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Mar 31, 2023
Assurant Q1 2023 Earnings Report
First quarter results were driven by strong performance in Global Housing; Global Lifestyle results improved sequentially.
Key Takeaways
Assurant reported first quarter results with stronger than expected performance in Global Housing and improved Global Lifestyle results. The company reaffirms its 2023 outlook and expects to resume share repurchases later in the second quarter.
GAAP net income decreased 24 percent to $113.6 million year-over-year, while net income per diluted share decreased 20 percent to $2.12 versus the prior year period
Adjusted EBITDA, excluding reportable catastrophes, decreased 7 percent to $293.3 million, or 5 percent on a constant currency basis
Adjusted earnings, excluding reportable catastrophes, per diluted share, decreased 12 percent to $3.49
Holding company liquidity was $383 million
Assurant
Assurant
Forward Guidance
The company continues to expect Adjusted EBITDA, excluding reportable catastrophes, to increase by low single-digits, driven by improved performance in Global Housing and more modest growth in Global Lifestyle. Adjusted earnings, excluding reportable catastrophes, per diluted share growth rate is expected to be lower than Adjusted EBITDA, excluding reportable catastrophes growth due to higher depreciation expense and a higher effective tax rate.
Positive Outlook
- Global Housing Adjusted EBITDA, excluding reportable catastrophes, is expected to grow, driven by improved performance in Homeowners reflecting higher lender-placed net earned premiums along with expense savings to be realized over the course of the year.
- Global Lifestyle Adjusted EBITDA, is expected to grow modestly, driven by Connected Living and Global Automotive, including contributions from new and existing client programs and expense savings realized over the course of the year.
- Capital deployment priorities to focus on maintaining a strong financial position, supporting organic growth and returning capital to shareholders through common stock dividends and share repurchases, subject to Board approval.
- Given expectations for continued strong capital generation, the company expects to gradually resume repurchases later in the second quarter, albeit at modest levels as it continues to monitor the macroeconomic environment.
Challenges Ahead
- Higher 2023 catastrophe reinsurance program costs as well as continued elevated non-catastrophe loss experience across all lines of business, particularly in the first half of 2023, are expected to impact the segment.
- Lower contributions from international, including the impact of continued foreign exchange headwinds, are expected to pressure results particularly in the first half of 2023.
- Corporate and Other Adjusted EBITDA loss is expected to be approximately $105 million as the company continues to drive expense leverage.
- Adjusted earnings, excluding reportable catastrophes, per diluted share growth rate is expected to be lower than Adjusted EBITDA, excluding reportable catastrophes growth due to higher depreciation expense of approximately $114 million and a higher effective tax rate of approximately 22 to 24 percent, following a $9 million benefit in 2022.
- Interest expense is expected to be approximately $110 million, in-line with 2022.