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Cover and table of contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☒			Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended September 30, 2021


☐			Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from to

Assurant, Inc.

(Exact name of registrant as specified in its charter)


Delaware						001-31978						39-1126612
(State or other jurisdiction of incorporation)						(Commission File Number)						(I.R.S. Employer Identification No.)

55 Broadway, Suite 2901

New York, New York 10006

(212) 859-7000

(Address, including zip code, and telephone number, including area code, of Registrant’s Principal Executive Offices)

Securities registered pursuant to Section 12(b) of the Act:


Title of Each Class	Trading Symbol(s)	Name of Each Exchange on Which Registered
Common Stock, $0.01 Par Value	AIZ	New York Stock Exchange
5.25% Subordinated Notes due 2061	AIZN	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒	Accelerated filer	☐

Non-accelerated filer	☐	Smaller reporting company	☐

		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares of the registrant’s common stock outstanding at October 29, 2021 was 56,976,709.

ASSURANT, INC.

QUARTERLY REPORT ON FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2021

TABLE OF CONTENTS


Item Number		Page Number
	PART I FINANCIAL INFORMATION

1.	Consolidated Financial Statements (unaudited) of Assurant, Inc.:

	Consolidated Balance Sheets (unaudited) as of September 30, 2021 and December 31, 2020	2

	Consolidated Statements of Operations (unaudited) for the three and nine months ended September 30, 2021 and 2020	3

	Consolidated Statements of Comprehensive Income (unaudited) for the three and nine months ended September 30, 2021 and 2020	4

	Consolidated Statements of Changes in Equity (unaudited) for the three and nine months ended September 30, 2021 and 2020	5

	Consolidated Statements of Cash Flows (unaudited) for the nine months ended September 30, 2021 and 2020	7

	Notes to Consolidated Financial Statements (unaudited)	9

2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	38

3.	Quantitative and Qualitative Disclosures About Market Risk	61

4.	Controls and Procedures	61

	PART II OTHER INFORMATION

1.	Legal Proceedings	62

1A.	Risk Factors	62

2.	Unregistered Sales of Equity Securities and Use of Proceeds	62

6.	Exhibits	63

	Signatures	64

Assurant, Inc.

Consolidated Balance Sheets (unaudited)


	September 30, 2021		December 31, 2020
	(in millions, except number of shares and per share amounts)
Assets
Investments:
Fixed maturity securities available for sale, at fair value (net of allowances for credit losses of $0.0 and $1.2 at September 30, 2021 and December 31, 2020, respectively; amortized cost - $7,271.3 and $6,245.8 at September 30, 2021 and December 31, 2020, respectively)	$	7,650.3	$	6,815.5
Equity securities at fair value	422.3		290.2
Commercial mortgage loans on real estate, at amortized cost (net of allowances for credit losses of $0.9 and $1.6 at September 30, 2021 and December 31, 2020, respectively)	227.3		138.3
Short-term investments	217.5		292.0
Other investments (net of allowances for credit losses of $0.0 at September 30, 2021 and $1.4 at December 31, 2020, respectively)	679.2		686.8
Total investments	9,196.6		8,222.8
Cash and cash equivalents	2,027.9		2,207.6
Premiums and accounts receivable (net of allowances for credit losses of $10.6 and $13.3 at September 30, 2021 and December 31, 2020, respectively)	1,702.4		1,548.9
Reinsurance recoverables (net of allowances for credit losses of $22.8 and $24.6 at September 30, 2021 and December 31, 2020, respectively)	7,135.4		6,605.4
Accrued investment income	63.6		67.0
Deferred acquisition costs	8,548.2		7,388.0
Property and equipment, net	529.0		446.1
Goodwill	2,579.9		2,589.3
Value of business acquired	698.6		1,152.2
Other intangible assets, net	638.4		696.2
Other assets (net of allowances for credit losses of $4.1 and $1.8 at September 30, 2021 and December 31, 2020, respectively)	493.3		496.2
Assets held in separate accounts	11.5		11.5
Assets held for sale (Note 4)	—		13,218.7
Total assets	$	33,624.8	$	44,649.9
Liabilities
Future policy benefits and expenses	$	1,334.1	$	1,358.5
Unearned premiums	18,457.2		17,293.1
Claims and benefits payable	1,897.4		1,610.3
Commissions payable	664.6		699.1
Reinsurance balances payable	389.3		359.3
Funds held under reinsurance	350.0		358.6
Accounts payable and other liabilities	2,574.4		2,640.5
Debt	2,201.9		2,252.9
Liabilities related to separate accounts	11.5		11.5
Liabilities held for sale (Note 4)	—		12,111.3
Total liabilities	27,880.4		38,695.1
Commitments and contingencies (Note 16)
Stockholders’ equity
6.50% Series D mandatory convertible preferred stock, par value $1.00 per share, 0 shares and 2,875,000 shares authorized, issued and outstanding at September 30, 2021 and December 31, 2020, respectively (1)	—		2.9
Common stock, par value $0.01 per share, 800,000,000 shares authorized, 59,850,255 and 62,967,808 shares issued and 57,554,166 and 57,967,808 shares outstanding at September 30, 2021 and December 31, 2020, respectively	0.7		0.6
Additional paid-in capital	1,731.3		1,956.8
Retained earnings	4,219.3		3,548.7
Accumulated other comprehensive (loss) income	(84.1)		709.8
Treasury stock, at cost; 2,296,089 and 5,000,000 shares at September 30, 2021 and December 31, 2020, respectively	(122.8)		(267.4)
Total Assurant, Inc. stockholders’ equity	5,744.4		5,951.4
Non-controlling interests	—		3.4
Total equity	5,744.4		5,954.8
Total liabilities and equity	$	33,624.8	$	44,649.9

(1)Each outstanding share of mandatory convertible preferred stock converted to common stock in March 2021. Refer to Note 13 for further information.

See the accompanying Notes to Consolidated Financial Statements (unaudited)

Assurant, Inc.

Consolidated Statements of Operations (unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
	(in millions, except number of shares and per share amounts)
Revenues
Net earned premiums	$	2,140.1	$	2,086.8	$	6,396.3	$	6,173.6
Fees and other income	309.6		209.4		858.0		829.4
Net investment income	76.0		63.3		235.2		212.3
Net realized gains (losses) on investments (including $—, $(1.3), $0.2 and $(14.0) of impairment-related gains (losses) for the three and nine months ended September 30, 2021 and 2020, respectively)	112.1		17.2		123.2		(37.9)
Total revenues	2,637.8		2,376.7		7,612.7		7,177.4
Benefits, losses and expenses
Policyholder benefits	614.2		638.5		1,681.2		1,697.3
Amortization of deferred acquisition costs and value of business acquired	965.6		927.3		2,903.7		2,689.6
Underwriting, general and administrative expenses	818.3		672.9		2,301.2		2,290.9

Interest expense	27.5		25.5		84.7		77.7
Loss on extinguishment of debt (Note 10)	20.7		—		20.7		—
Total benefits, losses and expenses	2,446.3		2,264.2		6,991.5		6,755.5
Income from continuing operations before income tax expense	191.5		112.5		621.2		421.9
Income tax expense	37.9		24.5		134.4		20.6
Net income from continuing operations	153.6		88.0		486.8		401.3
Net income (loss) from discontinued operations (Note 4)	728.8		(118.5)		762.0		(97.6)
Net income (loss)	882.4		(30.5)		1,248.8		303.7
Less: Net loss (income) attributable to non-controlling interests	—		0.3		—		(1.1)
Net income (loss) attributable to stockholders	882.4		(30.2)		1,248.8		302.6
Less: Preferred stock dividends	—		(4.7)		(4.7)		(14.0)
Net income (loss) attributable to common stockholders	$	882.4	$	(34.9)	$	1,244.1	$	288.6

Earnings Per Common Share
Basic
Net income from continuing operations	$	2.60	$	1.39	$	8.07	$	6.39
Net income (loss) from discontinued operations	$	12.32	$	(1.97)	$	12.74	$	(1.61)
Net income (loss) attributable to common stockholders	$	14.92	$	(0.58)	$	20.81	$	4.78
Diluted
Net income from continuing operations	$	2.58	$	1.38	$	8.00	$	6.32
Net income (loss) from discontinued operations	$	12.25	$	(1.96)	$	12.52	$	(1.54)
Net income (loss) attributable to common stockholders	$	14.83	$	(0.58)	$	20.52	$	4.78
Share Data
Weighted average common shares outstanding used in basic per common share calculations	59,126,313		60,190,103		59,769,690		60,384,817
Plus: Dilutive securities	353,151		235,619		1,085,631		2,956,041
Weighted average common shares outstanding used in diluted per common share calculations	59,479,464		60,425,722		60,855,321		63,340,858

See the accompanying Notes to Consolidated Financial Statements (unaudited)

Assurant, Inc.

Consolidated Statements of Comprehensive Income (unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
	(in millions)
Net income (loss)	$	882.4	$	(30.5)	$	1,248.8	$	303.7
Other comprehensive income (loss):
Change in unrealized gains (losses) on investments, net of taxes of $184.4, $(13.0), $220.8 and $(54.1) for the three and nine months ended September 30, 2021 and 2020, respectively (1)	(663.1)		56.8		(786.2)		188.2
Change in unrealized gains on derivative transactions, net of taxes of $0.2, $0.2, $0.6 and $0.5 for each of the three and nine months ended September 30, 2021 and 2020, respectively	(0.6)		(0.6)		(1.8)		(1.8)


Change in foreign currency translation, net of taxes of $1.1, $(1.5), $1.3 and $4.2 for the three and nine months ended September 30, 2021 and 2020, respectively (1)	(23.7)		35.3		(2.9)		15.2
Change in pension and postretirement unrecognized net periodic benefit cost, net of taxes of $0.2, $0.6, $0.9 and $(12.0) for the three and nine months ended September 30, 2021 and 2020, respectively (2)	(0.7)		(2.2)		(3.0)		45.1
Total other comprehensive income (loss)	(688.1)		89.3		(793.9)		246.7
Total comprehensive income	194.3		58.8		454.9		550.4
Less: Comprehensive income (loss) attributable to non-controlling interests	—		0.3		—		(1.1)
Total comprehensive income attributable to stockholders	$	194.3	$	59.1	$	454.9	$	549.3

(1)Three and nine months ended September 30, 2021 include $0.3 million of foreign currency translation adjustments and $605.7 million of net unrealized gains on investments, for a total of $606.0 million, that were recognized through income from discontinued operations upon the sale of the disposed Global Preneed business. Refer to Note 4 for further information.

(2)Change in nine months ended September 30, 2020 includes the prior service credit resulting from the February 2020 amendment of the Retirement Health Benefits plan. Refer to Note 15 for further information.

See the accompanying Notes to Consolidated Financial Statements (unaudited)

Assurant, Inc.

Consolidated Statements of Changes in Equity (unaudited)


	Three Months Ended September 30, 2021
	Preferred Stock		Common Stock		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Treasury Stock		Non-controlling Interests		Total
	(in millions)
Balance at June 30, 2021	$	—	$	0.7	$	1,786.2	$	3,640.3	$	604.0	$	(122.8)	$	—	$	5,908.4

Stock plan issuances	—		—		6.4		—		—		—		—		6.4
Stock plan compensation expense	—		—		18.2		—		—		—		—		18.2
Common stock dividends ($0.66 per share)	—		—		—		(38.5)		—		—		—		(38.5)
Acquisition of common stock	—		—		(62.6)		(264.9)		—		—		—		(327.5)

Net income	—		—		—		882.4		—		—		—		882.4




Acquisition of non-controlling interests	—		—		(16.9)		—		—		—		—		(16.9)
Other comprehensive income (loss)	—		—		—		—		(688.1)		—		—		(688.1)
Balance at September 30, 2021	$	—	$	0.7	$	1,731.3	$	4,219.3	$	(84.1)	$	(122.8)	$	—	$	5,744.4


	Three Months Ended September 30, 2020
	Preferred Stock		Common Stock		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income		Treasury Stock		Non-controlling Interests		Total
	(in millions)
Balance at June 30, 2020	$	2.9	$	1.6	$	4,550.4	$	6,194.4	$	568.9	$	(5,350.4)	$	16.7	$	5,984.5

Stock plan issuances	—		—		4.7		—		—		—		—		4.7
Stock plan compensation expense	—		—		15.5		—		—		—		—		15.5
Common stock dividends ($0.63 per share)	—		—		—		(37.5)		—		—		—		(37.5)
Acquisition of common stock	—		—		(1.7)		—		—		(70.1)		—		(71.8)

Net loss	—		—		—		(30.2)		—		—		(0.3)		(30.5)

Preferred stock dividends ($1.63 per share)	—		—		—		(4.7)		—		—		—		(4.7)
Change in equity of non-controlling interests	—		—		—		4.0		—		—		(11.2)		(7.2)
Acquisition of non-controlling interests	—		—		(0.7)		—		—		—		(1.6)		(2.3)
Other comprehensive income	—		—		—		—		89.3		—		—		89.3
Balance at September 30, 2020	$	2.9	$	1.6	$	4,568.2	$	6,126.0	$	658.2	$	(5,420.5)	$	3.6	$	5,940.0

Assurant, Inc.

Consolidated Statements of Changes in Equity (unaudited)


	Nine Months Ended September 30, 2021
	Preferred Stock		Common Stock		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Treasury Stock		Non-controlling Interests		Total
	(in millions)
Balance at December 31, 2020	$	2.9	$	0.6	$	1,956.8	$	3,548.7	$	709.8	$	(267.4)	$	3.4	$	5,954.8

Stock plan issuances	—		—		11.8		—		—		—		—		11.8
Stock plan compensation expense	—		—		48.6		—		—		—		—		48.6
Common stock dividends ($1.98 per share)	—		—		—		(118.5)		—		—		—		(118.5)
Acquisition of common stock	—		—		(127.2)		(454.4)		—		—		—		(581.6)

Net income	—		—		—		1,248.8		—		—		—		1,248.8
Preferred stock conversion	(2.9)		0.1		(141.8)		—		—		144.6		—		—

Preferred stock dividends ($1.63 per share)	—		—		—		(4.7)		—		—		—		(4.7)
Change in equity of non-controlling interests	—		—		—		(0.6)		—		—		(3.4)		(4.0)
Acquisition of non-controlling interests	—		—		(16.9)		—		—		—		—		(16.9)
Other comprehensive income (loss)	—		—		—		—		(793.9)		—		—		(793.9)
Balance at September 30, 2021	$	—	$	0.7	$	1,731.3	$	4,219.3	$	(84.1)	$	(122.8)	$	—	$	5,744.4


	Nine Months Ended September 30, 2020
	Preferred Stock		Common Stock		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income		Treasury Stock		Non-controlling Interests		Total
	(in millions)
Balance at December 31, 2019	$	2.9	$	1.6	$	4,537.7	$	5,966.4	$	411.5	$	(5,267.3)	$	29.3	$	5,682.1
Cumulative effect of change in accounting principles, net of taxes (1)	—		—		—		(20.4)		—		—		—		(20.4)
Stock plan issuances	—		—		8.6		—		—		—		—		8.6
Stock plan compensation expense	—		—		41.9		—		—		—		—		41.9
Common stock dividends ($1.89 per share)	—		—		—		(115.1)		—		—		—		(115.1)
Acquisition of common stock	—		—		(19.3)		—		—		(153.2)		—		(172.5)

Net income	—		—		—		302.6		—		—		1.1		303.7

Preferred stock dividends ($4.88 per share)	—		—		—		(14.0)		—		—		—		(14.0)
Change in equity of non-controlling interests	—		—		—		6.5		—		—		(25.2)		(18.7)
Acquisition of non-controlling interest	—		—		(0.7)		—		—		—		(1.6)		(2.3)
Other comprehensive income	—		—		—		—		246.7		—		—		246.7
Balance at September 30, 2020	$	2.9	$	1.6	$	4,568.2	$	6,126.0	$	658.2	$	(5,420.5)	$	3.6	$	5,940.0

(1)Amount relates to the adoption of the accounting standard for accounting for expected credit losses for assets held at amortized cost, which established allowances for such expected credit losses as of January 1, 2020.

See the accompanying Notes to Consolidated Financial Statements (unaudited)

Assurant, Inc.

Consolidated Statements of Cash Flows (unaudited)


	Nine Months Ended September 30,
	2021		2020
	(in millions)
Operating activities
Net income attributable to stockholders	$	1,248.8	$	302.6
Adjustments to reconcile net income to net cash provided by operating activities:
Noncash revenues, expenses, gains and losses included in net income from operations:
Income from discontinued operations (1)	(762.0)		97.6
Deferred tax expense	122.3		179.5

Depreciation and amortization	126.0		104.2
Net realized (gains) losses on investments, including impairment losses	(123.2)		37.9


Stock based compensation expense	48.6		41.9
Loss on extinguishment of debt	20.7		—

Iké related charges, net of derivative gains (2)	—		1.7
Changes in operating assets and liabilities:
Change in insurance policy reserves and expenses	1,427.8		608.2
Change in premiums and accounts receivable	(131.6)		107.3
Change in commissions payable	(77.4)		14.0
Change in reinsurance recoverable	(517.7)		(151.7)
Change in reinsurance balance payable	31.2		79.5
Change in funds withheld under reinsurance	(8.6)		42.6
Change in deferred acquisition costs and value of business acquired	(712.1)		(343.8)
Change in taxes payable (receivable) (3)	(122.7)		(25.7)
Change in other assets and other liabilities	(177.2)		(381.4)
Other	(17.1)		(6.5)
Net cash provided by operating activities - discontinued operations	151.2		193.7
Net cash provided by operating activities	527.0		901.6
Investing activities
Sales of:
Fixed maturity securities available for sale	668.9		390.0
Equity securities	10.6		17.5
Other invested assets (4)	124.4		87.4

Subsidiary, net of cash transferred (1)	1,319.6		—
Iké foreign currency hedge (2)	—		22.0
Maturities, calls, prepayments, and scheduled redemption of:
Fixed maturity securities available for sale	730.4		561.5
Commercial mortgage loans on real estate	11.0		12.6
Purchases of:
Fixed maturity securities available for sale	(2,316.9)		(1,115.3)
Equity securities	(34.9)		(23.6)
Commercial mortgage loans on real estate	(95.7)		—
Other invested assets (4)	(58.9)		(75.7)
Property and equipment and other	(131.3)		(81.1)
Subsidiaries, net of cash transferred (5)	(16.6)		(166.1)

Net cash outflow related to sale of interests in Iké and termination of put/call obligations	—		(73.3)
Consolidated investment entities (6):

Assurant, Inc.

Consolidated Statements of Cash Flows (unaudited)


Purchases of investments	—		(353.1)
Sale of investments	—		550.2
Change in short-term investments	(30.2)		160.4
Other	1.5		0.2
Net cash used in investing activities - discontinued operations	(145.2)		(188.8)
Net cash provided by (used in) investing activities	36.7		(275.2)
Financing activities

Issuance of debt, net of issuance costs	347.2		—
Repayment of debt	(419.8)		—


Repayment of debt for consolidated investment entities (6)	—		(1.2)

Borrowings under unsecured revolving credit facility	—		200.0
Payments on secured revolving credit facility	—		(200.0)
Acquisition of common stock	(544.3)		(154.5)
Common stock dividends paid	(118.5)		(115.1)
Preferred stock dividends paid	(4.7)		(14.0)
Employee stock purchases and withholdings	(17.3)		(12.0)



Net cash provided by (used in) financing activities - discontinued operations	—		—
Net cash used in financing activities	(757.4)		(296.8)
Effect of exchange rate changes on cash and cash equivalents - continuing operations	(7.2)		6.5
Effect of exchange rate changes on cash and cash equivalents - discontinued operations	0.2		(0.2)
Effect of exchange rate changes on cash and cash equivalents	(7.0)		6.3
Change in cash and cash equivalents	(200.7)		335.9
Cash and cash equivalents at beginning of period	2,228.6		1,867.1
Cash and cash equivalents at end of period	2,027.9		2,203.0
Less: Cash and cash equivalents of discontinued operations at end of period	—		13.7
Cash and cash equivalents of continuing operations at end of period	$	2,027.9	$	2,189.3

(1)Relates to the disposition of the Global Preneed business, net of $27.3 million of cash transferred. For additional information, refer to Note 4.

(2)Relates to the disposition of Iké Grupo, Iké Asistencia and certain of their affiliates (collectively, “Iké”).

(3)The nine months ended September 30, 2020 includes receipt of the $204.9 million federal tax refund, which includes interest, related to the ability to carryback net operating losses to prior periods under the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”).

(4) In connection with the sale of the Company’s minority interests in Iké in May 2020, the Company provided financing to Iké Grupo in an aggregate principal amount of $34.0 million (the “Iké Loan”), which was reflected in purchases of other invested assets in the nine months ended September 30, 2020. In April 2021, the Iké Loan was prepaid in full, which was reflected in sales of other invested assets in the nine months ended September 30, 2021.

(5)The nine months ended September 30, 2020 consists of $175.4 million in cash consideration for the acquisition of American Financial & Automotive Services, Inc., net of $39.6 million of cash acquired, and $30.3 million in total cash consideration for three business acquisitions within the Global Lifestyle business.

(6)Relates to cash flows from the Company’s variable interest entities.

See the accompanying Notes to Consolidated Financial Statements (unaudited)

Assurant, Inc.

Notes to Consolidated Financial Statements (unaudited)

(in millions, except number of shares and per share amounts)

1. Nature of Operations

Assurant, Inc. (the “Company”) is a global provider of lifestyle and housing solutions that support, protect and connect major consumer purchases. The Company partners with leading brands to develop innovative products and services and to deliver enhanced customer experience. The Company operates in North America, Latin America, Europe and Asia Pacific through two operating segments: Global Lifestyle and Global Housing. Through its Global Lifestyle segment, the Company provides mobile device solutions and extended service products and related services for consumer electronics and appliances (referred to as “Connected Living”); vehicle protection and related services (referred to as “Global Automotive”); and credit and other insurance products (referred to as “Global Financial Services and Other”). Through its Global Housing segment, the Company provides lender-placed homeowners insurance, lender-placed manufactured housing insurance and lender-placed flood insurance (referred to as “Lender-placed Insurance”); renters insurance and related products (referred to as “Multifamily Housing”); and voluntary manufactured housing insurance, voluntary homeowners insurance and other specialty products (referred to as “Specialty and Other”). The businesses previously reported as the Global Preneed segment, through which the Company provided pre-funded funeral insurance, final need insurance and related services, as well as certain businesses previously disposed of through reinsurance, were sold in August 2021. Refer to Note 4 for additional information on the sale.

The Company’s common stock is traded on the New York Stock Exchange under the symbol “AIZ”.

2. Basis of Presentation

The accompanying unaudited interim Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information. Accordingly, these statements do not include all of the information and notes required by GAAP for complete financial statements.

The interim financial data as of September 30, 2021 and for the three and nine months ended September 30, 2021 and 2020 is unaudited. In the opinion of management, the interim data includes all adjustments necessary for a fair statement of the results for the interim periods. The unaudited interim Consolidated Financial Statements include the accounts of the Company and all of its wholly owned subsidiaries. All inter-company transactions and balances are eliminated in consolidation. Certain prior period amounts have been reclassified to conform to the current year presentation, including the impacts of businesses held for sale and discontinued operations as further summarized in Note 4.

Operating results for the three and nine months ended September 30, 2021 are not necessarily indicative of the results that may be expected for the year ending December 31, 2021. The accompanying unaudited interim Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.

3. Recent Accounting Pronouncements

Adopted

Simplifying the Accounting for Income Taxes: In December 2019, the Financial Accounting Standards Board (“FASB”) issued new guidance to simplify the accounting for income taxes by removing certain exceptions to the general principles and also simplify areas such as franchise taxes, step-up in tax basis goodwill, separate entity financial statements and interim recognition of enactment of tax laws or rate changes. The standard was adopted by the Company beginning on January 1, 2021 with no material impact on its financial position or results of operations.

Not Yet Adopted

Targeted improvements to the accounting for long-duration contracts: In August 2018, the FASB issued guidance that provides targeted improvements to the accounting for long-duration contracts. The guidance includes the following primary changes: assumptions supporting benefit reserves will no longer be locked-in but must be updated at least annually with the impact of changes to the liability reflected in earnings (except for discount rates); the discount rate assumptions will be based on the upper-medium grade (low credit risk) fixed-income instrument yield instead of the earnings rate of invested assets; the discount rate must be evaluated at each reporting date and the impact of changes to the liability estimate as a result of updating

Assurant, Inc.

Notes to Consolidated Financial Statements (unaudited)

(in millions, except number of shares and per share amounts)

the discount rate assumption is required to be recognized in other comprehensive income; the provision for adverse deviation is eliminated; and premium deficiency testing is eliminated. Other noteworthy changes include the following: differing models for amortizing deferred acquisition costs will become uniform for all long-duration contracts based on a constant rate over the expected term of the related in-force contracts; all market risk benefits associated with deposit contracts must be reported at fair value with changes reflected in income except for changes related to credit risk which will be recognized in other comprehensive income; and disclosures will be expanded to include disaggregated roll forwards of the liability for future policy benefits, policyholder account balances, market risk benefits, separate account liabilities, and deferred acquisition costs, as well as information about significant inputs, judgments, assumptions and methods used in measurement.

The guidance is effective for fiscal years beginning after December 15, 2022, and interim periods within those fiscal years. Early adoption is permitted. Generally, the amendments are applied retrospectively as of the beginning of the earliest period presented with two transition options available for changing the assumptions. The Company is evaluating the requirements of this guidance and the potential impact on the Company’s financial position and results of operations.

Facilitation of the Effects of Reference Rate Reform on Financial Reporting: In March 2020, the FASB issued guidance which provides optional expedients and exceptions for applying GAAP to contract modifications and hedging relationships, subject to meeting certain criteria, that reference LIBOR or another reference rate expected to be discontinued.

The relief is applicable only to legacy contracts if the amendments made to the agreements are solely for reference rate reform activities. The provisions must be applied consistently for all relevant transactions other than derivatives, which may be applied at a hedging relationship level. The guidance is effective upon issuance. The guidance on contract modifications is applied prospectively from any date beginning March 12, 2020. Unlike other topics, the provisions of this update are only available until December 31, 2022, when the reference rate replacement activity is expected to have been completed.

The adoption of this standard is expected to have no material impact on the Company’s financial position and results of operations.

Improvements to Convertible Instruments and Contracts in an Entity’s Own Equity: In August 2020, the FASB issued guidance that simplifies accounting for convertible instruments by removing major separation models required under current GAAP. Consequently, more convertible debt instruments will be reported as a single liability instrument and more convertible preferred stock as a single equity instrument with no separate accounting for embedded conversion features. The guidance removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception, which will permit more contracts in an entity’s own equity to qualify for it. The guidance also simplifies the diluted earnings per common share (“EPS”) calculation in the areas of convertible instruments and instruments that qualify for the derivatives scope exception for contracts in an entity’s own equity to address accounting for the guidance changes to the classification, recognition and measurement.

The guidance is effective for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. The adoption of this standard is expected to have no material impact on the Company’s financial position and results of operations.

Recognition and Measurement of Revenue Contracts with Customers Acquired in a Business Combination: In October 2021, the FASB issued guidance to improve comparability after a business combination is reported in the acquirer’s financial statements by providing consistent recognition and measurement guidance for revenue contracts with customers acquired in a business combination and revenue contracts with customers not acquired in a business combination. Generally, the acquirer will recognize the acquired contract assets and contract liabilities at the same amounts recorded by the acquiree. Historically, such amounts were recognized by the acquirer at fair value in the acquisition accounting. Under the amended guidance, the acquirer should account for the related revenue contracts as if it had originated the contracts. The amendments provide certain practical expedients for acquirers when recognizing and measuring acquired contract assets and contract liabilities from revenue contracts in a business combination.

The guidance is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The amendments should be applied prospectively to business combinations occurring on or after the effective date of the amendments. Early adoption of the amendment is permitted, including adoption in an interim period. An entity that early adopts in an interim period should apply the amendments (1) retrospectively to all business combinations for which the acquisition date occurs on or after the beginning of the fiscal year that includes the interim period of early application and (2) prospectively

Assurant, Inc.

Notes to Consolidated Financial Statements (unaudited)

(in millions, except number of shares and per share amounts)

to all business combinations that occur on or after the date of initial application. The adoption of this standard is expected to have no material impact on the Company’s financial position and results of operations.

4. Business Held for Sale and Discontinued Operations

On August 2, 2021, the Company completed its sale of the legal entities which comprise the businesses previously reported as the Global Preneed segment and certain businesses previously disposed of through reinsurance, which were previously reported in the Corporate and Other segment (collectively, the “disposed Global Preneed business”), to subsidiaries of CUNA Mutual Group (“CUNA”) for an aggregate purchase price at closing of $1.35 billion in cash. The aggregate purchase price was comprised of a base purchase price of $1.25 billion, adjusted for (i) the amount of Leakage (as defined in the Equity Purchase Agreement, dated as of March 8, 2021, by and among the Company, Interfinancial Inc., CMFG Life Insurance Company and TruStage Global Holdings, ULC (the “Equity Purchase Agreement”)) paid by the disposed Global Preneed business after December 31, 2020 and at or prior to the closing of the transaction, (ii) the amount of any Transaction Related Expenses (as defined in the Equity Purchase Agreement) paid by the disposed Global Preneed business after the closing of the transaction (iii) the difference between the book value of certain assets in the disposed Global Preneed business’s investment portfolio as of December 31, 2020 and the value of cash paid in substitution for the fair market value of such assets by the Company and (iv) the accrual of interest on the base purchase price, as adjusted pursuant to clauses (i) to (iii), at a rate of 6% per annum during the period beginning on January 1, 2021 and ending on the date immediately prior to the date of the closing of the transaction. The purchase price is subject to a post-closing true-up mechanism as set forth in the Equity Purchase Agreement, which is expected to be determined within approximately 120 days from the date of the closing of the transaction. The net proceeds, which is comprised of the aggregate purchase price less $37.7 million of costs to sell, were $1.31 billion. The net after-tax gain on the sale for the nine months ended September 30, 2021 was $723.2 million, including $606.0 million of net after-tax gains recognized from accumulated other comprehensive income.

The Company reports a business as held for sale when management has received approval to sell the business and is committed to a formal plan, the business is available for immediate sale, the business is being actively marketed, the sale is anticipated to occur during the ensuing year and certain other specified criteria are met. A business classified as held for sale is recorded at the lower of its carrying amount or estimated fair value less costs to sell, which is required to be remeasured each reporting period. If the carrying amount of the business exceeds its estimated fair value, which is based on the estimated sales price of the transaction, less costs to sell, a loss is recognized. Depreciation is not recorded on assets of a business classified as held for sale.

The Company reports the results of operations of a business as discontinued operations if (i) the business is classified as held for sale; (ii) the business represents a strategic shift that will have a major impact on the Company’s operations and financial results; (iii) the operations and cash flows of the business have been or will be eliminated from the ongoing operations of the Company as a result of the disposal transaction; and (iv) the Company will not have any significant continuing involvement in the operations of the business after the disposal transaction. The results of discontinued operations are reported in net income from discontinued operations in the consolidated statements of operations for all periods presented, commencing in the period in which the business is either disposed of or is classified as held for sale, including any gain or loss recognized on closing or adjustment of the carrying amount to fair value less costs to sell. Assets and liabilities related to a business classified as held for sale which also meets the criteria for discontinued operations are segregated in the consolidated balance sheets for the current and prior periods presented.

Prior to the sale, the Company determined that the disposed Global Preneed business met the criteria to be classified as held for sale and that the sale represented a strategic shift that will have a major impact on the Company’s operations and financial results. Accordingly, the results of operations of the disposed Global Preneed business are presented as net income from discontinued operations in the consolidated statements of operations and segregated in the consolidated statement of cash flows for all periods presented, and the assets and liabilities for the disposed Global Preneed business have been classified as held for sale and segregated for all periods presented in the consolidated balance sheets.

Assurant, Inc.

Notes to Consolidated Financial Statements (unaudited)

(in millions, except number of shares and per share amounts)

The following table presents the major classes of assets and liabilities as of August 2, 2021, the date of the sale, and the major classes of asset and liabilities held for sale included in the consolidated balance sheet as of December 31, 2020.


	August 2, 2021		December 31, 2020
Assets
Investments:
Fixed maturity securities available for sale, at fair value	$	6,761.0	$	6,633.5
Equity securities at fair value	112.6		113.9
Commercial mortgage loans on real estate, at amortized cost	599.0		616.0
Short-term investments	58.7		41.2
Other investments	14.8		52.0
Total investments	7,546.1		7,456.6
Cash and cash equivalents	27.3		21.0
Premiums and accounts receivable	4.2		7.5
Reinsurance recoverables	3,235.4		3,234.5
Accrued investment income	66.8		62.7
Deferred acquisition costs (1)	334.0		185.5
Property and equipment, net	49.3		47.2
Value of business acquired	3.9		4.3
Other assets	20.8		22.6
Assets held in separate accounts	2,322.1		2,176.8
Total assets held for sale	$	13,609.9	$	13,218.7
Liabilities
Future policy benefits and expenses	$	8,921.8	$	8,703.5
Unearned premiums (1)	36.6		14.9
Claims and benefits payable	1,024.2		1,049.2
Commissions payable	10.6		9.4
Reinsurance balances payable	4.1		3.1
Accounts payable and other liabilities	127.2		154.4
Liabilities related to separate accounts	2,322.1		2,176.8
Total liabilities held for sale	$	12,446.6	$	12,111.3

(1)Deferred acquisition costs and unearned premiums include the impact of changes in unrealized gains (losses) on the amortization.

Assurant, Inc.

Notes to Consolidated Financial Statements (unaudited)

(in millions, except number of shares and per share amounts)

The following table summarizes the components of net income (loss) from discontinued operations included in the consolidated statements of operations:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Revenues
Net earned premiums	$	6.1	$	16.0	$	42.6	$	49.4
Fees and other income	13.6		38.6		91.0		113.6
Net investment income	23.7		71.8		168.4		216.0
Net realized gains (losses) on investments	0.5		(0.6)		4.2		(16.7)
Gain on disposal of businesses (1)	926.4		—		920.1		—
Total revenues	970.3		125.8		1,226.3		362.3
Benefits, losses and expenses
Policyholder benefits	24.6		71.1		172.7		211.6
Amortization of deferred acquisition costs and value of business acquired	7.1		18.9		46.2		56.1
Underwriting, general and administrative expenses	5.7		14.6		39.0		46.8
Goodwill impairment (2)	—		137.8		—		137.8
Total benefits, losses and expenses	37.4		242.4		257.9		452.3
Income (loss) from discontinued operations before income taxes	932.9		(116.6)		968.4		(90.0)
Provision for income taxes (3)	204.1		1.9		206.4		7.6
Net income (loss) from discontinued operations	$	728.8	$	(118.5)	$	762.0	$	(97.6)

(1)Includes $774.2 million of pre-tax AOCI, primarily net unrealized gains on investments, that was recognized in earnings upon sale.

(2)During the third quarter of 2020, the Company identified impairment indicators impacting the fair value of the Global Preneed reportable segment in connection with exploring strategic alternatives for the Global Preneed business. Such impairment indicators, including the evaluation of the long-term economic performance of the segment in light of further expected declines in interest rates, triggered the requirement for an interim goodwill impairment analysis in the third quarter of 2020. The fair value, which was determined using a discounted cash flow method, was lower than the carrying value, resulting in the impairment charge of the entire goodwill of $137.8 million.

(3)Includes $168.2 million of tax on the AOCI that was recognized in earnings upon sale, as noted above.

5. Segment Information

As of September 30, 2021, the Company had three reportable segments which are defined based on the manner in which the Company’s chief operating decision maker, the Chief Executive Officer (“CEO”), reviews the business to assess performance and allocate resources, and which align to the nature of the products and services offered:

Global Lifestyle;
Global Housing; and
Corporate and Other: includes activities of the holding company, financing and interest expenses, net realized gains (losses) on investments (which includes unrealized gains (losses) on equity securities and changes in fair value of direct investments in collateralized loan obligations), interest income earned from short-term investments held, income (expenses) primarily related to the Company’s frozen benefit plans, amounts related to businesses previously disposed of through reinsurance and the run-off of the Assurant Health business. Corporate and Other also includes goodwill impairments, the foreign currency gains (losses) from remeasurement of monetary assets and liabilities, changes in the fair value of derivative instruments and other expenses related to merger and acquisition activities, as well as other highly variable or unusual items other than reportable catastrophes (reportable catastrophe losses, net of reinsurance and client profit sharing adjustments, and including reinstatement and other premiums).

Assurant, Inc.

Notes to Consolidated Financial Statements (unaudited)

(in millions, except number of shares and per share amounts)

The following tables summarize selected financial information by segment:


	Three Months Ended September 30, 2021

	Global Lifestyle		Global Housing		Corporate and Other		Consolidated
Revenues
Net earned premiums	$	1,688.5	$	451.6	$	—	$	2,140.1
Fees and other income	274.5		35.1		—		309.6
Net investment income	48.5		20.2		7.3		76.0
Net realized gains on investments	—		—		112.1		112.1
Total revenues	2,011.5		506.9		119.4		2,637.8
Benefits, losses and expenses
Policyholder benefits	335.1		279.1		—		614.2
Amortization of deferred acquisition costs and value of business acquired	910.0		55.6		—		965.6
Underwriting, general and administrative expenses	614.6		169.5		34.2		818.3
Interest expense	—		—		27.5		27.5
Loss on extinguishment of debt	—		—		20.7		20.7
Total benefits, losses and expenses	1,859.7		504.2		82.4		2,446.3
Segment income from continuing operations before provision (benefit) for income tax	151.8		2.7		37.0		191.5
Provision (benefit) for income taxes	27.8		(0.5)		10.6		37.9
Segment net income from continuing operations	$	124.0	$	3.2	$	26.4	153.6
Net income from discontinued operations							728.8
Net income							882.4
Less: Net income attributable to non-controlling interests							—
Net income attributable to stockholders							882.4
Less: Preferred stock dividends							—
Net income attributable to common stockholders							$	882.4
	As of September 30, 2021
Segment assets:	$	25,425.3	$	4,285.2	$	3,914.3	$	33,624.8

Assurant, Inc.

Notes to Consolidated Financial Statements (unaudited)

(in millions, except number of shares and per share amounts)


	Three Months Ended September 30, 2020

	Global Lifestyle		Global Housing		Corporate and Other		Consolidated
Revenues
Net earned premiums	$	1,633.2	$	453.6	$	—	$	2,086.8
Fees and other income	171.8		37.7		(0.1)		209.4
Net investment income	44.6		16.5		2.2		63.3
Net realized gains on investments	—		—		17.2		17.2
Total revenues	1,849.6		507.8		19.3		2,376.7
Benefits, losses and expenses
Policyholder benefits	365.4		272.8		0.3		638.5
Amortization of deferred acquisition costs and value of business acquired	870.5		56.8		—		927.3
Underwriting, general and administrative expenses	480.8		162.2		29.9		672.9

Interest expense	—		—		25.5		25.5
Total benefits, losses and expenses	1,716.7		491.8		55.7		2,264.2
Segment income (loss) from continuing operations before provision (benefit) for income taxes	132.9		16.0		(36.4)		112.5
Provision (benefit) for income taxes	26.3		2.9		(4.7)		24.5
Segment net income (loss) from continuing operations	$	106.6	$	13.1	$	(31.7)	88.0
Net loss from discontinued operations							(118.5)
Net loss							(30.5)
Less: Net loss attributable to non-controlling interest							0.3
Net loss attributable to stockholders							(30.2)
Less: Preferred stock dividends							(4.7)
Net loss attributable to common stockholders							$	(34.9)

Assurant, Inc.

Notes to Consolidated Financial Statements (unaudited)

(in millions, except number of shares and per share amounts)


	Nine Months Ended September 30, 2021

	Global Lifestyle		Global Housing		Corporate and Other		Consolidated
Revenues
Net earned premiums	$	5,014.6	$	1,381.7	$	—	$	6,396.3
Fees and other income	748.5		109.1		0.4		858.0
Net investment income	148.7		63.3		23.2		235.2
Net realized gains on investments	—		—		123.2		123.2
Total revenues	5,911.8		1,554.1		146.8		7,612.7
Benefits, losses and expenses
Policyholder benefits	1,007.3		673.9		—		1,681.2
Amortization of deferred acquisition costs and value of business acquired	2,731.8		171.9		—		2,903.7
Underwriting, general and administrative expenses	1,690.0		501.3		109.9		2,301.2
Interest expense	—		—		84.7		84.7
Loss on extinguishment of debt	—		—		20.7		20.7
Total benefits, losses and expenses	5,429.1		1,347.1		215.3		6,991.5
Segment income (loss) from continuing operations before provision (benefit) for income tax	482.7		207.0		(68.5)		621.2
Provision (benefit) for income taxes	105.8		42.7		(14.1)		134.4
Segment net income (loss) from continuing operations	$	376.9	$	164.3	$	(54.4)	486.8
Net income from discontinued operations							762.0
Net income							1,248.8
Less: Net income attributable to non-controlling interests							—
Net income attributable to stockholders							1,248.8
Less: Preferred stock dividends							(4.7)
Net income attributable to common stockholders							$	1,244.1

Assurant, Inc.

Notes to Consolidated Financial Statements (unaudited)

(in millions, except number of shares and per share amounts)


	Nine Months Ended September 30, 2020

	Global Lifestyle		Global Housing		Corporate and Other		Consolidated
Revenues
Net earned premiums	$	4,799.0	$	1,374.6	$	—	$	6,173.6
Fees and other income	721.6		106.0		1.8		829.4
Net investment income	143.5		54.9		13.9		212.3
Net realized losses on investments	—		—		(37.9)		(37.9)
Total revenues	5,664.1		1,535.5		(22.2)		7,177.4
Benefits, losses and expenses
Policyholder benefits	1,044.7		651.9		0.7		1,697.3
Amortization of deferred acquisition costs and value of business acquired	2,519.7		169.9		—		2,689.6
Underwriting, general and administrative expenses	1,649.4		496.6		144.9		2,290.9

Interest expense	—		—		77.7		77.7
Total benefits, losses and expenses	5,213.8		1,318.4		223.3		6,755.5
Segment income (loss) from continuing operations before provision (benefit) for income tax	450.3		217.1		(245.5)		421.9
Provision (benefit) for income taxes	101.0		44.4		(124.8)		20.6
Segment net income (loss) from continuing operations	$	349.3	$	172.7	$	(120.7)	401.3
Net loss from discontinued operations							(97.6)
Net income							303.7
Less: Net income attributable to non-controlling interest							(1.1)
Net income attributable to stockholders							302.6
Less: Preferred stock dividends							(14.0)
Net income attributable to common stockholders							$	288.6

6. Contract Revenues

The Company partners with clients to provide consumers with a diverse range of protection products and services. The Company’s revenues from protection products are accounted for as insurance contracts and are recognized over the term of the insurance protection provided. Revenues from service contracts and sales of products are recognized as the contractual performance obligations are satisfied or the products are delivered. Revenue is measured as the amount of consideration the Company expects to be entitled to in exchange for performing the services or transferring products. If payments are received before the related revenue is recognized, the amount is recorded as unearned revenue or advance payment liabilities, until the performance obligations are satisfied or the products are transferred.

The disaggregated revenues from service contracts included in fees and other income on the consolidated statements of operations are $264.0 million and $124.6 million for Global Lifestyle and $22.4 million and $25.3 million for Global Housing for the three months ended September 30, 2021 and 2020, respectively. The disaggregated revenues from service contracts included in fees and other income on the consolidated statement of operations are $730.1 million and $579.3 million for Global Lifestyle and $71.8 million and $71.1 million for Global Housing for the nine months ended September 30, 2021 and 2020, respectively.

Global Lifestyle

In the Company’s Global Lifestyle segment, revenues from service contracts and sales of products are primarily from the Company’s Connected Living business. Through partnerships with mobile carriers, the Company provides administrative services related to its mobile device protection products, including program design and marketing strategy, risk management, data analytics, customer support and claims handling, supply chain and service delivery, repair and logistics, and device

Assurant, Inc.

Notes to Consolidated Financial Statements (unaudited)

(in millions, except number of shares and per share amounts)

disposition. Administrative fees are generally billed monthly based on the volume of services provided during the billing period (for example, based on the number of mobile subscribers) with payment due within a short-term period. Each service or bundle of services, depending on the contract, is an individual performance obligation with a standalone selling price. The Company recognizes revenue as it invoices, which corresponds to the value transferred to the customer.

The Company also repairs, refurbishes and then sells mobile and other electronic devices, on behalf of its clients, for a bundled per unit fee. The entire processing of the device is considered one performance obligation with a standalone selling price and thus, the per unit fee is recognized when the products are sold. Payments are generally due prior to shipment or within a short-term period.

Global Housing

In the Company’s Global Housing segment, revenues from service contracts and sales of products are primarily from the Company’s Lender-placed Insurance business. Under the Company’s Lender-placed Insurance business, the Company provides loan and claim payment tracking services for lenders. The Company generally invoices its customers weekly or monthly based on the volume of services provided during the billing period with payment due within a short-term period. Each service is an individual performance obligation with a standalone selling price. The Company recognizes revenue as it invoices, which corresponds to the value transferred to the customer.

Contract Balances

The receivables and unearned revenue under these contracts were $248.9 million and $148.9 million, respectively, as of September 30, 2021, and $257.9 million and $89.8 million, respectively, as of December 31, 2020. These balances are included in premiums and accounts receivable and accounts payable and other liabilities, respectively, in the consolidated balance sheets. Revenue from service contracts and sales of products recognized during the three months ended September 30, 2021 and 2020 that was included in unearned revenue as of December 31, 2020 and 2019 was $12.5 million and $10.3 million, respectively. Revenue from service contracts and sales of products recognized during the nine months ended September 30, 2021 and 2020 that was included in unearned revenue as of December 31, 2020 and 2019 was $47.6 million and $37.5 million, respectively.

In certain circumstances, the Company defers upfront commissions and other costs in connection with client contracts in excess of one year where the Company can demonstrate future economic benefit. For these contracts, expense is recognized as revenues are earned. The Company periodically assesses recoverability based on the performance of the related contracts. As of September 30, 2021 and December 31, 2020, the Company had approximately $6.6 million and $13.8 million, respectively, of such intangible assets attributed to service contracts that will be expensed over the term of the client contracts.

Assurant, Inc.

Notes to Consolidated Financial Statements (unaudited)

(in millions, except number of shares and per share amounts)

7. Investments

The following tables show the cost or amortized cost, allowance for credit losses, gross unrealized gains and losses, and fair value of the Company’s fixed maturity securities as of the dates indicated:


	September 30, 2021
	Cost or Amortized Cost		Allowance for Credit Losses		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Fixed maturity securities:
U.S. government and government agencies and authorities	$	88.3	$	—	$	2.6	$	(0.2)	$	90.7
States, municipalities and political subdivisions	138.3		—		7.6		(0.6)		145.3
Foreign governments	418.3		—		7.9		(2.3)		423.9
Asset-backed	541.3		—		14.6		(0.9)		555.0
Commercial mortgage-backed	468.2		—		13.7		(2.0)		479.9
Residential mortgage-backed	620.7		—		32.8		(0.8)		652.7
U.S. corporate	3,706.9		—		271.0		(12.5)		3,965.4
Foreign corporate	1,289.3		—		55.2		(7.1)		1,337.4
Total fixed maturity securities	$	7,271.3	$	—	$	405.4	$	(26.4)	$	7,650.3


	December 31, 2020
	Cost or Amortized Cost		Allowance for Credit Losses		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Fixed maturity securities:
U.S. government and government agencies and authorities	$	90.4	$	—	$	3.7	$	—	$	94.1
States, municipalities and political subdivisions	164.4		—		11.0		(0.1)		175.3
Foreign governments	442.4		—		27.4		(0.1)		469.7
Asset-backed	251.9		—		9.4		(0.8)		260.5
Commercial mortgage-backed	266.3		—		16.5		(1.4)		281.4
Residential mortgage-backed	685.8		—		49.0		(0.2)		734.6
U.S. corporate	3,315.6		(1.2)		380.6		(4.4)		3,690.6
Foreign corporate	1,029.0		—		80.6		(0.3)		1,109.3
Total fixed maturity securities	$	6,245.8	$	(1.2)	$	578.2	$	(7.3)	$	6,815.5

The Company’s state, municipality and political subdivision holdings are highly diversified across the U.S., with no individual state, municipality or political subdivision exposure (including both general obligation and revenue securities) exceeding 0.3% and 0.4% of the overall investment portfolio as of September 30, 2021 and December 31, 2020. As of September 30, 2021 and December 31, 2020, the securities included general obligation and revenue bonds issued by states, cities, counties, school districts and similar issuers, including $20.3 million and $39.6 million, respectively, of advance refunded or escrowed-to-maturity bonds (collectively referred to as “pre-refunded revenue bonds”), which are bonds for which an irrevocable trust has been established to fund the remaining payments of principal and interest. As of September 30, 2021 and December 31, 2020, revenue bonds accounted for 53% and 60% of the holdings, respectively. Excluding pre-refunded revenue bonds, the activities supporting the income streams of the Company’s revenue bonds are across a broad range of sectors, primarily water, airport and marina, specifically pledged tax revenues, leases, colleges and universities, and other miscellaneous sources such as bond banks, finance authorities and appropriations.

The Company’s investments in foreign government fixed maturity securities are held mainly in countries and currencies where the Company has policyholder liabilities, to facilitate matching of assets to the related liabilities. As of September 30, 2021, approximately 26%, 25% and 14% of the foreign government securities were held in Brazil, Canadian government/

Assurant, Inc.

Notes to Consolidated Financial Statements (unaudited)

(in millions, except number of shares and per share amounts)

provincials and Mexico, respectively. As of December 31, 2020, approximately 26%, 24% and 16% of the foreign government securities were held in Brazil, Canadian government/provincials and Mexico, respectively. No other country represented more than 9% and 8% of the Company’s foreign government securities as of September 30, 2021 and December 31, 2020, respectively.

The Company had European investment exposure in its corporate fixed maturity securities of $735.7 million with a net unrealized gain of $25.9 million as of September 30, 2021 and $589.5 million with a net unrealized gain of $41.8 million as of December 31, 2020. Approximately 37% and 29% of the corporate fixed maturity European exposure was held in the financial industry as of September 30, 2021 and December 31, 2020, respectively. The Company’s largest European country exposure (the United Kingdom) represented approximately 5% and 6% of the fair value of the Company’s corporate fixed maturity securities as of September 30, 2021 and December 31, 2020, respectively. The Company’s international investments are managed as part of the overall portfolio with the same approach to risk management and focus on diversification.

The Company had exposure to the energy sector in its corporate fixed maturity securities of $352.8 million with a net unrealized gain of $22.5 million as of September 30, 2021 and $319.4 million with a net unrealized gain of $23.0 million as of December 31, 2020. Approximately 85% and 81% of the energy exposure is rated as investment grade as of September 30, 2021 and December 31, 2020, respectively.

The cost or amortized cost and fair value of fixed maturity securities as of September 30, 2021 by contractual maturity are shown below. Actual maturities may differ from contractual maturities because issuers of the securities may have the right to call or prepay obligations with or without call or prepayment penalties.


	Cost or Amortized Cost		Fair Value
Due in one year or less	$	366.7	$	371.4
Due after one year through five years	2,423.0		2,533.9
Due after five years through ten years	1,877.8		1,998.1
Due after ten years	973.6		1,059.3
Total	5,641.1		5,962.7
Asset-backed	541.3		555.0
Commercial mortgage-backed	468.2		479.9
Residential mortgage-backed	620.7		652.7
Total	$	7,271.3	$	7,650.3

The following table sets forth the net realized gains (losses), including impairment, recognized in the consolidated statements of operations for the periods indicated:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Net realized gains (losses) related to sales and other:
Fixed maturity securities	$	16.1	$	0.6	$	19.3	$	6.4
Equity securities (1) (2)	95.1		12.6		100.6		(6.6)
Commercial mortgage loans on real estate	0.5		(0.6)		0.7		(0.7)
Other investments	0.4		5.9		2.4		9.3
Consolidated investment entities (3)	—		—		—		(32.3)
Total net realized gains (losses) related to sales and other	112.1		18.5		123.0		(23.9)
Net realized gains (losses) related to impairments:
Fixed maturity securities (4)	—		(1.3)		1.2		(2.6)
Other investments (1)	—		—		(1.0)		(11.4)
Total net realized gains (losses) related to impairments	—		(1.3)		0.2		(14.0)
Total net realized gains (losses)	$	112.1	$	17.2	$	123.2	$	(37.9)

Assurant, Inc.

Notes to Consolidated Financial Statements (unaudited)

(in millions, except number of shares and per share amounts)

(1)Gross gains of $23.0 million and $25.1 million were realized on equity investments accounted for under the measurement alternative for the three and nine months ended September 30, 2021. Gross gains of $2.2 million were realized on equity investments accounted for under the measurement alternative for the nine months ended September 30, 2020. There were no gross gains realized on equity investments accounted for under the measurement alternative for the three months ended September 30, 2020. The carrying value of equity investments accounted for under the measurement alternative was $112.0 million and $96.5 million as of September 30, 2021 and 2020, respectively. For the nine months ended September 30, 2021 and 2020, there were impairments of $1.0 million and $11.4 million, respectively. There were no impairments for the three months ended September 30, 2021 and 2020. As of September 30, 2021 and 2020, the cumulative carry value fair value increases were $46.0 million and $26.8 million and the cumulative impairment losses were $19.6 million and $12.8 million, respectively. These investments are included within other investments on the consolidated balance sheets.

(2)Three and nine months ended September 30, 2021 included $74.6 million of unrealized gains from three equity positions that went public in Third Quarter 2021. The total fair value of these equity securities as of September 30, 2021 was $107.1 million and reported on the Equity Securities line on the consolidated balance sheet. Prior to going public these equity positions were reported within the Other Investments line on the consolidated balance sheet and the fair value as of December 31, 2020 was $31.6 million.

(3)Consists of net realized losses from the change in fair value of the Company’s direct investment in collateralized loan obligations (“CLOs”).

(4)The Company recorded a $1.2 million allowance for credit losses on fixed maturity securities available for sale for the year ended December 31, 2020. Specific securities, for which the reserve was established, were sold during the three month period ended June 30, 2021 resulting in the elimination of the $1.2 million allowance for credit losses.

The following table sets forth the portion of unrealized gains (losses) related to equity securities for the periods indicated:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Net gains (losses) recognized on equity securities	$	95.1	$	12.6	$	100.6	$	(6.6)
Less: Net realized gains related to sales of equity securities	1.1		(0.1)		2.1		0.9
Total net unrealized gains (losses) on equity securities held	$	94.0	$	12.7	$	98.5	$	(7.5)

The investment category and duration of the Company’s gross unrealized losses on fixed maturity securities as of September 30, 2021 and December 31, 2020 were as follows:


	September 30, 2021
	Less than 12 months				12 Months or More				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Fixed maturity securities:
U.S. government and government agencies and authorities	$	17.8	$	(0.2)	$	—	$	—	$	17.8	$	(0.2)
States, municipalities and political subdivisions	38.5		(0.6)		—		—		38.5		(0.6)
Foreign governments	107.1		(2.3)		—		—		107.1		(2.3)
Asset-backed	228.9		(0.8)		8.1		(0.1)		237.0		(0.9)
Commercial mortgage-backed	156.0		(1.5)		1.8		(0.5)		157.8		(2.0)
Residential mortgage-backed	66.1		(0.7)		9.5		(0.1)		75.6		(0.8)
U.S. corporate	704.3		(11.3)		14.5		(1.2)		718.8		(12.5)
Foreign corporate	414.6		(7.0)		1.7		(0.1)		416.3		(7.1)
Total fixed maturity securities	$	1,733.3	$	(24.4)	$	35.6	$	(2.0)	$	1,768.9	$	(26.4)

Assurant, Inc.

Notes to Consolidated Financial Statements (unaudited)

(in millions, except number of shares and per share amounts)


	December 31, 2020
	Less than 12 months				12 Months or More				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Fixed maturity securities:

States, municipalities and political subdivisions	$	6.1	$	(0.1)	$	—	$	—	$	6.1	$	(0.1)
Foreign governments	28.3		(0.1)		—		—		28.3		(0.1)
Asset-backed	54.5		(0.2)		37.4		(0.6)		91.9		(0.8)
Commercial mortgage-backed	28.2		(0.7)		3.3		(0.7)		31.5		(1.4)
Residential mortgage-backed	23.9		(0.1)		1.5		(0.1)		25.4		(0.2)
U.S. corporate	71.9		(2.9)		13.8		(1.5)		85.7		(4.4)
Foreign corporate	30.1		(0.3)		—		—		30.1		(0.3)
Total fixed maturity securities	$	243.0	$	(4.4)	$	56.0	$	(2.9)	$	299.0	$	(7.3)

Total gross unrealized losses represented approximately 1% and 2% of the aggregate fair value of the related securities as of September 30, 2021 and December 31, 2020. Approximately 92% and 60% of these gross unrealized losses had been in a continuous loss position for less than twelve months as of September 30, 2021 and December 31, 2020, respectively. The total gross unrealized losses are comprised of 909 and 180 individual securities as of September 30, 2021 and December 31, 2020, respectively. In accordance with its policy, the Company concluded that for these securities, the gross unrealized losses as of September 30, 2021 and December 31, 2020 were related to non-credit factors and therefore, did not recognize credit-related losses during the three and nine months ended September 30, 2021. Additionally, the Company currently does not intend to and is not required to sell these investments prior to an anticipated recovery in value.

The Company has entered into commercial mortgage loans, collateralized by the underlying real estate, on properties located throughout the U.S. As of September 30, 2021, approximately 43% of the outstanding principal balance of commercial mortgage loans was concentrated in the states of California, Texas and Oregon. Although the Company has a diversified loan portfolio, an economic downturn could have an adverse impact on the ability of its debtors to repay their loans. The outstanding balance of commercial mortgage loans range in size from $0.1 million to $9.7 million as of September 30, 2021 and from $0.1 million to $9.9 million as of December 31, 2020.

Credit quality indicators for commercial mortgage loans are loan-to-value and debt-service coverage ratios. The loan-to-value ratio compares the principal amount of the loan to the fair value of the underlying property collateralizing the loan, and is commonly expressed as a percentage. The debt-service coverage ratio compares a property’s net operating income to its debt-service payments and is commonly expressed as a ratio. The loan-to-value and debt-service coverage ratios are generally updated annually in the fourth quarter.

The following table presents the amortized cost basis of commercial mortgage loans, excluding the allowance for credit losses, by origination year for certain key credit quality indicators at September 30, 2021 and December 31, 2020.


	September 30, 2021
	Origination Year
	2021		2020		2019		2018		2017		Prior		Total		% of Total
Loan to value ratios (1):
70% and less	$	40.6	$	2.9	$	—	$	—	$	4.0	$	109.3	$	156.8	68.7	%
71% to 80%	54.9		2.7		—		4.7		—		—		62.3		27.3	%
81% to 95%	—		—		—		—		—		3.2		3.2		1.4	%
Greater than 95%	—		—		—		—		5.9		—		5.9		2.6	%
Total	$	95.5	$	5.6	$	—	$	4.7	$	9.9	$	112.5	$	228.2	100.0	%

Assurant, Inc.

Notes to Consolidated Financial Statements (unaudited)

(in millions, except number of shares and per share amounts)


	September 30, 2021
	Origination Year
	2021		2020		2019		2018		2017		Prior		Total		% of Total
Debt-service coverage ratios (2):
Greater than 2.0	$	42.2	$	5.6	$	—	$	—	$	4.0	$	77.3	$	129.1	56.5	%
1.5 to 2.0	19.9		—		—		4.7		—		17.1		41.7		18.3	%
1.0 to 1.5	33.4		—		—		—		—		13.8		47.2		20.7	%
Less than 1.0	—		—		—		—		5.9		4.3		10.2		4.5	%
Total	$	95.5	$	5.6	$	—	$	4.7	$	9.9	$	112.5	$	228.2	100.0	%


	December 31, 2020
	Origination Year
	2020		2019		2018		2017		2016		Prior		Total		% of Total
Loan to value ratios (1):
70% and less	$	2.9	$	—	$	—	$	4.1	$	29.0	$	87.1	$	123.1	88.0	%
71% to 80%	2.6		—		4.8		—		—		—		7.4		5.3	%
81% to 95%	—		—		—		—		—		2.2		2.2		1.6	%
Greater than 95%	—		—		—		6.0		—		1.2		7.2		5.1	%
Total	$	5.5	$	—	$	4.8	$	10.1	$	29.0	$	90.5	$	139.9	100.0	%


	December 31, 2020
	Origination Year
	2020		2019		2018		2017		2016		Prior		Total		% of Total
Debt-service coverage ratios (2):
Greater than 2.0	$	5.5	$	—	$	—	$	4.1	$	26.4	$	53.3	$	89.3	63.9	%
1.5 to 2.0	—		—		4.8		—		2.6		17.5		24.9		17.8	%
1.0 to 1.5	—		—		—		—		—		15.0		15.0		10.7	%
Less than 1.0	—		—		—		6.0		—		4.7		10.7		7.6	%
Total	$	5.5	$	—	$	4.8	$	10.1	$	29.0	$	90.5	$	139.9	100.0	%

(1)Loan-to-value ratio derived from current loan balance divided by the fair value of the property. The fair value of the underlying commercial properties is updated at least annually.

(2)Debt-service coverage ratio calculated using most recent reported operating results from property operators divided by annual debt service coverage.

8. Fair Value Disclosures

Fair Values, Inputs and Valuation Techniques for Financial Assets and Liabilities Disclosures

The fair value measurements and disclosures guidance defines fair value and establishes a framework for measuring fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company has categorized its recurring fair value basis financial assets and liabilities into a three-level fair value hierarchy based on the priority of the inputs to the valuation technique.

The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The inputs used to measure fair value may fall into different

Assurant, Inc.

Notes to Consolidated Financial Statements (unaudited)

(in millions, except number of shares and per share amounts)

levels of the fair value hierarchy. In such cases, the level in the fair value hierarchy within which the fair value measurement in its entirety falls has been determined based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and takes into account factors specific to the asset or liability.

The levels of the fair value hierarchy are described below:

Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company can access.
Level 2 inputs utilize other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability. Level 2 inputs include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active and inputs other than quoted prices that are observable in the marketplace for the asset or liability. The observable inputs are used in valuation models to calculate the fair value for the asset or liability.
Level 3 inputs are unobservable but are significant to the fair value measurement for the asset or liability, and include situations where there is little, if any, market activity for the asset or liability. These inputs reflect management’s own assumptions about the assumptions a market participant would use in pricing the asset or liability.

The Company reviews fair value hierarchy classifications on a quarterly basis. Changes in the observability of valuation inputs may result in a reclassification of levels for certain securities within the fair value hierarchy.

The following tables present the Company’s fair value hierarchy for assets and liabilities measured at fair value on a recurring basis as of September 30, 2021 and December 31, 2020. The amounts presented below for short-term investments, other investments, cash equivalents, other assets, assets held in and liabilities related to separate accounts and other liabilities differ from the amounts presented in the consolidated balance sheets because only certain investments or certain assets and liabilities within these line items are measured at estimated fair value. Other investments are comprised of investments in the Assurant Investment Plan (“AIP”), the American Security Insurance Company Investment Plan, the Assurant Deferred Compensation Plan, a modified coinsurance arrangement and other derivatives. Other liabilities are comprised of investments in the AIP, contingent considerations related to business combinations and other derivatives. The fair value amount and the majority of the associated levels presented for other investments and assets and liabilities held in separate accounts are received directly from third parties.

Assurant, Inc.

Notes to Consolidated Financial Statements (unaudited)

(in millions, except number of shares and per share amounts)


	September 30, 2021
	Total		Level 1			Level 2			Level 3
Financial Assets
Fixed maturity securities:
U.S. government and government agencies and authorities	$	90.7	$	—		$	90.7		$	—
States, municipalities and political subdivisions	145.3		—			145.3			—
Foreign governments	423.9		—			423.9			—
Asset-backed	555.0		—			555.0			—
Commercial mortgage-backed	479.9		—			472.8			7.1
Residential mortgage-backed	652.7		—			652.7			—
U.S. corporate	3,965.4		—			3,954.4			11.0
Foreign corporate	1,337.4		—			1,332.6			4.8
Equity securities:
Mutual funds	37.7		37.7			—			—
Common stocks	123.5		14.2			0.7			108.6		(6)
Non-redeemable preferred stocks	261.1		—			261.1			—
Short-term investments	178.7		160.9		(2)	17.8			—
Other investments	225.9		69.2		(1)	156.6		(3)	0.1
Cash equivalents	1,302.8		1,210.9		(2)	91.9		(3)	—

Other assets	0.3		—			0.3		(4)	—
Assets held in separate accounts	11.4		7.3		(1)	4.1		(3)	—
Total financial assets	$	9,791.7	$	1,500.2		$	8,159.9		$	131.6

Financial Liabilities
Other liabilities	$	72.0	$	69.2	(1)	$	—		$	2.8	(5)
Liabilities related to separate accounts	11.4		7.3		(1)	4.1		(3)	—
Total financial liabilities	$	83.4	$	76.5		$	4.1		$	2.8

Assurant, Inc.

Notes to Consolidated Financial Statements (unaudited)

(in millions, except number of shares and per share amounts)


	December 31, 2020
	Total		Level 1			Level 2			Level 3
Financial Assets
Fixed maturity securities:
U.S. government and government agencies and authorities	$	94.1	$	—		$	94.1		$	—
States, municipalities and political subdivisions	175.3		—			175.3			—
Foreign governments	469.7		0.5			468.8			0.4
Asset-backed	260.5		—			260.5			—
Commercial mortgage-backed	281.4		—			272.7			8.7
Residential mortgage-backed	734.6		—			734.6			—
U.S. corporate	3,690.6		—			3,678.6			12.0
Foreign corporate	1,109.3		—			1,105.4			3.9
Equity securities:
Mutual funds	42.3		42.3			—			—
Common stocks	15.2		13.3			0.7			1.2
Non-redeemable preferred stocks	232.7		—			231.6			1.1
Short-term investments	253.5		202.0		(2)	51.5			—
Other investments	241.3		72.9		(1)	168.3		(3)	0.1
Cash equivalents	1,558.6		1,536.6		(2)	22.0		(3)	—


Assets held in separate accounts	11.4		6.7		(1)	4.7		(3)	—
Total financial assets	$	9,170.5	$	1,874.3		$	7,268.8		$	27.4

Financial Liabilities
Other liabilities	$	76.1	$	72.9	(1)	$	0.5	(4)	$	2.7	(5)
Liabilities related to separate accounts	11.4		6.7		(1)	4.7		(3)	—
Total financial liabilities	$	87.5	$	79.6		$	5.2		$	2.7

(1)Primarily includes mutual funds and related obligations.

(2)Primarily includes money market funds.

(3)Primarily includes fixed maturity securities and related obligations.

(4)Primarily includes derivatives.

(5)Includes contingent consideration liabilities and other derivatives.

(6)In third quarter 2021, the Company received $107.1 million of common stock through special purpose acquisition company mergers. See Note 7 for additional information. These equity securities are subject to lock up agreements and therefore an illiquidity discount was applied to the exchange traded price, which includes significant unobservable inputs.

Assurant, Inc.

Notes to Consolidated Financial Statements (unaudited)

(in millions, except number of shares and per share amounts)

The following tables disclose the carrying value, fair value and hierarchy level of the financial instruments that are not recognized or are not carried at fair value in the consolidated balance sheets as of the dates indicated:


	September 30, 2021
			Fair Value
	Carrying Value		Total		Level 1		Level 2		Level 3
Financial Assets
Commercial mortgage loans on real estate	$	227.3	$	239.6	$	—	$	—	$	239.6
Other investments	20.4		20.4		14.0		—		6.4
Other assets	22.2		22.2		—		—		22.2
Total financial assets	$	269.9	$	282.2	$	14.0	$	—	$	268.2
Financial Liabilities
Policy reserves under investment products (Individual and group annuities, subject to discretionary withdrawal) (1)	$	68.3	$	80.0	$	—	$	—	$	80.0
Funds withheld under reinsurance	350.0		350.0		350.0		—		—
Debt	2,201.9		2,489.9		—		2,489.9		—
Total financial liabilities	$	2,620.2	$	2,919.9	$	350.0	$	2,489.9	$	80.0

	December 31, 2020
			Fair Value
	Carrying Value		Total		Level 1		Level 2		Level 3
Financial Assets
Commercial mortgage loans on real estate	$	138.3	$	198.3	$	—	$	—	$	198.3
Other investments	52.1		52.1		14.4		—		37.7
Other assets	23.3		23.3		—		—		23.3
Total financial assets	$	213.7	$	273.7	$	14.4	$	—	$	259.3
Financial Liabilities
Policy reserves under investment products (Individual and group annuities, subject to discretionary withdrawal) (1)	$	70.6	$	85.4	$	—	$	—	$	85.4
Funds withheld under reinsurance	358.6		358.6		358.6		—		—
Debt	2,252.9		2,540.0		—		2,540.0		—
Total financial liabilities	$	2,682.1	$	2,984.0	$	358.6	$	2,540.0	$	85.4

(1)Only the fair value of the Company’s policy reserves for investment-type contracts (those without significant mortality or morbidity risk) are reflected in the table above.

9. Reserves

Reserve Roll Forward

The following table provides a roll forward of the Company’s beginning and ending claims and benefits payable balances. Claims and benefits payable is the liability for unpaid loss and loss adjustment expenses and is comprised of case and incurred but not reported (“IBNR”) reserves.

Since unpaid loss and loss adjustment expenses are estimates, the Company’s actual losses incurred may be more or less than the Company’s previously developed estimates, which is referred to as either unfavorable or favorable development, respectively.

Assurant, Inc.

Notes to Consolidated Financial Statements (unaudited)

(in millions, except number of shares and per share amounts)

The best estimate of ultimate loss and loss adjustment expense is generally selected from a blend of methods that are applied consistently each period. There have been no significant changes in the methodologies and assumptions utilized in estimating the liability for unpaid loss and loss adjustment expenses for any of the periods presented.


	For the Nine Months Ended September 30,
	2021		2020
Claims and benefits payable, at beginning of period	$	1,610.3	$	1,613.1
Less: Reinsurance ceded and other	(849.4)		(855.1)
Net claims and benefits payable, at beginning of period	760.9		758.0
Incurred losses and loss adjustment expenses related to:
Current year	1,706.9		1,739.5
Prior years	(25.7)		(42.7)
Total incurred losses and loss adjustment expenses	1,681.2		1,696.8
Paid losses and loss adjustment expenses related to:
Current year	1,152.0		1,187.5
Prior years	447.7		434.5
Total paid losses and loss adjustment expenses	1,599.7		1,622.0
Net claims and benefits payable, at end of period	842.4		832.8
Plus: Reinsurance ceded and other (1)	1,055.0		906.1
Claims and benefits payable, at end of period (1)	$	1,897.4	$	1,738.9

(1)Includes reinsurance recoverables and claims and benefits payable of $221.6 million and $118.4 million as of September 30, 2021 and 2020, respectively, which was ceded to the U.S. government. The Company acts as an administrator for the U.S. government under the voluntary National Flood Insurance Program.

The Company experienced favorable development in both periods presented in the roll forward table above. Global Lifestyle contributed $34.1 million and $34.0 million to the net favorable development during the nine months ended September 30, 2021 and 2020, respectively. The net favorable development in both years was attributable to nearly all lines of business across most of the Company’s regions with a concentration on more recent accident years and based on emerging evaluations regarding loss experience each period. Many of these contracts and products contain retrospective commission (profit sharing) provisions that would result in offsetting increases or decreases in expense dependent on if the development was favorable or unfavorable. Global Housing contributed $15.2 million of net unfavorable development and $2.9 million of net favorable development for the nine months ended September 30, 2021 and 2020, respectively. The net unfavorable development in 2021 was primarily attributable to higher-than-expected loss and loss adjustment expense associated with the run-off of the Small Commercial product in accident years 2018 and 2019 and increases in prior reported claims and reserve assumptions for Sharing Economy business in accident years 2019 and 2020. The net favorable development in 2020 was primarily attributable to Lender-placed Insurance products from the most recent accident years due to lower than expected non-catastrophe claim frequency. All others contributed $6.8 million and $5.8 million on net favorable development for the nine months ended September 30, 2021 and 2020, respectively.

Assurant, Inc.

Notes to Consolidated Financial Statements (unaudited)

(in millions, except number of shares and per share amounts)

10. Debt

The following table shows the principal amount and carrying value of the Company’s outstanding debt, less unamortized discount and issuance costs as applicable, as of September 30, 2021 and December 31, 2020:


	September 30, 2021				December 31, 2020
	Principal Amount		Carrying Value		Principal Amount		Carrying Value
Floating Rate Senior Notes due March 2021 (1)	$	—	$	—	$	50.0	$	50.0
4.00% Senior Notes due March 2023 (2)	—		—		350.0		348.9
4.20% Senior Notes due September 2023	300.0		298.8		300.0		298.4
4.90% Senior Notes due March 2028	300.0		297.4		300.0		297.2
3.70% Senior Notes due February 2030	350.0		347.2		350.0		347.0
2.65% Senior Notes due January 2032	350.0		346.3		—		—
6.75% Senior Notes due February 2034	275.0		272.4		275.0		272.3
7.00% Fixed-to-Floating Rate Subordinated Notes due March 2048 (3)	400.0		395.8		400.0		395.4
5.25% Subordinated Notes due January 2061	250.0		244.0		250.0		243.7
Total Debt			$	2,201.9			$	2,252.9

(1)The outstanding aggregate principal amount was repaid in January 2021. Prior to repayment, these senior notes bore floating interest at a rate equal to three-month LIBOR plus 1.25% per annum.

(2)The outstanding aggregate principal amount was redeemed in full in July 2021.

(3)Bears a 7.00% annual interest rate to March 2028 and an annual interest rate equal to three-month LIBOR plus 4.135% thereafter.

Debt Issuance

2032 Senior Notes: In June 2021, the Company issued senior notes due January 2032 with an aggregate principal amount of $350.0 million, which bear interest at a rate of 2.65% per year and were issued at a 0.158% discount to the public (the “2032 Senior Notes”). Interest is payable semi-annually in arrears on January 15 and July 15 of each year, beginning on January 15, 2022. Prior to October 15, 2031, the Company may redeem the 2032 Senior Notes at any time in whole or from time to time in part at a make-whole premium plus accrued and unpaid interest. On or after that date, the Company may redeem the 2032 Senior Notes at any time in whole or from time to time in part at a redemption price equal to 100% of the principal amount being redeemed plus accrued and unpaid interest.

In July 2021, the Company used the net proceeds from the sale of the 2032 Senior Notes, together with cash on hand, to redeem all of the $350.0 million outstanding aggregate principal amount of its 4.00% senior notes due March 2023 and to pay accrued interest, related premiums, fees and expenses, including a loss on extinguishment of debt of $20.7 million which was recorded during the three months ended September 30, 2021.

The interest rate payable on the 2032 Senior Notes will be subject to adjustment from time to time, if either Moody’s Investor Service, Inc. (“Moody’s”) or S&P Global Ratings, a division of S&P Global Inc. (“S&P”) downgrades the credit rating assigned to such series of senior notes to Ba1 or below or to BB+ or below, respectively, or subsequently upgrades the credit ratings once the senior notes are at or below such levels. The following table details the increase in interest rate over the issuance rate by rating, with the impact equal to the sum of the number of basis points next to such rating for a maximum increase of 200 basis points over the issuance rate:


	Rating Agencies
Rating Levels	Moody’s (1)	S&P (1)	Interest Rate Increase (2)
1	Ba1	BB+	25 basis points
2	Ba2	BB	50 basis points
3	Ba3	BB-	75 basis points
4	B1 or below	B+ or below	100 basis points

(1)Including the equivalent ratings of any substitute rating agency.

Assurant, Inc.

Notes to Consolidated Financial Statements (unaudited)

(in millions, except number of shares and per share amounts)

(2)Applies to each rating agency individually.

Credit Facility

The Company has a senior unsecured $450.0 million revolving credit agreement (the “Credit Facility”) with a syndicate of banks arranged by JPMorgan Chase Bank, N.A. and Wells Fargo Bank, National Association (the “Lenders”). The Credit Facility provides for revolving loans and the issuance of multi-bank, syndicated letters of credit and letters of credit from a sole issuing bank in an aggregate amount of $450.0 million, which may be increased up to $575.0 million. The Credit Facility is available until December 2022, provided the Company is in compliance with all covenants. The Credit Facility has a sub-limit for letters of credit issued thereunder of $50.0 million. The proceeds from these loans may be used for the Company’s commercial paper program or for general corporate purposes. As of September 30, 2021, no borrowings were outstanding under the Credit Facility, and $445.5 million was available under the Credit Facility due to $4.5 million of letters of credit outstanding.

Interest Rate Derivatives

In March 2018, the Company exercised a series of derivative transactions it had entered into in 2017 to hedge the interest rate risk related to expected borrowing to finance the acquisition of TWG Holdings Limited and its subsidiaries. The Company determined that the derivatives qualified for hedge accounting as effective cash flow hedges and recognized a deferred gain of $26.7 million upon settlement that was reported through other comprehensive income. The deferred gain is being recognized as a reduction in interest expense related to the 4.20% senior notes due 2023, the 4.90% senior notes due 2028 and the 7.00% fixed-to-floating rate subordinated notes due 2048, in each case on an effective yield basis. The amortization of the deferred gain for the three months ended September 30, 2021 and 2020 was $0.7 million, and the amortization of deferred gain for the nine months ended September 30, 2021 and 2020 was $2.2 million. The remaining deferred gain as of September 30, 2021 was $16.4 million.

11. Accumulated Other Comprehensive Income

Certain amounts included in the consolidated statements of comprehensive income are net of reclassification adjustments. The following tables summarize those reclassification adjustments (net of taxes) for the periods indicated:


	Three Months Ended September 30, 2021
	Foreign currency translation adjustment		Net unrealized gains on investments		Net unrealized gains on derivative transactions		Unamortized net losses on Pension Plans		Accumulated other comprehensive income
Balance at June 30, 2021	$	(274.8)	$	974.5	$	13.5	$	(109.2)	$	604.0
Change in accumulated other comprehensive income (loss) before reclassifications	(23.4)		(44.6)		—		0.3		(67.7)
Amounts reclassified from accumulated other comprehensive income (loss) (1)	(0.3)		(618.5)		(0.6)		(1.0)		(620.4)
Net current-period other comprehensive income (loss)	(23.7)		(663.1)		(0.6)		(0.7)		(688.1)
Balance at September 30, 2021	$	(298.5)	$	311.4	$	12.9	$	(109.9)	$	(84.1)

Assurant, Inc.

Notes to Consolidated Financial Statements (unaudited)

(in millions, except number of shares and per share amounts)


	Three Months Ended September 30, 2020
	Foreign currency translation adjustment		Net unrealized gains on investments		Net unrealized gains on derivative transactions		Unamortized net losses on Pension Plans		Accumulated other comprehensive income
Balance at June 30, 2020	$	(379.0)	$	1,003.4	$	15.9	$	(71.4)	$	568.9
Change in accumulated other comprehensive income (loss) before reclassifications	35.3		55.3		—		(0.5)		90.1
Amounts reclassified from accumulated other comprehensive income (loss)	—		1.5		(0.6)		(1.7)		(0.8)
Net current-period other comprehensive income (loss)	35.3		56.8		(0.6)		(2.2)		89.3
Balance at September 30, 2020	$	(343.7)	$	1,060.2	$	15.3	$	(73.6)	$	658.2

	Nine Months Ended September 30, 2021
	Foreign currency translation adjustment		Net unrealized gains on securities		Net unrealized gains on derivative transactions		Unamortized net losses on Pension Plans		Accumulated other comprehensive income
Balance at December 31, 2020	$	(295.6)	$	1,097.6	$	14.7	$	(106.9)	$	709.8
Change in accumulated other comprehensive income (loss) before reclassifications	(2.6)		(162.5)		—		0.6		(164.5)
Amounts reclassified from accumulated other comprehensive income (loss) (1)	(0.3)		(623.7)		(1.8)		(3.6)		(629.4)
Net current-period other comprehensive income (loss)	(2.9)		(786.2)		(1.8)		(3.0)		(793.9)
Balance at September 30, 2021	$	(298.5)	$	311.4	$	12.9	$	(109.9)	$	(84.1)

	Nine Months Ended September 30, 2020
	Foreign currency translation adjustment		Net unrealized gains on securities		Net unrealized gains on derivative transactions		Unamortized net (losses) gains on Pension Plans (2)		Accumulated other comprehensive income
Balance at December 31, 2019	$	(358.9)	$	872.0	$	17.1	$	(118.7)	$	411.5
Change in accumulated other comprehensive income (loss) before reclassifications	(23.2)		189.4		—		48.4		214.6
Amounts reclassified from accumulated other comprehensive income (loss)	38.4		(1.2)		(1.8)		(3.3)		32.1
Net current-period other comprehensive income (loss)	15.2		188.2		(1.8)		45.1		246.7
Balance at September 30, 2020	$	(343.7)	$	1,060.2	$	15.3	$	(73.6)	$	658.2

(2)The Retirement Health Benefits plan was amended in February 2020, which resulted in a prior service credit recognized in other comprehensive income that will be recognized in income over the remaining period of the plan. Refer to Note 15 for additional information.

The following tables summarize the reclassifications out of accumulated other comprehensive income (“AOCI”) for the periods indicated:


Details about accumulated other comprehensive income components	Amount reclassified from accumulated other comprehensive income				Affected line item in the statement where net income is presented
	Three Months Ended September 30,
	2021		2020
Foreign currency translation adjustment	$	(0.8)	$	—	(1)

Assurant, Inc.

Notes to Consolidated Financial Statements (unaudited)

(in millions, except number of shares and per share amounts)


	0.5		—		(1)
	$	(0.3)	$	—	Net of tax
Net unrealized (gains) losses on investments	$	(789.6)	$	1.8	Net realized gains (losses) on investments (1)

	171.1		(0.3)		Provision for income taxes (1)
	$	(618.5)	$	1.5	Net of tax
Net unrealized gains on derivative transactions	$	(0.7)	$	(0.7)	Interest expense
	0.1		0.1		Provision for income taxes
	$	(0.6)	$	(0.6)	Net of tax






Amortization of pension and postretirement unrecognized net periodic benefit cost:
Amortization of net loss	$	1.8	$	1.3	(2)
Amortization of prior service credit	(3.4)		(3.4)		(2)
Settlement loss	0.3		—		(2)
	(1.3)		(2.1)
	0.3		0.4		Provision for income taxes
	$	(1.0)	$	(1.7)	Net of tax
Total reclassifications for the period	$	(620.4)	$	(0.8)	Net of tax

Details about accumulated other comprehensive income components	Amount reclassified from accumulated other comprehensive income				Affected line item in the statement where net income is presented
	Nine Months Ended September 30,
	2021		2020
Foreign currency translation adjustment	$	(0.8)	$	38.4	Underwriting, general and administrative expenses (1)
	0.5		—		Provision for income taxes (1)
	$	(0.3)	$	38.4	Net of tax
Net unrealized gains on investments	$	(796.1)	$	(1.6)	Net realized gains (losses) on investments (1)

	172.4		0.4		Provision for income taxes (1)
	$	(623.7)	$	(1.2)	Net of tax
Net unrealized gains on derivative transactions	$	(2.1)	$	(2.1)	Interest expense
	0.3		0.3		Provision for income taxes
	$	(1.8)	$	(1.8)	Net of tax






Amortization of pension and postretirement unrecognized net periodic benefit cost:
Amortization of net loss	$	5.4	$	3.8	(2)
Amortization of prior service credit	(10.2)		(7.9)		(2)
Settlement loss	0.3		—		(2)
	(4.5)		(4.1)
	0.9		0.8		Provision for income taxes
	$	(3.6)	$	(3.3)	Net of tax
Total reclassifications for the period	$	(629.4)	$	32.1	Net of tax

(1)Three and nine months ended September 30, 2021 include $0.3 million after-tax ($0.8 million pre-tax) of foreign currency translation adjustments and $605.7 million after-tax ($773.4 million pre-tax) of net unrealized gains on investments, for a total of $606.0 million after-tax ($774.2 million pre-tax) that were recognized through income from discontinued operations upon the sale of the disposed Global Preneed business. Refer to Note 4 for additional information.

Assurant, Inc.

Notes to Consolidated Financial Statements (unaudited)

(in millions, except number of shares and per share amounts)

(2)These AOCI components are included in the computation of net periodic pension cost. See Note 15 for additional information.

12. Stock Based Compensation

Under the Assurant, Inc. 2017 Long-Term Equity Incentive Plan (the “ALTEIP”), as amended in May 2021, the Company is authorized to issue up to 1,840,112 new shares of the Company’s common stock to employees, officers and non-employee directors. Under the ALTEIP, the Company may grant awards based on shares of its common stock, including stock options, stock appreciation rights, restricted stock (including performance shares), unrestricted stock, restricted stock units (“RSUs”), performance share units (“PSUs”) and dividend equivalents. All share-based grants are awarded under the ALTEIP.

Restricted Stock Units

The following table shows a summary of RSU activity during the three and nine months ended September 30, 2021 and 2020:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
RSU compensation expense	$	8.8	$	7.2	$	23.5	$	20.8
Income tax benefit	(1.5)		(1.4)		(4.2)		(3.8)
RSU compensation expense, net of tax	$	7.3	$	5.8	$	19.3	$	17.0
RSUs granted	18,590		32,844		216,983		294,794
Weighted average grant date fair value per unit	$	156.85	$	101.81	$	140.60	$	92.20
Total fair value of vested RSUs	$	9.7	$	4.8	$	42.0	$	29.2

As of September 30, 2021, there was $26.2 million of unrecognized compensation cost related to outstanding RSUs. That cost is expected to be recognized over a weighted-average period of 1.1 years.

Performance Share Units

The following table shows a summary of PSU activity during the three and nine months ended September 30, 2021 and 2020:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
PSU compensation expense	$	8.9	$	7.6	$	23.7	$	19.7
Income tax benefit	(1.1)		(0.8)		(2.9)		(2.1)
PSU compensation expense, net of tax	$	7.8	$	6.8	$	20.8	$	17.6
PSUs granted	—		—		208,040		302,274
Weighted average grant date fair value per unit	$	—	$	—	$	148.04	$	87.36
Total fair value of vested PSUs	$	2.1	$	0.3	$	24.6	$	24.7

As of September 30, 2021, there was $29.5 million of unrecognized compensation cost related to outstanding PSUs. That cost is expected to be recognized over a weighted-average period of 0.9 year.

The fair value of PSUs with market conditions was estimated as of the date of grant using a Monte Carlo simulation model, which utilizes multiple variables that determine the probability of satisfying the market condition stipulated in the award. Expected volatilities for awards issued during the nine months ended September 30, 2021 and 2020 were based on the historical stock prices of the Company’s stock and peer group. The expected term for grants issued during the nine months ended September 30, 2021 and 2020 was assumed to equal the average of the vesting period of the PSUs. The risk-free rate was based on the U.S. Treasury yield curve in effect at the time of grant.

Assurant, Inc.

Notes to Consolidated Financial Statements (unaudited)

(in millions, except number of shares and per share amounts)

13. Equity Transactions

Stock Repurchase

During the nine months ended September 30, 2021 and 2020, the Company repurchased 3,513,870 and 1,312,443 shares of the Company’s outstanding common stock at a cost of $554.7 million and $153.2 million, exclusive of commissions, respectively, leaving $1.13 billion aggregate cost at purchase remaining unused under the existing repurchase authorizations as of September 30, 2021. Shares repurchased during the nine months ended September 30, 2021 were retired upon acquisition.

The timing and the amount of future repurchases will depend on market conditions, the Company’s financial condition, results of operations and liquidity and other factors.

Mandatory Convertible Preferred Stock (“MCPS”)

In March 2018, the Company issued 2,875,000 shares of the MCPS, with a par value of $1.00 per share, at a public offering price of $100.00 per share. Each outstanding share of MCPS converted in March 2021 into 0.9405 of common shares, or 2,703,911 common shares in total plus an immaterial amount of cash in lieu of fractional shares. The Company used a portion of its treasury stock for the common shares, using the average cost method to account for the reissuance of such shares.

Dividends on the MCPS were payable on a cumulative basis when, as and if declared, at an annual rate of 6.50% of the liquidation preference of $100.00 per share. The Company paid preferred stock dividends of $4.7 million for the three months ended September 30, 2020. The Company paid preferred stock dividends of $4.7 million and $14.0 million for the nine months ended September 30, 2021 and 2020, respectively.

14. Earnings Per Common Share

The following table presents net income, the weighted average common shares used in calculating basic EPS and those used in calculating diluted EPS for each period presented below. Diluted EPS reflects the incremental common shares from: (1) common shares issuable upon vesting of PSUs and the purchase of shares under the Employee Stock Purchase Plan (the “ESPP”) using the treasury stock method; and (2) common shares issuable upon the conversion of the MCPS using the if-converted method. Refer to Notes 12 and 13 for further information regarding potential common stock issuances. The outstanding RSUs have non-forfeitable rights to dividend equivalents and are therefore included in calculating basic and diluted EPS under the two-class method.

Assurant, Inc.

Notes to Consolidated Financial Statements (unaudited)

(in millions, except number of shares and per share amounts)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Numerator
Net income from continuing operations	$	153.6	$	88.0	$	486.8	$	401.3
Less: Net loss (income) attributable to non-controlling interest	—		0.3		—		(1.1)
Net income from continuing operations attributable to stockholders	153.6		88.3		486.8		400.2
Less: Preferred stock dividends	—		(4.7)		(4.7)		(14.0)
Net income from continuing operations attributable to common stockholders	153.6		83.6		482.1		386.2
Less: Common stock dividends paid	(38.5)		(37.5)		(118.5)		(115.1)
Undistributed earnings	$	115.1	$	46.1	$	363.6	$	271.1

Net income from continuing operations attributable to common stockholders	$	153.6	$	83.6	$	482.1	$	386.2
Add: Net income (loss) from discontinued operations	728.8		(118.5)		762.0		(97.6)
Net income (loss) attributable to common stockholders	$	882.4	$	(34.9)	$	1,244.1	$	288.6

Denominator
Weighted average common shares outstanding used in basic per common share calculations	59,126,313		60,190,103		59,769,690		60,384,817
Incremental common shares from:
PSUs	352,918		233,039		371,793		253,982
ESPP	233		2,580		—		2,146
MCPS	—		—		713,838		2,699,913
Weighted average common shares outstanding used in diluted per common share calculations	59,479,464		60,425,722		60,855,321		63,340,858
Earnings per common share - Basic
Distributed earnings	$	0.65	$	0.62	$	1.98	$	1.91
Undistributed earnings	1.95		0.77		6.09		4.48
Net income from continuing operations	2.60		1.39		8.07		6.39
Net income (loss) from discontinued operations	12.32		(1.97)		12.74		(1.61)
Net income (loss) attributable to common stockholders	$	14.92	$	(0.58)	$	20.81	$	4.78
Earnings per common share - Diluted
Distributed earnings	$	0.65	$	0.62	$	1.95	$	1.82
Undistributed earnings	1.93		0.76		6.05		4.50
Net income from continuing operations	2.58		1.38		8.00		6.32
Net income (loss) from discontinued operations	12.25		(1.96)		12.52		(1.54)
Net income (loss) attributable to common stockholders	$	14.83	$	(0.58)	$	20.52	$	4.78

Average PSUs totaling 3,289 and 1,650 for the three and nine months ended September 30, 2021, respectively, were anti-dilutive and thus not included in the computation of diluted EPS under the treasury stock method. There were no anti-dilutive PSUs for the three and nine months ended September 30, 2020. Average MCPS totaling 2,699,913 for the three months ended September 30, 2020 were anti-dilutive and thus not included in the computation of diluted EPS under the if-converted method.

15. Retirement and Other Employee Benefits

The Company and its subsidiaries participate in a non-contributory, qualified defined benefit pension plan (“Assurant Pension Plan”) covering substantially all employees prior to closing to new hires on January 1, 2014. The Company also has

Assurant, Inc.

Notes to Consolidated Financial Statements (unaudited)

(in millions, except number of shares and per share amounts)

various non-contributory, non-qualified supplemental plans covering certain employees, including the Assurant Executive Pension Plan and the Assurant Supplemental Executive Retirement Plan. The qualified and non-qualified plans are referred to as “Pension Benefits” unless otherwise noted. In addition, the Company provides certain life and health care benefits (“Retirement Health Benefits”) for retired employees and their dependents. The Pension Benefits and Retirement Health Benefits (together, the “Plans”) were frozen on March 1, 2016.

In February 2020, the Company amended the Retirement Health Benefits to terminate effective December 31, 2024 (the “Termination Date”). Benefits will be paid up to the Termination Date. The Retirement Health Benefits obligations were re-measured using a discount rate of 1.55%, selected based on a cash flow analysis using a bond yield curve as of February 29, 2020, and the fair market value of the Retirement Health Benefits assets as of February 29, 2020. The remeasurement resulted in a reduction to the Retirement Health Benefits obligations of $65.6 million and a corresponding prior service credit in AOCI, which will be reclassified from AOCI as it is amortized in the net periodic benefit cost over the remaining period until the Termination Date.

The following tables present the components of net periodic benefit cost for the Plans for the three and nine months ended September 30, 2021 and 2020:


	Qualified Pension Benefits				Unfunded Non-qualified Pension Benefits				Retirement Health Benefits
	For the Three Months Ended September 30,				For the Three Months Ended September 30,				For the Three Months Ended September 30,
	2021		2020		2021		2020		2021		2020
Interest cost	$	3.5	$	5.1	$	0.3	$	0.5	$	0.1	$	0.1
Expected return on plan assets	(6.8)		(7.7)		—		—		(0.4)		(0.8)
Amortization of prior service credit	—		—		—		—		(3.4)		(3.4)
Amortization of net loss (gain)	1.2		0.7		0.8		0.6		(0.2)		—
Settlement loss	—		—		0.3		—		—		—
Net periodic benefit cost	$	(2.1)	$	(1.9)	$	1.4	$	1.1	$	(3.9)	$	(4.1)

	Qualified Pension Benefits				Unfunded Nonqualified Pension Benefits				Retirement Health Benefits
	For the Nine Months Ended September 30,				For the Nine Months Ended September 30,				For the Nine Months Ended September 30,
	2021		2020		2021		2020		2021		2020
Interest cost	$	10.5	$	15.3	$	0.9	$	1.5	$	0.1	$	0.6
Expected return on plan assets	(20.6)		(23.1)		—		—		(1.2)		(1.3)
Amortization of prior service credit	—		—		—		—		(10.2)		(7.9)
Amortization of net loss (gain)	3.6		2.1		2.4		1.7		(0.4)		—
Settlement loss	—		—		0.3		—		—		—
Net periodic benefit cost	$	(6.5)	$	(5.7)	$	3.6	$	3.2	$	(11.7)	$	(8.6)

The Assurant Pension Plan funded status was $56.6 million at September 30, 2021 and $43.2 million at December 31, 2020 (based on the fair value of the assets compared to the accumulated benefit obligation). This equates to a 107% and 105% funded status at September 30, 2021 and December 31, 2020, respectively. During the nine months ended September 30, 2021, no cash was contributed to the Assurant Pension Plan. Due to the Assurant Pension Plan’s current funded status, no additional cash is expected to be contributed to the Assurant Pension Plan over the remainder of 2021.

16. Commitments and Contingencies

Letters of Credit

In the normal course of business, letters of credit are issued primarily to support reinsurance arrangements in which the Company is the reinsurer. These letters of credit are supported by commitments under which the Company is required to indemnify the financial institution issuing the letter of credit if the letter of credit is drawn. The Company had $7.2 million and $7.6 million of letters of credit outstanding as of September 30, 2021 and December 31, 2020, respectively.

Assurant, Inc.

Notes to Consolidated Financial Statements (unaudited)

(in millions, except number of shares and per share amounts)

Legal and Regulatory Matters

The Company is involved in a variety of litigation and legal and regulatory proceedings relating to its current and past business operations and, from time to time, it may become involved in other such actions. The Company continues to defend itself vigorously in these proceedings. The Company has participated and may participate in settlements on terms that the Company considers reasonable.

The Company has established an accrued liability for certain legal and regulatory proceedings. The possible loss or range of loss resulting from such litigation and regulatory proceedings, if any, in excess of the amounts accrued is inherently unpredictable and uncertain. Consequently, no estimate can be made of any possible loss or range of loss in excess of the accrual. Although the Company cannot predict the outcome of any pending legal or regulatory proceeding, or the potential losses, fines, penalties or equitable relief, if any, that may result, it is possible that such outcome could have a material adverse effect on the Company’s consolidated results of operations or cash flows for an individual reporting period. However, on the basis of currently available information, management does not believe that the pending matters are likely to have a material adverse effect, individually or in the aggregate, on the Company’s financial condition.

Next: Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations