Q2 2025 Assurant Inc Earnings Call
Welcome to Assurance, second quarter 2025 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.
We ask that you please hold all questions until the completion of the formal remarks at which time you will be given instructions for the question and answer session.
It is now my pleasure to turn the floor over to shun MOA vice president of investor relations you may begin.
Thank you, operator. And good morning, everyone. We look forward to discussing our second quarter results with you today.
Joining me for Assurance conference. Call are Keith demings, our president and chief executive officer and keep Meyer, our Chief Financial Officer.
Yesterday, after the market closed, we issued an earnings release announcing our results. For the second quarter 2025
The release and corresponding Financial supplement are available on assurant.com.
Also, on our website is a slide presentation for our webcast. Participants.
some of the statements made today are forward-looking forward-looking statements are based upon our historical, 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,
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.
During today's call, we will refer to non-GAAP financial measures, which we believe are important in analyzing 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 earnings release presentation and financial supplement on our website.
We'll start today's call with remarks before moving into Q&A.
I will now turn the call over to Keith Demmings.
Thanks Sean and good morning everyone.
we delivered a very strong second quarter with double digit growth in both adjusted, evida and earnings per share, excluding reportable catastrophes,
Our results were fueled by continued outperformance in global housing and growth in global lifestyle reinforcing a strong first half of 2025.
Through the first 6 months, adjusted IBA increased by 14% and adjusted EPS Rose 16% both excluding cats.
Given our year-to date performance, where meaningfully increasing Assurance, full year, 2025 growth expectations.
Excluding catastrophes.
We now expect full year, adjusted EPS growth to approach 10%.
Driven by mid to high single-digit growth in adjusted ibida.
When excluding prior year reserve development, we expect to deliver double-digit underlying growth for both metrics.
Additionally, our significant cash generation and balance Capital allocation continue to support long-term. Shareholder value.
This year's performance reinforces our long-standing, track record of success.
Driven by our powerful business model and the dedication of our Global team.
By combining innovative services with our protection and specialty insurance products.
We deliver differentiated value through our unique B2B Toc distribution channels in attractive lifestyle and housing markets.
Our Partnerships with the world's leading brands are powered by transparency, data-driven protection, Solutions, and value added services.
We've continued to be a leader in our markets by embedding technology into our client systems. Enabling exceptional customer experiences and optimizing performance.
We are well positioned to achieve our ninth consecutive year of profitable growth in 2025.
Our diversified business model enables us to perform consistently across a range of economic environments.
Often diverging from the broader industry trends.
We believe this strength and resilience continue to differentiate Assurance from the broader PNC industry.
Now, let me share some specific examples of the momentum. We're seeing within our lifestyle and housing segments.
Within Global lifestyle. Adjusted ebit growth accelerated in the second quarter supporting our year-to-date performance.
through the first 6 Months of the Year lifestyle earnings increased 2% on a constant currency basis, which was in line with our expectations
We are well positioned to deliver growth for the full year.
In Connected, living adjusted EBITDA increased 4% year to date on a constant currency basis.
Sustained investments in our device, Care Centers Automation and Technology platforms. Enhance our end-to-end Solutions across the value chain.
These capabilities at scale.
Simplicity and flexibility tapping into new profit pools and accelerating growth and value creation for our assurance, and our partners.
This is enabled, our success in growing mobile subscribers globally, over the last year we've added 2.4 million devices protected. Bringing our total is 65 million subscribers.
our growth is led by new client programs and the continued expansion of our partner relationships,
We continue to make investments related to new products services and programs, which we expect to roll out in the second half of this year.
Following our Acquisitions of cell phone repair or CPR in the US.
And I Smash in the UK we recently acquired, you Solutions in Japan to expand our local walk-in repair capability in the world's second largest mobile market.
This acquisition strengthens our customer experience in the local market and unlocks future growth opportunities.
In Global Automotive earnings were up modestly supported by year-over-year improvements in loss experience.
Net, written premiums have increased 8% year to date. Achieved through rate increases over the last 2 years and new business. Wins driven by our scale and critical dealer services business.
A key highlight is our recent partnership with Sokka Automotive, a fast-growing automotive group with more than 50 dealerships in New Jersey and Pennsylvania.
For a short vehicle care. We deliver vehicle protection products, and comprehensive dealership. Operational Support, including in dealership training,
Internationally, we recently completed the acquisition of Just Otto in Brazil, expanding our automotive distribution network, diversifying our product portfolio, and reinforcing our presence in Latin America.
Just expertise aligns with our commitment to delivering, excellent service and seeking continuous Improvement.
The acquisition presents. Exciting opportunities for future growth.
Beyond new business wins and our expanding presence. We're renewing relationships across distribution channels, including dealership groups oems, and other Affinity Partners further reinforcing our client base and Market position.
We're driving innovation in automotive by investing in AI Technologies.
These advancements are transforming key areas from enhancing dealership training to enabling seamless digital claim processing.
Turning to Global housing. Following 2 years of exceptional growth. The segment continues to outperform in 2025
For the first 6 Months of the Year adjusted IA was up 25% excluding reportable cats.
our business continues to benefit from multiple growth levers, including
Increased demand for lender placed insurance within homeowners, driven by the hardening of the voluntary insurance market across the U.S.
Significant expense leverage across global housing, which is improved by over 700 basis points over the last 2 years.
An increase in scale for new business wins, including the third quarter rollout of a new mortgage servicing partner, which will add approximately 300,000 loans to our portfolio.
In homeowners, we see meaningful opportunities to expand with new clients by leveraging our existing infrastructure.
Ongoing technology Investments further, enhance efficiency as we process and digitized millions of insurance documents each year through our market-leading loan tracking solution.
In renters our tech-enabled services remain. A key driver of growth.
Consecutive years of double-digit Premium growth.
The platform continues to deliver higher penetration rates, client, renewals and new business wins.
During the second quarter, we signed a top 15 PMC partner with over 100,000 units nationwide and completed multi-year renewals with 2 of our top 4 PMC partners.
We've also increased our renters' policies by 11% year-to-date, including a new renters' book that we added earlier this year.
Overall, our growth within housing is underpinned by our attractive combined ratios.
Excluding prior year development, we've achieved a year-to-date combined ratio of 87% with catastrophe losses.
We remain on track to deliver a mid 80s, combined ratio for the full year, including our full year cat Assumption of dollars.
Innovation is deeply embedded in Insurance DNA and it continues to underpin our ability to generate future growth.
As we look over the long term, we see significant opportunities across clients products and geographies including expanding offerings and increasing attachment rates with existing partners.
Winning new clients across the globe by executing on opportunities already in our pipeline.
Increasing investments in core markets, including launching new products and services across the lifestyle and housing businesses.
And entering attractive adjacent, sectors through new product offerings.
We're laser focused on executing on each of these opportunities.
as we continue to position Assurance for long-term growth,
Creating value for our partners, consumers, and shareholders.
I'll now turn it over to Keith Meyer to highlight our second quarter results.
And expectations for the remainder of the year.
Thanks, Keith and good morning everyone.
We are very pleased with the growth in the quarter across both Global housing and Global lifestyle.
Overall second quarter growth was strong.
With adjusted ibida. Increasing 13%.
And adjusted earnings per share growing 17% both excluding cats.
Are year to-day performance supports the increase to our full year 2025 Outlook, which I will cover shortly.
Starting with capital.
Our holding company liquidity position at quarter end, was 518 million?
Providing us with flexibility to drive future growth.
Our robust cash flow is a key differentiator for Assurance.
In the quarter, our businesses Upstream over 230 million of cash flow to the holding company.
Which allowed us to return, 105 million to our shareholders.
Including 62 million of share repurchases.
Through August 1st. We repurchased an additional 25 million of shares and have now completed 150 million in repurchases so far this year
I'll now walk through our segment results in Greater detail beginning with global lifestyle.
Second quarter, adjusted IBA, increased 6% compared to last year, where 7% on a constant currency basis.
In Connected, living earnings increased 9%, or 11% on a constant currency basis.
Led by our Global mobile device protection programs.
And modest growth in our mobile trade-in programs.
The strength in device protection was driven by strong subscriber growth from new mobile clients and programs that began last year.
this is a prime example of our momentum given the important Investments we made in 2024,
Our device training business saw improved profitability from higher volumes compared to Prior year.
Including increased carrier promotions as well as consumer demand, pull forward in the quarter.
based on historical Trends, we anticipate lower sequential third quarter volumes given normal seasonality and a strong second quarter
Moving the global auto.
Adjust the debit. I was up modestly.
In line with our expectations, we were pleased to see improved loss ratios in our vehicle service contract business.
And stable earnings overall.
We continue to benefit from previous rate, increases earning through our book and improvements to our claims processes while keeping us on track to grow for the full year.
For Global lifestyle.
Led by strong growth and connected living from mobile device, protection and trade-in programs.
As well as contributions from a new program within Financial Services launched late last year.
Moving Global housing.
Second quarter, adjusted Eva, was 214 million which included, 30 million of reportable catastrophe. Impacts
Excluding cats Global housing delivered, another quarter of strong double-digit growth.
As adjusted Eva increased 18% to 244 million.
Our homeowners business continued to benefit from favorable non- catastrophe loss experience with lower claims frequencies and increases to lender Place policies in force.
Benefiting from pressure in the voluntary insurance Market.
Results also increase from a higher favorable prior period and reserve development.
Which was 34 million in the quarter compared to 17 million in the second quarter of 2024.
Before moving to our 2025 outlook, I wanted to discuss Assurance's long-standing focus on leveraging technology to drive innovation for our partners and end consumers.
We have invested in Ai and related Technologies to support our clients delivering efficiencies and improving the customer experience.
We also have an effective AI framework that allows us to create evaluate and scale use cases across our businesses.
Artificial intelligence presents a powerful opportunity to further accelerate, our capabilities and creates additional value for our clients.
It enables us to improve productivity. Enhance decision-making, and upscale our employees delivering simpler faster and more consistent outcomes.
There are several areas throughout our businesses where we believe AI can continue to transform our operations and product offerings.
In global lifestyle, our Innovation and device care. Center near Nashville is increasing. The use of Robotics and AI to assess mobile device, quality and process trade-ins with greater speed and consistency.
This supports higher average selling prices and better value for clients and and consumers.
We are also further embedding AI into our personal Tech Pro premium Tech Support Services, which cover connected devices and appliances.
This enables us to better assist customers in navigating, technical challenges and inquiries with precision and ease.
In housing we recently deployed our generative AI solutions to enhance the speed and accuracy of document classification and processing across our loan tracking Solutions with impressive early results.
Looking ahead.
Technology-based solutions will play a critical role in extending client tenure and expanding market share.
In our technology advantages will enable us to continue to differentiate Assurance against competitors in the market.
Finally.
I want to share some thoughts on our increased outlook for 2025.
Driven by the strength of our first-half results, including outperformance within global housing.
We now expect Enterprise full year, adjusted EPS growth to approach, 10% and adjusted ibida to grow mid to high single digits. Both excluding cats
This represents a meaningful increase from our initial expectation of modest growth for both metrics.
to put a finer point on the strength of our Outlook excluding favorable, prior year development of 63 million in the first half of 2025,
And 107 million for full year, 2024.
Underlying growth Trends are expected to deliver double-digit adjusted earnings and EPS growth.
We now expect strong growth in global housing, and continue to expect growth within Global lifestyle, where both connected living and Global Automotive are expected to grow.
For Global lifestyle growth is expected to be partially offset by investments in new Partnerships and programs as well as unfavorable foreign exchange.
As a reminder, through the first half of 2025,
We've made approximately 5 million dollars of strategic Investments and would expect roughly 10 million dollars in the second half of the year.
These Investments are directly tied to the programs and clients we are in the process of launching or expect to launch in the near future.
We expect continued policy growth in lender placed.
as a reminder, our Outlook does not contemplate additional prior year Reserve development beyond the 63 million seen in the first half of the year
We have considered and continue to monitor macroeconomic conditions within our Outlook including tariffs inflation or in exchange and interest rate levels, which may impact the pace and timing of growth.
And finally,
our Capital objectives remain consistent. Given our position of strength.
As we focus on, maintaining balance and flexibility to support new business growth, while returning excess Capital to shareholders.
From a share repurchase perspective.
Given our confidence in our solid Capital position.
Increased earnings Outlook.
And attractive share price. We now expect to share repurchases for the year to be between $250 million to $300 million, the upper end of our 2025 guidance.
This is subject to m&a as well as market and other conditions.
In conclusion.
Our year-to-date performance and increase in outlook for 2025 is a testament to the unique and differentiated nature of assurance.
As we continue to be, well, positioned to grow earnings once again for the ninth consecutive year while also navigating various macroeconomic environments.
With that operator, please open the call for questions.
Thank you.
The floor is now open for questions.
If you would like to ask a question, please click on the raise hand button which can be found on the black bar at the bottom of your screen. When it is your turn, you will receive a message on your screen from the host, allowing you to talk, and then you'll hear your name called.
Please accept, unmute your audio and ask your question.
We will wait, 1 moment to allow the Q to form.
Our first question will come from the line of Jeff Schmitt from William Blair.
You may now unmute your audio and ask your question.
Good morning everyone morning Jeff. So, when I looked at the overall benefit ratio, um,
In global lifestyle, it's around 23 to 24% um, even up a little bit, I guess, from last year.
Should we expect that to trim down as rate continues to earn through in Global Auto or is this sort of a decent run rate? I mean, how should we think about the trend there?
Yeah, maybe maybe I'll offer a couple of overarching thoughts and then Keith can talk about the trend line. I, I'd say, first of all, really pleased with the progress that you're seeing in the second quarter for Global lifestyle. Overall, certainly connected living um performed really well up, 11% constant currency Auto. We're also seeing a really nice stability there and I think we're well positioned. Midway through the year, very much in line with our expectations and feel confident in the full year opportunity to grow both housing, Auto and connected, living overall. But Keith, what would you add about the benefit level? Yeah, I think Jeff overall. Uh, there's always a little bit of a mix shift in terms of the, uh, dynamics of the deal structures with the different clients within lifestyle. So the ones that we're really focused on is in Auto and I think what we're seeing there is encouraging um, point this year where we're seeing
The Improvement in the vehicle service contract loss experience.
And so I think that is really leading us to an what we feel like is an inflection point this year for that that business, which also allows us to feel good about our growth, uh, outlook for our auto business. And I think it sets us up for uh, a nice run over the long term for, you know, for our auto business.
Great. Um and then investment income from other Investments was negative in the first half. What? What are those Investments and what's driving the decline there?
All our uh up to 5, uh, 5.33 percent, you know, that's 10 basis points over the first quarter. Um, it's also 20 basis points better than
Than the prior year. Um so uh, so I think we're our portfolio is is performing well, and so, you know, I think from an overall position, I think we're in a, uh, a good place for investment income overall. I think you can see us having, uh, a positive impact because of the higher average asset levels and then the positive yields in fixed income and then that'll be offset a little bit by the the, uh, the shorter term investments in in our cash investment. So the I think, but overall we see investment income being up for the year.
Thank you.
You're welcome.
Our next question comes from Tommy MC joint with KBW Tommy, please unmute your audio and ask your
Hey, good morning guys, thanks for taking our questions.
Um, morning Tommy.
Yeah, so the the first 1 here, just is there a way to to think about any way to quantify, um, any pull forward and consumer activity when we think about the the number of devices that that you guys reported or the the number of uh protected vehicles that you guys had um got the sense that there was a nice uplifting growth in the second quarter. Just so just trying to see if any of that was
Pull forward of activity ahead of the, the tariffs.
Yeah. Maybe we'll, we'll break it into to 2 parts. I think, when I look at Connected living and and Mobile in particular, you know, we probably saw a little bit of pull forward, um, relative to trade in. Um, there was a more activity, um, in the marketplace in general, more switching activity, more promotional work and I think some of that was, uh, pulled forward relative to tariffs. But I I do think that the bulk of the beat in Connected living was driven by the growth in device protection. Um, you see the sequential growth in subscribers up, 700,000 2.4 million year-over-year that by Far and Away was the Lion's Share of the improved profitability in the quarter trade in certainly helped. But uh it wasn't the biggest driver and then in terms of of Auto, maybe I'll offer 1 thought and then Keith can jump in.
You know, I think when you look at the first half Auto Sales overall, it was a pretty strong and resilient auto market, um, you know, our results kind of followed that as well. So I think retail car sales are up 6 or 7% year to date. You're seeing net written premiums up, pretty significantly, uh, 8% for Assurance year to date. So some of that certainly is pull forward. I don't think the car sales will maintain at that same level in the second half but no impact on earnings because obviously that earns out over multiple years but you know Keith what else might you add? Yeah, I think
Overall, we were pleased with the momentum that we're building. Uh, on our auto side for, for our, our sales growth, um, you know, Keith mentioned the written premiums up 8%. You know, I think that's a blend of, uh, some of the rate increases that we've had, uh, over the last couple of years. I think it's also driven by some new business wins that we highlighted, uh, a little bit earlier. And, you know, then I think there is a little bit of, uh, pull forward in demand in the early part of the quarter, but we also saw the, um, the production being pretty good. As we went through the quarter. Um, I think there's a little bit more promotional activity, uh, that the dealers are, uh, driving. And I think when there's promotional activity, you know, I think that allows
That allows consumers to sometimes utilize some of those promotional dollars to buy some of the the additional services, like the extended, uh, service contracts. So, uh, overall I think we, we like, the the progress we're making, and, you know, our protected vehicles, uh, are up, uh, nicely in the quarter, uh, as well. So overall liking the momentum we see in on the auto sales side.
Okay. Got it. Um and switching over to the the housing side. Um, I like to look at the expense ratio within that segment. Um you guys have delivered a lot of operating leverage uh, over over the past few years that expense ratio is now running in in the high 30s. Um can you talk about the opportunity to to gain more leverage? Just as that business line continues to grow across both lender place the voluntary Market as well as renters growth. Um maybe perhaps it'd be helpful to think about, you know what, what percentage of those costs are fixed versus more variable or commission based um than any insights around. The expense of the side of that thing.
A lot of that, the cost is the, the operational execution, you know, not a huge part of that is going to be commissioned. There's no Commission in the lender place, which is obviously, the biggest part of the housing business. Um, and I think there is opportunity to continue to create leverage over time and, and it's coming from a couple different ways. Tommy 1, we're seeing obviously growth in the underlying under Place portfolio.
Of the hard Market. We're also seeing growth because we're actually winning and gaining more market share with new clients. Some of our clients are are on boarding, new loans, Etc. So there's there's natural growth coming through a couple of different ways that naturally creates a lot of scale advantages, but then we're driving a tremendous amount of effort around technology automation driving more operational efficiency. Keith highlighted a couple of examples of how we're thinking about that within all of the businesses. And I think all of those things together, create continuous opportunity to drive that expense level down. We want to create as much efficiency as we can. It's good for consumers, it's good for our clients. Ultimately it's good for getting the right rates in the marketplace and and we're going to continue to be um as efficient as we can to to create value.
But Keith, what would you add? Yeah, and I think along the lines of your question, Tommy, you know, you can think about selling an underwriting type expenses, being about 20% of the overall so that leaves us that other 80%, to be able to leverage like he talked about. So we, we do see a lot of opportunity. As we, you know, as we continue to live our leverage, our technology and scale,
Yeah, and it's interesting, the Investments that we make. Um, they don't just make us more efficient, they make the solution set better and it actually strengthens our competitive advantage in the marketplace, and it makes us more likely to win net new clients because we're just, you know, not only are we more efficient but we're doing it in a way that's better. From a consumer perspective.
Thank you.
You bet, you're welcome.
I have a reminder, if you would like to ask a question, please click on the raise hand button which can be found on the black bar at the bottom of your Zoom screen.
Our next question comes from Mark Hughes with truist.
Mark, please go ahead for your question.
Morning.
Good morning.
Um,
the part of your development.
Could you characterize where that is coming from in the global housing?
Yeah, so I'd say it's really related to 3 main things. Um, Mark, you know, I would say 1 is the improvements uh, in Florida uh, due to a lot of the regulatory changes that that took place. Uh, we're also seeing some lower frequencies and then, certainly, the third, uh, thing is the inflation being lower than expected. And so, you know, I think that's just where we're, we're really just reacting to those those 3 elements that are driving our, our prior year development,
then the, uh,
Tariffs.
Anything you observe so far? Your thoughts about what that might mean going forward? And then, how much cushion you might have in your second half? Guidance for tariff impacts.
Yeah, probably at the simplest level. Very limited impact in in the first half of the year that was also true specifically to the second quarter as we looked at the Outlook, we certainly included, you know, our best estimate based on the most current information, I think very manageable as we look at the balance of the year and we are staying proactive as well as we think about inflation over time, not just with our inflation guard feature,
Within lender place, our ability to get rate with filed products. And then our, our work with clients around service, efficiency and rates and deal structures. So I feel like we're really well positioned. Uh, we try to be comprehensive in in how we thought about the full year.
And then I you've talked about pressure in the voluntary Market, um, and I think in earlier calls, you would maybe suggest that that's helped retention. Um, that uh,
When consumers get the lender placed, they may be more likely to keep it that. Do I remember that properly and is that Dynamic still in place, you know, to the same degree?
The tough market, and our rates have become more competitive. Uh, in the product has been well received by consumers, but what, what else would you add to you? Yeah, I think the customers are keeping our policies probably 6 to 12 months longer, Mark, you know, and I think that just speaks to the things that we talked about earlier, you know, where we're driving a lot of the expense leverage that can reduce the the rate. So our, our products are looking, you know, I think more more attractive and and better to Consumers uh than they've ever been before. So I think the the price that we're delivering is good and then we're also you know, really delivering great service to the customers when they when they have uh, needs as well. So I think that combination is serving us. Well,
In Alaska.
A lot of uh kind of specific new programs expansion of Partnerships. How would you characterize the uh new business pipeline? Now versus 12 24 months ago? And are there any themes that you would highlight about? What is, uh,
You know, on the uh, on the horizon for you.
Yeah, a couple thoughts. I think we've had a lot of momentum, really the last couple of years across the board. Um, whether that's in Connected living in housing in Auto. I think, you know, we've seen some acceleration in in the pipeline as we look forward from here. There are some things that we're actively working on, we talked about, you know, the Investments we made in the first half, being around 5 million to support new business growth. Specifically in Connected living, we think that'll be more like an additional 10 in the second half.
Hopeful to be able to talk more in November about some of the things that we're working on. But I would say, we are very excited about some of the things that we're going to announce.
Uh and then it's a nice combination of new client wins.
Adding additional services to expand relationships with major clients and then also launching new products. So it's a nice mix of activity and and very, very much focused on connected living. But we are seeing a lot of opportunity for growth in the rest of the company as well. We talked about a big win in the auto space earlier. In the discussion, the pipeline and letter place is, is quite strong. And we've seen a lot of momentum in renters with, you know, 12 consecutive quarters of double-digit growth in the property management channel, on top of a pretty significant book role. So lots of opportunity across the board and and certainly that's the priority Focus for this company.
Thank you very much.
You bet. Thank you.
There are no further questions at this time. I will now hand back to management for closing remarks.
All right. Well, thanks everybody for joining the call and we will certainly look forward to updating you again in November and until then hope everybody stays safe. Thanks very much.
Thank you. This does conclude today's teleconference.
Please disconnect your lines at this time and have a wonderful day.