Assurant, Inc. (AIZ) Q3 2025 Earnings Call Transcript

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Overview

The earnings call highlighted strong financial performance with 15% YoY EBITDA growth and stabilized losses. The strategic partnerships and new program initiatives suggest future growth, while increased buyback guidance indicates strong capital deployment. The Q&A session showed management's confidence in countercyclical business benefits and new opportunities. Despite some uncertainties about future programs, the overall sentiment is positive, with expectations of continued growth and strategic investments.

Key Financial Performance

Adjusted EBITDA growth 13% year-to-date, excluding reportable catastrophes. This growth is attributed to strong performance in both Global Housing and Global Lifestyle segments.

Adjusted EPS growth 15% year-to-date, excluding reportable catastrophes. The increase is driven by strong business performance and operational excellence.

Global Lifestyle Adjusted EBITDA Increased 12% in the third quarter compared to last year, driven by double-digit earnings growth across Connected Living and Global Automotive.

Connected Living Earnings Increased 11% in the third quarter, supported by strength within Financial Services, a new card benefits program, and subscriber growth in mobile with 2.1 million net additions year-over-year.

Global Automotive Adjusted EBITDA Increased 15% in the third quarter, including a net non-run rate benefit of approximately $6 million. When normalized, adjusted EBITDA was up 6%, driven by improved loss experience and prior rate increases.

Global Housing Adjusted EBITDA $256 million in the third quarter, including $3 million of reportable catastrophes. Excluding catastrophes, adjusted EBITDA increased 13%, benefiting from favorable non-catastrophe loss experience and top-line growth in lender-placed policies.

Net Earned Premiums, Fees, and Other Income for Global Lifestyle Grew 7%, primarily driven by Connected Living growth from mobile programs and a new program in financial services, as well as contributions from Global Automotive.

Liquidity Position $613 million at the end of the quarter, providing flexibility for investments, shareholder returns, and future growth.

Shareholder Returns $122 million returned in the third quarter, including $81 million in share repurchases and $41 million in dividends.

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Operating Highlights

Connected Living: Announced two new opportunities: 1) Expanded repair and logistics capabilities through a multiyear agreement with a large U.S. mobile carrier, including a state-of-the-art logistics facility for device returns and refurbishment. 2) Partnership with Best Buy to provide administration and underwriting for Geek Squad protection customers, offering AI-enabled virtual agents, live chat, and repair services.

Global Automotive: Expanded partnership with Holman Automotive, supporting 30 new dealership locations with finance and insurance products. Focused on optimizing performance through product design, claims cost management, and client partnerships.

Global Housing: Continued property management company (PMC) expansion within renters, including a multiyear renewal with the largest PMC in the U.S. and two new PMC partnerships. Sustained double-digit premium growth and increased penetration rates for renters policies.

Operational Excellence: Leveraged advanced automation, AI, and robotics in logistics and device care centers to improve efficiency and customer outcomes. Focused on disciplined expense management to support growth.

Strategic Investments: Invested in launching high-impact programs and clients, including $15 million in strategic investments for 2025. Planning new product offerings for early 2026 to enter adjacent sectors and drive organic growth.

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Risk or Challenges

Market Conditions: Unfavorable foreign exchange rates are expected to partially offset earnings expansion within Global Lifestyle, indicating exposure to currency fluctuations.

Strategic Investments: Approximately $15 million of strategic investments in 2025 are tied to launching high-impact programs and clients, which could strain short-term financials.

Corporate Segment Loss: The 2025 full-year loss in the Corporate segment is expected to increase by $5 million due to organic investments in a new adjacent program, reflecting potential cost overruns.

Inflationary Pressures: Ongoing inflationary pressures in the Global Automotive sector could impact claims costs and profitability despite prior rate increases and process enhancements.

Supply Chain and Operational Risks: The success of new programs, such as the mobile repair and logistics facility, depends on seamless integration of operational technology and supply chain management, posing execution risks.

Regulatory and Compliance Risks: The company operates in highly regulated industries, and any changes in regulations or compliance requirements could adversely impact operations.

Economic Uncertainties: Economic uncertainties could affect consumer spending and demand for products and services, particularly in sectors like Global Automotive and Connected Living.

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Guidance & Outlook

2025 Adjusted EPS Growth: Expected to grow in low double digits, reflecting strong business performance.

2025 Adjusted EBITDA Growth: Projected to approach 10%, excluding catastrophes, driven by strong performance in Global Housing and Global Lifestyle.

Global Lifestyle Growth: Earnings expansion expected in both Connected Living and Global Automotive segments, despite investments in new partnerships and unfavorable foreign exchange impacts.

Global Housing Growth: Strong growth anticipated, led by lender-placed business with increased policies in force and disciplined expense management.

Strategic Investments for 2025: Approximately $15 million allocated for launching high-impact programs and clients.

Capital Return to Shareholders: Expected to reach $300 million in 2025 through share repurchases, at the top end of the anticipated range.

2026 and Beyond Growth Opportunities: Plans to launch new products and services in early 2026, targeting adjacent sectors and leveraging innovation in AI, robotics, and personalized solutions.

Connected Living Expansion: New multiyear agreement with a large U.S. mobile carrier and partnership with Best Buy to enhance service offerings and expand market presence.

Global Automotive Momentum: Renewed partnerships with international OEMs and U.S. dealership groups, including expanded collaboration with Holman Automotive.

Renters Market Expansion: Sustained double-digit premium growth and new partnerships in the property management company channel, supported by technology-enabled services.

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Shareholder Return Plan

Dividends Paid in Q3 2025: $41 million

Total Dividends Paid Year-to-Date: $234 million (including share repurchases)

Share Repurchases in Q3 2025: $81 million

Total Share Repurchases Year-to-Date: $234 million (including dividends)

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Key Q&A

Q:You referred to a pipeline in Homeowners or Renters and said you had a strong pipeline. Could you expand on that?

A:Keith Demmings explained that there has been significant momentum in housing, with strong fundamental performance and investments in technology and operational capabilities. He highlighted their market-leading lender-placed solution and consistent PMC growth in Renters over the last three years, which is expected to continue.

Q:In Global Auto, the loss performance was better year-over-year but stable sequentially. Is it sustainable or likely to hold steady going forward?

A:Keith Meier stated that they are pleased with the quarter's performance, with EBITDA growing 15% year-over-year. Loss performance has stabilized due to rate actions and product changes, and GAAP side loss exposures continue to diminish as expected. Overall, the business has stabilized well this year.

Q:In Homeowners, if the housing market starts to soften, does that have implications for your top-line prospects?

A:Keith Demmings acknowledged the dynamics at play, noting that they have benefited from the challenging voluntary market and policy growth. He mentioned that the business is countercyclical, so a downturn in the economy could lead to an uptick in placement rates. They will monitor how these factors interact.

Q:Can you provide details on the impact of the reverse logistics and Geek Squad deals in Connected Living?

A:Keith Demmings described the reverse logistics deal as strategic, with contributions expected in 2026 and positive EBITDA impact next year. Similarly, the Best Buy opportunity will contribute in 2026, with investments tapering off and aiding future EBITDA.

Q:Given the increase in buyback guidance, how are you thinking about capital deployment next year?

A:Keith Meier highlighted their strong capital position with $613 million in Holdco liquidity. They aim for a balanced approach, including organic investments, M&A opportunities, and share buybacks. They will provide more guidance on buybacks next year. Keith Demmings added that they expect growth across all businesses and will discuss 2026 expectations in February.

Q:On the 2 Renters PMC deals, can you dimension the opportunity relative to this year's growth?

A:Keith Demmings emphasized consistent performance in Renters, with 13 consecutive quarters of double-digit growth. They renewed their largest PMC client to a multiyear agreement and added additional PMCs, fueling continued momentum.

Q:In Housing, with a 60%+ market share in lender-placed, how much more share can you realistically grow?

A:Keith Demmings stated that they are focused on having the best solution and capabilities, targeting big client opportunities. They have not set a specific growth target but aim to acquire clients continuously.

Q:What are the notable drivers supporting housing results recently, and how do you rank their contributions?

A:Keith Demmings identified policy growth (up 8% year-over-year) as the biggest driver, supported by a hard voluntary market. AIVs have been favorable but not dramatically changed. Keith Meier added that placement rates and new client opportunities also contribute to growth.

Q:What is Assurant's role and opportunity in the iPhone upgrade cycle?

A:Keith Meier noted a robust cycle, with protection programs providing stability as customers roll over their programs to new phones. Keith Demmings added that their clients gained 81% of postpaid net adds, benefiting from elevated switching and strong demand for new devices.

Q:Are there any major investment projects planned for next year?

A:Keith Demmings mentioned a new program in an adjacent business launching early next year, creating a long-term growth vector. Keith Meier noted that they have already started investing in this initiative, raising corporate loss guidance by $5 million this year.

Q:In Global Housing, is there a material difference in the loss ratio between lender-placed and voluntary policies?

A:Keith Meier explained that premium rates differ, with lender-placed policies including tracking expenses versus commissions in voluntary policies. The mix of business and expense efficiencies have made their product more competitive, contributing to improved placement rates.

Q:What is the magnitude of the premium differential between lender-placed and voluntary policies?

A:Keith Meier stated that lender-placed rates vary by state but have become more competitive due to expense efficiencies. Their expense ratio has improved from the mid-40s to the high-30s, helping placement rates as the voluntary market raises rates.

Q:What is the new program you plan to discuss in February?

A:Keith Demmings revealed it is a new line of business driven by their Chief Innovation Officer, aiming to create a long-term growth pathway. More details will be shared in February.

Q:Would you prefer reducing retention for larger events or reducing cost on the reinsurance program?

A:Keith Meier stated their focus is on reducing volatility. They are in a good position for next year, with no reinsurance tower impacts this year and low cat activity. Their renewal in April will provide more clarity.

Q:Review of Unclear Management Responses

A:Management avoided providing specific details on the new program launching in an adjacent business, stating only that it will create a long-term growth vector and more information will be shared in February.

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Earnings Word Cloud

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AIZ Transcript

Assurant, Inc. (AIZ) Q3 2025 Earnings Call Transcript

Positive11-5

Assurant, Inc. (AIZ) Q2 2025 Earnings Call Transcript

Positive8-6

The earnings call reveals strong financial performance, with significant growth in EBITDA across segments and new business wins. The Q&A highlights management's confidence in long-term growth, operational efficiencies, and minimal tariff impact. Although some concerns were not fully addressed, the overall sentiment is positive, driven by record high revenue in mobile subscribers and strategic expansion in various segments.

Assurant, Inc. (AIZ) Q3 2024 Earnings Call Transcript

Unknown11-6

The earnings call presents a mixed outlook. Financial performance shows strong growth in Global Housing and Connected Living, but challenges like unfavorable foreign exchange, catastrophe losses, and regulatory issues persist. The Q&A highlights management's optimism about future growth, particularly in Connected Living, but lacks clarity on investment impacts. Positive factors include a robust share repurchase plan and strong adjusted EPS growth. However, ongoing losses and regulatory challenges in Global Housing, along with GAAP losses in Auto, create uncertainty. Given these mixed signals, the stock price is likely to remain neutral in the short term.

Assurant, Inc. (AIZ) Q2 2024 Earnings Call Transcript

Positive8-7

The earnings call summary highlights strong financial performance, particularly in adjusted EPS and Global Housing. Despite challenges in Global Automotive, management expects improvement. The Q&A section indicates optimism about future growth and partnerships, particularly with Chase, and addresses inflation impacts. Shareholder returns through repurchases are positive. While some management responses were vague, the overall sentiment is positive, with strong financials and optimistic guidance. The absence of market cap data suggests a moderate reaction, leading to a positive prediction.

AIZ Slides

Assurant Q1 2025 slides reveal double-digit earnings growth, reaffirms 2025 outlook

2025-05-06

AIZ Report

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