing confidence in continued mitigation | Continuing but gradually easing |
Share repurchases | Expected $200–$300 million in Q1, near high end in Q2, and at $300 million total by Q3 2024; supported by a strong capital position | Returned over $450 million to shareholders in 2024, including $300 million of repurchases, and announced an 11% dividend increase, reflecting strong capital returns | Increased returns, robust capital management |
Promotion-driven subscriber growth | Carriers were not focused on device promotions in Q1 2024; reduced promotional activity in Q2; some trade-in offset in Q3 | No mention in Q4 2024 [no specific references] | Absent this period |
Potential large future impact | Prior quarters highlighted weather-related events, auto profitability recovery measures, and new client expansions as significant drivers of future performance | California wildfires near reinsurance retention, auto profitability poised for further recovery, and continued client expansions (e.g., T-Mobile, large banks) expected to shape 2025 results | Watchful on catastrophe costs; positive auto & client |
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Investment Spend and Payback Period
Q: Are the new programs generating $25 million EBITDA in 2025 to offset 2024's $25 million investment?
A: Yes, the new programs are generating $25 million in positive EBITDA in 2025, fully offsetting the $25 million drag in 2024. -
Global Lifestyle Top-line Growth Outlook
Q: How should we think about top-line growth in Lifestyle for 2025?
A: We expect continued top-line growth in Lifestyle, driven by securing mobile clients in Connected Living and the addition of Chase in Q4, which will drive financial services growth throughout the year. The growth momentum from prior years is expected to continue. -
Combined Ratio Outlook in Housing Segment
Q: Does increased scale and strong underwriting change your outlook for the combined ratio in Housing?
A: Despite the California fires estimated at slightly over $150 million in losses, we expect to maintain a mid-80s combined ratio for 2025, delivering over 20% ROEs in the housing business. We feel good about the momentum and will monitor rates as we go forward. -
Reinsurance Renewal Costs and Rates
Q: How should we think about reinsurance renewal costs and getting additional rate approvals in impacted areas?
A: Reinsurance costs for 2024 were about $186 million, including a $15 million benefit. We expect to maintain a consistent program with probable maximum loss, with pricing likely favorable. We have a strong track record of obtaining appropriate rates through state-level filings and expect this to continue. -
Foreign Exchange Headwind and Investment Impact in 2025
Q: What is the specific Forex headwind for 2025, and how do investments affect growth?
A: We anticipate a Forex headwind of a couple of points and investments causing a 1-2% headwind. In 2024, we had $25 million incremental investments; in 2025, we expect a similar or slightly lower level, leading to a 1-2% headwind in Lifestyle overall. -
Elevated Losses in GAP Book and Outlook
Q: Are you still seeing elevated losses in the GAP book in Global Auto?
A: Losses in the GAP book have stabilized from Q3 to Q4, flat to slightly better. We feel good about 2025 and expect growth in auto. Most of the business written in 2025 will be off risks we write, improving stability. -
Prior Year Development Impact and Future Expectations
Q: Was the prior year development in Q4 similar to earlier in the year?
A: Yes, prior year development was influenced by the inflationary environment and lower than expected claim frequencies. We believe we are appropriately reserved and in a good position for the future. Housing business showed a 28% growth rate for the full year, even after adjusting for prior year development. -
Impact of Tariffs and FX on Input Costs
Q: How do tariffs impact input costs in Lifestyle, and what about FX in 2025?
A: We haven't included tariffs in our guidance due to uncertainty but have considered FX and interest rates in our 2025 view. Tariffs may affect consumer demand and input costs. We have measures like automatic inflation guard in housing and strong processes in auto to manage rising costs. -
Management's Strategy to Enhance Company Appreciation
Q: What actions are planned to better convey the company's strengths?
A: We aim to highlight the fundamental strength of our housing business, which has a 10-year combined ratio of 89%, outperforming the industry. Our integrated services complement core insurance products, creating value that's unique and hard to replicate. We will continue telling this story to investors. -
Placement Rate in Housing and Insurer Exits from California
Q: Are insurers fleeing California after fires, impacting placement rates?
A: A moratorium in California is preventing insurers from exiting immediately after the wildfires, tempering any short-term impact. We don't expect significant insurer exits from the state in the near term. -
Additional Investment Spend and Plans for 2025
Q: What are the new investment programs in 2025, and how do they relate to last year's?
A: The 2025 investments are entirely new, involving marquee brands you'll recognize. We have a strong pipeline and will be transparent about these investments and their benefits as we progress through the year.