Assurant, Inc.

Welcome to Assurance fourth quarter and full year 2021 conference call and webcast. At this time, all participants have been placed in a 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 star 1 again. We ask that you please pick up your handset to allow optimal sound quality. Lastly, if you should require assistance, please press star zero. It is now my pleasure to turn the floor over to Suzanne Shepherd, Senior Vice President of Investor Relations and Sustainability. You may begin your conference.

Thank you, Operator, and good morning, everyone. We look forward to discussing our fourth quarter and full year 2021 results with you today. Joining me for Assurance conference call are Keith Denning, 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 2021. The release and corresponding financial supplement are available on Assurance.com. We'll start today's call with remarks from Keith and Richard before moving into a Q&A session. Some of the statements made today are forward-looking. Forward-looking statements are based upon our historical performance and current expectations and 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 report. 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. I will now turn the call over to Keith.

Thank you, Suzanne, and good morning, everyone. As I begin my tenure as CEO, I'm extremely proud of the opportunity to lead our nearly 16,000 employees across the world as we support consumers' ever-connected lifestyles. As I reflect on assurance transformation over the past several years, not only have we evolved our business model, but also significantly expanded the breadth of our offerings and our customer base. Today, Assurant represents a cohesive group of higher growth, service-oriented businesses serving more than 300 million consumers globally. Collectively, our connected consumer and specialty P&C businesses have generated and are expected to drive continued profitable growth and strong returns. As we position Assurant for 2022 and beyond, we see compelling opportunities to sustain growth, particularly with the convergence of the connected consumer in the global markets and geographies in which we operate. Continued success will require us to deliver on our vision for the future, to empower leading brands to connect, protect, and support their customers' connected lifestyles. Ongoing investments in our people and capabilities will enable us to meet our customers how, where, and when they want to be met, Differentiating our offerings through a superior customer experience. Continuously adapting to the changing needs of the connected consumer will be critical to achieving our long-term growth. To continue to capture new opportunities, I believe success will require more than ever our focus on five priorities. First, attracting, retaining, and developing the best talent to unlock future potential. Second, delivering a superior digital-first customer experience. Third, deepening our strong partnerships with major clients and prospects worldwide while also developing offerings and capabilities that continue to differentiate Assurant. Fourth, accelerating the pace of innovation and prioritizing the necessary investments across our operations and technology. And finally, continuing to further embed and support sustainability and inclusivity for the benefit of all stakeholders and the communities in which we operate. And already this year, we've made progress in our continued objective to build a more sustainable Assurant. I'm proud of our recognition by CDP on our environmental impact and commitment and our continued inclusion in the corporate equality and Bloomberg gender equality indices. I want to take a moment to highlight our lifestyle and housing businesses and how we successfully executed our strategy throughout 2021. Within Connected Living, our mobile device lifecycle management solution has enhanced our ability to introduce value-added services and capabilities to monthly device protection plans and trade-in and upgrade programs. This has helped expand our market share and further differentiate our offerings. We now cover almost 63 million mobile devices, a figure that's doubled since 2015 and increased 18% in 2021 alone. At year end, we launched a partnership with Deutsche Telekom in Germany to provide an innovative mobile phone device protection program and trade-in program. Assurant has already been recognized by Deutsche Telekom for our commitment to sustainability with a hashtag green magenta label highlighting how our products and services make a positive climate contribution and reflect a responsible use of resources. This is another example of further integrating ESG into Assurance business operations and offerings worldwide to drive more value for our partners and for our consumers. Throughout the year, critical investments continue to drive growth and differentiate the customer experience. Our trade-in and upgrade business, now inclusive of Hyla Mobile, drove exceptional performance, processing over 25 million devices supported by the rollout of 5G, as well as our repair, asset disposition, and technology capabilities. We recently expanded our longstanding partnership with Telefonica to provide a comprehensive device trade-in program across several key countries in Europe and Latin America, where Telefonica is a market leader. The program will enable Telefonica to access our leading trade-in technology. We also continue to integrate mobile service delivery options into our offerings through CPR's local same-day capability and the come-to-you repair capability through our acquisition of Fixed. Demonstrating our commitment to improving the customer experience, CPR by Assurant ranked first in the 2022 Entrepreneurial Franchise 500 for Electronics Repair. This is a testament to the success of our CPR franchisees and our commitment to provide customers with exceptional experiences, services, and support. And we successfully executed on the major rollout of the in-store repair capability to nearly 500 T-Mobile store locations nationwide, showcasing our ability to adapt to rapidly changing consumer preferences. Over a period of five months, we recruited, trained, and deployed nearly 2,000 technicians to deliver a seamless experience to T-Mobile customers in-store, while also converting approximately 10 million Sprint subscribers to Assurant. The in-store repair rollout will continue in 2022 as we further enhance the overall experience for T-Mobile customers. Turning to our global automotive business, where we also have a strong track record of growth and innovation, we've continued to capture market share and see significant opportunities ahead. In 2021, we grew global protected vehicles by 10% to nearly $54 million and increased net operating income by 21%. The auto business is critical to the long-term success of Assurant, and we should continue to benefit in the future from increased scale through our alignment with industry leaders and our ability to support customers through digital channels. Turning to renters, the business grew policies and revenue by 7% in 2021, a testament to strong affinity and property management company channel relationships. We also secured multi-year renewals with two top 10 property management companies. Technology and innovation are critical components to our success in this business, and we'll continue to invest in our technology over the next several years to further enhance the customer experience for our 2.6 million policyholders. Investments in 2021 included the continued rollout of Cover360, launching new customer-facing sales portals, and expanding self-service capabilities that leverage machine learning to enable automation of claim payments. Ultimately, our investments should increase policy attachment rates, which have not yet hit mature levels throughout the industry. Additionally, in our attractive P&C offerings, including lender-placed insurance, we have maintained our market-leading position with large U.S. servicers and banks, tracking over 30 million loans. Last year alone, we renewed 10 clients and partnered with two new clients. As we look to 2022, we'll continue investments in operations such as our customer-centric single-source processing platform, differentiating our tracking capabilities and improving efficiency. Overall, I'm pleased that our businesses have delivered on our commitments for 2021 as we delivered value for our clients and customers. We also further demonstrated the resiliency of our unique business model as we navigated the pandemic and managed inflationary pressures. Excluding reportable catastrophes, we generated 14% earnings per share growth on the high end of our expectations. Net operating income, also excluding CATs, grew by 11% to $672 million, making 2021 our fifth consecutive year of profitable growth. our balance sheet remained strong. Combined, our businesses contributed a total of $729 million in dividends to the holding company, representing approximately 100% of segment earnings. This allowed us to return a total of $1 billion in share repurchases and common stock dividends, and complete our three-year $1.35 billion capital return objective. In addition, we completed 60% of the $900 million we committed to return through share repurchases as part of the sale of our pre-need business. We anticipate returning the remainder by the end of the second quarter. Next, I'd like to review some initial thoughts for 2022. As we look ahead to sharing our long-term vision, strategy, and financial objectives at Investor Day in March, we can make an even more compelling case for the future. Given our ongoing shift to more service-oriented fee-based businesses, we believe adjusted EBITDA, rather than net operating income, is a better representation of how to evaluate our operating performance for the enterprise and segments. In 2021, adjusted EBITDA, excluding CATs, increased 9% to $1.1 billion, driven by strong results in global lifestyle, particularly in global automotive and connected living, as well as a lower corporate loss. In 2022, we expect growth in adjusted EBITDA ex-cats of 8% to 10%, a reflection of the strength of our business portfolio. Within global lifestyle, we expect adjusted EBITDA to increase by low double digits, but likely not exceed the 12% growth we had in 2021. Segment growth will be driven by connected living, particularly mobile, even as we make strategic investments to support new business, including continued investments in our in-store mobile repair capabilities. Within global housing, adjusted EBITDA, excluding CATS, is expected to grow mid to high single digits, driven primarily by lender placed from higher average insured values, operating efficiencies, and improved results in specialty offerings. Our corporate segment is expected to generate a loss of approximately $105 million of adjusted EBITDA, which is in line with our historical levels. Cash flow generation is also expected to remain strong and is a core component of Assurance financial profile, allowing us to continue to invest in and transform this company. As we look at our capital management priorities going forward, we'll continue to be strong stewards of capital. Our goal is to continue to maximize long-term value creation through disciplined capital deployment, while also maintaining our investment grade and financial strength ratings. Given the attractive business opportunities we see ahead, we expect a more balanced capital deployment mix, targeting compelling investments to drive long-term growth, whether organic or through M&A, as well as ongoing return of capital to shareholders. We believe this combination will enable us to sustain above market profitable growth and generate significant value for our shareholders. We recognize that for periods of time this may result in higher than average levels of holding company liquidity to ensure we have the flexibility to make investments that generate compelling returns while also returning capital mainly through buybacks given the attractiveness of our stock. Lastly, I wanted to acknowledge and thank all who have supported my transition to CEO over the last several quarters. Your feedback and ongoing dialogue has been incredibly valuable as we collectively look to build upon the success of Assurant for the future. And I want to thank our employees around the world for their extraordinary efforts in 2021, a year in which they again outperformed despite the challenges of the pandemic. I will turn the call over to Richard to review the fourth quarter results and our 22 outlook, and business trends.