Q4 2024 Assurant Inc Earnings Call
<unk> fourth quarter, and full year 2024 conference call and webcast.
Speaker Change: 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, if you'd like to ask a question at that time. Please press star nine to raise your hand and star sixth on mute. We ask that you. Please pickup your handset to allow optimal sound quality. It is now my pleasure to turn the floor over to Sean.
Speaker Change: <unk> Vice President of Investor Relations you May now begin.
Sean: Thank you operator, and good morning, everyone. We look forward to discussing our fourth quarter and full year 2024 results with you today.
Speaker Change: Turning me for Assurance 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 2024.
Speaker Change: The release and corresponding financial supplement are available on Assurant Dot com.
Speaker Change: Also on our website is a slide presentation for our webcast participants.
Speaker Change: Some of the statements made today are forward looking.
Speaker Change: 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.
Speaker Change: 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 GAAP measures and a reconciliation of the two please refer to the news release and supporting materials, We will start today's call when mark.
Speaker Change: Before moving into Q&A I will now turn the call over to Keith <unk>.
Keith: Thanks, Sean and good morning, everyone.
Keith: 2024 represented another strong year for Assurant.
Keith: I am incredibly proud of the performance of our teams across the company, whose commitment to delivering for our clients and customers enabled us to achieve 15% adjusted EBITDA growth and.
Keith: And 19% adjusted earnings per share growth, both excluding reportable cats.
Keith: Strategic investments in our people client partnerships technology and capabilities and targeted actions to drive improved performance across key areas of the business position us to continue to outperform and deliver exceptional value through our products and services.
Keith: Our people are at the center of everything we do.
Keith: Our performance is made possible by our world class culture.
Keith: Our culture is how we attract and retain incredible talent to deliver for our customers.
Keith: We're extremely proud of the recognitions, we've received highlighting our commitment to innovation and sustainability, while supporting and empowering our employees.
Keith: Our competitive advantage comes from the ongoing dedication of our global workforce and leadership team to drive new business through innovative solutions, while elevating the customer experience and deepening existing partnerships.
Keith: In global lifestyle, we had an unprecedented year of client wins and renewals, particularly within connected living.
Keith: We continue to invest in new innovative client programs and leading edge technology, including the incorporation of automation robotics and AI at our device care center outside of Nashville.
Keith: We recently partnered to launch T Mobile's protection 360 home Tech product.
Keith: This new offering provides protection for an unlimited number of Wi Fi enabled devices and electronics, while providing premium tech support to consumers.
Keith: This critical new product represents another strategic growth vector and underscores the long term opportunity presented by the convergence of broadband and mobile in the connected home.
Keith: By prioritizing investments in programs and capabilities, we generated significant momentum and plan to execute on additional opportunities.
Keith: In global automotive, we made progress in stabilizing earnings through targeted actions to address elevated claim costs in our vehicle service contract business and our guaranteed asset protection product.
Keith: We continue to be optimistic about the long term outlook for this business.
Keith: Before discussing global housing I want to first share that our thoughts are with everyone who is impacted by the events of the last few months, including the California wildfires.
Keith: In these times, we have a critical role to play in our customers' journey.
Keith: In Southern California, we're focused on making it quick and easy for policyholders to file claims online on the phone or in person at mobile claim centers accelerating customer payments.
Keith: We remain proud of our role in removing the risk of uninsured loss for lenders investors and homeowners through our housing offerings.
Keith: As we look at housings results, we delivered sustained outperformance in 2024 benefiting from the strength of our homeowners and renters businesses, including the rollout of technology innovation to enhance our customer experience.
Keith: Leveraging this segment's differentiated advantages and efficiency initiatives, we have more than doubled our adjusted EBITDA in the past two years.
Keith: Growing the business from just over $400 million in.
Keith: In 2022, bill over $900 million in 2024, excluding cats.
Keith: Even including Cats housing has outperformed the P&C industry.
Keith: Over the past five years, we've achieved an average return on equity of over 22%.
Keith: And our increased scale and efficiency has driven a 10 year average combined ratio of 89% compared to the broader P&C market of 95% with.
Keith: With clear outperformance and expected growth ahead, the business has the opportunity to be better appreciated from evaluation perspective.
Keith: 2024 was a remarkable year of commercial success across Assurant.
Keith: Marked by significant client momentum as we enter 2025.
Keith: Strong execution enabled us to capture new opportunities, while solidifying and extending key client relationships.
Keith: Across our global footprint, we had several key wins, including Australia's largest mobile carrier and two major financial institutions in the U S.
Keith: We renewed client relationships and reinforced our position as a leader in preferred partner throughout our businesses.
Keith: And our mobile business within connected living we completed major renewals in 2024 that represent three of the top five largest mobile carriers in the U S.
Keith: More recently, we also secured a multiyear renewal with a large mobile carrier in Japan.
Keith: We have now renewed our four largest mobile clients in the last year, who represent over 40 million mobile devices protected a testament to our ability to execute mobile protection programs across the globe.
Keith: Within housing, we renewed 10 lender placed clients representing over $17 million loans tracked.
Keith: And in renters, we completed renewals of two top 10 property management companies as we continue the rollout of key technology enabled services like cover 360, and Assurant Tech Pro.
Keith: These help increased policy attachment, while enhancing the experience of our partners and renters.
Keith: Ultimately the continuing demand for our offerings and solutions.
Keith: Bind with our strong competitive edge.
Keith: <unk> commercial momentum that will extend into 2025 and beyond.
Keith: We believe in the power of our unique business to business to consumer or <unk> business model.
Keith: At our core we're a premier global protection company that partners with the world's leading brands to safeguard and service connected devices homes and automobiles utilizing data driven technology solutions to provide exceptional customer experiences.
Keith: The common thread across our entire enterprise is our powerful <unk> distribution strategy and both lifestyle and housing where we.
Keith: We have strong leadership positions in attractive markets.
Keith: Through our differentiated distribution strong public Fortune 500 company financials, and unwavering emphasis on client transparency, we create deep partnerships with leading brands across the world.
Keith: In addition, our commitment to continuously enhance customer experience through customized solutions that wrap around our protection products is built on decades of investment and ongoing innovation.
Keith: This allows us to deeply integrate our technology and platforms with clients supporting long tenured partnerships and exceptional customer experiences.
Keith: Since 2019, we've increased adjusted EBITDA by over $630 million or a 12% compounded annual growth rate, while growing adjusted EPS by over $11 per share.
Keith: Or an 18% compounded annual growth rate.
Keith: Excluding catastrophes.
Keith: As we look at our performance versus the broader P&C industry. We've continued to outperform the S&P 500, P&C Index median.
Keith: <unk>, excluding and including cats, when comparing across adjusted earnings and EPS growth.
Keith: Our compelling track record of outperformance includes eight consecutive years of profitable growth demonstrating resiliency through various macroeconomic environments.
In addition, our portfolio benefits from earnings and capital diversification across geographies and business lines.
Keith: Positioning us to continue to invest in and achieve future growth.
Keith: We believe we remain an attractive investment with a compelling path ahead.
Keith: And we believe we should be valued at a premium to the S&P 500, PNC Index median.
Speaker Change: Before turning it over to Keith Meyer to share additional insights on our results and review business trends I want to highlight our strong momentum heading into 2025, and how we plan to deliver future growth.
Speaker Change: First we will focus on executing optimizing and scaling significant new partnerships and program launches through our lifestyle and housing where we invested last year.
Keith Meyer: Overall, we believe our 2024 investments should be fully earned back through 2025 with an attractive one year payback.
Speaker Change: Next will support incremental investments for new launches in our pipeline and accelerate emerging growth opportunities.
Speaker Change: In addition to our connected home product launch, we have new opportunities with several clients, particularly in global lifestyle, and we look forward to sharing more details over the coming quarters.
Speaker Change: And finally, we will drive financial performance and operational excellence.
Speaker Change: We believe we are well positioned to meet our 2025 objectives given the commercial momentum we have within connected living.
Speaker Change: Long term tailwind and global auto and sustained outperformance in global housing.
Speaker Change: Overall, our ability to deliver for our clients drive efficiencies across our operations and focus on data driven technology solutions should enhance our position as a leader in the businesses that we operate and extend our compelling track record of financial performance.
Keith Meyer: I'll now turn it over to Keith.
Speaker Change: Thanks, Keith and good morning, everyone.
Speaker Change: I am proud of what we achieved in 2024, including the financial results delivered by our incredibly strong team.
Speaker Change: For the year, we increased adjusted EBITDA by 15% to over $1 $5 billion, while growing adjusted earnings per share to over $20, both excluding cats.
Speaker Change: We have continued our long term track record of growing earnings consistently demonstrating the power of Assurant.
Speaker Change: Our performance was highlighted by another exceptional year in global housing, where we delivered double digit earnings growth overall for the second consecutive year.
Speaker Change: Within global lifestyle connected living grew 9%.
Speaker Change: Excluding $25 million of investments and $12 million of unfavorable foreign exchange.
Speaker Change: More importantly, we set a solid foundation for growth as we enter 2025.
Speaker Change: And global auto targeted actions in our vehicle service contract and gap products stabilized earnings in the second half of 2024.
Speaker Change: And we are excited about the trajectory of the business as we move into 2025.
Speaker Change: I'll begin by highlighting key trends, we saw in the fourth quarter.
Speaker Change: From there I'll walk through our 2025 outlook as we look to deliver our ninth consecutive year of profitable growth.
Speaker Change: Beginning with our fourth quarter enterprise results adjusted EBITDA and earnings per share both increased 13%.
Speaker Change: Excluding cats led by global housing.
Within global lifestyle connected living grew 9%, excluding $25 million of investments and $12 million of unfavorable foreign exchange.
Speaker Change: Looking at capital Global lifestyle, and global housing continued to generate significant cash flow.
Speaker Change: As we upstream nearly $250 million from our segments in the fourth quarter and over $800 million for the full year.
More importantly, we set a solid foundation for growth as we enter 2025.
And global auto targeted actions in our vehicle service contract and gap products stabilized earnings in the second half of 2024.
Speaker Change: We returned $161 million of that cash to our shareholders in the fourth quarter.
Speaker Change: Which puts our total capital returned to shareholders for the year in excess of $450 million <unk>.
And we are excited about the trajectory of the business as we move into 2025.
Speaker Change: Including $300 million of share repurchases.
Speaker Change: Our buyback level was at the top end of our expectations for the year.
I'll begin by highlighting key trends, we saw in the fourth quarter.
From there I'll walk through our 2025 outlook as we look to deliver our ninth consecutive year of profitable growth.
Speaker Change: At the same time, we ended the year in a strong capital position with $673 million of liquidity at the holding company.
Beginning with our fourth quarter enterprise results adjusted EBITDA and earnings per share both increased 13%.
Speaker Change: This past November we increased our common stock dividend by 11%.
Excluding cats led by global housing.
Speaker Change: The increase represented the 20th consecutive year, we have raised our dividend since our IPO.
Looking at capital Global lifestyle, and global housing continued to generate significant cash flow as.
Speaker Change: In addition, we were just added to the S&P high yield dividend aristocrats index earlier this month.
As we upstream nearly $250 million from our segments in the fourth quarter and over $800 million for the full year.
Speaker Change: We are incredibly proud of this achievement and expect our strong capital returns to continue as part of our balanced capital deployment framework.
We returned $161 million of that cash to our shareholders in the fourth quarter.
Which puts our total capital returned to shareholders for the year in excess of $450 million.
Speaker Change: Turning to our segment results beginning with global lifestyle.
Speaker Change: Fourth quarter, adjusted EBITDA was down 6% compared to last year or 5% on a constant currency basis.
Including $300 million of share repurchases.
Our buyback level was at the top end of our expectations for the year.
Speaker Change: In connected living earnings were roughly flat on a constant currency basis.
At the same time, we ended the year in a strong capital position with $673 million of liquidity at the holding company.
Speaker Change: Fourth quarter results included $4 million of incremental investments related to new capabilities and client partnerships that are expected to drive future growth.
This past November we increased our common stock dividend by 11%.
Speaker Change: Investments in 2024 are already paying off as earnings from recently launched clients, including card benefits within our financial services business have begun to contribute to connected living <unk> fourth quarter performance.
The increase represented the 20th consecutive year, we have raised our dividend since our IPO.
In addition, we were just added to the S&P high yield dividend aristocrats index earlier this month.
Speaker Change: As Keith mentioned, we are now focused on scaling these partnerships for growth.
We are incredibly proud of this achievement and expect our strong capital returns to continue as part of our balanced capital deployment framework.
Speaker Change: These contributions were offset by lower U S train programs.
Speaker Change: Year over year trading results were impacted by business mix and lower volumes. However, we did see sequential trading growth as expected.
Turning to our segment results beginning with global lifestyle.
Fourth quarter, adjusted EBITDA was down 6% compared to last year or 5% on a constant currency basis.
Speaker Change: Turning to global auto in.
Speaker Change: In the quarter results were down 11% compared to last year.
In connected living earnings were roughly flat on a constant currency basis.
Speaker Change: The year over year decline was largely driven by lower real estate joint venture partnership income of $13 8 million.
Fourth quarter results included $4 million of incremental investments related to new capabilities and client partnerships that are expected to drive future growth.
Speaker Change: Fourth quarter 2023 included a more significant real estate joint venture gain compared to a smaller gain this year.
Investments in 2024 are already paying off as earnings from recently launched clients, including card benefits within our financial services business have begun to contribute to connected living <unk> fourth quarter performance.
Speaker Change: Excluding this results in global auto we're largely flat as higher investment income was partially offset by elevated loss experience in both our GAAP product and our vehicle service contract business compared to last year.
As Keith mentioned, we are now focused on scaling these partnerships for growth.
Speaker Change: Importantly, we continued to see claims experience remained stable from last quarter as previously implemented program changes and rate increases continue to earn through our book leading to a sequential improvement in earnings.
These contributions were offset by lower U S trade in programs.
Year over year trading results were impacted by business mix and lower volumes. However, we did see sequential trading growth as expected.
Speaker Change: In terms of revenue our net earned premiums fees and other income for global lifestyle grew 2% or approximately 6% on a constant currency basis in.
Turning to global auto.
In the quarter results were down 11% compared to last year the.
The year over year decline was largely driven by lower real estate joint venture partnership income of $13 $8 million.
Speaker Change: And excluding $85 million of favorable non run rate premium adjustments and global automotive in fourth quarter 2023.
Fourth quarter 2023 included a more significant real estate joint venture gain compared to a smaller gain this year.
Speaker Change: Moving to global housing.
Speaker Change: Fourth quarter results were strong building on an exceptional performance for the year.
Excluding this results in global auto we're largely flat as higher investment income was partially offset by elevated loss experience in both our GAAP product and our vehicle service contract business compared to last year.
Speaker Change: Adjusted EBITDA was $225 million, which included $50 million of cat losses, largely from Hurricane Milton.
Speaker Change: Excluding cats adjusted EBITDA increased 32%.
Importantly, we continued to see claims experience remained stable from last quarter as previously implemented program changes and rate increases continue to earn through our book leading to a sequential improvement in earnings.
Speaker Change: In the quarter, we saw a continuation of robust policy growth in homeowners from higher placement rates, given voluntary insurance market pressure.
Speaker Change: As these additional policies are placed we benefit from the significant expense leverage we've driven in this business from our technology investments.
In terms of revenue our net earned premiums fees and other income for global lifestyle grew 2%.
Speaker Change: Earnings growth in the quarter also included impacts from favorable non catastrophe losses due to lower frequency as well as lower catastrophe reinsurance costs.
Approximately 6% on a constant currency basis.
And excluding $85 million of favorable non run rate premium adjustments and global automotive in fourth quarter 2023.
Speaker Change: While we had favorable prior period reserve development of $38 million in the quarter.
Moving to global housing.
Fourth quarter results were strong.
Speaker Change: It was relatively consistent with fourth quarter, 2023, and did not impact year over year growth trends.
Building, an exceptional performance for the year.
Adjusted EBITDA was $225 million, which included $50 million of cat losses, largely from Hurricane Milton.
Speaker Change: Within our renters business, we continued to benefit from strong results in our PMC channel, which achieved its 10th consecutive quarter of double digit gross written premium growth.
Excluding cats adjusted EBITDA increased 32%.
Speaker Change: Now, let's discuss our outlook for 2025.
In the quarter, we saw a continuation of robust policy growth in homeowners from higher placement rates, given voluntary insurance market pressure.
Speaker Change: We expect full year, adjusted EBITDA and earnings per share to increase modestly.
Speaker Change: <unk> excluding cats.
As these additional policies are placed we benefit from the significant expense leverage we've driven in this business from our technology investments.
Speaker Change: Overcoming $107 million of favorable prior year Reserve development in housing is 2024 results.
Earnings growth in the quarter also included impacts from favorable non catastrophe losses due to lower frequency as well as lower catastrophe reinsurance costs.
Speaker Change: Excluding the significant favorable <unk> in 2024.
Speaker Change: <unk> underlying growth trends are expected to deliver high single digit earnings and EPS growth both excluding cats.
While we had favorable prior period reserve development of $38 million in the quarter.
Speaker Change: Our outlook includes our forward view of foreign exchange rates and interest rates.
It was relatively consistent with fourth quarter, 2023, and did not impact year over year growth trends.
Speaker Change: But does not factor in potential impacts from tariffs, including those related to claims costs, where consumer demand.
Within our renters business, we continued to benefit from strong results in our PMC channel, which achieved its 10th consecutive quarter of double digit gross written premium growth.
Speaker Change: While tariffs could potentially affect claims costs. We believe we are well positioned to react quickly to address potential impacts.
Speaker Change: Over time, our business model has had a proven ability to deliver in the face of various economic environments and cycles.
Now, let's discuss our outlook for 2025.
We expect full year, adjusted EBITDA and earnings per share to increase modestly.
Speaker Change: Looking at our segments for 2025, we expect global lifestyle growth driven by higher contributions from connected living and global automotive.
<unk> excluding cats.
Overcoming $107 million of favorable prior year Reserve development and housing is 2024 results.
Speaker Change: Growth is expected to be partially offset by an unfavorable impact from foreign exchange rates as well as investments in new partnerships and programs in 2025.
Excluding the significant favorable <unk> in 2024 strong underlying growth trends are expected to deliver high single digit earnings and EPS growth both excluding cats.
Speaker Change: Combined we expect foreign exchange and incremental investments to mute growth by a few percentage points.
Our outlook includes our forward view of foreign exchange rates and interest rates, but does not factor in potential impacts from tariffs, including those related to claims costs, where consumer demand.
Speaker Change: Turning to global housing.
Speaker Change: We expect EBITDA, excluding cats to decline modestly given the $107 million of favorable prior year reserve development seen in 2024.
While tariffs could potentially affect claims costs. We believe we are well positioned to react quickly to address the potential impacts.
Speaker Change: Excluding the impact of prior year development in 2024 on an underlying basis.
Over time, our business model has had a proven ability to deliver in the face of various economic environments and cycles.
Speaker Change: We expect strong global housing EBITDA growth in 2025.
Speaker Change: As a reminder, our 2025 outlook does not contemplate additional prior year development.
Looking at our segments for 2025, we.
We expect global lifestyle growth driven by higher contributions from connected living and global automotive.
Speaker Change: Underlying growth is expected to be driven by our homeowners business, which will continue to benefit from lender placed policy growth and expense leverage.
Growth is expected to be partially offset by an unfavorable impact from foreign exchange rates as well as investments in new partnerships and programs in 2025.
Speaker Change: Or the recent wildfires in California, we remain focused on settling claims and helping our policyholders navigate through the event.
In addition, our portfolio benefits from earnings and capital diversification across geographies and business lines, positioning us to continue to invest in and achieve future growth.
Combined we expect foreign exchange and incremental investments to mute growth by a few percentage points.
Speaker Change: Reportable catastrophes from the California wildfires are expected to approach or slightly exceed our per event catastrophe reinsurance program retention of $150 million.
Turning to global housing.
We believe we remain an attractive investment with a compelling path ahead, and we believe we should be valued at a premium to the S&P 1500 PNC Index Median.
We expect EBITDA, excluding cats to decline modestly given the $107 million of favorable prior year reserve development seen in 2024.
Speaker Change: We'll provide a further update in may as we learn more and continue to settle claims.
Speaker Change: In terms of other impacts to 2025, we are working through the placement of our catastrophe reinsurance program, which will be effective on April one.
Speaker Change: Before turning it over to Keith Meier to share additional insights on our results and review business trends, I want to highlight our strong momentum heading into 2025 and how we plan to deliver future growth.
Excluding the impact of prior year development in 2024 on an underlying basis, we expect strong global housing EBITDA growth in 2025.
Speaker Change: We expect a similar structure to our 2024 program maintaining robust coverage at both the top and bottom end of our program.
As a reminder, our 2025 outlook does not contemplate additional prior year development.
Speaker Change: As the program terms are finalized we will also get greater insights into our expected cat load for the year.
Underlying growth is expected to be driven by our homeowners business, which will continue to benefit from lender placed policy growth and expense leverage.
Speaker Change: We will provide an update in may on expectations, which will be inclusive of our California wildfire estimates.
With the recent wildfires in California, we remain.
<unk> focused on settling claims and helping our policyholders navigate through the event.
Speaker Change: Our capital objectives for 2025 are consistent with prior years, as we focus on maintaining balance and flexibility to support new business growth, while returning excess capital to shareholders.
Reportable catastrophes from the California wildfires are expected to approach or slightly exceed our per event catastrophe reinsurance program retention of $150 million.
Speaker Change: From a share repurchase perspective, our expected range for 2025 is between $200 million to $300 million subs.
We'll provide a further update in may as we learn more and continue to settle claims.
Speaker Change: Subject to M&A as well as market and other conditions.
In terms of other impacts to 2025, we are working through the placement of our catastrophe reinsurance program, which will be effective on April one.
Speaker Change: This range accounts for our estimated impact from the California wildfires.
Speaker Change: Of course, we will continue to make sound capital allocation decisions over the course of the year as our track record has shown.
We expect a similar structure to our 2024 program.
Maintaining robust coverage at both the top and bottom end of program.
Speaker Change: Through February 7th we've repurchased $24 million of shares.
As the program in terms of finalized we will also get greater insight into our expected cat load for the year.
Speaker Change: We expect buybacks to be more consistent throughout the year compared to backend weighted in prior years driven.
We will provide an update in may on expectations, which will be inclusive of our California wildfire estimates.
Speaker Change: Driven by our confidence in our strong capital position and cash flow generation.
Speaker Change: And finally <unk>.
Our capital objectives for 2025 are consistent with prior years, as we focus on maintaining balance and flexibility to support new business growth, while returning excess capital to shareholders.
Speaker Change: Speaking of cash flow generation, we believe assurant is differentiate a compared to the broader P&C industry, given our unique lifestyle and housing portfolio, which creates strong capital efficiencies and the ability to reinvest for growth.
Speaker Change: From a share repurchase perspective, our expected range for 2025 between $200 million to $300 million subs.
Speaker Change: In 2025, we expect to continue to generate meaningful cash flows aligned with our recent performance.
Speaker Change: Subject to M&A as well as market and other conditions.
Speaker Change: Overall, we are proud of our consistent outperformance and feel well positioned to continue our growth trajectory in 2025.
Speaker Change: This range accounts for our estimated impact from the California wildfires.
Speaker Change: With that operator, please open the call for questions.
Speaker Change: Of course, we will continue to make sound capital allocation decisions over the course of the year as our track record has shown.
Speaker Change: The floor is now open for questions. At this time, if you have a question or comment. Please press star nine to raise your hand and start.
Speaker Change: Through February 7th we've repurchased $24 million of shares.
Speaker Change: Again, we do ask when you pose your question that you pick up your handset to provide optimal sound quality.
Speaker Change: We expect buybacks to be more consistent throughout the year compared to backend weighted in prior years driven.
Speaker Change: We will wait a moment for the Q the form.
Speaker Change: Driven by our confidence and our strong capital position and cash flow generation.
Speaker Change: Yeah.
Speaker Change: And finally <unk>.
Speaker Change: Speaking of cash flow generation, we believe assurant as differentiated compared to the broader P&C industry, given our unique lifestyle and housing portfolio, which creates strong capital efficiencies and the ability to reinvest for growth.
Speaker Change: Our first question comes from Mark Hughes with Chewy. Please on your line and ask your question.
Speaker Change: Good morning, Mark.
Mark Hughes: Good morning.
Speaker Change: In 2025, we expect to continue to generate meaningful cash flows aligned with our recent performance.
Mark Hughes: Good morning, Keith.
Mark Hughes: Myself on mute myself.
Speaker Change: Overall, we are proud of our consistent outperformance and feel well positioned to continue our growth trajectory in 2025.
Mark Hughes: Okay.
Mark Hughes: Good morning.
Mark Hughes: On the homeowners business the placement the placement rate has been looking quite good can you talk about the what is the voluntary versus the lender placed.
Speaker Change: With that operator, please open the call for questions.
Speaker Change: The floor is now open for questions. At this time, if you have a question or comment. Please press star named to raise your hand and start <unk> on mute.
Mark Hughes: And do you still see the.
Mark Hughes: Same dislocation in those markets.
Mark Hughes: Pushing the voluntary presumably.
Speaker Change: Again, we do ask when you pose your question that you pick up your handset to provide optimal sound quality.
Mark Hughes: How much momentum does that give you for 2025.
Mark Hughes: Yeah.
Speaker Change: So we'll wait a moment for the Q form.
Mark Hughes: Great question and thanks for for that so I would say a couple of things we've definitely seen really strong growth on lender placed throughout the year that trend continues.
Speaker Change:
Speaker Change: Our first question comes from Mark Hughes with choice on your line and ask your question.
Mark Hughes: Certainly in the fourth quarter year over year were up 16% in terms of policies in force.
Mark Hughes: Good morning, Mark.
Mark Hughes: And if I simplify that I'd, probably say a third of that is.
Mark Hughes: Good morning.
Mark Hughes: Client growth and loan movement within clients.
Mark Hughes: Good morning, Keith muted myself on mute.
Mark Hughes: Third of that is California due to the hard big market and then the other third is the rest of the country growth from a similar dynamics. So we are definitely still seen.
Yeah.
Mark Hughes: Good morning.
Mark Hughes: On the homeowners business the placement the placement rate is looking quite good can you talk about the.
Mark Hughes: Hard insurance markets, creating opportunity for policy growth on our book of business and we've seen a lot of diversification as well across geographies. So I think that likely continues certainly the trend was pretty consistent in the fourth quarter as we saw for the first three quarters. So expect some continued growth there probably not at the same level that we've seen but certainly.
Speaker Change: <unk> is a voluntary versus the lender placed.
Mark Hughes: And do you still see the.
Mark Hughes: Same dislocation in those markets, that's been pushing voluntary presumably.
Mark Hughes: Much momentum that gives you.
Mark Hughes: Jim.
Mark Hughes: Yeah.
Mark Hughes: Good about the momentum overall in housing.
Mark Hughes: Great question and thanks for for that so I would say a couple of things we've seen really strong pip growth under place throughout the year that trend continues.
Speaker Change: In global lifestyle, how do we think about the topline growth just kind of broadly you've given good guidance on the EBITDA you have given some thoughts about customer growth that sort of thing.
Mark Hughes: Certainly in the fourth quarter year over year were up 16% in terms of policies enforced by simplified that I'd, probably say a third of that is.
Speaker Change: But how do we think about top line growth, maybe in 2025 or just more broadly in the lifestyle.
Client growth and loan movement within client.
Mark Hughes: A third of that is California due to the hard big market and then the other third is the rest of the country growth from a similar dynamics. So we are definitely still seen hard insurance markets, creating opportunity for policy growth on our book of business and we've seen a lot of diversification as well across geographies. So I think that likely continues.
Speaker Change: Yes, I mean, if I think about lifestyle.
Speaker Change: Lifestyle, the first and the first thing I would highlight and we covered it in the prepared remarks, but we are particularly excited on the connected living side, securing our top four mobile clients is really really important and so fundamental to the business long term. It then allows us to focus more energy with.
Mark Hughes: Certainly the trend was pretty consistent in the fourth quarter as we saw for the first three quarters. So expect some continued growth there probably not at the same level that we've seen but certainly feel good about the momentum overall housing.
Speaker Change: Our partners to drive growth to launch new products to optimize customer experience, there's a lot of energy around making sure. We're optimizing all the buy flows of touch points to serve consumers. So I think that will be a catalyst for continued momentum certainly.
Speaker Change: And then in global lifestyle, how do we think about the topline growth just kind of broadly you've given good guidance on the EBITDA you have given.
Speaker Change: On the connected living business, we saw chase come on in the fourth quarter, that's going to obviously drive financial services growth throughout the year. So I do think we're well positioned.
Mark Hughes: Talked about customer growth that sort of thing.
Speaker Change: How do we think about top line growth.
Speaker Change: We've had pretty consistent lifestyle growth in terms of the topline for last few years I think that growth continues as we move forward and then auto it's about the loss recovery and our ability to continue to see that mature and feel really good about how the second half of the year stabilized obviously more road to go but feel like we're well positioned but Keith anything else.
Speaker Change: 125, or just more broadly.
Speaker Change: Lifestyle.
Speaker Change: Yes, I mean, if I think about <unk>.
Speaker Change: Our lifestyle first and the first thing I would highlight and we covered it in the prepared remarks, but we are particularly excited on the connected living side, securing our top four mobile clients is really really important and fundamental to the business long term. It then allows us to focus more energy with.
Keith Meyer: No I think I think.
Keith Meyer: It really speaks to the momentum that we have and the opportunities that we have as we look forward to 'twenty five.
Speaker Change: Our partners to drive growth to launch new products to optimize customer experience, there's a lot of energy around making sure. We're optimizing all the bi flow the touch points to serve consumers. So I think that will be a catalyst for continued momentum certainly.
Keith Meyer: We talked about making some investments in 'twenty four and we certainly expect to do that again in 2025.
Keith Meyer: It's because of the momentum we've got.
Keith Meyer: In our markets, especially in connected living so we certainly look forward to sharing more of those updates as we go through the year.
Speaker Change: On the connected living business, we saw.
Speaker Change: Chase come on the fourth quarter, that's going to obviously drive financial services growth throughout the year. So I do think we're well positioned.
Keith Meyer: And one final quick one the Forex headwind for 2025, I think you said with Forex and investments a few percentage points above Forex specifically.
Keith Meier: We've had pretty consistent lifestyle growth in terms of the topline for last year's I think that growth continues as we move forward and then in auto it's about the less recovery and our ability to continue to see that mature and feel really good about how the second half of the year stabilized obviously more road to go but feel like we're well positioned but Keith anything else.
Keith Meyer: Yes, I think we'd probably say foreign exchange a couple points of headwind in terms of the investments probably one to two points.
Keith Meyer: If you think about 24, just to kind of create context, we had $25 million of incremental investments roughly $10 million of that was depot automation that we've talked about and the other $15 million or sell roughly two thirds.
Speaker Change: No I think I think.
Speaker Change: It really speaks to the momentum that we have and the opportunities that we have as we look forward to 'twenty five.
Keith Meyer: It was client related launches so as we look at 25, probably somewhere maybe approaching a similar level of investment in clients, maybe slightly below so we are getting given the 1% to 2% headwind relative to lifestyle overall, but we do have some good things in the hopper with clients new clients existing clients.
Speaker Change: We've talked about making some investments in 'twenty four and we certainly expect to do that again in 2025.
Speaker Change: It's because of the momentum we've got in our markets, especially in connected living so we certainly look forward to sharing more of those updates as we go through the year.
Speaker Change: Then one quick one the Forex headwind for 2025, I think you said with Forex investments a few percentage points above four specifically.
Keith Meyer: New product launches and we're certainly excited to update as we go through the year.
Keith Meyer: Okay.
Keith Meyer: Thank you.
Speaker Change: Our next question comes from Jeff Schmitt, Please on the airline and ask your question.
Speaker Change: Yes, I think we'd probably say foreign exchange a couple points of headwind in terms of the investments probably one to two points.
Speaker Change: Hey, Joe.
Keith Meyer: Great.
Keith Meyer: Perfectly yes, good morning.
Speaker Change: If you think about 'twenty four or just.
Keith Meyer: So the placement rate in housing just one more question on that are you seeing a lot of insurers, we California after the fires.
Speaker Change: Kind of create context net $25 million of incremental investment roughly $10 million of that was depot automation that we've talked about and the other $15 million or sell roughly two thirds.
Keith Meyer: So could we maybe see that kind of jump in Q1.
Speaker Change: Was client related launches so as we look at 25, probably somewhere maybe approaching a similar level of investment in clients, maybe slightly below so we've got a given the one to two <unk>.
Speaker Change: Yeah, and I think overall for California, Jeff There was a moratorium put on in California, So that the insurers would not be leaving.
Keith Meyer: <unk>.
Keith Meyer: The wildfires just taking place. So we think that will temper some of that for a while and then I'm sure that will open back up later, but.
Speaker Change: <unk> headwind relative to lifestyle overall, but we do have some good things in the hopper with clients new clients existing clients, new product launches and <unk>.
Keith Meyer: But for right now in the short term I would say, we don't expect a lot of.
Speaker Change: Certainly excited to update as we go through the year.
Keith Meyer: A lot of exits from the from the state.
Speaker Change: Okay.
Speaker Change: Thank you.
Keith Meyer: Okay.
Keith Meyer: Okay.
Speaker Change: Our next question comes from Jeff Schmitt, Please on the airline and ask your question.
Keith Meyer: And then in global Auto are you still seeing elevated losses in that GAAP book and how.
John Guinee: Hi, John Guinee.
Speaker Change: Jeremy.
Speaker Change: Perfectly yes, good morning.
Keith Meyer: How much did that contribute to the loss ratio in the quarter.
Speaker Change: So the placement rate in housing just one more question on that are you seeing a lot of insurers, we California after the hires.
Keith Meyer: Yes, so from a GAAP perspective, Jeff.
Keith Meyer: Seen it stabilize.
Keith Meyer: From the third quarter to the fourth quarter.
Speaker Change: So could we maybe see that kind of dumped in Q1.
Keith Meyer: It was flat to maybe slightly better.
Keith Meyer: So I think from that perspective.
Speaker Change: Yeah, and I think overall for California, there was a moratorium put on California, so that the insurers would not be leaving.
Keith Meyer: I think that also points to why we feel good about where we're going for 2025 and in that we signaled that we see growth in auto.
Speaker Change: Yeah.
Speaker Change: The wildfires just taking place. So we think that will temper some of that for a while and then I'm sure that will open back up later, but.
Keith Meyer: As we go through this year, yes.
Keith Meyer: Yes, and maybe just one add on comment as we think about gap and we've talked about this when we look at the the written business. We expect to put on in 'twenty five will largely be off of.
Speaker Change: But for right now in the short term I would say, we don't expect a lot of.
Speaker Change: Sort of exits from the from the state.
Keith Meyer: Most not quite all but close to all of the risks that we write.
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: And then in global Auto are you still seeing elevated losses in that GAAP book and.
Keith Meyer: So that will definitely change that dynamic longer term and create more stability in our approach.
Keith Meyer: Okay.
Speaker Change: How much did that contribute to the loss ratio in the quarter.
Keith Meyer: On the size of that impact that we could have just in the quarter in the last two quarters really.
Jeff Schmitt: Yes, so from a GAAP perspective, Jeff.
Speaker Change: Seen it stabilize.
Jeff: I would say just maybe a million or two better for this quarter, Jeff but pretty stable.
Speaker Change: From the third quarter to the fourth quarter.
Speaker Change: It was flat to maybe slightly better.
Keith Meyer: Okay.
Keith Meyer: Okay alright. Thanks.
Speaker Change: So I think from that perspective.
Speaker Change: I think that also points to why we feel good about where we're going for 2025 and in that we've signaled that we see growth in auto.
Keith Meyer: Thank you.
Speaker Change: Our next question comes from Tommy Joint with <unk>. Please ask your question Alright.
Keith Meyer: Alright, Tommy Tommy.
Speaker Change: As we go through this year, yes.
Tommy Joint: Hey, good morning.
Speaker Change: Yes, and maybe just one add on comment as we think about <unk> and we've talked about this when we look at the the written business, we expect to put on in 'twenty five.
Tommy Joint: Yes, another question on the investment spend.
Tommy Joint: You called out the $25 million last year, and I just want to understand.
Speaker Change: Will largely be off of.
Tommy Joint: Your comments about the payback period is effectively being one year. So are you, saying that those new programs are generating $25 million of positive EBITDA in 2025.
Speaker Change: Most not quite all but close to all of the risks that we write.
Speaker Change: So that will definitely change the dynamic longer term and create more stability in our approach.
Tommy Joint: Fully out current debt related $25 million drag into 'twenty or is that am I understanding that right.
Speaker Change: Okay.
Speaker Change: On the size of that impact that we could have just in the quarter and last quarter is really.
Tommy Joint: Perfectly that's exactly what we're saying.
Jeff Schmitt: I'd say, just maybe a million or two better for this quarter, Jeff but pretty stable.
Tommy Joint: Okay, and then new investments for 2025, what types of programs are those are those related to the one last year I think related.
Speaker Change: Okay.
Speaker Change: Okay alright. Thanks.
Speaker Change: Jason and travel benefits or what can you say about the new new plants.
Speaker Change: Thank you.
Speaker Change: Our next question comes from Tommy Joint with key VW. Please ask your question.
Speaker Change: Yes, I would say entirely separate from the clients that we signaled.
Speaker Change: Morning, Tommy Tommy.
Speaker Change: Last year, and obviously, we had T. Mo will also roll something out in the fourth quarter that we would have been investing in last year as well. So we're typically telling you about the things sort of after they become public in the market, but if we look at the potential for kind of one to two points of headwind relative to those investments in 25, it will be net new.
Tommy Joint: Hey, good morning.
Tommy Joint: Yes, another question on the investment spend.
You called out the $25 million last year, and I just want to understand.
Tommy Joint: Your comments about the payback period is effectively being one year. So are you, saying that those new programs are generating $25 million of positive EBITDA in 2025 fully all corona related $25 million drag into 'twenty four is that am I understanding that right.
Speaker Change: New things that we haven't discussed yet with marquee brands and clients that I think you would very much recognized so we're super excited we don't want to get in front of ourselves. There's a lot of ongoing contracting with clients launch plans technology investment. So theres always a lot of it works, but we have a really really strong pipeline in 'twenty five.
Tommy Joint: Perfectly.
Tommy Joint: Actually what we're saying.
Speaker Change: Okay, and then new investments for 2025, what types of programs are those are those related to the one last year I think Brad.
Speaker Change: And I'd say it's.
Speaker Change: Similar types of things with different clients, obviously in 'twenty five and I think Tommy one thing you can expect is just like we did last year as we make those investments through 2025.
Speaker Change: Jason and travel benefits or what can you say about the new and the new plants.
Speaker Change: I would say.
Speaker Change: <unk> separate from the clients that we signaled.
Speaker Change: Last year.
Speaker Change: We'll be very transparent about what they were in and the benefits and the clients that came as a result, so we'll be sharing that with you and connecting that to the investments as we go through the year.
Speaker Change: And obviously, we had T mobile also role Cynthia on the fourth quarter that we would have in investing in last year as well. So we're typically telling you about the things sort of activate to become public in the market, but if we look at the potential for kind of one to two points of headwind relative to those investments in 25, it will be net new things that we haven't discussed yet.
Speaker Change: Okay got it.
Speaker Change: And then switching over to the the housing side.
Speaker Change: With the higher placement rates and seemingly ever rising average insured values that segment continues to generate a lot of scale.
Speaker Change: With marquee brands and clients that I think you would very much recognize so we're super excited.
Speaker Change: Cited we don't want to get in front of ourself. There is a lot of ongoing.
Speaker Change: It does that increased scale and I guess, just combined with really strong underlying performance on the <unk>.
Speaker Change: Cardiac thing with clients launch plan technology investments, so theres always a lot of it works, but we have a really really strong pipeline in 'twenty five and I'd say it's.
Speaker Change: Underwriting side does that change your outlook for the combined ratio in that segment at all.
Speaker Change: Yes, I think what I would say if we look at 25, even with the California fires and we sized that at slightly less than or slightly more than $150 million of overall losses.
Speaker Change: Similar types of things with current clients.
Tommy Joint: In 'twenty five and I think Tommy one thing you can expect is just like we did last year as we make those investments through 2025, we'll be very transparent about what they were in and the benefits and the clients that came as a result, so we will be sharing that with you.
Speaker Change: We think we're we're still going to be in that mid eighty's combined for the for the full year of 25, and we think that's a really really strong result.
Speaker Change: Obviously, the dynamics change so we will see longer term, what we think the right long term target is for that but feel really good and again, we will deliver north of 20%.
Speaker Change: And connecting that to the investments as we go through the year.
Speaker Change: Okay got it.
Speaker Change: And then switching over to the the housing side.
Speaker Change: With the higher placement rates and seemingly ever rising average insured value.
Speaker Change: In that business as well and to your point not only have we seen a lot of growth that we've created a lot of expense leverage invested a lot in technology and that has helped us deliver pretty strong outperformance. So we'll kind of reassess as we go forward, but if we look at 25, we think we think rates will be relatively neutral to us this year.
Speaker Change: <unk> continues to generate a lot of scale.
Speaker Change: It does that increased scale and I guess, just combined with really strong underlying performance.
Speaker Change: Underwriting side does that change your outlook for the combined ratio in that segment at all.
Speaker Change: Yes, I think.
Speaker Change: <unk>, we're not seeing big increases certainly in rate, but that will ebb and flow and we'll monitor that as we go.
Speaker Change: What I would say if we look at 25, even with the California fires and we size that at slightly less than or slightly more than $150 million of overall losses. We think we're still going to be in that mid eighty's combined for the for the full year of <unk> 25, and we think that's a really really strong.
Speaker Change: Great.
Speaker Change: You bet. Once again, if you do have a question you May press star nine on your Touchtone phone at this time.
Speaker Change: Our next question comes from James Schmal with Piper Sandler. Please ask your question.
Speaker Change: <unk> result.
James Schmal: Good morning, good morning.
Speaker Change: Obviously, the dynamic change so we will see longer term, what we think the right long term target is for that but feel really good and again, we will deliver.
Speaker Change: Okay.
Speaker Change: James Please Amit your line and ask your question.
Speaker Change: With a 20% Roe.
Speaker Change: In that business as well and to your point not only have we seen a lot of growth that we've created a lot of expense leverage invest a lot in technology and that has helped us deliver pretty strong outperformance. So we'll kind of reassess as we go forward, but if we look at 25.
Amit: Hello, Good morning, Thank you for the opportunity.
Speaker Change: Good morning, how should we be thinking of reinsurance renewal costs and the ability to get additional rate through regulators and impacted geography.
Speaker Change: We think rates will be relatively neutral to us. This year, we're not seeing big increases certainly in rate, but that will ebb and flow and we'll monitor that as we go.
Speaker Change: So maybe Keith I'll start on <unk>.
Speaker Change: Our reinsurance I'll hit on rate.
Speaker Change: Yes, so from a reinsurance perspective.
Speaker Change: We were at about $186 million for 2024.
Speaker Change: Great.
Speaker Change: You bet. Once again, if you do have a question you May press star nine on your Touchtone phone at this time.
Speaker Change: That included in the first quarter of benefit when we went to the single placement of about $15 million. So that would move you to around $200 million for the reinsurance.
Speaker Change: Our next question comes from James Schmal with Piper Sandler. Please ask your question.
Speaker Change: And then we're going through the process right now.
Speaker Change: Morning.
Speaker Change: <unk>.
Speaker Change: We're currently evaluating our our program structure.
Speaker Change: Okay.
Speaker Change: We expect to maintain a relatively consistent program retention historically, a one in five.
Speaker Change: James Amit your line and ask your question.
Speaker Change: <unk> loss.
Speaker Change: Hello, Good morning, Thank you for the opportunity.
Speaker Change: So with the volume as being up a little bit we think that the.
Speaker Change: Good morning, how should we be thinking of reinsurance renewal costs and the ability to get additional rate regulators impacted geography.
Speaker Change: The pricing should be pretty favorable as well so.
Speaker Change: It will probably be up a little bit for the volumes from there.
Speaker Change: Maybe slightly better on the on the on level pricing, but what we'll definitely do for you is give a.
Speaker Change: So maybe Keith I will start on.
Speaker Change: Reinsurance I'll hit on rate.
Speaker Change: Yes, so from a reinsurance perspective.
Speaker Change: More details on our.
Speaker Change: Final program as we get into our next earnings call.
We were at about 186 million for 2024.
Speaker Change: Yeah, and I think we've got a really really strong track record.
Speaker Change: Graham is certainly outperformed the market generally for our reinsurance partners. We've got a really diverse panel of reinsurers and I think our relationships are incredibly strong. So expect that to continue as we go forward and then as we think about <unk>.
Speaker Change: That included in the first quarter of benefit when we went to the single placement of about $15 million. So that would move you to around $200 million for the reinsurance.
Speaker Change: And then we're going through the process right now.
Speaker Change: We're currently evaluating our our program structure.
Speaker Change: Right and the ability to get rate on the housing side I'd say, we obviously file our rates at a state level. Those rates are reviewed and approved and we've had a really good track record of getting appropriate rates relative to the risk that we write no reason to believe that won't continue to be true as we go forward and I think we've had a long history of doing that so.
Speaker Change: And we expect to maintain a relatively consistent program retention historically, a one in five.
Speaker Change: Probable maximum loss.
Speaker Change: So with the volumes being up a little bit we think the the pricing should be.
Speaker Change: Favorable as well so.
Speaker Change: Not a point of concern and certainly a normal part of our process.
Speaker Change: It will probably be up a little bit for the volumes from there maybe.
Speaker Change: Maybe slightly better on the on the on level pricing, but what we will definitely do for you is give a.
Speaker Change: Perfect. Thank you for the color my follow up question regarding tariffs.
Speaker Change: Does this impact your view on input costs for the businesses of lifestyle and how should we be thinking of the FX impact in 'twenty five thank you.
Speaker Change: More details on the final program as we get into our next earnings call.
Speaker Change: And I think we've got a really really strong track record or our program is certainly outperformed the market generally for our reinsurance partners, we've got a really diverse.
Speaker Change: You bet. Thank you so we.
Speaker Change: No we haven't baked anything into our guide for the year relative to tariffs just because of the uncertainty that surrounds that an.
Speaker Change: Panel of reinsurers and I think our relationships are incredibly strong so expect that to continue as we go forward and then as we think about.
Speaker Change: Ever evolving so, but we did certainly think about foreign exchange, we thought about interest rates. We tried to include assumptions around those elements, which obviously tariffs have an impact on so thats certainly baked into our 25 view.
Speaker Change: Right and the ability to get rate on the housing side I'd say, we obviously file our rates at a state level. Those rates are reviewed and approved and we've had a really good track record of getting appropriate rates relative to the risk that we write no reason to believe that won't continue to be true as we go forward and I think we've had a long history of doing that so.
Speaker Change: And then what I would say on tariffs is certainly the bigger.
Speaker Change: <unk> for us would be longer term is there.
Speaker Change: A drop in consumer demand with elevated pricing, that's something we'll monitor it'll have a longer term effect certainly in terms of financial impact the bigger short term impact would be rising input costs around claims parts and materials. What I would highlight is we saw a significant amount of inflation in 2022 and housing.
Speaker Change: Not a point of concern and certainly a normal part of our process.
Speaker Change: Perfect. Thank you for the color my follow up question regarding tariffs how does this impact your view on input costs for the businesses of lifestyle and how should we be thinking of the FX impact in 'twenty five thank you.
Speaker Change: Because our product is built with an automatic inflation guard feature we've always got the ability to get rate. We took a lot of action around product and efficiency the recovery from that has been.
Speaker Change: You bet. Thank you.
Speaker Change: We haven't baked anything into our guide for the year relative to tariffs just because of the uncertainty that surrounds that and it's ever evolving so but we did certainly think about foreign exchange. We thought about interest rates. We tried to include assumptions around those elements, which obviously tariffs have an <unk>.
Speaker Change: Quite quite strong in the last two years, so feel really good about our long term ability to get to a good place and then the other side would be the auto business. We've seen elevated CPI on auto repairs. The last couple of years, we've built a really strong muscle with our clients in terms of regular reviews monthly reviews around loss ratios claims costs.
Speaker Change: <unk>, so that's certainly baked into our 20 <unk> view.
Speaker Change: And then what I would say on tariffs is certainly the bigger <unk>.
Speaker Change: By location by geography that will continue to be true and if there is elevated input costs around tariffs will will continue to run the playbook that we've been running it doesn't change our long term view around the strength of this business fundamentally, but what would you add yes, and I think going through the inflation environment for auto and.
Speaker Change: <unk> for us would be longer term is there a <unk>.
Speaker Change: Drop in consumer demand with elevated pricing, that's something we'll monitor it'll have a longer term effect certainly in terms of financial impact bigger short term impact would be rising input costs around claims parts and materials.
Speaker Change: I would highlight is we saw a significant amount of inflation in 2022 and housing and because our product is built with an automatic inflation guard future. We've always got the ability to get rate took a lot of action around product and efficiency the recovery from that has been.
Speaker Change: And for housing has really.
Speaker Change: Helped us develop a tremendous amount of rigor around navigating any changes in inflation.
A good example is in our housing business.
Speaker Change: We used to.
Speaker Change: Quite quite strong in the last two years, so feel really good about our long term ability to get to a good place.
Speaker Change: Have an inflation guard adjustment that would be that would take place once a year and now.
Speaker Change: The other side would be the auto business, we've seen elevated CPI on auto repairs. The last couple of years, we've built a really strong muscle with our clients in terms of regular reviews monthly reviews around loss ratios claims costs by location by geography that will continue to be true and if there is elevated input costs.
Speaker Change: And across all of the 50 states now we actually can do it quarterly and we do it by state. So I think those are the types of things that as you go through those times you actually.
Speaker Change: You actually can come out of it stronger and better and I think Thats. A good example of what we've been able to do after the last couple of years.
Speaker Change: Around tariffs will will continue to run the playbook that we've been running.
Speaker Change: Our last question will come from Mark Hughes as choice. Please ask your question.
Speaker Change: It doesn't change our long term view around the strength of this business fundamentally, but what would you add yes, and I think going through the inflation environment for auto and.
Mark Hughes: Hey, Mark you got back in thank you.
Speaker Change: Yes, I love it.
Speaker Change: The prior year development in the fourth quarter.
Speaker Change: And for housing has really.
Speaker Change: Helped us develop a tremendous amount of rigor around navigating any changes in inflation.
Speaker Change: The driver of that similar to what you saw earlier in the year.
Speaker Change: A good example is.
Speaker Change: Yeah. So I think the short answer is probably yes.
Speaker Change: In our housing business.
Speaker Change: We used to.
Speaker Change: Have an inflation guard.
Speaker Change: The key thing.
Speaker Change: <unk> that would be that would take place once a year and now.
Speaker Change: Mark is it really relates to a couple of things one certainly coming out of the inflationary environment for the last couple of years that that's really what's contributed to our priority.
Speaker Change: And across all 50 states now we actually can do it quarterly and we do it by state. So I think those are the types of things that as you go through those times you actually you actually can come out of it stronger and better and I think that's a good example of what we've been able to do after the last couple of years.
Speaker Change: Our prior year development.
Speaker Change: In 2024.
Speaker Change: And then I think there is also an element of our <unk>. We also saw.
Speaker Change: Moments of frequency as being lower than than expected. A. Good example is there was a quarter.
Speaker Change: Yeah.
Mark Hughes: Our last question will come from Mark Hughes as choice. Please ask your question.
Speaker Change: And the last couple of years that was.
Speaker Change: What are the lowest frequency quarters from a historical perspective for us. So yeah. There's a couple of those dynamics that I would say we're playing into.
Mark Hughes: Hey, Mark you got back in thank you.
Speaker Change: Yeah.
Speaker Change: Yes, I love it.
Speaker Change: The prior year development in the fourth quarter.
Speaker Change: Playing into the reserves for the last year or so, but overall I think were appropriately reserved and in a good position for the future.
Speaker Change: Was the driver of that similar to what you saw earlier in the year.
Speaker Change: Yeah. So I think the short answer is probably yes.
Speaker Change: And I think if you look at the housing business and you you sort of walked out the $107 million of <unk>. This year, and then you walked out of $54 million of <unk> last year.
Speaker Change: The key thing.
Speaker Change: Mark is it really relates to a couple of things one certainly coming out of the inflationary.
Speaker Change: Environment for the last couple of years that that's really what's contributed to our priority.
Speaker Change: Still at a 28%.
Speaker Change: <unk> growth rate for the full year. So at every level of the housing businesses outperformed.
Speaker Change: Prior year development.
Speaker Change: In 2024.
Speaker Change: No matter, how you look at it.
Speaker Change: And then I think there is also an element of our <unk>. We also saw.
Speaker Change: Yes.
Speaker Change: Right in thinking that the fourth quarter.
Speaker Change: Our moments of frequency as being lower than than expected. A good example is with the quarter.
Speaker Change: Ex cat.
Speaker Change: Prior year development loss ratio.
Speaker Change: Last couple of years.
Speaker Change: It was very good do you assume that that will continue into the 2025 I know you said the mid Eighty's combined I assume that hub.
Speaker Change: What are the lowest frequency quarters from a historical perspective for us. So yeah. There's a couple of those dynamics that I would say we're playing into.
Speaker Change: Does that have Catherine it or not.
Speaker Change: Playing into the reserves for the last year or so, but overall I think were appropriately reserved and in a good position for the future yeah.
Speaker Change: And should we think that <unk> is that.
Speaker Change: So you can run rate or is that an anomaly.
Speaker Change: Yes, I think our best view as we think about 25 would be.
Yeah, and I think if you look at the housing business and you sort of walked out the $107 million of <unk>. This year and then you walked out the $54 million of <unk> last year, you are still at a 28%.
Speaker Change: The cat loss ratio in the high Thirty's and expense ratio in the high Thirty's and probably 10 ish points of cat given the California wildfires in the first quarter. So.
Speaker Change: Growth rate for the full year. So at every level for housing businesses outperformed no.
Speaker Change: Probably a little bit better non cat loss ratio trend that we've seen a little bit higher cat load probably gets you right back to a similar spot in the mid eighties.
Speaker Change: No matter, how you look at it.
Speaker Change: Yeah.
Speaker Change: Yes, I right in thinking that the fourth quarter.
Speaker Change: Yes, maybe just to add then.
Speaker Change: Okay.
Prior year development loss ratio.
Speaker Change: Yes.
Mark Hughes: Sorry, Mark I was just maybe just to add the 10 points just the way to think about it is.
Speaker Change: It was very good do you assume that that will continue into the 2025 I know you said the mid Eighty's combined I assume that have.
Mark Hughes: Give or take $150 million on the wildfires last year, we did 155 million cat load.
Speaker Change: Does that have Catherine it or not.
Mark Hughes: And so we expect that to be a little higher this year with the growth, but if you.
Speaker Change: And should we think that <unk> is that.
Speaker Change: So you can run rate or is that an anomaly.
Mark Hughes: Add those together, we expect it to be somewhere in the low three hundreds and we'll finalize that more specifically on the next earnings call.
Speaker Change: Yes, I think our best view as we think about 25 would be not.
Speaker Change: Non cat loss ratio in the high Thirty's.
Mark Hughes: And then.
Speaker Change: Spence ratio in the high Thirty's, and probably 10 ish points of cat, given the California wildfires in the first quarter. So.
Mark Hughes: You talked about the opportunity to be better appreciated Keith in your opening comments.
Mark Hughes: And I know you gave a lot of statistics about your performance relative to industry metrics.
Speaker Change: Probably a little bit better non cat loss ratio trend that we've seen a little bit higher cat load probably gets you right back to a similar spot in the mid eighties.
Mark Hughes: Anything more specific you had in mind when you think about the opportunity to be better appreciated some action on your part or positioning of the company.
Speaker Change: Yes, maybe just to add and then 10%.
Speaker Change: Yeah.
Mark Hughes: Great.
Speaker Change: Oh, sorry, Martin obviously, maybe just add that the 10 points just the way to think about it is.
Mark Hughes: Yes, we probably used similar phrases in different ways at different times I think.
Give or take $150 million on the wildfires last year, we did 155 million cat load.
Mark Hughes: Certainly the market appreciates the lifestyle business, it's more capital light fee income et cetera.
Speaker Change: So we expect that to be a little higher this year with the growth.
Mark Hughes: And I think what sometimes gets missed is the strength of the fundamental strength of the housing business and the housing franchise over the long term, it's been a really really strong performer as well risk managed we've demonstrated considerable resiliency, it's much less volatile.
Speaker Change: But if you.
Speaker Change: Add those together, we expect it to be somewhere in the low three hundreds and we'll finalize that more specifically on the next earnings call.
Speaker Change: And then.
Speaker Change: You talked about the opportunity to be better appreciated Keith in your opening comments.
Mark Hughes: And we're delivering we've talked about it on the prepared remarks.
Speaker Change: You gave a lot of good statistics about your performance relative to industry metrics.
Mark Hughes: A 10 year combined ratio of 89%.
Mark Hughes: Against any measure that is outperforming the market the industry. If you looked at pure homeowners companies. It would even be a more dramatic differential versus just looking at a wider cross section across P&C. So.
Speaker Change: Anything more specific you had in mind when you think about the opportunity to be better appreciated some action on your part or positioning of the company.
Mark Hughes: The business is incredibly powerful I think it scales well, it's deeply integrated and it's not a traditional product. It's the services that we deliver that complement the core insurance products that differentiate us.
Speaker Change: That's great.
Speaker Change: Yes.
Speaker Change: Yes, we probably used similar raises in different ways at different times I think.
Certainly the market appreciates the lifestyle business, it's more out of late fee income et cetera.
Mark Hughes: It's on Assurant to help tell that story and just further educate the secret sauce of what we do and how we create value because our story is consistent whether it's mobile whether it's auto or housing how we add value for our partners is really unique super differentiated and hard to replicate and it scales incredibly well because we.
Speaker Change: I think what sometimes gets missed is the strength the fundamental strength of the <unk>.
Speaker Change: Business in the housing franchise over the long term, it's been a really really strong performer.
Speaker Change: Well risk managed we demonstrated <unk>.
Speaker Change: <unk> resiliency, it's much less volatile.
Speaker Change: And we're delivering we talked about it on the prepared remarks a.
Mark Hughes: We're partnered with the who is who the leaders in the market and the market consolidator. So we've got to continue to tell that story and that's what we'll do as we go forward.
Speaker Change: 10 year combined ratio of 89%.
Speaker Change: Against any measure that is outperforming the market the industry. If you looked at pure homeowners companies. It can be a more dramatic differential versus just looking at a wider cross section across P&C. So.
Mark Hughes: I appreciate it thank you.
Mark Hughes: Thank you.
Mark Hughes: And I think that was the last question. So we'll go ahead and.
Speaker Change: The business is incredibly powerful scales, well, it's deeply integrated and it's not a traditional product. It's the services that we deliver that complement the core insurance products that differentiate us.
Mark Hughes: Thank you everybody for joining and we'll look forward to providing more updates on our next earnings call in May Thanks, very much have a great day. Thank you.
Mark Hughes: Thank you. This does conclude today's teleconference. Please disconnect your lines at this time and have a wonderful day.
Speaker Change: It's on assurance to help tell that story and just further educate the secret sauce of what we do and how we create value because our story is consistent whether it's mobile whether it's auto or housing how we add value for partners is really unique super differentiated and hard to replicate at scales incredibly well because we are.
Speaker Change: Hard with the who's who of <unk> market and the market consolidator. So we've got to continue to tell our story and that's what we'll do as we go forward.
Speaker Change: Okay got it thank you.
Speaker Change: Thank you.
Speaker Change: Okay.
Speaker Change: And I think that was the last question. So we'll go ahead and.
Speaker Change: Thank you everybody for joining and we'll look forward to providing more updates on our next earnings call in May. Thank you.
Speaker Change: Have a great day. Thank you.
Speaker Change: Thank you. This does conclude today's teleconference. Please disconnect your lines this time and have a wonderful day.