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Business Wire 6-Nov-2018 4:15 PM
3Q 2018 Net Income of $48.3 million, $0.76 per diluted share
3Q 2018 Net Operating Income of $67.4 million, $1.06 per diluted share
Key Financial Highlights Year-to-Date 2018:
Note: On May 31, 2018, Assurant closed its acquisition of The Warranty Group (TWG). Beginning June 1, Assurant net operating income and net operating income per diluted share include TWG results and related financing obtained in March 2018. On August 1, 2018, Assurant closed the sale of Global Housing's mortgage solutions business. Results for mortgage solutions are included in Assurant's net operating income and net operating income per diluted share through July 2018.
Assurant, Inc. (NYSE:AIZ), a premier global provider of risk management solutions, today reported results for third quarter ended September 30, 2018.
"Our underlying results were in-line with expectations as earnings benefitted from both our acquisition of The Warranty Group and solid organic growth in mobile and multifamily housing," said Assurant President and Chief Executive Officer Alan Colberg.
Colberg added, "This quarter, we supported homeowners impacted by Hurricane Florence and expanded partnerships across our business that provide consumers a broader array of services to protect the purchases that matter most to them. We remain confident in our ability to deliver on our full-year 2018 financial commitments and we're well-positioned for continued profitable growth next year."
Reconciliation of Net Operating Income to GAAP Net Income Attributable to Common Stockholders |
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(UNAUDITED) | 3Q | 3Q | 9 Months | 9 Months | ||||||||||||||||
(in millions, net of tax) | 2018 | 2017 | 2018 | 2017 | ||||||||||||||||
Global Housing | $ | 19.4 | $ | (110.3 | ) | $ | 163.2 | $ | 7.8 | |||||||||||
Global Lifestyle | 75.9 | 42.6 | 199.8 | 135.2 | ||||||||||||||||
Global Preneed | 16.8 | 12.3 | 41.3 | 35.0 | ||||||||||||||||
Corporate and other | (19.0 | ) | (13.0 | ) | (56.5 | ) | (33.7 | ) | ||||||||||||
Interest expense | (21.0 | ) | (7.9 | ) | (45.0 | ) | (24.2 | ) | ||||||||||||
Preferred stock dividends | (4.7 | ) | — | (6.3 | ) | — | ||||||||||||||
Net operating income (loss) | 67.4 | (76.3 | ) | 296.5 | 120.1 | |||||||||||||||
Adjustments: | ||||||||||||||||||||
Assurant Health runoff operations | 0.2 | 0.1 | 2.4 | 11.5 | ||||||||||||||||
Net realized (losses) gains on investments | (4.6 | ) | 5.5 | (13.2 | ) | 16.3 | ||||||||||||||
Amortization of deferred gains on disposal of businesses | 10.0 | 15.0 | 36.5 | 54.3 | ||||||||||||||||
Impact of TCJA at enactment | (1.5 | ) | — | (1.5 | ) | — | ||||||||||||||
Net TWG acquisition related charges(1) | (8.0 | ) | (2.4 | ) | (61.0 | ) | (2.4 | ) | ||||||||||||
Loss on sale of mortgage solutions | 2.0 | — | (32.4 | ) | — | |||||||||||||||
Foreign exchange related (losses) gains | (18.3 | ) | — | (14.5 | ) | — | ||||||||||||||
Other adjustments | 1.1 | 0.8 | 3.7 | 6.9 | ||||||||||||||||
GAAP net income (loss) attributable to common stockholders | $ | 48.3 | $ | (57.3 | ) | $ | 216.5 | $ | 206.7 | |||||||||||
Note: 2018 net operating income includes TWG earnings beginning June 1 and mortgage solutions results prior to the sale on August 1. | ||
(1) |
Additional details about the components of net TWG acquisition related charges are included in the Financial Supplement located on Assurant's Investor Relations website http://ir.assurant.com/investor/default.aspx |
Third Quarter 2018 Consolidated Results
Reportable Segments
Global Housing |
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(in millions) | 3Q18 | 3Q17 | % Change | 9M18 | 9M17 | % Change | |||||||||||||||
Net operating income (loss) | $ | 19.4 | $ | (110.3) | 118% | $ | 163.2 | $ | 7.8 | 1,992% | |||||||||||
Net earned premiums, fees and other | $ | 521.6 | $ | 530.3 | (2)% | $ | 1,587.2 | $ | 1,612.2 | (2)% | |||||||||||
Note: On August 1, 2018, Assurant closed the sale of Global Housing's mortgage solutions business. Results for this business are included in Global Housing's revenue and net operating income through July 2018 and full-year 2017. |
(a) Combined ratio for the Global Housing risk-based businesses is equal to total policyholder benefits, losses and expenses, including reportable catastrophe losses, divided by net earned premiums and fees and other income, for lender-placed and manufactured housing and other risk-based businesses. |
Global Lifestyle |
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(in millions) | 3Q18 | 3Q17 | % Change | 9M18 | 9M17 | % Change | |||||||||||||||
Net operating income | $ | 75.9 | $ | 42.6 | 78 % | $ | 199.8 | $ | 135.2 | 48 % | |||||||||||
Net earned premiums, fees and other | $ | 1,541.5 | $ | 841.7 | 83 % | $ | 3,562.2 | $ | 2,482.6 | 43 % | |||||||||||
Note: Starting June 1, 2018, the results of TWG business operations is reflected within Global Lifestyle segment results. |
(a) Combined ratio for the Global Lifestyle risk-based businesses is equal to total policyholder benefits, losses and expenses, divided by net earned premiums and fees and other income, for Global Automotive and Financial Services. |
(b) Pre-tax margin for the Global Lifestyle fee-based, capital-light businesses is equal to income before provision for income taxes divided by total net earned premiums, fees and other income, for Connected Living, including mobile, extended service contracts and assistance services. |
Global Preneed |
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(in millions) | 3Q18 | 3Q17 | % Change | 9M18 | 9M17 | % Change | ||||||||||||||||
Net operating income | $ | 16.8 | $ | 12.3 | 37 % | $ | 41.3 | $ | 35.0 | 18 % | ||||||||||||
Net earned premiums, fees and other | $ | 48.1 | $ | 44.6 | 8 % | $ | 141.2 | $ | 135.1 | 5 % | ||||||||||||
Corporate & Other |
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(in millions) | 3Q18 | 3Q17 | % Change | 9M18 | 9M17 | % Change | ||||||||||||||||
Net operating loss (6) | $ | (19.0) | $ | (13.0) | (46)% | $ | (56.5) | $ | (33.7) | (68)% |
Capital Position
Company Outlook
On May 31, 2018, Assurant closed the acquisition of TWG from TPG Capital. As of June 1, TWG results, the acquisition financing, and expected expense synergies are reflected in Assurant's operating results and its 2018 outlook. Results for the mortgage solutions business sold on August 1, 2018 are included in the outlook for periods prior to sale.
Based on current market conditions, for full-year 2018 the company now expects:
Earnings Conference Call
The third quarter 2018 earnings conference call and webcast will be held Wednesday, November 7, 2018 at 8:00 a.m. ET. The live and archived webcast, along with supplemental information, will be available in the Investor Relations section of www.assurant.com.
About Assurant
Assurant, Inc. (NYSE:AIZ) is a global provider of risk management solutions, protecting where consumers live and the goods they buy. A Fortune 500 company, Assurant focuses on the housing and lifestyle markets, and is among the market leaders in mobile device protection and related services; extended service contracts; vehicle protection products; pre-funded funeral insurance; renters insurance; and lender-placed homeowners insurance. Assurant has a market presence in 21 countries, while its Assurant Foundation works to support and improve communities. Learn more at assurant.com or on Twitter @AssurantNews.
Safe Harbor Statement
Some of the statements included in this news release and its exhibits, particularly those anticipating future financial performance, business prospects, growth and operating strategies and similar matters including with respect to The Warranty Group and the benefits and synergies of the transaction, are forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. You can identify these statements by the use of words such as "outlook," "will," "may," "can," "anticipates," "expects," "estimates," "projects," "intends," "plans," "believes," "targets," "forecasts," "potential," "approximately," or the negative version of those words and other words and terms with a similar meaning. Any forward-looking statements contained in this news release or its exhibits are based upon our historical performance and on current plans, estimates and expectations. The inclusion of this forward-looking information should not be regarded as a representation by us or any other person that the future plans, estimates or expectations contemplated by us will be achieved. Our actual results might differ materially from those projected in the forward-looking statements. The company undertakes no obligation to update or review any forward-looking statements in this news release or the exhibits, whether as a result of new information, future events or other developments. The following risk factors could cause our actual results to differ materially from those currently estimated by management, including those projected in the company outlook:
(i) | the effective integration of The Warranty Group acquisition; | |
(ii) | the loss of significant client relationships or business, distribution sources and contracts; | |
(iii) | the impact of general economic, financial market and political conditions; | |
(iv) | the adequacy of reserves established for future claims; | |
(v) | the impact of catastrophic losses, including human-made catastrophic losses; | |
(vi) | a decline in our credit or financial strength ratings; | |
(vii) | risks related to our international operations, including fluctuations in exchange rates; | |
(viii) | an impairment of the company's goodwill or other intangible assets resulting from a sustained significant decline in the company's stock price, a decline in actual or expected future cash flows or income, a significant adverse change in the business climate or slower growth rate, among other circumstances; | |
(ix) | a failure to effectively maintain and modernize our information technology systems; | |
(x) | the company's vulnerability to system security threats, data protection breaches, cyber-attacks and data breaches compromising client information and privacy; | |
(xi) | significant competitive pressures in our businesses or changes in customer preferences; | |
(xii) | the failure to find and integrate suitable acquisitions and new ventures; | |
(xiii) | a decline in the sales of our products and services resulting from an inability to develop and maintain distribution sources or attract and retain sales representatives; | |
(xiv) | a decrease in the value of our investment portfolio; | |
(xv) | the impact of recently enacted tax reform legislation in the U.S.; | |
(xvi) | the impact from litigation, other contingent liabilities and loss contingencies, regulatory investigations, reviews and markets studies to which we are or may become subject; | |
(xvii) | the extensive laws and regulations to which we are and may become subject, including relating to data privacy, could increase our costs; restrict the conduct of our business and limit our growth; | |
(xviii) | the failure to successfully manage outsourcing activities, such as call center services; | |
(xix) | a decline in the value of mobile devices in our inventory or those that are subject to guaranteed buyback provisions; | |
(xx) | the unavailability or inadequacy of reinsurance coverage; | |
(xxi) | the insolvency of third parties to whom we have sold or may sell businesses through reinsurance or modified co-insurance; | |
(xxii) | the credit risk of some of our agents that we are exposed to due to the structure of our commission program; | |
(xxiii) | the inability of our subsidiaries to pay sufficient dividends to the holding company; and | |
(xxiv) | the failure to attract and retain key personnel and to provide for succession of senior management and key executives. | |
For a detailed discussion of the risk factors that could affect our actual results, please refer to the risk factors identified in our SEC reports, including, but not limited to our Annual Report on Form 10-K, as filed with the SEC.
Non-GAAP Financial Measures
Assurant uses the following non-GAAP financial measures to analyze the company's operating performance for the periods presented in this news release. Because Assurant's calculation of these measures may differ from similar measures used by other companies, investors should be careful when comparing Assurant's non-GAAP financial measures to those of other companies.
(1) Assurant uses net operating income (defined below), excluding reportable catastrophes (which represents catastrophe losses net of reinsurance and client profit sharing adjustments and including reinstatement and other premiums), as an important measure of the company's operating performance. The company believes this metric provides investors a valuable measure of the performance of the company's ongoing business because it excludes reportable catastrophes, which can be volatile. The comparable GAAP measure is net income attributable to common stockholders.
(UNAUDITED) | 3Q | 3Q | 9 Months | 9 Months | ||||||||||||||||
(in millions) | 2018 | 2017 | 2018 | 2017 | ||||||||||||||||
Global Housing, excluding reportable catastrophes | $ | 86.0 | $ | 76.5 | $ | 237.5 | $ | 195.2 | ||||||||||||
Global Lifestyle(1) | 77.0 | 47.6 | 199.6 | 140.2 | ||||||||||||||||
Global Preneed | 16.8 | 12.3 | 41.3 | 35.0 | ||||||||||||||||
Corporate and other | (19.0 | ) | (13.0 | ) | (56.5 | ) | (33.7 | ) | ||||||||||||
Interest expense | (21.0 | ) | (7.9 | ) | (45.0 | ) | (24.2 | ) | ||||||||||||
Preferred stock dividends | (4.7 | ) | — | (6.3 | ) | — | ||||||||||||||
Net operating income, excluding reportable catastrophes | 135.1 | 115.5 | 370.6 | 312.5 | ||||||||||||||||
Adjustments, pre-tax: | ||||||||||||||||||||
Assurant Health runoff operations | — | 1.0 | 2.9 | 17.9 | ||||||||||||||||
Net realized (losses) gains on investments | (5.7 | ) | 8.5 | (16.6 | ) | 25.1 | ||||||||||||||
Reportable catastrophes | (85.7 | ) | (294.7 | ) | (93.8 | ) | (295.6 | ) | ||||||||||||
Amortization of deferred gains on disposal of businesses | 12.7 | 23.1 | 46.2 | 83.5 | ||||||||||||||||
Impact of TCJA at enactment | (1.5 | ) | — | (1.5 | ) | — | ||||||||||||||
Net TWG acquisition related charges(2) | (10.6 | ) | (3.7 | ) | (75.1 | ) | (3.7 | ) | ||||||||||||
Loss on sale of mortgage solutions | 2.5 | — | (41.0 | ) | — | |||||||||||||||
Foreign exchange related (losses) gains | (18.3 | ) | — | (13.2 | ) | — | ||||||||||||||
Other adjustments | 1.8 | 1.2 | 5.1 | 10.9 | ||||||||||||||||
Benefit for income taxes | 18.0 | 91.8 | 33.0 | 56.1 | ||||||||||||||||
GAAP net income (loss) attributable to common stockholders | $ | 48.3 | $ | (57.3 | ) | $ | 216.5 | $ | 206.7 | |||||||||||
(1) | Due to significant flooding from Hurricane Harvey, 3Q 2017 and Nine Months 2017 exclude $5.0 million loss after-tax ($7.7 million pre-tax) related to reportable catastrophes primarily related to vehicle protection products. 3Q 2018 excludes a $1.1 million loss after-tax ($1.4 million pre-tax), primarily related to Hurricane Florence, and Nine Months 2018 excludes a $0.2 million benefit after-tax ($0.2 million pre-tax) due to favorable development related to 3Q 2017 reportable catastrophes, partially offset by the Hurricane Florence related loss. | |
(2) |
Additional details about the components of net TWG acquisition related charges are included in the Financial Supplement located on Assurant's Investor Relations website http://ir.assurant.com/investor/default.aspx |
|
(2) Assurant uses net operating income per diluted share (defined below), excluding reportable catastrophes as an important measure of the company's stockholder value. The company believes this metric provides investors a valuable measure of stockholder value because it excludes reportable catastrophes, which can be volatile. The comparable GAAP measure is net income attributable to common stockholders per diluted share, defined as net income plus any dilutive preferred stock dividends divided by weighted average diluted shares outstanding.
(UNAUDITED) | 3Q | 3Q | 9 Months | 9 Months | ||||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||||||
Net operating income, excluding reportable catastrophes, per diluted share(1) | $ | 2.12 | $ | 2.12 | $ | 6.37 | $ | 5.64 | ||||||||||||
Adjustments, pre-tax: | ||||||||||||||||||||
Assurant Health runoff operations | — | 0.02 | 0.05 | 0.32 | ||||||||||||||||
Net realized (losses) gains on investments | (0.09 | ) | 0.16 | (0.29 | ) | 0.46 | ||||||||||||||
Reportable catastrophes | (1.34 | ) | (5.40 | ) | (1.61 | ) | (5.33 | ) | ||||||||||||
Amortization of deferred gains on disposal of businesses | 0.20 | 0.42 | 0.79 | 1.51 | ||||||||||||||||
Impact of TCJA at enactment | (0.02 | ) | — | (0.03 | ) | — | ||||||||||||||
Net TWG acquisition related charges | (0.17 | ) | (0.07 | ) | (1.28 | ) | (0.07 | ) | ||||||||||||
Loss on sale of mortgage solutions | 0.04 | — | (0.71 | ) | — | |||||||||||||||
Foreign exchange related (losses) gains | (0.29 | ) | — | (0.22 | ) | — | ||||||||||||||
Other adjustments | 0.03 | 0.02 | 0.09 | 0.19 | ||||||||||||||||
Benefit for income taxes | 0.28 | 1.68 | 0.56 | 1.01 | ||||||||||||||||
Net income (loss) attributable to common stockholders per diluted share(1) | $ | 0.76 | $ | (1.05 | ) | $ | 3.72 | $ | 3.73 | |||||||||||
(1) |
Additional information on the share counts used in the per share calculations are included in the Financial Supplement located on Assurant's Investor Relations website http://ir.assurant.com/investor/default.aspx |
(3) Assurant uses operating return on common stockholders' equity ("Operating ROE"), excluding accumulated other comprehensive income ("AOCI") and reportable catastrophes, as an important measure of the company's operating performance. Operating ROE, excluding AOCI and reportable catastrophe losses, equals net operating income (as defined below) for the periods presented divided by average common stockholders' equity, excluding AOCI and reportable catastrophe losses, for the year to date period. The company believes this metric provides investors a valuable measure of the performance of the company's ongoing business because it excludes the effect of reportable catastrophes, which can be volatile. The comparable GAAP measure is GAAP return on common stockholders' equity ("GAAP ROE"), defined as net income attributable to common stockholders', for the period presented, divided by average common stockholders' equity for the year to date period.
(UNAUDITED) | 3Q | 3Q | 9 Months | 9 Months | ||||||||
2018 | 2017 | 2018 | 2017 | |||||||||
Annual operating return on average common stockholders' equity, excluding AOCI and reportable catastrophes(1) | 10.6 % | 11.9 % | 11.0 % | 10.7 % | ||||||||
Assurant Health runoff operations | —% | —% | 0.1 % | 0.4 % | ||||||||
Net realized (losses) gains on investments | (0.4)% | 0.6 % | (0.4)% | 0.6 % | ||||||||
Amortization of deferred gains on disposal of businesses | 0.8 % | 1.5 % | 1.1 % | 1.9 % | ||||||||
Impact of TCJA at enactment | (0.1)% | —% | —% | —% | ||||||||
Net TWG acquisition related charges | (0.6)% | (0.2)% | (1.8)% | (0.1)% | ||||||||
Reportable catastrophes | (5.3)% | (19.7)% | (2.2)% | (6.6)% | ||||||||
Loss on sale of mortgage solutions | 0.2 % | —% | (1.0)% | —% | ||||||||
Foreign exchange related (losses) gains | (1.4)% | —% | (0.4)% | —% | ||||||||
Other adjustments | 0.1 % | —% | 0.1 % | 0.3 % | ||||||||
Change due to effect of including AOCI | —% | 0.4 % | (0.2)% | (0.5)% | ||||||||
Annual GAAP return on average common stockholders' equity(1) | 3.9 % | (5.5)% | 6.3 % | 6.7 % | ||||||||
(1) | Average common stockholders' equity excludes $276.4 million of preferred stock for 3Q 2018 and Nine Months 2018. In addition, Nine Months 2018 average common stockholders' equity reflects the impact of the 10.4 million common shares issued in connection with the TWG acquisition for the period that they were outstanding. |
(4) Assurant uses net operating income as an important measure of the company's operating performance. Net operating income equals net income, excluding Assurant Health runoff operations, net realized gains on investments, amortization of deferred gains on disposal of businesses (including Assurant Employee Benefits), net TWG acquisition related charges, loss on net assets held for sale related to mortgage solutions, foreign exchange gains (losses) from remeasurement of monetary assets and liabilities and other highly variable or unusual items. The company believes net operating income provides investors a valuable measure of the performance of the company's ongoing business because the excluded items do not represent the ongoing operations of the company. The comparable GAAP measure is net income attributable to common stockholders.
(UNAUDITED) | 3Q | 3Q | 9 Months | 9 Months | ||||||||||||||||
(in millions) | 2018 | 2017 | 2018 | 2017 | ||||||||||||||||
Net operating income (loss) | $ | 67.4 | $ | (76.3 | ) | $ | 296.5 | $ | 120.1 | |||||||||||
Adjustments (pre-tax): | ||||||||||||||||||||
Assurant Health runoff operations | — | 1.0 | 2.9 | 17.9 | ||||||||||||||||
Net realized (losses) gains on investments | (5.7 | ) | 8.5 | (16.6 | ) | 25.1 | ||||||||||||||
Amortization of deferred gains on disposal of businesses | 12.7 | 23.1 | 46.2 | 83.5 | ||||||||||||||||
Impact of TCJA at enactment | (1.5 | ) | — | (1.5 | ) | — | ||||||||||||||
Net TWG acquisition related charges(1) | (10.6 | ) | (3.7 | ) | (75.1 | ) | (3.7 | ) | ||||||||||||
Loss on sale of mortgage solutions | 2.5 | — | (41.0 | ) | — | |||||||||||||||
Foreign exchange related (losses) gains | (18.3 | ) | — | (13.2 | ) | — | ||||||||||||||
Other adjustments | 1.8 | 1.2 | 5.1 | 10.9 | ||||||||||||||||
(Provision) benefit for income taxes | — | (11.1 | ) | 13.3 | (47.1 | ) | ||||||||||||||
GAAP net income (loss) attributable to common stockholders | $ | 48.3 | $ | (57.3 | ) | $ | 216.5 | $ | 206.7 | |||||||||||
(1) |
Additional details about the components of net TWG acquisition related charges are included in the Financial Supplement located on Assurant's Investor Relations website http://ir.assurant.com/investor/default.aspx |
(5) Assurant uses net operating income per diluted share as an important measure of the company's stockholder value. Net operating income per diluted share equals net operating income (defined below) divided by weighted average diluted shares outstanding, excluding any dilutive effect from the assumed conversion of the mandatory convertible preferred stock prior to the acquisition date. The company believes this metric provides investors a valuable measure of stockholder value because it excludes items that do not represent the ongoing operations of the company. In addition, it excludes the effect of the mandatory convertible preferred stock, which was used to finance the acquisition, prior to the acquisition date. The comparable GAAP measure is net income attributable to common stockholders per diluted share, defined as net income attributable to common stockholders plus any dilutive preferred stock dividends divided by weighted average diluted shares outstanding.
(UNAUDITED) | 3Q | 3Q | 9 Months | 9 Months | ||||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||||||
Net operating income (loss) per diluted share(1) | $ | 1.06 | $ | (1.40 | ) | $ | 5.09 | $ | 2.17 | |||||||||||
Adjustments, pre-tax: | ||||||||||||||||||||
Assurant Health runoff operations | — | 0.02 | 0.05 | 0.32 | ||||||||||||||||
Net realized (losses) gains on investments | (0.09 | ) | 0.16 | (0.29 | ) | 0.46 | ||||||||||||||
Amortization of deferred gains on disposal of businesses | 0.20 | 0.42 | 0.79 | 1.51 | ||||||||||||||||
Impact of TCJA at enactment | (0.02 | ) | — | (0.03 | ) | — | ||||||||||||||
Net TWG acquisition related charges | (0.17 | ) | (0.07 | ) | (1.28 | ) | (0.07 | ) | ||||||||||||
Loss on sale of mortgage solutions | 0.04 | — | (0.71 | ) | — | |||||||||||||||
Foreign exchange related (losses) gains | (0.29 | ) | — | (0.22 | ) | — | ||||||||||||||
Other adjustments | 0.03 | 0.02 | 0.09 | 0.19 | ||||||||||||||||
(Provision) benefit for income taxes | — | (0.20 | ) | 0.23 | (0.85 | ) | ||||||||||||||
Net income (loss) attributable to common stockholders per diluted share(1) | $ | 0.76 | $ | (1.05 | ) | $ | 3.72 | $ | 3.73 | |||||||||||
(1) |
Additional details about the components of net TWG acquisition related charges are included in the Financial Supplement located on Assurant's Investor Relations website http://ir.assurant.com/investor/default.aspx |
(6) Assurant uses Corporate and Other net operating loss as an important measure of the corporate segment's performance. Corporate and Other net operating loss equals Total Corporate and Other segment net (loss) income, excluding Health runoff operations net income, amortization of deferred gains on disposal of businesses, net TWG acquisition related charges, interest expense, net realized gains on investments, loss on net assets held for sale related to mortgage solutions, foreign exchange gains (losses) from remeasurement of monetary assets and liabilities and other highly variable or unusual items. The company believes Corporate and Other net operating loss provides investors a valuable measure of the performance of the company's corporate segment because it excludes highly variable items that do not represent the ongoing results of the company's corporate segment. The comparable GAAP measure is Total Corporate & Other segment net (loss) income attributable to common stockholders.
(UNAUDITED) | 3Q | 3Q | 9 Months | 9 Months | ||||||||||||||||
(in millions) | 2018 | 2017 | 2018 | 2017 | ||||||||||||||||
GAAP Total Corporate & Other segment net (loss) income attributable to common stockholders | $ | (63.8 | ) | $ | (1.9 | ) | $ | (187.8 | ) | $ | 28.7 | |||||||||
Excluding: Health runoff operations net income | 0.2 | 0.1 | 2.4 | 11.5 | ||||||||||||||||
GAAP Corporate & Other segment net (loss) income attributable to common stockholders | (64.0 | ) | (2.0 | ) | (190.2 | ) | 17.2 | |||||||||||||
Adjustments, pre-tax: | ||||||||||||||||||||
Amortization of deferred gains on disposal of businesses | (12.7 | ) | (23.1 | ) | (46.2 | ) | (83.5 | ) | ||||||||||||
Impact of TCJA at enactment | 1.5 | — | 1.5 | — | ||||||||||||||||
Net TWG acquisition related charges(1) | 10.6 | 3.7 | 75.1 | 3.7 | ||||||||||||||||
Interest expense | 26.5 | 12.2 | 56.9 | 37.2 | ||||||||||||||||
Net realized losses (gains) on investments | 5.7 | (8.5 | ) | 16.6 | (25.1 | ) | ||||||||||||||
Loss on sale of mortgage solutions | (2.5 | ) | — | 41.0 | — | |||||||||||||||
Foreign exchange related losses (gains) | 18.3 | — | 13.2 | — | ||||||||||||||||
Other adjustments | (1.8 | ) | (1.2 | ) | (5.1 | ) | (10.9 | ) | ||||||||||||
(Benefit) provision for income taxes | (5.3 | ) | 5.9 | (25.6 | ) | 27.7 | ||||||||||||||
Preferred stock dividends | 4.7 | — | 6.3 | — | ||||||||||||||||
Corporate & other net operating loss | $ | (19.0 | ) | $ | (13.0 | ) | $ | (56.5 | ) | $ | (33.7 | ) | ||||||||
(1) |
Additional details about the components of net TWG acquisition related charges are included in the Financial Supplement located on Assurant's Investor Relations website http://ir.assurant.com/investor/default.aspx |
(7) The company outlook for Corporate & Other full-year net operating loss constitutes forward-looking information and the company believes that it cannot reconcile such forward-looking information to the most comparable GAAP measure without unreasonable efforts. Many of these components cannot be reliably quantified due to the combination of variability and volatility of such components and may, depending on the size of the components, have a significant impact on the reconciliation. The company is able to quantify ranges for the components discussed below. The company is able to reasonably quantify a range for amortization of deferred gains based on certain assumptions relating to future reinsured premium on disposed business during the forecast period. In addition, the company is able to quantify a range for interest expense assuming it does not incur additional debt or extinguish debt in the forecast period. Finally, the company is able to quantify an estimate for preferred stock dividends, which are subject to Board approval. Amortization of deferred gains on disposal of businesses is expected to be approximately $42-50 million after-tax, interest expense is expected to be approximately $65-66 million after-tax and preferred stock dividends are expected to be $11 million. This reflects the lower effective tax rate and the notes refinanced in March but excludes $13.5 million after-tax interest expense and $3.2 million of preferred dividends incurred in connection with the financing of the TWG acquisition prior to June 1, 2018 that were included in GAAP net income.
A summary of net operating income disclosed items is included on page 21 of the company's Financial Supplement, which is available in the Investor Relations section of www.assurant.com.
Assurant, Inc. Consolidated Statement of Operations (unaudited) Three Months and Nine Months Ended September 30, 2018 and 2017 |
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3Q | 9 Months | ||||||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||||||
(in millions except number of shares and per share amounts) | |||||||||||||||||||
Revenues | |||||||||||||||||||
Net earned premiums | $ | 1,853.6 | $ | 1,073.1 | $ | 4,316.8 | $ | 3,238.7 | |||||||||||
Fees and other income | 257.9 | 349.1 | 976.6 | 1,016.2 | |||||||||||||||
Net investment income | 151.8 | 132.6 | 417.6 | 374.9 | |||||||||||||||
Net realized (losses) gains on investments | (5.7 | ) | 8.5 | (16.6 | ) | 25.1 | |||||||||||||
Amortization of deferred gains on disposal of businesses | 12.7 | 23.1 | 46.2 | 83.5 | |||||||||||||||
Total revenues | 2,270.3 | 1,586.4 | 5,740.6 | 4,738.4 | |||||||||||||||
Benefits, losses and expenses | |||||||||||||||||||
Policyholder benefits | 680.9 | 682.2 | 1,586.1 | 1,456.6 | |||||||||||||||
Selling, underwriting, general and administrative expenses | 1,487.1 | 999.6 | 3,789.9 | 2,958.4 | |||||||||||||||
Interest expense | 26.5 | 12.2 | 74.0 | 37.2 | |||||||||||||||
Total benefits, losses and expenses | 2,194.5 | 1,694.0 | 5,450.0 | 4,452.2 | |||||||||||||||
Income before provision for income taxes | 75.8 | (107.6 | ) | 290.6 | 286.2 | ||||||||||||||
Provision (benefit) for income taxes | 22.8 | (50.3 | ) | 64.6 | 79.5 | ||||||||||||||
Net income (loss) | 53.0 | (57.3 | ) | 226.0 | 206.7 | ||||||||||||||
Less: Preferred stock dividends | (4.7 | ) | — | (9.5 | ) | — | |||||||||||||
Net income (loss) attributable to common stockholders | $ | 48.3 | $ | (57.3 | ) | $ | 216.5 | $ | 206.7 | ||||||||||
Net income attributable to common stockholders per share: | |||||||||||||||||||
Basic | $ | 0.76 | $ | (1.05 | ) | $ | 3.73 | $ | 3.75 | ||||||||||
Diluted | $ | 0.76 | $ | (1.05 | ) | $ | 3.72 | $ | 3.73 | ||||||||||
Common stock dividends per share | $ | 0.56 | $ | 0.53 | $ | 1.68 | $ | 1.59 | |||||||||||
Share data: | |||||||||||||||||||
Basic weighted average shares outstanding | 63,621,184 | 54,524,874 | 57,988,570 | 55,096,933 | |||||||||||||||
Diluted weighted average shares outstanding | 63,800,347 | 54,524,874 | 58,193,940 | 55,409,251 | |||||||||||||||
Assurant, Inc. Consolidated Condensed Balance Sheets (unaudited) At September 30, 2018 and Dec. 31, 2017 |
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September 30, | December 31, | |||||||
2018 | 2017 | |||||||
(in millions) | ||||||||
Assets | ||||||||
Investments and cash and cash equivalents | $ | 14,804.8 | $ | 12,550.3 | ||||
Reinsurance recoverables | 11,256.8 | 9,790.2 | ||||||
Deferred acquisition costs | 4,270.1 | 3,484.5 | ||||||
Goodwill | 2,312.5 | 917.7 | ||||||
Value of business acquired | 3,905.5 | 24.4 | ||||||
Assets held in separate accounts | 1,904.4 | 1,837.1 | ||||||
Other assets | 3,389.5 | 2,492.3 | ||||||
Assets of consolidated investment entities | 1,599.5 | 746.5 | ||||||
Total assets | $ | 43,443.1 | $ | 31,843.0 | ||||
Liabilities | ||||||||
Policyholder benefits and claims payable | $ | 14,229.6 | $ | 14,179.6 | ||||
Unearned premiums | 15,497.2 | 7,038.6 | ||||||
Debt | 2,005.4 | 1,068.2 | ||||||
Liabilities related to separate accounts | 1,904.4 | 1,837.1 | ||||||
Deferred gain on disposal of businesses | 81.9 | 128.1 | ||||||
Accounts payable and other liabilities | 3,110.7 | 2,736.5 | ||||||
Liabilities of consolidated investment entities | 1,374.2 | 573.4 | ||||||
Total liabilities | 38,203.4 | 27,561.5 | ||||||
Stockholders' equity | ||||||||
Equity, excluding accumulated other comprehensive income | 5,317.1 | 4,036.6 | ||||||
Accumulated other comprehensive income | (97.7 | ) | 234.0 | |||||
Total Assurant, Inc. stockholders' equity | 5,219.4 | 4,270.6 | ||||||
Non-controlling interest | 20.3 | 10.9 | ||||||
Total equity | 5,239.7 | 4,281.5 | ||||||
Total liabilities and equity | $ | 43,443.1 | $ | 31,843.0 |
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