Executive Summary / Key Takeaways

• Assurant (AIZN) is a premier global protection company leveraging a differentiated B2B2C model across Global Lifestyle (mobile, auto) and Global Housing (lender-placed, renters) segments, underpinned by strategic technology investments.
• Despite facing elevated catastrophe losses in Q1 2025 ($157M pre-tax, including $125M from California wildfires), the company demonstrated strong underlying growth in Global Housing (+31% Adjusted EBITDA ex-cats) driven by policy growth from voluntary market shifts and operational efficiency.
• Global Lifestyle performance in Q1 2025 reflected growth in global mobile protection and a new financial services program, offset by investments and FX headwinds, while Global Auto showed stable earnings with improved loss experience.
• The company is on track for its 9th consecutive year of profitable growth in 2025, guiding for modest increases in Adjusted EBITDA and EPS (ex-cats), supported by growth in both segments and anticipating a one-year payback on 2024 strategic investments.
• AIZN maintains a strong capital position with $501.2M holding company liquidity (above its $225M target) and plans $200M-$300M in share repurchases for 2025, balancing growth investments with shareholder returns.

Assurant's Transformation and Tech-Powered Foundation

Assurant, Inc. (AIZN) has strategically reshaped itself into a focused global protection company, shedding non-core assets like pre-need and health insurance businesses to concentrate on two specialized, attractive markets: Global Lifestyle and Global Housing. This multi-year transformation, culminating in a shift in its GICS classification to P&C insurance in June 2024, was designed to enhance its business mix, improve its risk profile, and sharpen its market positioning. At the heart of this strategy is a powerful business-to-business-to-consumer (B2B2C) distribution model, where Assurant partners with leading brands to offer protection solutions directly to their customers.

Within the competitive landscape, Assurant operates alongside large, diversified insurers like AIG (AIG) and Allstate (ALL), major auto insurers like Progressive (PGR), and specialty players like Chubb (CB). While these competitors often boast greater scale and brand recognition (Allstate holds 10-12% of the U.S. P&C market, Progressive 15-18% of U.S. auto), Assurant carves out its niche through deep client integration and specialized offerings. Its estimated 3-5% aggregate market share in its primary markets is growing faster than the industry average, though trailing some high-growth competitors like Progressive. Assurant's strategic response to larger, more established rivals and agile insurtechs like Lemonade (LMND) is rooted in its operational efficiency and customer-focused innovation, enabled significantly by its technology.

Assurant's technological differentiation is not centered on a single, revolutionary material science like some industries, but rather on leveraging data-driven solutions, automation, and integrated platforms to enhance its B2B2C model. Key technological initiatives include investments in automation, robotics, and AI at device care centers, and the development of technology-enabled services like the Cover360 platform and Assurant Tech Pro in its Housing segment.

These technologies yield tangible benefits. Automation in device care aims to optimize the global supply chain and drive growth in the secondary device market. Platforms like Cover360 support double-digit written premium growth in the Property Management Company (PMC) channel by enhancing the digital customer experience, leading to higher penetration and simplified enrollment. Overall, Assurant's integrated technology enables operational efficiencies and expense leverage, particularly evident in the Global Housing segment's sustainable expense ratio in the high 30s percentage range, a significant improvement over recent years. This efficiency, coupled with faster claims processing implied by their operational focus, provides a competitive edge against competitors with more traditional processes, potentially leading to higher customer loyalty and better margins. For investors, this technological focus translates into a competitive moat built on deep integration, operational efficiency, and the ability to innovate rapidly in partnership with major brands, supporting financial performance through lower costs and enhanced market positioning.

Performance Reflecting Strategy and Market Dynamics

Assurant's recent financial performance underscores the impact of its strategic focus and the dynamic market environment. In the first quarter of 2025, the company reported consolidated net income of $146.6 million, a decrease from $236.4 million in Q1 2024. This decline was primarily attributable to significantly higher reportable catastrophe losses within the Global Housing segment.

Global Housing's Q1 2025 Adjusted EBITDA was $112.4 million, a substantial decrease from $192.5 million in the prior year quarter. However, this figure included $156.7 million of pre-tax reportable catastrophe losses, with approximately $125.0 million stemming from the California wildfires. Excluding these cat impacts, Global Housing's Adjusted EBITDA surged by 31% year-over-year to $269.1 million. This strong underlying growth was fueled by continued top-line momentum in Homeowners, where net earned premiums, fees, and other income increased by 16.9%. This growth was driven by higher policies in-force, benefiting from increased placement rates due to pressure in the voluntary insurance market, as well as higher average premiums. Favorable non-catastrophe loss experience, including $26.4 million of favorable prior year reserve development, also contributed significantly. The Renters business also saw growth, boosted by the addition of a new book of over 250,000 policies and continued double-digit written premium growth in the PMC channel, supported by the Cover360 platform. The segment's operational efficiency was evident in its 90% combined ratio in Q1 2025, even with the elevated cat load.

The Global Lifestyle segment reported Q1 2025 Adjusted EBITDA of $197.8 million, a 5% decrease from $207.7 million in Q1 2024. This was primarily driven by lower results in Connected Living, impacted by lower domestic mobile performance, a one-time client contract benefit in the prior year, and unfavorable foreign exchange ($5.7M headwind). However, growth in global mobile device protection programs and contributions from a newly launched financial services program partially offset these factors. The segment's net earned premiums, fees, and other income increased by 5.4%. Global Automotive results remained largely stable, as improved loss experience helped counter lower investment income and FX impacts. Management noted sequential stability and improvement in Auto loss experience, reflecting the impact of prior rate increases and program changes.

Overall operating cash flow saw a significant increase, rising to $392.4 million in Q1 2025 from $82.5 million in Q1 2024. This improvement was largely attributed to the underlying business growth in Homeowners and Connected Living, as well as favorable timing of vendor payments, partially offset by higher net paid claims.

Strategic Outlook and Capital Deployment

Assurant remains confident in its strategic direction and financial trajectory, reaffirming its enterprise outlook for 2025. Management expects to achieve its 9th consecutive year of profitable growth, guiding for modest increases in Adjusted EBITDA and Adjusted EPS, both excluding reportable catastrophes. This outlook is framed against a strong 2024 performance, which included a significant $107 million of favorable prior year reserve development in Housing; excluding this, the underlying growth trends are expected to deliver high single-digit earnings and EPS growth (ex-cats).

The 2025 outlook is underpinned by expected growth in both operating segments. Global Housing's outlook was notably increased following the strong Q1 performance, anticipating continued growth driven by lender-placed policy expansion and expense leverage. Global Lifestyle is also expected to grow, benefiting from momentum in Connected Living and Global Automotive. However, this growth is expected to be partially muted by unfavorable foreign exchange and planned incremental investments in new partnerships and programs, which management estimates will temper Lifestyle growth by a few percentage points. These investments build on the $25 million made in 2024 (related to new clients and device care automation), which are expected to yield a full one-year payback in 2025.

Managing risk remains a core focus. The company successfully placed its 2025 catastrophe reinsurance program, securing $1.76 billion of coverage for the main U.S. per-occurrence program in excess of a $160 million retention. The estimated total cost for the 2025 program is $222.7 million. Including the Q1 California wildfires, the expected full year 2025 catastrophe load is $300 million. Assurant is also actively managing risks in Global Auto, addressing VSC inflation through rate increases and program changes, and proactively transitioning risk in the volatile GAP product. Macroeconomic factors like tariffs are being monitored, though management believes their impact is manageable within the current outlook.

Assurant's strong capital position provides flexibility for both growth investments and shareholder returns. Holding company liquidity stood at $501.2 million as of March 31, 2025, comfortably above the target minimum of $225.0 million.

The company has a long track record of returning capital, having increased its common stock dividend for 20 consecutive years. For 2025, the expected range for share repurchases is between $200 million and $300 million, reflecting confidence in ongoing cash flow generation and accounting for the estimated impact of the California wildfires.

Conclusion

Assurant's investment thesis is centered on its evolution into a focused, tech-enabled global protection leader operating through resilient Global Lifestyle and Global Housing segments. The company's B2B2C model, supported by strategic technology investments in operational efficiency and client integration, provides a competitive edge in specialized markets. While Q1 2025 results were impacted by significant catastrophe losses, the underlying performance, particularly the strong growth and efficiency demonstrated in Global Housing and the momentum in key areas of Global Lifestyle, validates the strategic transformation.

Looking ahead, the company is positioned for continued profitable growth in 2025, driven by expanding policy counts and operational leverage in Housing, and scaling partnerships and new program launches in Lifestyle. Despite facing macroeconomic headwinds and ongoing investments, Assurant's strong capital position and commitment to returning value to shareholders underscore its financial health. Key factors for investors to monitor include the successful execution of new program launches, the continued recovery and stabilization in the Global Auto segment, and the impact of macroeconomic conditions and catastrophe events on future results. Assurant's ability to leverage its technological foundation and integrated partnerships should remain critical to sustaining its growth trajectory and delivering value.