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Jun 30, 2022
Assurant Q2 2022 Earnings Report
Experienced continued momentum in Global Lifestyle, while weaker Global Housing performance lowered results.
Key Takeaways
Assurant's Q2 2022 results were impacted by higher-than-expected costs in Global Housing due to the current inflationary environment, but were pleased by the continued earnings growth momentum of services-oriented businesses in Global Lifestyle. The company has revised its full-year outlook for 2022 and remains confident that its combined Lifestyle and Housing business portfolio will continue to deliver attractive profitable growth, strong cash flow generation and superior shareholder returns relative to the broader market.
GAAP net income decreased 72 percent versus prior year period, while net income per diluted share decreased 69 percent
Adjusted EBITDA, excluding reportable catastrophes, decreased 8 percent to $277 million
Adjusted earnings, excluding reportable catastrophes, per diluted share, decreased 1 percent to $3.25
Holding company liquidity was $595 million
Assurant
Assurant
Forward Guidance
The company now expects 3 to 6 percent growth in Adjusted EBITDA, excluding reportable catastrophes, driven by profitable growth in Global Lifestyle and 14 to 18 percent growth in Adjusted earnings, excluding reportable catastrophes, per diluted share, driven by share repurchases and continued profitable earnings growth.
Positive Outlook
- Global Lifestyle Adjusted EBITDA is expected to increase by mid- to high-teens, driven mainly by mobile in Connected Living from global expansion in existing and new clients across device protection and trade-in and upgrade programs.
- Global Automotive is also expected to increase, driven by higher investment income and more favorable loss experience in select ancillary products.
- Adjusted earnings, excluding reportable catastrophes, per diluted share to increase 14 to 18 percent, driven by share repurchases, including the return of net proceeds from the sale of Global Preneed, and earnings growth in Global Lifestyle.
- Assurant’s consolidated effective tax rate is expected to be approximately 22 to 24 percent, which reflects the impact of the first quarter tax benefit.
- Capital to be deployed to support business growth by funding investments and M&A, and to return capital to shareholders in the form of share repurchases and dividends, subject to Board approval and market conditions.
Challenges Ahead
- Global Lifestyle Adjusted EBITDA will be partially offset by unfavorable impacts of foreign exchange and strategic investments to support new business opportunities.
- Global Housing Adjusted EBITDA, excluding reportable catastrophes, is expected to decrease by low- to mid-teens, primarily due to higher non-catastrophe loss experience related to elevated inflationary trends, mainly in lender-placed, as well as increased catastrophe reinsurance costs.
- Business segment dividends to be moderately below the company’s average annual target of approximately three quarters of segment Adjusted EBITDA, including reportable catastrophes.
- Corporate and Other Adjusted EBITDA loss is expected to be approximately $105.0 million, reflecting higher employee-related and technology expenses.
- This is subject to the growth of the businesses, investment portfolio performance, and rating agency and regulatory capital requirements.