Q4 2023 Assurant Inc Earnings Call

Welcome to assurance fourth quarter, and full year 2023 conference call and webcast.

Operator: Welcome to Assurant's fourth quarter and full year 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 a question at that 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 star one.

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 a question at that time. Please press star one on your touch tone Paul.

If at any point. Your question has been answered you may remove yourself from the queue by pressing star.

One.

Operator: We ask that you please take up your handset to allow optimal sound quality. Lastly, if you should require operator assistance, please press star zero. It is now my pleasure to turn the floor over to Sean Mosier, Vice President of Investor Relations. You may begin.

We ask that you please pick up your hand.

To allow optimal sound quality.

Lastly, if you should require operator assistance, please press star zero.

It is now my pleasure to turn the floor over to Sean Mosier.

Sean Mosier: Vice President of Investor Relations you may begin.

Sean Mosier: Thank you operator, and good morning, everyone. We look forward to discussing our fourth quarter and full year 2023 results with you today.

Sean Mosier: Thank you, operator, and good morning, everyone. We look forward to discussing our fourth quarter and full year 2023 results with you today. Joining me for Assurant's conference call are Keith Demmings, our President and Chief Executive Officer, and Keith Meyer, our Chief Financial Officer. Yesterday, after the market closed, we issued a news release announcing our results for the fourth quarter and full year 2023. The release and corresponding financial supplement are available on Assurant.com. Also on our website is a slide presentation that we introduced this quarter for our webcast participants. Some of the statements made today are forward-looking. Such statements are based upon our historical performance and current expectations and are subject to risks, uncertainties, and other factors that may cause actual results to differ materially from those contemplated by these statements.

Sean Mosier: Joining me for <unk> Conference call are Keith <unk>, our President and Chief Executive Officer, and Keith Meyer, Our Chief Financial Officer.

Speaker Change: Yesterday after the market closed we issued a news release announcing our results for the fourth quarter and full year 2023.

Release, and corresponding financial supplement are available on Assurant Dot Com also on our website is a slide presentation that we introduced this quarter for our webcast participants.

Speaker Change: 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 these statements.

Speaker Change: Additional information regarding these factors can be found in the earnings release presentation and financial supplement on our website as well as in our SEC reports.

Sean Mosier: Additional information regarding these factors can be found in the earnings release, presentation, and financial supplement on our website, as well as in our SEC report. During today's call, we will refer to non-GAAP 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 the news release and supporting materials. We'll start today's call with remarks before moving into Q&A. I will now turn the call over to Keith Demmings. Keith?

Speaker Change: Today's call, we will refer to non-GAAP financial measures, which we believe are important in evaluating the company's performance for more details on these measures. The most comparable GAAP measures and a reconciliation of the two please refer to the news release and supporting materials.

Speaker Change: We'll start today's call with remarks before moving to Q&A.

Speaker Change: I will now turn the call over to Keith Damnings Keith.

Keith Warner Demmings: Thanks, John. And good morning, everyone. 2023 was an extraordinary year for Assurant, our seventh consecutive year of profitable growth. We drove shareholder value by delivering financial outperformance, maintaining a strong capital position, and generating significant momentum throughout our business. Adjusted EBITDA grew 21% to nearly $1.4 billion, and adjusted EPS increased by 26%, both excluding reportable catastrophes. Our results were driven by the strength of our homeowners' business within global housing, which delivered adjusted EBITDA growth of nearly 65%, excluding cash. In addition, our connected living business continued to grow, supported by our strong U.S. partnerships with mobile carriers and cable operators and our ability to innovate and execute for our clients. Together, Lifestyle and Housing generated nearly $775 million in dividends.

Keith Warner Demmings: Thanks, Sean and good morning, everyone.

Keith Warner Demmings: 2023 was an extraordinary year for Assurant.

Keith Warner Demmings: Our seventh consecutive year of profitable growth.

Keith Warner Demmings: We drove shareholder value by delivering financial outperformance, maintaining a strong capital position and generating significant momentum throughout our businesses.

Keith Warner Demmings: Adjusted EBITDA grew 21% to nearly $1 4 billion.

Keith Warner Demmings: And adjusted EPS increased by 26%, both excluding reportable catastrophes.

Keith Warner Demmings: Our results were driven by the strength of our homeowners business within global housing, which delivered adjusted EBITDA growth of nearly 65% excluding cats.

Keith Warner Demmings: In addition, our connected living business continued to grow supported by a strong U S partnerships with mobile carriers and cable operators.

Keith Warner Demmings: And our ability to innovate and execute for our clients.

Keith Warner Demmings: Together <unk>.

Keith Warner Demmings: Style and housing generated nearly $775 million in dividends.

Keith Warner Demmings: This allowed us to return over $350 million to shareholders, including $200 million of share repurchase. 2023 was a testament to the power and attractive financial profile of our unique and differentiated lifestyle and housing business. Assurant would not have been able to achieve this level of success without our talented people, including our newly refreshed Management Committee, further strengthening our leadership team. As we celebrate our 20th year as a public company, I am proud of the world-class culture we've created, exemplified by the many recognitions Assurant has received throughout 2023. Earlier this week, Just 100 included Assurant as part of its 2024 rankings of America's Most Just Company, recognizing our commitment to serving our employees, customers, communities, the environment, and our shareholders.

Keith Warner Demmings: This allowed us to return over $350 million to shareholders.

Keith Warner Demmings: <unk> $200 million of share repurchases.

Keith Warner Demmings: 2023 was a testament to the power and attractive financial profile of our unique and differentiated lifestyle and housing businesses.

Keith Warner Demmings: Sure It would not have been able to achieve this level of success without our talented people include.

Keith Warner Demmings: Including our newly refreshed management Committee.

Keith Warner Demmings: Further strengthening our leadership team.

Keith Warner Demmings: As we celebrate our 20th year as a public company.

Keith Warner Demmings: I am proud of the World class culture, we've created exemplified by the many recognitions Assurant has received throughout 2023.

Keith Warner Demmings: Earlier. This week just 100 included Assurant as part of its 2024 rankings of America's most just companies.

Keith Warner Demmings: Recognizing our commitment to serving our employees customers communities the environment and our shareholders.

Keith Warner Demmings: In addition, we received recognition from fortune as one of America's most innovative companies.

Keith Warner Demmings: In addition, we receive recognition from Fortune as one of America's most innovative companies, and Newsweek recognizes the progress we've made to incorporate sustainability into our strategy by placing us on its list of America's Most Responsive. The dedication from our employees and leadership team, who strive to achieve our vision every day, makes it possible for us to innovate to better serve our clients and create value for our shareholders. We begin 2024 in a position of strength and with great momentum. Over the past two years, we've focused on further strengthening our business portfolio and driving operational excellence while accelerating innovation. By investing in businesses where we have leadership positions, we believe we're well-positioned for future success. For instance, within global lifestyle, we've grown our presence in specialized markets, including in the commercial equipment space, where acquisitions have contributed to new client partnerships. We've strengthened our company through active portfolio management, making decisions to exit businesses that are not core to our long-term strategy. This included exiting our sharing economy offerings and international cat-exposed businesses in housing, further simplifying our portfolio.

Keith Warner Demmings: And Newsweek recognize the progress we've made to incorporate sustainability into our strategy by placing us on its list of America's most responsible companies.

Keith Warner Demmings: The dedication from our employees and leadership team who.

Keith Warner Demmings: We strive to achieve our vision every day makes it possible to innovate to better serve our clients and create value for our shareholders.

Keith Warner Demmings: Yeah.

We begin 2024, and a position of strength and with great momentum.

Keith Warner Demmings: Over the past two years, we have focused on further strengthening our business portfolio and driving operational excellence, while accelerating innovation.

Keith Warner Demmings: By investing in businesses, where we have leadership positions, we believe we're well positioned for future success.

Keith Warner Demmings: For instance, within global lifestyle, we have grown our presence in specialized markets, including in the commercial equipment space, where acquisitions have contributed to new client partnerships.

Keith Warner Demmings: We've strengthened our company through active portfolio management.

Keith Warner Demmings: Decisions to exit businesses that are not core to our long term strategy.

Keith Warner Demmings: This included exiting our sharing economy offerings and international cat exposed businesses and housing.

Keith Warner Demmings: Further simplifying our portfolio.

Keith Warner Demmings: We've made significant progress in driving operational excellence across Assurant with a streamlined organizational structure and real estate footprint. We've implemented digital first initiatives across our operations to support our businesses and drive value for end consumers. Finally, we've accelerated innovation in a variety of ways to drive our business growth. Moving forward, technological innovation will continue to be an important driver of growth and value creation for Assurant. Our approach has driven success within our financial results and is evident in our track record of winning new business and renewing client partnerships. This expansion of our client base is an integral part of our strategy and creates important tailwinds as we look toward the future. Now turning to highlights across our business segment. For 2023, global lifestyle earnings were relatively flat on a constant currency basis.

Keith Warner Demmings: We've made significant progress in driving operational excellence across Assurant with a streamlined organizational structure and real estate footprint.

Keith Warner Demmings: We've implemented digital first initiatives across our operations to support our businesses and drive value for end consumers.

Keith Warner Demmings: Finally, we've accelerated innovation in a variety of ways to drive our business growth.

Keith Warner Demmings: Moving forward technology innovation will continue to be an important driver of growth and value creation for assurant.

Keith Warner Demmings: Our approach has driven success within our financial results and as evidenced in our track record of winning new business and renewing client partnerships.

Keith Warner Demmings: This expansion of our client base is an integral part of our strategy and creates important tailwind as we look towards the future.

Keith Warner Demmings: Now turning to highlights across our business segments.

Keith Warner Demmings: For 2023 global lifestyle earnings were relatively flat on a constant currency basis.

Keith Warner Demmings: In connected living 2023 represented another year of growth for the business with a 3% increase in earnings.

Keith Warner Demmings: In Connected Living, 2023 represented another year of growth for the business, with a 3% increase in earnings. Within our U.S. business, we drove high single-digit EBITDA growth as we continue to innovate and execute for our growing carrier and cable operator clients through our device protection program. We strengthened critical partnerships, including Spectrum Mobile, where we provide mobile protection, trade-in, and other value-added services.

Keith Warner Demmings: Within our U S business, we drove high single digit EBIT growth as we continue to innovate and execute for our growing carrier and cable operator clients through our device protection programs.

Keith Warner Demmings: We strengthened critical partnerships, including spectrum mobile, where we provide mobile protection trade in and other value added services.

Keith Warner Demmings: In addition, we expanded our trade-in programs with major OEMs by adding a large new partner, as well as renewing AT&T, where we're deploying robotics in our mobile device facilities throughout the U.S. We continue to make progress internationally. In Europe, we stabilized earnings by driving expense efficiencies while continuing to address ongoing macroeconomic challenges. Throughout Asia-Pacific, we're excited by our market position and our long-term outlook. We're very pleased to announce a new partnership with Telstra, Australia's largest mobile operator.

Keith Warner Demmings: In addition, we expanded our trade in programs with major Oems by adding a large new partner.

As well as renewing AT&T, where we're deploying robotics and our mobile device facilities throughout the U S.

Keith Warner Demmings: We continue to make progress internationally.

In Europe, we stabilized earnings by driving expense efficiencies, while continuing to address ongoing macroeconomic challenges.

Keith Warner Demmings: Throughout Asia Pacific, we're excited by our market position and our long term outlook.

Keith Warner Demmings: We're very pleased to announce a new partnership with Telstra Australia's largest mobile operator.

Keith Warner Demmings: Our new multi-year deal will allow us to provide comprehensive products to support the end-to-end device lifecycle for Telstra's broad base of customers, including their core mobile protection program, as well as trade-in and repair capabilities. This partnership is significant as we continue to build our presence in Asia-Pacific. Turning to auto, year-over-year declines were driven by inflationary impacts on claims costs.

Keith Warner Demmings: Our new multiyear deal will allow us to provide comprehensive products to support the end to end device lifecycle for <unk> broad base of customers.

Keith Warner Demmings: Including their core mobile protection program as well as trade in and repair capabilities.

Keith Warner Demmings: This partnership is significant as we continue to build our presence in Asia Pacific.

Turning to auto year over year declines were driven by inflationary impacts on claims costs.

Keith Warner Demmings: Beginning in 2022, we took decisive action to address significant inflation that impacted the auto repair industry.

Keith Warner Demmings: Beginning in 2022, we took decisive action to address significant inflation that impacted the auto repair industry. For the handful of deal structures where we've been negatively impacted by underwriting results, we successfully partnered with our clients to implement meaningful rate increases while making important changes to strengthen and enhance our claims adjudication process. Given the longer average duration of our auto service contracts, we'll earn through the full benefit of these actions over time, with improvement expected to begin in 2024. Based on the actions taken in Otto and the continued growth of Connected Living, we feel well positioned to deliver global lifestyle growth in 2024. Let's move on to global housing.

Keith Warner Demmings: For the handful of deal structures, where we've been negatively impacted by underwriting results. We successfully partnered with our clients to implement meaningful rate increases.

Keith Warner Demmings: While making important changes to strengthen and enhance our claims adjudication process.

Keith Warner Demmings: Given the longer average duration of our auto service contracts.

Keith Warner Demmings: <unk> earned through the full benefit of these actions over time.

Keith Warner Demmings: With improvement expected to begin in 2024.

Keith Warner Demmings: Based on the actions taken in auto and the continued growth of connected living we feel well positioned to deliver global lifestyle growth in 2024.

Keith Warner Demmings: Let's move on to global housing.

Keith Warner Demmings: In 2023 this segment grew significantly driving our overall enterprise performance.

Keith Warner Demmings: In 2023, the segment grew significantly, driving our overall enterprise performance. Growth was led by our homeowners business, which was supported by higher premiums and enforced policy growth. The business rebounded from the inflation impacts on claims experienced in 2022 and also benefited from favorable prior year reserve development, in addition to highlighting the significant earnings power of the business. Our 23 housing results demonstrated differentiated returns and strong cash flow. Excluding favorable priority development, our 2023 combined ratio was 83%, including $111 million of reportable cats, which was below our assumed annual cat load of $140 million.

Keith Warner Demmings: Growth was led by our homeowners business, which was supported by higher premiums and enforce policy growth.

Keith Warner Demmings: The business rebounded from the inflation impacts on claims experienced in 2022.

Keith Warner Demmings: And also benefited from favorable prior year Reserve development.

Keith Warner Demmings: In addition to highlighting the significant earnings power of the business or.

Keith Warner Demmings: 'twenty three housing results demonstrated differentiated returns and strong cash flow.

Keith Warner Demmings: Excluding favorable prior year development, our 2023 combined ratio was 83%.

Keith Warner Demmings: Including $111 million of reportable cats, which was below our assumed annual cat load of $140 million.

Keith Warner Demmings: We are also very pleased to announce a new partnership in our lender-placed business. Beginning in the first quarter of 2024, we'll provide lender-placed insurance services to Bank of America's $1.8 million loan portfolio, further enhancing our market position and validating the competitive strength of our office. In renters and other, we increased earnings modestly in 2023 as our property management channel continued to expand; written premiums in the property management channel grew nearly 20% in 2023. Along with adding new clients, we also achieved double-digit growth across eight of our top 10 PMC clients, creating significant business momentum. Growth was supported by the continued expansion of Cover360, where we now track over 1 million residents, a nearly 45% increase over the prior year.

Keith Warner Demmings: We are also very pleased to announce a new partnership in our lender placed business.

Keith Warner Demmings: Beginning in the first quarter of 2024 will provide lender placed insurance services to bank of Americas, $1 8 million loan portfolio.

Keith Warner Demmings: Further enhancing our market position and validating the competitive strength of our offerings.

Keith Warner Demmings: And renters and other we increased earnings modestly in 2023, as our property management channel continued to expand.

Keith Warner Demmings: Written premiums in the property management channel grew nearly 20% in 2023.

Keith Warner Demmings: Along with adding new clients. We also achieved double digit growth across eight of our top 10, PMC clients, creating significant business momentum.

Keith Warner Demmings: Growth was supported by the continued expansion of cover 360 <unk>.

Keith Warner Demmings: We now track over 1 million residents.

Keith Warner Demmings: Nearly 45% increase over the prior year.

Keith Warner Demmings: Technology innovation has also enhanced our digital customer experience, including a new digital agent leasing portal and expanded claims processing powered by machine learning. Now, let's turn to our 2024 Enterprise Outlook. We expect continued profitable growth in 2024, driven by our business momentum. While growth is expected to be lower than the significant outperformance we delivered in 2023, we expect our 2024 results will demonstrate the combined earnings power of our Advantage portfolio. Adjusted EBITDA excluding cats is expected to grow mid-single digit, with Global Lifestyle and Global Housing delivering similar growth rates for the year.

Technology innovation also enhanced our digital customer experience, including a new digital agent leasing portal and expanded claims processing powered by machine learning.

Speaker Change: Let's turn to our 2020 for enterprise outlook.

Speaker Change: We expect continued profitable growth in 2024, driven by our business momentum.

Speaker Change: While growth is expected to be lower than the significant outperformance. We delivered in 2023, we expect our 24 results will demonstrate the combined earnings power of our advantaged portfolio.

Speaker Change: Adjusted EBITDA, excluding cats is expected to grow mid single digits.

Speaker Change: With global lifestyle, and global housing delivering similar growth rates for the year.

Speaker Change: Adjusted EPS growth is expected to modestly trail adjusted EBITDA growth, primarily reflecting higher annual depreciation expenses related to technology investments critical and executing our strategy.

Keith Warner Demmings: Adjusted EPS growth is expected to modestly trail adjusted EBITDA growth, primarily reflecting higher annual depreciation expenses related to technology investments critical in executing our strategy. Before concluding, I'd like to introduce our recently appointed CFO, Keith Meyer. Keith has been with Assurant for over 25 years and has served in leadership positions managing P&Ls across many of Assurant's businesses.

Speaker Change: Before concluding I'd like to introduce our recently appointed CFO Keith Meyer.

Keith Warner Demmings: Keith has been with Assurant for over 25 years and has served in leadership positions managing p&l's across many of assurance businesses.

Keith Warner Demmings: In his most recent role as Chief operating Officer, Keith led the transformation of our technology and drove significant operational efforts to support the end customer experience.

Keith Warner Demmings: In his most recent role as Chief Operating Officer, Keith led the transformation of our technology and drove significant operational efforts to support the end customer experience. I have no doubt that Keith, as our CFO, will be an enabler of driving profitable growth while allocating capital strategically. Now, Keith, and good morning, everyone.

Keith Warner Demmings: I have no doubt that Keith as our CFO will be an enabler of driving profitable growth, while allocating capital strategically.

Keith Warner Demmings: Now over to Keith to review, our quarterly results and 2024 outlook in further detail.

Thanks, Keith and good morning, everyone.

Keith Warner Demmings: Before reviewing the quarterly results, I'd like to share my perspective as I'm about to wrap up my first 90 days as Assurant's CFO. During my time at Assurant, I've been fortunate to have led several businesses as well as taken on a variety of other roles across the organization, including most recently leading our technology and operational team. These experiences have provided me with deep insights into our global clients and an understanding of what is needed to deliver a high level of business performance, always backed by strong financial expertise and discipline. As CFO, driving growth and financial performance will continue to be my priority. I'm focused on ensuring our capital position remains strong as we create additional shareholder value and drive profitable growth through further innovation and differentiation within our product portfolio.

Keith: Before reviewing the quarterly results I'd like to share my perspectives as Im about to wrap up my first 90 days is assurance CFO.

Keith: During my time at Assurant I've been fortunate to have led several businesses as well as take out a variety of other roles across the organization.

Keith: Including most recently, leading our technology and operational teams.

Keith: These experiences have provided me with deep insights into our global clients and the understanding of what is needed to deliver a high level of business performance.

Keith: These backed by strong financial expertise and discipline.

Keith: As CFO driving growth and financial performance will continue to be my priorities.

Keith: And focused on ensuring our capital position remains strong as we create additional shareholder value and drive profitable growth through further innovation and differentiation within our product portfolio.

Keith: As I look towards the future I'm also focused on continued expense efficiencies by utilizing digital and AI technology, which also enables us to deliver better customer experiences.

Keith Warner Demmings: As I look toward the future, I'm also focused on continued expense efficiencies by utilizing digital and AI technology, which also enables us to deliver a better customer experience. Lastly, I've appreciated the opportunity to meet with many of our investors, employees, and clients over the last several months and their willingness to share observations about Assurant as I began my tenure as CFO. Our discussions have enabled me to better shape my views and the path going forward. Now, let's talk about our fourth-quarter financial results, which reinforce the strength of our businesses and the performance that we've seen throughout the year. For the quarter, Adjusted EBITDA grew 29% to $382 million, and Adjusted EPS increased by 38% to $4.96, both excluding reportable catastrophes.

Lastly, I've appreciated the opportunity to meet with many of our investors employees and clients over the last several months and their willingness to share observations about assurant as I began my tenure as CFO.

Keith: Our discussions have enabled me to better shape my views and the path going forward.

Keith: Now, let's talk about our fourth quarter financial results, which reinforced the strength of our businesses and the performance that we've seen throughout the year.

Keith: For the quarter, adjusted EBITDA grew 29% to $382 million and.

Keith: <unk> EPS increased by 38% to $4 90.

Keith: Both excluding reportable catastrophes.

Keith: Adjusted earnings and EPS growth were driven by year over year growth in both housing and lifestyle.

Keith Warner Demmings: Adjusted earnings and EPS growth were driven by year-over-year growth in both housing and lifestyle. Our capital position remains strong, generating $280 million of segment dividends in the fourth quarter and ending the year with $606 million of holding company liquidity. This allowed us to return $169 million to shareholders in the quarter, including $130 million of share repurchase. Let's review the businesses, beginning with Global Lifestyle.

Keith: Our capital position remains strong generating $280 million of segment dividends in the fourth quarter and.

Keith: And ending the year with $606 million of holding company liquidity.

Keith: This allowed us to return $169 million to shareholders in the quarter, including a $130 million of share repurchases.

Keith: Let's review the businesses beginning with global lifestyle.

Keith Warner Demmings: For the quarter, adjusted EBITDA grew 12% to $205 million, led by strong earnings growth of 23% within connected living as our U.S. mobile protection programs continued to grow. Higher yields on invested assets also contributed to the improved fourth quarter results. Globally, our trade-in programs represent a critical component of our device lifecycle value proposition, as well as a fee-based income driver supporting the growth of our mobile business. Throughout 2023, we serviced over 25 million devices, including 7.5 million in the fourth quarter, which represented a high watermark for the year.

Keith: For the quarter adjusted EBITDA grew 12% to $205 million led by strong earnings growth of 23% within connected living as our U S. Mobile protection programs continued to grow.

Keith: Higher yields on invested assets also contributed to the improved fourth quarter results.

Keith: Globally, our trade in programs represent a critical component of our device lifecycle value proposition.

Keith: As well as our fee based income driver supporting the growth of our mobile business.

Keith: Throughout 2023, we serviced over $25 million devices, including $7 5 million in the fourth quarter, which represented the high watermark for the year.

Keith: While trading results were down modestly year over year, we saw fee income growth from higher sale prices for used devices.

Keith Warner Demmings: While trade-in results were down modestly year-over-year, we saw fee-income growth from higher sale prices for used devices and contributions from new U.S. trade and programs. Internationally, we continue to be impacted by subscriber declines in Japan, but we have stabilized performance in a challenging macroeconomic backdrop. In global auto, fourth-quarter adjusted EBITDA was relatively flat, as higher claims costs from inflation were offset by higher investment income.

Keith: Contributions from new U S trading programs.

Keith: Internationally, we continue to be impacted by subscriber declines in Japan, but have stabilized performance in a challenging macroeconomic backdrop.

Keith: And global Auto fourth quarter, adjusted EBITDA was relatively flat as higher claims costs from inflation were offset by higher investment income.

Keith Warner Demmings: Claims were also elevated due to the expected normalization of auto ancillary products and from international clients. However, during the latter part of the year, we saw positive signs in U.S. loss trends as we began to benefit from prospective rate increases that were implemented. Turning to Net Earned Premiums, Fees, and Other Income, Lifestyle increased by $268 million, or 13%. Growth from Global Automotive, which increased 14%, was due to $85 million of non-run rate premium adjustment, with no corresponding earnings impact, as well as prior period sales of vehicle service contracts. Connected Living's net earned premiums, fees, and other income increased 12%.

Keith: Claims were also elevated from the expected normalization of auto ancillary products and from international clients.

Keith: During the latter part of the year, we saw positive signs in U S loss trends as we began to benefit from prospective rate increases that were implemented.

Keith: Turning to net earned premiums fees and other income lifestyle.

Keith: Lifestyle grew by $268 million or 13%.

Keith: Growth from global automotive, which increased 14% was due to $85 million of non run rate premium adjustments with no corresponding earnings impact as well as prior period sales of vehicle service contracts.

Keith: Connected living as net earned premiums fees and other income increased 12%.

Keith: Benefiting from contributions from new trading programs higher prices unused mobile devices.

Keith Warner Demmings: Benefiting from contributions from new trade-in programs, higher prices on used mobile devices, and modest growth in North America mobile subscribers. Looking ahead to 2024, we expect global lifestyles adjusted EBITDA to grow, driven by both Connected Living and Global Automotive. We expect growth and connected living to be led by the continued expansion of our U.S. business. We expect Japan and Europe to remain generally stable throughout the year.

Keith: And modest growth in North America mobile subscribers.

Keith: Looking ahead to 2024, we expect global Lifestyle's adjusted EBIT to grow.

Keith: Driven by both connected living and global automotive.

Keith: We expect growth in connected living to be led by the continued expansion of our U S business we.

Keith: We expect Japan, and Europe to remain generally stable throughout the year.

Keith: On global Auto we expect rate actions taken over the past 18 months to drive improvement over time, beginning in 2024.

Keith Warner Demmings: In global auto, we expect rate actions taken over the past 18 months to drive improvement over time, beginning in 2024. Investments related to new client implementations will temper growth in 2024 for lifestyle but are critical levers to expand our portfolio and strengthen our business over the long term. We continue to monitor foreign exchange impacts, broader macroeconomic conditions, and interest rates, which may impact the pace and timing of growth. In terms of full-year net earned premiums, fees, and other income, growth is expected mainly from our connected living business. Moving to global housing, 2023 was truly a strong year. We drove growth from the actions taken over the past few years to ensure rate adequacy and drive expense leverage while benefiting from the streamlining that we undertook to simplify our portfolio. Fourth quarter adjusted EBITDA was $186 million, which included $22 million of reportable cash.

Keith: Investments related to new client implementations will temper growth in 2024 for lifestyle.

Keith: But our critical levers to expand our portfolio and strengthen our business over the long term.

Keith: We continue to monitor foreign exchange impacts broader macroeconomic conditions and interest rates, which may impact the pace and timing of growth.

Keith: In terms of full year net earned premiums fees and other income lifestyle is expected to grow mainly from our connected living business.

Keith: Moving to global housing.

Keith: 2023 was truly a strong year.

Keith: We drove growth from the actions taken over the past few years to ensure rate adequacy and drive expense leverage while benefiting from the streamlining that we undertook to simplify our portfolio.

Keith: Fourth quarter, adjusted EBITDA was $186 million, which included $22 million of reportable cats.

Keith Warner Demmings: Excluding reportable cats, adjusted EBITDA increased by nearly 50%, or $68 million, to $208 million. Two-thirds of the increase was driven by favorable non-cat loss experience in homeowners, including a favorable year-over-year impact of $35 million related to prior period reserve development. This was comprised of $40 million of reserve reductions in the current quarter compared to a $5 million reduction in the fourth quarter of 2022.

Keith: Excluding reportable cat adjusted EBITDA increased by nearly 50% or $68 million to $208 million.

Keith: Two thirds of the increase was driven by favorable non cat loss experience in homeowners, including a favorable year over year impact of $35 million related to prior period Reserve development.

Keith: This was comprised of $40 million of reserve reductions in the current quarter compared to a $5 million reduction in the fourth quarter of 2022.

Keith: Yeah.

Keith: The remainder of the adjusted EBITDA increase was from continued topline growth in homeowners.

Keith Warner Demmings: The remainder of the adjusted EBITDA increase was from continued top-line growth in homeowners, from higher premiums, and an increase in the number of enforced policies. Higher investment income also contributed to earnings. However, growth was partially offset by incremental expenses to support new business and an increase to our catastrophe reinsurance premium. For renters and others, earnings were flat as growth in our property management channel was offset by software affinity channel volume.

Keith: Some higher premiums and an increase in the number of in force policies.

Higher investment income also contributed to earnings growth.

Keith: Growth was partially offset by incremental expenses to support new business.

Keith: And an increase to our catastrophe reinsurance premium.

Keith: For renters another.

Keith: Earnings were flat as growth in our property management channel was offset by softer affinity channel volumes.

Keith Warner Demmings: For the full year 2024, we expect Global Housing Adjusted EBITDA, excluding reportable CATs, to grow, driven by continued top-line momentum in homeowners. In 2023, we benefited from $54 million of favorable prior year reserve development. Our expectation is to deliver growth in housing in 2024, overcoming the $54 million of favorable prior year reserve development, demonstrating the strength of the housing business. As Keith discussed, we will begin onboarding 1.8 million loans from Bank of America in the first quarter. When fully onboarded, we expect the placement rate of the book to be below Assurant's current portfolio average of 1.8%, which may impact overall placement rate trends. Additionally, due to implementation expenses, we do not expect these loans to contribute significantly to adjusted EBITDA in 2024.

Keith: For the full year 2024, we expect global housing adjusted EBITDA, excluding reportable cats to grow <unk>.

Keith: Driven by continued topline momentum and homeowners.

Keith: In 2023, we benefited from $54 million of favorable prior year Reserve development.

Keith: Our expectation is to deliver growth in housing in 2020 for overcoming the $54 million of favorable prior year reserve development, demonstrating the strength of the housing business.

Keith: As Keith discussed we will begin onboarding $1 8 million loans from bank of America in the first quarter.

Keith: When fully on boarded we expect the placement rate of the book to be below assurance current portfolio average of one 8%.

Keith: This may impact overall placement rate trends.

Keith: Due to implementation expenses, we do not expect these loans to contribute significantly to adjusted EBITDA in 2024.

Keith: In terms of our cat reinsurance program, we have transitioned to a single April 1st placement date, beginning this year.

Keith Warner Demmings: In terms of our cat reinsurance program, we have transitioned to a single April 1st placement date beginning this year. This greatly simplifies our placement process while maintaining comprehensive coverage in the market. As this is a transition year, we placed virtually all of our 2024 program in January, with some smaller components remaining for the April placement. For our 2024 program, our per event retention will increase to $150 million, aligning with a one-in-five-year probable maximum loss for PML, as we continue to optimize risk and return. This is consistent with our 2023 program. We've expanded our risk protection to align with exposure by increasing our top end limit to protect against a 1 in 265 PML event.

Keith: This greatly simplifies our placement process, while maintaining comprehensive coverage in the market.

Keith: As this is a transition year, we placed virtually all of our 2024 program in January.

Keith: With some smaller components remaining for the April placement.

Keith: For our 2024 program our per event retention will increase to $150 million allow.

Keith: Aligning with a one in five year probable maximum loss for P&L.

Keith: As we continue to optimize risk and return this.

Keith: This is consistent with our 2023 program.

Keith: We've expanded our risk protection to align with exposure by increasing our top end limit to protect against a one in 265 P&L event.

Keith: Over the past two years, we've continued to increase our capital protection.

Keith Warner Demmings: Over the past two years, we've continued to increase our capital protection, increasing the top end of our program from a 1 in 174 PML in 2022 to a one in 225 PML in 2023 and now to a one in 265 PML in 2024. Reflecting on these expected changes, we now estimate the appropriate cat load to be $155 million for 2024.

Keith: Increasing the top end of our program from a one in 174 PMO in 2022.

Keith: To a one in 225 P&L in 2023.

Keith: Now a one in 265 P&L in 2024.

Keith: Reflecting on these expected changes, we now estimate the appropriate cat load to be $155 million for 2024.

Keith: Given the exit of our international property business and the better market pricing as we leverage our strong reinsurer relationships.

Keith Warner Demmings: Given the exit of our international property business and the better market pricing as we leverage our strong reinsurer relationship, we expect a modest overall cost savings in 2024. We will provide further updates on the reinsurance program in May. Moving to corporate, the fourth quarter adjusted EBITDA loss was $30 million.

Keith: We expect a modest overall cost savings in 2024.

Keith: We will provide further updates on the reinsurance program in May.

Keith: Moving to corporate.

Keith: The fourth quarter adjusted EBITDA loss was $30 million.

Keith Warner Demmings: A $3 million year-over-year increase, mainly due to higher employee-related expenses. For 2024, we expect the corporate adjusted EBITDA loss to approximate $105 million. Turning to capital management, as we look forward to 2024, we expect to continue to generate significant capital and focus on maintaining balance and flexibility to support business growth. For the full year, we expect our businesses to generate meaningful cash flows, approximating two-thirds of segment-adjusted EBITDA, including reportable cash. Cash flow expectations assume a continuation of the current macroeconomic environment and are subject to the growth of the businesses.

Keith: A $3 million year over year increase mainly due to higher employee related expenses.

Keith: For 2024, we expect the corporate adjusted EBITDA loss to approximate $105 million.

Keith: Turning to capital management.

Keith: As we look forward to 2024, we expect to continue to generate significant capital.

Keith: And focus on maintaining balance and flexibility to support business growth.

Keith: For the full year, we expect our businesses to generate meaningful cash flows approximating two thirds of segment adjusted EBITDA, including reportable cats.

Cash flow expectations assume a continuation of the current macroeconomic environment and are subject to the growth of the businesses.

Keith Warner Demmings: Investment Portfolio Performance, and Rating Agency and Regulatory Requirements. We repurchased $200 million of common stock in 2023 and currently expect share repurchases to be in the range of $200 million to $300 million for 2024, which will depend on strategic M&A opportunities, market conditions, and Cat Activities. As you can see, we are well positioned to deliver another year of growth in 2024 through the power of the Assurant franchise. I'll now turn the call back to Keith Demmings to share his views on performance, as supported by our differentiated business model. Keith

Keith: Investment portfolio performance and rating agency and regulatory requirements.

Keith: We repurchased $200 million of common stock in 2023, and currently expect share repurchases to be in the range of $200 million to $300 million for 2024.

Keith: Which will depend on strategic M&A opportunities market conditions and cat activity.

Keith: As you can see we are well positioned to deliver another year of growth in 2024 through the power of the Assurant franchise.

Keith: I'll now turn the call back to Keith <unk> to share his views on performance as supported by our differentiated business model.

Keith: <unk>.

Keith: I'd like to take a few minutes to discuss why we believe that assurant is so attractively valued today.

Keith Warner Demmings: I'd like to take a few minutes to discuss why we believe that Assurant is so attractively valued today. Assurant is a powerful, differentiated business with unique advantages that have outperformed over time. Our B2B2C business model in lifestyle and housing is different from other insurers and service-oriented companies. Not only do we operate in unique, highly specialized, and attractive markets, but we hold strong market positions and benefit from our scale. At our core, we provide specialty insurance solutions and fee-based services that are often deeply integrated with our large clients, as we play an important role delivering services to their end customers. Our alignment with industry leaders and market disruptors has helped us generate significant scale within our business. Our competitive advantages are further strengthened by our broad set of capabilities that allow us to innovate and execute for our partners and customers, enabling us to be flexible and agile. We have compelling and unique aspects of our business model that we believe create advantages. Our low capital intensity businesses allow us to grow efficiently while generating additional capital for deployment.

Keith: Assurant is a powerful differentiated business with unique advantages that have outperformed over time.

Keith: Our <unk> business model throughout lifestyle and housing is different from other insurers and service oriented companies.

Keith: Not only do we operate and unique highly specialized in attractive markets, where we hold strong market positions and benefit from our scale.

Keith: At our core we provide specialty insurance solutions and fee based services that are often deeply integrated with our large clients.

Keith: As we play an important role delivering services to their end customers.

Keith: Our alignment with industry leaders and market Disruptors.

Keith: This helped us generate significant scale within our businesses.

Keith: Our competitive advantages are further strengthened by a broad set of capabilities that allow us to innovate and execute for our partners and customers, enabling us to be flexible and agile.

Keith: We have compelling and unique aspects of our business model that we believe create advantages.

Keith: Our low capital intensity businesses allow us to grow efficiently, while generating additional capital for deployment.

Keith Warner Demmings: This is evident through our capital efficiency and strong cash generation of $3.5 billion over the last five years. Additionally, our risk profile is attractive. Earnings volatility is lowered by the risk-sharing structures within our business models, reducing the impacts of macroeconomic volatility. For example, throughout connected living and global auto, approximately two-thirds of total risk is reinsured or profit shared with our partners. Within housing, our portfolio simplification efforts have focused on exiting more capital-intensive businesses, which has enhanced our risk profile. In addition, a robust catastrophe program substantially limits retained risk due to the low per occurrence retention level and high limit at the top end of the tower.

Keith: This is evident through our capital efficiency and strong cash generation of $3 $5 billion over the last five years.

Keith: Our risk profile is attractive.

Keith: Earnings volatility is lowered by the risk sharing structures within our business models.

Keith: Reducing the impacts of macroeconomic volatility.

Keith: For example throughout connected living and global auto approximately two thirds of total risk is reinsured, our profit share to our partners.

Keith: Within housing our portfolio simplification efforts have focused on exiting more capital intensive businesses, which has enhanced our risk profile.

Keith: In addition, our robust catastrophe program substantially limits retained risk due to the low per occurrence retention level and high limit at the top end of the tower.

Keith: Lastly, we are well positioned to adjust pricing to enable our targeted rates of return.

Keith Warner Demmings: Lastly, we're well positioned to adjust pricing to enable our targeted rates of return. LenderPlace is a prime example where a product has a built-in annual inflation guard feature to ensure policy pricing accounts for higher labor and materials costs, as we've seen over the last two years. In auto, most of our client deal structures share in the risk through re-insurance or profit shares.

Keith: Lender placed is a Prime example, where our product has a built in annual inflation guard feature to ensure policy pricing accounts for higher labor and materials cost as we've seen over the last two years.

Keith: In auto most of our client deal structures sharing the risk through reinsurance or profit shares. This creates closer alignment between assurance underlying economics, and our clients' financial results.

Keith Warner Demmings: This creates close alignment between Assurant's underlying economics and our clients' financial results. Given this dynamic, we have the ability to adjust rates together with our clients to account for inflation impacts in the broader market. For example, over the past 18 months, we've successfully worked with our clients to put through prospective rate increases on new vehicle service contracts. Financial performance is paramount for Assurant.

Keith: Given this dynamic we have the ability to adjust rates together with our clients to account for inflation impacts in the broader market.

Keith: Over the past 18 months, we have successfully worked with our clients to put through prospective rate increases on new vehicle service contracts.

Keith: Financial performance is Paramount for Assurant.

Keith: While growth may not always be linear we have delivered average annual earnings and EPS growth of double digits since 2019.

Keith Warner Demmings: While growth may not always be linear, we've delivered average annual earnings and EPS growth of double digits since 2019, which has generated significant cash flow. Our 2024 outlook adds to this historical growth that we have delivered. To demonstrate the strength of our business model, we thought it would be useful to show how we perform versus a broad group of insurers on an adjusted earnings basis, given the available data. Please keep in mind this example is not to suggest a new peer group.

Keith: Which has generated significant cash flow.

Keith: Our 2024 outlook adds to this historical growth that we've delivered.

To demonstrate the strength of our business model, we thought it would be useful to show how we perform versus a broad group of insurers on an adjusted earnings basis, given the available data.

Keith: Please keep in mind. This example is not to suggest a new peer group.

Keith: We've selected the S&P 500, PNC index to highlight our performance against a credible and broad index that includes members, we are often compared to including specialty and P&C insurers.

Keith Warner Demmings: We've selected the S&P 1500 P&C Index to highlight our performance against a credible and broad index that includes members we are often compared to, including specialty and P&C insurers. Over the past five years, we've grown double digits and outperformed the index. Our average annual adjusted earnings growth rate, excluding CATS, of 12 percent is almost double the index growth rate of 7 percent over the same time period. Including Reportable Cats, we've also outpaced the market, driving 10% average annual growth versus the index growth rate of 6%. We believe that our consistent ability to demonstrate strong, profitable growth and returns with lower volatility and required capital makes Assurant attractively valued. I'm confident that we'll continue to drive long-term profitable growth and create shareholder value. And with that, Operator, please open the call to questions. The floor is now open for your 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 star one.

Keith: Over the past five years, we've grown double digits and outperformed the index.

Keith: Our average annual adjusted earnings growth rate, excluding cats up 12% is almost double the index growth rate of 7% over the same time period.

Keith: Including reportable Cat, we've also outpaced the market driving 10% average annual growth versus the index growth rate of 6%.

Keith: We believe that our consistent ability to demonstrate strong profitable growth and returns with lower volatility and required capital makes us Sharon attractively valued.

Keith: I am confident that we will continue to drive long term profitable growth and create shareholder value.

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

Speaker Change: The floor is now open for your questions. At this time 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 star one.

Operator: Again, we do ask that while you pose your question, you pick up your handset to provide optimal sound quality. Thank you. Our first question is coming from Mark Hughes with Truist Securities. Please go ahead.

Speaker Change: Again, we do ask that wall E. Pose your question that you pick up your handset to provide optimal sound quality.

Speaker Change: Thank you.

Speaker Change: Our first question is coming from Mark Hughes with Truest Securities. Please go ahead.

Mark Hughes: Good morning, Mark. Yeah, thanks. Good morning.

Mark Hughes: Good morning, Mark Yeah. Thanks, good morning.

Keith Warner Demmings: Welcome Keith Meyer.

Keith Warner Demmings: Welcome, Keith Meyer. The B of A, congratulations on that. You say that the placement rate is going to be lower. Is that just because the placement rate on an underlying basis is lower, or is that... The actual premium and the covered homes are not being transferred over to you.

Speaker Change: The bofa.

Speaker Change: Congratulations on that.

You say that the placement rate is going to be lower.

Speaker Change: Is that just because the.

Speaker Change: Placement rate on an underlying basis is lower or is that.

Speaker Change: Correct the actual premium in the cupboard homes are not being transferred over to you.

Speaker Change: No we're going to be picking up all of the loans and then all of the policies, but the placement rate on that particular block of business is just lower than the average if you look at our current average it's one 8% it'll be south of that just the nature of of the loans the nature of the business but.

Keith Warner Demmings: No, we're going to be picking up all of the loans and then all of the policies, but the placement rate on that particular block of business is just lower than the average. If you look at our current average, it's 1.8%. It'll be south of that, just the nature of the loans, the nature of the business. But to the more fundamental point, really excited about the opportunity, many years in the making, and a huge congratulations to our lender place team for doing an incredible job building a relationship. And then obviously getting to this point is incredibly exciting and extremely validating. Yeah, and then on the homeowners business, the reserve, and favorable reserve development. We can't, just because, uh...

Speaker Change: To the more fundamental point really excited about the opportunity in many years in the making and a huge congratulations to our lender place team for <unk>.

Speaker Change: We're doing an incredible job building a relationship and then obviously getting to this point is incredibly exciting and extremely validating.

Speaker Change: Yeah.

Speaker Change: On the.

Speaker Change: Homeowners business.

Speaker Change: Reserve.

Speaker Change: Favorable reserve development.

Speaker Change: We then just because.

Speaker Change: Okay Hurricane Ian turned out better than expected or is there are you seeing.

Keith Warner Demmings: The hurricane, Ian, turned out better than expected. Are you seeing a... Fundamental change in underlying trends, and it seems like the non-CAT losses have been very favorable lately. Is this something we should view as sustained and sustainable? Yeah, hi, Mark. And this is this is Keith Meyers.

Speaker Change: Fundamental change in underlying trends it seems like the non cat losses that they're very favorable lately.

Speaker Change: Something we should view as.

Speaker Change: As being the sustainable.

Speaker Change: Yeah, Hi, Mark and this is this is Keith Myers. So I think the first thing I would say is the.

Keith Warner Demmings: So I think the first thing I would say is that the positive reserve development was more in relation to the higher inflationary environment that we had previously. Now that that's more settled, that's what's really been the change in the estimates that our team has made there. So I think that was more of the driver than any other type of weather activity or any other type of experience.

Keith Warner Demmings: The reserved about the positive reserve development was more.

Keith Warner Demmings: In relation to the the higher inflationary environment that we had previously now that Thats <unk>.

Keith Warner Demmings: <unk> settled that's what's really been the change in the estimates that our team has.

Keith Warner Demmings: <unk> has made there so I think that was more the driver then.

Speaker Change: Any other.

Speaker Change: Type of weather activity or or any other <unk>.

Speaker Change: Type of experience. So I think that was the.

Keith Warner Demmings: So I think that was the..., the key there. And then, in terms of your question about the quarter, The way to think about that is, if you take out the prior year, the prior period development, and over the whole year, we basically are at about a 40% non-CAT loss ratio. It's about a point better than last year. And then if you think about looking at 2024, we would see our non-CAT loss ratio be somewhat similar to what we're seeing in 2023. So that's probably the way to think about our views on the non-CAT loss ratio.

Speaker Change: And the key there and then in terms of your question on the quarter.

Speaker Change: The way to think about that is if you take out the prior year the prior period development.

Speaker Change: And over the whole year, we basically are about at about a 40%.

Speaker Change: Non cat loss ratio, it's about one point better than last year and then if you think about.

Speaker Change: Looking at 2024, we would see our non cat loss ratio to be somewhat level to what we're seeing in 2023. So that's probably the way to think about our views on the on the non cat loss ratio and just one final thought I mean modestly better.

Keith Warner Demmings: Yeah, and just one final thought. I mean, modestly better in the quarter when you make the adjustment at 38%, but that's just normal seasonality. Nothing we would really point to there, Mark. Yeah, if I could squeeze in one more, the income and lifestyle were up substantially, much more so than the Devices Serviced. What was going on there?

Speaker Change: In the quarter when you make the adjustment at 38%, but that's just normal seasonality nothing we would really point to there mark.

Mark Hughes: Yeah, if I can squeeze in one more.

Speaker Change: Fee income and lifestyle.

Speaker Change: Substantially much more stable.

Speaker Change: Devices service, what was going on there.

Speaker Change: Yes.

Keith Warner Demmings: Yeah, that's mainly the higher trade-in volumes that we saw in the fourth quarter. In the fourth quarter, we also saw the addition of two new programs, so one with one of the major OEMs, and then also a program that cuts across several of our other clients. Then that was also tempered a little bit by some of the promotional activity, but overall, we felt really good about the trade-in performance in the quarter. Thank you very much.

Speaker Change: That's mainly the.

Speaker Change: Higher trading volumes that we have seen in the fourth quarter. So in the fourth quarter. We also saw the addition of two new programs. So one with one of the major Oems and then also a program that cuts across several of our other.

Speaker Change: Clients then that's also tempered a little bit by some of the promotional activity, but overall, we felt really good about the trading performance in the quarter.

Speaker Change: Thank you very much.

Speaker Change: Great. Thanks, Mark.

Keith Warner Demmings: Great. Thanks, Mark. Our next question is coming from John Barnidge with Piper Sandler. Please go ahead. Hey, John. Hey, good morning.

Okay.

Speaker Change: Our next question is coming from John Barnidge with Piper Sandler. Please go ahead.

John Bakewell Barnidge: Hey, John.

John Bakewell Barnidge: Hey, good morning, Thanks for the opportunity to appreciate hope you're all well.

John Bakewell Barnidge: Thanks for the opportunity. I appreciate it. Hope you're all well.

John Bakewell Barnidge: All right. My first question: I know there was an expense reduction program on December 22, with full savings emerging on December 24. Are you able to talk about the geography of those savings that's supposed to emerge in 24 and how you view a run rate global housing expense ratio? Sure. So I think it's a blend of both employee actions as well as some of our facilities that we've been able to gain some efficiencies on as well. But I think in terms of the expense efficiencies for housing.

John Bakewell Barnidge: Good morning.

My first question I know there was an expense reduction program in December 'twenty, two with full savings emerging in <unk> score.

John Bakewell Barnidge: Were you able to talk about geography of those savings.

John Bakewell Barnidge: Thus to emerge in 'twenty, four and how you will run rate global housing expense ratio.

John Bakewell Barnidge: Yeah.

Speaker Change: Sure so.

Speaker Change: I think the.

Speaker Change: It's a blend of both.

Speaker Change: Employee actions as well as <unk>.

Speaker Change: Some of our.

Speaker Change: Facilities that we've been able to gain some efficiencies on that as well but.

Speaker Change: But I think in terms of the expense efficiencies for housing.

Keith Warner Demmings: You know, we had a really, really strong year, and this has really been the story of the last couple of years, especially a lot of our technology investments and the work that we've done through our digital programs and really driving an even better customer experience. You know, when you look at our expense ratio, year over year, we're down 6 points from 46 to about 40. And so, you know, that really has been the story of a lot of our technology investments that we've been making. And I think that's what's enabling us to, if you think into 2024, we should be able to take a lot more expense leverage with the growth we have in housing but not increase our expenses in a corresponding way. I'm really proud of the work that our teams have done there to not just lower the cost but also create advantages in the market. And I think when you think about the customer experience that we've been delivering, I think that's a great example of why a client like Bank of America would want to do business with Assurant.

Speaker Change: We had a really really strong year and this has really been the story of the last couple of years, especially a lot of our technology investments and the work that we've done it.

Through our digital.

Speaker Change: Programs and really driving an even better customer experience. When you look at our expense ratio year over year were down six six points from 46 to about 40, and so that really has been a story of a lot of our technology investments that we've been making and I think thats whats, enabling us to.

Speaker Change: If you think into 2024, we should be able to take a lot more expense leverage with the growth we had in housing, but but not increasing our our expenses in a corresponding way. So really proud of the work that our teams have done there to not just lower the cost, but also create advantages in the market and I think.

Speaker Change: When you think about the customer experience that we have been delivering I think thats a great example of why a client like bank of America would want to do business with assurance. So.

Keith Warner Demmings: So I think those investments are paying off in multiple ways. Thank you. Thank you. And on auto input costs, can you maybe talk about the ability to recoup the elevated auto input costs through contracted actions for 24?

Speaker Change: Those investments are paying off in multiple ways.

Speaker Change: Yes.

Speaker Change: Thanks.

Speaker Change: On auto input costs can you maybe talk about the ability to we.

Speaker Change: Keep the elevated auto input costs through.

Speaker Change: Contracted actions for 24, I think you talked about improvement expected this year.

Keith Warner Demmings: I think you talked about improvement expectations, so maybe I'll take that. And I think, you know, what I would say is, there's a handful of clients and deal structures where we're feeling the pressure on the underwriting results, which we've talked about, you know, we've made significant rate adjustments over the last 18 months or so with all five of these clients and feel really good about how we're positioned. I mean, the relationships are incredibly strong.

Speaker Change: Yeah, So maybe I'll take that and I think what I would say is there's a handful of clients clients and deal structures, where we're feeling the pressure on the underwriting results, which we've talked about.

Speaker Change: We've made significant rate adjustments over the last 18 months or so with all five of these clients and feel really good about how we're positioned and the relationships are incredibly strong to your point our contracts are built with transparency, we've got very much aligned.

Keith Warner Demmings: To your point, our contracts are built with transparency, and we've got very much aligned interests in terms of financial performance. So we put a lot of rate in, we'll continue to look at performance, and, obviously, monitor claims activity. I would say that we saw things level off in the fourth quarter, which is a good sign. We've stabilized severity in the business. And then, you know, based on the nature of these service contracts, it takes a little longer for them to earn money through than when you think about what happened within the housing business. Those are annual policies. These are three, four, five, and six-year policies.

Interest in terms of financial performance. So we've put a lot of rate and we will continue to look at performance. Obviously monitor claims activity I would say that we saw things level off in the fourth quarter, which is a good side, we've stabilized severity in the business and then.

Speaker Change: And the nature of these service contracts it takes a little longer for it to earn through then when you think about what happened within the housing business. Those are annual policies. These are 3456 year policy. So it's a little bit different from that perspective, but I would say, we feel really well positioned and certainly see improvement in 'twenty four and that should continue to flow through.

Keith Warner Demmings: So it's a little bit different from that perspective, but I would say we feel really well positioned and certainly see improvement in 24. And that should continue to flow through in 25 and beyond. Thanks for the answers.

Speaker Change: <unk> and 'twenty five and beyond.

Speaker Change: Thanks for the answers I appreciate it.

Keith Warner Demmings: Appreciate it. Great. Thanks, John. Our next question is coming from Tommy McJoint with KBW. Please go ahead. Morning, Tommy.

Speaker Change: Great. Thanks, John.

Speaker Change: Our next question is coming from Tommy Mick joined with K VW. Please go ahead.

Speaker Change: Tommy.

Tommy McJoint: Hey, good morning guys. Thanks for taking our questions here. There sounds like there's a couple moving pieces related to the mobile side.

Tommy Mick: Hey, good morning, guys. Thanks for taking our questions here.

Tommy Mick: It sounds like there's a couple moving pieces related to the mobile side. So you called out some upcoming investments in that space and you also have the onboarding of Telstra in Australia.

Tommy McJoint: So you called out some upcoming investments in that space, and you also have the onboarding of Telstra in Australia. Are you able to quantify some of the figures around that in terms of the investment costs, the onboarding costs, and then what the run rate, either revenue or earnings contribution from Telstra could be?

Tommy Mick: Are you able to quantify some of the figures around that.

Tommy Mick: In terms of the investment cost the Onboarding costs, and then what the Ah.

Tommy Mick: Run rate either revenue or earnings contribution from Telstra could be.

Keith Warner Demmings: We're just trying to think about, you know, after the next 12 months, sort of what the earnings power of that Kinesco Living mobile device business might look like. Yeah, I'll probably offer a couple of thoughts. Obviously, it's a pretty exciting development. We're super proud of the team in Australia, and it's a great example of leveraging our capabilities and our global reach.

Tommy Mick: We're just trying to think about you know after the next 12 months sort of what the earnings power of that connected living mobile device business might look like.

Speaker Change: Yes, probably I probably offer a couple of thoughts obviously, it's a pretty exciting development.

Speaker Change: We're super proud of the team in Australia.

Speaker Change: This is a great example of leveraging our capabilities and our global reach its going to rollout in phases, we expect to launch in the first quarter and then there's a number of different phases to the rollout. So it'll be I would say probably modestly EBITDA negative this year in terms of the investment to get that wrapped up obviously.

Keith Warner Demmings: It's gonna roll out in phases. We expect to launch in the first quarter, and then there are a number of different phases to the rollout, so it'll be, I would say, probably modestly, even a negative this year in terms of the investment to get that ramped up. Obviously, I would expect it to be significantly improved in certainly in 25, sorry, yeah, in 25 over 24. In terms of the size and scale of investments, the one thing I would say, Tommy, there's quite a bit of investment going on within Assurant. Certainly, we talked about B of A, but even just on the lifestyle and connected living side, Telstra is one example.

Speaker Change: <unk> I would expect it to be.

Speaker Change: Significantly improved and certainly in 25, sorry, 25 over 24.

Speaker Change: In terms of the size and scale of investments. The one thing I would say Tommy there's quite a bit of investment going on.

Speaker Change: Within Assurant.

Speaker Change: We talked about bofa, but even just on the lifestyle in connected living side <unk>. One example, obviously, we're talking about it publicly but there are also a lot of other investments that we're making building out capabilities and we're in many many discussions with different clients different prospects.

Keith Warner Demmings: Obviously, we're talking about it publicly, but there are also a lot of other investments that we're making, building out capabilities, and we're in many, many discussions with different clients, different prospects about rolling out new products, new services. So I would say we probably have more investment going on, even beyond Telstra, within connected living this year than we would in a normal average year. When we talk about mid-single-digit growth for lifestyle, you could probably think about the investment putting pressure on that by a few points. So it would be more in the high single-digit range if we weren't making some of these, for us, are significant investments in the future. I got it.

Speaker Change: Rolling out new product New services. So I would say, we probably have more investment going on even beyond Telstra within connected living this year than we would in a normal average year.

Speaker Change: We talk about mid single digit growth for lifestyle, you could probably think about the investment.

Speaker Change: Putting pressure on that by a few points. So it would be more in the high single digit range, if we werent, making some of these.

Speaker Change: For us our significant investments in the future.

Speaker Change: Okay.

Speaker Change: Got it I appreciate you quantifying some of those numbers.

Keith Warner Demmings: Appreciate you quantifying some of those numbers. You also separately reported some pretty high net investment yields across the various business lines this quarter and even for the full year. Is there any upside to net investment income from here, and what's the sensitivity of those various portfolios to potential rates? Yeah, Tommy.

Speaker Change: You also separately reported some pretty high net investment yields across the various business lines this quarter and even for the full year is there any upside to the net investment income from here and what's the sensitivity of those various portfolios to potential rate cuts.

Speaker Change: Okay.

Speaker Change: Yeah, Tommy so.

Keith Warner Demmings: So I think, one, in terms of our expectations for next year, you know, we see investment income being relatively flat to slightly up. You mentioned the higher results for this quarter. You know, we had our real estate joint venture sale, so that contributed. We don't think we'll have as many real estate sales next year, but we do think it should be relatively positive going into next year. You know, right now, our portfolio book yield is at 4.99, so just under 5%. New money rates will be a little bit higher than that.

Tommy Mick: I think one in terms of our expectations for next year, we see investment income being <unk>.

Tommy Mick: Relatively flat to slightly up.

Tommy Mick: We you mentioned the higher.

Tommy Mick: Results for this quarter, we had our real estate joint venture sales. So that contributed we don't think well have as high of real estate sales.

Tommy Mick: Into next year, but we do think it should be relatively positive going into next year right now.

Tommy Mick: Our portfolio book yield is at.

Tommy Mick: At $4 99, so just just under 5% new money rates will be a little bit higher than that.

Keith Warner Demmings: And so we do expect, as the year goes on, the Fed is expected to reduce rates through the year. So depending on the timing of some of those rate changes, those will be kind of offsetting the increase that you saw this year. So overall, we think we're in a pretty good place from an investment income standpoint, but probably slightly higher. Yeah, and maybe Tommy, just to add a little bit more color on how I'm thinking about that.

Tommy Mick: And so we do expect as the year goes on of course, the fed's expected to reduce rates through the year. So depending on the timing of some of those rate changes those will be kind of offsetting the.

Tommy Mick: <unk>.

The increase that you saw this year. So overall, we think it will we're in a pretty good place from an investment income standpoint, but probably slightly up for next year.

Tommy Mick: And maybe Tom just to add a little bit more color on how I'm thinking about that I mean, when you look at the overall guide for the year, we're overcoming $54 million of PID in housing.

Keith Warner Demmings: I mean, you know, when you look at the overall guide for the year, you know, we're overcoming 54 million PYD in housing, and then, you know, we don't have material tailwinds on investment income; it might be modestly positive, but not like what we saw this year. So obviously, being able to deliver strong growth on top of those two factors is something we feel really good about, along with the investments that I mentioned earlier. I got it. That's a good color.

Tom: Don't have material tailwind on investment income it might be modestly positive, but not like what we saw this year. So obviously being able to deliver strong growth on top of those two factors, we feel really good about along with the investments that I mentioned earlier.

Tom: Got it that's good color. Thank you alright.

Brian Robert Meredith: Thank you. Great. Thanks, Tommy. Our next question is coming from Brian Meredith with UBS. Please go ahead. Yeah, thanks. Hey, how are y'all? A couple of them here.

Speaker Change: Alright, Thanks Tommy.

Speaker Change: Our next question is coming from Brian Meredith with UBS. Please go ahead.

Thanks.

How are you.

Brian Robert Meredith: A couple of them here first one I'm just curious.

Brian Robert Meredith: First one, I'm just curious, Keith. You mentioned that Japan was going to be relatively flat this year. I'm just curious kind of how we should think about that with respect to the contract kind of changes that are going on. Is that kind of ending in 2024? Are there still pressures there in respect to some growth?

Brian Robert Meredith: Keith you mentioned that.

Brian Robert Meredith: Japan was going to be relatively flat. This year I'm, just curious kind of how we should think about that with respect to the contract kind of changes that are going on is that kind of ending in 2024, there's still pressures. There you expect some growth and then also on that because it maybe you can kind of tell us what's your kind of baseline macro assumption is.

Keith Warner Demmings: And then also on that, maybe you can kind of tell us what your kind of baseline macro assumption is in your kind of outlook for 2024. Yes, sure, Brian. And so starting with Japan, you know, we mentioned the four-year customer contracts that were running off, and then the new contracts were evergreen. That's still going to be a bit of a pressure for us, not as much as 23, but there'll still be pressure for us in 24.

Brian Robert Meredith: In your kind of outlook for 2024.

Okay.

Speaker Change: Yes, sure Brian and so.

Speaker Change: Starting with Japan.

Speaker Change: We mentioned the four year customer contracts that were running off and then the new contracts were.

Speaker Change: We're evergreen that's still going to be a bit of a pressure for us not as much as 23, but there'll still be a pressure for us in 'twenty four I think that is offset a little bit by some new structures and new programs that we have launched in Japan, So that's where that youll see that moderating and I think longer term.

Keith Warner Demmings: I think that is offset a little bit by some new structures and new programs that we have launched in Japan, so that's where you'll see that moderating. And I think, longer term, I feel even better about Japan, where, you know, a few years ago, we only had a couple of relationships with the mobile carriers. Now fast forward to today; we've got business, active business that we do with all of the four top mobile operators. And so, in our business, it's not easy to win big clients, but when you can be an existing partner already and then be able to grow that relationship from there, I think that puts us in a very good position and why we have a lot of optimism for the future of Japan. But with some of those new programs coming up, I think that's what's allowed us to feel like we've gotten past some of those headwinds from before. We certainly stabilized Japan here if we look at the last couple of quarters, Q3 and Q4 in terms of the overall financial performance.

Speaker Change: Term I feel even better about Japan, where.

Speaker Change: A few years ago, we only had a couple of relationships with the mobile carriers.

Speaker Change: Now you fast forward to today, we've got business active business that we do with all of the four top mobile operators and so.

Speaker Change: In our business, it's not easy to win big clients, but when you can be an existing partner already and then be able to grow that relationship from there I think that puts us in a very good position and why we have a lot of optimism for the future of of Japan, but with some of those new programs coming up.

Speaker Change: Thats whats.

Speaker Change: Allowed us to feel like we have.

Speaker Change: Gotten past some of those headwinds from before.

Speaker Change: It certainly stabilized Japan here, if we look at the last couple of quarters Q3, and Q4 in terms of the overall financial performance. So we feel good about that.

Keith Warner Demmings: So we feel good about that and I would say as we look forward to 2024, expect to see some modest improvement over time and, to Keith's point, longer term, still an exciting market. Yeah, and in terms of the macro economic conditions, Brian, I don't think we're expecting anything significant. You know, obviously, we talked about interest rates and things like that. But beyond that, you know, there's nothing that's contemplated that's that significant.

Speaker Change: As we look forward to 'twenty four I expect to see some modest improvement over time, and then to Keith's point longer term still an exciting market for us.

Speaker Change: And in terms of the macroeconomic conditions Brian.

Speaker Change: I don't think were expecting anything significant obviously, we talked about interest rates and things like that but beyond that not theres nothing thats contemplated that that's significant.

Keith Warner Demmings: Great. And then one other quick one here. On the B of A deal, I'm just assuming your kind of guidance for cap loads for this year includes the B of A deal?

Speaker Change: Great and then one other just quick one here.

Speaker Change: On the Bofa deal I'm just.

Speaker Change: Assuming your kind of guidance for cat load for this year includes the Bofa deal.

Keith Warner Demmings: Yes, it does. Great. Thank you. Great. Thanks, Brian. Our final question is coming from Grace Carter with Bank of America. Please go ahead. Good morning, Grace. It does appear we did lose her.

Speaker Change: Yes, it does.

Speaker Change: Great.

Speaker Change: Thank you.

Speaker Change: Great. Thanks, Brian.

Speaker Change: Our final question is coming from.

Speaker Change: Bruce Carter with Bank of America. Please go ahead.

Speaker Change: Great.

Speaker Change: Okay.

Speaker Change: It does appear we did lose greaves.

Speaker Change: One moment please.

Operator: One moment, please. No problem. But it does appear that Grace has dropped off the call, gentlemen.

Speaker Change: Okay.

Speaker Change: No problem.

Speaker Change: Okay.

Speaker Change: It does appear that Grace has dropped off the call gentlemen.

Speaker Change: Okay.

Speaker Change: No problem, Alright, and that was the last question am I correct that is correct Sir.

Operator: No problem. All right. And that was the last question. Am I correct?

Keith Warner Demmings: That is correct, sir. Wonderful. Okay, well, we will call it a wrap for today, and we'll look forward to speaking to everybody again in May. And then, obviously, in the meantime, please feel free to reach out to our IR team. We'll be happy to answer any questions that everybody has.

Speaker Change: Wonderful, Okay, what we will call it a wrap for today and we'll look forward to speaking to everybody again in May and then obviously in the meantime, please feel free to reach out to our IR team wholly happy to answer any question that everybody has but thanks very much and we'll talk soon thank you.

Operator: But thanks very much, and we'll talk soon. Thank you. Thank you. This does conclude today's teleconference. Please disconnect your lines at this time and have a wonderful day.

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

Speaker Change: Yeah.

Speaker Change: Okay.

Speaker Change:

Speaker Change: Yeah.

Speaker Change: Yeah.

Speaker Change: Okay.