Assurant, Inc.

Welcome to Assurance Second Quarter 2024 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 prepared remarks. If you would like to ask a question at that time, please press star 9 to raise your hand and star 6 to unmute. We ask that you please pick up your handset to allow optimal sound quality. It is now my pleasure to turn the floor over to Sean Mosier, Vice President of Investor Relations. You may begin.

Thank you, Operator, and good morning, everyone. We look forward to discussing our second quarter 2024 results with you today. Joining me for Assurance Conference Call are Keith Demings, our President and Chief Executive Officer, and Keith Meyer, our Chief Financial Officer. Yesterday, after the market closed, we issued a news release announcing our results for the second quarter 2024. The release and corresponding financial supplement are available on Assurance.com. Also on our website is a slide presentation for our webcast participants. 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 those statements. Additional information regarding these factors can be found in the earnings release, presentation, and financial supplement on our website 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 the news release and supporting materials. We'll start today's call with remarks before moving into Q&A. I will now turn the call over to Keith Demings.

Keith Demings Thanks, Sean. And good morning, everyone. Our strong first half 2024 results demonstrate continued outperformance from global housing and underlying momentum in connected living, positioning us to increase our full year 2024 growth expectations for Assurant overall. Excluding reportable catastrophes, adjusted EBITDA increased 20% year-to-date, and adjusted EPS grew 29%. These results reflect the power of our combined housing and lifestyle business model. Starting with our first half business highlights. In global lifestyle, first half 2024 adjusted EBITDA was $397 million, consistent with the first half of 2023. Our year-to-date performance has been driven by continued growth and momentum within our connected living business, particularly in the U.S., In connected living, adjusted EBITDA increased 6% or 8% on a constant currency basis. As we've previously discussed, 2024 includes incremental spending related to the implementation of new partnerships and programs that we expect will support long-term growth for Assurant. Excluding first half investments of approximately $13 million, Year-to-date growth for connected living was 14% on a constant currency basis. One example of our innovative new offerings included the rollout of two programs with Spectrum Mobile, Anytime Upgrade and the Repair and Replace Plan. Additionally, we onboarded the pre- and post-paid device protection subscribers of Telstra, our new partner in Australia. Combined, these new programs added 1.6 million mobile subscribers, driving strong sequential growth. This year, we've also completed long-term contract extensions with all of our major US mobile device protection clients, including T-Mobile and two US cable operators, continuing to strengthen our position in the market. In total, These renewals represent three of the top five largest U.S. carriers by subscribers. With T-Mobile, this included a multi-year contract extension to continue supporting their postpaid and prepaid consumers beyond 2030. The renewal of T-Mobile allows us to continue to invest in this critical partnership and drive innovation for the future. In financial services, We expanded our longstanding relationship with Chase by partnering with Chase Card Services within our growing card benefits business. We executed a multi-year contract to provide coverage to millions of Chase cardholders. This program will provide end-to-end delivery for approximately 15 travel and purchase protection benefits, including underwriting, claim processing, and benefit servicing. We expect continued investments over the second half of this year as we move toward program launch at the end of 2024. This represents a marquee win for our card benefits business, which has gained strong momentum over the last several years. Our relationship with Chase now spans across our lifestyle and housing businesses, reinforcing the depth of client partnerships that we drive across the Assurant enterprise. Moving to global automotives, Our first half earnings have continued to be pressured by ongoing inflation impacts on motor vehicle repair costs. We expect that the effects of inflation will continue to impact our auto results throughout the second half of 2024 in our vehicle service contract business. In addition, we expect continued elevated loss experience within our ancillary guaranteed asset protection or gap product. Our longer-term outlook, however, is bright. as we've begun to see moderation of claims inflation on our vehicle service contract business, given the rate actions taken over the past 24 months. Within our GAP product, we're experiencing elevated losses driven by the combination of continued declines in used car prices from pandemic highs, higher interest rates, and the increase in the number of vehicles declared total losses by the primary insurance carrier. We expect this impact to be shorter term in nature relative to vehicle service contracts as the majority of GAAP claims are made within the first 24 months after vehicle purchase. In addition, over the past year, we've been proactively partnering with several clients to transition the risk on the GAAP business, which will reduce a substantial amount of our claims exposure over time. Lastly, We believe the auto business will continue to benefit from our position as a market leader with scale and strong partnerships across multiple distribution channels. Now let's turn to global housing. For the first half of the year, global housing's earnings increased nearly 45%, excluding reportable catastrophes. Housing's year-to-date results have demonstrated both the importance of the business to our overall portfolio and the power of our unique and differentiated business model, which has largely outperformed the broader P&C market. Our lender-placed insurance business safeguards homes that need insurance, regardless of geography, while supporting the U.S. mortgage industry by removing the risk of uninsured loss for lenders, investors, and homeowners. We review rates with each state on a regular basis to ensure that they are appropriate and that homeowners are protected. This process allows us to work together to balance risk and reward with fair and adequate rates while creating product safeguards to address macroeconomic factors such as inflation. In addition, we benefit from our strong track record, continued investments in customer experience, and our compliance expertise, our most critical competitive advantages. These efforts have allowed us to renew existing partnerships and win new clients, including Bank of America. This, in turn, has contributed to increased scale, which combined with technology investments has led to significant operational efficiencies. Ultimately, this creates meaningful expense leverage, which we'll continue to benefit from going forward. Our specialized product and client base provide Assurant with differentiated advantages compared to many traditional homeowners insurance carriers. Overall, these combined advantages have led to the recovery and growth of this business within a relatively short timeframe. We believe we are well positioned, and we continue to believe there's an opportunity for the market to better value our specialized lender-placed business. In renters, we benefit from an attractive financial profile that is more capital efficient compared to traditional P&C businesses. We're focused on expanding our presence as a market leader within the property management company or PMC channel while providing our partners with innovative new offerings. In the first half of the year, we increased gross written premiums in our PMC channel by over 20%, reflecting strong client demand for our Cover 360 solution. This marks eight straight quarters of double-digit growth of gross written premium in the PMC channel. Following the initial launch of our Assurant TechPro resident troubleshooting service, we recently signed a partnership with the largest PMC in the U.S. to be the first to provide this service to the industry. We expect to begin rollout in the second half of this year. Turning to our enterprise outlook, given the strength of our first half results, we now expect full-year adjusted EBITDA to grow high single digits. and adjusted earnings per share to increase low double digits, both excluding catastrophes. This represents an increase from our initial expectation for both metrics. We anticipate strong growth within global housing, which is expected to lead our enterprise growth for 2024. In global lifestyle, we expect modest growth in 2024. Connected Living is expected to deliver another year of growth as we remain focused on driving long-term momentum through new partnerships and programs. Overall, we believe our first half performance and our increased 2024 outlook demonstrate the power of our differentiated business model with unique advantages which make Assurant attractively valued. Over time, we've enhanced Assurant's risk profile by focusing on our capital-efficient businesses within lifestyle and housing, which are highly cash generative. We've established a track record of winning and delivering for B2B2C clients throughout both lifestyle and housing, many of whom are industry leaders and market disruptors across the globe. We've created leadership positions and amplified competitive advantages through our protection solutions across devices, automobiles, and homes. Together with our clients, we've seen these deliver mutual benefit from scale and deep integration, supporting innovative and flexible solutions to differentiate the customer experience. We focus on specialized attractive markets with growth opportunities and long-term secular tailwinds. These factors contributed to long-term outperformance versus the broader P&C market particularly the S&P Composite 1500 P&C Index. We believe this comparison better reflects our current mix of businesses and offerings as we provide insurance solutions and fee-based services to our partners and their end consumers. In June, our sub-industry index classification under the Global Industry Classification Standard, or GICS, transitioned from multi-line insurance to P&C insurance. a product of our multi-year transformation that included exiting pre-need, health, and life insurance-related businesses. Before handing it over to Keith Meyer, I wanted to highlight our recently published 2024 Sustainability Report, which demonstrates our progress in advancing our sustainability strategy and initiatives. We've introduced our new sustainability vision focused on advancing a connected, respected, and protected world. We've established long-term ambitions to support a thriving society, a circular economy, and a stable climate. We believe there's an important connection between our vision and ambitions and how we deliver value for our business and for our stakeholders. These priorities strengthen assurance for the future, including how we attract, empower, and reward a diverse workforce to drive innovation, contribute to the development and adoption of sustainable products, and reduce the climate impact of assurance operations and supply chain. Overall, we're excited about the progress we've made so far this year, continuing to drive attractive financial results and outperformance for the overall enterprise. As we look ahead, we believe we are well positioned to continue to drive business momentum in the second half and beyond. I'll now turn it over to Keith Meyer to review our second quarter results in business trends impacting our 2024 outlook.