The operator welcomes participants to Assurant's First Quarter 2024 Conference Call and Webcast, and introduces Sean Moshier, Vice President of Investor Relations. Moshier acknowledges the presence of Keith Demmings, President and CEO, and Keith Meier, CFO. He mentions that the company has released its first quarter 2024 results and provides access to the news release, financial supplement, and slide presentation on their website. Moshier also mentions that some statements made during the call are forward-looking and that the company will refer to non-GAAP financial measures. He then turns the call over to Demmings, who highlights the strong start to 2024 for Assurant, with a 31% growth in adjusted EBITDA and 42% growth in adjusted EPS, both excluding reportable catastrophes.

Assurant's first quarter results were driven by the strength of their Global Housing and Global Lifestyle segments, supported by their unique business model and strong operational performance. The company's market leadership positions and competitive advantages have allowed them to be flexible and agile in serving their clients and consumers. They have also been recognized for their ethical practices and have consistently outperformed the broader P&C market, delivering double-digit earnings growth.

In the first quarter of 2024, Global Lifestyle saw a 4% increase in adjusted EBITDA, with double-digit growth in the Connected Living business. The company has made strategic investments in new partnerships, including with Telstra and Spectrum Mobile. These partnerships have resulted in new offerings, such as protection, upgrades, and trade-ins for Telstra's postpaid subscribers, and anytime upgrades and device protection for Spectrum Mobile customers. Additionally, the company acquired iSmash in the UK to enhance its global capabilities.

The company's recent acquisition has expanded their walk-in repair services and demonstrates their commitment to growing their business globally. While the automotive sector has faced challenges due to inflation, the company has taken steps to address it and expects flat earnings in 2024. However, the global housing sector has performed well, with a 75% increase in earnings in the first quarter. The company's unique business model and strong market positions have contributed to this success, and they have recently onboarded a new client, Bank of America.

The company has been able to achieve rate adequacy quickly through built-in product features and state rate filings in their Lender-Placed business. Their scale and focus on operational efficiencies have also created expense leverage. The lender-placed business provides a countercyclical hedge in case of a housing market downturn. The company's renters and other business is also performing well, with strong growth in their PMC channel. They have leveraged enterprise-wide capabilities to improve customer experience and have a positive outlook for 2024, with expected mid-single-digit growth in Enterprise adjusted EBITDA.

The company is expecting global housing to be the main driver of their enterprise growth. Their full year outlook in Global Lifestyle remains unchanged, with growth in Connected Living offset by investments. They are closely monitoring global economic conditions and expect adjusted EPS to approximate adjusted EBITDA growth. In the first quarter, adjusted EBITDA grew 31% and adjusted EPS increased by 42%. They are committed to driving long-term shareholder value through understanding consumer needs, executing on opportunities, and disciplined capital management. They ended the quarter with strong capital position and returned $77 million to shareholders, including $40 million in share repurchases. Global Lifestyle's adjusted EBITDA grew 4% in the quarter, or 5% on a constant currency basis.

The year-over-year growth of the company was driven by strong performance in Connected Living, particularly in the U.S., but was partially offset by lower results in Global Automotive. The increase in earnings was primarily due to continued momentum in U.S. mobile protection programs and higher investment income. However, there were also investments in new capabilities and client partnerships. In the U.S., there were improvements in loss experience and trade-in results were flat. International results were stable, except for a one-time benefit in Japan. Foreign exchange and higher claims costs impacted the company's adjusted EBITDA growth. Net earned premiums, fees, and other income also saw growth, driven by contributions from new programs.

In the first quarter, Global Automotive saw a 3% growth in net earned premiums and other income, driven by prior period sales of vehicle service contracts. For the full year 2024, the company expects continued growth in Connected Living and flat adjusted EBITDA in Global Auto due to higher investment income offsetting inflation losses. The company is also monitoring foreign exchange impacts and macroeconomic conditions. In Global Housing, adjusted EBITDA increased by 74%, driven by improving non-cat loss ratios and higher average premiums. A portion of the claims improvement was due to a favorable impact from prior period reserve development.

The remainder of the adjusted EBITDA increase was driven by top line growth in homeowners and an increase in in-force policies, lower catastrophe reinsurance costs, and higher investment income. The property management channel also contributed to earnings growth. Expense leverage throughout housing has been a strong differentiator, leading to outperformance. Global Housing's adjusted EBITDA growth is expected to lead overall enterprise growth in 2024, driven by non-cat loss experience, top line momentum, and lower catastrophe reinsurance costs. The lender-placed business will be impacted by client portfolio movements, but policies in force are expected to grow overall. In the second quarter, there was $22 million of prior year reserve development and normalized catastrophe reinsurance costs are expected to be modestly above $50 million.

In the second quarter, non-cat loss experience tends to be high. The 2024 catastrophe reinsurance program has been successfully placed with increased coverage and cost savings. The estimated premiums for the program are $190 million, lower than the previous year. The per event retention has increased to $150 million, providing coverage for a one-in-five-year probable maximum loss. The corporate adjusted EBITDA loss for the first quarter was $30 million, and it is expected to be consistent with 2023 at $110 million. In terms of capital management, $254 million was upstreamed in segment dividends in the first quarter, and for 2024, the businesses are expected to generate significant cash flow with two-thirds of segment adjusted EBITDA being converted to the holding company. These cash flow expectations are subject to various factors such as the macroeconomic environment, business growth, and regulatory requirements.

The company is focused on maintaining balance and flexibility to support new business growth and return capital to shareholders. They expect to repurchase shares in the range of $200 million to $300 million, depending on various factors. They are confident in achieving their 2024 financial objectives and have a strong capital position. The operator then opens the call for questions from analysts. The first question is about the strength of the company's Connected Living segment, which saw 14% EBITDA growth despite stable covered device counts. The company has consistently had double-digit growth in this segment for the past seven years, and domestic Connected Living was up double-digits in the first quarter. The company feels well positioned and saw some softness in the devices covered count.

The majority of the company's US postpaid business is performing well, with stable margins in Japan and some growth in the prepaid side. The company's inflation guard will be updated on July 1 and is expected to see a modest adjustment of around 1%. The non-cat loss experience in housing was good, with a non-cat loss ratio of just under 39%. This was in line with expectations and was helped by normalized severity levels and rate increases. The company also saw leverage in operating expenses due to scale and automation efforts. When combined with cat coverage, the company's expense ratio is in the mid to high-80s.

Keith Demmings and Mark Hughes discuss the progress of Bank of America and Telstra onboarding expenses. Keith Meier explains that the loans are now being tracked and policies should be coming online in the second and third quarter, with full implementation by the end of the third quarter. He also mentions that there will be ongoing investments in long-term growth, with an estimated 2-3% impact on overall growth for the year.

The speaker discusses the deployment of solutions for clients and prospects, as well as the impact of inflation on the Global Auto sector. They mention that the issue is not more pervasive than before and that they are working on rate adjustments to mitigate the effects. They also express optimism about the long-term prospects of the auto business. A question is then asked by Brian Meredith about the severity of the issue and any potential solutions.

The company expects changes in their portfolio due to the addition and removal of clients, but overall policy counts should increase by the end of the year. They also mention stable placement rates and a decrease in device servicing during the first quarter, but overall margins in the trade-in side of the business have been maintained.

The company's margins are stable, and they are making up for any losses with new clients and volume. Promotional activity was light in the quarter, but the company still performed well financially. They are well positioned for any changes in the market, but it is hard to predict. The reinsurance costs decreased due to a simplified program and the per event retention stayed the same. The top end of the program was increased for better protection. Overall, the company is pleased with the outcome of the changes made to the program.

The company has had favorable rates online due to the quality of their book and overall performance in the reinsurance market. They are looking forward to the next quarter and encourage anyone with questions to reach out to the IR team. The teleconference has now ended.

This summary was generated with AI and may contain some inaccuracies.