Q3 2023 Assurant Inc Earnings Call

Speaker 1: Welcome to Assurance Third Quarter 2023 Conference Call and Webcast. At this time, all participants have been placed in a listen only mode. And the floor will be open for your questions following management's prepared remarks.

Welcome to assurance third quarter 2023 conference call and webcast at this time, all participants have been placed in a listen only mode.

And the floor will be opened for your questions following management's prepared remarks.

Speaker 1: If you'd like to ask question this during this time, please press star 1 on your touchtone phone. If at any point your question has been entered, you may remove yourself from the cube by pressing the star 1 again.

I would like to ask a question. During this time. Please press star one on your touched on Salt if at any point. Your question has been answered you may remove yourself from the queue by pressing the star one again.

Speaker 1: We ask that you please pick up your handset to allow optimal sound quality. Lastly, should you require any operator assistance press star 0.

We ask that you. Please pick up your handset to allow optimal sound quality lastly, should you require any operator assistance press star zero.

Speaker 1: It is now my pleasure to turn the floor over to Suzanne Shepherd, Senior Vice President of Investor Relations and Sustainability. You may begin.

It is now my pleasure to turn the floor over to Suzanne Shepherd Senior Vice President of Investor Relations and sustainability you may begin.

Speaker 2: Thank you, operator, and good morning, everyone. We look forward to discussing our third quarter 2023 results with you today.

Thank you operator, and good morning, everyone. We look forward to discussing our third quarter 2023 was also due to that John.

Speaker 2: Joining me for Assurance Conference Call are Keith Gummings, our President and Chief Executive Officer, and Richard Jago, our Chief Financial Officer.

Joining me for Assurance conference call are Keith Jennings, our President and Chief Executive Officer and Mr. Jos.

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Speaker 2: Yesterday after the market closed, we issued a news release announcing our results for the third quarter of 2023. The release and corresponding financial supplements are available on Assurance.com.

Yesterday after the market closed we issued a news release announcing our results for the third quarter 2023.

Elyse and corresponding financial supplement are available on Assurant dotcom.

Speaker 2: We'll start today's call with remarks from Keith and Richard before moving into a Q&A session.

We'll start today's call with remarks from Keith and Richard before moving into a Q&A session.

Speaker 2: Some of the statements made today are forward looking. Forward looking statements are based upon our historical performance and current expectations and subject to risks, uncertainties, and other factors that may cause actual results to differ materially from those contemplated by the state.

Some of the statements made today are forward looking forward looking statements are based upon our historical performance and current expectations.

Subject to risks uncertainties and other factors that may cause actual results to differ materially from those contemplated by these statements.

Speaker 2: Additional information regarding these factors can be found in yesterday's earnings relief and financial supplement as well as in our SEC report.

Additional information regarding these factors can be found in yesterday's earnings release and financial supplement as well as in our SEC reports.

Speaker 2: During today's call, we will refer to our non-gape financial measures, which we believe are important in evaluating the company's performance.

During today's call we will refer to are non-GAAP financial measures, which we believe are important in evaluating the company's performance.

Speaker 2: For more details on these measures, the most comparable GAAP measures and a reconciliation of the two, please refer to yesterday's news release and financial supplement. It is now my pleasure to turn the call over to Keith.

For more details on these measures the most comparable GAAP measures and a reconciliation of the two please refer to yesterday's news release and financial supplement.

It is now my pleasure to turn the call over to Keith.

Thanks, Suzanne and good morning, everyone.

Speaker 3: We're very pleased with the exceptionally strong results we achieved in the third quarter, with adjusted EBITDA excluding catastrophes growing nearly 50% year over year, or 19% on a year to date basis. Both ahead of-

We're very pleased with the exceptionally strong results, we achieved in the third quarter with adjusted EBITDA, excluding catastrophes growing nearly 50% year over year or 19% on a year to date basis.

Both ahead of our expectations.

Speaker 3: Our results were largely driven by continued momentum in global housing. And our steadfast focus on executing our strategy. Including driving innovation, creating efficiencies. And strengthening our global partnership.

Our results were largely driven by continued momentum in global housing and our steadfast focus on executing our strategy, including driving innovation, creating efficiencies and strengthening our global partnerships.

Speaker 3: These efforts have positioned us to exceed our previous expectations of high single digit adjusted EBITDA growth to exuding catastrophe.

These efforts have positioned us to exceed our previous expectations of high single digit adjusted EBITDA growth excluding catastrophes.

Speaker 3: We now expect adjusted even a growth of mid to high teeth.

We now expect adjusted EBITDA growth of mid to high teens.

Speaker 3: Our year-and-a-te performance highlights assurance competitive differentiators, including our advantaged global housing and global lifestyle businesses, but a proven leadership positions with scale and significant cash generation.

Our year to date performance highlights assurance competitive differentiators, including our advantaged global housing global lifestyle businesses that have proven leadership positions with scale and significant cash generation.

Speaker 3: Combined, these businesses are extending assurance track record, a strong financial performance. Thanks in part to the swift actions we've taken across our global operations to improve results and strengthen the business given broader macroeconomic headwind.

Combined these businesses are extending assurance track record of strong financial performance. Thanks in part to the Swift actions, we've taken across our global operations to improve results and strengthen the business given broader macroeconomic headwinds.

Speaker 3: We continue to realize benefits from the actions we announced in 2022 to simplify our business in corporate real estate and realign our organizational structure allowing us to reinvest throughout the enterprise.

We continue to realize benefits from the actions, we announced in 2022 to simplify our business and corporate real estate and realign our organizational structure, allowing us to reinvest throughout the enterprise.

Speaker 3: We extended our 2022 restructuring plan to include additional actions across the enterprise. As we believe further enhancing assurance operational efficiency will support our long-term profitable growth and value creation.

We extended our 2022 restructuring plan to include additional actions across the enterprise as we believe further enhancing assurance operational efficiency will support our long term profitable growth and value creation.

Speaker 3: We now expect total restructuring costs associated with our extended plan to be between 90 and 95 million dollars pre-tax. Above our previously announced expectations of 60 to 65 million dollars.

We now expect total restructuring costs associated with our extended plan.

To be between 90, and $95 million pretax above our previously announced expectations of 60% to $65 million.

Looking at our business segments.

Speaker 3: In global housing, I want to thank all of our employees who supported policy holders impacted by Hurricane Adalia and the Hawaii wildfires as well as several other significant weather events during the quarter.

In global housing I want to thank all of our employees, who supported policyholders impacted by Hurricane Italia and the Hawaii wildfires.

Well as several other significant weather events during the quarter.

Speaker 3: Assurance plays a critical role in safeguarding our policy holders and supporting the US mortgage industry.

Assurant plays a critical role in safeguarding our policyholders and supporting the U S mortgage industry.

Operator: Welcome to Assurant's third quarter 2023 conference call and webcast. At this time, all participants have been placed in a listen only mode, and the floor will be open for your questions following management's prepared remarks. If you'd like to ask questions during this time, please press star one on your touchtone phone. If at any point your question has been answered, you may remove yourself from the queue by pressing the star one again. We ask that you please pick up your handset and to allow optimal sound quality. Lastly, should you require any operator assistance, press star zero.

Speaker 3: Our global housing adjusted EBITDA, excluding cats, more than doubled year over year, and increased 72% year to date, led by significant growth in our homeowners' business through top-line growth and improving loss experience.

Our global housing adjusted EBITDA, excluding cats more than doubled year over year and increased 72% year to date led by significant growth in our homeowners business through topline growth and improving loss experience.

Speaker 3: Our ability to quickly execute changes, particularly in our lender-placed business, that help us gain earnings momentum from higher-inforced policies, average-insured values, and state-approved rating increases, following inflation impacts in 2022.

Our ability to quickly execute changes, particularly in our lender placed business has helped us gain earnings momentum from higher enforced policies average insured values and state approved rate increases following inflation impacts in 2022.

Suzanne Shepherd: It's not my pleasure to turn the floor over to Suzanne Shepherd, Senior Vice President of Investor Relations and Sustainability. You may begin. Thank you operator and good morning everyone. We look forward to discussing our third quarter 2023 results with you today.

Speaker 3: Our performance so far this year highlights global housing's compelling and uniquely positioned portfolio.

Our performance so far this year highlights global Housing's compelling and are uniquely positioned portfolio.

Speaker 3: Year to date, including $89 million of reportable catastrophes, our combined ratio is 82%, and our annualized ROE is 29%. Demonstrating strong returns and cash generation.

Year to date, including $89 million of reportable catastrophes.

Our combined ratio was 82% and our annualized ROE is 29% demonstrating strong returns and cash generation.

Suzanne Shepherd: Joining you made for Assurant's conference call are Keith Demings, our President and Chief Executive Officer, and Richard Jago, our Chief Financial Officer. Yesterday after the market closed, we issued a news release announcing our results for the third quarter 2023. The release and corresponding financial supplements are available on Assurant.com.

Speaker 3: In our renters business, we saw continued strength at our property management channel, where policies and forests have grown double digits this year.

And our renters business, we saw continued strength in our property management channel where policies in force have grown double digits. This year.

Speaker 3: We continue to win new clients, grow existing partnerships, and release new capabilities, including our upgraded leasing agent portal and digital insurance tracking enhance.

We continue to win new clients grow existing partnerships and released new capabilities, including our upgraded leasing agent portal and digital insurance tracking enhancements.

Suzanne Shepherd: We'll start today's call with remarks from Keith and Richard before moving into a Q&A session. Some of the statements made today are forward-looking. Forward-looking statements are based upon our historical performance and current expectations and subject to risks, uncertainties, and other factors that may cause actual results to differ materially from those contemplated by the statement. Additional information regarding these factors can be found in yesterday's earnings release and financial supplement as well as in our SEC reports.

Speaker 3: We're very pleased with Global Housing's strong performance here today, which reflects our focused execution around streamlined product lines, where we have a clear competitive advantage and scale.

We're very pleased with global Housing's strong performance year to date, which reflects our focused execution around streamline product lines, where we have a clear competitive advantage and scale.

Speaker 3: Turning to global lifestyle. Third quarter earnings increased 7% year over year. Or 14% excluding a one time client benefit within connected living last year.

Turning to global lifestyle.

Third quarter earnings increased 7% year over year or 14%, excluding a onetime client benefit within connected living last year.

Speaker 3: Your today to just at EBITDA down 6% versus the same period in 22 has continued to improve throughout the year and is tracking in line with our expectations of a modest decline for the full year.

Year to date, adjusted EBITDA down 6% versus the same period in 2002 has continued to improve throughout the year and is tracking in line with our expectations of a modest decline for the full year.

Suzanne Shepherd: During today's call, we will refer to our non-gap financial measures, which we believe are important in evaluating the company's performance. For more details on these measures, the most comparable gap measures and a reconciliation of the two, please refer to yesterday's news release and financial supplement.

Speaker 3: Within connected living, we continue to support long-term growth to the development of innovative offerings for our partners.

Within connected living we continue to support long term growth through the development of innovative offerings for our partners.

Speaker 3: U.S. connected living is poised for another year of solid growth, particularly within our mobile protection business, a testament to our breadth of innovative offerings, customer experience expertise, and deep relationships with mobile carriers and cable operators.

U S connected living is poised for another year of solid growth, particularly within our mobile protection business.

Keith Demings: It is now my pleasure to turn the call over to Keith. Thanks Suzanne and good morning everyone. We're very pleased with the exceptionally strong results we achieved in the third quarter with adjusted EBITDA excluding catastrophes growing nearly 50% year-over-year or 19% on a year-to-date basis, both ahead of our expectations. Our results were largely driven by continuing momentum in global housing and our steadfast focus on executing our strategy, including driving innovation, creating efficiencies, and strengthening our global partnerships.

Testament to our breadth of innovative offerings.

Customer experience expertise and deep relationships with mobile carriers and cable operators.

Speaker 3: As macroeconomic headwinds have persisted, including impacts from inflation, we've taken decisive action across our global operations to mitigate these impacts.

As macroeconomic headwinds persisted, including impacts from inflation, we've taken decisive action across our global operations to mitigate these impacts.

Speaker 3: In Europe , expense actions have allowed us to stabilize earnings as we focus on critical opportunities to grow our top line.

In Europe.

Expense actions have allowed us to stabilize earnings as we focus on critical opportunities to grow our topline.

Speaker 3: We also continue to invest to advance product innovation and anticipate our client's needs, as well as improve customer experience through expanded service delivery capability.

We also continue to invest to advance product innovation and anticipate our clients' needs as well as improved customer experience through expanded service delivery capabilities.

Keith Demings: These efforts have positioned us to exceed our previous expectations of high single digit adjusted EBITDA growth excluding catastrophes. We now expect adjusted EBITDA growth of mid to high teens. Our year-to-date performance highlights assurance competitive differentiators, including our advantaged global housing and global lifestyle businesses that have proven leadership positions with scale and significant cash generation. Combined, these businesses are extending assurance track record, a strong financial performance. Thanks in part to the swift actions we've taken across our global operations to improve results and strengthen the business, given broader macroeconomic headwind.

Speaker 3: For example, as part of the extension of our 22 plan to realize benefits and simplify our business and corporate real estate, we're consolidating our mobile device care centers into two sites in the US.

For example, as part of the extension of our 'twenty two plan to realize benefits and simplify our business and corporate real estate, we're consolidating our mobile device care centers into two sites in the U S.

Speaker 3: We'll move the services currently offered in York, Pennsylvania to our existing facility in Texas.

We'll move the services currently offered in York, Pennsylvania to our existing facility in Texas.

Speaker 3: Over time, we'll be investing in a new site in Nashville where we can leverage a strong talent market and greater logistics efficiencies as we evolve with emerging clients.

Over time, we'll be investing in a new site in Nashville, where we can leverage a strong talent market and greater logistics efficiencies as we evolve with emerging clients.

Speaker 3: Turning to our global auto business, we're beginning to see initial signs of claims improvement as a result of the decisive actions taken over the last year to improve performance.

Keith Demings: We continue to realize benefits from the actions we announced in 2022 to simplify our business in corporate real estate and realign our organizational structure, allowing us to reinvest throughout the enterprise. We extended our 2022 restructuring plan to include additional actions across the enterprise as we believe further enhancing assurance operational efficiency will support our long-term profitable growth and value creation. We now expect total restructuring costs associated with our extended plan to be between 90 and 95 million dollars pre-tax above our previously announced expectations of 60 to 65 million dollars.

Turning to our global auto business, we're beginning to see initial signs of claims improvement as a result of the decisive actions taken over the last year to improve performance.

Speaker 3: These actions included implementing rate increases on new policies across impacted clients and advancing opportunities to improve loss experience for programs where we hold the risk.

These actions included implementing rate increases on new policies across impacted clients.

And advancing opportunities to improve loss experience for programs, where we hold the risk.

Speaker 3: We continue to monitor claims costs closely and expect improvement will be gradual over time, given the way the auto business earns.

We continue to monitor claims costs closely and expect improvement will be gradual over time, given the way the auto business earns.

Speaker 3: In auto, we launched a short vehicle care at over 500 dealers.

In auto we launched Assurant vehicle care at over 500 dealers.

Speaker 3: Building on decades of proprietary data on cost of claims, Assurance Vehicle Care is a comprehensive new suite of vehicle protection products.

Building on decades of proprietary data on cost of claims.

Aaron vehicle care as a comprehensive new suite of vehicle protection products.

Keith Demings: Looking at our business segments in global housing, I want to thank all of our employees who supported policy holders impacted by Hurricane Adalia and the Hawaii wildfires as well as several other significant weather events during the quarter. Assurant plays a critical role in safeguarding our policy holders and supporting the US mortgage industry. Our global housing adjusted EBITDA excluding cats more than doubled year over year and increased 72% year-to-date led by significant growth in our homeowners business through top-line growth and improving loss experience.

Speaker 3: It was developed to help our dealer partners optimize product design, pricing, training, and sales to ultimately enhance attachment and economics.

It was developed to help our dealer partners optimized product design pricing training and sales to ultimately enhance attachment and economics.

Speaker 3: For the consumer, Assuring Vehicle Care provides a digital experience with more vehicle coverage, flexibility, and transparency. Now let's.

For the consumer assuring vehicle care provides a digital experience with more vehicle coverage flexibility and transparency.

Now, let's turn to our enterprise outlook and capital.

Speaker 3: Given our year-to-date results and our business outlook for the remainder of 2023, we now expect adjusted EBITDA to grow mid-to-high teens excluding catastrophe.

Given our year to date results and our business outlook for the remainder of 2023, we now expect adjusted EBITDA to grow mid to high teens, excluding catastrophes.

Speaker 3: Adjusted EPS growth is now expected to exceed adjusted EBITDA growth, each excluding catastrophes. This is primarily due to higher earnings growth that now more than offsets the increase in depreciation expense.

Adjusted EPS growth is now expected to exceed adjusted EBIT growth each excluding catastrophes. This is primarily due to higher earnings growth that now more than offsets the increase in depreciation expense.

Keith Demings: Our ability to quickly execute changes particularly in our lender-placed business that help us gain earnings momentum from higher-inforced policies, average-insured values, and state-approved rate increases following inflation impacts in 2022. Our performance so far this year highlights global housing's compelling and uniquely positioned portfolio. Year-to-date including $89 million of reportable catastrophes, our combined ratio is 82%, and our annualized ROE is 29%, demonstrating strong returns and cash generation. In our renters business, we saw continued strength in our property management channel where policies in force have grown double digits this year.

Speaker 3: From a capital perspective, we upstreamed $202 million of segment dividends during the third quarter and $493 million year to date.

From a capital perspective, we upstream $202 million of segment dividends during the third quarter and $493 million year to date.

Speaker 3: We ended the third quarter with $491 million of holding company liquidity consistent with the end of the second quarter.

We ended the third quarter with $491 million of holding company liquidity.

Insistent with the end of the second quarter.

Speaker 3: In terms of share repurchases, during the third quarter, repurchases totaled $50 million.

In terms of share repurchases during the third quarter repurchases totaled $50 million.

Speaker 3: This brings our total repurchases to approximately $100 million for the year, including an additional $30 million of shares purchased through the end of October .

This brings our total repurchases to approximately $100 million for the year, including an additional $30 million of shares purchased through the end of October.

Keith Demings: We continue to win new clients, grow existing partnerships, and release new capabilities including our upgraded leasing agent portal and digital insurance tracking enhancements. We're very pleased with global housing's strong performance year-to-date, which reflects our focused execution around streamlined product lines where we have a clear competitive advantage and scale. Turning to global lifestyle, third quarter earnings increased 7% year-over-year, or 14%, excluding a one-time client benefit within connected living last year. Year-to-date adjusted EBITDA, down 6% versus the same period in 22, has continued to improve throughout the year and is tracking in line with our expectations of a modest decline for the full year.

Speaker 3: Based on our strong year-to-date results, we expect fourth-quarter buybacks to accelerate from third-quarter levels and to be approximately $200 million for the year, consistent with our underlying repurchase activity in 2022.

Based on our strong year to date results, we expect fourth quarter buybacks to accelerate from third quarter levels and to be approximately $200 million for the year consistent with our underlying repurchase activity in 2022.

Speaker 3: We're pleased with our strong capital position, which affords us more long-term flexibility over time.

We're pleased with our strong capital position, which affords us more long term flexibility over time.

Speaker 3: Looking to 2024, we expect a more modest level of earnings growth in global housing, excluding catastrophes, building on strong 2023 financial results, which included $40 million of favorable prior year reserve development.

Looking to 2024, we expect a more modest level of earnings growth in global housing excluding catastrophes building on strong 2023 financial results, which included $40 million of favorable prior year Reserve development.

Speaker 3: In global lifestyle, we expect earnings growth to be led by connected living, particularly in the US from the expansion of current programs as we work to gradually improve the auto business, which will continue to manage closely.

In global lifestyle, we expect earnings growth to be led by connected living particularly in the U S. From the expansion of current programs as we work to gradually improve the auto business, which we will continue to manage closely.

Keith Demings: Within connected living, we continue to support long-term growth through the development of innovative offerings for our partners. US-connected living is poised for another year of solid growth, particularly within our mobile protection business, a testament to our breadth of innovative offerings, customer experience expertise, and deep relationships with mobile carriers and cable operators. As macroeconomic headwinds are persisted, including impacts from inflation, we've taken decisive action across our global operations to mitigate these impacts.

Speaker 3: From a capital perspective, we're committed to maintaining flexibility for our strong balance sheet and deploying capital for share repurchases and opportunistic acquisitions to support our growth objective.

From a capital perspective, we're committed to maintaining flexibility through a strong balance sheet and deploying capital for share repurchases and opportunistic acquisitions to support our growth objectives.

Speaker 3: We will share our 2024 outlook in February , factoring in our fourth quarter earnings, business trends, as well as the latest forecast of the macro environment for the year.

We will share our 2024 outlook in February factoring in our fourth quarter earnings business trends as well as the latest forecast of the macro environment for the year.

Speaker 3: In the near term, we're focused on achieving our 2023 objectives and setting a path for continued growth and value creation in 2024 and beyond.

In the near term, we're focused on achieving our 2023 objectives and setting a path for continued growth and value creation in 2024 and beyond.

Speaker 3: As we look ahead, we remain committed to execution, innovation, and enhancing the customer experience for our clients and their end consumers, particularly as we look to capitalize on growth opportunities while supporting continued momentum.

As we look ahead, we remain committed to execution innovation and enhancing the customer experience for our clients and their end consumers, particularly as we look to capitalize on growth opportunities while supporting continued momentum.

Keith Demings: In Europe, expense actions have allowed us to stabilize earnings as we focus on critical opportunities to grow our top line. We also continue to invest to advance product innovation and anticipate our client's needs, as well as improve customer experience to expand its service delivery capabilities. For example, as part of the extension of our 22 plan to realize benefits and simplify our business and corporate real estate, we're consolidating our mobile device care centers into two sites in the US.

Speaker 3: Before I turn the call over to Richard to review the third quarter results and our 2023 outlook in greater detail, I want to once again, thank our employees for their hard work and dedication to deliver for our clients.

Before I turn the call over to Richard to review, the third quarter results and our 2023 outlook in greater detail I want to once again, thank our employees for their hard work and dedication to deliver for our clients.

Speaker 3: Our company was recently recognized as one of Time's best companies in the world, highlighting Assurance's strong employee satisfaction, revenue growth, and sustainability efforts.

Our company was recently recognized as one of times best companies in the world highlighting assurance strong employee satisfaction revenue growth and sustainability efforts.

Keith Demings: We'll move the services currently offered in York, Pennsylvania to our existing facility in Texas. Over time, we'll be investing in a new site in Nashville, where we can leverage a strong talent market and greater logistics efficiencies as we evolve with emerging clients.

Speaker 3: Assurance was also recognized by Newsweek as one of America's greenest companies, demonstrating our commitment to and progress in operating more sustainably.

Assurant was also recognized by Newsweek as one of Americas greatest companies, demonstrating our commitment to and progress in operating more sustainably.

Speaker 3: The recognition was timely as we recently introduced CarbonIQ by Assurance.

The recognition was timely as we recently introduced carbon IQ by assurance.

Speaker 3: This offering enables clients to see the carbon impact of each device, including new and refurbished devices, and provides them with estimated CO2 emissions throughout the supply chain and life cycle to identify opportunities for reduction.

Keith Demings: Turning to our global auto business, we're beginning to see initial signs of claims improvement as a result of the decisive actions taken over the last year to improve performance. These actions included implementing rate increases on new policies across impacted clients and advancing opportunities to improve loss experience for programs where we hold the risk. We continue to monitor claims costs closely and expect improvement will be gradual over time, given the way the auto business earns.

This offering enables clients to see the carbon impact of each device, including new and refurbished devices and provides them with estimated <unk> emissions throughout the supply chain and lifecycle to identify opportunities for reduction.

Speaker 3: We're honored to be recognized for our outstanding culture, products, and sustainability, all of which help us better serve our clients and now.

Im honored to be recognized for our outstanding culture products and sustainability, all of which help us better serve our clients.

And now over to Richard.

Okay.

Speaker 4: Thank you, Keith and good morning everyone for the 3rd quarter of 2023 adjusted excluding reportable catastrophes totaled 357Million dollars up 118Million dollars or nearly 50% year over year.

Thank you Keith and good morning, everyone.

For the third quarter of 2023, adjusted EBITDA, excluding reportable catastrophes totaled $357 million up $118 million or nearly 50% year over year.

Keith Demings: In auto, we launched Assurance Vehicle Care at over 500 dealers. Building on decades of proprietary data on cost of claims, Assurance Vehicle Care is a comprehensive new suite of vehicle protection products. It was developed to help our dealer partners optimize product design, pricing, training and sales to ultimately enhance attachment and economics. For the consumer, Assurance Vehicle Care provides a digital experience with more vehicle coverage, flexibility and transparency.

Speaker 4: Adjusted earnings per share excluding reportable catastrophes totaled four dollars and 68 cents for the quarter delivering year-over-year growth of 67%

Adjusted earnings per share, excluding reportable catastrophes totaled $4 68 for the quarter delivering year over year growth of 67%.

Speaker 4: To review results in greater detail, let's start with global lifestyle. The segment reported adjusted EBITDA of $192 million in the third quarter, an increase of $12 million, or 7% year over year.

To review results in greater detail, let's start with global lifestyle. The segment reported adjusted EBITDA of $192 million in the third quarter, an increase of $12 million or 7% year over year.

Keith Demings: Now, let's turn to our enterprise outlook in capital. Given our year to date results and our business outlook for the remainder of 2023, we now expect adjusted EBITDA to grow mid to high teens, excluding catastrophes. Adjusted EPS growth is now expected to exceed adjusted EBITDA growth, each excluding catastrophes. This is primarily due to higher earnings growth that now more than offsets the increase in depreciation expense. From a capital perspective, we upstreamed $202 million of segment dividends during the third quarter and $493 million year to date.

Speaker 4: As a reminder, prior period results included a one-time client benefit of $11 million within Connected Living.

As a reminder, prior period results included a one time client benefit of $11 million within connected living.

Speaker 4: excluding the prior period gain, global lifestyles adjusted EBITDA increased 14% or $24 million.

Excluding the prior period gain global Lifestyle's, adjusted EBITDA increased 14% or $24 million.

Speaker 4: This increase was primarily driven by higher contributions from investment income and mobile growth.

This increase was primarily driven by higher contributions from investment income and mobile growth.

Speaker 4: Connected Living Earnings increased $30 million, or 32%, excluding the one-time client benefit, demonstrating strong mobile growth from North American device protection programs, from carrier and cable operator clients, and better trade-in performance.

Connected living earnings increased $30 million or 32%, excluding the one time client benefit demonstrating strong mobile growth from North American device protection programs from carrier and cable operator clients and better trading performance.

Keith Demings: We ended the third quarter with $491 million of holding company liquidity consistent with the end of the second quarter. In terms of share repurchases, during the third quarter, repurchases total $50 million. This brings our total repurchases to approximately $100 million for the year, including an additional $30 million of shares purchased through the end of October. Based on our strong year-to-date results, we expect fourth quartered buybacks to accelerate from third quarter levels and to be approximately $200 million for the year consistent with our underlying repurchase activity in 2022.

Speaker 4: financial services also contributed to the growth.

Financial services also contributed to the growth.

Speaker 4: Trading results benefited from improved margins related to higher sales prices for used devices.

Trading results benefited from improved margins related to higher sales prices for used devices.

Speaker 4: partially offset by lower volumes, impacted by the timing and structure of carrier promotion.

Partially offset by lower volumes.

Impacted by the timing and structure of carrier promotions.

Speaker 4: In Europe , we stabilize performance or expense actions, mitigating the impact of headwinds that began in the second half of 2022.

In Europe, we stabilized performance through expense actions mitigating the impact of headwinds that began in the second half of 2022.

Speaker 4: In Japan, results were impacted by subscriber decline, which is expected to continue into 2024.

In Japan results were impacted by subscriber decline, which is expected to continue into 2024.

Speaker 4: Global Auto adjusted EBIT to decline $6 million, or 8%.

Global auto adjusted EBIT declined $6 million or 8%.

Keith Demings: We're pleased with our strong capital position which affords us more long-term flexibility over time Looking to 2024, we expect a more modest level of earnings growth in global housing, excluding catastrophes, building on strong 2023 financial results, which included $40 million of favorable prior year reserve development. In global lifestyle, we expect earnings growth to be led by connected living, particularly in the US from the expansion of current programs as we work to gradually improve the auto business, which will continue to manage closely. From a capital perspective, we're committed to maintaining flexibility for our strong balance sheet and deploying capital for share repurchases and opportunistic acquisitions to support our growth objectives.

Speaker 4: Results continue to be impacted by inflation of labor and parts, leading to higher average claims costs.

<unk> continued to be impacted by inflation of labor and parts, leading to higher average claims costs.

Speaker 4: As expected claims experience for auto-insulated products has also contributed to higher incurred claims costs in the quarter.

As expected claims experience for auto ancillary products has also contributed to higher incurred claims costs in the quarter.

Speaker 4: The auto earnings decline was partially offset by an increase in investment income from higher yields and asset values.

The auto earnings decline.

It was partially offset by an increase in investment income from higher yields and asset values.

Speaker 4: Turning to net-earn premiums fees and other income, lifestyle was up by $83 million or 4%.

Turning to net earned premiums fees and other income lifestyle was up by $83 million or 4%.

Speaker 4: This growth was primarily driven by global automotive, reflecting an increase of 6% from prior period sales of vehicle service contracts.

This growth was primarily driven by global automotive, reflecting an increase of 6% from prior period sales of vehicle service contracts.

Speaker 4: Connected Living's NetEarn Premium S fees and other income increased 3%.

Good livings net earned premiums fees and other income increased 3%.

Speaker 4: Growth was muted by the previously disclosed mobile program contract changes of approximately $55 million with no corresponding impacts to profitability.

Keith Demings: We will share our 2024 outlook in February, factoring in our fourth quarter earnings, business trends, as well as the latest forecasts of the macro environment for the year. In the near term, we're focused on achieving our 2023 objectives and setting up paths for continued growth and value creation in 2024 and beyond. As we look ahead, we remain committed to execution, innovation and enhancing the customer experience for our clients and their end consumers, particularly as we look to capitalize on growth opportunities while supporting continued momentum.

Growth was muted by the previously disclosed mobile program contract changes of approximately $55 million.

With no corresponding impacts to profitability.

Speaker 4: Excluding the impact of these contract changes, connected living's netter and premium fees and other income grew by 8%.

Excluding the impact of these contract changes connected living as net earned premiums fees and other income grew by 8%.

Speaker 4: The quarter benefited from higher prices on use mobile devices and modest growth in North America mobile subscribers excluding ongoing client runoff

The quarter benefited from higher prices unused mobile devices and modest growth in North America mobile subscribers, excluding ongoing client runoff.

Speaker 4: Turning to the full year 2023, we continue to expect lifestyles adjusted EBITDA to decline modestly. Global auto will be down for the full year from unfavorable loss experience, including the impacts from continuation of the organization for select and salary products previously mentioned.

Turning to the full year 2023, we continue to expect lifestyles adjusted EBITDA to decline modestly.

Keith Demings: Before I turn the call over to Richard to review the third quarter results in our 2023 outlook in greater detail, I want to once again thank our employees for their hard work and dedication to deliver for our clients. Our company was recently recognized as one of times best companies in the world, highlighting assurance strong employee satisfaction, revenue growth and sustainability efforts. Assurance was also recognized by Newsweek as one of America's greatest companies demonstrating our commitment to and progress in operating more sustainably.

Global auto will be down for the full year from unfavorable loss experience, including the impacts from continued normalization for select ancillary products previously mentioned.

Speaker 4: We've taken decisive actions this year in response to higher claims experience in our auto book, including prospective rate increases and repair cost reduction.

We've taken decisive actions this year in response to higher claims experienced in our auto book, including prospective rate increases.

<unk> repair cost reduction.

Speaker 4: While we've seen some improvement, the improvement is expected to take place over a longer period of time, given the earnings pattern of the business.

We've seen some improvement the improvement is expected to take place over a longer period of time, given the earnings pattern of the business.

Speaker 4: and connected living, we expect our US business to grow for the full year.

In connected living we expect our U S business to grow for the full year.

Keith Demings: The recognition was timely as we recently introduced carbon IQ by Assurance. This offering enables clients to see the carbon impact of each device, including new and refurbished devices and provides them with estimated CO2 emissions throughout the supply chain and lifecycle to identify opportunities for redevelopment.

Speaker 4: Overall, we are pleased with lifestyle strong third quarter performance, especially in light of ongoing challenges in auto claims.

Overall, we are pleased with lifestyle strong third quarter performance, especially in light of ongoing challenges in auto claims.

Speaker 4: For the fourth quarter, we expect higher trade in volumes in mobile, but we also expect ongoing top line challenges in Japan and Europe , and investments to support business growth.

For the fourth quarter, we expect higher trading volumes in mobile, but we also expect ongoing top line challenges in Japan, and Europe and investments to support business growth.

Richard Dziadzio: We're honored to be recognized for our outstanding culture, products and sustainability, all of which help us better serve our clients and now over to Richard. Thank you Keith and good morning everyone for the third quarter of 2023 adjusted EBITDA excluding reportable catastrophes total $357 million up $118 million or nearly 50% year over year. Adjusted earnings per share excluding reportable catastrophes totaled $4.68 for the quarter delivering year over year growth of 67%.

Speaker 4: In terms of full urinetorm premiums, fees, and other income, lifestyle is expected to grow consistent with year-to-date trends.

In terms of full year net premiums fees and other income lifestyle is expected to grow consistent with year to date trends.

Speaker 4: Moving to global housing, adjusted EBITDA was $165 million, which included $26 million in report book catastrophes, primarily from Hurricane Adalia and Hawaii wildfire.

Moving to global housing.

Adjusted EBITDA was $165 million, which included $26 million in reportable catastrophes, primarily from hurricane and Dahlia and Hawaii wildfires.

Speaker 4: Excluding reportable catastrophes, adjusted a bit more than doubled to $191 million, with an increase of $106 million.

Excluding reportable catastrophes, adjusted EBITDA more than doubled to $191 million with an increase of $106 million.

Speaker 4: Housing performance was mainly led by three main items.

Housing performance was mainly led by three main items.

Speaker 4: First, continue top line growth in homeowners from higher premium rates and average insured values in lender place, as well as an increase in the number of in force policy.

First continued topline growth in homeowners from higher premium rates and average insured values in lender placed as well as an increase in the number of in force policies.

Richard Dziadzio: To review results in greater detail, let's start with global lifestyle. The segment reported adjusted EBITDA of $192 million in the third quarter. It increased of $12 million or 7% year over year.

Speaker 4: Second, favorable non-CAT loss experience across the segment, including a year over year positive impact of $39 million related to prior peer reserve development.

Second favorable non cat loss experience across the segment, including a year over year positive impact of $39 million related to prior period Reserve development.

Richard Dziadzio: As a reminder, prior peer results included a one-time client benefit of $11 million within connected living. Excluding the prior period gain, global lifestyles adjusted EBITDA increased 14% or $24 million. Davis. This increase was primarily driven by higher contributions from investment income and mobile growth. Connected living earnings increased $30 million or 32 percent, excluding the one-time client benefit. Demonstrating strong mobile growth from North American Device Protection programs from carrier and cable operator clients and better trade-in performance.

Speaker 4: This was comprised of $15 million of reserve reductions in the current quarter compared to reserve strengthening of $24 million in the prior period.

This was comprised of $15 million of reserve reductions in the current quarter compared to reserve strengthening of $24 million in the prior period.

Speaker 4: And lastly, additional scale within our homeowners expense base, ultimately driving stronger operating leverage.

And lastly, additional scale within our homeowners expense base ultimately driving stronger operating leverage.

Speaker 4: Higher investment income also contributed to earnings growth for homeowners.

Higher investment income also contributed to earnings growth for homeowners.

Speaker 4: For renters and others, earnings grew modestly from favorable prior period reserve development.

For renters and others earnings grew modestly from favorable prior period Reserve development.

Speaker 4: Growth within the Property Management Channel was offset by Software Affinity Channel Volume.

Richard Dziadzio: Financial services also contributed to the growth. Trading results benefited from improved margins related to higher sales prices for used devices, partially offset by lower volumes, impacted by the timing and structure of carrier promotions. In Europe, we stabilized performance through expense actions, mitigating the impact of headwinds that began in the second half of 2022.

Growth within the property management channel was offset by softer affinity channel volumes.

Speaker 4: For the full year 2023, we expect global housing adjusted EBITDA, excluding reportable cats, to grow significantly due to the strong homeowners' performance, driven by top-line expansion, lender-placed, and favorable non-cat loss experience.

For the full year 2023, we expect global housing adjusted EBITDA, excluding reportable cats to grow significantly due to the strong homeowners performance driven by top line expansion in lender placed and favorable non cat loss experience.

Speaker 4: In the fourth quarter, we expect higher expenses to support business growth. In addition, the third quarter included $15 million of favorable pirate period developed.

In the fourth quarter, we expect higher expenses to support business growth. In addition, the third quarter included $15 million of favorable prior period development.

Richard Dziadzio: In Japan, results were impacted by subscriber decline, which is expected to continue into 2024.

Richard Dziadzio: Global auto adjusted evaded declined $6 million or 8 percent. Results continue to be impacted by inflation of labor and parts, leading to higher average claims costs. As expected, claims experience for auto and cellular products has also contributed to higher incurred claims costs in the quarter. The auto earnings decline was partially offset by an increase in investment income from higher yields and asset values. Turning to net-earn premiums fees and other income, lifestyle was up by $83 million or 4 percent.

Speaker 4: Moving to corporate, the third quarter adjusted EBITDA loss was $26 million, representing a modest year over year increase, mainly related to higher employee expenses.

Moving to corporate the third quarter adjusted EBITDA loss was $26 million.

Representing a modest year over year increase mainly related to higher employee expenses.

Speaker 4: For the four year 2023, we continue to expect the corporate adjusted eBerlost to approximate $105 million.

For the full year 2023, we continue to expect the corporate adjusted EBITDA loss to approximate $105 million.

Speaker 4: During the holding company liquidity, we ended the quarter with $491 million and dividends from our operating segments total $202 million.

Turning to holding company liquidity, we ended the quarter with $491 million and dividends from our operating segments totaled $202 million.

Speaker 4: In addition to cash used for corporate and interest expenses, third quarter cash outflows included three items.

In addition to cash use for corporate and interest expenses third quarter cash outflows included three items.

Richard Dziadzio: This growth was primarily driven by global automotive, reflecting an increase of 6 percent from prior period sales of vehicle service contracts. Connected livings net-earn premiums fees and other income increased 3 percent. Growth was muted by the previously disclosed mobile program contract changes of approximately $55 million, with no corresponding impacts to profitability. Excluding the impact of these contract changes, connected livings net-earn premiums fees and other income grew by 8 percent. The quarter benefited from higher prices on use-mobile devices and modest growth in North America mobile subscribers, excluding ongoing client runoff.

Speaker 4: $50 million of share repurchases, $37 million for common stock dividends, and $50 million to complete the repayment of our September , 2020-3 note.

$50 million of share repurchases and $37 million for common stock dividends and $50 million to complete the repayment of our September 2023 notes.

Speaker 4: As Keith mentioned, given our year-to-day performance and outlook for the year, as well as the strength of assurance balance sheet, we expect to achieve full-year share repurchases of approximately $200 million.

As Keith mentioned, given our year to date performance and outlook for the year as well as the strength of assurance balance sheet, we expect to achieve full year share repurchases of approximately $200 million.

Speaker 4: For the full year, we continue to expect our businesses to generate meaningful cash flows, approximating 65% of segment adjusted EBITDA, including reportable catastrophe.

For the full year, we continue to expect our businesses to generate meaningful cash flows approximating 65% of segment adjusted EBITDA, including reportable catastrophes.

Speaker 4: cash flow expectations, assume a continuation of the current economic environment and are subject to the growth of the businesses, investment portfolio performance, and rating agency and regulatory requirements.

Cash flow expectations assume a continuation of the current economic environment and are subject to the growth of the businesses investment portfolio performance and rating agency and regulatory requirements.

Richard Dziadzio: Turning to the full year 2023, we continue to expect lifestyles adjusted EBRA to decline modestly. Global auto will be down for the full year from unfavorable loss experience, including the impacts from continued normalization for select and salary products previously mentioned. We've taken decisive actions this year in response to higher claims experience in our auto book, including prospective rate increases and repair cost reduction. While we've seen some improvement, the improvement is expected to take place over a longer period of time, given the earnings pattern of the business. In connected living, we expect our U.S, business to grow for the full year.

Speaker 4: In closing, through the resilience of our unique business model, the decisive management actions taken, and our intense client focus, we are confident in our ability to achieve the higher-fool your objectives we have outlined today. And with that, upper- we are confident in our ability to achieve the higher-fool your objectives we have outlined today.

In closing through.

The resilience of our unique business model.

The decisive management actions taken in our intense client focus we are confident in our ability to achieve the higher full year objectives, we have outlined today.

And with that operator, please open the call for questions.

Speaker 1: The floor is not open for questions. At this time, if you have a question or comment, please press star one on your touch tone phone. If at any point your question is answered, you may remove yourself from the queue by pressing the pound when I'm sorry, as a star one key again. Again, we do ask that while you pose your question that you pick up your head and hint at to provide optimal sound quality.

The floor is now open for questions. At this time, if you have a question or comment. Please press star one on your Touchtone phone if at any point. Your question is answered you may remove yourself from the queue by pressing the pound sorry, the star one key again.

Richard Dziadzio: Overall, we are pleased with lifestyle strong third quarter performance, especially in light of ongoing challenges in auto claims. For the fourth quarter, we expect higher trade in volumes in mobile, but we also expect ongoing top-line challenges in Japan and Europe and investments to support business growth. In terms of full year net-earn premiums fees and other income, lifestyle is expected to grow consistent with year-to-date trends.

Again, we do ask that wall you pose your question that you pick up your handset to provide optimal sound quality.

Speaker 1: Thank you. Your first question is coming from the line of Mark Hughes of Twist.

Thank you. Your first question is coming from the line of.

Mark Hughes of <unk>. Your line is open.

Speaker 5: Morning Mark. Yeah, thank you. Good morning, Mark. Keith, Richard, I really like this housing business and I'm glad you didn't listen to those people who said you should divest it. Ha, ha, ha. Um, look, look just there. Um, on the housing business, uh, increased policy count. How much of that is coming from voluntary versus, uh, some up kick perhaps in a delinquency to propose your REO?

Good morning, Mark Yes. Thank you good morning.

Richard.

Like the housing business and I'm glad you didn't listen to those people, who said you should divert.

Richard Dziadzio: Moving to global housing, adjusted EBITDA was $165 million, which included $26 million in reportable catastrophes, primarily from Hurricane Adalia and Hawaii wildfires. Excluding reportable catastrophes, adjusted EBITDA more than doubled to $191 million, with an increase of $106 million. Housing performance was mainly led by three main items. First, continued top-line growth in homeowners from higher premium rates and average insured values in lender place, as well as an increase in the number of enforced policies.

[laughter].

Little goes there.

On the housing business.

Increased policy count how much of that is coming from voluntary versus.

Some uptick perhaps delinquencies foreclosures or Oreo.

Speaker 3: Yeah, I'd say, first of all, yeah, we're pretty excited about...

Yes, I'd say first of all yes, we're pretty excited about the results in housing and a tremendous amount of work by the team in the last year and it's really showing through here.

Speaker 3: The result in housing and a tremendous amount of work by the team in the last year, and it's really shown through here.

Speaker 3: the last few quarters and we're building a lot of momentum. I would say very little of the policy growth relates to the underlying economy or REO at all. We're really seeing.

The last few quarters, and we're building a lot of momentum I would say very little of the policy growth.

Richard Dziadzio: Second, favorable non-cat loss experience across the segment, including a year-over-year positive impact of $39 million, related to prior peer reserve development. This was comprised of $15 million of reserve reductions in the current quarter compared to reserve strengthening of $24 million in the prior period. And lastly, additional scale within our homeowners expense base ultimately driving stronger operating leverage. Higher investment income also contributed to earnings growth for homeowners. For renters and others, earnings grew modestly from favorable prior period reserve development. Growth within the Property Management Channel was offset by softer affinity channel volumes.

Relates to the underlying economy, our Oreo at all we're really seeing no change in placement rate based on economic conditions, maybe a little bit of increase in policy count.

Speaker 3: No change in placement rate based on economic conditions.

Speaker 4: Maybe a little bit of increase in policy count in a state like California, I'd say very modest, but a bit of a harder market. So we're seeing a little bit of growth there. Florida basically flat year today. So most of the growth is clients and client loan-related mix. And nothing yet in terms of the...

In a state like California, I'd say very modest, but a bit of a harder market. So we're seeing a little bit of growth there Florida.

Basically flat year to date, so most of the growth as clients and client loan related mix.

Nothing yet in terms of the broader economy.

Speaker 5: What's your sense of opportunity for sustained momentum, say in higher values for higher rate? Is that activity peak, perhaps, or is there still some way to go on both those?

What's your sense.

Opportunity for sustained momentum and higher values for.

Higher rate.

Is that activity.

Perhaps or there's still some way to go on both those fronts.

Richard Dziadzio: For the full year 2023, we expect global housing adjusted EBITDA, excluding reportable cats, to grow significantly due to the strong homeowners performance driven by top-line expansion in lender place and favorable non-cat loss experience. In the fourth quarter, we expect higher expenses to support business growth. In addition, the third quarter included $15 million of favorable prior period development.

Speaker 3: Yeah, I mean, obviously we work on rates related to that product line consistently, you know, state by state.

Yes, I mean, obviously, we work on.

Rates related to that product line consistently state by state.

Speaker 3: We also have, as you know, the average insured value adjustment that we do in the summer every year, and obviously last summer we put a meaningful double-digit increase into average insured values. This year it was

Also have as you know the average insured value adjustment that we do in the summer every year and obviously last summer, we put a meaningful double digit increase into average insured values. This year. It was just over 3% three 1% that went in in July and then state by state based on historical performance.

Speaker 3: just over 3%, 3.1% that went in in July . And then state-by-state based on, you know, historical performance.

Richard Dziadzio: Moving to corporate, the third quarter adjusted EBITDA loss was $26 million, representing a modest year-over-year increase, mainly related to higher employee expenses. For the full year 2023, we continue to expect the corporate adjusted EBITDA loss to approximate $105 million. During the holding company liquidity, we ended the quarter with $491 million, and dividends from our operating segments total $202 million.

Speaker 3: And expected costs, we continue to work with states. I feel like we still have momentum running through the portfolio. You know, we haven't certainly haven't topped out in terms of the impact from the rate adjustments, but we do see it tapering and slowing. Certainly, as we think about Q4, as we head into to 2024, but, you know, year to date.

And expected cost we continue to work with states I feel like we still have momentum running through the portfolio. We haven't certainly haven't topped out in terms of the impact from the rate adjustments, but we do see it tapering and slowing certainly as we think about Q4 as we head into 2024, but year to date.

Speaker 3: Feel good with where our loss ratio is set. And housing where 42% non-cat loss ratio if you adjust for prior period development in a very consistent with where we were last year. So we feel like the rates that we have are certainly appropriate. And as we see, impacts on cost acclaims will modify as we go forward.

Feel good with where our loss ratio sit in.

And housing were 42% non cat loss ratio, if you adjust for prior period development and a very consistent with where we were last year. So we feel like the rates that we have are certainly appropriate and as we see.

Richard Dziadzio: In addition to cash used for corporate and interest expenses, third quarter cash outflows included three items, $50 million of share repurchases, $37 million for common stock dividends, and $50 million to complete the repayment of our September 2023 notes. As Keith mentioned, given our year-to-day performance and outlook for the year, as well as the strength of assurance balance sheet, we expect to achieve full-year share repurchases of approximately $200 million. For the full year, we continue to expect our businesses to generate meaningful cash flows, approximating 65 percent of segment adjusted EBITDA, including reportable catastrophes. Cash flow expectations assume a continuation of the current economic environment and are subject to the growth of the businesses, investment portfolio performance, and rating agency and regulatory requirements.

Impacts on cost of claims will modify as we go forward.

Speaker 5: Then one final one, your fee income was up in lifestyle, your devices service were down 20% plus. I think you mentioned a higher value per.

Then one final one your fee income was up and lifestyle Youre devices service.

Down.

20% I think.

You mentioned the higher value or.

Speaker 5: a device, anything else, contributing to that just a divergence between the fee income and the device of service.

Goodbye.

Anything else contributing to that.

Divergent between the fee income in the device and service.

Speaker 3: Yeah, so, you know, if we think about that year over year, certainly volumes are down. We saw software promotional activity in the third quarter, you know, not out of alignment with what we expected. We did see a pickup in the back half of September , obviously after new product introduction by Apple. So hopefully that sets us up with what we'd expect in the fourth quarter to be an improvement there. You know, and as I look at that, that business, we...

Yes, so I think.

If we think about that year over year, certainly volumes are down we saw softer promotional activity.

In the third quarter not out of alignment with what we expected we did see a pickup.

In the back half of September obviously, after new product introduced introduction by Apple So hopefully that sets us up with what we'd expect in the fourth quarter to be an improvement there and.

Lawrence: Lawrence.

And as I look at that that business, we've done a really nice job in driving operational efficiency and automation to continue to improve.

Lawrence: In closing through the resilience of our unique business model, the decisive management actions taken, and our intense client focus, we are confident in our ability to achieve the higher full-year objectives we have outlined today.

Speaker 3: done a really nice job in driving operational efficiency and automation to continue to improve.

Speaker 3: the efficiency with which we operate. And then as you said, we've gotten higher.

The efficiency with which we operate and then as you said, we've gotten higher sale prices when we're selling devices and obviously, we derive revenue based on how well we sell devices in the secondary market, but I'd say, there's not much else to report profitability, a little bit stronger, but if youll remember third quarter last year, we had a bit of a mismatch between expenses and revenue.

Speaker 5: sale prices when we're selling devices and obviously we derive revenue based on how well we sell devices in the secondary market. But I'd say there's not much else to report, you know, profitability a little bit stronger. But if you'll remember, third quarter last year, we had a bit of a mismatch between expenses and revenue. So Q3 trade-in results were a little bit depressed last year.

Operator: And with that operator, please open the call for questions. The floor is not open for questions. At this time if you have a question or comment, please press star one on your touchstone phone. If at any point your question is answered, you may remove yourself from the queue by pressing the pound, when I'm sorry, the star one key again. Again, we do ask that while you pose your question that you pick up your head and hint at to provide optimal sound quality. Thank you.

So Q3.

Trading results were a little bit depressed last year.

Okay.

Okay I appreciate it thank you.

Great. Thanks.

Speaker 1: Your next question comes from the line of Jeff Smith of William Blair. Your line is open.

Your next question comes from the line of Jeff Smith of William Blair. Your line is open.

Mark Hughes: Your first question is coming from the line of Mark Hughes of Truist. Your line is open. Morning, Mark. Yeah, thank you. Good morning, Mark. Keith, Richard, I really like this housing business, and I'm glad you didn't listen to those people who said you shouldn't digest it. Little joke there. Following the housing business, increased policy count. How much of that is coming from voluntary versus some upkick perhaps in a delinquency of your proposals or are you?

Speaker 5: Good morning. Good morning. Back to growth in global housing. So PFO growth was 23% of the quarter.

Hi, Good morning, good morning, good morning.

Back to growth in global housing, so Pf <unk> growth was 23% in the quarter.

Speaker 5: And I'm just trying to think through the components. You'd mentioned inflation guard was 3%, I think in June or July , but I guess 12% last year. So maybe kind of a mix there, burning through. What's rate at, you know, how much was the rate component and you know, how much was the unit growth component? I'm just trying to think of the different parts there.

And I'm just trying to think through the components. You had mentioned inflation guard was 3% I think in June or July, but I guess, 12% last year. So maybe.

Kind of a mix there earning through.

Whats Ray that how much was the rate component and how much was the unit growth components I'm, just trying to think of the different parts there.

Speaker 3: Yeah, so maybe I can start and then certainly Richard can jump in. Obviously, when you look at...

Yes, so maybe I can start and then certainly Richard can jump in obviously when you look at housing revenue year over year, it's up it's up meaningfully a $100 million $103 million year over year from all of that is from growth in homeowners, which is up 31% year over year in terms of revenue if we think.

Mark Hughes: Yeah, I'd say, first of all, yeah, we're pretty excited about the results in housing and tremendous amount of work by the team in the last year and it's really showing through here. The last few quarters and we're building a lot of momentum. I would say very little of the policy growth relates to the underlying economy or RIO at all. We're really seeing no change in placement rate based on economic conditions. Maybe a little bit of increase in policy count in a state like California.

Speaker 3: Housing's revenue year over year, it's up meaningfully $100 million, $103 million year over year. All of that is from growth in homeowners, which is up 31% year over year in terms of revenue. If we think about what's driving the performance from an underlying EBITDA perspective and, you know, and Richard obviously talked about the prior period development, if you adjust

About what's driving the performance from an underlying EBITDA perspective.

Richard obviously talked about the prior period development, if you adjust the development $50 million this year against.

Speaker 3: the development, $15 million this year against an adverse development last year of $24 million. We still see a $67 million increase.

Mark Hughes: I'd say very modest, but a bit of a harder market. So we're seeing a little bit of growth there. Florida basically flat year today. So most of the growth is clients and client loan related mix and nothing yet in terms of the broader economy.

Adverse development last year of 24, we still see a $67 million increase in our.

Speaker 3: in our underlying EBITDA and I would say two-thirds of that is really driven by rate

Our underlying EBITDA and I would say two thirds of that is really driven by rates average insured values, which obviously play together and then relatively stable losses related to higher levels of premium rolling through and then the balance maybe a third is split between policy growth, which is up three five.

Speaker 3: average insured values, which obviously play together, and then relatively stable losses related to higher levels of premium rolling through. And then the balance, maybe a third, is split between policy growth, which is up three and a half percent year over year, and then investment income, which is obviously helping with cash yields and more assets being held. But Richard, happy to have you add any other detail.

Keith Demings: What's your sense in the opportunity for sustained momentum? Say, higher values for higher rate. Is that activity peak perhaps or is there still some way to go on both those fronts? Yeah, I mean, obviously, we work on rates related to that product line consistently, state by state. We also have, as you know, the average and shared value adjustment that we do in the summer every year. And obviously last summer we put a meaningful double digit increase into average and shared values.

<unk> year over year, and net investment income, which is obviously, helping with with cash yields and more assets being held but Richard happy to have you had any other detail, yes sure yes, that's exactly.

Speaker 4: Yeah, sure. Yeah, that's exact. And I guess I would add, and by the way, good morning, Jeff. What I would add is that if you just look at the premium component that Keith just talked about,

I guess I would add by the way good morning, Jeff What I would add is that if you just look at the premium component that that Keith just talked about think about it generally as being a third for each of the components that we that we've just discussed.

Speaker 4: Think about it generally as being a third for each of the components that we that we've just discussed. You know, it's the increase.

The increase in rates.

Keith Demings: This year it was just over 3%, 3.1% that went in in July. And then state by state based on, you know, historical performance and expected costs we continue to work with states. I feel like we still have momentum running through the portfolio. You know, we haven't certainly haven't topped out in terms of the impact from the rate adjustments. But we do see it tapering and slowing certainly as we think about Q4 as we head into 2024.

Speaker 4: you know, average insured values and inflation guard. That's sort of the way to look at it. And the other thing too.

Average insured values.

And inflation guard, that's sort of the way to look at it and the other thing too.

Speaker 4: that I would mention is you see, you heard Keith talk about how much drops to the bottom line. I think that's also a credit to the expense discipline that we've had and the leverage we're getting. And you can see that coming out in the expense ratios that the growth in the premiums and the leverage that we have in the business is really allowing us to increase the bottom line.

That I would mention as you see you.

You heard Keith talk about how much drops to the bottom line I think that's also a credit to the expense discipline that we've had and the leverage we're getting and you can see that coming out in the expense ratios.

The growth in the premiums and the leverage that we have in the business is really allowing us to increase fee the bottom line.

Keith Demings: But, you know, year to date, feel good with where our loss ratio sit and housing were 42% non-cat loss ratio if you adjust for prior period development, you know, very consistent with where we were last year. So we feel like the rates that we have are certainly appropriate. And, you know, as we see impacts on cost acclaims will modify as we go forward, then one final one, your fee income was up in lifestyle, your device's service were down in 20 percent cloth.

Speaker 5: got it very helpful. And then in global lifestyle, just looking at that benefit ratio, kind of continues to move up, despite rate increases, it was 23% of the quarter, mainly driven by auto, it sounds like could you maybe just discuss the pricing strategy there? Like when did that begin? What level of pricing can you get in this market? Really any detail on that would be helpful.

Got it very helpful and then in.

Global lifestyle, just looking at that benefit ratio kind of continues to move up.

Despite rate increases it was 23% in the quarter.

Mainly driven by auto it sounds like could you maybe just discuss the pricing strategy. There like when does that begin what level of pricing can you can you get in this market really any detail on that would be helpful.

Speaker 3: Yeah, I can certainly start, Richard. So if I think about the auto business, actually pleased with the work done by our team.

Yes, I can certainly start Richard.

Keith Demings: I think you mentioned the higher value per device. Anything else, contributing to that divergence between the fee income and the device's service? Yeah, so, you know, think if we think about that year over year, certainly volumes are down, we saw softer promotional activity in the third quarter, you know, not out of alignment with what we expected. We did see a pickup in the back half of September, obviously after new product introduced introduction by Apple, so hopefully that sets us up with what we'd expect in the fourth quarter to be an improvement there.

If I think about the auto business actually pleased with.

The work done by our team so.

Speaker 3: We started making adjustments to rate late last year, so we've probably been in about a 12 month cycle, making adjustments with clients. We're, we're really on.

We started making adjustments to rate late last year. So we've probably been in about a 12 month cycle, making adjustments with clients, we're really on the risk.

Speaker 3: in a meaningful way for four or five different programs. So it's not the bulk of our business, as we've talked about before. Most of that business is reinsured. So there's a handful of clients that we're working with very closely.

In a meaningful way for four or five different programs. So it's not the bulk of our business as we've talked about before most of that business is reinsured. So there's a handful of clients that we're working with very closely.

Speaker 3: And we've put rate in place that we feel is appropriate to get the business to perform at the levels that are expected. So that's that works been done. It's been ongoing for the last 4 quarters or so feel good about the adjustments we've made. We've had incredible.

And we've put right in place that we feel is appropriate to get the business to perform at the levels that are expected. So that's that work's been done its been ongoing for the last four quarters or so feel good about the adjustments. We've made we've had incredible discussions with our clients to try to get the programs to the right level of profitability.

Keith Demings: You know, and as I look at that business, we've done a really nice job in driving operational efficiency and automation to continue to improve the efficiency with which we operate, and then as you said, we've gotten higher sale prices when we're selling devices and obviously we derive revenue based on how well we sell devices in the secondary market. But I'd say there's not much else to report, you know, profitability a little bit stronger, but if you'll remember, third quarter last year, we had a bit of a mismatch between expenses and revenue, so Q3 traded results were a little bit depressed last year. Okay, I appreciate it. Thank you. Great. Thanks.

Speaker 3: discussions with our clients to try to get the programs to the right level of profitability. We've also been working incredibly hard, not just on rate, but on the claims adjudication process, how we're acquiring parts, how we're thinking about repairs and which repair shops to use when the options are available to us to drive more efficiency, and a lot of diligence end-to-end, and very much in partnership with the client. So as we look at the results in the court.

We've also been working incredibly hard not just on rate, but on the claims adjudication process, how we're acquiring parts how we're thinking about.

<unk> in which repair shops to use when when the options are available to us to drive more efficiency and a lot of diligence end to end and very much in partnership with the client so.

As we look at the results in the quarter.

Speaker 3: You know, certainly seeing a similar pattern to what we saw in Q2, but the good news is we've seen

Certainly seeing a similar pattern to what we saw in Q2, but the good news is we've seen relative stability.

Speaker 3: relative stability. You know, the cost of severity on the autoside is up a little bit in Q3 over Q2.

The cost of severity on the auto side is up a little bit in Q3 over Q2, but the premium earning through is also up and were seeing a modest improvement in the underlying loss ratio. When we look at the risk clients. So feel like we're doing the right things, it's going to take time certainly to earn through but early signs of good momentum.

Jeff Smith: Your next question comes from the line of Jeff Smith of William Blair. Your line is open. Hi, good morning. Good morning. Back to growth in global housing, so PFO growth was 23% in the quarter. And I'm just trying to think through the components. You'd mentioned inflation guard was 3%, I think in June or July, but I just 12% last year, so maybe kind of a mix there, earning through what's radat, you know, how much was the rate component, and you know, how much was the unit growth component. I'm just trying to think of the different parts there.

Speaker 3: But the premium earning through is also up and we're seeing a modest improvement in the underlying loss ratio when we look at the risk client. So feel like we're doing the right things. It's gonna take time certainly to earn through but early signs of good momentum at least in starting to stabilize as we look to bend the curve, but Richard certainly anything else.

At least starting to stabilize as we look to bend the curve, but Richard certainly anything else you want to add.

Speaker 4: Yeah, I think I think that's exactly right. And in our prepared remarks, we basically talked about, you know, it will take some time. The claims adjudication work we're doing, and the teams are doing a fantastic job. That's helping us today, you know, bend the curve a little bit.

Yes, I think I think that's exactly right and in our prepared remarks, we basically talked about it will take some time the claims adjudication work, we're doing and the teams are doing a fantastic job, that's helping us today bend the curve a little bit we've been able to get rate, which is fantastic.

Keith Demings: Yeah, so maybe I can start and then certainly Richard can jump in. Obviously, when you look at housing's revenue year over year, it's up, it's up meaningfully $100 million, $103 million year over year. All of that is from growth in homeowners, which is up 31% year over year in terms of revenue. If we think about what's driving the performance from an underlying EBITDA perspective and you know, and Richard obviously talked about the prior period development, if you adjust the development, 50 million this year against an adverse development last year of 24, we still see a $67 million increase in our underlying EBITDA.

Speaker 4: We've been able to get rate, which is fantastic. But it's going to take time because we've sold what we've sold in the past, and that's going to run through. And then the new rates and the new premiums are getting, that'll come through and help us bend the curve as we go in the future. But it will take some time.

It's going to take time, because we've sold what we've sold in the past and that is going to run through and then the new rates in the new premiums were getting that'll come through and help us bend the curve as we go into future, but it will take some time.

Great. Thank you.

Speaker 1: Your next question comes from the line of Brian Meredith of UBS, your line is open.

Your next question comes from the line of Brian Meredith of UBS. Your line is open yes.

Speaker 5: Hey, could you talk a little bit about what's going on in Japan and maybe when we might see a flip there from a growth perspective. I know you said you'll still see some pressures in 2024 and I know you've got the new contracts that are going in. When do we see that flip? I would have thought that was going to be a nice little tailwind for growth in 2024.

Yeah. Thanks, Brian.

Hey, Keith could you talk a little bit about.

What's going on in Japan.

And maybe when we might see a slip there from a growth perspective, I know you said you will still see some pressures in 2024 and I know you've got the new contracts that are coming in when do we see that flip I would've thought that was going to be a nice little tailwind for growth in 'twenty four.

Keith Demings: And I would say two-thirds of that is really driven by rates, average insured values, which obviously play together, and then you know, relatively stable losses related to higher levels of premium rolling through. And then the balance, maybe a third, is split between policy growth, which is up three and a half percent year over year, and then investment income, which is obviously helping with cash yields and more assets being held, but Richard, happy to have you any other detail.

Speaker 3: Yeah, sure. Let me start at the highest level with Japan. I mean, and I've talked about this before, and hopefully this comes through. I mean, this is a

Yes sure.

Let me.

Start at the highest level with Japan, and I've talked about this before and hopefully this come through.

Speaker 3: really, really critical market for a sure-in. It's a tremendous mobile marketplace. It's the second largest in the world after the US. And I do think we are well positioned for long-term growth. That's the fundamental point. We're doing a lot of investing in the market, investing in not just capabilities, but also talent. And we're in a really fortunate position to...

Really really critical market for Assurant.

Tremendous mobile marketplace. It's the second largest in the world after the U S and I do think we are well positioned for long term growth.

Richard Dziadzio: Yeah, sure. Yeah, that's exact. And I guess I would add, by the way, good morning, Jeff, what I would add is that if you just look at the premium component that Keith just talked about, think about it generally as being a third for each of the components that we've just discussed, you know, it's the increase in rates, you know, average insured values and inflation guard. That's sort of the way to look at it.

The fundamental point, we're doing a lot of investing in the market invest again, not just capabilities, but also talent and we're in a really fortunate position today.

Speaker 3: and that we have relationships with every major operator in the marketplace. We don't do all things for all operators, but we've got access, we've got deep relationships, and I think over time that will bear fruit. I would say, as we think about exiting 2023, we're certainly stabilizing the financial performance in Japan. We've seen some subscriber runoff, as we've talked about in the past.

We have relationships with every major operator in the marketplace. We don't do all things for all operators, but we've got access we've got deep relationships and I think over time that will bear fruit.

Richard Dziadzio: And the other thing too, that I would mention is you see, you heard Keith talk about how much drops to the bottom line. I think that's also a credit to the expense discipline that we've had in the leverage we're getting, and you can see that coming out in the expense ratios that the growth in the premiums and the leverage that we have in the business is really allowing us to increase the bottom line.

I would say as we think about exiting 2023, we're certainly stabilizing the financial performance in Japan, we've seen some subscriber runoff as we've talked about in the past.

Jeff Smith: I got it, very helpful.

Speaker 3: I expect that to continue to decelerate into 24, and we do think we'll grow EBITDA in Japan year over year, 24 over 23. So I am really pleased with the hard work that the teams are doing and how we're positioned in the market. But that market is about what is it going to look like in five years, and how do we unlock the full potential of what I think we can achieve in that market.

I expect that to continue to decelerate into 'twenty four and we do think we will grow EBITDA in Japan year over year 24 over 23, So I am really pleased with the hard work that the teams are doing and how we're positioned in the market, but that market is about what is it going to look like in five years and how do we unlock the full potential.

Keith Demings: And then in global lifestyle, just looking at that benefit ratio, kind of continues to move up, despite rate increases, it was 23% of the quarter, mainly driven by auto, it sounds like, could you maybe just discuss the pricing strategy there, like when did that begin, what level of pricing can you get in this market, really any detail on that would be helpful? Yeah, I can certainly start, Richard. So if I think about the auto business, actually pleased with the work done by our team.

All of what I think we can achieve in that market.

Speaker 5: Do you have like a percentage you could give us of how much of the Japanese business is now in a perpetual policy versus, I guess it was a four-year policy is what they were?

Do you have like a percentage you could give us of how much of the Japanese business is now on a perpetual policy versus I guess it was a four year policies what they were.

Speaker 4: Yeah, so the four-year policies continue to run down. Certainly, the majority of the business is on an evergreen policy. 100% of the business that is sold today is on an evergreen policy, but certainly the vast majority.

Yes.

The four year policies continue to run down certainly the majority of the business is on an evergreen policy, 100% of the business that is sold today is on an evergreen policy.

Keith Demings: So we started making adjustments to rate late last year. So we've probably been in about a 12 month cycle, making adjustments with clients. We're really on the risk in a meaningful way for four or five different programs. So it's not the bulk of our business as we've talked about before. Most of that business is re-insured. So there's a handful of clients that we're working with very closely. And we've put rate in place that we feel is appropriate to get the business to perform at the levels that are expected.

But certainly the vast majority.

Speaker 5: Gotcha. And then second question, just going back to global housing. I'm just curious, what are you seeing right now from an inflationary perspective in that business? Right? It sounds like it's pretty modest given what your lost races are pretty good, but if I look at some of the other home owners insurance companies, they're still seeing a fair amount of inflationary pressure there. And maybe you can pivot that into, maybe your business is a little bit different, and you've got better ways to control those that inflation than maybe some traditional homeowners.

Got you and then second question just going back to global housing.

Just curious what are you seeing right now from an inflationary perspective in that business right. It sounds like it's pretty modest given with your loss ratios are pretty pretty good, but if I look at some of the other homeowners insurance companies.

Still seeing a fair amount of inflationary pressure there.

And maybe you can pivot that into maybe your business is a little bit different.

Keith Demings: So that's, that works been done. It's been ongoing for the last four quarters or so. Feel good about the adjustments we've made. We've had incredible discussions with our clients to try to get the programs to the right level of profitability. We've also been working incredibly hard, not just on rate, but on the claims adjudication process, how we're acquiring parts, how we're thinking about repairs and which repair shops to use when the options are available to us to drive more efficiency.

<unk> got better ways to control those that inflation than maybe some of the traditional homeowners companies.

Speaker 3: Yeah, so we definitely have still seen inflationary pressure. If we look at the Q3 results, as an example, we did see higher severities year over year. We did see higher frequencies year over year, but because of the rate action that we've taken and the change with Inflation Guard on insured values,

Yes, so we definitely.

We have still seen inflationary pressure if we look at.

The Q3 results as an example, we did see higher severities year over year, we did see higher frequencies year over year, but because of the rate action that we've taken and the change with inflation guard uninsured values.

Speaker 3: The premiums that we're getting more than offset, those increases from a claims perspective. So I'd say that.

Keith Demings: And a lot of diligence and, and, and very much in partnership with the clients. So as we look at the results in the quarter, you know, certainly seeing a similar pattern to what we saw in Q2. But the cost of severity on the other side is up a little bit in Q3 over Q2. But the premium earning through is also up. And we're seeing a modest improvement in the underlying loss ratio when we look at the risk client. So feel like we're doing the right things, you know, it's going to take time certainly to earn through.

The premiums that we're getting more than offset those increases from a claims perspective, so I'd say that that's largely why we're outperforming in this market and obviously our team is doing a really good job to Richard's point not just on the way we operate claims and the diligence that we work with but the effort around expense efficiency.

Speaker 3: That's largely why we're outperforming in this market. And obviously our team is doing a really good job to Richard's point, not just on the way we operate claims and the diligence that we work with, but the effort around expense efficiency. I mean, if you think about housing, we've scaled that business, and it really is a scale business. We've scaled tremendously, and our expenses, operational expenses, are flat to down.

I mean, if you think about housing we've scaled that business and it really is a scale business, we've scaled tremendously and our expenses operational expenses are flat to down.

Speaker 3: for the bulk of the housing business and overall done a really good job on containing DNA.

For the bulk of the housing business and overall have done a really good job on containing DNA <unk>.

Richard Dziadzio: But early signs of good momentum, at least in starting to stabilize as we look to bend the curve, but Richard certainly anything else you want to add. Yeah, I think, I think that's exactly right. And in our prepared remarks, we basically talked about, you know, it will take some time. The claims of adjudication, we're, we're, work we're doing and the teams are doing a fantastic job. That's helping us today, you know, bend the curve a little bit.

Speaker 4: simplifying and focusing and driving a lot of digital initiatives to drive efficiency. So it's a combination of four or five things that are coming together to lead to the out performance. It's not as simple as rate. It's a lot of work across the board over the last, you know, 12 months or so.

Simplifying and focusing and driving a lot of digital initiatives to drive efficiency. So it's a combination of four or five things that are coming together to lead to the outperformance it's not as simple as right. It's a lot of work across the board over the last 12 months or so.

Makes sense. Thank you.

Richard Dziadzio: We've been able to get rate, which is fantastic. But it's going to take time because we sold what we've sold in the past and that's going to run through. And then the new rates and the new premiums we're getting, that'll come through and help us bend the curve as we go in the future. But it will take some time. Great.

Great. Thank you.

Speaker 1: Once again, if you have a question, you may press star one on your touchtone font at this time. Your next question comes from the line of John Varnish of Paper Sandler. Your line does open.

Once again, if you have a question you May press star one on your Touchtone phone at this time. Your next question comes from the line of John <unk>.

Carnage of Piper Sandler Your line is open hi.

Speaker 6: John . Morning. Thanks for that. Good morning. Thanks for the opportunity. Appreciate it. Talk about on the call consolidated mobile service centers to two areas that believe you name check Texas and Tennessee if I heard correctly. Both are low tax previously low cost states. Are there further opportunities and the 24 to move.

John.

Good morning, good morning, Thanks for that good morning, Thanks for the opportunity appreciate it.

Brian Meredith: Thank you. Your next question comes to the line of Brian Meredith of UBS. Your line is open. Yeah, thanks. Hey, Kate, could you talk a little bit about what's going on in Japan. And maybe when we might see a flip there from a growth perspective, I know you said you'll still see some pressures in 2024. And I know you've got the new contracts are going in. When do we see that flip, I would have thought that we're going to be a nice little tailwind for growth in 2020, for.

You talked about on the call consolidated mobile service centers two areas I believe you name checked, Texas, and Tennessee, if I heard correctly.

Both are low tax previously low cost dates are there further opportunities in the 24 to move.

Speaker 6: Businesses are operations in cheaper areas in the US that you're considering.

Businesses or operations and cheaper areas in the USA you are considering.

Speaker 3: Yeah, I would say that we're not actively considering any other relocations. You know, if you think back to...

Yes, I would say that we're not actively considering any other relocations.

If you think back to <unk>.

Speaker 3: when we acquired HILA. So go back to December 2020. We acquired HILA, HILA had a large facility in Nashville, Tennessee, and then a shurant had a facility in New York and a facility in Texas.

Keith Demings: Yeah, sure. Let me start at the highest level with Japan. I mean, and I've talked about this before and hopefully this comes through. I mean, this is a really, really critical market for Assurant. It's a tremendous mobile marketplace. It's the second largest in the world after the US. And I do think we are well positioned for long-term growth. That's the fundamental point. We're doing a lot of investing in the market, investing in not just capabilities, but also talent.

When we acquired highlights so go back to December 2020, we acquired Hyla highlight had a large facility in Nashville, Tennessee, and then Assurant had a facility in New York in a facility in Texas.

Speaker 3: And as we've looked at our business model and we always wanted to have multiple sites for redundancy, certainly an operational resilience, but trying to get back to two sites feels like a strategically the right thing to do for the business and then looking at geographies where we feel like we're really well positioned from an access to talent, from a logistics, access to clients, et cetera. So it's really more about the strategic... us. See we're fundamentally greatly equipped to see what our potential for cheaper CEO would beween?!

And as we've looked at our business model and we always wanted to have multiple sites for redundancy certainly an operational resilience, but trying to get back to two sites feels like a strategically.

The right thing to do for the business and then looking at.

Keith Demings: And we're in a really fortunate position today. And then we have relationships with every major operator in the marketplace. We don't do all things for all operators, but we've got access. We've got deep relationships. And I think over time, that will bear fruit. You know, I would say as we think about exiting 2023, we're certainly stabilizing the financial performance in Japan. We've seen some subscriber runoff as we've talked about in the past.

Geographies, where we feel like we're really well positioned from a access to talent from a logistics access to clients et cetera. So it's really more about the strategic.

Speaker 3: Decision here than it is purely on a cost basis and it's trying to, you know, have.

Decision here than it is purely on a cost basis and it is trying to have scaled facilities that we can make proper investments and then and then obviously get access to the talent. So that's what's driving that change and we will be actually scaling our facility in Nashville, we're in the process of doing that work now so we will be building a newer.

Speaker 4: Scaled facilities that we can make proper investments in and then obviously get access to the talent. So that's what's driving that change. And we will be actually scaling our facility in Nashville. We're in the process of doing that work now. So we'll be building a newer, more modern and significantly larger facility to support the long-term growth of that business.

Keith Demings: I expect that to continue to decelerate into 24. And we do think we'll grow EBITDA in Japan year over year, 24 over 23. So I am really pleased with the hard work that the teams are doing and how we're positioned in the market. But that market is about, what is it going to look like in five years? And how do we unlock the full potential of what I think we can achieve in that market?

For a more modern.

And significantly larger facility to support the long term growth of that business.

Speaker 4: I'd also just, that's exactly right. And I just add to that too, is one of the other areas we've been getting some real estate efficiency. If I can put it that way, is on our corporate real estate, we have been either downsizing some of our offices or eliminating some of the offices. And that helps us from an expense base too. That overall corporate expense that we have. So that's another area that we've gotten, some pretty good efficiency in John .

I'd also just that's exactly right and I would just add to that to US is one of the other areas. We've been getting some some real estate efficiency. If I can put it that weighs on our corporate real estate.

We have been either downsizing some of our offices or or or eliminating some of the offices and that helps us from an expense base to that overall corporate expense that we have so that's another area that we've gotten some pretty good efficiency and John.

Keith Demings: Do you have like a percentage of you give us of how much of the Japanese business is now in a perpetual policy versus, I guess it was a four-year policy is what they were? Yeah, so the four-year policies continue to run down. Certainly the majority of the businesses on an evergreen policy, 100% of the business that is sold today is on an evergreen policy, but certainly the vast majority. Gotcha. And then second question, just going back to global housing, I'm just curious, what are you seeing right now from an inflationary perspective in that business?

Speaker 6: It's very helpful. I appreciate that. Arnie's growth has been very strong in my follow-up question. I'm not trying to get ahead of formal guidance coming in February . And I appreciate what you've offered today. But how do we think of re-insurance savings next year emerging on-

That's very helpful. I appreciate that.

Earnings growth has been very strong and my follow up question I'm not trying to get ahead of formal guidance come in in February and I. Appreciate what you've offered today, but how do we think of reinsurance savings next year for.

Emerging on.

Speaker 6: book that's being run off within global housing juxtaposed against what's fortunately knock on wood but somewhat favorable of a cat environment for you this year.

Keith Demings: Right, it sounds like it's pretty modest given which your lost races are pretty good, but if I look at some of the other homeowners insurance companies, you know, they're still seeing a fair amount of inflationary pressure there. And maybe you can pivot that into maybe your business is a little bit different, you know, and you've got better ways to control those that inflation than maybe some of the traditional homeowners companies. Yeah, so we definitely have still seen inflationary pressure.

Book, that's being run off within global housing juxtaposed against.

Fortunately knock on wood, but somewhat favorable of a cat environment for you this year.

Speaker 3: Yeah, so maybe I'll just offer 1 thought and then Richard can speak to the process, but, you know, to your point, we've obviously had a.

Yes, so maybe I'll just offer one thought and then Richard can speak to the process, but.

To your point, we've obviously had a.

Speaker 3: Favorable cat year to this point, significantly below last year. And we talked about a target cat load of 140 million. We're sitting at 89 million year to date. So obviously that's fortunate from that perspective. And we'll, we'll certainly look to to those statistics as we talk to our partners heading into to the renewal cycle and hopefully a little bit of a different environment than what we're in. We're in last year. But Richard, maybe talk a little bit about how we're thinking about reinsurance.

Favorable cat year to this point.

Significantly below last year, and we talked about a target cat load of $140 million, we're sitting at $89 million year to date. So obviously thats fortunate from that perspective, and we will certainly look to.

Keith Demings: If we look at the Q3 results as an example, we did see higher severities year over year, we did see higher frequencies year over year. But because of the rate action that we've taken and the change with inflation guard on insured values, the premiums that we're getting more than offset those increases from a claims perspective. So I'd say that's largely why we're outperforming in this market. And obviously our team is doing a really good job to Richard's point, not just on the way we operate claims and the diligence that we work with, but the effort around expense efficiency.

To those statistics as we talk to our partners heading into the renewal cycle and hopefully a little bit of a different environment than what we are and were in last year, but Richard maybe talk a little bit about how we're thinking about reinsurance.

Speaker 4: Yeah, thanks. Thanks, Keith. Yeah, in terms of the reinsurance, it's a little bit early days to talk too specifically about it, but I think you hit it on the head in the question. The market has stabilized in terms of pricing. It has stabilized versus what it was in the last couple of years, so we're going into better market conditions.

Yes, thanks, Thanks Keith.

Yes in terms of in terms of the reinsurance, it's a little bit early days to talk too specifically about it but I think you hit it on the head and the question. The market has stabilized in terms of pricing pricing it has stabilized.

Keith Demings: I mean, if you think about housing, we've scaled that business and it really is a scale business. We've scaled tremendously and our expenses operation expenses are flat to down for the bulk of the housing business. And overall done a really good job on containing DNA, simplifying and focusing and driving a lot of digital initiatives to drive efficiency. So it's a combination of four or five things that are coming together to lead to the outperformance. It's not as simple as rate. It's a lot of work across the board over the last 12 months or so. Thank you.

<unk> what it was in the last couple of years, so we're going into better better market conditions I would say, we will have a consistent approach that we've had in the last couple of couple of years. When we go into the market and as Keith said, we're entering the market I would say is one of the good guys in.

Speaker 4: I would say we'll have a consistent approach that we've had in the last couple of years when we go into the market.

Speaker 4: And as Keith said, we're entering the market, I would say, as one of the good guys in terms of we have not gone up past our retention levels to the reinsurers this year for the CAT reinsurance. So, when we walk into the meetings, we'll be there and presenting a very favorable position relative to the reinsurers where they ended up in 2023.

In terms of we have not gone up into our past our retention levels to the reinsurers. This year for the cat reinsurance. So we walk into the meetings will be will be there and presenting a very favorable.

<unk> position relative to the reinsurers, where they ended up in 2023.

Operator: Great. Thank you. Once again, if you have a question, you may press star one on your touch phone at this time.

Thanks, a lot for the answers best of luck.

Great. Thank you.

John Barnidge: Your next question comes from the line of John Barnidge of Piper Sandler. Your line is open. Hey, John. Good morning. Thanks for that. Good morning. Thanks for the opportunity. Appreciate it. You talked about on the call, consolidated mobile service centers to two areas. I believe you name check Texas and Tennessee. If I heard correctly, both are low tax, previously low cost states.

Thank you.

Yes.

Speaker 1: Your next question comes from the line of Tommy McJoint of KBW. Your line is open.

Your next question comes from the line of Tommy Joint of <unk>. Your line is open.

Hey, Tommy.

Speaker 7: Morning, Tommy. Hey, good morning, guys. Thanks for taking my question. I think you said, Keith, that in those breadcrumbs for 2024, that you're expecting more modest growth in housing in 2024. Just want to clarify that that is still expecting growth. And then is that in reference or, I guess, in terminology of excluding catastrophes or including catastrophes?

Good morning, Tommy Hey, Good morning, guys. Thanks for taking my question.

I think you said Keith that.

And those breadcrumbs for 2024 that you are expecting more modest growth in housing in 2024.

Keith Demings: Are there further opportunities in the 24 to move businesses or operations in cheaper areas in the US that you're considering? Yeah, I would say that we're not actively considering any other relocations. You know, if you think back to when we acquired HILA, so go back to December 2020, we acquired HILA, HILA had a large facility in Nashville, Tennessee, and then Assurant had a facility in New York and a facility in Texas.

Just wanted to clarify that that is still expecting growth and then is that in reference.

I guess in terminology, and excluding catastrophes or including catastrophes.

Speaker 5: Yes, great question. So we're, we're looking at X cat. First of all, obviously hard to predict what cats are going to look like, but.

Yes, great question. So we're looking at ex Cat first of all obviously hard to predict what.

Cats are going to look like but.

Speaker 3: As I think about housing in 24, I think when we suggest modest growth, there's a couple of things to remember. 1st of all, a phenomenal 2023. I mean, this is a, you know, a pretty significant recovery year, obviously a little bit more challenge in 22, but roaring back in 2023. So we're.

As I think about housing in 'twenty four I think when we suggest modest growth. There's a couple of things to remember first of all.

Phenomenal 2023, I mean, this is a pretty significant recovery year, obviously, a little bit more challenged in 'twenty, two but roaring back in 2023. So we're extremely pleased about that and of course that trend line can't continue because it's been such a turnaround, but what I would say is we've also seen.

Keith Demings: And as we've looked at our business model, and we always wanted to have multiple sites for redundancy, certainly in operational resilience, but trying to get back to two sites feels like a strategically the right thing to do for the business. And then looking at geographies where we feel like we're really well positioned from an access to talent, from a logistics, access to client, et cetera. So it's really more about the strategic decision here than it is purely on a cost basis.

Speaker 3: extremely pleased about that. And of course, that trend line, you know, can't continue because it's been such a turnaround. But what I would say is we've also seen about 40 million of prior year development benefiting the P&L in 2023.

$40 million of prior year development benefiting the P&L.

Speaker 3: But we still think we'll grow housing, even though we've got to grow through that 40 million dollars of PYD before we generate a dollar of growth. We still think we'll grow housing because of the momentum that we see and all the great work done by the team. So that's what we're trying to signal. Obviously, we'll get.

In 2023, but we still think we will grow housing even though we've got to grow through that $40 million of <unk> before we generate a dollar of growth. We still think we will grow housing because of the momentum that we see in all the great work done by the team. So that's what we're trying to signal obviously, we will get into the detailed forecasts.

Keith Demings: And it's trying to, you know, have scaled facilities that we can make proper investments in and then obviously get access to the talent. So that's what's driving that change. And we will be actually scaling our facility in Nashville. We're in the process of doing that work now. So we'll be building a newer, more modern and significantly larger facility to support the long-term growth of that business. I'd also just, that's exactly right.

Speaker 4: into the detailed forecast as we come back in February , but we do feel good about how we're positioned, right? You know, housing obviously is gonna moderate, but we've got great trend lines sitting behind us and great momentum. And then as we saw in lifestyle in the third quarter, although we've got challenges we're working through on the autoside, overall, we're exactly where we thought we would be, you know, we're still signaling.

As we come back in February, but we do feel good about how we're positioned right housing obviously is going to moderate but we've got great trend lines sitting behind us and great momentum and then as we saw in lifestyle in the third quarter. Although we've got challenges we're working through on the auto side overall, we're exactly.

Keith Demings: And I just add to that too, is one of the other areas we've been getting some real estate efficiency, if I can put it that way, is on our corporate real estate. You know, we have been either downsizing some of our offices or, or, or eliminating some of the offices. And that helps us from an expense base too, you know, that overall corporate expense that we have. So that's another area that we've gotten some pretty good efficiency in John. That's very helpful. I appreciate that. Ernie's growth has been very strong in the fall question. I'm not trying to get ahead of formal guidance coming in February. And I appreciate what you've offered today.

Where we thought we would be we're still signaling down modestly for the year. We are signaling growth in 2024 for lifestyle and we'll come back with more details, but certainly driven by the strength of the U S connected living business, which has been <unk>.

Speaker 3: down modestly for the year. We are signaling growth in 2024 for lifestyle and we'll come back with more details, but certainly driven by the strength of the US-connected living business, which has been growing nicely for seven years.

Growing nicely for seven or eight years.

Speaker 4: And just just another, you know, addition on on housing, you know, we will have something like 40 million dollars of PYD going into next year. So obviously can't count on that in the future year. So that's something we're going to need to overcome. And as Keith said, it's just a fantastic year. We're having in housing and kind of the way I look at it and we look at it inside is is we look at it a multi year journey.

And just just another addition on on housing we will have something like $40 million of <unk> going into next year. So obviously you can't count on that in the future years. So that's something we're going to need to overcome and as Keith said, it's just a fantastic year, we're having in housing and kind of the way I look at it and we look.

Richard Dziadzio: But how do we think of re-insurance savings next year, emerging on the book that's being run off within global housing, juxtaposed against what's fortunately knock on wood, but somewhat favorable of a cat environment for you this year. Yeah, so maybe I'll just offer one thought, and then Richard can speak to the process. But, you know, to your point, we've obviously had a favorable cat year to this point, significantly below last year.

Inside is as we look at it at a multi year journey. So really looking at last year was a bit of a tougher year. We turned the corner really quickly in terms of the uniqueness of our business and we've talked about the inflation guard in the rates and the expense leverage that we're getting so we are expecting it to be to be.

Speaker 4: So really looking at, you know, last year was a bit of a tougher year. We turned the corner really quickly in terms of the uniqueness of our business. And we've talked about the inflation guard and the rates and the expense leverage that we're getting.

Speaker 4: So we are expecting it to be continued rate, but at a slower pace.

Right, but at a slower pace.

Speaker 4: but again it can't it's not going to be like this year it's going to be slower given all the elements that Keith and I have mentioned.

But again, it's not going to be like this year, it's going to be slower given all the elements that Keith and I have mentioned.

Richard Dziadzio: And we talked about a target cat load of 140 million. We're sitting at 89 million year-to-date. So obviously, that's fortunate from that perspective. And we'll certainly look to, to those statistics as we talk to our partners heading into the renewal cycle. And hopefully a little bit of a different environment than we were in last year.

Speaker 7: makes sense, thanks. And then, Richard, you talked a little bit about the new money yields that you guys are getting, the duration of your investment portfolio, and just how much the tailwinds of reinvesting over time could be. And then also how that allocates between, you know, potential upside for connected living versus auto versus housing, just kind of how that investment income gets within each of those.

Makes sense. Thanks.

And then Richard can you talk a little bit about the new money yield that you guys are getting the duration of your investment portfolio.

And just how much of a tailwind.

Reinvesting over time could be and then also how that allocates between.

Richard Dziadzio: But Richard, maybe talk a little bit about how we're thinking about re-insurance. Yeah, thanks, Keith. Yeah, in terms of the reinsurance, it's a little bit early days to talk to specifically about it, but I think you hit it on the head in the question. The market has stabilized in terms of pricing. It has stabilized versus what it was in the last couple of years, so we're going into better market conditions. I would say we'll have a consistent approach that we've had in the last couple of years when we go into the market.

Potential upside for connected living versus auto versus housing and just kind of how that net investment income fits within each of those.

Speaker 4: Yeah, thanks, thanks Tommy. And in fact, you know, yields and interest rates have been a nice tailwind for us. It's helping us offset some of the inflationary issues that we've talked about, particularly in auto, for example.

Yeah. Thanks, Thanks, Tommy and in fact.

Yields and interest rates have been.

A nice tailwind for us is helping us offset some of the inflationary issues that we've talked about.

Particularly in housing.

In auto for example, so if you look at year to year.

Speaker 4: So if you look at year to year, our investment income is up about 50% or $40 million.

Our investment income is up about 50% or $40 million. So a really nice really nice number coming through I would say in answer to your question. That's probably think about it being maybe one third housing two thirds lifestyle and in lifestyle.

Richard Dziadzio: And as Keith said, we're entering the market, I would say, as one of the good guys, in terms of we have not gone up into our, past our retention levels to the reinsures this year for the cat reinsurance. So we walk into the meetings, we'll be there in presenting a very favorable position relative to the reinsures where they ended up in 2023. Thanks a lot for the answers. That's a lot. Great.

Speaker 4: So, a really nice number coming through. I would say, in answer to your question, that's probably, think about it being maybe one-third housing, two-thirds lifestyle, and in lifestyle.

Tommy McJoynt: Thank you.

Speaker 4: The bigger component of it is in auto. You know what you're seeing in this corner is really the result of two things. I've talked about it in past earnings calls. It's really, it's coming from fixed income and fixed in fields. Our assets are up a little bit, but yields are up. Is that, you know,

The bigger component of it is in auto what Youre seeing in this quarter is really the result of two things I've talked about it in the past.

Past earnings calls, it's really it's coming from fixed income and fixed income yields are assets are up a little bit but yields are up is that is that.

Speaker 4: as those fixed income maturities roll over, and we get more investment income on those, but also cash yields are really high.

As those fixed income maturities rollover and we get more investment income on those but also cash yields are really high as you know.

Keith Demings: Your next question comes from line of Tommy McJoynt of KBW. Your line is open. Hey, Tommy. Morning, Tommy. Good morning, guys. Thanks for taking my question. I think he said Keith said in his bread promise for 2024 that you're expecting more modest growth in housing in 2024. Just want to clarify that that is still expecting growth. And then is that in reference, or yes, in terminology of excluding catastrophes or including catastrophes?

Speaker 4: Who knows what the Fed's gonna do next year, but for the moment we're getting nice, real high returns off the cash that we're holding.

Who knows what's going to what the fed is going to do next year, but for the moment, we're getting nice relevant real high returns off the cash that we're holding.

Speaker 4: So, you know, nice sort of tailwinds to us and that should continue as long as rates and so forth hold up. But if rates start coming down, I would say inflation's probably coming down. So we'll get some offset there hopefully as well.

Nice nice sort of tailwind to us and that should continue as long as rates and so forth holdup.

<unk> start coming down I would say inflation is probably coming down so we'll get some offset there hopefully as well.

Okay.

Got it thanks, guys. Thanks.

Thanks Connie.

Keith Demings: Yes, great question. So we're looking at XCAT first of all, obviously hard to predict what cats are going to look like. But as I think about housing in 2024, I think when we suggest modest growth, there's a couple of things to remember. First of all, a phenomenal 2023. I mean, this is a, you know, a pretty significant recovery year, obviously a little bit more challenge in 2022, but roaring back in 2023.

Speaker 1: Again, if you have a question, you may press star one on your touchtone phone at this time.

Again, if you have a question you May press star one on your Touchtone phone at this time.

Speaker 1: Our last question comes from the line of Grace Carter of Bank of America. Your line is open.

Our last question comes from the line of Greg Carter of Bank of America. Your line is open.

Speaker 8: Morning, Grace. Good morning. Good morning. I guess back to the expectations for housing next year. I was wondering if we could maybe talk a little bit about the components of the growth that's expected. I mean, even excluding the reserve development this quarter, the underlying loss ratio looked pretty good and just the extent to which maybe the improvement in the loss ratio and the expense ratio was.

Good morning, Greg Good morning.

Morning I.

I guess back to the expectations for housing next year I was wondering if we could maybe talk a little bit about the components of the growth that's expected I mean, even excluding the reserve development. This quarter the underlying loss ratio looks pretty good and just the extent to which maybe the improvement in the loss ratio.

Keith Demings: So we're extremely pleased about that. And of course, that trend line, you know, can't continue because it's been such a turnaround. But what I would say is we've also seen about 40 million of prior year development, benefiting the PNL in 2023. But we still think we'll grow housing, even though we've got a growth through that 40 million dollars of PYD before we generate a dollar of growth, we still think we'll grow housing because of the momentum that we see and all the great work done by the team.

Vince ratio versus the sustainable are they.

Speaker 8: sustainable, or the extent to which maybe they could improve even further just

Extent to which maybe they can improve even further.

Speaker 8: Recent pricing actions continue to earn through the book. And I guess just kind of the expectations for the top line given that...

Recent pricing actions continue to earn through the book and I guess, just kind of expectations for the top line given that.

Speaker 3: Presumably, maybe some of the benefits from the inflation adjustment and things like that, start to decelerate a bit next year. Thank you. Yeah, that's a great question. And certainly, Richard, you can add in. But when I think about...

Presumably maybe some of the <unk>.

Keith Demings: So that's what we're trying to signal. Obviously, we'll get into the detailed forecast as we come back in February, but we do feel good about how we're positioned. You know, housing obviously is going to moderate, but we've got great trend lines sitting behind us and great momentum. And then as we saw in lifestyle in the third quarter, although we've got challenges we're working through on the auto side overall, we're exactly where we thought we would be, you know, we're still signaling down modestly for the year.

From an inflation adjustment and things like that start to decelerate a bit next year. Thank you yeah, no. That's a great question and.

Certainly Richard can add in but when I think about that business and we've talked about.

Speaker 3: that business and we've talked about over the long term an expected combined ratio range of 86 to 91 percent.

Over the long term and expected combined ratio range of of 86% to 91%.

Speaker 3: If you look at where we sit on a reported basis this year looks a little bit lower, but adjusting for the prior year development, it's about 85% year-to-date with a relatively light cat year.

Look at where we sit on a reported basis this year, it looks a little bit lower but.

Adjusting for the prior year development, its about 85% year to date with a relatively light cat year.

Keith Demings: We are signaling growth in 2024 for lifestyle and we'll come back with more details, but certainly driven by the strength of the US connected living business, which has been growing nicely for, you know, seven or eight years. And just just another, you know, addition on housing, you know, we will have something like 40 million dollars of PYD going into next year. So obviously can't count on that in the future years. So that's something we're going to need to overcome.

Speaker 3: so far in terms of the P&L. So, you know, we're relatively close to that range today, which is good. Obviously, we think that's an appropriate long-term range for the business.

Far in terms of the P&L. So we're relatively close to that range today, which is good obviously, we think that's an appropriate long term range for the business. We do think rate will continue to come through but as we've said at a more moderated pace as we have less of that double digit AAV, earning through and then it obviously.

Speaker 3: We do think rate will continue to come through, but as we've said, at a more moderated pace.

Speaker 3: as we have less of that double-digit AIV earning through, and then it obviously comes through at just over 3% going forward. Let's call that a more normalized level. I think policy count's relatively stable, but we do think we're well-positioned. If you think about industry consolidation and think about the clients that we operate with.

It comes through at just over 3% going forward, let's call that a more normalized level.

I think policy counts relatively stable, but.

Keith Demings: And as Keith said, it's just a fantastic year we're having in housing and kind of the way I look at it and we look at it inside is we look at it a multi year journey. So really looking at, you know, last year was a bit of a tougher year. We turned the corner really quickly in terms of the uniqueness of our business and we talked about the inflation guard and the rates and the expense leverage that we're getting.

But we do think we're well positioned if you think about industry consolidation and think about the clients that we operate with we partner with a lot of major players in this space and hopefully as the market dynamics move around there could be some opportunity for us to continue to grow policies over time. So I do think it will be just a moderated.

Speaker 3: We partner with a lot of major players in the space and hopefully as the market dynamics move around, you know, there could be some opportunity for us to continue to grow policies over time. So I do think it will be just a moderated...

Speaker 3: trend line from what we saw this year, but certainly still expect strong results in in housing and hence overcoming the 40 million of of prior year development. But Richard, what else might you add?

Keith Demings: So we are expecting it to be, to be, you know, continue rate, but at a slower pace. But again, it can't, it's not going to be like this year, it's going to be slower given all the elements that Keith and I have mentioned.

A trend line from what we saw this year, but certainly still expect strong results in housing and hence overcoming the $40 million of prior year development, but Richard what else might you add.

Speaker 4: Yeah, I think that I guess I would would also say that grace that it

Yes, I think that.

I guess I would also say that grace.

Richard Dziadzio: Thank you. And then, Richard, you talked a little bit about the new money yields that you guys are getting, the duration of your investment portfolio, and just how much the tailwinds of sort of reinvesting over time could be. And then also how that allocates between, you know, potential upside for connected living versus auto versus housing just kind of how that that investment income fits within each of those. Yeah, thanks. Thanks, Tommy.

Speaker 4: When we look at the combined operating ratio, it's something we keep our eye on. So really a combination of everything we're getting. We've talked about the top line growth, and that would be tapering. The expense ratio, we're in a good place with that. I think that could continue. Maybe not as low as it is now, because we'll always have, maybe some investments and so forth. But we're in a good place there. The loss ratio.

When we look at the combined operating ratio is something we keep our eye on so really a combination of everything we're getting we've talked about the top line growth and that would be tapering DXP.

The expense ratio, we're in a good place with that I think that could continue maybe not as low as it is now because we'll always have maybe some have some investments and so forth.

But we're in a good place there the loss ratio.

Speaker 4: you know, think about 40, 42, maybe full year, that kind of thing. But even then, it's going to depend on what weather we're going to get, you know, what's the severity, what's the frequency, what are the storms, the convective storms that we had in the springtime. So obviously, that's something that's hard to call. But if we talk about the combined ratio at 86 to 91 percent with CAT, that's probably something that we look to and say on a normal CAT year, we'd probably be in and around that range, if that's helpful.

Richard Dziadzio: And in fact, you know, yields and interest rates have been a nice tailwind for us. It's helping us offset some of the inflationary issues that we've talked about, particularly in housing in auto, for example. So if you look at year to year, our investment income is up about 50% or $40 million. So a really nice, a really nice number coming through. I would say, and answer your question, that's probably think about it being maybe one third housing, two thirds lifestyle.

Think about 40 42, maybe full year that kind of thing, but even then it's going to depend on what whether we're going to get what's the severity. What's the frequency what are the storms. The convective storms that we had in the spring time. So obviously, that's something that's hard to call.

But if we talk about the combined ratio at 86% to 91% with cat, that's probably something that we look to and say in a normal cat year, we'd probably be in and around that range. If that if that's helpful.

Richard Dziadzio: And in lifestyle, the bigger component of it is in auto. You know, what you're seeing in this quarter is really the result of two things. And I've talked about it in past past earnings calls. It's really it's coming from fixed income and fixed in fields. Our assets are up a little bit, but yields are up as that. You know, as those six income maturities roll over and we get more investment income on those, but also cash yields are really high, as you know, who knows what's going to what the Fed's going to do next year.

Okay. That's helpful. Thank you.

Speaker 8: And I guess on the renters book, we've heard some personal auto players this quarter say that they're starting to see severity trends maybe flatten out a bit. And I was just curious on the affinity partners aspect of that business, if y'all are seeing any green shoots there or when that might inflect back to strong growth.

Thanks, Chris on the.

Richard Dziadzio: But for the moment, we're getting nice real real high returns off the cash that we're holding. So, you know, nice, nice sort of tailwinds to us and that should continue as long as rates and so forth hold up. But if rates start coming down, I would say inflation is probably coming down. So we'll get some offset there, hopefully as well. Got it. Thanks. Right. Thanks. Again, if you have a question, you may press star one on your touch tone phone at this time.

The renters, but we've heard some.

Personal auto players this quarter say that they are starting to see severity trends, maybe flatten out a bit and I was just curious on the affinity partners aspect of that business. As you all are seeing any green shoots there or when that might.

Inflect back to strong growth.

Speaker 3: Yeah, you know, I think, I think we're seeing maybe early signs of modest.

Yeah, I think I think we're seeing maybe early signs of modest improvement there I'd say, it's probably too early to call. It grace, but definitely when we look at renters really strong performance and we've signaled this over the last few years and the property management channel. So certainly diversifying our portfolio.

Speaker 4: I'd say it's probably too early to call it grace, but definitely when we look at renters, really strong performance, and we've signaled this over the last few years in the Property Management Channel. So certainly diversifying our portfolio between affinity.

Between affinity.

Speaker 3: and property management. And we actually grew our PMC in the third quarter this year more than we grew it all of 2022. So the team's done an incredible job.

And property management, and we actually grew our PMC in the third quarter. This year more than we grew it.

All of 2022, so the team has done an incredible job, adding clients driving attach and leveraging our cover 360 platform and then to your point should we start to see an acceleration in and marketing relative to auto insurers then that could certainly provide upside opportunity over time I'd say, it's too early to suggest that we're seeing.

Speaker 4: adding clients, driving attach, and leveraging our cover 360 platform. And then to your point, you know, should we start to see an acceleration in in marketing relative to auto insurers, then that could certainly provide upside opportunity over time. I'd say it's too early to suggest that we're seeing, you know, firm trends, but definitely feel like there's opportunity there as we look forward and certainly in 24.

Grace Carter: Our last question comes from the line of Grace Carter of Bank of America. Your line is open. Morning. Great. Good morning. I guess back to the expectations for housing next year. I was wondering if we could maybe talk a little bit about the components of the growth that's expected. I mean, even excluding the reserve development this quarter, the underlying loss ratio looked pretty good. And just the extent to which maybe the improvement in the loss ratio and expense ratio or sustainable or the extent to which maybe they could improve even further just as recent pricing actions continue to earn through the book.

Firm trends, but definitely feel like there's opportunity there as we look forward and certainly in 'twenty four.

Thank you.

Thanks, Chris.

Yeah.

Speaker 3: Okay, I think that was the last question. So thank you everybody for joining the call. We'll certainly look forward to reconnecting in February . And as always, if you have questions, please reach out to Suzanne or Sean and we'll get back in touch. Thanks so much.

Okay. I think that was the last question. So thank you everybody for joining the call. We will certainly look forward to reconnecting in February and as always if you have questions. Please reach out to Suzanne are Sean and we will get back in touch. Thanks, So much.

Grace Carter: And I guess just kind of the expectations for the top line given that presumably maybe some of the benefits from the inflation adjustment and things like that start to decelerate a bit next year. Thank you. Yeah. No, it's a great question. And certainly Richard can add in. But when I think about that business and we've talked about over the long term and expected combined ratio range of of 86 to 91%. If you look at where we sit on a reported basis this year looks a little bit lower, but adjusting for the prior year development, it's about 85% year today with a relatively light cat year so far in terms of the piano.

Speaker 1: Thank you. This does conclude today's teleconference. Please disconnect your lines at this time and have a wonderful day.

Thank you. This does concludes today's teleconference. Please disconnect your lines at this time and have a wonderful day.

Okay.

Yeah.

Speaker 1: Thank you. This concludes today's teleconference. Please disconnect your lines at this

Thank you. This does concludes today's teleconference. Please disconnect your lines at this.

Grace Carter: So, you know, we're relatively close to that range today, which is good. Obviously, we think that's an appropriate long term range for the business. We do think rate will continue to come through, but as we've set up at a more moderated pace as we have less of that double digit AIV earning through and then it obviously comes through at just over 3% going forward. Let's call that a more normalized level. I think policy counts relatively stable.

Grace Carter: But we do think we're well positioned if you think about industry consolidation and think about the clients that we operate with. We partner with a lot of major players in the space and hopefully is the market dynamics move around. You know, there could be some opportunity for us to continue to grow policies over time.

Keith Demings: So, I do think it will be just a moderated trend line from what we saw this year, but certainly still expect strong results in housing and hence overcoming the 40 million of prior year development, but Richard, what else might you add? Yeah, I think that, I guess I would also say that, Grace, when we look at the combined operator ratio, something we keep our eye on, so really a combination of everything we're getting.

Keith Demings: We've talked about the top-line growth, and that would be tapering the expense ratio. We're in a good place with that. I think that could continue, maybe not as low as it is now, because we'll always have, maybe some investments and so forth, but we're in a good place there. The loss ratio, think about 40-42, maybe full-year, that kind of thing, but even then it's going to depend on what weather we're going to get.

Keith Demings: What's the severity? What's the frequency? What are the storms, the convective storms that we had in the spring time? Obviously, that's something that's hard to call. If we talked about the combined ratio at 86 to 91% with CAT, that's probably something that we look to and say on a normal CAT year, we'd probably be in and around that range, if that's helpful. Yeah, that's helpful. Thank you. And I guess on the renters' book, we've heard some personal auto players this quarter say that they're starting to see severity trends, maybe flatten out a bit, and I was just curious on the affinity partners aspect of that business, if y'all are seeing it in the green shoots there, or when that might inflect back to strong growth.

Keith Demings: Yeah, I think we're seeing maybe early signs of modest improvement there. I'd say it's probably too early to call it grace, but definitely when we look at renters, really strong performance, and we've signaled this over the last few years in the property management channel, so certainly diversifying our portfolio between affinity and property management, and we actually grew our PMC in the third quarter this year more than we grew it all of 2022, so the team's done an incredible job, adding clients, driving attached and leveraging our Cover360 platform, and then your point, should we start to see an acceleration in marketing relative to auto insurers, then that could certainly provide upside opportunity over time. I'd say it's too early to suggest that we're seeing firm trends, but definitely feel like there's opportunity there as we look forward and certainly in 24. Thank you. Thanks, Grace.

Operator: Okay, I think that was the last question, so thank you everybody for joining the call.

Operator: We'll certainly look forward to reconnecting in February, and as always, if you have questions, please reach out to Suzanne or Sean, and we'll get back in touch. Thanks so much. Thank you.

Operator: This thus concludes today's teleconference. Please disconnect your lines at this time and have a wonderful day. Thank you.

Operator: This thus concludes today's teleconference.

Operator: Please disconnect your lines at this.