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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
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☒ |
Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 |
For the quarterly period ended September 30, 2022
OR
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☐ |
Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 |
For the transition period from
to
Commission file number 001-31978
Assurant, Inc.
(Exact name of registrant as specified in its charter)
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Delaware |
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39-1126612 |
(State or other jurisdiction of incorporation) |
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(I.R.S. Employer Identification No.) |
55 Broadway, Suite 2901
New York, New York 10006
(212) 859-7000
(Address, including zip code, and telephone number, including area
code, of Registrant’s Principal Executive Offices)
Securities registered pursuant to Section 12(b) of the
Act:
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Title of Each Class |
Trading Symbol(s) |
Name of Each Exchange on Which Registered |
Common Stock, $0.01 Par Value |
AIZ |
New York Stock Exchange |
5.25% Subordinated Notes due 2061 |
AIZN |
New York Stock Exchange |
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past
90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted
electronically every Interactive Data File required to be submitted
pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter)
during the preceding 12 months (or for such shorter period that the
registrant was required to submit such
files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer, a
smaller reporting company or an emerging growth company. See the
definitions of “large accelerated filer,” “accelerated filer,”
“smaller reporting company” and “emerging growth company” in Rule
12b-2 of the Exchange Act.
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Large accelerated filer |
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Accelerated filer |
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☐ |
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Non-accelerated filer |
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☐
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Smaller reporting company |
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☐ |
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Emerging growth company |
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If an emerging growth company, indicate by check mark if the
registrant has elected not to use the extended transition period
for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange
Act.
☐
Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Exchange
Act). Yes ☐ No ☒
The number of shares of the registrant’s common stock outstanding
at October 28, 2022 was 52,831,429.
ASSURANT, INC.
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2022
TABLE OF CONTENTS
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Item
Number
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Page
Number
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1. |
Consolidated Financial Statements (unaudited) of Assurant,
Inc. |
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Consolidated Balance Sheets (unaudited) as of September 30, 2022
and December 31, 2021
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Consolidated Statements of Operations (unaudited) for the three and
nine months ended September 30, 2022 and 2021
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Consolidated Statements of Comprehensive Income (unaudited) for the
three and nine months ended September 30, 2022 and
2021
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Consolidated Statements of Changes in Equity (unaudited) for the
three and nine months ended September 30, 2022 and
2021
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Consolidated Statements of Cash Flows (unaudited) for the nine
months ended September 30, 2022 and 2021
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Notes to Consolidated Financial Statements (unaudited) |
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2. |
Management’s Discussion and Analysis of Financial Condition and
Results of Operations |
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3. |
Quantitative and Qualitative Disclosures About Market
Risk |
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4. |
Controls and Procedures |
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1. |
Legal Proceedings |
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1A. |
Risk Factors |
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2. |
Unregistered Sales of Equity Securities and Use of
Proceeds |
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6. |
Exhibits |
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Signatures |
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Assurant, Inc.
Consolidated Balance Sheets (unaudited)
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September 30, 2022 |
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December 31, 2021 |
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(in millions, except number of
shares and per share amounts) |
Assets |
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Investments: |
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Fixed maturity securities available for sale, at fair value
(amortized cost - $6,863.6 and $6,903.9 at September 30, 2022 and
December 31, 2021, respectively)
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$ |
6,137.9 |
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$ |
7,215.3 |
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Equity securities at fair value |
302.6 |
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445.7 |
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Commercial mortgage loans on real estate, at amortized cost (net of
allowances for credit losses of $1.1 at September 30, 2022 and
December 31, 2021)
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304.4 |
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256.5 |
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Short-term investments |
266.8 |
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247.8 |
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Other investments |
504.4 |
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506.3 |
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Total investments |
7,516.1 |
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8,671.6 |
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Cash and cash equivalents |
1,429.8 |
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2,040.8 |
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Premiums and accounts receivable (net of allowances for credit
losses of $11.5 and $9.4 at September 30, 2022 and December 31,
2021, respectively)
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2,288.9 |
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1,942.5 |
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Reinsurance recoverables (net of allowances for credit losses of
$5.7 and $5.0 at September 30, 2022 and December 31, 2021,
respectively)
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7,561.8 |
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6,181.2 |
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Accrued investment income |
85.1 |
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62.1 |
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Deferred acquisition costs |
9,577.8 |
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8,811.0 |
|
Property and equipment, net |
617.6 |
|
|
561.4 |
|
Goodwill |
2,547.4 |
|
|
2,571.6 |
|
Value of business acquired |
323.5 |
|
|
583.4 |
|
Other intangible assets, net |
631.0 |
|
|
719.2 |
|
Other assets (net of allowances for credit losses of $2.0 and $2.5
at September 30, 2022 and December 31, 2021,
respectively)
|
666.7 |
|
|
698.9 |
|
|
|
|
|
Assets held for sale (Note 4) |
— |
|
|
1,076.9 |
|
Total assets |
$ |
33,245.7 |
|
|
$ |
33,920.6 |
|
Liabilities |
|
|
|
Future policy benefits and expenses |
$ |
406.7 |
|
|
$ |
413.2 |
|
Unearned premiums |
19,554.9 |
|
|
18,623.7 |
|
Claims and benefits payable |
3,022.4 |
|
|
1,604.8 |
|
Commissions payable |
670.9 |
|
|
692.7 |
|
Reinsurance balances payable |
520.9 |
|
|
446.2 |
|
Funds held under reinsurance |
374.5 |
|
|
364.2 |
|
Accounts payable and other liabilities |
2,467.2 |
|
|
3,044.4 |
|
Debt |
2,129.3 |
|
|
2,202.5 |
|
|
|
|
|
Liabilities held for sale (Note 4) |
— |
|
|
1,064.8 |
|
Total liabilities |
29,146.8 |
|
|
28,456.5 |
|
Commitments and contingencies (Note 16) |
|
|
|
Stockholders’ equity |
|
|
|
Common stock, par value $0.01 per share, 800,000,000 shares
authorized, 55,187,797 and 58,050,202 shares issued and 52,891,708
and 55,754,113 shares outstanding at September 30, 2022 and
December 31, 2021, respectively
|
0.6 |
|
|
0.7 |
|
Additional paid-in capital |
1,627.1 |
|
|
1,695.0 |
|
Retained earnings |
3,678.9 |
|
|
4,041.2 |
|
Accumulated other comprehensive loss |
(1,084.9) |
|
|
(150.0) |
|
Treasury stock, at cost; 2,296,089 shares at September 30, 2022 and
December 31, 2021
|
(122.8) |
|
|
(122.8) |
|
|
|
|
|
|
|
|
|
Total equity |
4,098.9 |
|
|
5,464.1 |
|
Total liabilities and equity |
$ |
33,245.7 |
|
|
$ |
33,920.6 |
|
See the accompanying Notes to Consolidated Financial Statements
(unaudited)
Assurant, Inc.
Consolidated Statements of Operations (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
2022 |
|
2021 |
|
2022 |
|
2021 |
|
(in millions, except number of shares and per share
amounts) |
Revenues |
|
|
|
|
|
|
|
Net earned premiums |
$ |
2,197.1 |
|
|
$ |
2,140.1 |
|
|
$ |
6,502.4 |
|
|
$ |
6,396.3 |
|
Fees and other income |
294.6 |
|
|
309.6 |
|
|
942.2 |
|
|
858.0 |
|
Net investment income |
83.5 |
|
|
76.0 |
|
|
261.8 |
|
|
235.2 |
|
Net realized (losses) gains on investments (including $—, $—,
$(2.1) and $0.2 of impairment-related (losses) gains for the three
and nine months ended September 30, 2022 and 2021, respectively)
and fair value changes to equity securities
|
(27.4) |
|
|
112.1 |
|
|
(166.2) |
|
|
123.2 |
|
Total revenues |
2,547.8 |
|
|
2,637.8 |
|
|
7,540.2 |
|
|
7,612.7 |
|
Benefits, losses and expenses |
|
|
|
|
|
|
|
Policyholder benefits |
670.5 |
|
|
617.4 |
|
|
1,760.5 |
|
|
1,684.2 |
|
Underwriting, selling, general and administrative
expenses |
1,842.5 |
|
|
1,784.0 |
|
|
5,444.8 |
|
|
5,210.4 |
|
|
|
|
|
|
|
|
|
Interest expense |
26.3 |
|
|
27.5 |
|
|
80.4 |
|
|
84.7 |
|
Loss on extinguishment of debt |
— |
|
|
20.7 |
|
|
0.9 |
|
|
20.7 |
|
Total benefits, losses and expenses |
2,539.3 |
|
|
2,449.6 |
|
|
7,286.6 |
|
|
7,000.0 |
|
Income from continuing operations before income tax
expense |
8.5 |
|
|
188.2 |
|
|
253.6 |
|
|
612.7 |
|
Income tax expense |
1.2 |
|
|
37.2 |
|
|
45.1 |
|
|
133.8 |
|
Net income from continuing operations |
7.3 |
|
|
151.0 |
|
|
208.5 |
|
|
478.9 |
|
Net income from discontinued operations (Note 4) |
— |
|
|
728.8 |
|
|
— |
|
|
762.0 |
|
Net income |
7.3 |
|
|
879.8 |
|
|
208.5 |
|
|
1,240.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Preferred stock dividends |
— |
|
|
— |
|
|
— |
|
|
(4.7) |
|
Net income attributable to common stockholders |
$ |
7.3 |
|
|
$ |
879.8 |
|
|
$ |
208.5 |
|
|
$ |
1,236.2 |
|
|
|
|
|
|
|
|
|
Earnings Per Common Share |
|
|
|
|
|
|
|
Basic |
|
|
|
|
|
|
|
Net income from continuing operations |
$ |
0.14 |
|
|
$ |
2.56 |
|
|
$ |
3.81 |
|
|
$ |
7.94 |
|
Net income from discontinued operations |
$ |
— |
|
|
$ |
12.32 |
|
|
$ |
— |
|
|
$ |
12.74 |
|
Net income attributable to common stockholders |
$ |
0.14 |
|
|
$ |
14.88 |
|
|
$ |
3.81 |
|
|
$ |
20.68 |
|
Diluted |
|
|
|
|
|
|
|
Net income from continuing operations |
$ |
0.14 |
|
|
$ |
2.54 |
|
|
$ |
3.78 |
|
|
$ |
7.87 |
|
Net income from discontinued operations |
$ |
— |
|
|
$ |
12.25 |
|
|
$ |
— |
|
|
$ |
12.52 |
|
Net income attributable to common stockholders |
$ |
0.14 |
|
|
$ |
14.79 |
|
|
$ |
3.78 |
|
|
$ |
20.39 |
|
Share Data |
|
|
|
|
|
|
|
Weighted average common shares outstanding used in basic per common
share calculations |
53,717,373 |
|
|
59,126,313 |
|
|
54,693,799 |
|
|
59,769,690 |
|
Plus: Dilutive securities |
349,232 |
|
|
353,151 |
|
|
431,051 |
|
|
1,085,631 |
|
Weighted average common shares outstanding used in diluted per
common share calculations |
54,066,605 |
|
|
59,479,464 |
|
|
55,124,850 |
|
|
60,855,321 |
|
See the accompanying Notes to Consolidated Financial Statements
(unaudited)
Assurant, Inc.
Consolidated Statements of Comprehensive Income
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
2022 |
|
2021 |
|
2022 |
|
2021 |
|
(in millions) |
Net income |
$ |
7.3 |
|
|
$ |
879.8 |
|
|
$ |
208.5 |
|
|
$ |
1,240.9 |
|
Other comprehensive (loss) income: |
|
|
|
|
|
|
|
Change in unrealized gains on securities, net of taxes of
$50.5,$184.4, $213.3 and $220.8 for the three and nine months ended
September 30, 2022 and 2021, respectively
|
(209.3) |
|
|
(663.1) |
|
|
(836.0) |
|
|
(786.2) |
|
Change in unrealized gains on derivative transactions, net of taxes
of $0.1, $0.2, $0.5 and $0.6 for each of the three and nine months
ended September 30, 2022 and 2021, respectively
|
(0.6) |
|
|
(0.6) |
|
|
(1.9) |
|
|
(1.8) |
|
Change in foreign currency translation, net of taxes of $0.1, $1.1,
$(2.5) and $1.3 for the three and nine months ended September 30,
2022 and 2021, respectively
|
(51.4) |
|
|
(23.7) |
|
|
(92.0) |
|
|
(2.9) |
|
Change in pension and postretirement unrecognized net periodic
benefit cost, net of taxes of $0.4, $0.2, $1.3 and $0.9 for the
three and nine months ended September 30, 2022 and 2021,
respectively
|
(1.4) |
|
|
(0.7) |
|
|
(5.0) |
|
|
(3.0) |
|
Total other comprehensive loss |
(262.7) |
|
|
(688.1) |
|
|
(934.9) |
|
|
(793.9) |
|
Total comprehensive (loss) income |
(255.4) |
|
|
191.7 |
|
|
(726.4) |
|
|
447.0 |
|
|
|
|
|
|
|
|
|
Total comprehensive (loss) income attributable to
stockholders |
$ |
(255.4) |
|
|
$ |
191.7 |
|
|
$ |
(726.4) |
|
|
$ |
447.0 |
|
See the accompanying Notes to Consolidated Financial Statements
(unaudited)
Assurant, Inc.
Consolidated Statements of Changes in Equity
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, 2022 |
|
|
|
Common Stock |
|
Additional
Paid-in
Capital |
|
Retained
Earnings |
|
Accumulated
Other
Comprehensive
Loss |
|
Treasury
Stock |
|
|
|
Total |
|
|
(in millions) |
Balance at June 30, 2022 |
|
|
$ |
0.6 |
|
|
$ |
1,629.9 |
|
|
$ |
3,774.2 |
|
|
$ |
(822.2) |
|
|
$ |
(122.8) |
|
|
|
|
$ |
4,459.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock plan exercises |
|
|
— |
|
|
5.8 |
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
5.8 |
|
Stock plan compensation expense |
|
|
— |
|
|
17.9 |
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
17.9 |
|
Common stock dividends ($0.68 per share)
|
|
|
— |
|
|
— |
|
|
(36.7) |
|
|
— |
|
|
— |
|
|
|
|
(36.7) |
|
Acquisition of common stock |
|
|
— |
|
|
(26.5) |
|
|
(65.9) |
|
|
— |
|
|
— |
|
|
|
|
(92.4) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
|
— |
|
|
— |
|
|
7.3 |
|
|
— |
|
|
— |
|
|
|
|
7.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive loss |
|
|
— |
|
|
— |
|
|
— |
|
|
(262.7) |
|
|
— |
|
|
|
|
(262.7) |
|
Balance at September 30, 2022 |
|
|
$ |
0.6 |
|
|
$ |
1,627.1 |
|
|
$ |
3,678.9 |
|
|
$ |
(1,084.9) |
|
|
$ |
(122.8) |
|
|
|
|
$ |
4,098.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, 2021 |
|
|
|
Common Stock |
|
Additional
Paid-in
Capital |
|
Retained
Earnings |
|
Accumulated
Other
Comprehensive
Income (Loss) |
|
Treasury
Stock |
|
|
|
Total |
|
|
(in millions) |
Balance at June 30, 2021 |
|
|
$ |
0.7 |
|
|
$ |
1,786.2 |
|
|
$ |
3,619.8 |
|
|
$ |
604.0 |
|
|
$ |
(122.8) |
|
|
|
|
$ |
5,887.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock plan exercises |
|
|
— |
|
|
6.4 |
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
6.4 |
|
Stock plan compensation expense |
|
|
— |
|
|
18.2 |
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
18.2 |
|
Common stock dividends ($0.66 per share)
|
|
|
— |
|
|
— |
|
|
(38.5) |
|
|
— |
|
|
— |
|
|
|
|
(38.5) |
|
Acquisition of common stock |
|
|
— |
|
|
(62.6) |
|
|
(264.9) |
|
|
— |
|
|
— |
|
|
|
|
(327.5) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
|
— |
|
|
— |
|
|
879.8 |
|
|
— |
|
|
— |
|
|
|
|
879.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition of non-controlling interests |
|
|
— |
|
|
(16.9) |
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
(16.9) |
|
Other comprehensive income |
|
|
— |
|
|
— |
|
|
— |
|
|
(688.1) |
|
|
— |
|
|
|
|
(688.1) |
|
Balance at September 30, 2021 |
|
|
$ |
0.7 |
|
|
$ |
1,731.3 |
|
|
$ |
4,196.2 |
|
|
$ |
(84.1) |
|
|
$ |
(122.8) |
|
|
|
|
$ |
5,721.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, 2022 |
|
|
|
Common Stock |
|
Additional
Paid-in
Capital |
|
Retained
Earnings |
|
Accumulated
Other
Comprehensive Loss |
|
Treasury
Stock |
|
|
|
Total |
|
|
|
(in millions) |
Balance at December 31, 2021 |
|
|
$ |
0.7 |
|
|
$ |
1,695.0 |
|
|
$ |
4,041.2 |
|
|
$ |
(150.0) |
|
|
$ |
(122.8) |
|
|
|
|
$ |
5,464.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock plan exercises |
|
|
— |
|
|
13.6 |
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
13.6 |
|
Stock plan compensation expense |
|
|
— |
|
|
47.2 |
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
47.2 |
|
Common stock dividends ($2.04 per share)
|
|
|
— |
|
|
— |
|
|
(112.7) |
|
|
— |
|
|
— |
|
|
|
|
(112.7) |
|
Acquisition of common stock |
|
|
(0.1) |
|
|
(128.7) |
|
|
(458.1) |
|
|
— |
|
|
— |
|
|
|
|
(586.9) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
|
— |
|
|
— |
|
|
208.5 |
|
|
— |
|
|
— |
|
|
|
|
208.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive loss |
|
|
— |
|
|
— |
|
|
— |
|
|
(934.9) |
|
|
— |
|
|
|
|
(934.9) |
|
Balance at September 30, 2022 |
|
|
$ |
0.6 |
|
|
$ |
1,627.1 |
|
|
$ |
3,678.9 |
|
|
$ |
(1,084.9) |
|
|
$ |
(122.8) |
|
|
|
|
$ |
4,098.9 |
|
Assurant, Inc.
Consolidated Statements of Changes in Equity
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, 2021 |
|
Preferred Stock |
|
Common Stock |
|
Additional
Paid-in
Capital |
|
Retained
Earnings |
|
Accumulated
Other
Comprehensive
Income (Loss) |
|
Treasury
Stock |
|
Non-controlling Interests |
|
Total |
|
(in millions) |
Balance at December 31, 2020 |
$ |
2.9 |
|
|
$ |
0.6 |
|
|
$ |
1,956.8 |
|
|
$ |
3,533.5 |
|
|
$ |
709.8 |
|
|
$ |
(267.4) |
|
|
$ |
3.4 |
|
|
$ |
5,939.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock plan exercises |
— |
|
|
— |
|
|
11.8 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
11.8 |
|
Stock plan compensation expense |
— |
|
|
— |
|
|
48.6 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
48.6 |
|
Common stock dividends ($1.98 per share)
|
— |
|
|
— |
|
|
— |
|
|
(118.5) |
|
|
— |
|
|
— |
|
|
— |
|
|
(118.5) |
|
Acquisition of common stock |
— |
|
|
— |
|
|
(127.2) |
|
|
(454.4) |
|
|
— |
|
|
— |
|
|
— |
|
|
(581.6) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
— |
|
|
— |
|
|
— |
|
|
1,240.9 |
|
|
— |
|
|
— |
|
|
— |
|
|
1,240.9 |
|
Preferred stock conversion |
(2.9) |
|
|
0.1 |
|
|
(141.8) |
|
|
— |
|
|
— |
|
|
144.6 |
|
|
— |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock dividends ($1.63 per share)
|
— |
|
|
— |
|
|
— |
|
|
(4.7) |
|
|
— |
|
|
— |
|
|
— |
|
|
(4.7) |
|
Change in equity of non-controlling interests |
— |
|
|
— |
|
|
— |
|
|
(0.6) |
|
|
— |
|
|
— |
|
|
(3.4) |
|
|
(4.0) |
|
Acquisition of non-controlling interest |
— |
|
|
— |
|
|
(16.9) |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(16.9) |
|
Other comprehensive income |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(793.9) |
|
|
— |
|
|
— |
|
|
(793.9) |
|
Balance at September 30, 2021 |
$ |
— |
|
|
$ |
0.7 |
|
|
$ |
1,731.3 |
|
|
$ |
4,196.2 |
|
|
$ |
(84.1) |
|
|
$ |
(122.8) |
|
|
$ |
— |
|
|
$ |
5,721.3 |
|
See the accompanying Notes to Consolidated Financial Statements
(unaudited)
Assurant, Inc.
Consolidated Statements of Cash Flows (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, |
|
2022 |
|
2021 |
|
(in millions) |
Operating activities |
|
|
|
Net income attributable to stockholders |
$ |
208.5 |
|
|
$ |
1,240.9 |
|
Adjustments to reconcile net income to net cash provided by
operating activities: |
|
|
|
Noncash revenues, expenses, gains and losses included in net income
from operations: |
|
|
|
Income from discontinued operations |
— |
|
|
(762.0) |
|
Deferred tax expense |
65.6 |
|
|
122.3 |
|
Depreciation and amortization |
140.2 |
|
|
126.0 |
|
Net realized losses (gains) on investments, including impairment
losses |
166.2 |
|
|
(123.2) |
|
|
|
|
|
|
|
|
|
Stock based compensation expense |
47.2 |
|
|
48.6 |
|
Loss on extinguishment of debt |
0.9 |
|
|
20.7 |
|
|
|
|
|
|
|
|
|
Changes in operating assets and liabilities: |
|
|
|
Insurance policy reserves and expenses |
2,388.4 |
|
|
1,425.8 |
|
Premiums and accounts receivable |
(384.2) |
|
|
(131.6) |
|
Commissions payable |
(9.4) |
|
|
(77.4) |
|
Reinsurance recoverable |
(1,397.2) |
|
|
(518.7) |
|
Reinsurance balance payable |
71.8 |
|
|
37.2 |
|
Funds withheld under reinsurance |
13.2 |
|
|
(8.6) |
|
Deferred acquisition costs and value of business
acquired |
(514.1) |
|
|
(706.6) |
|
Taxes payable (receivable) |
49.3 |
|
|
(123.4) |
|
Other assets and other liabilities |
(508.7) |
|
|
(177.2) |
|
Other |
(17.9) |
|
|
(17.0) |
|
Net cash provided by operating activities - discontinued
operations |
— |
|
|
151.2 |
|
Net cash provided by operating activities |
319.8 |
|
|
527.0 |
|
Investing activities |
|
|
|
Sales of: |
|
|
|
Fixed maturity securities available for sale |
2,310.3 |
|
|
668.9 |
|
Equity securities |
43.2 |
|
|
10.6 |
|
Other invested assets |
123.9 |
|
|
124.4 |
|
|
|
|
|
Subsidiary, net of cash transferred |
4.8 |
|
|
1,319.6 |
|
|
|
|
|
Maturities, calls, prepayments, and scheduled redemption
of: |
|
|
|
Fixed maturity securities available for sale |
386.3 |
|
|
730.4 |
|
Commercial mortgage loans on real estate |
29.1 |
|
|
11.0 |
|
Purchases of: |
|
|
|
Fixed maturity securities available for sale |
(2,681.9) |
|
|
(2,316.9) |
|
Equity securities |
(27.0) |
|
|
(34.9) |
|
Commercial mortgage loans on real estate |
(77.0) |
|
|
(95.7) |
|
Other invested assets |
(91.1) |
|
|
(58.9) |
|
Property and equipment and other |
(133.9) |
|
|
(131.3) |
|
Subsidiaries, net of cash transferred |
|
|
(16.6) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in short-term investments |
(22.1) |
|
|
(30.2) |
|
Other |
0.5 |
|
|
1.5 |
|
Net cash used in investing activities - discontinued
operations |
— |
|
|
(145.2) |
|
Net cash (used in) provided by investing activities |
(134.9) |
|
|
36.7 |
|
Assurant, Inc.
Consolidated Statements of Cash Flows (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, |
|
2022 |
|
2021 |
Financing activities |
|
|
|
Issuance of debt, net of issuance costs |
— |
|
|
347.2 |
|
Repayment of debt |
(75.9) |
|
|
(419.8) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition of common stock |
(557.6) |
|
|
(544.3) |
|
Common stock dividends paid |
(112.7) |
|
|
(118.5) |
|
Preferred stock dividends paid |
— |
|
|
(4.7) |
|
Employee stock purchases and withholdings |
(21.0) |
|
|
(17.3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) financing activities - discontinued
operations |
— |
|
|
— |
|
Net cash used in financing activities |
(767.2) |
|
|
(757.4) |
|
Effect of exchange rate changes on cash and cash equivalents -
continuing operations |
(42.7) |
|
|
(7.2) |
|
Effect of exchange rate changes on cash and cash equivalents -
discontinued operations |
— |
|
|
0.2 |
|
Effect of exchange rate changes on cash and cash
equivalents |
(42.7) |
|
|
(7.0) |
|
Change in cash and cash equivalents |
(625.0) |
|
|
(200.7) |
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at beginning of period |
2,054.8 |
|
|
2,228.6 |
|
Cash and cash equivalents at end of period |
$ |
1,429.8 |
|
|
$ |
2,027.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
See the accompanying Notes to Consolidated Financial Statements
(unaudited)
Assurant, Inc.
Notes to Consolidated Financial Statements (unaudited)
(in millions, except number of shares and per share
amounts)
INDEX OF NOTES
|
|
|
|
|
|
|
|
|
Note
Number
|
|
Page
Number
|
1. |
|
|
2. |
|
|
3. |
|
|
4. |
|
|
5. |
|
|
6. |
|
|
7. |
|
|
8. |
|
|
9. |
|
|
10. |
|
|
11. |
|
|
12. |
|
|
13. |
|
|
14. |
|
|
15. |
|
|
16. |
|
|
17. |
|
|
18. |
|
|
1. Nature of Operations
Assurant, Inc. (the “Company”) is a leading global business
services company that supports, protects and connects major
consumer purchases. The Company supports the advancement of the
connected world by partnering with the world’s leading brands to
develop innovative solutions and to deliver an enhanced customer
experience through mobile device solutions, extended service
contracts, vehicle protection services, renters insurance,
lender-placed insurance products and other specialty products. The
Company operates in North America, Latin America, Europe and Asia
Pacific through two operating segments: Global Lifestyle and Global
Housing. Through its Global Lifestyle segment, the Company provides
mobile device solutions, extended service products and related
services for consumer electronics and appliances, and credit and
other insurance products (referred to as “Connected Living”); and
vehicle protection and related services (referred to as “Global
Automotive”). Through its Global Housing segment, the Company
provides lender-placed homeowners insurance, lender-placed
manufactured housing insurance and lender-placed flood insurance
(referred to as “Lender-placed Insurance”); renters insurance and
related products (referred to as “Multifamily Housing”); and
voluntary manufactured housing insurance, voluntary homeowners
insurance and other specialty products (referred to as “Specialty
and Other”).
The Company’s common stock is traded on the New York Stock Exchange
under the symbol “AIZ”.
2. Basis of Presentation
The accompanying unaudited interim Consolidated Financial
Statements have been prepared in accordance with accounting
principles generally accepted in the United States of America
(“GAAP”) for interim financial information. Accordingly, these
statements do not include all of the information and notes required
by GAAP for complete financial statements.
The interim financial data as of September 30, 2022 and for the
three and nine months ended September 30, 2022 and 2021 is
unaudited. In the opinion of management, the interim data includes
all adjustments necessary for a fair statement of the results for
the interim periods. The unaudited interim Consolidated Financial
Statements include the accounts of the Company
Assurant, Inc.
Notes to Consolidated Financial Statements (unaudited)
(in millions, except number of shares and per share
amounts)
and all of its wholly owned subsidiaries. All inter-company
transactions and balances are eliminated in consolidation. Certain
prior period amounts have been revised to conform to the current
year presentation, including the change to the segment measure of
profitability described in Note 5.
Operating results for the three and nine months ended September 30,
2022 are not necessarily indicative of the results that may be
expected for the year ending December 31, 2022. The accompanying
unaudited interim Consolidated Financial Statements should be read
in conjunction with the audited Consolidated Financial Statements
and related notes included in the Company’s Annual Report on Form
10-K for the year ended December 31, 2021.
Revision of Prior Period Financial Statements
In second quarter 2022, the Company revised its prior period
financial statements to reflect the correction of an error
identified in second quarter 2022 related to reinsurance of claims
and benefits payable within the Connected Living business unit in
the Global Lifestyle segment occurring in late 2018 through first
quarter 2022, as well as other immaterial errors which were
previously recorded in the periods in which the Company identified
them.
A summary of revisions to the Company’s consolidated balance sheet
as of December 31, 2021; and the consolidated statements of
operations, comprehensive income and changes in equity, in each
case, for the three and nine months ended September 30, 2021, and
cash flows for the nine months ended September 30, 2021 is
presented in Note 17. The Company will also correct previously
reported financial information for such errors in its future
filings, as applicable.
3. Recent Accounting Pronouncements
Adopted
Facilitation of the Effects of Reference Rate Reform on Financial
Reporting:
In March 2020, the Financial Accounting Standards Board (the
“FASB”) issued guidance which provides optional expedients and
exceptions for applying GAAP to contract modifications and hedging
relationships, subject to meeting certain criteria, that reference
LIBOR or another reference rate expected to be
discontinued.
The relief is applicable only to legacy contracts if the amendments
made to the agreements are solely for reference rate reform
activities. The provisions must be applied consistently for all
relevant transactions other than derivatives, which may be applied
at a hedging relationship level. The guidance is effective upon
issuance. The guidance on contract modifications is applied
prospectively from any date beginning March 12, 2020. Unlike other
topics, the provisions of this update are only available until
December 31, 2022, when the reference rate replacement activity is
expected to have been completed.
This standard is effective as of January 1, 2022, but has no impact
on the Company’s consolidated financial statements as the Company
currently has no contracts or hedging relationships for which the
reference LIBOR or another rate is expected to be discontinued and
a GAAP contract modification is required.
Improvements to Convertible Instruments and Contracts in an
Entity’s Own Equity:
In August 2020, the FASB issued guidance that simplifies accounting
for convertible instruments by removing major separation models
required under current GAAP. Consequently, more convertible debt
instruments will be reported as a single liability instrument and
more convertible preferred stock as a single equity instrument with
no separate accounting for embedded conversion features. The
guidance removes certain settlement conditions that are required
for equity contracts to qualify for the derivative scope exception,
which will permit more contracts in an entity’s own equity to
qualify for it. The guidance also simplifies the diluted earnings
per common share (“EPS”) calculation in the areas of convertible
instruments and instruments that qualify for the derivatives scope
exception for contracts in an entity’s own equity to address
accounting for the guidance changes to the classification,
recognition and measurement.
This standard is effective as of January 1, 2022, but has no impact
on the Company’s consolidated financial statements as the Company
currently has no convertible instruments or contracts in its own
equity.
Not Yet Adopted
Targeted improvements to the accounting for long-duration
contracts:
In August 2018, the FASB issued guidance that provides targeted
improvements to the accounting for long-duration contracts. The
guidance includes the following primary changes: assumptions
supporting benefit reserves will no longer be locked-in but must be
updated at least annually with the
Assurant, Inc.
Notes to Consolidated Financial Statements (unaudited)
(in millions, except number of shares and per share
amounts)
impact of changes to the liability reflected in earnings (except
for discount rates); the discount rate assumptions will be based on
the upper-medium grade (low credit risk) fixed-income instrument
yield instead of the earnings rate of invested assets; the discount
rate must be evaluated at each reporting date and the impact of
changes to the liability estimate as a result of updating the
discount rate assumption is required to be recognized in other
comprehensive income; the provision for adverse deviation is
eliminated; and premium deficiency testing is eliminated. Other
noteworthy changes include the following: differing models for
amortizing deferred acquisition costs will become uniform for all
long-duration contracts based on a constant rate over the expected
term of the related in-force contracts; all market risk benefits
associated with deposit contracts must be reported at fair value
with changes reflected in income except for changes related to
credit risk which will be recognized in other comprehensive income;
and disclosures will be expanded to include disaggregated roll
forwards of the liability for future policy benefits, policyholder
account balances, market risk benefits, separate account
liabilities, and deferred acquisition costs, as well as information
about significant inputs, judgments, assumptions and methods used
in measurement.
The guidance is effective for fiscal years beginning after December
15, 2022, and interim periods within those fiscal years. Early
adoption is permitted. Generally, the amendments are applied
retrospectively as of the beginning of the earliest period
presented with two transition options available for changing the
assumptions. With the sale of the disposed Global Preneed business
in August 2021, the adoption of this standard is expected to have
no material impact on the Company’s financial position and results
of operations.
Recognition and Measurement of Revenue Contracts with Customers
Acquired in a Business Combination:
In October 2021, the FASB issued guidance to improve comparability
after a business combination is reported in the acquirer’s
financial statements by providing consistent recognition and
measurement guidance for revenue contracts with customers acquired
in a business combination and revenue contracts with customers not
acquired in a business combination. Generally, the acquirer will
recognize the acquired contract assets and contract liabilities at
the same amounts recorded by the acquiree. Historically, such
amounts were recognized by the acquirer at fair value in the
acquisition accounting. Under the amended guidance, the acquirer
should account for the related revenue contracts as if it had
originated the contracts. The amendments provide certain practical
expedients for acquirers when recognizing and measuring acquired
contract assets and contract liabilities from revenue contracts in
a business combination.
The guidance is effective for fiscal years beginning after December
15, 2022, including interim periods within those fiscal years. The
amendments should be applied prospectively to business combinations
occurring on or after the effective date of the amendments. Early
adoption of the amendment is permitted, including adoption in an
interim period. An entity that early adopts in an interim period
should apply the amendments (1) retrospectively to all business
combinations for which the acquisition date occurs on or after the
beginning of the fiscal year that includes the interim period of
early application and (2) prospectively to all business
combinations that occur on or after the date of initial
application. The adoption of this standard is expected to have no
material impact on the Company’s financial position and results of
operations.
Fair Value Measurement of Equity Securities Subject to Contractual
Sale Restrictions:
In June 2022, the FASB issued guidance on investments in equity
securities measured at fair value that are subject to contractual
restrictions preventing the sale of those securities. The
amendments clarify that a contractual restriction on the sale of an
equity security is not considered part of the unit of account of
the equity security and, therefore, is not considered in measuring
fair value. Disclosures will be required to provide investors with
information about the restriction including the fair value of the
equity securities subject to any contractual sale restrictions
reflected in the balance sheet, the nature and remaining duration
of such restrictions, and any circumstances that could cause a
lapse in such restrictions.
The guidance is effective for fiscal years beginning after December
15, 2023, including interim periods within those fiscal years.
Early adoption is permitted for both interim and annual financial
statements that have not yet been issued or made available for
issuance. The Company plans to early adopt the standard if it
invests in equity securities that have contractual restrictions
preventing the sale of those securities prior to the effective
date.
Inflation Reduction Act of 2022:
In August 2022, the U.S. government enacted the Inflation Reduction
Act (the “IRA”) which makes changes to the Internal Revenue Code of
1986, as amended, including the imposition of (1) a new corporate
alternative minimum tax (“CAMT”) based on applicable financial
statement income and (2) a 1% excise tax on corporate stock
repurchases. The effective date of the IRA is January 1, 2023.
After initial analysis of the IRA, the Company does not expect a
material impact to the financial statements in 2022. The Company is
undergoing further analysis to determine if the CAMT will apply to
the financial statements in 2023 and future years. Additionally,
any excise tax incurred on corporate stock repurchases is expected
to be recognized as part of the cost basis of the treasury stock
acquired and not reported as part of income tax
expense.
Assurant, Inc.
Notes to Consolidated Financial Statements (unaudited)
(in millions, except number of shares and per share
amounts)
4. Dispositions
Sale of Global Preneed
On August 2, 2021, the Company completed its sale of the legal
entities which comprise the businesses previously reported as the
Global Preneed segment and certain businesses previously disposed
of through reinsurance, which were previously reported in the
Corporate and Other segment, to subsidiaries of CUNA Mutual Group
for an aggregate purchase price at closing of $1.34 billion in
cash.
The following table summarizes the components of net income from
discontinued operations included in the consolidated statements of
operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
2021 |
|
2021 |
Revenues |
|
|
|
Net earned premiums |
$ |
6.1 |
|
|
$ |
42.6 |
|
Fees and other income |
13.6 |
|
|
91.0 |
|
Net investment income |
23.7 |
|
|
168.4 |
|
Net realized gains on investments and fair value changes to equity
securities |
0.5 |
|
|
4.2 |
|
Gain on disposal of businesses |
926.4 |
|
|
920.1 |
|
Total revenues |
970.3 |
|
|
1,226.3 |
|
Benefits, losses and expenses |
|
|
|
Policyholder benefits |
24.6 |
|
|
172.7 |
|
Underwriting, selling, general and administrative
expenses |
12.8 |
|
|
85.2 |
|
|
|
|
|
Total benefits, losses and expenses |
37.4 |
|
|
257.9 |
|
Income from discontinued operations before income taxes |
932.9 |
|
|
968.4 |
|
Benefit for income taxes |
204.1 |
|
|
206.4 |
|
Net income from discontinued operations |
$ |
728.8 |
|
|
$ |
762.0 |
|
Sale of John Alden Life Insurance Company
On April 1, 2022, the Company completed its sale of John Alden Life
Insurance Company (“JALIC”), a run-off business reported in the
Corporate and Other segment. Prior to the sale, JALIC met the
criteria for held for sale presentation and, therefore, its assets
and liabilities were recorded as held for sale in the December 31,
2021 consolidated balance sheet. The major classes of assets and
liabilities held for sale included $915.8 million of future policy
benefits and expenses, $881.6 million of reinsurance recoverables,
$159.6 million of other investments and $117.2 million of claims
and benefits payable as December 31, 2021.
Most of the $881.6 million reinsurance recoverables balance for
JALIC, which was included in assets held for sale as of December
31, 2021 was reinsured with Employers Reassurance Corporation and
was uncollateralized.
5. Segment Information
In conjunction with the transition of the Company’s CEO and chief
operating decision maker on January 1, 2022, the Company changed
its segment measure of profitability for its reportable segments to
an Adjusted EBITDA metric, as the primary measure used for purposes
of making decisions about allocating resources to the segments and
assessing performance, from segment net income from continuing
operations, effective as of that date. Prior period amounts have
been revised to reflect the new segment measure of
profitability.
Beginning with second quarter 2022, the Company changed the
calculation of its segment measure of profitability, Adjusted
EBITDA, to exclude certain businesses which the Company expects to
fully exit, including the long-tail commercial
Assurant, Inc.
Notes to Consolidated Financial Statements (unaudited)
(in millions, except number of shares and per share
amounts)
liability businesses in Global Housing (sharing economy and small
commercial businesses), as well as certain legacy long-duration
insurance policies within Global Lifestyle (collectively referred
to as “non-core operations”), and present them as a reconciling
item to consolidated net income from continuing operations. The
non-core operations have been or are in the process of being exited
by the Company, but do not qualify as held for sale or discontinued
operations under GAAP accounting guidance.
As of September 30, 2022, the Company had three reportable
segments: Global Lifestyle, Global Housing and Corporate and Other.
The Company defines Adjusted EBITDA as net income from continuing
operations, excluding net realized gains (losses) on investments
and fair value changes to equity securities, COVID-19 direct and
incremental expenses, loss on extinguishment of debt, non-core
operations (defined above), net income (loss) attributable to
non-controlling interests, interest expense, provision (benefit)
for income taxes, depreciation expense, amortization of purchased
intangible assets, restructuring costs related to strategic exit
activities (outside of normal periodic restructuring and cost
management activities), as well as other highly variable or unusual
items.
All prior period amounts have been revised, which impacts both
segment Adjusted EBITDA and other adjustments under reconciling
items to consolidated net income from continuing operations, but
does not impact consolidated net income. The sharing economy and
small commercial businesses, previously reported through the
Company’s Global Housing segment, generated Adjusted EBITDA of
$(3.6) million and $(46.8) million for the three and nine
months ended September 30, 2022, respectively, and Adjusted EBITDA
of $(6.1) million and $(0.6) million for the three and
nine months ended September 30, 2021, respectively. The legacy
long-duration insurance policies included in non-core operations
and previously reported through the Company’s Global Lifestyle
segment, generated Adjusted EBITDA of $0.7 million and
$1.7 million for the three and nine months ended September 30,
2022, respectively, and Adjusted EBITDA of $(2.1) million and
$(2.0) million for the three and nine months ended September
30, 2021, respectively.
Segment Adjusted EBITDA was also revised for an error related to
reinsurance of claims and benefits payable within the Connected
Living business unit in the Global Lifestyle segment, and for other
unrelated immaterial errors. See Note 2 for more
information.
Assurant, Inc.
Notes to Consolidated Financial Statements (unaudited)
(in millions, except number of shares and per share
amounts)
The following table presents segment Adjusted EBITDA with a
reconciliation to net income attributable to common
shareholders:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
2022 |
|
2021 |
|
2022 |
|
2021 |
Adjusted EBITDA by segment: |
|
|
|
|
|
|
|
Global Lifestyle |
$ |
165.9 |
|
|
$ |
176.3 |
|
|
$ |
587.3 |
|
|
$ |
546.0 |
|
Global Housing |
(25.0) |
|
|
15.2 |
|
|
166.7 |
|
|
235.2 |
|
Corporate and Other |
(24.9) |
|
|
(23.0) |
|
|
(72.0) |
|
|
(67.8) |
|
Reconciling items to consolidated net income from continuing
operations: |
|
|
|
|
|
|
|
Interest expense |
(26.3) |
|
|
(27.5) |
|
|
(80.4) |
|
|
(84.7) |
|
Depreciation expense |
(22.6) |
|
|
(18.1) |
|
|
(64.7) |
|
|
(52.4) |
|
Amortization of purchased intangible assets |
(17.3) |
|
|
(15.7) |
|
|
(51.9) |
|
|
(50.0) |
|
Net realized (losses) gains on investments and fair value changes
to equity securities |
(27.4) |
|
|
112.1 |
|
|
(166.2) |
|
|
123.2 |
|
COVID-19 direct and incremental expenses |
(1.1) |
|
|
(2.0) |
|
|
(3.6) |
|
|
(7.2) |
|
Loss on extinguishment of debt |
— |
|
|
(20.7) |
|
|
(0.9) |
|
|
(20.7) |
|
Non-core operations |
(2.9) |
|
|
(8.2) |
|
|
(45.1) |
|
|
(2.6) |
|
Other adjustments |
(9.9) |
|
|
(0.2) |
|
|
(15.6) |
|
|
(6.3) |
|
|
|
|
|
|
|
|
|
Total reconciling items |
(107.5) |
|
|
19.7 |
|
|
(428.4) |
|
|
(100.7) |
|
Income from continuing operations before income tax
expense |
8.5 |
|
|
188.2 |
|
|
253.6 |
|
|
612.7 |
|
Income tax expense |
1.2 |
|
|
37.2 |
|
|
45.1 |
|
|
133.8 |
|
Net income from continuing operations |
$ |
7.3 |
|
|
$ |
151.0 |
|
|
$ |
208.5 |
|
|
$ |
478.9 |
|
Assurant, Inc.
Notes to Consolidated Financial Statements (unaudited)
(in millions, except number of shares and per share
amounts)
The Company’s net earned premiums, fees and other income by segment
and product are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
2022 |
|
2021 |
|
2022 |
|
2021 |
Global Lifestyle: |
|
|
|
|
|
|
|
Connected Living (1) |
$ |
1,046.8 |
|
|
$ |
1,094.1 |
|
|
$ |
3,182.0 |
|
|
$ |
3,221.9 |
|
Global Automotive |
943.5 |
|
|
867.1 |
|
|
2,751.5 |
|
|
2,535.1 |
|
Total |
$ |
1,990.3 |
|
|
$ |
1,961.2 |
|
|
$ |
5,933.5 |
|
|
$ |
5,757.0 |
|
|
|
|
|
|
|
|
|
Global Housing: |
|
|
|
|
|
|
|
Lender-placed Insurance |
$ |
262.2 |
|
|
$ |
256.2 |
|
|
$ |
801.9 |
|
|
$ |
790.9 |
|
Multifamily Housing |
119.9 |
|
|
121.7 |
|
|
362.0 |
|
|
361.2 |
|
Specialty and Other |
102.0 |
|
|
93.2 |
|
|
301.9 |
|
|
295.5 |
|
Total |
$ |
484.1 |
|
|
$ |
471.1 |
|
|
$ |
1,465.8 |
|
|
$ |
1,447.6 |
|
(1)Effective
January 1, 2022, the Connected Living line of business includes the
previous Global Financial Services and Other line of business.
Prior period amounts have been revised to reflect this
change.
Net earned premiums, fees and other income for non-core operations
were $17.2 million for each of the three months ended
September 30, 2022 and 2021, and $44.7 million and
$49.1 million for the nine months ended September 30, 2022 and
2021, respectively.
The following table presents total assets by segment:
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2022 |
|
December 31, 2021 |
Global Lifestyle (1) |
$ |
26,617.9 |
|
|
$ |
26,120.9 |
|
Global Housing (1) |
5,367.8 |
|
|
4,007.3 |
|
Corporate and Other (2) |
1,260.0 |
|
|
3,792.4 |
|
Segment assets |
$ |
33,245.7 |
|
|
$ |
33,920.6 |
|
(1)Segment
assets for Global Lifestyle and Global Housing do not include net
unrealized gains (losses) on securities attributable to those
segments, which are all included within Corporate and
Other.
(2)Includes
the assets for non-core operations of $385.0 million and
$326.3 million as of September 30, 2022 and December 31, 2021,
respectively.
6. Contract Revenues
The Company partners with clients to provide consumers with a
diverse range of protection products and services. The Company’s
revenues from protection products are accounted for as insurance
contracts and are recognized over the term of the insurance
protection provided. Revenues from service contracts and sales of
products are recognized as the contractual performance obligations
are satisfied or the products are delivered. Revenue is measured as
the amount of consideration the Company expects to be entitled to
in exchange for performing the services or transferring products.
If payments are received before the related revenue is recognized,
the amount is recorded as unearned revenue or advance payment
liabilities, until the performance obligations are satisfied or the
products are transferred.
The disaggregated revenues from service contracts included in fees
and other income on the consolidated statements of operations are
$257.9 million and $264.0 million for Global Lifestyle and $19.8
million and $22.4 million for Global Housing for the three months
ended September 30, 2022 and 2021, respectively. The disaggregated
revenues from service contracts included in fees and other income
on the consolidated statement of operations are $825.5 million and
$730.1 million for Global Lifestyle and $63.4 million and $71.8
million for Global Housing for the nine months ended September 30,
2022 and 2021, respectively.
Assurant, Inc.
Notes to Consolidated Financial Statements (unaudited)
(in millions, except number of shares and per share
amounts)
Global Lifestyle
In the Company’s Global Lifestyle segment, revenues from service
contracts and sales of products are primarily from the Company’s
Connected Living business. Through partnerships with mobile
carriers, the Company provides administrative services related to
its mobile device protection products, including program design and
marketing strategy, risk management, data analytics, customer
support and claims handling, supply chain and service delivery,
repair and logistics, and device disposition. Administrative fees
are generally billed monthly based on the volume of services
provided during the billing period (for example, based on the
number of mobile subscribers) with payment due within a short-term
period. Each service or bundle of services, depending on the
contract, is an individual performance obligation with a standalone
selling price. The Company recognizes revenue as it invoices, which
corresponds to the value transferred to the customer.
The Company also repairs, refurbishes and then sells mobile and
other electronic devices, on behalf of its clients, for a bundled
per unit fee. The entire processing of the device is considered one
performance obligation with a standalone selling price and thus,
the per unit fee is recognized when the products are sold. Payments
are generally due prior to shipment or within a short-term
period.
Global Housing
In the Company’s Global Housing segment, revenues from service
contracts and sales of products are primarily from the Company’s
Lender-placed Insurance business. Under the Company’s Lender-placed
Insurance business, the Company provides loan and claim payment
tracking services for lenders. The Company generally invoices its
customers weekly or monthly based on the volume of services
provided during the billing period with payment due within a
short-term period. Each service is an individual performance
obligation with a standalone selling price. The Company recognizes
revenue as it invoices, which corresponds to the value transferred
to the customer.
Contract Balances
The receivables and unearned revenue under these contracts were
$265.9 million and $173.7 million, respectively, as of September
30, 2022, and $313.7 million and $191.5 million, respectively, as
of December 31, 2021. These balances are included in premiums and
accounts receivable and accounts payable and other liabilities,
respectively, in the consolidated balance sheets. Revenue from
service contracts and sales of products recognized during the three
months ended September 30, 2022 and 2021 that was included in
unearned revenue as of December 31, 2021 and 2020 was $20.0 million
and $12.5 million, respectively. Revenue from service contracts and
sales of products recognized during the nine months ended September
30, 2022 and 2021 that was included in unearned revenue as of
December 31, 2021 and 2020 was $69.0 million and $47.6 million,
respectively.
In certain circumstances, the Company defers upfront commissions
and other costs in connection with client contracts in excess of
one year where the Company can demonstrate future economic benefit.
For these contracts, expense is recognized as revenues are earned.
The Company periodically assesses recoverability based on the
performance of the related contracts. As of September 30, 2022 and
December 31, 2021, the Company had approximately $62.3 million and
$93.0 million, respectively, of such intangible assets attributed
to service contracts that will be expensed over the term of the
client contracts.
Assurant, Inc.
Notes to Consolidated Financial Statements (unaudited)
(in millions, except number of shares and per share
amounts)
7. Investments
The following tables show the cost or amortized cost, allowance for
credit losses, gross unrealized gains and losses, and fair value of
the Company’s fixed maturity securities as of the dates
indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2022 |
|
Cost or
Amortized
Cost |
|
Allowance for Credit Losses |
|
Gross
Unrealized
Gains |
|
Gross
Unrealized
Losses |
|
Fair Value |
Fixed maturity securities: |
|
|
|
|
|
|
|
|
|
U.S. government and government agencies and authorities |
$ |
102.0 |
|
|
$ |
— |
|
|
$ |
0.3 |
|
|
$ |
(7.1) |
|
|
$ |
95.2 |
|
States, municipalities and political subdivisions |
160.8 |
|
|
— |
|
|
0.9 |
|
|
(16.6) |
|
|
145.1 |
|
Foreign governments |
403.1 |
|
|
— |
|
|
0.6 |
|
|
(21.0) |
|
|
382.7 |
|
Asset-backed |
670.1 |
|
|
— |
|
|
3.0 |
|
|
(46.9) |
|
|
626.2 |
|
Commercial mortgage-backed |
461.7 |
|
|
— |
|
|
— |
|
|
(50.5) |
|
|
411.2 |
|
Residential mortgage-backed |
515.5 |
|
|
— |
|
|
0.5 |
|
|
(57.7) |
|
|
458.3 |
|
U.S. corporate |
3,253.0 |
|
|
— |
|
|
9.9 |
|
|
(374.1) |
|
|
2,888.8 |
|
Foreign corporate |
1,297.4 |
|
|
— |
|
|
1.9 |
|
|
(168.9) |
|
|
1,130.4 |
|
Total fixed maturity securities |
$ |
6,863.6 |
|
|
$ |
— |
|
|
$ |
17.1 |
|
|
$ |
(742.8) |
|
|
$ |
6,137.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2021 |
|
Cost or
Amortized
Cost |
|
Allowance for Credit Losses |
|
Gross
Unrealized
Gains |
|
Gross
Unrealized
Losses |
|
Fair Value |
Fixed maturity securities: |
|
|
|
|
|
|
|
|
|
U.S. government and government agencies and authorities |
$ |
83.0 |
|
|
$ |
— |
|
|
$ |
2.1 |
|
|
$ |
(0.1) |
|
|
$ |
85.0 |
|
States, municipalities and political subdivisions |
142.2 |
|
|
— |
|
|
7.0 |
|
|
(0.7) |
|
|
148.5 |
|
Foreign governments |
436.0 |
|
|
— |
|
|
5.9 |
|
|
(4.2) |
|
|
437.7 |
|
Asset-backed |
411.1 |
|
|
— |
|
|
14.2 |
|
|
(2.3) |
|
|
423.0 |
|
Commercial mortgage-backed |
466.7 |
|
|
— |
|
|
10.3 |
|
|
(3.3) |
|
|
473.7 |
|
Residential mortgage-backed |
578.4 |
|
|
— |
|
|
25.2 |
|
|
(1.7) |
|
|
601.9 |
|
U.S. corporate |
3,581.2 |
|
|
— |
|
|
235.9 |
|
|
(14.0) |
|
|
3,803.1 |
|
Foreign corporate |
1,205.3 |
|
|
— |
|
|
46.0 |
|
|
(8.9) |
|
|
1,242.4 |
|
Total fixed maturity securities |
$ |
6,903.9 |
|
|
$ |
— |
|
|
$ |
346.6 |
|
|
$ |
(35.2) |
|
|
$ |
7,215.3 |
|
The cost or amortized cost and fair value of fixed maturity
securities as of September 30, 2022 by contractual maturity are
shown below. Actual maturities may differ from contractual
maturities because issuers of the securities may have the right to
call or prepay obligations with or without call or prepayment
penalties.
Assurant, Inc.
Notes to Consolidated Financial Statements (unaudited)
(in millions, except number of shares and per share
amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost or
Amortized Cost |
|
Fair Value |
Due in one year or less |
$ |
182.5 |
|
|
$ |
181.6 |
|
Due after one year through five years |
1,697.8 |
|
|
1,614.2 |
|
Due after five years through ten years |
2,241.6 |
|
|
1,973.5 |
|
Due after ten years |
1,094.4 |
|
|
872.9 |
|
Total |
5,216.3 |
|
|
4,642.2 |
|
Asset-backed |
670.1 |
|
|
626.2 |
|
Commercial mortgage-backed |
461.7 |
|
|
411.2 |
|
Residential mortgage-backed |
515.5 |
|
|
458.3 |
|
Total |
$ |
6,863.6 |
|
|
$ |
6,137.9 |
|
The following table sets forth the net realized gains (losses) on
investments and fair value changes to equity securities, including
impairments, recognized in the consolidated statements of
operations for the periods indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
2022 |
|
2021 |
|
2022 |
|
2021 |
Net realized (losses) gains on investments related to sales and
other and fair value changes to equity securities: |
|
|
|
|
|
|
|
Fixed maturity securities |
$ |
(21.9) |
|
|
$ |
16.1 |
|
|
$ |
(63.0) |
|
|
$ |
19.3 |
|
Equity securities (1) |
(5.2) |
|
|
95.1 |
|
|
(102.4) |
|
|
100.6 |
|
Commercial mortgage loans on real estate |
(0.2) |
|
|
0.5 |
|
|
— |
|
|
0.7 |
|
Other investments |
(0.1) |
|
|
0.4 |
|
|
1.3 |
|
|
2.4 |
|
Total net realized (losses) gains on investments related to sales
and other and fair value changes to equity securities |
(27.4) |
|
|
112.1 |
|
|
(164.1) |
|
|
123.0 |
|
Net realized (losses) gains related to impairments: |
|
|
|
|
|
|
|
Fixed maturity securities |
— |
|
|
— |
|
|
(1.6) |
|
|
1.2 |
|
Other investments |
— |
|
|
— |
|
|
(0.5) |
|
|
(1.0) |
|
Total net realized (losses) gains related to
impairments |
— |
|
|
— |
|
|
(2.1) |
|
|
0.2 |
|
Total net realized (losses) gains on investments and fair value
changes to equity securities |
$ |
(27.4) |
|
|
$ |
112.1 |
|
|
$ |
(166.2) |
|
|
$ |
123.2 |
|
(1)Upward
adjustments of $0.0 million, $19.5 million, $23.0 million and
$25.1 million and impairments of $0.0 million, $0.0 million,
$0.0 million and $1.0 million were realized on equity
investments accounted for under the measurement alternative for the
three and nine months ended September 30, 2022 and 2021,
respectively.
The following table sets forth the portion of fair value changes to
equity securities held for the periods indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
2022 |
|
2021 |
|
2022 |
|
2021 |
Net (losses) gains recognized on equity securities |
$ |
(5.2) |
|
|
$ |
95.1 |
|
|
$ |
(102.4) |
|
|
$ |
100.6 |
|
Less: Net realized gains related to sales of equity
securities |
(0.2) |
|
|
1.1 |
|
|
20.0 |
|
|
2.1 |
|
Total fair value changes to equity securities held (1) |
$ |
(5.0) |
|
|
$ |
94.0 |
|
|
$ |
(122.4) |
|
|
$ |
98.5 |
|
(1)Three
and nine months ended September 30, 2022 included $0.6 million
and $78.5 million of net losses from four equity positions that
went public during 2021. The total fair value of these investments
as of September 30, 2022 was $24.4 million, included in equity
securities on the consolidated balance sheet.
Equity investments accounted for under the measurement alternative
are included within other investments on the consolidated balance
sheets. The following table summarizes information related to these
investments:
Assurant, Inc.
Notes to Consolidated Financial Statements (unaudited)
(in millions, except number of shares and per share
amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2022 |
|
December 31, 2021 |
Initial cost |
$ |
86.0 |
|
|
$ |
74.4 |
|
Cumulative upward adjustments |
58.6 |
|
|
42.7 |
|
Cumulative downward adjustments (including impairments) |
(15.4) |
|
|
(15.4) |
|
Carrying value |
$ |
129.2 |
|
|
$ |
101.7 |
|
The investment category and duration of the Company’s gross
unrealized losses on fixed maturity securities as of September 30,
2022 and December 31, 2021 were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2022 |
|
Less than 12 months |
|
12 Months or More |
|
Total |
|
Fair Value |
|
Unrealized
Losses |
|
Fair Value |
|
Unrealized
Losses |
|
Fair Value |
|
Unrealized
Losses |
Fixed maturity securities: |
|
|
|
|
|
|
|
|
|
|
|
U.S. government and government agencies and authorities |
$ |
87.8 |
|
|
$ |
(6.6) |
|
|
$ |
4.1 |
|
|
$ |
(0.5) |
|
|
$ |
91.9 |
|
|
$ |
(7.1) |
|
States, municipalities and political subdivisions |
96.4 |
|
|
(10.9) |
|
|
21.8 |
|
|
(5.7) |
|
|
118.2 |
|
|
(16.6) |
|
Foreign governments |
306.9 |
|
|
(17.9) |
|
|
26.8 |
|
|
(3.1) |
|
|
333.7 |
|
|
(21.0) |
|
Asset-backed |
474.3 |
|
|
(38.5) |
|
|
76.7 |
|
|
(8.4) |
|
|
551.0 |
|
|
(46.9) |
|
Commercial mortgage-backed |
337.9 |
|
|
(35.5) |
|
|
73.3 |
|
|
(15.0) |
|
|
411.2 |
|
|
(50.5) |
|
Residential mortgage-backed |
413.2 |
|
|
(45.2) |
|
|
32.3 |
|
|
(12.5) |
|
|
445.5 |
|
|
(57.7) |
|
U.S. corporate |
2,460.4 |
|
|
(295.9) |
|
|
225.8 |
|
|
(78.2) |
|
|
2,686.2 |
|
|
(374.1) |
|
Foreign corporate |
942.8 |
|
|
(117.5) |
|
|
157.8 |
|
|
(51.4) |
|
|
1,100.6 |
|
|
(168.9) |
|
Total fixed maturity securities |
$ |
5,119.7 |
|
|
$ |
(568.0) |
|
|
$ |
618.6 |
|
|
$ |
(174.8) |
|
|
$ |
5,738.3 |
|
|
$ |
(742.8) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2021 |
|
Less than 12 months |
|
12 Months or More |
|
Total |
|
Fair Value |
|
Unrealized
Losses |
|
Fair Value |
|
Unrealized
Losses |
|
Fair Value |
|
Unrealized
Losses |
Fixed maturity securities: |
|
|
|
|
|
|
|
|
|
|
|
U.S. government and government agencies and authorities |
$ |
31.5 |
|
|
$ |
(0.1) |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
31.5 |
|
|
$ |
(0.1) |
|
States, municipalities and political subdivisions |
48.1 |
|
|
(0.7) |
|
|
— |
|
|
— |
|
|
48.1 |
|
|
(0.7) |
|
Foreign governments |
216.0 |
|
|
(4.1) |
|
|
4.0 |
|
|
(0.1) |
|
|
220.0 |
|
|
(4.2) |
|
Asset-backed |
257.7 |
|
|
(2.1) |
|
|
9.8 |
|
|
(0.2) |
|
|
267.5 |
|
|
(2.3) |
|
Commercial mortgage-backed |
274.8 |
|
|
(2.9) |
|
|
2.0 |
|
|
(0.4) |
|
|
276.8 |
|
|
(3.3) |
|
Residential mortgage-backed |
94.0 |
|
|
(1.5) |
|
|
10.0 |
|
|
(0.2) |
|
|
104.0 |
|
|
(1.7) |
|
U.S. corporate |
687.8 |
|
|
(13.1) |
|
|
15.2 |
|
|
(0.9) |
|
|
703.0 |
|
|
(14.0) |
|
Foreign corporate |
394.0 |
|
|
(8.6) |
|
|
6.7 |
|
|
(0.3) |
|
|
400.7 |
|
|
(8.9) |
|
Total fixed maturity securities |
$ |
2,003.9 |
|
|
$ |
(33.1) |
|
|
$ |
47.7 |
|
|
$ |
(2.1) |
|
|
$ |
2,051.6 |
|
|
$ |
(35.2) |
|
Total gross unrealized losses represented approximately 13% and 2%
of the aggregate fair value of the related securities as of
September 30, 2022 and December 31, 2021, respectively.
Approximately 76% and 94% of these gross unrealized losses had been
in a continuous loss position for less than twelve months as of
September 30, 2022 and December 31, 2021, respectively. The
total gross unrealized losses are comprised of 3,874 and 1,202
individual securities as of September 30, 2022 and
December 31, 2021, respectively. In accordance with its
policy, the Company concluded that for these securities, the gross
unrealized losses as of September 30, 2022 and December 31,
2021 were related to non-credit factors and therefore, did
not
Assurant, Inc.
Notes to Consolidated Financial Statements (unaudited)
(in millions, except number of shares and per share
amounts)
recognize credit-related losses during the three and nine months
ended September 30, 2022. Additionally, the Company currently does
not intend to and is not required to sell these investments prior
to an anticipated recovery in value.
The Company has entered into commercial mortgage loans,
collateralized by the underlying real estate, on properties located
throughout the U.S. As of September 30, 2022, approximately 36% of
the outstanding principal balance of commercial mortgage loans was
concentrated in the states of California, Texas and Maryland.
Although the Company has a diversified loan portfolio, an economic
downturn could have an adverse impact on the ability of its debtors
to repay their loans. The outstanding balance of commercial
mortgage loans range in size from less than $0.1 million to
$9.5 million as of September 30, 2022 and from
$0.1 million to $9.6 million as of December 31,
2021.
Credit quality indicators for commercial mortgage loans are
loan-to-value and debt-service coverage ratios. The loan-to-value
ratio compares the principal amount of the loan to the fair value
of the underlying property collateralizing the loan, and is
commonly expressed as a percentage. The debt-service coverage ratio
compares a property’s net operating income to its debt-service
payments and is commonly expressed as a ratio. The loan-to-value
and debt-service coverage ratios are generally updated annually in
the fourth quarter.
The following table presents the amortized cost basis of commercial
mortgage loans, excluding the allowance for credit losses, by
origination year for certain key credit quality indicators at
September 30, 2022 and December 31, 2021.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2022 |
|
Origination Year |
|
2022 |
|
2021 |
|
2020 |
|
2019 |
|
2018 |
|
Prior |
|
Total |
|
% of Total |
Loan to value
ratios (1): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
70% and less |
$ |
43.9 |
|
|
$ |
68.8 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
85.9 |
|
|
$ |
198.6 |
|
|
65.0 |
% |
71% to 80% |
30.9 |
|
|
44.8 |
|
|
2.7 |
|
|
— |
|
|
4.6 |
|
|
1.0 |
|
|
84.0 |
|
|
27.5 |
% |
81% to 95% |
— |
|
|
21.0 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
21.0 |
|
|
6.9 |
% |
Greater than 95% |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
1.9 |
|
|
1.9 |
|
|
0.6 |
% |
Total |
$ |
74.8 |
|
|
$ |
134.6 |
|
|
$ |
2.7 |
|
|
$ |
— |
|
|
$ |
4.6 |
|
|
$ |
88.8 |
|
|
$ |
305.5 |
|
|
100.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2022 |
|
Origination Year |
|
2022 |
|
2021 |
|
2020 |
|
2019 |
|
2018 |
|
Prior |
|
Total |
|
% of Total |
Debt-service coverage ratios (2): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Greater than 2.0 |
$ |
24.0 |
|
|
$ |
57.9 |
|
|
$ |
2.7 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
56.8 |
|
|
$ |
141.4 |
|
|
46.3 |
% |
1.5 to 2.0 |
26.9 |
|
|
37.1 |
|
|
— |
|
|
— |
|
|
4.6 |
|
|
19.6 |
|
|
88.2 |
|
|
28.9 |
% |
1.0 to 1.5 |
23.9 |
|
|
39.6 |
|
|
— |
|
|
— |
|
|
— |
|
|
7.1 |
|
|
70.6 |
|
|
23.1 |
% |
Less than 1.0 |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
5.3 |
|
|
5.3 |
|
|
1.7 |
% |
Total |
$ |
74.8 |
|
|
$ |
134.6 |
|
|
$ |
2.7 |
|
|
$ |
— |
|
|
$ |
4.6 |
|
|
$ |
88.8 |
|
|
$ |
305.5 |
|
|
100.0 |
% |
Assurant, Inc.
Notes to Consolidated Financial Statements (unaudited)
(in millions, except number of shares and per share
amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2021 |
|
Origination Year |
|
2021 |
|
2020 |
|
2019 |
|
2018 |
|
2017 |
|
Prior |
|
Total |
|
% of Total |
Loan to value
ratios (1): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
70% and less |
$ |
71.7 |
|
|
$ |
5.6 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
4.0 |
|
|
$ |
99.8 |
|
|
$ |
181.1 |
|
|
70.3 |
% |
71% to 80% |
61.8 |
|
|
— |
|
|
— |
|
|
4.7 |
|
|
— |
|
|
1.0 |
|
|
67.5 |
|
|
26.2 |
% |
81% to 95% |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
1.1 |
|
|
1.1 |
|
|
0.4 |
% |
Greater than 95% |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
5.8 |
|
|
2.1 |
|
|
7.9 |
|
|
3.1 |
% |
Total |
$ |
133.5 |
|
|
$ |
5.6 |
|
|
$ |
— |
|
|
$ |
4.7 |
|
|
$ |
9.8 |
|
|
$ |
104.0 |
|
|
$ |
257.6 |
|
|
100.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2021 |
|
Origination Year |
|
2021 |
|
2020 |
|
2019 |
|
2018 |
|
2017 |
|
Prior |
|
Total |
|
% of Total |
Debt-service coverage ratios (2): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Greater than 2.0 |
$ |
59.3 |
|
|
$ |
5.6 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
70.5 |
|
|
$ |
135.4 |
|
|
52.6 |
% |
1.5 to 2.0 |
34.1 |
|
|
— |
|
|
— |
|
|
4.7 |
|
|
4.0 |
|
|
17.5 |
|
|
60.3 |
|
|
23.4 |
% |
1.0 to 1.5 |
40.1 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
9.9 |
|
|
50.0 |
|
|
19.4 |
% |
Less than 1.0 |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
5.8 |
|
|
6.1 |
|
|
11.9 |
|
|
4.6 |
% |
Total |
$ |
133.5 |
|
|
$ |
5.6 |
|
|
$ |
— |
|
|
$ |
4.7 |
|
|
$ |
9.8 |
|
|
$ |
104.0 |
|
|
$ |
257.6 |
|
|
100.0 |
% |
(1)Loan-to-value
ratio derived from current loan balance divided by the fair value
of the property. The fair value of the underlying commercial
properties is updated at least annually.
(2)Debt-service
coverage ratio calculated using most recent reported operating
results from property operators divided by annual debt service
coverage.
8. Fair Value Disclosures
Fair Values, Inputs and Valuation Techniques for Financial Assets
and Liabilities Disclosures
The fair value measurements and disclosures guidance defines fair
value and establishes a framework for measuring fair value. Fair
value is defined as the price that would be received to sell an
asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date. The Company
has categorized its recurring fair value basis financial assets and
liabilities into a three-level fair value hierarchy based on the
priority of the inputs to the valuation technique.
The fair value hierarchy gives the highest priority to quoted
prices in active markets for identical assets or liabilities (Level
1) and the lowest priority to unobservable inputs (Level 3). The
inputs used to measure fair value may fall into different levels of
the fair value hierarchy. In such cases, the level in the fair
value hierarchy within which the fair value measurement in its
entirety falls has been determined based on the lowest level input
that is significant to the fair value measurement in its entirety.
The Company’s assessment of the significance of a particular input
to the fair value measurement in its entirety requires judgment and
takes into account factors specific to the asset or
liability.
The levels of the fair value hierarchy are described
below:
•Level
1 inputs utilize quoted prices (unadjusted) in active markets for
identical assets or liabilities that the Company can
access.
•Level
2 inputs utilize other than quoted prices included in Level 1 that
are observable for the asset or liability, either directly or
indirectly, for substantially the full term of the asset or
liability. Level 2 inputs include quoted prices for similar assets
or liabilities in active markets, quoted prices for identical or
similar assets or liabilities in markets that
Assurant, Inc.
Notes to Consolidated Financial Statements (unaudited)
(in millions, except number of shares and per share
amounts)
are not active and inputs other than quoted prices that are
observable in the marketplace for the asset or liability. The
observable inputs are used in valuation models to calculate the
fair value for the asset or liability.
•Level
3 inputs are unobservable but are significant to the fair value
measurement for the asset or liability, and include situations
where there is little, if any, market activity for the asset or
liability. These inputs reflect management’s own assumptions about
the assumptions a market participant would use in pricing the asset
or liability.
The Company reviews fair value hierarchy classifications on a
quarterly basis. Changes in the observability of valuation inputs
may result in a reclassification of levels for certain securities
within the fair value hierarchy.
The following tables present the Company’s fair value hierarchy for
assets and liabilities measured at fair value on a recurring basis
as of September 30, 2022 and December 31, 2021. The amounts
presented below for short-term investments, other investments, cash
equivalents, other assets, assets held in and liabilities related
to separate accounts and other liabilities differ from the amounts
presented in the consolidated balance sheets because only certain
investments or certain assets and liabilities within these line
items are measured at estimated fair value. Other investments are
comprised of investments in the Assurant Investment Plan (“AIP”),
the American Security Insurance Company Investment Plan, the
Assurant Deferred Compensation Plan and other derivatives. Other
liabilities are comprised of investments in the AIP, contingent
considerations related to business combinations and other
derivatives. The fair value amount and the majority of the
associated levels presented for other investments and assets and
liabilities held in separate accounts are received directly from
third parties.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2022 |
|
|
Total |
|
Level 1 |
|
Level 2 |
|
Level 3 |
|
Financial Assets |
|
|
|
|
|
|
|
|
Fixed maturity securities: |
|
|
|
|
|
|
|
|
U.S. government and government agencies and authorities |
$ |
95.2 |
|
|
$ |
— |
|
|
$ |
95.2 |
|
|
$ |
— |
|
|
States, municipalities and political subdivisions |
145.1 |
|
|
— |
|
|
145.1 |
|
|
— |
|
|
Foreign governments |
382.7 |
|
|
— |
|
|
382.7 |
|
|
— |
|
|
Asset-backed |
626.2 |
|
|
— |
|
|
569.3 |
|
|
56.9 |
|
(7) |
Commercial mortgage-backed |
411.2 |
|
|
— |
|
|
411.2 |
|
|
— |
|
|
Residential mortgage-backed |
458.3 |
|
|
— |
|
|
458.3 |
|
|
— |
|
|
U.S. corporate |
2,888.8 |
|
|
— |
|
|
2,885.0 |
|
|
3.8 |
|
|
Foreign corporate |
1,130.4 |
|
|
— |
|
|
1,127.3 |
|
|
3.1 |
|
|
Equity securities: |
|
|
|
|
|
|
|
|
Mutual funds |
32.9 |
|
|
32.9 |
|
|
— |
|
|
— |
|
|
Common stocks |
37.4 |
|
|
36.5 |
|
|
0.7 |
|
|
0.2 |
|
|
Non-redeemable preferred stocks |
232.3 |
|
|
— |
|
|
232.3 |
|
|
— |
|
|
Short-term investments |
228.1 |
|
|
150.0 |
|
(2) |
78.1 |
|
(3) |
— |
|
|
Other investments |
56.3 |
|
|
56.1 |
|
(1) |
— |
|
|
0.2 |
|
|
Cash equivalents |
667.0 |
|
|
608.5 |
|
(2) |
58.5 |
|
(3) |
— |
|
|
|
|
|
|
|
|
|
|
|
Other assets |
4.2 |
|
|
— |
|
|
4.2 |
|
(4) |
— |
|
|
Assets held in separate accounts |
9.8 |
|
|
4.5 |
|
(1) |
5.3 |
|
(3) |
— |
|
|
Total financial assets |
$ |
7,405.9 |
|
|
$ |
888.5 |
|
|
$ |
6,453.2 |
|
|
$ |
64.2 |
|
|
|
|
|
|
|
|
|
|
|
Financial Liabilities |
|
|
|
|
|
|
|
|
Other liabilities |
$ |
64.4 |
|
|
$ |
56.1 |
|
(1) |
$ |
— |
|
|
$ |
8.3 |
|
(5) |
Liabilities related to separate accounts |
9.8 |
|
|
4.5 |
|
(1) |
5.3 |
|
(3) |
— |
|
|
Total financial liabilities |
$ |
74.2 |
|
|
$ |
60.6 |
|
|
$ |
5.3 |
|
|
$ |
8.3 |
|
|