Assurant, Inc.

Welcome to Assurance 4th Quarter and Full Year 2018 Earnings Conference Call and Webcast. At this time, all participants have been placed in the listen-only mode and the floor will be open for your questions following management's prepared remarks. If you would like to ask a question at that time, please press star 1 on your touchtone phone. If at any point your question has been answered, you may remove yourself from the queue by pressing the pound key. We ask that you please pick up your handset to allow optimal sound quality. Lastly, if you should require operator assistance, please press star zero. It is now my pleasure to turn the floor over to Suzanne Shepard, Senior Vice President of Investor Relations. You may begin.

Thank you, Christina, and good morning, everyone. We look forward to discussing our fourth quarter and full year 2018 results with you today. Joining me for Assurance Conference Call are Alan Kohlberg, our President and Chief Executive Officer, and Richard Jajo, our Chief Financial Officer. Yesterday, after the market closed, we issued a news release announcing our results for the fourth quarter and full year 2018. The release and corresponding financial supplement are available on Assurant.com. We'll start today's call with brief remarks from Alan and Richard before moving into a Q&A session. Some of the statements made today may be forward-looking. Forward-looking statements are subject to risks, uncertainties, and other factors that may cause actual results to differ materially from those contemplated by these statements. Additional information regarding these factors can be found in yesterday's earnings release as well as in our SEC reports. During today's call, we will refer to non-GAAP financial measures, which we believe are important in evaluating the company's performance. For more details on these measures, the most comparable GAAP measures, and a reconciliation of the two, please refer to yesterday's news release and financial supplement available on Assurance.com. I will now turn the call over to Alan.

Thanks, Suzanne, and good morning, everyone. We are pleased with our performance in 2018. We successfully delivered on our financial commitments to shareholders while also investing to ensure a stronger Assurance for the future. For the full year 2018, we grew net operating income excluding reportable catastrophes by 25% at the high end of our outlook for the year. This was driven by a lower effective tax rate, our acquisition of the warranty group, and organic growth in targeted areas. Operating earnings per diluted share excluding catastrophes grew 16% at a lower rate than net operating income given the 10 million share issuance related to our acquisition of the warranty group. We are also pleased by the ongoing cash flow generation of our specialty businesses, which contributes $740 million of dividends to the holding company. As a result, we issued 3 million fewer shares to finance our TWG acquisition and returned $266 million to shareholders through buybacks and common stock dividends. This year through February 8th, we returned another $22 million to shareholders as we continue to view our stock as attractively priced. We also remain confident in the cash flow generation of our businesses. Last November, we increased our common stock dividend by 7%, representing the 15th increase since becoming a public company. More importantly, in 2018, we took steps to sustain outperformance and profitable growth long term. We further strengthened our leading franchises within connected living, global automotive, and multi-family housing. We did this by broadening our distribution, expanding client partnerships, introducing new and differentiated offerings, and acquiring TWG. At the same time, we managed lender place declines and supported policyholders in the aftermath of natural catastrophes. Let me now share some 2018 highlights for each of our operating segments. Global Lifestyles earnings grew by 20% organically as we strengthened our market position with innovative full-surface offerings well beyond insurance. We are pleased with our progress thus far integrating TWG. We've successfully managed the transition of client relationships with minimal disruption. As we complete our integration later this year, we expect to further capitalize on our leading position with our global automotive products and services. In addition, Through year-end 2018, we realized $14 million in after-tax operating synergies. On a run-rate basis, we now have in place more than half of the $60 million pre-tax target expected by the end of 2019. Within Connected Living, we added new partnerships in the fast-growing cable MSO market while also expanding our relationships with leading OEMs and mobile carriers. Most recently, we launched a device protection program with Visible, Verizon's all-digital prepaid mobile carrier. This program provides device protection, including accidental damage, loss and theft, as well as mechanical breakdown following the manufacturer's warranty. It also includes PocketGeek, our self-diagnostic platform to help consumers optimize device performance and safeguard personal information. As of year end, we now protect over 46 million covered devices worldwide, with a growing portion leveraging our premium tech support and self-diagnostic tools. Global Automotive continues to perform well in 2018 with nearly 16% revenue growth, excluding contributions from TWG. Our combined global automotive business benefited from prior year strong sales with third-party administrators, dealer networks, national accounts, as well as leading global OEMs. We now protect 48 million vehicles. In addition, we are working closely with our partners to develop innovative offerings that reflect the evolution of the automotive market. Most recently, this includes launching Pocket Drive by Assurant, a plug-in vehicle device that empowers auto dealers and customers to benefit from vehicle data and mobile connectivity. This technology-based connected car platform will provide consumers with proactive maintenance alerts, diagnostic warnings, roadside assistance, and other features. We believe innovative offerings such as Pocket Drive will further expand our vehicle protection product suite beyond insurance and deliver significant value to our partners and end consumers. 2018 represented another year of elevated catastrophe activity in global housing, with hurricanes in the Mid-Atlantic and Southeast as well as the California wildfires. This resulted in $170 million of net after-tax CAT losses for Assurance. As part of our January placement, we substantially lowered our per event retention from 2018, further reducing our earnings exposure to natural catastrophes. While this will result in higher cost, primarily in lender placed, we believe lowering our cat exposure will help us generate more predictable earnings over time. 2018 net operating income for global housing excluding catastrophes increased 10% year over year. The segment benefited from tax reform and growth in multifamily housing in our portfolio of specialty property offerings. In multifamily housing, we now provide an expanded suite of offerings. This includes a tracking system to ensure continuous renter's protection and an integrated billing platform for property management companies and their renters. We also invested in creating an even more seamless digital experience for our customers, which we believe will enable us to sustain profitable growth in the future. In lender place, we also recently secured another multi-year contract renewal with one of our top five largest clients, helping to solidify our leading position in this business. Moving to global pre-need, with $58 million of non-operating income, the segment continues to be a steady contributor of earnings and cash flow for Assurant. In 2018, we strengthened our client relationships with the multi-year SCI Canada renewal and expanded our distribution with new partnerships. We also added new offerings for the senior lifestyle market, including ancillary products like executor care to assist in the death notification and estate planning process. This should support continued strong returns and cash flow in the future. Throughout 2019 and beyond, we will continue to invest in capabilities and offerings that will better support consumers' connected lifestyles, leveraging our deep expertise within the mobile, auto, and home value chains. And as we do so, we will also look to leverage global talent and scale more effectively to support profitable growth. Our recent success in the Japanese mobile market is a great example of this. We also see additional opportunities to drive even greater efficiency and deliver a superior customer experience as we deploy new technologies such as artificial intelligence across our portfolio. We believe these initiatives, among others, will support continued profitable growth this year. Based on current market conditions, we expect 2019 operating earnings per diluted share, excluding catastrophe losses, to increase 6% to 10% year-over-year, reflecting continued double-digit earnings expansion. This range takes into account incremental reinsurance costs to reduce our CAT exposure, lowering our EPS outlook by two percentage points. The 2019 share count will include the full year impact of the TWG 10 million share issuance, but also assumes that the preferred shares will be dilutive and added to our share count compared to the anti-dilutive approach in 2018. 2019 earnings will reflect full-year contributions from TWG, including an additional $25 million to $30 million of after-tax operating synergies. We also expect modest profitable growth driven in connected living, multifamily housing, and global automotive. This will be partially offset by continued investments in key capabilities to support growth and declines in the legacy credit business within global financial services. Our outlook also includes the impact of approximately $40 million pre-tax of acquisition-related intangible amortization, including TWG. Overall, cash flow generation is expected to remain strong with segment earnings roughly equaling segment dividends. We will update our view of long-term financial metrics and targets at our upcoming March 14th Investor Day. Overall, we are pleased with our performance this year. We remain confident in our ability to continue to expand earnings and cash flow long-term. We believe our attractive business portfolio, combined with a scalable operating structure, will produce more diversified, predictable earnings. This should allow us to continue to invest in our business and return excess capital through buybacks and common stock dividends. I'll now turn the call over to Richard to review our fourth quarter 2018 results and our 2019 outlook in greater detail. Richard? Thank you, Alan, and good morning, everyone.