Assurant, Inc.

Welcome to Assurance fourth quarter and full year 2022 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 again pressing star 1. 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 Shepherd, Senior Vice President of Investor Relations and Sustainability. You may begin.

Thank you, operator. Good morning, everyone. We look forward to discussing our fourth quarter and full year 2022 results with you today. Joining me for assurance conference call are Keith Demings, 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 2022. The release and corresponding financial supplement are available on Assurant.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 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 and financial supplement, 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. Effective January 1st, 2023, we realigned the composition of our segments to better manage our risk and fee-based capital-like businesses. Global housing is now comprised of two primary lines of business, homeowners and renters and others. Certain product lines, including our lease and finance business previously reported in housing, have been moved to global lifestyle to better align with our go-to-market strategy. While this change has no impact on our consolidated results, it will modestly impact earnings trends within the segment. Our 2023 outlook is based on this realigned view. Please refer to the financial supplement for a reconciliation of certainty data for these changes. I will now turn the call over to Keith.

Thanks, Suzanne, and good morning, everyone. Reflecting on my first year as CEO, I couldn't be prouder of the extraordinary dedication and commitment demonstrated by our employees in delivering for our clients and customers around the world. During the year, we made progress in executing our vision to be the leading global business services provider supporting the advancement of the connected world. We continue to grow and strengthen our partnerships with key clients and deliver new innovative solutions, all while navigating more volatile market conditions. Our portfolio of lifestyle and housing businesses prove resilient, but not immune to macroeconomic headwinds. In 2022, we grew adjusted earnings per share by 11% and delivered over $1.1 billion of adjusted EBITDA, both excluding reportable catastrophes. Adjusting for $27 million of unfavorable foreign exchange, adjusted EBITDA growth was 3%, and 2022 represented our sixth consecutive year of profitable growth. This is a reflection of our compelling strategy and resilient culture. We've held true to our company's purpose of helping people thrive with a steadfast commitment to being a socially responsible company for all of our stakeholders. I'm proud that we've been recognized as a great place to work in 13 countries and most recently in the US for the second consecutive year. Our focus remains on engaging and developing our diverse talent pool through enhanced leadership and skills development programs. We also continue to reduce our environmental impact as a core pillar of our ESG strategy. Building on our progress to date we announced in December our goal to reduce greenhouse gas emissions by 40% by 2030. This target aligns with the Paris Agreement and ensures we drive meaningful reductions. We've also taken a number of actions within our businesses to strengthen assurance for the future. In global housing, we initiated a business transformation, including exiting certain non-core businesses such as our sharing economy as well as international CAD-exposed business where we did not see a path to leadership positions. More broadly across Assurant, we realigned our organizational structure, as Suzanne referenced, to drive more focus and better deploy talent. We also took decisive action by accelerating several expense initiatives to realize additional efficiencies and position us for continued long-term growth. As we announced in December, we expect to realize $55 million of annualized gross savings by the end of 2024, through the simplification of our organizational structure and our real estate consolidation program, given our increasingly hybrid workforce. These actions will help mitigate the impact of higher labor costs and headwinds from the macroeconomic environment, as well as fund additional investments, including increased automation. In addition to ensuring a more streamlined organizational and cost structure, we've gained momentum throughout the year in both global lifestyle and global housing, renewing and winning new clients in each of our major lines of business. In global lifestyle, adjusted EBITDA increased 7% in 2022, with growth from both connected living and global automotive. On a constant currency basis, adjusted EBITDA expanded by 11%, aligned with our original expectations for the year. In connected living, we grew adjusted EBITDA by 15% on a constant currency basis, driven by mobile protection program growth in North America. Our ability to continuously innovate our products and services has supported a stronger and more differentiated customer experience, resulting in increased net promoter scores. In addition to key partner renewals, including T-Mobile and Xfinity, we secured new business opportunities and new client partnerships, continuing to diversify our broad client base. In our mobile protection business, we now protect nearly 62 million global devices, driven by the 25 new protection programs we've added since 2015. We serviced over 28 million devices in 2022 mainly from our mobile trade-in business as we add scale and further demonstrate our position as a market leader with this important value-added service to our clients. We added several new trade-in clients and now have over 40 trade-in programs globally. We continue to invest in talent and strengthen supply chain operations to maintain our competitive advantage. In global automotive, we grew global protected autos in 2022 by 2% to 54.1 million vehicles, helping to generate adjusted EBITDA growth of 5%. Recently, we expanded and enhanced our EV1 protection offering in the US, and coverage is now available for battery electric vehicles and plug-in hybrid electric vehicles, including comprehensive battery coverage. In our newly combined leased and financed business, We partnered with CNH Industrial in the US and Canada to provide service contracts and physical damage insurance. CNH is the third largest agriculture and construction equipment company in the world. This partnership was made possible by the talent and expertise of our teams, including through the acquisition of EPG. In global housing, we took swift action to mitigate the impact of high inflation within our lender place business. We began to see improved performance as we exited the year, reflecting the rate increases implemented over the course of the year. We expect higher rates to roll through our book into 2023 and beyond while we manage ongoing elevated claims costs. In 2022, we renewed eight lender-placed clients, including several of our most significant partnerships with multi-year agreements. These renewals represent 36% of our over 31 million loans tracked. In multifamily housing, we now have over 2.6 million renters policies. While we've seen slower growth from our affinity partnerships, our volume with property management companies continues to expand as we signed several new partnerships, including two top PMCs with over 100,000 combined units. We also successfully completed multi-year renewals with six key client relationships. As we continue to convert clients to our Cover360 platform, we expect to see ongoing policy growth in that channel. Throughout the year, we maintained a strong balance sheet as we navigated increased macroeconomic uncertainty. Our businesses contributed a total of $550 million in dividends to the holding company, or roughly 52% of segment earnings, including catastrophe losses. Together with the remaining net proceeds from the global pre-need sale, we returned a total of $718 million in share repurchases and common stock dividends. Looking ahead, we believe we have a compelling vision and strategy that will drive outperformance in shareholder value long term. As a business services leader, we will continue to pursue profitable growth in more fee-based, capital-light businesses which continue to account for the majority of our earnings. In addition, we'll continue to optimize results and cash flow generation in our risk-based business. In 2023, we believe we can drive continued profitable growth, though at a more modest pace, given strong 22 results in lifestyle and our near-term view of the broader economy. Specifically, we expect adjusted EBITDA, excluding CATS, to increase low single digits, with results improving as the year progresses, reflecting trends in the business and the broader market, as well as the restructuring actions taken in 2022. Earnings growth is expected to be driven by improved performance in global housing, as well as more modest growth in global lifestyle. Adjusted earnings per share growth is expected to trail adjusted EBITDA growth, primarily reflecting a higher annual depreciation expense related to several strategic technology investments critical to executing our strategy, a higher consolidated effective tax rate compared to a favorable 2022, and timing of capital deployment. We've had a long-standing track record of strong cash flow generation and disciplined capital deployment, and we continue to believe that a balanced capital deployment strategy drives long-term value. Our capital management priorities for this year will be focused on supporting the organic growth of our business and maintaining our investment grade ratings. We expect share repurchases will remain a core component of our capital deployment strategy, given the attractiveness of our stock. But in light of the continued uncertain macro environment, we believe it is prudent to preserve flexibility over the near term. Therefore, based on current market conditions and expected business performance, We anticipate that any share repurchases would occur in the second half of the year and could be below 2022 underlying buyback activity. As the broader environment begins to stabilize and visibility improves, we will reevaluate levels and timing of capital deployment as part of our overall capital deployment strategy. Our M&A strategy will continue to focus on compelling deals and global lifestyle. However, the hurdle rate for M&A will be high, given the attractiveness of our stock. As we enter 2023, we remain well positioned for long-term growth through our differentiated lifestyle and housing portfolio. We are focused on creating new sources of growth, scaling new client wins, and deepening current client relationships to continually drive added value for our key clients and customers. I'll now turn the call over to Richard to review the fourth quarter results and our 2023 outlook in greater detail.