Assurant, Inc.

are extremely well positioned. The countercyclical nature and strong returns of the business continue to make it a critical part of our portfolio. Together, lifestyle and housing should drive ongoing above market growth and superior cash flow generation with the ability to outperform in any economic cycle and ultimately to create greater shareholder value over time. Our acquisition of Hyla Mobile, a leading provider of smartphone software and trade and upgrade services, will strengthen our market position with increased scale, complimentary client bases, and favorable tailwinds in the global mobile market. We valued Hyla at a multiple of low teens forward EBITDA. The combination of its patented software technology and trading capabilities with assurance end-to-end mobile device lifecycle management expertise will deliver three primary benefits. First, it will enhance the customer experience, making it easier for consumers to get trade-in value for their used mobile devices without an in-person inspection. Second, it will improve program economics and performance for our partners, including higher trade-in attachment rates. And finally, it will further strengthen assurance ability to take advantage of the 5G smartphone upgrade cycle. Tyla also has strong relationships with marquee partners complementary to assurance client base across our critical distribution channels and geographies, including leading US and Japanese mobile carriers, as well as major global OEMs. As we announced, we intend to fund our acquisition through a combination of cash on hand at the holding company and new debt issued prior to closing so that we can continue to optimize our capital structure while maintaining investment grade ratings. To better align resources to the best market opportunities within lifestyle and housing, we've also announced a review of strategic alternatives for a global pre-need, including a potential sale. This decision was not an easy one, given the strength of the business and the considerable value its employees have brought to Assurant. Global pre-need is a strong business with over 2 million policyholders throughout the U.S. and Canada. It has delivered consistent growth while generating robust cash flow and above-market returns. It has nearly $6 billion in investable assets and is relatively low risk compared to other life insurance type products. However, we believe the business has been historically undervalued as part of Assurant. So a transaction should unlock significant value by allowing us to deepen our focus on consumers' connected lifestyle and our differentiated P&C businesses. We expect that any proceeds from a potential transaction will be deployed to fund business growth with excess funds returned to shareholders over time. In the months ahead, we will provide updates on our progress as appropriate. And as always, during this time, we will continue to honor our commitments to clients and policyholders while delivering exceptional service. Now I'll provide a few key highlights from the third quarter that affirm our continued progress within our lifestyle and housing businesses. Within Connected Living, we've grown earnings 22% year-to-date. As we focus on continuing to drive long-term growth, we are moving forward with the build-out of our full-service customer capabilities to deliver superior customer service to our 54 million mobile subscribers. This quarter, we also acquired FIX, providing mobile customers increased choice through a come-to-you repair capability. This acquisition complements last year's purchase of cell phone repair or CPR that delivers the same-day local repair option. Like Hyla, these investments will support the acceleration of our strategy by expanding our capabilities and offerings as we anticipate the ever-evolving needs of connected consumers. We also recently launched Pocket Geek Home, which offers personalized tech support and bundled protection of at-home technology, including laptops, gaming systems, and other electronics from accidental damage and mechanical breakdown. While it is still early, we believe this offering is an important step in the development of future connected lifestyle protection products. In global automotive, we remain focused on opportunities to leverage our leadership position to scale in key global markets. In the UK, we recently launched a new product for electric and hybrid vehicles called EB1. This includes a new partnership with the London Electric Vehicle Company that will cover their iconic London Black Labs and electric van models. This supports the continued growth of our auto business globally while also gaining further insights into the evolving electric vehicle market, and it supports the UK's move toward EV as a standard by 2035. Within Global Financial Services, we are pleased to announce the launch of a new partnership in Canada with the Bank of Montreal, leveraging our omni-channel customer capabilities as we continue to reposition the business for profitable growth long-term. Moving to global housing, we extended our agreement with yet another client in the LenderPlace business. We've now renewed 20 clients, representing more than 85% of our track loans since the beginning of 2019. LenderPlace is a critical part of the mortgage landscape in the U.S. and continues to be an important component of our long-term strategy. In multifamily housing, we grew revenue and policies by 8% and 9%, respectively, year over year. Our Cover360 property management solution continues to gain momentum and drive higher penetration of renter's insurance with our property management company partners. The product, formerly known as Point of Lease, allows the customer to combine their payment of rent and insurance. The solution now includes insurance tracking, verification, and policy placement to eliminate coverage gaps. We're now tracking more than 335,000 rental units, which grew 40% since the second quarter. We also believe that our increased investments around the connected home and connected apartment will drive new opportunities to increase PMC penetration rates. Turning to our key financial metrics, we're pleased with our progress against our 2020 objectives. Through the first nine months, net operating earnings per share, excluding catastrophes, increased 25% year over year to $8.69. Net operating income, excluding catastrophes, was up 21% to $527 million. COVID-19 did not have a material impact on year-to-date results. For the full year, we now expect our operating earnings per share, excluding catastrophes, to grow between 17% to 21% compared to 2019, well ahead of our initial expectations. The revised outlook largely reflects global housing's favorable non-catastrophe loss experience through the first nine months of 2020, as well as continued growth in connected living and our disciplined expense management. Our capital position has remained strong throughout the pandemic. In the quarter, we resumed buybacks and we've now returned over 50% of our $1.35 billion objective from 2019 to the end of September. We expect to return the balance by the end of 2021 as we originally planned, primarily supported by the strong cash flow generated by our lifestyle and housing businesses. All of this is a reflection of the continued dedication of our 14,000 plus employees globally. They continue to do an outstanding job managing through the COVID pandemic while providing exceptional support to our customers, including those impacted by natural disasters this year. I'll now turn the call over to Richard to review third quarter results, recent trends, and our 2020 outlook in more detail. Richard?

Thank you, Alan, and good morning, everyone. I'd like to start by saying that we're really pleased with our third quarter. We reported operating earnings per share, excluding catastrophe losses, of $2.85, up 25% from the prior period. Net operating income for the quarter, also excluding catastrophe losses, was $172 million, an increase of 22% from last year, largely due to more favorable non-CAT loss experience in global housing, continued momentum in global lifestyle, and improved results in global pre-need. Sales trends across the board have been improving from lows recorded in March and April at the height of the pandemic. And we are seeing more normalized levels of COVID-related claims activity in global lifestyle and global housing. Now let's review segment results in greater detail. Starting with global lifestyle. This segment reported earnings of $107 million in the third quarter, up 4% compared to the prior year period. This increase was primarily driven by connected living, where we benefited from new mobile subscribers. Improved profitability within extended service contracts also contributed to growth in the quarter. Within global automotive, results reflected continued pressure from lower investment income and investments to support growth. Declines in global financial services reflected lower card balances and volumes, as well as less favorable loss experience. some of which was attributable to COVID. We also incurred additional expenses to launch new client programs. Looking at total revenue, net earned premiums and fees grew by $56 million, or 3%. The increase was driven primarily by 14% growth in global automotive, including prior period sales of vehicle service contracts. We're continuing to monitor sales trends, which have stabilized but still trail 2019 levels on a year-to-date basis due to impacts from COVID. Global lifestyle revenue growth was partially offset by lower revenue for mobile trading, primarily due to the contract change we disclosed last quarter. This change lowered revenues by $39 million as we changed reporting from a gross sales basis per device to a flat fee per device. As a reminder, this change will remove some of the revenue and expense variability we have historically seen in our financial results and mitigate supply and demand pricing risk. Overall, for the full year 2020, we continue to expect global lifestyle to grow net operating income when compared to full year 2019. Looking ahead, We anticipate an uptick in trading activity in the fourth quarter, which will continue into the beginning of next year. Funds will depend on the following, the timing and availability of devices for new phone introductions, the level of carrier promotions, and the growth from new business. Looking ahead to 2021, we expect earnings expansion within livestock and moderate from strong 2020 levels, which benefited from three items. First, $16 million of one time benefits year to date. Second, lower claims during the first few months of the COVID pandemic. And finally, lower expenditures on categories such as travel, giving the uncertainty around the pandemic. We also expect ongoing headwinds from low interest rates on investment income. Moving now to global housing, net operating income for the third quarter totaled $13 million, compared to $42 million in the third quarter of 2019. The decrease was primarily due to $51 million of higher reportable catastrophes. As we preannounced, we incurred a total of $87 million of after-tax CAT losses related to several hurricanes and wildfires in the U.S. Nearly half of the losses in the quarter were from Hurricane Laura, with the remainder primarily related to Hurricane Sally and Isaias, as well as wildfires in California and Oregon. Excluding catastrophe losses, earnings increased $23 million year-over-year, or 30% to $100 million. Approximately two-thirds of the increase was due to favorable non-CAT loss experience across specialty products and lender place. This included $8 million of favorable experience that we don't expect going forward, including reserve releases related to runoff businesses. Improvements in underwriting and product changes also led to more favorable experience. We also benefited from continued growth in multifamily housing from affinity partners. Within LenderPlace, the results also reflected higher premium rates. Growth was partially offset by the reduction in policies enforced, driven by declining REO volumes from the current foreclosure moratoriums and the previously disclosed financially insolvent client. Looking at placement rates, we recorded a two basis point sequential increase in the quarter to 1.58%. This was attributable to a shift in business mix. It's not an indication of a broader macro housing shift. Turning to global housing revenues, net earned premiums and fees decreased 4%. Similar to last quarter, this was driven mainly by three items, the exit of small commercial, the insolvent lender-placed client, and lower REO volumes. This decrease was partially offset by growth in both our multifamily housing and specialty property businesses. Multifamily housing revenues increased, driven mainly by growth from our affinity partners. For the full year, we expect global housing's net operating income, excluding CAATs, to increase year over year, driven by favorable non-CAAT loss experience, as well as improved results in each line of business. Looking ahead, We expect to see more normalized non-CAT loss experience, lower REO volumes due to foreclosure moratoriums that have now been extended through the remainder of 2020, and lower investment income due to lower yields. Specifically, in the fourth quarter, we also expect Hurricane Delta to be a reportable event, likely in the range of $12 to $20 million pre-tax, subject to further claims analysis. And while still too early in the claims process to speculate, Hurricane Zeta will likely be a reportable event as well. We will provide an update prior to fourth quarter earnings if necessary. Now let's move to global premium. Overall, the business continues to perform well. The segment reported net operating income of $13 million, an increase of $6 million year over year. The absence of a negative one-time accounting adjustment in the third quarter of last year was offset by lower investment income this quarter. While market mortality trends have fluctuated during the pandemic, the impact on mortality on earnings continued to be immaterial in the quarter. Revenue for pre-need was up slightly, primarily due to continued growth in sales of our final need products. And we are pleased to see a rebound in face sales since the second quarter, reflecting the reopening of funeral homes. Overall, for global pre-need, we expect 2020 earnings will approximate 2019 reported results. Moving to corporate, the net operating loss was $23 million, compared to $21 million in the third quarter of 2019. This was primarily due to lower investment income. For the full year, we expect 2020 corporate net operating loss to approximate $90 million, mainly as the result of lower investment income and investments for growth. Turning to holding company liquidity, we ended September with $460 million, or $235 million above our current minimum target level. In the third quarter, dividends from our operating segments totaled $245 million. In addition to our quarterly corporate and interest expenses, we also had outflows from three items. First, we bought back $70 million of stock after resuming share purchases in the quarter. Second, we paid $42 million in common and preferred stock dividends. And finally, we had approximately $10 million of net cash outflows related to the acquisitions of Allegra and Fixed and the sale of our CLO platform. In the fourth quarter through October 30th, we repurchased an additional 330,000 shares for $41 million. Regarding the new debt issuance to support the financing of HILA, we continue to target an overall debt-to-capital ratio of less than 30% and expect to remain within that target while also maintaining investment-grade ratings. For global pre-need, we reported a $136 million goodwill impairment charge. This was related to the decision to explore strategic alternatives for the segment, combined with the impact of the low interest rate environment. This is a non-cash charge and runs through net income. Moving forward, for the year overall, we still expect dividends to approximate segment earnings subject to the growth of the businesses, rating agency and regulatory capital requirements, and the performance of the investment portfolio. In summary, we've delivered solid results and maintained a strong financial position throughout the pandemic. As we approach year end, we remain focused on meeting our 2020 financial objectives and on building a stronger assurance for the future. And with that, operator, please open the call for questions.

The floor is now open for questions. At this time, if you have a question or comment, press star 1 on your touchtone phone. If at any point your question is answered, you may remove yourself from the queue by pressing the pound key. Again, we do ask that while you pose your questions, that you pick up your handset to provide sound quality. Thank you. Our first question is coming from the line of Mark from . Mark, your line is open.